Exhibit 99.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
JARDEN CORPORATION,
AND
DIAMOND BRANDS INC.,
DIAMOND BRANDS OPERATING CORP.,
DIAMOND BRANDS KANSAS, INC.
AND
XXXXXXX, INC.
November 27, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION...................................................................1
1.1 Definitions.....................................................................................1
1.2 Rules of Construction..........................................................................10
ARTICLE II PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES..................................................10
2.1 Purchase and Sale of Assets....................................................................10
2.2 Assignment and Assumption of Certain Liabilities...............................................12
2.3 Excluded Assets................................................................................12
2.4 No Other Liabilities Assumed...................................................................13
2.5 Assumption of Certain Contractual Obligations; Excluded Contracts..............................15
2.6 Deemed Consents; Cures.........................................................................15
ARTICLE III BASIC TRANSACTION....................................................................................15
3.1 Purchase Price.................................................................................15
3.2 Payment of the Deposit and Purchase Price......................................................16
3.3 Allocation of Purchase Price...................................................................16
ARTICLE IV CLOSING; CONDITIONS TO CLOSING........................................................................16
4.1 Closing........................................................................................16
4.2 The Debtors' Conditions........................................................................17
4.3 Buyer's Conditions.............................................................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE DEBTORS..........................................................21
5.1 Organization; Authorization....................................................................21
5.2 No Conflict; Consents..........................................................................21
5.3 Consents and Approvals of Governmental Authorities.............................................21
5.4 Contracts......................................................................................21
5.5 Financial Statements...........................................................................21
5.6 Equipment......................................................................................21
5.7 Inventory......................................................................................22
5.8 Intellectual Property..........................................................................22
5.9 Compliance with Laws...........................................................................23
5.10 Books and Records..............................................................................23
5.11 Permits........................................................................................23
5.12 Environmental Matters..........................................................................23
5.13 Employees; Benefit Plans.......................................................................23
5.14 Absence of Certain Changes.....................................................................24
5.15 Liabilities....................................................................................25
5.16 Insurance......................................................................................25
5.17 Taxes..........................................................................................25
5.18 Accounts Receivable............................................................................25
5.19 Brokers; Agents................................................................................25
5.20 Warranty Obligations...........................................................................25
5.21 Real Property..................................................................................25
5.22 Litigation.....................................................................................26
5.23 Trade Relations................................................................................26
5.24 Subsidiaries...................................................................................26
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................26
6.1 Organization...................................................................................26
6.2 Authorization..................................................................................26
6.3 No Conflict or Violation.......................................................................26
6.4 Consents and Approvals.........................................................................27
i
6.5 Brokers........................................................................................27
ARTICLE VII ACTIONS PRIOR TO AND ON THE CLOSING..................................................................27
7.1 Conduct of the Business prior to the Closing...................................................27
7.2 Inspection.....................................................................................28
7.3 Consents and Commercially Reasonable Efforts...................................................29
7.4 Employee Benefit Plans.........................................................................30
7.5 Employees......................................................................................30
7.6 Debtors' Cooperation in Hiring of Employees....................................................30
7.7 WARN Act.......................................................................................31
7.8 Bankruptcy Actions.............................................................................31
7.9 Excluded Real Property.........................................................................31
ARTICLE VIII ACTIONS AFTER THE CLOSING...........................................................................31
8.1 Employee Benefit Plans.........................................................................31
8.2 Cooperation of the Buyer and the Debtors.......................................................32
8.3 Further Assurances; Certain Consents...........................................................32
8.4 Name Changes...................................................................................32
8.5 Accounts Receivable/Collections................................................................32
8.6 Access to Information..........................................................................33
8.7 Transition Services............................................................................33
ARTICLE IX TERMINATION ..........................................................................................33
9.1 Termination and Abandonment....................................................................33
9.2 Notice of Termination..........................................................................34
9.3 Effect of Termination..........................................................................34
9.4 No Survival of Representations and Warranties..................................................34
ARTICLE X GENERAL PROVISIONS.....................................................................................34
10.1 Amendment and Modification.....................................................................34
10.2 Assignments....................................................................................34
10.3 Business Day...................................................................................34
10.4 Captions.......................................................................................34
10.5 Counterpart Facsimile Execution................................................................34
10.6 Counterparts...................................................................................34
10.7 Entire Agreement...............................................................................35
10.8 Schedules and Exhibits.........................................................................35
10.9 Expenses Incurred by the Parties...............................................................35
10.10 Failure or Delay...............................................................................35
10.11 Governing Law..................................................................................35
10.12 Legal Fees.....................................................................................35
10.13 Notices Between the Parties....................................................................35
10.14 Publicity Regarding This Agreement.............................................................36
10.15 Remedies Are Exclusive.........................................................................36
10.16 Severability...................................................................................36
10.17 Specific Performance and Injunctive Relief.....................................................37
10.18 Submission to Jurisdiction.....................................................................37
10.19 Successors and Assigns.........................................................................37
10.20 Third-Party Beneficiary........................................................................37
10.21 Effective Control..............................................................................37
10.22 Liability of Buyer's Affiliates................................................................37
ii
LIST OF SCHEDULES AND EXHIBITS
Schedule 2.1.1.5 - Assumed Contracts
Schedule 2.1.1.6 - Bank Accounts
Schedule 2.1.1.7 - Assumed Owned Real Property
Schedule 2.1.1.22 - Assumed Plans
Schedule 2.2.1(vi) - Assumed Obligations
Schedule 2.3.5 - Excluded Assets
Schedule 3.3 - Allocation Schedule
Schedule 5.3 - No Conflict or Violation
Schedule 5.4 - Contracts
Schedule 5.5 - Financial Statements
Schedule 5.6 - Equipment
Schedule 5.8 - Intellectual Property
Schedule 5.9 - Compliance with Laws
Schedule 5.11 - Permits
Schedule 5.12 - Environmental Matters
Schedule 5.13 - Employee Benefit Plans
Schedule 5.14 - Absence of Certain Changes
Schedule 5.15 - Liabilities
Schedule 5.16 - Insurance
Schedule 5.17 - Taxes
Schedule 5.20 - Warranty Obligations
Schedule 5.21 - Real Property
Schedule 5.22 - Litigation
Schedule 5.23 - Trade Relations
Schedule 5.24 - Subsidiaries
Schedule 7.1.1 - Conduct of Business
Schedule 7.5.1 - Employees
Exhibits
--------
Exhibit A - Plan of Reorganization
iii
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of
this 27th day of November, 2002, by and among Jarden Corporation, a Delaware
corporation (the "Buyer"), Diamond Brands, Incorporated, a Minnesota
corporation ("DBI"), Diamond Brands Operating Corp., a Delaware corporation
and wholly-owned subsidiary of DBI ("DBOC"), Diamond Brands Kansas, Inc., a
Kansas corporation ("DBKI"), and Xxxxxxx, Inc., a Maine corporation and
wholly-owned subsidiary of DBOC ("Xxxxxxx"). DBI, DBOC, DBKI and Xxxxxxx are
sometimes referred to herein individually as a "Debtor" and collectively as
the "Debtors." Capitalized terms used but not otherwise defined herein shall
have the meanings accorded to them in Section 1.1 hereof.
RECITALS
A. The Debtors are engaged in the business of designing,
manufacturing, marketing and selling plastic cutlery, matches, toothpicks and
other wooden and plastic consumer items (the "Acquired Product Lines").
B. On May 22, 2001, the Debtors filed in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court") for bankruptcy
protection pursuant to chapter 11 of the United States Bankruptcy Code, 11
U.S.C. ss.101 et seq. (the "Bankruptcy Code"), which chapter 11 case is being
administered under case number 01-1825 (the "Reorganization Cases").
C. The Debtors continue to produce the Acquired Product Lines as
debtors-in-possession.
D. The Buyer wishes to cause the Asset Buyer(s) to purchase from the
Debtors, and the Debtors wish to sell to the Asset Buyer(s), certain assets of
the Debtors upon the terms set forth herein.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein
contained and other good and valuable consideration (the receipt, adequacy and
sufficiency of which are hereby acknowledged by the Parties by their execution
hereof), the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Definitions. For purposes of this Agreement, the following
capitalized terms have the following meanings:
"Accounts Receivable" means all accounts receivable (including
all intercompany accounts receivable), notes receivable, trade accounts,
security deposits and other debts due or accruing to the Debtors.
"Acquired Assets" has the meaning set forth in Section 2.1.1
hereof.
"Acquired Product Lines" has the meaning set forth in Recital A.
"Additional Consideration" means, at the Buyer's election, (i)
$6,000,000 in cash payable by wire transfer of immediately available funds or
(ii) shares of the Buyer's Common Stock with an aggregate Fair Market Value of
$6,000,000 as of the date of delivery, which shares shall be freely tradeable,
registered and qualified for listing prior to their issuance.
"Administrative Claim" has the meaning set forth in the Plan of
Reorganization.
"Affiliate" means any Person which, directly or indirectly, is
in control of, is controlled by or is under common control with the party for
whom an affiliate is being determined.
"Affiliated Group" means any affiliated group within the meaning
of Code ss.1504(a) and any similar provision of local, state, or foreign law.
"Agreement" means this Asset Purchase Agreement, including all
Exhibits and Schedules hereto, as the same may be amended from time to time in
accordance with its terms.
"Alternative Transactions Order" has the meaning set forth in
the Plan of Reorganization.
"Asset Buyer" means one or more Affiliates of the Buyer (which
shall be formed by the Buyer prior to the Closing if not already in existence)
whom the Buyer designates to consummate the Closing.
"Assumed Contracts" means, collectively, all Contractual
Obligations to which any Debtor is a party or by which any Debtor is bound
which relate to the Acquired Assets and which are listed on Schedule 2.1.1.5
attached hereto, which Schedule 2.1.1.5 may be amended from time to time by
the Buyer in accordance with Section 2.5.
"Assumed Facilities" means the premises at which the Debtors
produce or distribute the Acquired Product Lines identified in the real
property leases which are Assumed Contracts. .
"Assumed Obligations" has the meaning set forth in Section 2.2.1
hereof.
"Assumed Owned Real Property" means the Owned Real Property
identified in Schedule 2.1.1.7 attached hereto.
"Assumed Plans" has the meaning set forth in Section 2.1.1.22.
"Audited Financials" has the meaning set forth in Section 5.5.
"Bankruptcy Code" has the meaning set forth in Recital B.
"Bankruptcy Court" has the meaning set forth in Recital B.
"Benefit Plan" has the meaning set forth in Section 5.13.
"Books and Records" means (i) all records and lists of the
Debtors, (ii) all records and lists pertaining to the Acquired Product Lines
(including, without limitation, merchandise and post-season analysis reports,
marketing analysis reports and creative material) or customers, suppliers or
personnel of the Debtors (including, without limitation, customer lists,
mailing lists, e-mail address lists, recipient lists, sales records,
correspondence with customers, customer files and account histories, supply
lists and records of purchases from and correspondence with suppliers), (iii)
all product, business and marketing plans of the Debtors and (iv) all other
books, ledgers, files, reports, plans, drawings and operating records of every
kind maintained by the Debtors related to or used in connection with the
Acquired Product Lines.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to close under
the laws of the United States of America.
"Buyer" has the meaning set forth in the opening paragraph of
this Agreement.
"Buyer's Common Stock" means the common stock, par value $.01
per share, of the Buyer.
"Buyer's Representations" means all representations and
warranties of the Buyer contained in Article VI.
"Cash Purchase Price" has the meaning as set forth in Section
3.1 hereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.).
2
"Claim" has the meaning set forth in ss.101(5) of the Bankruptcy
Code.
"Closing Date" has the meaning set forth in Section 4.1.
"Closing" has the meaning set forth in Section 4.1.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commercially Reasonable Efforts" means efforts which are
commercially reasonable under the circumstances taking into account all
relevant facts, but such term does not include the provision of any material
consideration to any Third Party or the suffering of any material economic
detriment to a Party's ongoing operations for the taking of any action
(including the procurement of any consent, authorization or approval) required
under this Agreement except for: (i) the costs of gathering or supplying any
data or other information or making any filings; (ii) fees and expenses of
counsel and consultants; and (iii) customary fees and charges of Governmental
Authorities and Third Parties.
"Confidentiality Agreement" means that certain Confidentiality
Agreement entered into between the Buyer and one of the Debtors.
"Confirmation Date" means the date on which the Confirmation
Order is entered by the Clerk of the Bankruptcy Court in the docket for the
Reorganization Cases, unless otherwise ordered by the Bankruptcy Court or such
other court of competent jurisdiction exercising jurisdiction over the matters
set forth in the Confirmation Order.
"Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan of Reorganization pursuant to ss.1129 of the Bankruptcy
Code.
"Contractual Obligation" means any binding contract, obligation,
agreement, commitment or undertaking, whether oral or written, including,
without limitation, any equipment leases and Facility Leases.
"Controversy" means any action, suit, proceeding, hearing,
arbitration, investigation, inquiry, complaint, charge, judgment, order,
decree, injunction, ruling, counterclaim, cross-claim, demand, cause of
action, writ or assessment.
"Copyrights" means copyrights, including all renewals and
extensions thereof, copyright registrations and applications for registration
thereof, and non-registered copyrights.
"Creditors' Committee" has the meaning set forth in the Plan of
Reorganization.
"Cure Amount" means the distribution of cash, or such other
property as may be agreed upon by the Parties or ordered by the Bankruptcy
Court, with respect to the assumption of an Assumed Contract, pursuant to
Section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid
monetary obligations, without interest, or such other amount as may be agreed
upon by the Parties, under such Assumed Contract, to the extent such
obligations are enforceable under the Bankruptcy Code and applicable
bankruptcy law.
"Current Balance Sheet" has the meaning set forth in Section 5.5.
"DBI" has the meaning set forth in the opening paragraph to this
Agreement.
"DBI Plan" has the meaning set forth in the Plan of
Reorganization.
"DBKI" has the meaning set forth in the opening paragraph of
this Agreement.
"DBOC" has the meaning set forth in the opening paragraph to
this Agreement.
3
"Debtor" and "Debtors" has the meaning set forth in the opening
paragraph to this Agreement.
"Debtors' Knowledge" means the actual knowledge, after reasonable
investigation, of any executive officer or facility manager of the Debtors.
"Debtors' Representations" means those representations and
warranties of the Debtors in Article V hereof.
"Deposit" means the $1,000,000 in xxxxxxx money deposited by the
Buyer pursuant to the Xxxxxxx Money Deposit Agreement.
"DIP Administrative Agent" means Xxxxx Fargo Bank, National
Association with respect to that certain DIP Loan Agreement.
"DIP Lenders" means the syndicate of banks and other financial
institutions which are parties to the DIP Loan Agreement.
"DIP Loan Agreement" means the credit agreement dated June 1,
2001, providing up to $92,250,000, and entered into by the Debtors, the DIP
Lenders and the DIP Administrative Agent, which credit agreement was approved
by order of the Bankruptcy Court entered on July 13, 2001.
"Xxxxxxx Money Deposit Agreement" means that certain deposit
letter from the Buyer addressed and delivered to the Debtors in accordance
with the Scheduling Order.
"Employee Benefit Plan" means any: (i) non-qualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (ii) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan; (iii) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit
Plan (including any Multiemployer Plan); (iv) Employee Welfare Benefit Plan,
material fringe benefit plan, severance or change of control benefit or other
executive compensation or benefit; (v) equity-based plan or arrangement,
including any stock option plan, stock purchase plan, stock appreciation
rights or phantom stock plan; (vi) bonus plan or arrangement or incentive
award plan or arrangement; (vii) consulting agreement or employment agreement;
or (viii) vacation policy.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA ss.3(1).
"Environment" has the meaning set forth in CERCLA.
"Environmental Laws" means all federal, state, local and foreign
statutes, regulations, ordinances and other provisions having the force or
effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law, in each case concerning public
health and safety, worker health and safety, pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, Release,
threatened Release, control, or cleanup of any Hazardous Substances (including
without limitation CERCLA and analogous state laws), each as amended or in
effect prior to, on or after the Closing.
"Equipment" means all machinery, equipment, vehicles, furniture,
furnishings, fixtures, operating equipment, supplies and tools, computer
hardware and all parts, spares and accessories thereof and ascensions thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974.
4
"ERISA Affiliate" means any trade or business (irrespective of
whether incorporated) which is a member of a group of which any of the Debtors
is a member and thereafter treated as a single employer under ss.414(b), (c),
(m) or (o) of the Code or applicable Treasury Regulations.
"Excluded Assets" has the meaning set forth in Section 0 hereof.
"Excluded Contracts" has the meaning set forth in Section 2.3.3
hereof.
"Excluded Environmental Liabilities" means any Liability or
investigatory, corrective, removal or remedial obligation, whenever arising or
occurring, arising under Environmental Laws with respect to the Debtors, the
Acquired Assets, the Owned Real Property, the Leased Facilities, or any
properties or facilities currently or formerly owned, operated or occupied by
the Debtors (including without limitation any arising from the on-site or
off-site Release, threatened Release, treatment, storage, disposal, or
arrangement for disposal of Hazardous Substances) whether or not constituting
a breach of any representation or warranty herein and whether or not set forth
on any disclosure schedule hereto, except where the facts or circumstances
underlying any such Liability or obligation were solely caused by the
operation of the Acquired Assets after the Closing Date.
"Excluded Real Property" has the meaning set forth on Schedule
2.3.5 (Excluded Assets).
"Exhibits" means the exhibits hereto.
"Facility Leases" means all leases, subleases, licenses,
concessions and other agreements (written or oral), pursuant to which any
Debtor holds a leasehold or subleasehold estate in, or is granted the right to
use or occupy, any land, buildings, structures, improvements, fixtures or
other interest in real property which is used or intended to be used in, or
otherwise related to, the Acquired Product Lines.'
"Fair Market Value" of each share of the Buyer's Common Stock
means, as of the date of issuance, the average of the closing prices of the
sales of the Buyer's Common Stock on all securities exchanges on which the
Buyer's Common Stock may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on
any day the Buyer's Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00
P.M., New York time, or, if on any day the Buyer's Common Stock is not quoted
in the NASDAQ System, the average of the highest bid and lowest asked prices
on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau Incorporated, or any similar successor organization,
in each such case averaged over a period consisting of the twenty (20)
consecutive Business Days immediately preceding the fifth Business Day
preceding the date of issuance.
"Final Order" means any order which has been entered by the
Bankruptcy Court or any other court of competent jurisdiction that has not
been reversed or stayed, is no longer subject to appeal, certiorari proceeding
or other proceeding for review, reargument, or rehearing, and as to which no
appeal, certiorari proceeding, or other proceeding for review, reargument, or
rehearing has been requested or is then pending and the time to file any such
appeal, certiorari proceeding or other proceeding for review, reargument, or
rehearing has expired or as to which any right to appeal, petition for
certiorari, reargue, or seek rehearing shall have been waived in writing in
form and substance satisfactory to the Debtors and the Buyer.
"Xxxxxxx" has the meaning set forth in the opening paragraph of
this Agreement.
"GAAP" means, at a given time, United States generally accepted
accounting principles, consistently applied.
"Governmental Authority" means any government of any nation,
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and includes the Bankruptcy Court.
5
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"Hazardous Substances" means any pollutants, contaminants or
chemicals, and any industrial, toxic or otherwise hazardous materials,
substances or wastes with respect to which liability or standards of conduct
are imposed under any Environmental Laws, including, without limitation,
petroleum and petroleum-related substances, and asbestos.
"Indebtedness" with respect to any Person means any obligation
of such Person for borrowed money, and in any event shall include (i) any
Liability incurred for all or any part of the purchase price of property or
other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the Ordinary
Course of Business, (ii) the face amount of all letters of credit issued for
the account of such Person, (iii) Liabilities (whether or not such Person has
assumed or become liable for the payment of such obligation) secured by Liens,
(iv) all guarantees and similar Liabilities of such Person, (v) all accrued
interest, fees and charges in respect of any Indebtedness and (vi) all
prepayment premiums and penalties, and any other fees, expenses, indemnities
and other amounts payable as a result of the prepayment or discharge of any
Indebtedness.
"Intellectual Property" means all of the following as they exist
in any jurisdictions throughout the world, in each case, to the extent owned
by, licensed to, or otherwise used or held for use by any of the Debtors:
(i) patents, pending patent applications, industrial rights and
the inventions, designs and improvements described and claimed therein,
patentable inventions, and other patent rights (including any divisionals,
continuations, continuations-in-part, renewals, substitutions or reissues
thereof, whether or not patents are issued on any such applications and
whether or not any such applications are amended, modified, withdrawn or
refilled);
(ii) Trademarks;
(iii) Copyrights;
(iv) Trade Secrets;
(v) all web sites and web pages and related rights and items;
and
(vi) Software.
"Inventory" means all inventory held by any Debtor for sale in
the Ordinary Course of Business and all raw materials, work-in-process,
semi-finished or finished products and similar items with respect to such
inventory, in each case wherever the same may be located.
"IP License(s)" means all permits, licenses, sublicenses and
other agreements or permissions under which any Debtor is a licensee or
otherwise authorized to use or practice, or under which any Debtor is a
licensor of, any Intellectual Property.
"Law" means any law, rule, regulation, order, decree or other
requirement having the force of law and, where applicable, any interpretation
thereof by any authority having jurisdiction with respect thereto or charged
with the administration thereof.
"Leased Facilities" means the real property leased or subleased
by the Debtors pursuant to the Facility Leases.
"Letter of Credit" has the meaning set forth in the Plan of
Reorganization, provided that the Letter of Credit shall be issued by Bank of
America.
6
"Liability" means any obligation or liability (in each case,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due and regardless of when asserted), including,
without limitation, any obligation or liability for Taxes.
"Licensed IP" means Intellectual Property that is the subject of
an IP License.
"Lien" means an indenture, as defined in ss.101(28) of the
Bankruptcy Code; a judicial lien, as defined in ss.101(36) of the Bankruptcy
Code; a lien, as defined in ss.101(37) of the Bankruptcy Code; a security
interest, as defined in ss.101(51) of the Bankruptcy Code; a statutory lien,
as defined in ss.101(53) of the Bankruptcy Code; and any other any mortgage,
deed of trust, security agreement, pledge, hypothecation, assignment, deposit
arrangement, lien (statutory or otherwise), security interest, financing
statement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement.
"Material Adverse Change" or "Material Adverse Effect" means,
any event, change, condition or matter that individually or in the aggregate
results in or would reasonably be expected to result in a material adverse
effect or change in the results of operations or condition (financial or
otherwise) of the Debtors, the Acquired Product Lines or the Acquired Assets.
"Material Customers" has the meaning set forth in Section 5.23.
"Material Suppliers" has the meaning set forth in Section 5.23.
"Multiemployer Plan" means a "multiemployer plan" as defined
inss.3(37) andss.4001(a)(3)(A) of ERISA.
"Notice" means any summons, citation, directive, order, claim,
litigation, proceeding, judgment, letter or other communication, written or
oral, actual or threatened, from a Governmental Authority including any lien
imposed pursuant to any Environmental Law on property owned, leased, occupied
or used by the Debtors or any predecessor or former Affiliates thereof .
"Options" means options, warrants, rights of first refusal,
purchase rights, sale rights, subscription rights, puts, calls, conversion
rights, exchange rights or similar Contractual Obligations.
"Order" means any decree, order, injunction, rule, judgment,
consent of or by any court or governmental authority.
"Ordinary Course of Business" means the production and
distribution of the Acquired Product Lines by the Debtors in the usual and
ordinary course consistent with past practice and custom.
"Owned Real Property" means all land and all buildings,
structures, fixtures and other improvements located thereon, and all
easements, rights of way, servitudes, tenements, hereditaments, appurtenances,
privileges and other rights with respect thereto owned by the Debtors.
"Party" means a Person named as entering into this Agreement.
"Permit" means all approvals, authorizations, consents, licenses,
franchises, orders, registrations, certificates, variances, permits and similar
rights, in each case obtained from or issued by any Governmental Authority.
"Permitted Liens" means (i) statutory liens for current property
Taxes and assessments not yet due and payable, including, without limitation,
liens for ad valorem Taxes and statutory liens not yet due and payable arising
other than by reason of any default on the part of the Debtors, and (ii)
easements, covenants, conditions, restrictions and other similar matters of
record on real property, leasehold estates or personalty that do not in any
material respect detract from the value of the property subject thereto
thereof and do not individually or in the
7
aggregate in any material respect interfere with the present use of the
property subject thereto with respect to the Acquired Product Lines.
"Person" means any natural person, corporation, limited
partnership, general partnership, joint venture, association, company, trust,
joint stock company, bank, trust company, land trust, vehicle trust, business
trust, real estate investment trust, estate, limited liability company,
limited liability partnership, limited liability limited partnership or other
organization irrespective of whether it is a legal entity, and any
Governmental Authority.
"Plan of Reorganization" means the Plan of Reorganization
Sponsored by Jarden Corporation in substantially the form attached hereto as
Exhibit A.
"Proceeding" has the meaning set forth in Section 2.2.20 hereof.
"Purchase Price" has the meaning set forth in Section 3.1 hereof.
"Regulation" means any law, statute, regulation, ruling, rule or
Order of, administered or enforced by or on behalf of, any court or
governmental authority.
"Rehired Employees" has the meaning set forth in Section 7.5.2
hereof.
"Release" has the meaning set forth in CERCLA.
"Reorganization Cases" has the meaning set forth in Recital B.
"Responsible Officer" means: (i) in the case of a corporation, a
president, a chief executive officer, a chief financial officer, a vice
president or a treasurer of such corporation; (ii) in the case of a
partnership, a general partner therein; or (iii) in the case of a limited
liability company, a manager or managing member of such entity.
"Rule" or "Rules" means the Federal Rules of Bankruptcy Procedure.
"Schedules" means the schedules attached hereto.
"Scheduling Order" means the Bankruptcy Court's Scheduling Order
Establishing (I) Procedures with Respect to Filing of Amended Proposed Plans
of Reorganization and (II) Hearing Date to Consider Proposed Plans of
Reorganization dated as of October 30, 2002.
"Software" means computer software programs and software
systems, including, without limitation, all databases, compilations, tool
sets, compilers, higher level or "proprietary" languages, and all related
material documentation and information, whether in source code, object code or
human readable form.
"Solicitation Date" means the date on which the Debtors
distribute the Plan of Reorganization to its creditors for the solicitation of
such creditors' approval of the Plan of Reorganization.
"Stock" means shares of capital stock (including common and
preferred stock) or other equity interests (regardless of how designated) of
or in a corporation or comparable entity (including a partnership, joint
venture or limited liability company), whether voting or nonvoting, or general
or limited.
"Stock Equivalents" means all securities convertible into or
exercisable or exchangeable for Stock and all Options to purchase or subscribe
for Stock, whether or not presently convertible, exercisable or exchangeable.
"Subsidiaries" means, with respect to any Person, any
corporation a majority of the total voting power of shares of stock of which
is entitled (without regard to the occurrence of any contingency) to vote in
8
the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof, or any
partnership, limited liability company, association or other business entity a
majority of the partnership or other similar ownership interest of which is at
the time owned or controlled, directly or indirectly, by that Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes of
this definition, a Person is deemed to have a majority ownership interest in a
partnership, limited liability company, association or other business entity
if such Person is allocated a majority of the gains or losses of such
partnership, limited liability company, association or other business entity
or is or controls the managing director or general partner of such
partnership, limited liability company, association or other business entity.
"Surveys" has the meaning set forth in Section 4.3.10.
"Tax" and, with correlative meaning, "Taxes" mean with respect
to any Person (i) all federal, state, local, county, foreign and other taxes,
assessments or other government charges, including, without limitation, any
income, alternative or add-on minimum tax, estimated gross income, gross
receipts, sales, use, ad valorem, value added, transfer, capital stock
franchise, profits, license, registration, recording, documentary,
intangibles, conveyancing, gains, withholding, payroll, employment, social
security (or similar), unemployment, disability, excise, severance, stamp,
occupation, premium, property (real and personal), environmental or windfall
profit tax, custom duty or other tax, governmental fee or other like
assessment, charge, or tax of any kind whatsoever, together with any interest,
penalty, addition to tax or additional amount imposed by any Governmental
Authority responsible for the imposition of any such tax (domestic or foreign)
whether such Tax is disputed or not, or (ii) liability for the payment of any
amounts of the type described in clause (a) above relating to any other Person
as a result of being party to any agreement to indemnify such other Person,
being a successor or transferee of such other Person, or being a member of the
same Affiliated Group or any consolidated, combined, unitary or other group
with such other Person.
"Tax Return" means any report, return, declaration, report,
claim for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto.
"Third Party" means any Person other than Debtors, the Buyer or
any of their respective Affiliates.
"Title Commitments" has the meaning set forth in Section 4.3.9.
"Title Insurer" has the meaning set forth in Section 4.3.9.
"Title Policies" has the meaning set forth in Section 4.3.9.
"Trademarks" means trademarks, service marks, trade dress, trade
names, brand names, domain names, designs, logos or corporate names and all
translations, adaptations, derivations and combinations of the foregoing
including, in each case, the goodwill associated therewith, whether registered
or unregistered, and all registrations and applications for registration
thereof, which shall include, without limitation, "Diamond Brands" and
"Xxxxxxx" or any derivation thereof.
"Trade Secrets" means trade secrets, confidential business
information and other proprietary information including, without limitation,
designs, research and development information, technical information,
specifications, operating and maintenance manuals, methods, engineering
drawings, know-how, data, mask works, discoveries, inventions, industrial
designs and other proprietary rights (whether or not patentable or subject to
copyright, mask work, or trade secret protection).
"Transition Period" has the meaning set forth in Section 8.6
hereof.
"Treasury Regulation" means those regulations promulgated by the
United States Department of the Treasury pursuant to the authority of the Code
or any other revenue law of the United States of America.
9
"Unassumed Liabilities" has the meaning set forth in Section 0
hereof.
"WARN Act" means the Worker Adjustment and Retraining
Notification Act, as amended, and any similar foreign, state or local law,
regulation or ordinance.
Rules of Construction. Unless the context of this Agreement
clearly requires otherwise: (i) references to the plural include the singular
and vice versa; (ii) references to any Person include such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement; (iii) references to one gender include all
genders; (iv) "including" is not limiting; (v) "or" has the inclusive meaning
represented by the phrase "and/or"; (vi) the words "hereof," "herein,"
"hereby," "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement;
(vii) section, clause, Exhibit and Schedule references are to this Agreement
unless otherwise specified; (viii) reference to any agreement (including this
Agreement), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in
accordance with the terms thereof and, if applicable, the terms hereof; and
(ix) general or specific references to any Law mean such Law as amended,
modified, codified or reenacted, in whole or in part, and in effect from time
to time. The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises regarding this Agreement, this Agreement will be
construed as if drafted jointly by the Parties and no presumption or burden of
proof will arise favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement.
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
2.1 Purchase and Sale of Assets.
2.1.1 Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Debtors shall sell, contribute, convey, assign,
transfer and deliver to the Asset Buyer (or, if there is more than one Asset
Buyer, then to such Asset Buyer designated by the Buyer), free and clear of
all Liens (other than Permitted Liens), and the Asset Buyer(s) shall purchase,
acquire and take assignment and delivery of, for the consideration set forth
in Section 0, all properties, assets, rights, titles and interests of every
kind and nature, owned or leased by the Debtors (including indirect and other
forms of beneficial ownership) as of the Closing Date, which are used in,
useful for or otherwise associated with the Acquired Product Lines, whether
tangible or intangible, real or personal and wherever located and by whomever
possessed, including, without limitation, all of the following assets but
excluding Excluded Assets pursuant to Section 0 (all of the assets to be sold,
assigned, transferred and delivered to the Buyer hereunder referred to herein
collectively as the "Acquired Assets"):
2.1.1.1 all marketable securities and other short-term
investments, deposits and advances, prepaid and other current assets relating
to the Acquired Product Lines, including, without limitation, all cash
(including, without limitation, checking account balances, certificates of
deposit and other time deposits and xxxxx cash);
2.1.1.2 all Accounts Receivables (whether current or
noncurrent) and all causes of action specifically pertaining to the collection
of all Accounts Receivable;
2.1.1.3 all promotional allowances and vendor rebates and
similar items;
2.1.1.4 all Intellectual Property, along with all income,
royalties, damages and payments due or payable to the Debtors as of the
Closing or thereafter, including, without limitation, damages and payments for
past, present or future infringements or misappropriations thereof, the right
to xxx and recover for past infringements or misappropriations thereof and any
and all corresponding rights that, now or hereafter, may be secured throughout
the world and all copies and tangible embodiments of any such Intellectual
Property in the Debtors' possession or control;
2.1.1.5 all of the Debtors' rights under the Assumed
Contracts;
10
2.1.1.6 all bank accounts, safety deposit boxes, lock
boxes and the like and a list of the foregoing shall be set forth on Schedule
2.1.1.6 attached hereto;
2.1.1.7 all Assumed Owned Real Property;
2.1.1.8 all Assumed Facilities and all plants, buildings
and other improvements located on such property, and all easements, licenses,
rights of way, Permits and all appurtenances to the real property leases which
are Assumed Contracts including, without limitation, all appurtenant rights in
and to public streets, whether or not vacated;
2.1.1.9 all leasehold improvements and all Equipment owned
by the Debtors with respect to the Acquired Product Lines, wherever located,
including, without limitation, all such items which are located in any
building, warehouse, office or other space leased, owned or occupied by the
Debtors;
2.1.1.10 all Inventories, replacement and spare parts,
packaging materials, operating supplies, and fuels, owned by the Debtors with
respect to the Acquired Product Lines, wherever located;
2.1.1.11 all office supplies, production supplies, spare
parts, other miscellaneous supplies, and other tangible property of any kind
relating to the Acquired Product Lines, wherever located, including, without
limitation, all property of any kind located in any building, office or other
space leased, owned or occupied by the Debtors or in any warehouse where any
of the Debtors' properties and assets may be situated;
2.1.1.12 except as set forth in Section 2.3.1, all claims,
deposits, prepayments, warranties, guarantees, refunds, causes of action,
rights of recovery, rights of set-off and rights of recoupment of every kind
and nature (whether or not known or unknown or contingent or non-contingent),
other than those relating exclusively to Excluded Assets;
2.1.1.13 the right to receive and retain mail, Accounts
Receivable payments and other communications relating to the Acquired Product
Lines;
2.1.1.14 the right to xxxx and receive payment for
products shipped or delivered and services performed but unbilled or unpaid as
of the Closing;
2.1.1.15 all Books and Records (excluding the originals of
the minute books, stock books and all Tax Returns of any Debtor);
2.1.1.16 all advertising, marketing and promotional
materials and all other printed or written materials;
2.1.1.17 all Permits and the rights to all data and
records held by the Governmental Authorities issuing or otherwise authorizing
such Permits; 2.1.1.18 all goodwill as a going concern and all other
intangible properties;
2.1.1.19 all telephone numbers used by the Debtors with
respect to the Acquired Product Lines;
2.1.1.20 all rights to indemnification relating to the
Acquired Assets or the Acquired Product Lines existing prior to the Closing
Date;
2.1.1.21 all rights under insurance policies to the extent
related to or payable in connection with any of the Acquired Assets, the
Assumed Obligations, Assumed Facilities, or the Assumed Owned Real Property
existing prior to the Closing Date;
11
2.1.1.22 the Employee Benefit Plans set forth on Schedule
2.1.1.22 (the "Assumed Plans"); and
2.1.1.23 all security deposits relating to Assumed
Contracts.
2.1.2 At the Closing, all of the Acquired Assets shall be
sold, assigned, transferred, conveyed and delivered to the applicable Asset
Buyer free and clear of all Liens (other than Permitted Liens) in accordance
with the terms of the Plan of Reorganization and the Confirmation Order and
sections 363(f) and 365 of the Bankruptcy Code.
2.2 Assignment and Assumption of Certain Liabilities.
2.2.1 Subject to the terms and conditions set forth in
this Agreement, at the Closing, the Asset Buyer(s) shall assume from the
Debtors and thereafter be responsible for the payment and/or performance of,
in accordance with their terms, only the following liabilities and obligations
of the Debtors (collectively, the "Assumed Obligations"): (i) obligations
under the Assumed Contracts first arising after the Closing, (ii) the "Pay to
Stay Bonus" and "Performance Bonus" payments under the Debtors' Key Employee
Retention Program in an amount not to exceed $1,200,000, (iii) obligations
associated with the Assumed Plans, (iv) obligations with respect to any unused
vacation or sick leave earned and accrued (to the extent not paid) by the
Rehired Employees as of the Closing Date; (v) obligations with respect to
Rehired Employees' wages and salary earned and accrued (to the extent not
paid) as of the Closing Date and (vi) the Liabilities set forth on Schedule
2.2.1(vi) attached hereto; provided, that this Section 2.2.1 shall not limit
any claims or defenses the Buyer or any Asset Buyer may have in respect of the
Assumed Obligations against any Person other than the Debtors. The Debtors
hereby acknowledge and agree that neither the Buyer nor any Asset Buyer is
assuming from the Debtors, or is in any way responsible for, any of the
Unassumed Liabilities.
2.2.2 The transactions contemplated by this Agreement
shall in no way expand the rights or remedies of any Third Party against the
Buyer, any Asset Buyer or the Debtors as compared to the rights and remedies
which such Third Party would have had against the Debtors absent the
Reorganization Cases, had the Buyer or the Asset Buyer(s) not assumed such
Assumed Obligations.
Excluded Assets. Notwithstanding anything to the contrary in this
Agreement, the following assets of the Debtors shall be retained by the
Debtors and are not being sold or assigned to the Buyer hereunder
(collectively, the "Excluded Assets"):
2.2.3 any and all rights of the Debtors under this
Agreement (including all cash and non-cash consideration payable or
deliverable to Debtors) and avoidance claims or causes of action arising under
the Bankruptcy Code or applicable state law, including, without limitation,
all rights and avoidance claims of Debtors arising under chapter 5 of the
Bankruptcy Code;
2.2.4 all Owned Real Property other than the Assumed Owned
Real Property;
2.2.5 all Leased Facilities other than the Assumed Facilities;
2.2.6 all Contractual Obligations to which any Debtor is a party
or by which any Debtor is bound which are not Assumed Contracts (collectively,
the "Excluded Contracts");
2.2.7 all of the assets set forth on Schedule 2.2.7 attached
hereto; provided that the Buyer may amend Schedule 2.3.5 at any time on or
before one (1) day prior to the Closing Date in order to exclude from the
definition of Acquired Asset any Licensed IP the Debtors use of which is not
in compliance with the terms and conditions of any applicable IP License;
2.2.8 income Tax Returns and related materials;
12
2.2.9 all Tax refunds, rebates, credits and similar items
relating to any period, or portion of any period, on or prior to the Closing
Date; and
2.2.10 the equity securities of any Debtor.
No Other Liabilities Assumed. Each Debtor acknowledges and agrees
that pursuant to the terms and provisions of this Agreement, neither the Buyer
nor any Asset Buyer shall assume, and shall not be deemed to have assumed, any
Claim against, or any debt or other Liability of, any Debtor or any of the
Debtors' respective Affiliates whatsoever (other than the Assumed
Obligations), including, without limitation, the following (collectively, the
"Unassumed Liabilities"):
2.2.11 except as specifically assumed under Section 2.2, any
Liability of, or Claim against, any of the Debtors or any predecessor(s) or
Affiliates of any of the Debtors that arose prior to, during or in connection
with the Reorganization Cases;
2.2.12 any Liability of, or Claim against, any of the Debtors or
any predecessor(s) or Affiliate(s) of the Debtors that relate to any of the
Excluded Assets (including any amounts relating to the rejection of Excluded
Contracts);
2.2.13 any Cure Amounts with respect to the Assumed Contracts in
excess of in the amount of such Cure Amounts set forth on Schedule 2.1.1.5 as
of the Solicitation Date;
2.2.14 Excluded Environmental Liabilities (whether or not
constituting a "Liability of any Debtor or any of the Debtors' Affiliates" for
the purposes of the preamble to this Section 2.4));
2.2.15 any Liability of, or Claim against, any of the Debtors or
any predecessor(s) or Affiliate(s) of any of the Debtors or for which the
Debtors or any predecessor(s) or Affiliate(s) of the Debtors could be liable
relating to Taxes (including with respect to the Acquired Assets or otherwise)
including, without limitation, any Taxes that will arise as a result of the
sale of the Acquired Assets or the assumption of the Assumed Obligations
pursuant to this Agreement and any deferred Taxes of any nature;
2.2.16 except as specifically assumed under Section 2.2, any
Liability of, or Claim against, any of the Debtors for any legal, accounting,
investment banking, brokerage or similar fees or expenses incurred by any
Debtor in connection with, resulting from or attributable to the transactions
contemplated by this Agreement or otherwise;
2.2.17 except as specifically assumed under Section 2.2, all
Indebtedness of any Debtor or any predecessor(s) or Affiliate(s) of any
Debtor;
2.2.18 all outstanding Stock and Stock Equivalents of the
Debtors and any Liabilities and/or Claims in any way related thereto;
2.2.19 except as specifically assumed under Section 2.2, any
Liability of, or Claim against, any of the Debtors or any predecessor(s) or
Affiliate(s) of the Debtors resulting from, caused by or arising out of, or
which relate to, directly or indirectly, the production and distribution of
the Acquired Product Lines or ownership or lease of any properties or assets
or any properties or assets (including, without limitation, the Acquired
Assets) previously used by the Debtors, or other actions, omissions,
including, without limitation, any amounts due or which may become due or
owing under the Assumed Contracts with respect to the period prior to Closing
(other than any Cure Amounts for which the Buyer may be responsible in
accordance with Section 2.6), whether known or unknown on the date hereof;
2.2.20 any Liability of, or Claim against, any of the Debtors or
any predecessor(s) or Affiliate(s) of the Debtors resulting from, caused by or
arising out of, or which relate to, directly or indirectly, the production or
distribution of the Acquired Product Lines anywhere or ownership or lease of
any properties or assets or any properties or assets previously used by the
Debtors at any time, or other actions, omissions or events occurring prior
13
to the Closing and which (i) constitute, may constitute or are alleged to
constitute a tort, breach of contract or violation of any law, rule,
regulation, treaty or other similar authority or (ii) relate to any and all
Claims, disputes, demands, actions, liabilities, damages, suits in equity or
at law, administrative, regulatory or quasi-judicial proceedings, accounts,
costs, expenses, setoffs, contributions, attorneys' fees and/or causes of
action of whatever kind or character ("Proceeding") against the Debtors or any
predecessor(s) or Affiliate(s) of the Debtors, whether past, present, future,
known or unknown, liquidated or unliquidated, accrued or unaccrued, pending or
threatened;
2.2.21 except as specifically assumed under Section 2.2, any
Liability of, or Claim against, the Debtors arising out of any Proceeding
commenced after the Closing and arising out of, or relating to, any occurrence
or event happening prior to the Closing;
2.2.22 except as specifically assumed under Section 2.2, any
Liability of, or Claim against, any of the Debtors (whether known or unknown)
with respect to the employees or former employees, or both, of any Debtor
arising from the production or distribution of the Acquired Product Lines
prior to the Closing, including, without limitation, payroll, vacation, sick
leave, worker's compensation, unemployment benefits, pension benefits,
employee stock option or profit sharing plans, health care plans or benefits,
or any other employee plans or benefits or other compensation of any kind to
any employee, and obligations of any kind including, without limitation, any
Liability pursuant to the WARN Act for any action or inaction prior to the
Closing;
2.2.23 except with respect to the Assumed Plans, any Liability
of, or Claim against, any of the Debtors arising under any Employee Benefit
Plan or any other employee benefit plan, program or arrangement at any time
maintained, sponsored or contributed to by any Debtor or any ERISA Affiliate,
or with respect to which any of the Debtors or any ERISA Affiliate has any
liability;
2.2.24 any Liability of, or Claim against, any of the Debtors
on, arising out of or relating to services and/or products of any of the
Debtors to the extent provided, manufactured, developed and/or sold prior to
the Closing;
2.2.25 any Liability of, or Claim against, any of the Debtors
under any Assumed Contract which arises after the Closing but which arises out
of or relates to any breach that occurred prior to the Closing;
2.2.26 any Liability of, or Claim against, any of the Debtors
under any Excluded Contract;
2.2.27 except as specifically assumed under Section 2.2, any
Liability of, or Claim against, any of the Debtors under any employment,
severance, retention or termination agreement with any employee, consultant or
contractor of Debtors;
2.2.28 any Liability of, or Claim against, any of the Debtors
arising out of or relating to any grievance by any Debtor's employees, whether
or not the affected employees are Rehired Employees;
2.2.29 any Liability of, or Claim against, any of the Debtors to
any shareholder or Affiliate of any Debtor;
2.2.30 any Liability of, or Claim against, any of the Debtors to
indemnify, reimburse or advance amounts to any officer, director, employee or
agent of any Debtor;
2.2.31 any Liability of, or Claim against, any of the Debtors to
distribute to any Debtor's shareholders or otherwise apply all or any part of
the consideration received hereunder;
2.2.32 any Liability of, or Claim against, any of the Debtors
arising out of or resulting from any Debtor's noncompliance with any Law;
2.2.33 any Liability of, or Claim against, any of the Debtors
based upon any of the Debtors' acts or omissions occurring after the Closing;
and
14
2.2.34 any Liability of, or Claim against, any of the Debtors
under this Agreement or any other document executed in connection herewith.
The Parties acknowledge and agree that disclosure of any Liability on any
Schedule to this Agreement shall not create an Assumed Obligation or other
Liability of or Claim against the Buyer or any Asset Buyer, except where such
disclosed obligation has been expressly assumed by an Asset Buyer as an
Assumed Obligation in accordance with the provisions of Section 2.2 hereof.
2.3 Assumption of Certain Contractual Obligations; Excluded Contracts.
2.3.1 At the Closing, the applicable Debtors shall assume and
such Debtors shall assign to the applicable Asset Buyer(s) the Assumed
Contracts. The Assumed Contracts shall be identified on Schedule 2.1.1.5 by
the date of the Assumed Contract, the other party or parties to the Assumed
Contract and the address of such party or parties, and all such information
shall be included on an exhibit attached to a motion for the authority to
assume and assign the Assumed Contracts which motion shall be filed by the
Debtors at the direction of the Buyer. Such exhibit shall also set forth the
amounts necessary to cure defaults under each of such Assumed Contracts as
determined by the Debtors based on the Debtors' Books and Records. Until the
Solicitation Date, the Buyer, in its sole discretion, by delivery of written
notice to the Debtors, shall have the right to (i) add any Contractual
Obligation to Schedule 2.1.1.5 and/or (ii) exclude any Contractual Obligation
listed on Schedule 2.1.1.5, and the Buyer shall not acquire any rights or
assume any Liabilities with respect to any such excluded Contractual
Obligation. The Plan of Reorganization shall reflect that the applicable Asset
Buyer's promise to perform from and after the Closing under the Assumed
Contracts shall be the only adequate assurance of future performance necessary
to satisfy the requirements of Section 365 of the Bankruptcy Code in respect
of the assignment to the applicable Asset Buyer of such Assumed Contracts.
Deemed Consents; Cures. For all purposes of this Agreement (including
all representations and warranties of the Debtors contained herein), the
Debtors shall be deemed to have obtained all required consents in respect of
the assignment of any Assumed Contract or Assumed Lease if, and to the extent
that, pursuant to the Plan of Reorganization or other Bankruptcy Court order,
the Debtors are authorized to assume and assign Assumed Contracts to the Asset
Buyer(s) pursuant to section 365 of the Bankruptcy Code and any applicable
Cure Amount has been satisfied. If there exists on the Closing Date any
default related to an Assumed Contract which relates to the Acquired Product
Lines, the Buyer shall be responsible for Cure Amounts only to the extent such
Cure Amounts are set forth on Schedule 2.1.1.5 as of the Solicitation Date as
a condition to the assumption and assignment of such Assumed Contract. At the
Closing, the Buyer shall provide funds to the Debtors (by wire transfer of
immediately available funds) in an amount sufficient to pay all such Cure
Amounts not to exceed the aggregate amount of the Cure Amounts set forth on
Schedule 2.1.1.5 as of the Solicitation Date for such Assumed Contracts.
Immediately upon receipt by the Debtors of such funds, the Debtors shall pay
all Cure Amounts for such Assumed Contracts.
ARTICLE III
BASIC TRANSACTION
Purchase Price. The aggregate consideration (the "Purchase Price") to
be paid for the Acquired Assets shall be an amount equal to the sum of (i)
cash in the amount of (a) $12,950,000 plus (b) the balance, as of the Closing,
of the principal amount due under the DIP Loan Agreement, taking into account
all payments made in respect of such principal amount by the Debtors through
the Closing (collectively the "Cash Purchase Price") plus (ii) the Additional
Consideration (which amount, if requested in writing by the Debtors at least
ten (10) Business Days prior to the Closing, shall be secured by a Letter of
Credit to be delivered by the Buyer at the Closing). Allowed Administrative
Claims (as defined in the Plan of Reorganization) shall be treated in
accordance with the terms of the Plan of Reorganization.
15
3.1 Payment of the Deposit and Purchase Price.
3.1.1 The Buyer will deposit the Deposit with the Debtors in
accordance with the terms of the Xxxxxxx Money Deposit Agreement. The Parties
hereby agree that it is impossible to determine accurately the amount of
damages that the Debtors would suffer if the transactions contemplated hereby
were not consummated as a result of a breach of this Agreement by the Buyer.
As a result, notwithstanding anything herein to the contrary, if (i) the Buyer
materially breaches its obligations under this Agreement (which breach has not
been cured within ten (10) Business Days following receipt by the Buyer from
the Debtors of written notice of such breach); and (ii) the Debtors terminate
this Agreement in accordance with Section 9.1.4, the Buyer shall be obligated
to pay liquidated damages in the amount of the Deposit in accordance with the
terms of the Xxxxxxx Money Deposit Agreement, and the receipt by the Debtors
of the Deposit shall be the Debtors' sole and exclusive remedy as liquidated
damages. Accordingly, if liquidated damages are payable hereunder in
accordance with the foregoing, the Deposit (together with all interest accrued
thereon) shall be released to the Debtors in accordance with the terms of the
Xxxxxxx Money Deposit Agreement. If this Agreement is terminated for any
reason other than under the foregoing circumstances, the Debtors shall upon
such termination return to the Buyer the Deposit together with all interest
accrued thereon in accordance with the terms of the Xxxxxxx Money Deposit
Agreement, and neither the Buyer nor the Asset Buyer(s) shall have any further
obligation of any kind to any of the Debtors. Upon the consummation of the
Closing hereunder, the Deposit (together with all interest accrued thereon)
shall be applied by the Debtors against the Cash Purchase Price as set forth
in Section 3.2.2 below.
3.1.2 At the Closing, the Buyer shall cause the Asset Buyer(s)
to pay by wire transfer of immediately available funds an amount in cash equal
to the Cash Purchase Price less the amount of the Deposit (together with all
interest accrued thereon). Such payment shall be made to the Debtors to such
account as designated by the Debtors in writing to the Buyer, in accordance
with the terms of the Plan of Reorganization, no later than two (2) Business
Days prior to the Closing Date. No later than six (6) months following the
Closing Date, the Buyer shall deliver the Additional Consideration to such
Person(s) as designated by the Debtors in writing to the Buyer no later than
January 22, 2003; provided that if no such designation is made on or prior to
January 22, 2003, the Additional Consideration shall be delivered to the
Debtors. If requested in writing by the Debtors no later than ten (10)
Business Days prior to the Closing, the Buyer shall deliver to the Debtors a
Letter of Credit in an amount equal to the Additional Consideration.
Allocation of Purchase Price. The Buyer and the Debtors shall
allocate the Purchase Price (plus the Assumed Obligations) among the Acquired
Assets as set forth on Schedule 3.3 attached hereto (which schedule shall be
agreed to by the Parties no later than thirty (30) Business Days after to the
Closing), and such Schedule shall be used by the parties in preparing (i) Form
8594, Asset Acquisition Statement, for the Buyer and the Debtors and (ii) all
Tax Returns. The Buyer and the Debtors shall each file Form 8594 prepared in
accordance with this Section 3.3 with its federal income Tax Return for its
tax period which includes the Closing Date. All allocations made pursuant to
this Section 3.3 shall be binding upon the parties and upon each of their
successors and assigns, and the Parties shall report the transactions
contemplated by this Agreement in accordance with such allocations.
ARTICLE IV
CLOSING; CONDITIONS TO CLOSING.
Closing. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") will take place at 10:00 a.m.
Chicago time on February 7, 2003, or, at the Buyer's sole election, as soon as
practicable following the Confirmation Date, or at such other date, time or
place which the Parties may mutually agree (the "Closing Date"). The Closing
shall occur at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx.
16
The Debtors' Conditions. All of the obligations of the Debtors
hereunder are subject to the satisfaction of every one of the following
conditions precedent unless, and only to the extent, waived in writing by DBOC
(on behalf of the Debtors):
4.1.1 this Agreement, any documents related hereto and the
transactions contemplated hereby (including the Plan of Reorganization) have
been approved and authorized to the extent required by the Bankruptcy Code
pursuant to an order of the Bankruptcy Court in form and substance reasonably
satisfactory to DBOC (on behalf of the Debtors), which order has been entered
for at least ten days, has not been modified, reversed or amended in any
manner materially adverse to the Debtors and has not been stayed pending a
timely commenced appeal, and no order staying the consummation of the
transactions contemplated by this Agreement has been entered in connection
with any timely commenced appeal or certiorari;
4.1.2 the Confirmation Order has been signed by the Bankruptcy
Court and duly entered on the docket for the Reorganization Cases by the Clerk
of the Bankruptcy Court in form and substance reasonably acceptable to DBOC
(on behalf of the Debtors), has been entered for at least ten days and has not
been modified, reversed or amended in any manner materially adverse to the
Debtors, and there is no stay in effect with respect to the Confirmation Order
and no pleading has been filed seeking such a stay or appeal of the
Confirmation Order;
4.1.3 the Buyer's Representations are true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made at and as of the Closing Date (without giving effect to any
disclosures made by the Buyer after the date hereof) (provided, however, that
if any portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 4.2.3 has been
satisfied with respect of such portion of such representation or warranty,
such portion of such representation or warranty as so qualified must be true
and correct in all respects);
4.1.4 the covenants, agreements and undertakings of the Buyer
herein have been complied with in all material respects;
4.1.5 the waiting period under the Xxxx-Xxxxx-Xxxxxx Act, if
applicable, has expired or been terminated;
4.1.6 no Controversy is pending or overtly threatened by or
before any arbitrator or Governmental Authority which is reasonably likely to
enjoin, restrain or prohibit, or result in material damages in respect of, or
which is related to or arises out of, this Agreement or the consummation of
the transactions contemplated hereby; and
4.1.7 at the Closing, the Buyer and the Asset Buyer(s) have
tendered to DBOC (acting on behalf of the Debtors) the following documents,
executed in a manner and otherwise in form and substance reasonably
satisfactory to DBOC (acting on behalf of the Debtors):
4.1.7.1 a duly executed assumption agreement or other
appropriate instruments (including, without limitation, appropriate
Intellectual Property assignments in recordable form to the extent necessary
to assign such Intellectual Property rights) assigning the Assumed Obligations
to the applicable Asset Buyer;
4.1.7.2 a copy of resolutions duly adopted by the board of
directors of the Buyer authorizing the execution and delivery of this
Agreement and by the board of directors of the Buyer and the Asset Buyer(s)
authorizing the execution and delivery of any other agreement to which it is a
party in connection herewith and the consummation of the transactions herein
and therein contemplated to be consummated by the Buyer or the Asset Buyer(s),
as applicable, duly certified, as of the applicable Closing Date, by a duly
authorized agent or officer of the Buyer or the Asset Buyer(s), as applicable;
and
4.1.7.3 a certificate, dated as of the Closing Date, of a
Responsible Officer of the Buyer to the effect that the Buyer's
Representations are true and correct in all material respects on and as of the
Closing Date, as though made on and as of the Closing Date (without giving
effect to any disclosures made by the Buyer
17
after the date hereof) (provided, however, that if any portion of any
representation or warranty is already qualified by materiality, for purposes
of determining whether this Section 4.2.7.3 has been satisfied with respect of
such portion of such representation or warranty, such portion of such
representation or warranty as so qualified must be true and correct in all
respects) and that the Buyer has complied in all material respects with its
covenants hereunder.
Buyer's Conditions. All of the obligations of the Buyer hereunder are
subject to the satisfaction of every one of the following conditions precedent
as of the Closing unless, and only to the extent, waived in writing by the
Buyer:
4.1.8 this Agreement, any documents related hereto and the
transactions contemplated hereby have been approved and authorized to the
extent required by the Bankruptcy Code pursuant to an Order or Orders of the
Bankruptcy Court in form and substance reasonably satisfactory to the Buyer,
which Order has not been modified, reversed or amended in any manner adverse
to the Buyer and has become a Final Order, and no Order staying the
consummation of the transactions contemplated by this Agreement has been
entered in connection with any timely commenced appeal or certiorari;
4.1.9 the Confirmation Order has been signed by the Bankruptcy
Court and duly entered on the docket for the Reorganization Cases by the Clerk
of the Bankruptcy Court in form and substance reasonably satisfactory to the
Buyer and has not been modified, reversed or amended in any manner, there is
no stay in effect with respect to the Confirmation Order, no pleading has been
filed seeking such a stay or appeal of the Confirmation Order and the
Confirmation Order is a Final Order; without limiting the generality of the
foregoing, the Confirmation Order must provide, among other things, in form
and substance reasonably satisfactory to the Buyer, that: (i) the Acquired
Assets shall have been sold, contributed, conveyed, assigned, transferred and
delivered to the Asset Buyer(s) free and clear of all Liens (other than
Permitted Liens); (ii) the transactions contemplated by this Agreement are
approved and effected pursuant to the Plan of Reorganization; (iii) the
Bankruptcy Court retains exclusive jurisdiction to interpret and enforce the
provisions of (1) this Agreement and any related agreements to which the Buyer
and the Debtors (as the case may be) are a party and (2) the Confirmation
Order in all respects; (iv) neither the Buyer nor the Asset Buyer(s) shall be
liable for any of the Unassumed Liabilities; (v) the Bankruptcy Court approves
and authorizes the assumption and assignment of the Assumed Contracts set
forth on Schedule 2.1.1.5 as of the Closing and (vi) the provisions of the
Confirmation Order are nonseverable and mutually dependent;
4.1.10 all Claims against the Debtors are treated and discharged
pursuant to the Plan of Reorganization and the Confirmation Order (other than
the Assumed Obligations expressly assumed by the Asset Buyer(s) hereunder);
4.1.11 the Debtors' Representations are true and correct in all
material respects on and as of the Closing Date with the same force and
effect, as if made at and as of the Closing Date (without giving effect to any
disclosures made by the Debtors after the date hereof) (provided, however,
that if any portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 4.3.4 has been
satisfied with respect of such portion of such representation or warranty,
such portion of such representation or warranty as so qualified must be true
and correct in all respects);
4.1.12 the covenants, agreements and undertakings of the Debtors
herein have been complied with in all material respects;
4.1.13 no Material Adverse Change has occurred since the date
hereof, and the Debtors have delivered to the Buyer a certificate, dated as of
the Closing Date and signed in its name by a Responsible Officer of each
Debtor, confirming the foregoing;
4.1.14 the waiting period under the Xxxx-Xxxxx-Xxxxxx Act, if
applicable, has expired or been terminated;
4.1.15 no Controversy is pending or threatened by or before any
arbitrator or Governmental Authority which is reasonably likely to enjoin,
restrain or prohibit, or result in material damages in respect of, or
18
which is related to or arises out of, this Agreement or the consummation of the
transactions contemplated hereby, or which could reasonably be expected to
result in a Material Adverse Change;
4.1.16 the Debtors have obtained, in preparation for the
Closing, at their own cost and expense, and have delivered to the Buyer no
later than ten (10) days prior to the Closing, a commitment for an ALTA Owners
Policy of Title Insurance 1992 Form, for each parcel of Assumed Owned Real
Property and each material Assumed Facility identified by the Buyer (the
"Title Commitments"), issued by the corporate office of Chicago Title
Insurance Company located in Chicago, Illinois (the "Title Insurer"), in such
amount as the Buyer determines to be the fair market value (including all
improvements thereon), insuring the Buyer's or the applicable Asset Buyer's
interest, as applicable, in such parcel as of the Closing, subject only to the
Permitted Liens. The Debtors shall deliver at the time of delivery of the
Title Commitments, copies of all documents of record referred to therein. The
Debtors will provide the Buyer with title insurance policies ("Title
Policies") on or before the applicable closing date, from the Title Insurer
based upon the Title Commitments. The Debtors will deliver to the Title
Insurer all affidavits, GAP undertakings and other title clearance documents
necessary to issue the Title Policies and endorsements thereto. Each such
Title Policy will be dated as of the Closing Date and (i) insure fee simple
title to the Assumed Owned Real Property or legal, valid, binding and
enforceable leasehold interest in each Assumed Facility (as the case may be)
and all recorded easements benefiting such parcels, subject only to Permitted
Liens, with gap coverage from the Debtors through the date of recording (ii)
contain an "extended coverage endorsement" insuring over the general
exceptions contained customarily in such policies, (iii) contain an ALTA
Zoning Endorsement 3.1, with parking (or equivalent), (iv) contain an
endorsement insuring that the parcel described in such Title Policy is the
parcel shown on the survey delivered with respect to such parcel and a survey
accuracy endorsement, (v) contain an endorsement insuring that each street
adjacent to such parcel is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from such parcel,
(vi) if the real estate covered by such policy consists of more than one
record parcel, contain a "contiguity" endorsement insuring that all of the
record parcels are contiguous to one another, (vii) contain a tax number
endorsement and (viii) contain such other endorsements as the Buyer and the
Buyer's lender may reasonably request;
4.1.17 the Debtors have procured, at their own cost and expense,
in preparation for the Closing, and shall have delivered to the Buyer no later
than ten (10) days prior to the Closing Date, current surveys of each of the
Assumed Owned Real Property and each material Assumed Facility ("Surveys"),
prepared by a licensed surveyor, satisfactory to the Buyer, and conforming to
1999 ALTA/ACSM Minimum Detail Requirements for Urban Land Title Surveys,
including Table A Items Nos. 1, 2, 3, 4, 6, 7(a), (b)(1) and (c), 8, 9, 10,
11(b)(2), 13, 14, 15 and 16, and such standards as the Title Insurer may
require as a condition to the removal of any survey exceptions from the Title
Policy, and certified to the Buyer, the Buyer's lenders and the Title Insurer,
within twenty-three days of the applicable closing date, in a form
satisfactory to such parties. The Surveys shall not disclose any encroachments
from or onto any of the Assumed Owned Real Property or Assumed Facility or any
portion thereof or any other such survey defect which has not been cured or
insured over to the Buyer's reasonable satisfaction prior to the Closing Date;
4.1.18 subject to Section 2.6 hereof, the Debtors shall have
obtained and delivered to the Buyer all material Third Party consents that are
required in order to prevent a breach of or default under, a termination or
modification of, or acceleration of the terms of, any Assumed Contract, in
each case on terms satisfactory to the Buyer;
4.1.19 in the event that the DBI Plan is not confirmed
simultaneously with the Plan of Reorganization, the Bankruptcy Court shall
have entered no later than the Confirmation Date the Alternative Transactions
Order, in form and substance reasonably acceptable to the Buyer and reasonably
acceptable to DBI and the Creditors' Committee; and
4.1.20 at the Closing, the applicable Debtor has tendered to the
Buyer or the Asset Buyer(s), as applicable, the following documents, executed
in a manner and otherwise in form and substance reasonably satisfactory to the
Buyer:
4.1.20.1 a duly executed xxxx or bills of sale and assignment or
other appropriate instruments (including, without limitation, appropriate
Intellectual Property assignments in recordable form to the
19
extent necessary to assign such Intellectual Property rights), transferring
title to and interest in the Acquired Assets to the Asset Buyer(s);
4.1.20.2 a copy of resolutions duly adopted by the board
of directors of the Debtors authorizing the execution and delivery of this
Agreement and any other agreement executed and delivered by the Debtors in
connection herewith and the consummation of the transactions herein and
therein contemplated to be consummated by the Debtors, duly certified, as of
the Closing Date, by the secretary or any assistant secretary of each Debtor;
4.1.20.3 a certificate, dated as of the Closing Date, of a
Responsible Officer of each Debtor to the effect that the Debtors'
Representations are true and correct in all material respects on and as of the
Closing Date, as though made on and as of the Closing Date (without giving
effect to any disclosures made by the Debtors after the date hereof)
(provided, however, that if any portion of any representation or warranty is
already qualified by materiality, for purposes of determining whether this
Section 4.3.14.3 has been satisfied with respect of such portion of such
representation or warranty, such portion of such representation or warranty as
so qualified must be true and correct in all respects) and that such Debtor
has complied in all material respects with its covenants hereunder;
4.1.20.4 a certificate of the Secretary and another
officer of each Debtor that contains their certification of the names and
signatures of the officers of such Debtor who have been authorized to execute
and deliver this Agreement and any other agreement executed and delivered on
behalf of such Debtor in connection herewith;
4.1.20.5 physical possession of all of the Acquired Assets
capable of passing by delivery with the intent that title in such Acquired
Assets shall pass by and upon delivery;
4.1.20.6 an affidavit from each Debtor stating such
Debtor's taxpayer identification number and that such Debtor is not a foreign
person pursuant to section 1445(b)(2) of the Code;
4.1.20.7 special warranty or limited warranty deeds (as
may be applicable) with respect to each Assumed Owned Real Property, in form
and substance reasonably satisfactory to Buyer, subject only to the Permitted
Liens;
4.1.20.8 certificates of title and title transfer
documents to all titled motor vehicles;
4.1.20.9 an assignment and assumption agreement with
respect to Permits and warranties in form and substance reasonably acceptable
to the Buyer, whereby the Debtors shall assign to the Buyer all of their
respective rights in and to any Permits and warranties relating to the
Acquired Assets or the Acquired Product Lines, to the extent such Permits and
warranties are assignable;
4.1.20.10 all Books and Records (excluding the originals
of the minute books, stock books and all Tax Returns of any Debtor); and
4.1.20.11 such other instruments as shall be reasonably
requested or required by the Buyer to vest in the Asset Buyer(s) title in and
to the Acquired Assets in accordance with the provisions hereof;
4.1.21 all proceedings in connection with the transactions
contemplated by this Agreement, and all documents and instruments incident
thereto, are reasonably satisfactory in form and substance to the Buyer, and
the Buyer has received all such documents and instruments, or copies thereof,
certified if requested, as may be reasonably requested;
4.1.22 all consents, licenses, permits, approvals and
authorizations of any Third Party necessary for consummation of the
transactions contemplated hereby have been obtained or made and copies thereof
delivered to the Buyer (other than those consents, licenses, permits,
approvals and authorizations which have been provided for in the Confirmation
Order); and
20
4.1.23 the process and proceedings relating to the
Reorganization Cases from the date of the filing of the Plan of Reorganization
to the date of the confirmation of the Plan of Reorganization are reasonably
satisfactory to the Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE DEBTORS
The Debtors hereby jointly and severally represent and warrant to the
Buyer that, with respect to the Acquired Product Lines, the statements
contained in this Article V are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article V.
Organization; Authorization. Each Debtor is a corporation duly
organized, validly existing and in good standing under the laws of its state
of incorporation as designated in the first paragraph of this Agreement and,
subject to entry of the Confirmation Order, has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Subject to entry of the Confirmation Order, the
execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action of each Debtor. This Agreement
has been duly and validly executed by each Debtor and, subject to the entry of
the Confirmation Order, constitutes a legal, valid and binding obligation of
each Debtor, enforceable against it in accordance with its terms.
No Conflict; Consents. Subject to the entry of the Confirmation
Order, neither the execution and delivery of this Agreement nor the
consummation of any or all of the transactions contemplated hereby will (i)
violate the certificate of incorporation or by-laws (or other governing
instrument) of any Debtor; (ii) violate, be in conflict with or constitute an
enforceable default under, or require the consent of any third party to, any
Assumed Contract; or (iii) to the Debtors' knowledge, violate any Laws or
Orders applicable to the Acquired Product Lines.
Consents and Approvals of Governmental Authorities. Other than the
approval of the Bankruptcy Court and consent under the Xxxx-Xxxxx-Xxxxxx Act,
no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority is required in connection with
the execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby.
Contracts. Schedule 5.4 sets forth a list of all Contractual
Obligations of the Debtors and, to the Debtors' knowledge, sets forth all Cure
Amounts as of the date of this Agreement. Each Contractual Obligation is
valid, binding and enforceable in accordance with its material terms, and is
in full force and effect. Except as set forth on Schedule 5.4 and except for
defaults of the type referred to in Section 365(b)(2) of the Bankruptcy Code,
there are no material defaults or events that, with notice or lapse of time or
both, would constitute a material default) by any Debtor or, to the Debtor's
knowledge, any other party under any of the Contractual Obligations.
Financial Statements. The Debtors have delivered to the Buyer the
audited consolidated balance sheet, income statement and statement of cash
flows of Debtors for the fiscal year ended December 31, 2001, (the "Audited
Financials") attached as Schedule 5.5 hereto and the interim unaudited balance
sheet, income statement and statement of cash flows of Debtors for the fiscal
period ended as of the last day of the most recent full month preceding the
date of this Agreement attached as Schedule 5.5 hereto (collectively, the
"Current Balance Sheet"). The Audited Financials fairly and accurately
reflect, in all material respects, the financial position of Debtors on a
consolidated basis as of the dates thereof, and have been prepared in
accordance with GAAP consistently applied during the periods involved, except
as indicated in the notes thereto. The Current Balance Sheet fairly and
accurately reflects, in all material respects, the financial position of
Debtors as of the date thereof, and has been prepared in accordance with GAAP
consistently applied during the periods involved, subject to the absence of
footnotes and year-end adjustments (which would not be material).
Equipment. Set forth on Schedule 5.6 is a complete and correct list
of all Equipment as of the last day of the most recent full month preceding
the date of this Agreement. Such Equipment is sufficient to produce or
21
distribute the Acquired Product Lines as these were produced or distributed
prior to May 22, 2001, and is in good operating condition and repair, subject
to normal wear and tear.
Inventory. With respect to the Acquired Product Lines, the amount of
Inventory on hand (i) has been manufactured and/or purchased in the Ordinary
Course of Business; and (ii) is not obsolete and is of a quality usable and
saleable in the Ordinary Course of Business, other than with respect to
reserves reflected in the financial statements described in Section 5.5 above
that are maintained by Debtors for obsolete or "slow moving" inventory.
5.1 Intellectual Property.
5.1.1 Schedule 5.8 sets forth the following items owned or
licensed by the Debtors or otherwise used or held for use by the Debtors with
respect to the Acquired Product Lines: (i) all U.S. and foreign issued patents
and utility patents, and all pending patent applications relating to any
inventions, and all reissues, divisions, continuations, continuations-in-part,
extensions, reexaminations or interferences of them; (ii) all U.S. and foreign
registered trademarks, registered service marks, trademark and service xxxx
applications, unregistered trademarks and service marks, trade names and
logos; (iii) all U.S. and foreign registered copyrights and copyright
applications and all renewals and extensions; (iv) a general identification of
all logos and domain name addresses; and (v) material Software (other than
commercially available off-the-shelf software purchased or licensed for less
than a total cost of $1,000 in the aggregate).
5.1.2 Schedule 5.8 sets forth all IP Licenses granted by or to
any Debtor and all other agreements to which any Debtor is a party, which
create rights in such Debtor or in any Third Party regarding any Intellectual
Property specifically or other intellectual property generally. The IP
Licenses are binding against such Debtor and in full force and effect. The
continued use by the Buyer (or the Asset Buyer(s) as applicable) of any IP
License or Licensed IP is not restricted by any IP License.
5.1.3 Except as set forth on Schedule 5.8, the Debtors are the
owners, free and clear of all liens, claims and encumbrances (except Permitted
Liens and liens under the DIP Loan Agreement which will be terminated as of
the Closing), of all right, title and interest in or have a valid and
enforceable license to use, all Intellectual Property necessary for the
production and distribution of the Acquired Product Lines, as presently
conducted or as presently proposed to be conducted, and the Debtors have the
absolute right to use and assign those rights without seeking the approval or
consent of any Third Party and without payments to any Third Party. All
registrations and applications for the Intellectual Property are in full force
and effect. There are no existing or, to Debtors' knowledge, threatened claims
or proceedings by any Person and there is no basis for any claim or proceeding
relating to the use by the Debtors of the Intellectual Property or challenging
its ownership of the same. Except as set forth on Schedule 5.8, to the
Debtors' knowledge, no Third Party has infringed, misappropriated, or
otherwise conflicted with any of the Debtors' Intellectual Property and to the
Debtors' knowledge, there are no facts that indicate a likelihood of any of
the foregoing.
5.1.4 To the Debtors' knowledge, no Debtor has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties, and, except as set forth on
Schedule 5.8, no Debtor has received any charge, complaint, claim, or notice
alleging any such interference, infringement, misappropriation or violation
and there is no basis for any such claim.
5.1.5 The Debtors have taken Commercially Reasonable Efforts to
maintain the confidentiality of their Trade Secrets.
5.1.6 Each present or past employee, officer, consultant or any
other person who developed any part of the Intellectual Property has vested in
a Debtor any and all right, title and interest in and to all such Intellectual
Property.
5.1.7 All Software owned or licensed by the Debtors for use in
connection with the Acquired Product Lines, or necessary for the production or
distribution of the Acquired Product Lines as such production or distribution
is currently conducted or anticipated to be conducted is set forth in Schedule
5.8.
22
5.1.8 The execution of this Agreement will not result in the
loss or impairment of the rights of the Buyer or the Asset Buyer(s) to own or
use any of the Intellectual Property.
5.1.9 The Debtors' products relating to the Acquired Product
Lines have been marked as required by the applicable patent statute and the
Debtors have given the public notice of its Copyrights and notice of its
Trademarks as required by the applicable Trademark and Copyright statutes.
Compliance with Laws. Except as set forth on Schedule 5.9, (i) the
production and distribution of the Acquired Product Lines have been conducted
in all material respects in accordance with all applicable Laws (including all
Environmental Laws) of all Governmental Authorities having jurisdiction over
Debtors and applicable to the Acquired Assets and (ii) no Debtor has received
any notification of any asserted present or past failure by any Debtor to
comply with any such Laws during the past three (3) years which apply to the
Acquired Product Lines or the Acquired Assets.
Books and Records. All of the Books and Records of the Debtors have
been made available to the Buyer. The Books and Records are complete and
correct in all material respects.
Permits. Set forth on Schedule 5.11 is a complete list of all of the
Debtors' Permits relating to the Acquired Assets and the Acquired Product
Lines. Except as set forth on Schedule 5.11, such Permits (i) are valid and
effective, (ii) represent all Permits required by any Governmental Authority
with jurisdiction over the Acquired Product Lines or the Acquired Assets to
own and operate the Acquired Assets in connection with the Acquired Product
Lines in the same manner as operated prior to the date hereof and (iii) may be
transferred or reissued to the Buyer or the Asset Buyer, as applicable,
without the approval of any Third Party.
5.2 Environmental Matters.
5.2.1 Except as set forth on Schedule 5.12, the Debtors and the
Acquired Assets are and have been in material compliance with all applicable
Environmental Laws. The Debtors have obtained all Permits and approvals
required under applicable Environmental Laws for the ownership and operation
of the Acquired Assets, all such Permits and approvals are in effect, the
Debtors have not received written Notice of any action to revoke or modify any
of such Permits or approvals, and the ownership and operation of the Acquired
Assets is and has been in material compliance with all terms and conditions
thereof. No Debtor has received written Notice of any pending or threatened
claim or investigation by any Governmental Authority or any other Person
concerning potential liability of any of the Debtors under Environmental Laws
in connection with the ownership or operation of the Acquired Assets. There
has not been a Release to the Environment of any Hazardous Substance at, upon,
in, from or under (i) any of the Assumed Owned Real Property, Assumed
Facilities or other properties upon which any of the Debtor's assets are or
were located at any time during the Debtors' ownership thereof or (ii) at any
location to or from which a Debtor has transported or arranged for the
transportation of Hazardous Substances from an Assumed Facility or the Assumed
Owned Real Property. None of the Assumed Facilities nor the Assumed Owned Real
Property is currently, and, to the Debtors' knowledge, none of the Assumed
Facilities nor the Assumed Owned Real Property has been, used as a treatment,
storage or disposal facility for Hazardous Waste, as such term is defined in
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss. 6901 et.
Seq.; and, to the Debtors' knowledge, no Hazardous Substances are present on
any Assumed Facility or the Assumed Owned Real Property, except in compliance
with all applicable Environmental Laws and as are used in the operation of the
Acquired Assets.
5.2.2 The Debtors have delivered to the Buyer all
correspondence, test results, records, notices, disclosures and reports in any
of the Debtor's possession or control with respect to the Debtors, the Assumed
Owned Real Property or any Assumed Facility, including all material
correspondence with any Governmental Authority concerning any and all past
and/or present health, safety and/or environmental issues or concerns.
5.2.3 Except as set forth on Schedule 5.12, no Debtor has
received Notice, or otherwise obtained knowledge, of the existence of any
circumstances or conditions that have a reasonable likelihood of resulting in
any damages for which it could be liable arising pursuant to any Environmental
Law.
23
5.3 Employees; Benefit Plans.
5.3.1 Set forth on Schedule 5.13 is the following: (i) a listing
of the names, titles and dates of hire of all of the employees of the Debtors
who are not governed by any collective bargaining agreement, (ii) a list of
collective bargaining agreements entered into by the Debtors and (iii) a list
of all "employee benefit plans" (within the meaning of Section 3(3) of ERISA),
whether or not subject to ERISA, in which current or former employees of the
Business participate (collectively, the "Benefit Plans"). The annual salaries
and bonuses of such employees of the Debtors and a copy of such collective
bargaining arrangements and employee benefit plans have been made available to
the Buyer on or prior to the date hereof.
5.3.2 Except as set forth on Schedule 5.13, none of the Benefit
Plans is, and no Debtor has ever maintained or had an obligation to contribute
to, or incurred any other obligation with respect to (i) a plan subject to
Title IV of ERISA or Section 412 of the Code or Title I, Subtitle B, Part 3 of
ERISA, (ii) a Multiemployer Plan or (iii) a funded welfare benefit plan, as
defined in Section 419 of the Code. None of the Debtors has any agreement or
commitment to create any additional Benefit Plan, or to modify or change any
existing Benefit Plan.
5.3.3 The Debtors have performed and complied with all of their
obligations under and with respect to the Benefit Plans in all material
respects and each of the Benefit Plans has, at all times, in form, operation
and administration complied in all material respects with its terms, and,
where applicable, the requirements of the Code, ERISA and all other applicable
Laws. Each Benefit Plan which is intended to be "qualified" within the meaning
of Section 401(a) of the Code has been determined by the Internal Revenue
Services to be so qualified, nothing has occurred which could reasonably be
expected to adversely affect such qualified status, and, to the extent
required by applicable law, each such Benefit Plan was timely amended and
filed with the Internal Revenue Service with respect to the legislation
referred to as GUST.
5.3.4 There are no unpaid contributions due prior to the date
hereof with respect to any Benefit Plan that are required to have been made
under its terms and provisions, any related insurance contract or any
applicable Law. There are no trusts or similar funding vehicles, reserve
assets, surpluses or prepaid premiums with respect to any Benefit Plan that is
a welfare plan.
5.3.5 No Debtor nor any ERISA Affiliate thereof has incurred any
liability or taken any action, and the Debtors have no knowledge of any action
or event, that could cause any Debtor or any ERISA Affiliate thereof to incur
any liability (i) under Section 412 of the Code or Title IV or ERISA with
respect to any "single-employer plan," as defined in Section 4001(a)(15) of
ERISA, or (ii) on account of a partial or complete withdrawal, as defined in
Section 4203 and 4205 of ERISA, respectively, with respect to any
Multiemployer Plan or on account of unpaid contributions to any Multiemployer
Plan.
5.3.6 There are no Controversies pending, or to the Debtors'
knowledge, threatened that involve any employees employed in connection with
the Business. Each Debtor has complied, and is in substantial compliance, in
all material respects with all Laws relating to the employment of labor,
including, without limitation, any provision thereof relating any provision
thereof relating to wages, hours, collective bargaining, employee health,
immigration, layoffs, safety and welfare, and the payment of social security
and similar taxes. There are presently no unfair labor practice complaints or
other material labor controversies pending against any Debtor, union
representation questions involving persons employed by the Debtors, or, to the
Debtors' knowledge, current activities or proceedings of any labor union (or
representative thereof) to organize any unorganized employees of any Debtor or
any strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or
with respect to any employees of any Debtor.
Absence of Certain Changes. Except as set forth in Schedule 5.14,
since the date of the Current Balance Sheet: (i) there has been no Material
Adverse Change; (ii) there has been no damage, destruction or loss to any
material asset or property, tangible or intangible, of the Debtors, ordinary
wear and tear excepted; (iii) other than in connection with the proposed sale
of the Acquired Assets and the Acquired Product Lines, the Business has been
conducted only in the Ordinary Course of Business; (iv) no Debtor has
increased the compensation of any officer or granted any general salary or
benefits increase to their employees other than in the Ordinary Course of
Business; (v) the post-Petition liabilities have been paid in the Ordinary
Course of Business; and (vi) there has been no material change by the Debtors,
in relation to the Acquired Product Lines or in accounting principles,
practices or methods.
24
Liabilities. None of the Debtors has any Liabilities other than (i)
Liabilities as set forth in the Current Balance Sheet or referred to in the
footnotes to the Audited Financials, (ii) Liabilities set forth in Schedule
5.15 and (iii) Liabilities incurred after the date of the Current Balance
Sheet in the Ordinary Course of Business.
Insurance. Schedule 5.16 contains an accurate summary description of
all policies of property, fire and casualty, product liability, workers
compensation and other forms of insurance owned by or held by any Debtor in
connection with the Acquired Assets or the Acquired Product Lines, together
with a list of all outstanding claims against any insurer relating to the
Acquired Assets or the Acquired Product Lines. Except as set forth on Schedule
5.16, no Debtor has received (a) any notice of cancellation or non-renewal of
any policy described in such Schedule 5.16 or refusal of coverage thereunder,
(b) any notice that any issuer of such policy has filed for protection under
applicable insolvency laws or is otherwise in the process of liquidating or
has been liquidated, or (c) any other indication that such policies are no
longer in full force or effect or that the issuer of any such policy is no
longer willing or able to perform its obligations thereunder.
Taxes. Except as set forth on Schedule 5.17, all Tax returns, reports
and forms of the Debtors due prior to the date hereof with respect to the
Acquired Assets or the Acquired Product Lines have been timely filed and
properly reflect the tax liability of the Debtors with respect to the
applicable periods, and no extension of time with respect to any date on which
any Tax return, report or form was or is to be filed with respect to the
Debtors is in force. All Taxes and withholding amounts due and payable (or
required to be withheld) prior to the date hereof have been paid (or
withheld). Except as set forth on Schedule 5.17, no ongoing audit, litigation
or similar proceeding concerning any Tax returns of any Debtor has been
proposed, threatened, or is in progress nor does there exist any waiver or
agreement for the extension of time for the assessment of any Taxes against
any Debtor. Except as set forth on Schedule 5.17, there are no Liens on any of
the assets of the Debtors that arose in connection with any failure (or
alleged failure) to pay any Tax and there are no claims for Taxes, and to
Debtors' knowledge, no basis for which any such claims might be made, that
might result in any such Liens. Except as set forth on Schedule 5.17, no claim
has ever been made by a taxing authority in a jurisdiction where the Debtors
do not currently file Tax returns that any Debtor is or may be subject to
taxation by such jurisdiction. None of the Acquired Assets is a "tax exempt
use property" within the meaning of Section 168(h) of the Code. None of the
Acquired Assets is subject to a lease made pursuant to Section 168(f)(8) of
the Internal Revenue Code of 1954.
Accounts Receivable. The Accounts Receivable constitute bona fide,
valid and collectible claims arising in the Ordinary Course of Business in a
manner consistent with the Debtors' normal credit practices and are subject to
no set-offs or counterclaims, subject only to reasonable reserves for bad
debts calculated in a manner consistent with the Debtors' past practice.
Brokers; Agents. Except with respect to Xxxxxxxxx & Company, Inc.,
the Debtors have not dealt with any agent, finder, broker or other
representative in any manner which could result in the Buyer or the Asset
Buyer(s) being liable for any fee or commission in the nature of a finder's
fee or originator's fee in connection with the subject matter of this
Agreement.
Warranty Obligations. Schedule 5.20 contains a true and complete
description of the Debtors' experience over the past three years with respect
to product warranty obligations, pricing and other accommodations with respect
to the Acquired Product Lines. To the best of Debtors' knowledge, as of
November 1, 2002, sufficient reserves were maintained on the books of the
Debtors to cover the Debtors' product warranty obligations. Over the past
three years, the Debtors have had no product recall obligations.
Real Property. Attached hereto as Schedule 5.21 is a description of
all Assumed Owned Real Property and the Assumed Facilities. True and complete
copies of all owners policies of title insurance obtained for the benefit of
any of the Debtors have been delivered to the Buyer. The Debtors own good and
marketable fee title to the Assumed Owned Real Property. At the Closing, such
title shall be free and clear of all Liens other than Permitted Liens. Except
as set forth in Schedule 5.21, the Assumed Owned Real Property and the Assumed
Facilities constitute all of the real property used by any of the Debtors in
connection with the Acquired Assets or the Acquired Product Lines. Each parcel
included in the Assumed Owned Real Property constitutes a separate tax lot.
There is no pending or, to the Debtors' knowledge, threatened condemnation (or
sale in lieu thereof) affecting the Assumed Owned Real Property.
25
Litigation. Except as set forth on Schedule 5.22 or claims made in
connection with the Reorganization Cases, there are no actions, claims,
charges, complaints, material grievances, causes of action, proceedings, suits
or investigations pending or, to the Debtors' knowledge, threatened, against
the Debtors or any of their respective assets, properties or rights, before
(or that could come before) any Governmental Authority or arbitrator that
would result in a Material Adverse Change. Except in connection with the
Reorganization Cases, none of Debtors is subject to any Order entered in any
lawsuit or proceeding.
Trade Relations. On or prior to the date hereof, the Debtors have
delivered to the Buyer a list of each of the Debtors' ten largest customers
(the "Material Customers") and ten largest suppliers (the "Material
Suppliers"), as determined by the dollar amount of sales to such customers and
purchases from such suppliers for the year ending December 31, 2001. Except as
set forth on Schedule 5.23, there exists no actual or, to the Debtors'
knowledge, threatened, cancellation of, or (except for the tightening of
credit terms as a result of Reorganization Cases) any material adverse
modification to or change in, the business relationship of the Debtors with
any Material Customer or Material Supplier.
Subsidiaries. Schedule 5.24 sets forth the name and jurisdiction of
incorporation of each Subsidiary of the Debtors, the number of shares of each
class of each of the Debtors' Subsidiary's Stock (both authorized, issued and
outstanding), the names of the holders of each such issued share of Stock and
the number of shares held by each such holder, the number of shares of each
such Subsidiary's Stock held in treasury and each Subsidiary's directors and
officers. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any Stock of any Subsidiary.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.
The Buyer represents and warrants to the Debtors that the statements
contained in this Article VI are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article VI.
Organization. The Buyer is, and, as of the Closing each Asset Buyer
will be, a duly organized and validly existing corporation in good standing
under the laws of the jurisdiction of its organization, and the Buyer has, and
as of the Closing each Asset Buyer will have, the power and authority to own,
lease and operate its assets and properties and to conduct its business as now
being conducted (or in the case of each Asset Buyer, conducted as of the
Closing).
Authorization. There is no provision in the Buyer's, and as of the
Closing, there will not be in any Asset Buyer's, organizational documents
which prohibits or limits the Buyer's or any Asset Buyer's respective ability
to consummate the transactions contemplated to be consummated by the Buyer and
the Asset Buyer(s) hereunder. The Buyer has, and each Asset Buyer will have,
the full right, power and authority to enter into this Agreement and to
consummate or cause to be consummated all of the transactions and to fulfill
all of the obligations contemplated to be consummated or fulfilled by the
Buyer and each Asset Buyer hereunder. The execution and delivery of this
Agreement by the Buyer and the due consummation by the Buyer of the
transactions contemplated to be consummated by the Buyer and each Asset Buyer
hereby have been, and with respect to each Asset Buyer will be, duly
authorized by all necessary action of the general partners, board of directors
or members or managers, as applicable, of the Buyer or such Asset Buyer,
respectively. This Agreement constitutes a legal, valid and binding agreement
of the Buyer enforceable against the Buyer in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
No Conflict or Violation. Except as may be required by the
Xxxx-Xxxxx-Xxxxxx Act, neither the execution and delivery of this Agreement
by the Buyer, nor the consummation by the Buyer or any Asset Buyer of the
transactions contemplated to be consummated by the Buyer and such Asset Buyer
hereby nor compliance by the
26
Buyer and each Asset Buyer with any of the provisions hereof will result in:
(i) a violation of or a conflict with any provision of the organizational
documents of the Buyer or any Asset Buyer, as applicable; or (ii) a violation
of any Law, or order, judgment, writ, injunction, decree or award, or an event
which, with the giving of notice, lapse of time or both, would result in any
such violation.
Consents and Approvals. No consent, approval or authorization of any
Person, nor any declaration, filing or registration with any Governmental
Authority or other Person, is required to be made or obtained by the Buyer in
connection with the execution, delivery and performance by the Buyer of the
transactions contemplated to be consummated by the Buyer hereunder, except as
may be required by the Xxxx-Xxxxx-Xxxxxx Act.
Brokers. No agent, broker or other Person acting pursuant to express
or implied authority of the Buyer is entitled to a commission or finder's fee
in connection with the transactions contemplated by this Agreement or,
pursuant to express or implied authority of the Buyer, will be entitled to
make any claim (including the assertion of a Lien) against the Debtors for a
commission or finder's fee.
ARTICLE VII
ACTIONS PRIOR TO AND ON THE CLOSING
Conduct of the Business prior to the Closing. Except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the Buyer, from the date hereof until the Closing, each of the Debtors shall,
with respect to the Acquired Product Lines and the Acquired Assets (i) produce
and distribute the Acquired Product Lines in the Ordinary Course of Business
(including with respect to the payment of accounts payable to the fullest
extent permissible under the Bankruptcy Code), (ii) use Commercially
Reasonable Efforts to preserve intact the Acquired Product Lines, to keep
available the services of present employees with respect thereto and to
maintain appropriate levels of Inventory and (iii) not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the Buyer, from the date hereof until the Closing, each Debtor shall:
7.1.1 not sell, assign, transfer, convey, pledge, mortgage,
lease, license or otherwise dispose of or encumber their respective assets, or
any interests therein, other than in the Ordinary Course of Business and
consistent with past practice or as set forth on Schedule 7.1.1;
7.1.2 not make any material change in its methods of management,
marketing, accounting or operating (or practices relating to payments);
7.1.3 provide to the Buyer, (i) all financial information which
the Debtors are required to provide to the DIP Lenders under the DIP Loan
Agreement and (ii) on a weekly basis, any other management reports and
financial information prepared by or for the Debtors in the Ordinary Course of
Business;
7.1.4 not take any action which is inconsistent with its
obligations under this Agreement;
7.1.5 maintain the Acquired Assets in good operating condition
and repair, subject to ordinary wear and tear;
7.1.6 continue all of its existing policies of insurance (or
comparable insurance) in full force and effect and at least at such levels as
are in effect on the date hereof, up to and including the Closing (and not
cancel any such insurance or take, or fail to take, any action that would
enable the insurers under such policies to avoid liability for claims arising
out of occurrences prior to the Closing);
7.1.7 not enter into any transaction or make or enter into any
Contractual Obligation or amend any such obligation which is not in the
Ordinary Course of Business;
7.1.8 not grant any increase in the compensation payable or to
become payable to any employee (including, without limitation, retention or
stay bonus arrangements), except such increases as are required
27
by contract and not contribute or make any commitment to, or representation
that it shall, contribute any amounts to any Employee Benefit Plan of the
Debtors, or otherwise alter any such Employee Benefit Plan of the Debtors or
the funding thereof except as required by law or by the terms of any such plan
as in effect on the date of this Agreement;
7.1.9 maintain the Books and Records in the usual, regular and
ordinary manner and consistent with past practice;
7.1.10 maintain compliance with all Laws, rules and Regulations
of all federal, state, local or foreign governmental or regulatory bodies that
relate to the Acquired Product Lines and the Acquired Assets;
7.1.11 not implement any employee layoffs that could implicate
the WARN Act;
7.1.12 apply or continue prosecution of applications already
submitted for any Permits required under Environmental Laws for the continued
operation of the Acquired Assets (as they are currently being operated) up to
and after the Closing;
7.1.13 not incur any Liability, whether absolute, fixed or
contingent, except in the Ordinary Course of Business;
7.1.14 not sell, transfer, license or otherwise dispose of, or
agree to sell, transfer, license or otherwise dispose of, or permit to lapse
any of the Intellectual Property;
7.1.15 not dividend, distribute or otherwise pay out any cash or
cash equivalents except (i) for the payment of the Debtors' trade payables in
the Ordinary Course of Business, (ii) to pay for professional fees and
expenses incurred by the Debtors (to the extent that the payment of such
professional fees and expenses is permitted by the Bankruptcy Court) and (iii)
to pay interest due under the DIP Loan Agreement;
7.1.16 not incur any Indebtedness including, without limitation,
drawing down any amounts under the DIP Loan Agreement; and
7.1.17 not terminate, discontinue, close or dispose of any
plant, Leased Facility or business operation relating to the Acquired Product
Lines.
The Debtors shall not (i) take or agree or commit to take any
action that would make any of the Debtors' Representations inaccurate in any
material respect at, or as of any time prior to, the Closing or (ii) omit or
agree to omit to take any action necessary to prevent any such representation
or warranty from being inaccurate in any material respect at any such time.
7.2 Inspection.
7.2.1 The Debtors agree that, prior to the Closing, the Buyer,
the Buyer's lenders, and their respective representatives shall, upon
reasonable notice and so long as such access does not unreasonably interfere
with the business operations of the Debtors, have reasonable access during
normal business hours to all Leased Facilities and Owned Real Property and
shall be entitled to make such reasonable investigation of the properties,
businesses and operations of the Debtors (including, without limitation, any
"Phase I" or "Phase II" environmental investigations) and such examination of
the Books and Records and financial condition of the Debtors as it reasonably
requests and to make extracts and copies to the extent necessary of such Books
and Records; provided that the Buyer shall be bound by and shall comply with
the terms of the Confidentiality Agreement with respect to the Buyer's ability
to use or disclose any such information; and provided further that no
investigation pursuant to this Section 7.2 shall affect any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the transactions contemplated by this Agreement.
7.2.2 The Debtors agree that, prior to the Closing, the Buyer
and the Buyer's lenders shall, upon reasonable notice and so long as such
access does not unreasonably interfere with the business operations of the
Debtors, through its authorized officers, employees, agents and
representatives, have reasonable access during
28
normal business hours to all facilities of the Debtors for the purposes of
permitting the Buyer's lenders (or a Third Party service provider selected by
the Buyer's lenders) to conduct a physical inventory of the Inventory. The
cost of any such physical inventory shall be the responsibility of the Buyer
or the Buyer's lenders.
7.2.3 The Debtors shall deliver to the Buyer copies of the
Debtors' interim monthly and year-to-date consolidated financial statements as
soon as reasonably practicable (and in any event within 15 days) following the
end of each monthly accounting period during the period between the date of
this Agreement and the Closing. These financial statements shall include
income statements, balance sheets, profit and loss and other analyses and
comparisons to the Debtors' budget for the Acquired Product Lines, as well as
an explanation of the assumptions and the accounting policies and practices
used in preparation thereof and such other matters as the Buyer may reasonably
request and, if any, interim statements and operating reports filed with the
United States Trustee or the Bankruptcy Court.
7.3 Consents and Commercially Reasonable Efforts.
7.3.1 Authorizations. Upon the approval of this Agreement by the
Bankruptcy Court, the Parties will commence to take all Commercially
Reasonable Efforts required to obtain all authorizations, consents, approvals,
orders and agreements of, and to give all notices and make all filings with,
Governmental Authorities and any other Person necessary to authorize, approve
or permit their respective obligations pursuant to this Agreement and the
consummation of the transactions contemplated hereby. Subject to the terms and
conditions herein provided, each of the Parties covenants and agrees to
cooperate fully with each other and use its Commercially Reasonable Efforts to
take, or cause to be taken, all actions or do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated hereby. The Parties will
cooperate with one another: (i) in determining whether any action by or in
respect of, or filing with, any Governmental Authority is required, or any
actions, consents, approvals or waivers are required to be obtained from
parties to any material Contractual Obligations in connection with the
consummation of the transactions contemplated by this Agreement; and (ii) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such actions, consents, approvals or waivers. Subject to
applicable Laws relating to the exchange of information, the Parties shall
have the right to review in advance, and to the extent practicable each will
consult with the other on, all information related to the Parties and their
respective subsidiaries that appears in any filing made with, or written
materials submitted to, any Third Party or Governmental Authority in
connection with the transactions contemplated by this Agreement.
7.3.2 Xxxx-Xxxxx-Xxxxxx Act. Upon the approval of this Agreement
by the Bankruptcy Court or earlier if directed by the Buyer, the Parties, if
applicable, will promptly prepare and file with the Federal Trade Commission
and the Antitrust Division of the United States Department of Justice
Notification and Report Forms and documentary material which comply with the
provisions of the Xxxx-Xxxxx-Xxxxxx Act and the rules thereunder and will use
Commercially Reasonable Efforts to promptly file any additional information
requested as soon as practicable after receipt of the request. The Buyer will
pay all filing and other fees in connection with such filings.
7.3.3 Plan of Reorganization. The Debtors will not amend the
Plan of Reorganization except in accordance with the terms of the Plan of
Reorganization. The Debtors will use Commercially Reasonable Efforts to have
the Plan of Reorganization confirmed by the Bankruptcy Court as soon as
possible.
7.3.4 Regulatory Approvals. No Party will take any action which
will have the effect of delaying, impairing or impeding the receipt of any
required regulatory approvals.
7.3.5 Notices of Certain Events. Each Party will notify the
other Party of: (i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any
notice or other communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement; (iii) any actions,
suits, claims, investigations or proceedings commenced or, to its knowledge
threatened against, relating to or involving or otherwise affecting such
Party or any of its Affiliates which relate to the consummation of the
transactions contemplated by this Agreement; and (iv) any change that is
reasonably likely to result in a Material Adverse
29
Change or is likely to delay or impede the ability of any Party to
consummate the transactions contemplated by this Agreement or to fulfill
its obligations set forth herein.
7.3.6 Forbearance Agreement. The Debtors will use their best
efforts to obtain an Order by the Bankruptcy Court that prohibits the DIP
Lenders from exercising any of their rights under the Forbearance Agreement
dated as of August ___, 2002 by and between the DIP Lenders and the Debtors
which could materially adversely effect the Debtors or interfere with the
Debtors' use and enjoyment of the Acquired Assets.
Employee Benefit Plans. The Debtors agree that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Buyer, from the date of this Agreement through the Closing, none of the
Debtors shall:
7.3.7 increase the compensation payable to or to become payable
to any director or executive officer of the Debtors or any ERISA Affiliate,
except for increases in salary or wages payable or to become payable upon
promotion to an office having greater operational responsibilities and
otherwise in the Ordinary Course of Business;
7.3.8 grant any severance or termination pay (other than
pursuant to the severance policies of the Debtors or any ERISA Affiliate or
any Contractual Obligation binding on the Debtors or any ERISA Affiliate, in
each case as in effect on the date of this Agreement and disclosed in the
schedules to this Agreement) to, or enter into any employment or severance
agreement with, any director, officer of the Debtors or any ERISA Affiliate,
either individually or as part of a class of similarly situated Persons;
7.3.9 establish, adopt or enter into any Employee Benefit Plan;
or
7.3.10 except as required by Law or the terms of the applicable
Employee Benefit Plan, amend or take any other actions, including acceleration
of vesting and waiver of performance criteria, with respect to any Employee
Benefit Plan.
7.4 Employees.
7.4.1 Immediately prior to the Closing, the employment of the
employees employed in connection with the Acquired Product Lines shall be
terminated by the Debtors, and all employees set forth on Schedule 7.5.1 shall
have the right to apply for employment with the Buyer and/or the Asset
Buyer(s). The Debtors acknowledge that the Buyer and/or the Asset Buyer(s)
intend to make offers of employment to certain employees employed in
connection with the Acquired Product Lines, on terms and conditions of
employment that may be different from those provided by the Debtors, and that
it is uncertain how many employees of the Debtors will accept employment with
the Buyer and/or the Asset Buyer(s). The number of offers of employment made
by the Buyer and/or the Asset Buyer(s), and the terms and conditions of such
offers, shall be determined by the Buyer in its sole discretion and in
accordance with applicable law. Except to the extent specifically assumed
under Section 2.2 hereof, the Debtors shall be responsible for any and all
wages, bonuses, commissions, employee benefits, retention or stay bonus
arrangements, and other compensation (including all obligations under any
Employee Benefit Plans) due to the employees employed in connection with the
Acquired Product Lines arising out of their employment with the Debtors prior
to and as of the Closing.
7.4.2 Nothing contained in this Agreement shall confer upon any
employee of the Debtors hired by the Buyer and/or any Asset Buyer (the
"Rehired Employees") any right with respect to continuance of employment by
the Buyer, nor shall anything herein interfere with the right of the Buyer
and/or the Asset Buyer(s) to terminate the employment of any Rehired Employees
at any time, with or without notice, or restrict the Buyer and/or the Asset
Buyer(s), in the exercise of their business judgment in modifying any of the
terms or conditions of employment of the Rehired Employees after the Closing.
Debtors' Cooperation in Hiring of Employees. The Debtors shall
cooperate with the Buyer and shall, permit the Buyer a reasonable period
prior to the Closing Date (i) to meet with employees of the Debtors
(including managers and supervisors) who are employed in connection with
the Acquired Product Lines at such times as the
30
Buyer shall reasonably request, (ii) to speak with such employees' managers
and supervisors (in each case with appropriate authorizations and releases
from such employees) who are being considered for employment by the Buyer
and/or the Asset Buyer(s), (iii) to distribute to such employees of the
Debtors such forms and other documents relating to potential employment by the
Buyer and/or the Asset Buyer(s) after the Closing as the Buyer may reasonably
request, and (iv) to the extent permitted by applicable law, to permit the
Buyer's counsel, upon request, to review personnel files and other relevant
employment information regarding employees of the Debtors.
WARN Act. In respect of notices and payments relating to events
occurring on or prior to the Closing, the Debtors shall be jointly and
severally responsible for and assume all liability for any and all notices,
payments, fines or assessments due to any government authority, pursuant to
any applicable federal, state or local law, common law, statute, rule or
regulation with respect to the employment, discharge or layoff of employees by
the Debtors as of or before the Closing, including but not limited to the WARN
Act. Likewise, in respect of notices and payments relating to events occurring
after the Closing, the Asset Buyer(s) shall be responsible and assume all
liability for any and all notices, payments, fines or assessments due to any
Governmental Authority, pursuant to any applicable Law, including but not
limited to the WARN Act, with respect to the employment, discharge or layoff
of Rehired Employees.
Bankruptcy Actions. The Debtors will provide the Buyer with a
reasonable opportunity to review and comment upon all motions, applications
and supporting papers prepared by the Debtors relating to this Agreement
(including forms of Orders and notices to interested parties) prior to the
filing thereof in the Reorganization Cases. All motions, applications and
supporting papers prepared by the Debtors and relating to the approval of this
Agreement (including forms of Orders and notices to interested parties) to be
filed on behalf of the Debtors after the date hereof must be acceptable in
form and substance to Buyer, in its reasonable discretion.
Excluded Real Property. The Debtors agree that the covenants
contained in Section 7.1 hereof shall apply to the Excluded Real Property. The
Debtors further agree that the Buyer shall have the right to cause the Debtors
to dispose of the Excluded Real Property prior to the Closing and to control
all aspects of such disposition including, without limitation, (i) the hiring
of real estate brokers, (ii) the negotiation of price and other terms of sale
for any parcel of the Excluded Real Property, and (iii) directing a donation
of any parcel of the Excluded Real Property. Any proceeds received by the
Debtors in connection with the disposition of any of the Excluded Real
Property whether by sale, condemnation or otherwise and whether received prior
to or after the Closing, shall be Acquired Assets for all purposes of this
Agreement. At the Buyer's direction, the Debtors will promptly execute any
documents the Buyer reasonably requests to effectuate the disposition of the
Excluded Real Property, including, without limitation, purchase and sale
agreements, deeds, transfer declarations and closing statements. In addition,
the Debtors shall obtain all necessary sale orders from the Bankruptcy Court
to effectuate such dispositions of the Excluded Real Property. If on or prior
to the Closing the Excluded Real Property is not disposed of pursuant to this
Agreement, at the Debtors' request, the Buyer will assume the Excluded Real
Property at Closing.
ACTIONS AFTER THE CLOSING
7.5 Employee Benefit Plans.
7.5.1 To the extent responsible on the Closing Date, the
Debtors shall be responsible for all Employee Benefit Plans (other than the
Assumed Plans) and to the extent not specifically assumed under Section
2.2.1 hereof, all obligations and liabilities thereunder. Except for the
Assumed Plans or obligations specifically assumed under Section 2.2.1
hereof, or as required by operation of applicable Law, neither the Buyer
nor any Asset Buyer shall assume any Employee Benefit Plans or any
obligation or liability thereunder, and the Asset Buyer(s) shall provide
benefits to those Rehired Employees as of or after the Closing as the
Buyer, in its sole discretion, shall determine. Except for obligations
arising, and relating solely to periods, after the Closing with respect to
the Assumed Plans or obligations specifically assumed under Section 2.2.1
hereof, the Debtors shall indemnify, defend and hold harmless the Buyer and
the Asset Buyer(s) from and against any and all Claims or Liabilities under
any Employee Benefit Plans. With respect to all Claims by current and
former employees of the Debtors who are or were employed in connection with
the Acquired Product Lines arising prior to or as of the Closing under any
31
Employee Benefit Plans, whether insured or otherwise (including, but not
limited to, life insurance, medical and disability programs), the Debtors
shall, at their own expense, honor or cause their respective insurance
carriers to honor such claims, whether made before or after the Closing, in
accordance with the terms and conditions of such Employee Benefit Plans
without regard to the employment by the Buyer or the Asset Buyer(s) of any
such employees after the Closing and without regard to the assumption by the
Buyer or the Asset Buyer(s) of the Assumed Plans.
7.5.2 As soon as reasonably possible after the Closing Date, the
Buyer shall cause each Rehired Employee to be given credit for his or her
service with the Debtors (only to the extent such service is taken into
account under any Debtor's vacation or sick leave policy, program or
arrangement) for the purpose of determining such Rehired Employee's vacation
and sick leave (on a going-forward basis) in any vacation or sick leave plan,
program or arrangement maintained for the Buyer's employees' benefit on or
after the Closing Date; provided, however, neither the Buyer nor the Asset
Buyer(s) shall be obligated to pay any cash amounts based on such credit.
Notwithstanding the forgoing, the Buyer and the Asset Buyer(s) shall be
responsible only for accrued liabilities and claims with respect to vacation
and sick leave earned or accrued by Rehired Employees on or prior to the
Closing Date to the extent such Liability is specifically assumed under
Section 2.2.1 hereof.
Cooperation of the Buyer and the Debtors. The Buyer and the Debtors
jointly covenant and agree that, from and after the Closing Date, the Buyer
and the Debtors will each use Commercially Reasonable Efforts to cooperate
with each other in connection with any action, suit, proceeding, investigation
or audit of the other relating to (a) the preparation of an audit of any Tax
Return of any Debtor or the Buyer for all periods prior to or including the
Closing Date and (b) any audit of the Buyer or any Asset Buyer and/or any
audit of any Debtor with respect to the sales, transfer and similar Taxes
imposed by the laws of any state or political subdivision thereof, relating to
the transactions contemplated by this Agreement. In furtherance hereof, the
Buyer and the Debtors further covenant and agree to promptly respond to all
reasonable inquiries related to such matters and to provide, to the extent
reasonably possible, substantiation of transactions and to make available and
furnish appropriate documents and personnel in connection therewith. All costs
and expenses incurred in connection with this Section 8.2 referred to herein
shall be borne by the party who is subject to such action.
Further Assurances; Certain Consents. From time to time after the
Closing and without further consideration, (i) the Debtors, upon the request
of the Buyer, shall execute and deliver such documents and instruments of
conveyance and transfer as the Buyer may reasonably request in order to
consummate more effectively the purchase and sale of the Acquired Assets as
contemplated hereby and to vest in the Asset Buyer title to the Acquired
Assets transferred hereunder, and (ii) the Buyer, upon the request of the
Debtors, shall execute and deliver (or shall cause to be executed and
delivered) such documents and instruments of contract or lease assumption as
Debtors may reasonably request in order to confirm the Asset Buyer(s)'
liability for the obligations specifically assumed hereunder or otherwise more
fully consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, if a consent of a Third Party which
is required in order to assign any Acquired Asset (or Claim, right or benefit
arising thereunder or resulting therefrom) is not obtained prior to the
Closing, or if an attempted assignment would be ineffective or would adversely
affect the ability of any Debtor to convey its interest in question to the
applicable Asset Buyer, the Debtors will cooperate with the Buyer and use
Commercially Reasonable Efforts in any lawful arrangement to provide that the
applicable Asset Buyer shall receive the interests of any Debtor in the
benefits of such Acquired Asset. If any consent or waiver is not obtained
before the Closing and the Closing is nevertheless consummated, each Debtor
agrees to continue to use Commercially Reasonable Efforts to obtain all such
consents as have not been obtained prior to such date.
Name Changes. Promptly after the Closing, each Debtor shall and shall
cause each of its Subsidiaries to take all necessary action to change its name
to a name bearing no resemblance to the names set forth on the signature pages
to this Agreement and following the Closing each Debtor shall not and shall
cause its Subsidiaries not to use, directly or indirectly, the name "Diamond"
or "Xxxxxxx" or any other name which is confusingly similar thereto.
Accounts Receivable/Collections. After the Closing, the Debtors shall
permit the applicable Asset Buyer to collect, in the name of the Debtors, all
Accounts Receivable constituting part of the Acquired Assets and to endorse
with the name of any Debtor for deposit in the applicable Asset Buyer's
account any checks or drafts received in payment thereof. Debtors shall
promptly deliver to the applicable Asset Buyer any cash, checks or other
32
property that they may receive after the Closing in respect of any Accounts
Receivable or other asset constituting part of the Acquired Assets.
Access to Information. For a period of twenty-four (24) months after
the Closing Date (the "Transition Period"), each Party and their
representatives shall have reasonable access to, and each shall have the right
to photocopy, all of the Books and Records relating to the Acquired Product
Lines or the Acquired Assets, including all employee records or other
personnel and medical records required by law, legal process or subpoena, in
the possession of the other party to the extent that such access may
reasonably be required by such Party in connection with the Assumed
Obligations or the Unassumed Liabilities, or other matters relating to or
affected by the operation of the Acquired Product Lines and the Acquired
Assets. During the Transition Period, and only to the extent that the Buyer's
operation of the Acquired Assets is not interrupted in any material respect,
the Buyer agrees to provide the Debtors, during ordinary business hours and
upon reasonable notice and at any Debtor's request, with reasonable access to
employees of the Buyer and/or the Asset Buyer(s) for purposes of winding down
the estates of the Debtors. Such access shall be afforded by the party in
possession of such Books and Records upon receipt of reasonable advance notice
and during normal business hours; provided, however, that (A) any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of any party or its
affiliates, (B) no party shall be required to take any action which would
constitute a waiver of the attorney-client privilege and (C) no party need
supply the other party with any information which such party is under a legal
obligation not to supply. The party exercising this right of access shall be
solely responsible for any costs or expenses incurred by it pursuant to this
Section 8.6. If the party in possession of such Books and Records shall desire
to dispose of any such Books and Records upon or prior to the expiration of
such period, such party shall, prior to such disposition, give the other party
a reasonable opportunity at such other party's expense, to segregate and
remove such Books and Records as such other party may select.
Transition Services.Following the Closing, the Debtors shall provide
to the Asset Buyer(s) and the Buyer various services, including without
limitation, operations support services (e.g., storage space for the Acquired
Assets) and other transition services pursuant to mutually acceptable terms
and conditions.
ARTICLE VIII
TERMINATION
Termination and Abandonment. This Agreement may be terminated and
abandoned at any time prior to the Closing Date:
8.1.1 by mutual written consent of the Parties;
8.1.2 by the Buyer if the Closing has not occurred on or before
February 7, 2003; provided that if the Buyer is in breach of its obligations
under this Agreement, the Buyer may not terminate this Agreement under this
Section 9.1.2 if its breach is a primary cause of the delay of the Closing;
8.1.3 by the Buyer, so long as the Buyer is not then in breach
of its obligations hereunder, if there has been a material breach of a
Debtor's Representation as of the date of this Agreement or at the time of
termination as if made on the date of such termination, except to the extent
it relates to a particular date, or if there has been a material breach by the
Debtors of their obligations under this Agreement, and in either case which
breach, if curable, has not been cured within ten (10) Business Days following
receipt by the Debtors of written notice of such breach and is existing at the
time of termination of this Agreement;
8.1.4 by the Debtors, so long as none of the Debtors is then in
breach of its obligations hereunder, if there has been a material breach of a
Buyer's Representation as of the date of this Agreement or at the time of
termination as if made on the date of such termination, except to the extent
it relates to a particular date, or if there has been a material breach by the
Buyer of its obligations under this Agreement, and in either case which
breach, if curable, has not been cured within ten (10) Business Days following
receipt by the Buyer of written notice of such breach and is existing at the
time of termination of this Agreement; and
33
8.1.5 by the Buyer or the Debtors, if any event occurs which
renders satisfaction of one or more of its conditions to effect the Closing
impossible; provided that the Buyer or the Debtors, as the case may be, shall
not be entitled to terminate this Agreement pursuant to this Section 9.1.5 if
the impossibility results primarily from such party itself breaching any
representation, warranty or covenant contained in this Agreement.
Notice of Termination. In the event of the termination of this
Agreement by either the Buyer or the Debtors in accordance with Section 9.1,
the terminating Party shall give prompt written notice thereof to the
non-terminating Party.
Effect of Termination. Except as specifically provided in Section
3.2.1, in the event of the termination or abandonment of this Agreement in
accordance with the provisions of Section 9.1, the Deposit will be returned to
the Buyer in accordance with the Xxxxxxx Money Deposit Agreement, and this
Agreement thereafter shall become null and void and cease to have any effect
other than the provisions of Sections 5.19, 6.5, 10.9 and 10.22, which
sections shall survive such termination.
No Survival of Representations and Warranties. The representations
and warranties of the Debtors and the Buyer contained in this Agreement or in
any instrument delivered in connection herewith shall not survive the Closing.
ARTICLE IX
GENERAL PROVISIONS
Amendment and Modification. No amendment, modification, supplement,
termination, consent or waiver of any provision of this Agreement, nor consent
to any departure therefrom, will in any event be effective unless the same is
in writing and is signed by Buyer and the Debtors. Any waiver of any provision
of this Agreement and any consent to any departure from the terms of any
provision of this Agreement is to be effective only in the specific instance
and for the specific purpose for which given.
Assignments. No Party may assign or transfer any of its rights or
obligations under this Agreement (whether voluntarily or involuntarily or by
operation of Law (including a merger or consolidation), judicial decree or
otherwise) to any other Person without the prior written consent of the other
Party. Notwithstanding the foregoing, the Buyer may assign its rights and
obligations under this Agreement to (i) any Affiliate of the Buyer and (ii) as
collateral for indebtedness for borrowed money, the Acquired Product Lines or
the Acquired Assets without the consent of the Debtors, but no such assignment
shall relieve the Buyer of any of its obligations hereunder.
Business Day. If any day on which any payment is required to be made
hereunder, or on which any notice must be sent, or on which any time period
described herein commences or ends is not a Business Day, then such day will
be deemed for all purposes of this Agreement to fall on the next succeeding
day which is a Business Day.
Captions. Captions contained in this Agreement and the table of
contents preceding this Agreement have been inserted herein only as a matter
of convenience and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof.
Counterpart Facsimile Execution. For purposes of this Agreement, a
document (or signature page thereto) signed and transmitted by facsimile
machine or telecopier is to be treated as an original document. The signature
of any Party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the
request of any Party, any facsimile or telecopy document is to be re-executed
in original form by the Parties who executed the facsimile or telecopy
document. No Party may raise the use of a facsimile machine or telecopier or
the fact that any signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this Agreement or any
amendment or other document executed in compliance with this Section.
Counterparts. This Agreement may be executed by the Parties on any
number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the Parties notwithstanding that all
the Parties are not signatories to the same counterpart.
34
Entire Agreement. This Agreement, together with the Plan of
Reorganization, constitutes the entire agreement among the Parties pertaining
to the subject matter hereof and supersede all prior agreements, letters of
intent, understandings, negotiations and discussions of the Parties, whether
oral or written. If there are any inconsistencies between the terms of this
Agreement and the terms of the Plan of Reorganization, the Parties and the
Creditors' Committee hereby agree to work in good faith to resolve any such
inconsistencies.
Schedules and Exhibits. All of the Schedules and Exhibits attached to
this Agreement are deemed incorporated herein by reference.
Expenses Incurred by the Parties. Except as otherwise provided
herein, in the Plan of Reorganization or agreed to in writing by the Parties,
all legal and other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby are to be paid by the Party
incurring such costs and expenses.
Failure or Delay. No failure on the part of any Party to exercise,
and no delay in exercising, any right, power or privilege hereunder operates
as a waiver thereof; nor does any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof,
or the exercise of any other right, power or privilege. No notice to or demand
on any Party in any case entitles such Party to any other or further notice or
demand in similar or other circumstances.
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might otherwise govern under applicable Delaware principles of conflicts of
law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
Legal Fees. In the event any Party brings suit or institutes
arbitration proceedings to construe or enforce the terms hereof, or raises
this Agreement as a defense in a suit or arbitration proceeding brought by
another Party, the prevailing Party in such suit or arbitration proceeding
shall be entitled to recover its attorneys' fees and expenses. The Debtors
agree to pay directly all Taxes, fees and other charges, including all sales
Taxes, transfer Taxes and recording charges, incurred as a result of the
consummation of the transactions contemplated by this Agreement. The Debtors
will seek a provision in the Confirmation Order that exempts the transactions
contemplated hereby from Taxes pursuant to ss.1146(c) of the Bankruptcy Code.
Notices Between the Parties. All notices, consents, requests, demands
and other communications hereunder are to be in writing, and are deemed to
have been duly given or made: (i) when delivered in person; (ii) three days
after deposited in the United States mail, first class postage prepaid; (iii)
in the case of telegraph or overnight courier services, one Business Day after
delivery to the telegraph company or overnight courier service with payment
provided; (iv) in the case of telecopy or fax, when sent, verification
received; or (v) in the case of electronic transmission such as e-mail, when
sent; in each case addressed as follows:
if to the Buyer:
Jarden Corporation
000 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx X-000
Xxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx
Fax No. (000) 000-0000
e-mail: xxxxxxxxx@xxxxxxxxxx.xxx
35
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Fax No: (000) 000-0000
e-mail: xxxxxxxxxx@xxxxxxx.xxxxxxxx.xxx
if to the Debtors:
Diamond Brands, Inc.
0000 Xxxxx Xxxxxxx 000
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax No. (000) 000-0000
e-mail: xxxxxx@xxxxxxxxxxxxx.xxx
with a copy to:
Xxxxxxx Xxxx Slate Xxxxxxx & Xxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Fax No. (000) 000-0000
e-mail: xxxxx@xxxxxxx.xxx
or to such other address as any Party may designate by notice to the other
Party in accordance with the terms of this Section.
Publicity Regarding This Agreement. Any publicity release,
advertisement, filing, public statement or announcement made by or at the
request of any Party regarding this Agreement or any of the transactions
contemplated hereby is to be first reviewed by and must be satisfactory to the
other Party. Notwithstanding the preceding sentence, if a Party is required by
applicable Law to make any publicity release, filing, public statement or
announcement, the issuing Party may make the same without the approval of the
other Party but the issuing Party must use Commercially Reasonable Efforts to
consult with the other Party before making any such release, public statement
or announcement.
Remedies Are Exclusive. Except in the case of fraud or willful
misconduct, the remedies provided herein are the sole remedies of the Parties
and are exclusive of any remedies or rights that might be available to any
Party at law, in equity or otherwise.
Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction is, as to such
jurisdiction, ineffective to the extent of any such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof, or affecting the validity, enforceability or legality of
such provision in any other jurisdiction, unless the ineffectiveness of such
provision would result in such a material change as to cause completion of the
transactions contemplated hereby to be unreasonable. Upon a determination that
any provision of this Agreement is prohibited, unenforceable or not
authorized, the Parties agree to negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
36
possible, in a mutually acceptable manner, in order that the transactions
contemplated hereby are consummated as originally contemplated to the fullest
extent possible.
Specific Performance and Injunctive Relief. Each Party recognizes
that, if it fails to perform, observe or discharge any of its obligations
under this Agreement, no remedy at law will provide adequate relief to the
other Party. Therefore, each Party is hereby authorized to demand specific
performance of this Agreement, and is entitled to temporary and permanent
injunctive relief, in a court of competent jurisdiction at any time when the
other Party fails to comply with any of the provisions of this Agreement
applicable to it. To the extent permitted by Law, each Party hereby
irrevocably waives any defense that it might have based on the adequacy of a
remedy at law which might be asserted as a bar to such remedy of specific
performance or injunctive relief.
Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MUST BE BROUGHT IN
THE BANKRUPTCY COURT AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
PARTY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF SUCH COURT. THE PARTIES IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF SUCH COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH OF THE OTHER PARTIES AT ITS
ADDRESS PROVIDED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING.
Successors and Assigns. All provisions of this Agreement are binding
upon, inure to the benefit of and are enforceable by or against the Parties
and their respective heirs, executors, administrators or other legal
representatives and permitted successors and assigns.
Third-Party Beneficiary. This Agreement is solely for the benefit of
the Parties and their respective successors and permitted assigns, and no
other Person has any right, benefit, priority or interest under or because of
the existence of this Agreement except as specifically set forth herein.
Effective Control. If the transactions contemplated under this
Agreement (as may be amended, supplemented or otherwise modified from time to
time) are consummated and the Plan of Reorganization (as may be amended,
supplemented or otherwise modified from time to time) is confirmed in
accordance with the terms and conditions hereunder and thereunder, the Parties
hereby agree that the date on which the Buyer and the Asset Buyer(s) will be
deemed to have acquired effective control (i.e., the risks and rewards of
ownership) of the Acquired Product Lines shall be January 1, 2003.
Liability of Buyer's Affiliates. No past, present or future director,
officer, employee, member, shareholder, incorporator, partner or Affiliate of
the Buyer or any Affiliate thereof will have any Liability for any obligations
of the Buyer under this Agreement or for any Claim based on, in respect of or
by reason of such obligations or their creation.
{The remainder of this page has been left intentionally blank.
The next page is the only signature page.}
37
IN WITNESS WHEREOF, the Parties hereto have caused this Asset
Purchase Agreement to be executed and delivered on the date first above
written.
BUYER:
JARDEN CORPORATION
By: /s/ Xxxxxxx XxXxxxxxx
------------------------------
Xxxxxxx XxXxxxxxx
Vice President
DEBTORS:
DIAMOND BRANDS INC.
By: /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
Chief Executive Officer
DIAMOND BRANDS OPERATING CORP.
By: /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
Chief Executive Officer
DIAMOND BRANDS KANSAS, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
Chief Executive Officer
XXXXXXX, INC.
By: /s/ Xxxxxx Xxxxx
------------------------------
Xxxxxx Xxxxx
Chief Executive Officer
