EXHIBIT 10.7
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ASSET PURCHASE AGREEMENT
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THIS AGREEMENT, made this 20th day of May, 1997, by and among Xxxxxxxxxx
Printing Company, Inc., an Iowa corporation ("SELLER"), Xxxxx Xxxxxxxxxx, III,
the controlling shareholder and holder of authorized Power of Attorneys from all
other shareholders of Seller ("XXXXXXXXXX") and Master Printing, Inc., a
Tennessee corporation ("MASTER" or "PURCHASER");
BACKGROUND
1. Seller is engaged, among other areas, in the printing business
and desires to sell to Purchaser all of Seller's assets. Xxxxxxxxxx is the
controlling stockholder, or record and beneficially, by reason of Stock
Authorizations and Powers of Attorney has control of all of Seller's issued and
outstanding capital stock and will benefit from the sale of the business to
Purchaser.
2. Purchaser, together with its subsidiaries and operating
affiliates (collectively "PURCHASER") is engaged, in substantial part, in
business as a printing company and Master, or a subsidiary of Master, desires to
purchase the assets of Seller's business and Purchaser agrees to assume the
existing liabilities of Seller, upon a limited basis, in accordance with the
provisions as hereinafter set forth.
3. Seller is currently operating as a Debtor-in-Possession under the
protection of a proceedings filed under Chapter 11 of the United States
Bankruptcy Code (the "BANKRUPTCY CODE"), Case #96-02524-C J-11 (the "BANKRUPTCY
CASE") in the United States Bankruptcy Court for the Southern District of Iowa,
Central Division (the "BANKRUPTCY COURT").
4. Seller has filed an Amended Plan of Reorganization (the "AMENDED
PLAN") which, if confirmed by the Bankruptcy Court, would allow the Seller to
restructure and refinance its operations and provide for a dividend distribution
to unsecured creditors of up to 80% over a 10-year period.
5. Purchaser has proposed as hereinafter set forth to Seller a
proposal for the purchase of Seller's assets and the limited payment of Seller's
debts, notwithstanding the Amended Plan of Reorganization upon the basis as
hereinafter defined.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE
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1.1 AGREEMENT TO SELL. At the Closing (as defined in Article II) and in
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reliance on the representations, warranties and covenants of Purchaser contained
herein, Seller shall sell, convey, assign, transfer and deliver to Purchaser or
its nominee, upon and subject to the terms and conditions of this Agreement, all
right, title and interest of Seller in and to the Assets (as defined below),
subject to the assumption of mortgages, liens, leases and security interests as
hereinafter set forth, but free and clear of all claims, restrictions and
encumbrances of unsecured creditors whatsoever, whether in rem or in personam,
pursuant to either (S)(S)363, 1123(b)(4), 1129 and 1141(c) of the Bankruptcy
Code, or providing the consent and approval of Seller's creditors to the sale is
received as hereinafter provided, upon dismissal pursuant to (S)1112(b) of the
Bankruptcy Code.
1.2 AGREEMENT TO PURCHASE. Upon and subject to the terms and conditions
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of this Agreement and the reliance upon the representations, warranties and
covenants of Seller and Xxxxxxxxxx contained herein, Purchaser shall, at
Closing, purchase the Assets from Seller in exchange for the Purchase Price (as
defined in Section 1.4 hereof).
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1.3 DESCRIPTION OF ASSETS TO BE ACQUIRED. Seller shall sell to Purchaser
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all Assets owned by Seller or useful in Seller's business (tangible or
intangible), including, without limitation, all cash, cash equivalents,
marketable securities, accounts receivable, and notes receivable; all supplies,
furniture, fixtures, leasehold improvements and equipment; all contract rights;
all trade secrets; all tradenames, trademarks, service marks and copyrights; all
software licenses, all deposits and prepaid expenses; rights to all past and
present corporate names of the Seller and other names used by the Seller or its
predecessor in its business; all customer lists owned by the Seller or used by
the Seller in its business; all licenses, permits, consents and authorizations
of Government authorities required for the operation by the Seller of its
business (the "LICENSES"); Seller's rights under any written or oral contract of
Employment Agreement with any of Seller's employees, including any rights to
enforce any Non-Compete Agreements; and the goodwill of the Seller as to its
business, excluding any shareholder notes receivable.
1.4 PURCHASE PRICE, PAYMENT, ALLOCATION, LIABILITIES.
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1.4.1 PURCHASE PRICE. Assuming the accuracy of the warranties and
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representations in Article III, and subject to any adjustments under
(S)1.4.3 hereof, the purchase price to be paid for the Assets (the
"PURCHASE PRICE") shall be equal to Two Million, Ninety-Three
Thousand, Five Hundred and Fifty-Five Dollars and Forty Cents,
($2,093,555.40 ) and shall be allocated among the assets as set forth
below based upon a separate addendum to be attached at Closing.
ALLOCATION OF PURCHASE PRICE
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. EQUIPMENT (MACHINERY, EQUIPMENT, See Separate Addendum
TOOLS, VEHICLES, FURNITURE, FURNISHINGS,
LEASEHOLD IMPROVEMENTS, GOODS AND
OTHER TANGIBLE PERSONAL PROPERTY) AS
DESCRIBED IN SECTION 1.3
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. Supplies and inventories set forth in Section 1.3 See Separate Addendum
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. Computer equipment, software and other See Separate Addendum
technology assets described in Section 1.3
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. Tradenames, trademarks, service marks and See Separate Addendum
copyrights and other intangible assets described in
Section 1.3
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. Rights to all past and present corporate names of See Separate Addendum
Seller and other names used by Seller or its
predecessor in its business, all customer lists owned by
Seller or used by Seller in its business, all capital
licenses owned by Seller and the goodwill of Seller
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. All of Seller's interest in the press and lease 1,800,000.00
equipment entered into between Seller and Norwest
Equipment Finance, Inc. involving Seller's Missouri
location
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. All of Seller's rights pursuant to the existing Lease to be either acquired or assumed
lease with the City of Ozark, Missouri on the personal by Purchaser
property and real estate of Seller in Ozark City,
Missouri
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. All of Seller's right, title or interest in the Lease to be acquired or assumed by
existing lease with Phoenixcor, Inc. involving Purchaser
equipment located in Montezuma, Iowa
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1.4.2 PAYMENTS; ASSUMPTION OF LIABILITIES
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The Purchase Price shall be paid as follows:
(a) On the Closing Date, Purchasers shall pay to the Escrow
Agent under an Escrow Agreement substantially in the
form attached hereto as Exhibit "B" the ("ESCROW
AGREEMENT") on account of the Purchase Price, the
amount of $2,093,555.40 (the "ESCROWED AMOUNT"). The
Escrowed Amount shall be held by Escrow Agent and shall
be released as follows:
(i) The amount of $1,102,525.16 (or the actual
amount as determined to be due and owing on
the Closing Date) shall be released by Escrow
Agent to Norwest Business Credit, Inc. for
the payoff of the security interest held on
Seller's Assets;
(ii) Seller shall assign to Purchaser all of
Seller's interest and rights as to the
equipment owned by Norwest Equipment Finance
Inc. and Purchaser shall pay to Norwest
Equipment Finance, Inc. the amount of
$1,800,000.00 for the purchase and/or
acquisition of the equipment heretofore
leased by Norwest Equipment Finance, Inc. to
Seller. Purchaser shall have the option to
assume or enter into a lease that Purchaser
deems acceptable with Norwest Equipment
Finance, Inc. on the leased collateral and
other collateral owned or secured by Norwest
Equipment Finance, Inc. and, Seller may
substitute this assumption for $1,800,000.00
set forth above. Seller shall be authorized
to utilize its cash on hand to reduce the
amount due Norwest Equipment Finance, Inc. to
the amount of $1,800,000.00 at closing;
(iii) Escrow Agent shall release upon Closing
$10,759.71 representing payroll taxes and
withholding taxes payable;
(iv) Escrow Agent shall release upon Closing
$191,675.98 representing current payables due
by Seller; and
(v) Escrow Agent shall release upon Closing
$788,594.62 representing an immediate 75%
dividend payment to Seller's unsecured
creditors.
1.4.3 ADJUSTMENT TO PURCHASE PRICE. Purchaser's acquisition of the
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Assets from Seller is based upon a January 31, 1997 combined balance sheet
and financial statement, and is additionally based upon the agreement by
Purchaser to pay to Seller's unsecured creditors a 75% lump sum dividend
distribution in full settlement of each of the unsecured creditors claims
and for the release of any lien or guaranty of Seller or Xxxxxxxxxx.
Purchaser's payment to Norwest Equipment Finance, Inc. of $1,800,000.00 for
the purchase of acquisition of the interest held by Norwest Equipment
Finance, Inc. is subject to Seller reducing the claim of Norwest Equipment
Finance, Inc. to this amount on or before Closing Date from Seller's cash
reserves. Purchaser shall no later than 10 days prior to Closing Date
ascertain the exact Purchase Price to be paid to the creditors, including
the unsecured creditors, the payroll taxes and withholding taxes payables,
the current payables, and Norwest Business Credit, Inc., which adjustment
to the Purchase Price shall only be made to the extent that such variance
exceeds 10% of the amount reflected in Sections 1.4.1 and 1.4.2 above,
based upon the January 31, 1997 combined balance sheet and financial
statement. Any commitment as to financing by Purchaser shall be removed on
or before May 20, 1997.
1.4.4 ASSUMPTION OF LIABILITIES. Except with respect to the
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acquisition of the Seller's interest in the Norwest Equipment Finance, Inc.
collateral, the existing lease with Phoenixcor, Inc. and the existing lease
with the City of Ozark, Missouri, Purchaser shall not assume or be
responsible for any other liability of Seller, whether accrued before or
after the Closing Date. For purposes of this Agreement, the term
"LIABILITY" or "LIABILITIES" shall include, without limitation, any direct
or indirect indebtednesses, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, affixed or
unfixed, known or unknown, asserted or unasserted, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured, matured or unmatured,
absolute or contingent, whether arising under a contract, tort or by
statute. Purchaser shall ensure that its acquisition and payment of the
Purchase Price set forth herein shall relieve and extinguish Xxxxxxxxxx
from any and all liabilities claimed due by reason of any guarantees held
by any secured or unsecured creditors of Seller. Without limiting the
breadth and generality of the foregoing, Purchaser shall not assume or
incur any liability in respect to any of the following:
(a) Liabilities to any of Seller's creditors for deficiencies
following the sale, return or disposition of any Assets
which are subject to their respective security interests;
(b) Any liability arising prior to or as a result of the
Closing to pay any employees, agent or independent
contractors of Seller, whether or not employed by
Purchaser after Closing, or under any benefit arrangement
with respect thereto except for liabilities arising after
Closing with respect to employees hired by Purchaser as a
result of the acquisition of any Employment Agreements;
(c) Any liability of Seller arising or incurred in connection
with the negotiations, preparation and the execution of
this Agreement and the transactions contemplated hereby
including, fees and expenses of counsel, accountants and
other experts.
1.5 ACQUISITION OF INTERESTS FROM EQUIPMENT LESSORS.
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Purchaser shall acquire from Equipment Lessors those Assets which Seller is
currently leasing under certain agreements denominated as equipment leases which
are identified and set forth in Exhibit D, attached hereto , and made by this
reference a part hereof. Purchaser shall acquire the Assets from the equipment
lessors either by entering into new lease agreements with Equipment Lessors
and/or through the purchase of the Equipment from the Equipment Lessors at
Purchaser's option. For purposes of this Agreement, the term "EQUIPMENT LESSORS"
shall include the leases with Norwest Equipment Finance, Inc., Phoenixcor, Inc.,
and the City of Ozark, Missouri.
1.6 REAL ESTATE. Purchaser shall acquire upon payment of the
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Purchase Price herein, all of Seller's right, title and interest in the real
estate located in Montezuma, Iowa, currently occupied by Seller, as well as all
right, title and interest in an to that real estate located in Ozark City,
Missouri, subject to the existing lease with the City of Ozark City, Missouri
involving the Ozark City Bank.
ARTICLE II
CLOSING
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The Closing ("CLOSING") of the sale and purchase of the Assets shall take
place at Black, Bobango & Xxxxxx, P.C., attorneys for Purchaser, 000 Xxx Xxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxx at 10:00 a.m., local time, on the date which is not
more than five (5) business days after the conditions set forth in Article V
have been satisfied or waived by the party whose obligations are subject to such
condition or on such other date as may be mutually agreed upon in writing by
Purchaser and Seller. The date of the Closing is some times herein referred to
as the ("CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
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3.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller and
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Xxxxxxxxxx, jointly and severally, hereby represent and warrant to Purchaser
that, except as set forth on the Disclosure Schedule attached hereto (the
"DISCLOSURE SCHEDULE"), which Disclosure Schedule shall specifically identify
the relevant subsection hereof to which it relates and shall be deemed to be
representations and warranties as if made hereunder:
3.1.1 CORPORATE EXISTENCE AND ORGANIZATION. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation; and Seller is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the contact of the business by it requires it to be so
qualified; as evidenced by certificates of good standing being issued by
such jurisdiction and included as part of the Disclosure Schedule.
Xxxxxxxxxx is the controlling shareholder of Seller and is the holder,
pursuant to signed and authorized powers of attorneys of the owners of all
issued and outstanding common stock of Seller and is entitled to exercise
all voting rights. There are no proxies, voting trust agreements, pledges
or other restrictions affecting those voting rights. There are no
agreements affecting Seller's corporate governance other than the Articles
of Incorporation and Bylaws included as a part of the Disclosure Schedules.
There are issued and outstanding no bonds, debentures, warrants, options,
multiple classes of stock or other instruments convertible to any class of
stock.
3.1.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Subject
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to the provisions of the Bankruptcy Code, the Bankruptcy Case and the
jurisdiction of the Bankruptcy Court, Seller has the corporate power,
authority and the legal right to execute, deliver and perform this
Agreement. Subject to the provisions of the Bankruptcy Code, and the
required confirmation of the Bankruptcy Court of this Agreement and the
underlying transactions contemplated thereby (in the event a sale is
consummated pursuant to the provisions of 11 U.S.C. (S)363), the execution,
delivery and performance of this Agreement by Xxxxxxxxxx and Seller has
been duly authorized by all necessary corporate and shareholder action.
This Agreement has been, and the other agreements, documents and
instruments required to be delivered by Seller in accordance with the
provisions hereof (the "SELLER'S DOCUMENTS") will be, duly executed and
delivered on behalf of Seller by duly authorized officers of Seller; and
this Agreement constitutes, and the Seller's Documents when executed and
delivered (and when approved by the Bankruptcy Court) will constitute, the
legal, valid and binding obligations of Seller, enforceable against Seller
in accordance with their respective terms.
3.1.3 VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. Subject to the
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provisions of the Bankruptcy Code, the Bankruptcy Case and the jurisdiction
of the Bankruptcy Court, the execution, delivery and performance of this
Agreement by Xxxxxxxxxx and Xxxxxxxxxx does not and will not violate,
conflict with or result in the breach of any term, condition or provision
of, or require the consent of any other person under, (a) any existing law,
ordinance, or governmental rule or regulation to which Seller or Xxxxxxxxxx
is subject; (b) any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or
authority which is applicable to Seller or Xxxxxxxxxx; (c) the charter
documents of Seller or any securities issued by Seller, or (d) any
mortgage, indenture, agreement, contract, commitment, lease, plan,
authorization, or any other instrument, document or understanding, oral or
written, to which Seller or Xxxxxxxxxx is a party, by which Seller or
Xxxxxxxxxx may have any rights or by which any of the Assets which may be
bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights of
Seller or Xxxxxxxxxx thereunder except as provided and set forth in this
Agreement.
3.1.4 NO THIRD PARTY OPTIONS. There are no existing agreements, options,
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commitments or rights with, of or to any person to acquire any of Seller's
assets, properties or rights included in the Assets or any interest therein
or Xxxxxxxxxx'x ownership interest in Seller.
3.1.5 FINANCIAL STATEMENTS. Seller has delivered to Purchaser true and
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complete copies of (a) the balance sheets of Seller at January 31, 1997,
together with December 31, 1996 financial statements, all of which have
been prepared in accordance with the generally accepted Accounting
Principles consistently applied throughout the periods involved. The
Financial Statements, including related notes fairly represent the
financial position, assets and liabilities (whether accrued, absolute or
contingent or otherwise) of Seller at the dates indicated. Seller has
provided to Purchaser access to Seller's books and records, accountants,
and lenders so that Purchaser can ascertain to Purchaser's satisfaction all
outstanding and potential liabilities of the Seller as of the Closing Date.
3.1.6 ACCOUNTS RECEIVABLE. The accounts receivable shown in the Financial
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Statements do not include any amounts attributable to goods not yet
delivered for services yet to be performed.
3.1.7 INVENTORY. All inventory of Seller used in the conduct of the
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business, including without limitation raw materials, work-in-process and
finished goods, reflected on the Financial Statement or acquired since the
date thereof was acquired and has been maintained in the ordinary course of
the business; is of good and merchantable quality; consists substantially
of a quality, quantity and condition usable in the ordinary course of the
business; is valued at reasonable amounts based on the ordinary course of
business of Seller during the past six months; and is not subject to any
write-down or write-off.
3.1.8 TAX AND OTHER RETURNS AND REPORTS. All federal, state, local and
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foreign tax returns, reports, statements and other similar filings required
to be filed by Seller (the "TAX RETURNS") with respect to any federal,
state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions,
(including, without limitation, all income tax, unemployment compensation,
Social Security, payroll, sales and use, excise, privilege, property, and
any other tax or similar governmental charge or imposition under the laws
of the United States or any state or municipal or political subdivision
thereof or of any foreign county or political subdivision thereof) (the
"TAX") have been filed with the appropriate governmental agencies in all
jurisdictions in which such tax returns are required to be filed, and all
such tax returns property reflect the liabilities of Seller for taxes for
the periods, property or events covered thereby. All taxes, including
without limitation those which are called for by the tax returns, or
heretofore or hereafter claimed to be due by any taxing authority from
Seller, have been properly
accrued or paid and no taxes are currently delinquent. The accruals for
taxes contained in the Financial Statements are accurate to cover the tax
liabilities of Seller with respect to the business as of that date and
include adequate provision for all deferred taxes, and nothing has occurred
subsequent to the date to make any of such accruals inadequate. Seller is
currently undergoing an audit by the Internal Revenue Service for the tax
years 1994-1995, the results of which, if known, will be disclosed by
Seller to Purchaser prior to Closing. Seller has not extended, or waived
the application of, any statute of limitations or any jurisdiction
regarding the assessment or collection of any taxes. There are no tax liens
(other than any lien for current taxes not yet due and payable) on any of
the assets or properties of Seller. Seller has no knowledge of any basis
for any additional assessments of any taxes. Seller has made all deposits
required by law to be made with respect to employees' withholding and other
employment taxes, including without limitation the portion of the such
deposits relating to taxes imposed upon Seller.
3.1.9 BOOKS OF ACCOUNT. The books, records and accounts of Seller
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maintained with respect to the business accurately and fairly reflect, in
reasonable detail, the assets and liabilities of Seller. Seller is not
engaged in any transaction with respect to the business, maintain any bank
account for the business or use any of the funds of Seller in the contact
of the business except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of the
business.
3.1.10 EXISTING CONDITION. Since the date of the January 31, 1997
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Balance Sheet and Financial Statement, and unless specifically authorized
by the Bankruptcy Court, Seller has not:
(a) incurred any liabilities, other than liabilities incurred in the
ordinary course of business (other than Debtor-in-Possession
financing), consistent with past practice, or discharged or
satisfied any lien or encumbrance, or paid any liabilities, other
than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any liabilities of
which the failure to pay or discharge has caused or will cause any
material damage or risk of material loss to it or any of its assets
or properties (except for the failure to make any payment or
discharge any Liabilities specifically authorized by the Bankruptcy
Court), and Seller has made all adequate protection payments to its
creditors required by the Bankruptcy Court;
(b) sold, unencumbered, assigned or transferred any assets or
properties which would have been included in the Assets if the Closing
had been held on the date of the January 31, 1997 Balance Sheet or on
any date since then, except for the sale, use or consumption of
inventory in the ordinary course of business consistent with past
practices;
(c) created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subject any of the Assets to
any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever, except for
Debtor-in-Possession financing;
(d) made or suffered any amendment or termination of any material
agreement, contract, commitment, lease or plan to which it is a party
or which it is bound, canceled, modified or waived any substantial
debts or claims held by it or waived any rights of substantial value,
whether or not in the ordinary course of business (other than Debtor-
in-Possession financing);
(e) declared, set aside or paid any dividend or made or agreed to make
any other distribution or payment in respect of its capital shares or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or acquire any of its capital shares;
(f) suffered any damage, destruction or loss, whether or not covered
by insurance, (i) material and adversely affecting it business,
operation, assets, properties or prospects, or (ii) or any item or
items carried on its books of account individually or in the aggregate
at more than $25,000.00, or suffered any repeated, reoccurring or
prolonged storage, assession or interruption of supplies or utilities
or other services required to conduct it business and operations;
(g) suffered any material adverse change in its business, operations,
assets, properties, prospects or condition, financial or otherwise;
(h) received notice or have knowledge of any actual or threatened
labor trouble, strike or other occurrence, event or condition of any
similar character which has had or might have any adverse affect on
its business, operations, assets, properties or prospects;
(i) made commitments or agreements for capital expenditures or capital
additions or betterments exceeding in the aggregate $25,000.00 except
such as may be involved in the ordinary repairs, maintenance or
replacements of its Assets;
(j) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its employees or made any increase in, or
any addition to, other benefits to which any of its employees may be
entitled;
(k) changed any of the accounting principles followed by it or the
methods of applying such principles; or
(l) entered into any transaction other than the ordinary course of
business consistent with past practices.
3.1.11 TITLE TO PROPERTIES. The Seller has good, valid and marketable
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title to all of its properties and assets, real, personal and mixed, which
will be included in the assets if the Closing took place on the date
hereof, which purports to own, including without limitation all Assets to
be acquired under this Agreement as reflected in the January 31 Balance
Sheet (except for inventory sold, used or consumed since the date thereof
in the ordinary course of business consistent with past practices) free and
clear of all mortgages, liens, pledges, security interests, charges,
claims, restrictions or other encumbrances and defects of title of any
nature whatsoever, except for Permitted Liens.
3.1.12 CONDITION OF TANGIBLE ASSETS. All buildings, structures,
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facilities, equipment, machinery, vehicles and other material items of
tangible property and assets which would be included in the Assets if the
Closing took place on the date hereof are in Seller's possession and
control, are in good operating condition and repair, subject to normal wear
and maintenance, are usable in the regular and ordinary course of Seller's
and Purchaser's business and conform to all applicable laws, ordinances,
codes, rules, regulations, authorizations, warranties and maintenance
schedules relating to their construction, manufacture, modification, use
and operation. No person other than Seller owns any equipment or other
tangible asset or property situated on any of the real estate owned or
leased by Seller or necessary to the operation of the business of Seller,
except for leased items disclosed in the Disclosure Statement or permitted
liens and for items of immaterial value.
3.1.13 COMPLIANCE WITH LAW; AUTHORIZATIONS. Seller has complied with
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each, and is not in violation of any law, ordinance, or governmental or
regulatory rule or regulation, whether federal, state, local or foreign, to
which Seller's business, operations, assets or properties is subject
("REGULATIONS"). Seller owns, holds, possesses or lawfully uses in the
operation of its business all operating authorities, franchises, licenses,
permits, easements, rights, applications, filings, registrations and other
authorizations ("AUTHORIZATIONS") which are in any manner necessary for it
to conduct it business is now or previously conducted or for the ownership
and use of the Assets owned or used by Seller in the conduct of the
business of Seller, free and clear of all liens, charges, restrictions and
encumbrances and in compliance with all Regulations. No shareholder,
director, officer, employee or former employee of Seller of any affiliates
of Seller, or any other person, firm or corporation owns or has any
priority, financial or other interest (direct or indirect) in any
authorization which Seller owns, possesses or uses in the operation of the
business of Seller as now or previously conducted:
3.1.14 INSURANCE. The Assets and operations of Seller are insured under
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various policies of general liability and other forms of insurance, all of
which are described in the Disclosure Schedule, which discloses for each
policy risk insured against, coverage limits, deductible amounts, all
outstanding claims thereunder, and whether the term of such policy provides
for retrospective premium adjustments. All such policies are in full force
and effect in accordance with the terms, no notice of cancellation has been
received, and there is no existing default or event which, with the giving
of notice or lapse of time or both, would constitute a default thereunder.
Such policies are in amounts which are adequate in relation to the business
and assets of Seller and all premiums to date have been paid-in-full.
Seller has not been refused any insurance, nor has his coverage been
limited, by any insurance carrier to which it is applied for insurance or
with which it has carried insurance during the past five years.
3.1.15 CONTRACTS AND COMMITMENTS. Each of the Agreements listed in the
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Disclosure Statement in response to this Section, or not required to be
listed therein because of the amount thereof, and to which Purchaser is to
acquire rights or obligations hereunder, is valid and enforceable in
accordance with its terms. Seller has previously been notified of the
termination of the existing lease with Norwest Equipment Finance, Inc.
Seller has entered into a commitment agreement with Norwest Equipment
Finance, Inc. which grants to Seller the right to purchase the Assets for
the total amount of $2,000,000.00 as of April 1, 1997. Seller is
continuing to pay to Norwest Equipment Finance, Inc. amounts towards this
purchase. Seller would also be obligated to pay personal property taxes on
the purchase, if applicable. As to the other obligations, Seller is, and to
Seller's knowledge all other parties thereto are, in compliance with the
provisions thereof; Seller is not, and to Seller's knowledge, no other
party thereto is, in default in the performance, observance or fulfillment
of any material obligation, covenant or condition contained
therein; and no event has occurred which with or without the giving of
notice of lapse of time, or both, would constitute a default thereunder. No
such agreement in the reasonable opinion of Seller, contains any
contractual requirement with which there is a reasonable likelihood Seller
or any other party thereto would be unable to comply. Seller's obligations
under the Phoenixcor, Inc. lease and the lease with the City of Ozark,
Missouri, are assignable, but require the consent of the appropriate party.
3.1.16 AVAILABILITY OF DOCUMENTS. Seller has made available to Purchaser
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or will make available to Purchaser prior to Closing, copies of all
documents, including without limitation all agreements, contracts,
commitments, insurance policies, leases, plan, instruments, undertakings,
authorizations, permits, licenses, patents, trademarks, tradenames, service
marks, copyrights and applications therefore listed in the Disclosure
Schedule hereto or referred to herein or any other documents reasonably
requested by Purchaser in its due diligence. Such copies are true and
correct and include all amendments, supplements and modifications thereto
or waivers currently in effect thereunder.
3.1.17 COMPLETENESS OF DISCLOSURE. No representation or warranty by
--------------------------
Seller in this Agreement no any certificate, schedule, statement, documents
or instrument furnished or to be furnished to Purchaser pursuant hereto, or
in connection with the negotiation, execution or performance of this
Agreement, contains or will contain any untrue statement of material fact
or omit or will omit to state a material fact required to be stated herein
or therein or necessary to make any statement herein or therein not
misleading.
3.1.18 ENVIRONMENTAL COMPLIANCE.
-------------------------
(i) All property owned, leased or subleased by Seller (the "Real
Property") and the use and operation thereof are currently in
compliance with all applicable laws, ordinances, rules and
regulations (including consent decrees and administrative orders)
relating to public health and safety in protection of the
environment, including those statutes, regulations and ordinances
identified in subparagraph (iii) below, all as now and hereafter
amended (collectively, "Environmental Laws"), and all permits,
licenses and authorizations relating to the use and operation of
the Real Property required by applicable Environmental Laws are in
effect.
(ii) There are no pending or threatened (A) requests for
information, actions or proceedings from or by any governmental
agency or any other person or entity regarding the condition or
use of the Real Property or the release, generation, discharge,
manufacture, treatment, transportation or disposal of Hazardous
Material on, in, under (including the underlying ground water) or
from the Real Property, or regarding any Environmental Law, or (B)
liens or governmental actions, notices or violations, notices of
non-compliance or other proceedings of any kind with respect to
the Real Property. Seller shall immediately notify Purchaser and
provide copies upon receipt of all written complaints, claims,
citations, inquiries, reports or notices relating to the condition
of the Real Property or compliance with Environmental Laws
(collectively, "Environmental Notices") received after the date
hereof.
(iii) For purposes of the Agreement, "Hazardous Material" means
(A) "Hazardous Substances" or "Toxic Substances" as those terms
are defined by the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., as now and
-------
hereinafter amended, (B) "Hazardous Wastes", as that term is
defined by the Resource Conservation and Recovery Act, 42 U.S.C.
6902 et seq., as now and hereinafter amended, (C) any pollutant
-------
or contaminate or hazardous, dangerous or toxic chemicals,
materials or substances within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to
or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste substances or
materials, all as now and hereinafter amended, (D) crude oil or
any fraction thereof which is liquid at standard conditions or
temperature and pressure (60 degrees fahrenheit and 14.7 pounds
per square inch absolute), (E) any radioactive material, including
any source, special nuclear or byproduct material as defined in 42
U.S.C. 211 et seq., as now and hereinafter amended, (F) asbestos
--------
in any form or condition, (G) polychlorinated biphenyls ("PCBs")
or substances or compounds containing PCBs, and (H) medical waste.
3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
--- -------------------------------------------
warrants to Seller as follows:
3.2.1 CORPORATE EXISTENCE. Purchaser is a corporation duly
----- -------------------
organized, valid and existing and in good standing under the laws of the
State of Tennessee.
3.2.2 CORPORATE POWER AND AUTHORIZATION. Purchaser has the corporate
----- ---------------------------------
power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by
Purchaser has been duly authorized by all necessary corporate action. This
agreement has been duly executed and delivered by duly authorized officers
of Purchaser and constitutes the legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms.
3.2.3 VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. The execution,
------------------------------------------
delivery, and performance of this Agreement by Purchaser does not and will
not violate, conflict with or result in the breach of any term, condition
or provision of, or (other than approval of the Bankruptcy Court) require
the consent of any other person under, (a) any existing law, ordinance, or
governmental rule or regulation to which Purchaser is subject, (b) any
judgment, order, writ, injunction, decree, or award of any Court,
arbitrator or governmental or regulatory official, body or authority which
is applicable to Purchaser, (c) the charter documents of Purchaser or any
securities issued by Purchaser, or (d) any mortgage, indenture, agreement,
contract, commitment, lease, plan, authorization, or other instrument,
document or understanding, oral or written, to which Purchaser is a party
or by which Purchaser may have rights to give any party with right
thereunder the right to terminate, modify, accelerate, or otherwise change
the existing rights or obligations of Purchaser thereunder.
3.3 SURVIVALS OF REPRESENTATIONS AND WARRANTIES. All representations and
-------------------------------------------
warranties made by the parties in this Agreement or in any certificate,
schedule, statement, document or instrument furnished hereunder or in connection
with the negotiation, execution and performance of this Agreement shall survive
the Closing. Notwithstanding any investigation, due diligence or audit
conducted before or after the Closing Date or the decision of any party to
complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein and therein.
ARTICLE IV
AGREEMENTS PENDING CLOSING
--------------------------
4.1 AGREEMENTS OF SELLER AND XXXXXXXXXX PENDING CLOSING. Seller and
---------------------------------------------------
Xxxxxxxxxx each covenant and agree that, pending the Closing and except as
otherwise agreed to in writing by Purchaser:
4.1.1 CONDUCT OF BUSINESS. The business shall be conducted solely in
-------------------
the ordinary course consistent with past practices. Neither Seller nor
Xxxxxxxxxx shall engage in any activity or other business competitive with
or detrimental to the business. Seller shall use its best efforts to
conduct its business in such a manner that on the Closing Date the
representations and warranties of Seller and Xxxxxxxxxx contained in this
Agreement shall be true, as though such representations and warranties were
made on and as of such date. Neither Seller nor Xxxxxxxxxx
shall provide any confidential information concerning the business or its
properties or assets to any third party, other than in the ordinary course
of business.
4.1.2 MAINTENANCE OF PHYSICAL ASSETS. Seller shall continue to maintain
------------------------------
and service the physical assets used in the conduct of the business in the
same manner as has been its consistent past practice.
4.1.3 EMPLOYEES AND BUSINESS RELATIONS. Seller shall use its best efforts
--------------------------------
to keep available the services of the present employees and agents of the
business and to maintain the relations and goodwill with the suppliers,
customers, distributors and any others having business relations with the
business. Seller shall not change the amount or method of compensation for
any employees.
4.1.4 MAINTENANCE OF INSURANCE. Seller shall notify Purchaser of any
------------------------
changes in the terms of the insurance policies and binders other than is
disclosed on the date hereof.
4.1.5 COMPLIANCE WITH LAWS, ETC. Seller shall comply with all laws,
-------------------------
ordinances, rules, regulations and orders applicable to the business, or
Seller's operations, assets or properties with respect thereof, the
noncompliance with which might materially affect the Business or the
Assets.
4.1.6 UPDATED SCHEDULES. Seller and Xxxxxxxxxx shall promptly disclose to
-----------------
Purchaser any information contained in its representations and warranties
or the Schedules which, because of an event occurring after the date
hereof, is incomplete or is no longer correct as of all times after the
date hereof until the Closing Date; provided, however, none of such
disclosure shall be deemed to modify, amend or supplement the
representations or warranties of Seller, and Xxxxxxxxxx, or the schedules
hereto for the purposes of Article V hereof, unless Purchaser shall have
consented thereto in writing.
4.1.7 SALE OF ASSETS. Seller shall not, directly or indirectly, sell or
--------------
encumber all or any part of its Assets.
4.1.8 ACCESS. Seller shall give to Purchaser's officers, employees,
------
counsel, accountants and other representatives free and full access to and
the right to inspect, during normal business hours, all of the premises,
properties, assets, records, contracts and other documents relating to the
Assets and shall permit them to consult with the officers, employees,
accountants, counsel and agents of Seller for the purpose of making such
investigation of the Assets, including without limitation Seller's
financial statements, as Purchaser shall desire to make, provided that such
investigation shall not unreasonably interfere with Seller's business
operations. Furthermore, Seller shall furnish to Purchaser all such
documents and copies of documents and records and information with respect
to the affairs of the business and copies of all working papers relating
thereto as Purchaser shall from time to time reasonably request and shall
permit Purchaser and its agents to make physical inventories and inspection
of the Assets as Purchaser may request from time to time.
4.1.9 PRESS RELEASES. Except as required by applicable law, neither
--------------
Seller nor Xxxxxxxxxx shall give notice to third parties or otherwise make
any public statement or releases concerning this Agreement or the
transactions contemplated hereby except for such written information as
shall have been approved in writing as to form and content by Purchaser,
which approval shall not be unreasonably withheld.
4.1.10 ENVIRONMENTAL INVESTIGATIONS. Seller acknowledges that
----------------------------
Purchaser may, at its expense, undertake or cause to be undertaken one or
more environmental investigations, including Phase I and/or Phase II
investigations, of each parcel of the Seller's real property. Seller shall
provide or cause to be provided all access,
information and documents reasonably required for such investigations,
including, but not limited to, any prior environmental assessments for any
Seller real property.
4.1.11 CORPORATE MATTERS. Seller shall not amend its Articles of
-----------------
Incorporation or Bylaws; make any tax election or change the tax status of
the corporation; merge with any other person or entity; acquire
substantially all of the assets of any other entity; convert to any form of
organization; or issue any new stock. Xxxxxxxxxx shall not transfer,
pledge or otherwise alienate or encumber his ownership interest in Seller;
pledge, transfer or severe any restrictions in his voting rights; or
exercise his voting rights in any manner, restricting, delaying or
impairing, or inconsistent with, the timely and full performance of Seller
or Xxxxxxxxxx'x covenants, warranties, agreements or obligations hereunder.
4.1.12 SECTION 363 SALE OR DISMISSAL. As soon as possible after the
-----------------------------
execution of this Agreement, but in no event later than 25 days prior to
the Closing Date, Seller shall have filed a motion pursuant to 11 U.S.C.
(S)363 to authorize the sale of its Assets free and clear of liens and
encumbrances except as those set forth in this Agreement, in the United
States Bankruptcy Court for the Southern District of Iowa, Central
Division, or, dependent and contingent upon Seller receiving the requisite
approval of its unsecured creditors to a 75% settlement of existing claims,
a motion to dismiss the Chapter 11 proceedings, so that the Asset purchase
can be completed consistent with the terms of this Agreement without any
Bankruptcy Court restriction. Seller represents and warrants that it shall
use its reasonable best efforts to obtain approval of its unsecured
creditors to the sale in a form filed or in a form as modified and agreed
within the terms of this Agreement with Purchaser.
4.2 AGREEMENTS OF PURCHASER PENDING THE CLOSING. Purchaser covenants
-------------------------------------------
and agrees that pending the Closing and except as otherwise agreed to in writing
by Seller:
4.2.1 ACTIONS OF PURCHASER. Purchaser will not take any action which
--------------------
would result in a breach of any of its representations and warranties
hereunder. Furthermore, Purchaser shall cooperate with Seller and use its
best efforts to cause all of the conditions to the obligations of Purchaser
and Seller under this Agreement to be satisfied on or prior to the Closing
Date.
4.2.2 PRESS RELEASES. Except as required by applicable law, Purchaser
--------------
shall not give notice to the third parties or otherwise make any public
statements or releases concerning this Agreement or the transactions
contemplated hereby except for such written information as shall have been
approved in writing as to form and content by Seller, which approval shall
not unreasonably withheld.
ARTICLE V
CONDITIONS PRECEDENT TO THE CLOSING
5.1 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. All obligations of
-----------------------------------------------
Purchaser under this Agreement are, at Purchaser's discretion subject to the
fulfillment or satisfaction, at the times indicated herein, of each of the
following conditions precedent:
5.1.1 REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE.
----------------------------------------------------------
The representations and warranties of Seller contained in this Agreement or
in any schedule, certificate or document delivered by Seller to Purchaser
pursuant to the provisions hereof shall have been true on the date hereof
and shall be true on the Closing Date with the same effect as those such
representations and warranties were made as of such date.
5.1.2 COMPLIANCE WITH THIS AGREEMENT. Seller and Xxxxxxxxxx shall have
------------------------------
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
5.1.3 NO THREATENED OR PENDING LITIGATION. On the Closing Date, no suit,
-----------------------------------
action or other proceeding, injunction or final judgment relating thereto,
shall be threatened or pending before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby, and
Seller shall be aware of no investigation that might result in any such
suit, action or proceeding that shall be pending or threatened.
5.1.4 CONSENTS, APPROVALS AND NOTICES. To the extent required by
-------------------------------
applicable law:
(a) To the extent that Seller's rights under any agreement,
contract, commitment, lease, authorization or other Asset to be
assigned to Purchaser hereunder may not be assigned without the
consent of another person which has not yet been obtained, this
Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be
unlawful.
(b) All notices shall have been given and all consents shall
have been obtained as required by the terms of the contracts,
commitments, agreements or authorizations.
(c) The holders of any indebtedness of Seller, the lessors of
any real or personal property or assets leased by Seller, the
parties (other than Purchaser) to any contract, commitment or
agreement to which Seller is a party of subject, any governmental
or regulatory official, body or authority or any other person which
owns or has authority to grant any authorization or any
governmental, judicial or regulatory official, body or authority
having jurisdiction over Xxxxxxxxxx, Seller or Purchaser to the
extent that their consent or approval is required or necessary
under the pertinent debt, lease, contract, commitment or agreement
or other document or instrument or under applicable orders, laws,
rules or regulations, for the consummation of the transactions
contemplated hereby in the manner herein provided, shall have
granted such consent or approval.
(d) Seller has received consent and agreement of any judgment
lien holders as to the release of the judgment as it effects any of
Seller's Assets and Xxxxxxxxxx has been released of any obligations
created or based upon any guarantees.
(e) Seller shall have received the consent of its unsecured
creditors to the acceptance of 75% of the unsecured creditors'
indebtednesses to be paid and received in full after Closing or if
any consent or approval shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights
under the Asset in question so that Purchaser would not in effect
require the benefit of all such rights, and Purchaser elects to
close this transaction without such consent, approval or
assignment, Purchaser shall have the discretion to require that
Seller, to the maximum extent permitted by law, cooperate with
Purchaser and act after the Closing as Purchaser's agent in order
to obtain for it the benefits under such Asset.
5.1.5 MATERIAL ADVERSE CHANGES. The business, operations, assets,
------------------------
properties or prospects of the business shall not have been and shall not
be threatened to be materially adversely affected in any way as a result
of any event or occurrence.
5.1.6 ESCROW AGREEMENT. Buyer shall deposit with counsel for Seller
----------------
the Purchase Price deemed necessary by Seller, pursuant to the Escrow
Agreement attached hereto, which funds shall be utilized by Seller's
counsel as Escrow Agent for the payment of those obligations and
liabilities identified in Provision 1.4.2 herein.
5.1.7 APPROVAL OF COUNSEL; CORPORATE MATTERS. All instruments and
--------------------------------------
documents required to carry out this Agreement or incidental thereto shall
have been approved on the Closing Date by Black, Bobango & Xxxxxx, counsel
for Purchaser, in the exercise of its reasonable judgment. Xxxxxxxxxx and
Seller shall also have delivered to Purchaser such other documents,
instruments, certifications and further assurances as such counsel may
reasonably require.
5.1.8 APPROVAL BY BANKRUPTCY COURT. If sale is pursuant to 11 U.S.C.
----------------------------
(S)363, prior to the Closing, the Bankruptcy Court shall have, in a form
satisfactory to Purchaser and its counsel, approved this Agreement and all
transactions contemplated hereunder, including, but not limited to, the
conveyance of the Assets, free and clear of all mortgages, liens, pledges,
said security agreements (except for security interests created by
Purchaser in favor of the lessors), charges, claims, restrictions and
encumbrances of any nature whatsoever pursuant to the applicable
provisions of the Bankruptcy Court (the "SALE APPROVAL ORDER"). The Sale
Approval Order with respect to the sale shall, among other things, unless
specifically waived in writing by Purchaser:
(a) Make a finding that those matters which are the subject of
this Agreement are ("CORE") matters over which the Bankruptcy Court
has jurisdiction pursuant to 28 U.S.C. (S)(S)1334 and 157;
(b) Make a finding the due and proper notice of the transactions
contemplated by this Agreement have been given to creditors,
shareholders and other parties-in-interest;
(c) Make a finding that the Purchase Price constitutes fair value
for the Assets;
(d) Make a finding that the Assets are being purchased by
Purchaser in good faith and that the Purchase Price was not controlled
by an agreement among potential bidders and otherwise complies with
the requirements of 11 U.S.C. (S)363(m);
(e) Make a finding that "sound business reasons" exist for
Bankruptcy Court approval of this Agreement;
(f) Approve the Agreement and provide that the Assets are to be
conveyed to Purchaser free and clear of any and all interests in such
Assets, including, but not limited to, tax liens, mortgages, liens,
security interests, encumbrances, claims (including third-party claims
of any nature whatsoever, including, but not limited to, any claim
which might otherwise give rise to successor liability), restrictions
and limitations;
(g) Direct the Clerk of the Bankruptcy Court to enter the Sale
Approval Order on the docket and provide that there is no just reason
to delay entry of the Sale Approval Order; and
(h) Specifically overrule objections, if any, to confirmation of
the sale; provided, however, that the Sale Approval Order shall not
have been stayed, materially modified, withdrawn or reversed as of the
Closing.
5.1.9 APPROVAL BY THE BANKRUPTCY COURT, DISMISSAL ALTERNATIVE. In the
-------------------------------------------------------
event the Seller proceeds with the Closing of this Sale Agreement upon
consent and approval of unsecured creditors, and prior to Closing, the
Bankruptcy Court shall have, in a form satisfactory to Purchaser and its
counsel, entered its Order dismissing the Bankruptcy Case.
5.1.10 SELLER'S DELIVERIES. The Seller shall have delivered to the
-------------------
Purchaser at or prior to the Closing the following, all of which shall be in a
form reasonably satisfactory to the Purchaser as counsel:
(a) Such bills of sale, deeds and assignments with covenants of
warranty, assignments, endorsements, and other good and sufficient
instruments and documents of conveyance and transfer, in a form
reasonably satisfactory to Purchaser and its counsel, as shall be
necessary and effective to transfer and assign to, invest in,
Purchaser (i) good and valid title in and to the Assets free and
clear of all liens and encumbrances as provided herein, (ii) good and
valid leasehold interest in and to the Assets leased by Seller as
Lessee, and (iii) Seller's rights under all agreements, warranties,
contracts, commitments, leases, plans, quotations, proposals,
instruments and other documents included in the Assets;
(b) Agreements, contracts, commitments, leases, plans, bids,
quotations, proposals, computer programs and software, manuals and
guide books, price books and price lists, customer and subscriber
lists, supplier lists, sales records, files, correspondence, legal
opinions, and other documents, books, records, papers, files, office
supplies and data belonging to Seller which are part of the Assets;
and simultaneously with such delivery, all such steps shall be taken
as may be required to put Purchaser in actual possession and operating
control of the Assets;
(c) The Escrow Agreement, duly executed by an Official Unsecured
Creditors Committee appointed in the Bankruptcy Case, the Purchaser
and the Seller; and
(d) The assignment, to the extent possible or required, of
Seller's telephone and telecopier numbers to Purchaser.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. All obligations of
-------------------------------------------------
Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
5.2.1 REPRESENTATIONS AND WARRANTIES TRUST AS OF THE CLOSING DATE. The
-----------------------------------------------------------
representations and warranties of Purchaser contained in this Agreement or in
any list, certificate or document delivered by Purchaser to Seller pursuant
to the provisions hereof shall be true on the Closing Date with the same
effect as those such representations and warranties were made as of such
date.
5.2.2 COMPLIANCE WITH THIS AGREEMENT. Purchaser shall have performed and
------------------------------
complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at Closing.
5.2.3 NO THREATENED OR PENDING LITIGATION. On the Closing Date, no suit,
-----------------------------------
action, or other proceeding, or
injunction or final judgment relating thereto, shall be threatened or
pending before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation
that might result in any such suit, action or proceedings shall be pending
or threatened.
5.2.4 ESCROW AGREEMENT. Any Official Committees appointed in the
----------------
Bankruptcy Case, the Purchaser and the Escrow Agent shall have executed and
delivered the Escrow Agreement.
5.2.5 APPROVAL OF COUNSEL; CORPORATE MATTERS. All instruments and
--------------------------------------
documents required to carry out this Agreement or incidental hereto shall
have been approved on the Closing Date by counsel for Seller in the
exercise of their reasonable judgment. Purchaser shall also have delivered
to Seller such other documents, instruments, certifications and further
assurances as such counsel for Seller may reasonably require.
5.2.6 EMPLOYMENT AGREEMENT. Purchaser shall have executed and delivered
--------------------
to Xxxxxxxxxx the Xxxxxxxxxx Employment Agreement, in the form satisfactory
to Xxxxxxxxxx, substantially similar to Exhibit "C" hereto.
ARTICLE VI
INDEMNIFICATION
---------------
6.1 GENERAL INDEMNIFICATION OBLIGATION OF SELLER AND XXXXXXXXXX. From
-----------------------------------------------------------
and after the Closing, Seller and Xxxxxxxxxx, jointly and severally, each will
reimburse, indemnify and hold harmless Purchaser and its successors and assigns
against in respect of:
(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses (including, without limitation, reasonable legal
expenses) incurred or suffered by Purchaser that result from,
relate to or arise out of:
(i) any and all liabilities and obligations of Seller of
any nature whatsoever, except those liabilities and
obligations of Seller that Purchaser assumes and agrees to pay
by this Agreement;
(ii) any and all actions, suits, claims, or legal,
administrative arbitration, governmental or other proceedings
or investigations against Purchaser that: (1) relate to Seller
or the Business, in which the principal event giving rise
thereto occurred prior to the Closing Date; or (2) result from
or arise out of any action or inaction of Seller or Xxxxxxxxxx
or any director, officer, employee, agent, representative or
subcontractor of Seller; or
(iii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of
Seller or Xxxxxxxxxx under this Agreement, or from any
misrepresentation in or omission from any certificate,
schedules, statement, document or instrument furnished to
Purchaser pursuant hereto or in connection win the
negotiation, execution or performance of this Agreement; and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable
legal fees and expenses) incident to any of the foregoing or to the
enforcement of this Section 6.1.
6.2 DEFENSE OF CLAIMS. If Purchaser seeks indemnity (the "INDEMNITEE")
-----------------
pursuant to this Article VI, it shall give notice to all indemnifying parties
(the "INDEMNITOR"), briefly describing the claim and providing a good faith
estimate of the amount of the claim if it is successful. Within ten (10) days
of the date the notice is given, the Indemnitor shall notify Indemnitee in
writing that the Indemnitor acknowledges its liability for defense and
indemnity; the Indemnitor denies all liability for indemnity or defense; or the
Indemnitor denies liability for Indemnity but is willing to provide a defense to
the indemnity. Defense of the claim shall be provided by counsel selected by
the indemnity, in the exercise of reasonable discretion, unless the Indemnitor
acknowledges full liability for indemnity and defense and provides to the
Indemnitee reasonable evidence that the Indemnitor has the financial wherewithal
to pay for both indemnity and defense. If the Indemnitor acknowledges its
liability for defense and indemnity and provides reasonable evidence that the
Indemnitor has the financial wherewithal to pay for both indemnity and defense,
any such claim shall not be settled without the consent of the Indemnitor, which
shall not be unreasonably withheld.
6.3 COMPLIANCE WITH BULK SALES LAW. Purchaser and Seller acknowledge that
------------------------------
the Seller's principal business is not the sale of inventory from stock, and
hereby waive compliance by Purchaser and Seller with the bulk sale law and any
other similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement, Seller shall indemnify Purchaser from, and hold
it harmless against, any liabilities, damages, costs and expenses resulting from
or arising out of (i) the party's failure to comply with any of such laws in
respect of the transactions contemplated by this Agreement, or (ii) any action
brought or levy made as a result thereof.
6.4 OTHER RIGHTS AND REMEDIES NOT AFFECTED. The indemnification rights of
--------------------------------------
the Indemnitee under this Article VI are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including without limitation
the right to seek specific performance, recision or restitution, none of which
rights or remedies shall be affected or diminished hereby.
ARTICLE VII
POST-CLOSING MATTERS
--------------------
7.1 EMPLOYEE BENEFITS. No portion of the Assets of any plan, fund,
-----------------
program or arrangement, written or unwritten, heretofore sponsored or maintained
by Seller (and no amount attributed to any such plan, fund, program or
arrangement) shall be transferred to Purchaser; and Purchaser shall not be
required to continue any such plan, fund, program or arrangement after the
Closing Date. The amounts payable on account of all benefit arrangements (other
than those specified in the following subsection) shall be determined with
reference to the date of the event by reason of which such amounts become
payable, without regard to conditions subsequent, and Purchaser shall not be
liable for any claim for insurance, reimbursement or other benefits payable by
reason of any event which occurs prior to the Closing Date. All employees of
Seller who may be employed by Purchaser on or after the Closing Date shall be
new employees of Purchaser and any prior employment by Seller of such employees
shall not effect entitlement to, or the amount of, salary or other cash
compensation, current or deferred, which Purchaser may make available to its
employees other than those employees that are under written employment contract
with Seller.
7.2 EMPLOYEES. As of the Closing Date, Purchaser may offer employment to,
---------
and Seller may use its best efforts to assist Purchaser in employing as new
employees of Purchaser, those employees that Purchaser wants to employ after the
Closing Date.
7.3 MAINTENANCE OF BOOKS AND RECORDS. Seller and Xxxxxxxxxx shall
--------------------------------
preserve all records possessed or to be possessed by such party relating to any
of the Assets, Liabilities or of the Business until the earlier of (i) the
tenth anniversary of the Closing Date or (ii) 90 days after notice to Purchaser
that Seller or Xxxxxxxxxx intends to destroy the records, in which case
Purchaser shall have 30 days to elect to receive the records and Seller and
Xxxxxxxxxx will deliver the
records as requested by Purchaser. After the Closing Date, where there is a
legitimate purpose, Xxxxxxxxxx shall provide the Purchaser with access, upon
prior reasonable written request specifying the need therefore, during regular
business hours, to (i) the officers and employees of Seller and Xxxxxxxxxx and
(ii) the books of account and records of Seller and Xxxxxxxxxx and the Purchaser
and its representatives shall have the right to make copies of such books and
records; provided, that the foregoing right of access shall not be exercisable
in such a matter as to interfere unreasonable with the normal operations and
business of Seller or Xxxxxxxxxx; and further, provided, that, as to so much of
such information as constitutes trade secrets or confidential business
information of Seller or Xxxxxxxxxx (and not part of the Assets), the Purchaser
and its officers, directors and representatives will use due care to not
disclose such information except (i) as required by law, (ii) with the prior
written consent of Seller or Xxxxxxxxxx, which consent shall not be unreasonably
withheld, or (iii) where such information becomes available to the public
generally, or becomes generally known to competitors of Seller or Xxxxxxxxxx,
through sources other than the Purchaser, its affiliates or its officers,
directors or representatives. Such records may nevertheless be destroyed by
Seller or Xxxxxxxxxx if such party sends to the Purchaser written notice of its
intent to destroy records, specify with particularity the contents of the
records to be destroyed. Such records may then be destroyed after the 30th day
after such notice is given unless Purchaser objects to the destruction in which
case the parties seeking to destroy the records shall deliver such records to
Purchaser.
7.4 PAYMENTS RECEIVED. Seller and Purchaser each agree that after the
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Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which property
belongs to the other party, including without limitation any insurance proceeds,
and will account to the other for all such receipts. From and after the
Closing, Purchaser shall have the right and authority to endorse, without
recourse, the name of Seller on any check or other evidences of indebtedness
received by Purchaser on account of the Assets transferred to Purchaser
hereunder.
7.5 UCC MATTERS. From and after the Closing Date, Seller will promptly
-----------
refer all inquiries with respect to the ownership of the Assets to Purchaser.
In addition, Seller will execute such documents and financing statements as
Purchaser may request from time to time to evidence transfer of the Assets to
Purchaser, including any necessary assignments of financing statements.
7.6 NON-COMPETITION AGREEMENT. Seller and Xxxxxxxxxx shall sign and
-------------------------
execute the covenant not to compete as attached hereto as Exhibit E which shall
remain in effect for a period of five (5) years from the date of the Closing of
this Agreement unless terminated prior to the expiration of the five (5) year
period in accordance with the terms as set forth in the Non-Competition
Agreement.
7.7 FURTHER ASSURANCES. Seller from time to time after the Closing, at
------------------
Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments and will take such other actions and execute and deliver such
other documents, certifications and further assurances as Purchaser may
reasonably require to vest more effectively in Purchaser, or to put Purchaser
more fully in possession of, any of the Assets. Each of the parties hereto will
cooperate with the other and execution and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by the other party hereto as necessary to
carry out, evidence and confirm the intended purposes of this Agreement.
7.8 RELEASE OF ESCROWED AMOUNT. Upon the order of the Bankruptcy Court
--------------------------
for the Southern District of Iowa, Central Division, either approving a sale
pursuant to the provisions of 11 U.S.C. (S)363(m) or upon an Order of Dismissal
being entered, Purchaser, Seller and Xxxxxxxxxx acknowledge and agree that the
Escrow Agent shall be authorized to release the funds held in escrow in order to
settle, discharge, or satisfy the creditors' claims against Seller.
ARTICLE VIII
MISCELLANEOUS
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8.1 TERMINATION.
-----------
8.1.1 CAUSES. Anything herein or elsewhere to the contrary
------
notwithstanding, this Agreement may be terminated by written notice of
termination at any time on or before the Closing Date only as follows:
(a) by mutual consent of Seller and Purchaser;
(b) by Purchaser (i) at any time if the representations and
warranties of Seller or Xxxxxxxxxx contained in Section 3.1 hereof
were incorrect in any material respect when made or at any time
thereafter, including as of Closing, (ii) upon written notice to
Seller given at any time after May 1, 1997 (or such later date as
shall have been specified in a writing authorized on behalf of the
Seller and Purchaser) if all of the conditions precedent set forth in
Section 5.1 hereof have not been met; or (iii) if Seller or
Xxxxxxxxxx breach any covenant or agreement which either of them make
under this Agreement or any other document contemplated by this
Agreement.
8.1.2 EFFECT OF TERMINATION. In the event of the termination and
---------------------
abandonment hereof pursuant to the provisions of this Section 8.1, this
Agreement shall become void and have no effect, without any liability on
the part of any of the parties or their directors or officers or
stockholders in respect of this Agreement, unless the termination was a
result of the representations and warranties of a party being materially
incorrect when made or the material breach by such party of the covenant
hereunder in which event the party whose representations and warranties
were incorrect or who breached such a covenant shall be liable to the other
party for all costs and expenses of the other party in connection with the
preparation, negotiation, execution and performance of this Agreement.
8.2 BROKER'S AND FINDER'S FEES. Purchaser and Seller each represent and
--------------------------
warrant to the other that all negotiations relative to this Agreement have been
carried on by them directly without the intervention of any person who may be
entitled to the brokerage or finder's fee or other commission in respect to this
Agreement or the consummation of the transactions contemplated hereby and each
agrees to indemnify and hold the other harmless against any and all claims,
losses, liabilities and expenses which may be asserted against or incurred by
each as a result of the other's dealings, arrangements or agreements of any such
person.
8.3 EXPENSES. Except as otherwise provided in this Agreement and
--------
hereunder, each party hereto shall pay its own expenses incidental to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
8.4 CONTENTS OF AGREEMENT; PARTIES-IN-INTEREST; ETC. This Agreement sets
------------------------------------------------
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Any and all
previous agreements and understandings between or among the parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement.
8.5 ASSIGNMENT AND BINDING EFFECT. This Agreement may not be assigned
-----------------------------
prior to the Closing by any party hereto without the prior written consent of
the other parties, except that prior to Closing, Purchaser may assign and
delegate any and all of its rights and obligations hereunder to one or more of
its subsidiaries, or other entity affiliated by common ownership with Purchaser
or one of its subsidiaries. Subject to the foregoing, all of the terms and
provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and assigns of Xxxxxxxxxx, Seller and Purchaser. Prior to
execution by all parties, this Agreement shall not be binding upon or
enforceable by or against any party, by estoppel or otherwise. In consideration
of Seller's agreement to permit Master to assign its obligations hereunder,
Master agrees that, in the event of a breach of the obligations of its Assignee
hereunder, Master shall remain liable for any such breach.
8.6 WAIVER. Any condition, term or provision of this Agreement may be
------
waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed buy such party. Any such written waiver shall not
imply a waiver as to any other term, condition, circumstance or occasion nor
estop any party from enforcing any term, condition, right or remedy not
expressly so waived. Failure of a party to insist upon adherence to any term or
condition of this Agreement on any occasion shall be considered a waiver or
deprive that party of the right thereafter to insist upon adherence to that term
of condition or any other term or condition of this Agreement.
8.7 NOTICES. Any notice or communication of this Agreement shall be in
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writing and delivered (by hand, telecopier, telegraph, telex or courier) or
deposited in the United States mail (first class, registered or certified)
postage fully prepaid and addressed as stated below. Notice by United States
mail shall be deemed given on the third day after its deposit. Notice by
telecopier, telegraph or telex shall be deemed given on the day sent. Notice by
hand delivery or courier shall be deemed given on the first business day when
such delivery is first attempted. Either party may, from time to time, specify
as to its address for purposes of this Agreement any other address upon the
giving of 10 days notice thereof to the other party in the manner required by
this paragraph. This paragraph shall not prevent the giving of written notice
in any other matter, but such notice shall be deemed effective only when and as
of its actual receipt at the proper address and by the proper addressee.
8.8 GOVERNING LAW. This Agreement shall be governed by and interpreted
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and enforced in accordance with the laws of the State of Iowa.
8.9 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
--------------------
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article VI hereof, the other parties certified to
indemnity or defense, and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any right on any other persons.
8.10 HEADINGS, GENDER AND "PERSON". All section headings contained in this
------------------------------
Agreement are for convenience of reference only, do not form a part of this
Agreement, and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or other entity.
8.11 SCHEDULES AND EXHIBITS. All Exhibits and Schedules referred to herein
----------------------
are intended to be and hereby are specifically made a part of this Agreement.
8.12 SEVERABILITY. Any provision of this Agreement which is invalid or
------------
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
8.13 JURISDICTION. Except with respect to such matters as properly remain
------------
within the jurisdiction of the Bankruptcy Court, Seller, Xxxxxxxxxx and
Purchaser consent to the jurisdiction and venue of the state and federal courts
located in Poweshiek County, Iowa and/or the Southern District of Iowa with
respect to any legal action, in tort or contract, arising directly or indirectly
from this Agreement or the relationship created hereby. This provision shall
not bar enforcement of a provisional, extraordinary, in rem or post-judgment
remedy in any court whose original jurisdiction is essential or exclusive as to
that remedy, despite the above consent to jurisdiction.
8.14 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for all of the other counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.
SELLER PURCHASER
XXXXXXXXXX PRINTING MASTER PRINTING, INC.
COMPANY, INC.
By: /s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxx X. Xxxxxx
--------------------- -------------------
Xxxxx Xxxxxxxxxx, III, Its Xxxx X. Xxxxxx, Its President
President
Address for Notices: Address for Notices:
000 Xxxxx Xxxxx Xxxxxx 2500 Xxxxx
Xxxxxxxxx, IA 50171 Xxxxxxx, XX 00000
Facsimile: (000) 000-0000) Facsimile: (000) 000-0000
XXXXXXXXXX
/s/ Xxxxx Xxxxxxxxxx, III
-------------------------
Xxxxx Xxxxxxxxxx, III
Address for Notices:
000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Copies of all notices to: Copies of all notices to:
Xxxxxx X. Xxxxxx, Esq. Xxxxxxx Xxxxxx, Esq.
I.D. No.: ###-##-#### Black, Bobango & Xxxxxx, P.C.
000 Xxxxx, Xxxxx 0000 000 Xxx Xxxxx Xxxxx
Xxx Xxxxxx, XX 00000-0000 Xxxxxxx, XX 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
COUNSEL FOR SELLER & COUNSEL FOR PURCHASER &
XXXXXXXXXX MASTER
LIST OF EXHIBITS
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Exhibit A January 31, 1996 Balance Sheet
Exhibit B Escrow Agreement
Exhibit C Xxxxxxxxxx Employment Agreement
Exhibit D Lease Identified on Exhibit D as follows: Exhibit "D" are those
Equipment Leases identified by Seller as follows:
Lease with Phoenixcor, Inc. regarding equipment located in
Montezuma, Iowa;
Lease with City of Ozark, Missouri on the personal property and
real estate of Seller located in Ozark City, Missouri;
Seller's previous lease with Norwest Equipment Financing, Inc.,
which lease has been terminated by Norwest Equipment Financing,
Inc., but which interest in said equipment to Seller specifically
assigns to Purchaser.
Exhibit E Non-Compete Agreement
