EXHIBIT 99.2
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
METATEC, INC.
AND
MTI ACQUISITION CORP.
DATED AS OF OCTOBER 16, 2003
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1.1 (a) Definitions .................................................................... 1
Section 1.2 Construction ........................................................................ 7
ARTICLE II PURCHASE AND SALE
Section 2.1 Purchase and Sale of Assets ......................................................... 7
Section 2.2 Excluded Assets ..................................................................... 8
Section 2.3 Assumed Liabilities ................................................................. 9
Section 2.4 Excluded Liabilities ................................................................ 9
Section 2.5 Assumption of Certain Leases and Other Contracts .................................... 11
ARTICLE III PURCHASE PRICE; ESCROW; ESCROW CURE AMOUNTS
Section 3.1 Purchase Price ...................................................................... 12
Section 3.2 Cure Amounts ........................................................................ 12
ARTICLE IV THE CLOSING
Section 4.1 Time and Place of the Closing ....................................................... 12
Section 4.2 Deliveries by Seller ................................................................ 13
Section 4.3 Deliveries by Buyer ................................................................. 13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER
Section 5.1 Organization and Standing: Authority Relative to this Agreement ..................... 14
Section 5.2 Consents and Approvals; No Violation; Title to Assets ............................... 14
Section 5.3 Intellectual Property ............................................................... 14
Section 5.4 Brokers ............................................................................. 16
Section 5.5 Required Consents ................................................................... 16
Section 5.6 Litigation .......................................................................... 16
Section 5.7 Compliance with Laws and Court Orders ............................................... 16
Section 5.8 Disclaimer of Other Representations and Warranties .................................. 16
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER
Section 6.1 Authority Relative to this Agreement ................................................ 17
Section 6.2 Consents and Approvals; No Violation ................................................ 17
Section 6.3 Legal Proceedings and Judgments ..................................................... 18
Section 6.4 Brokers ............................................................................. 18
ARTICLE VII COVENANTS OF THE PARTIES
Section 7.1 Conduct of Business ................................................................. 18
Section 7.2 Access to Information; Maintenance of Records ....................................... 19
Section 7.3 Expenses ............................................................................ 20
Section 7.4 Further Assurances .................................................................. 20
Section 7.5 Public Statements ................................................................... 20
Section 7.6 Governmental Authority Approvals and Cooperation .................................... 21
Section 7.7 Taxes ............................................................................... 21
Section 7.8 Submission for Bankruptcy Court Approval ............................................ 22
Section 7.9 Bidding Procedures ................................................................... 23
Section 7.10 Break-Up Fee; Expense Reimbursement .................................................. 24
Section 7.11 Buyer's Release of Claim to Cash Portion of Purchase Price ........................... 24
Section 7.12 Revisions to Schedules ............................................................... 24
Section 7.13 Employment of Employees .............................................................. 25
Section 7.14 Commencement of Avoidance Actions .................................................... 25
Section 7.15 Name Change .......................................................................... 25
ARTICLE VIII CONDITIONS TO CLOSING
Section 8.1 Conditions to Each Party's Obligations to Effect the Closing ......................... 25
Section 8.2 Conditions to Obligations of Buyer ................................................... 26
Section 8.3 Conditions to Obligations of Seller .................................................. 27
ARTICLE IX TERMINATION AND ABANDONMENT
Section 9.1 Termination .......................................................................... 27
Section 9.2 Procedure and Effect of Termination .................................................. 28
Section 9.3 Extension; Waiver .................................................................... 28
ARTICLE X MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification ........................................................... 29
Section 10.2 Waiver of Compliance; Consents ....................................................... 29
Section 10.3 Survival ............................................................................. 29
Section 10.4 No Impediment to Liquidation ......................................................... 29
Section 10.5 Notices .............................................................................. 29
Section 10.6 Assignment ........................................................................... 30
Section 10.7 Severability ......................................................................... 30
Section 10.8 Governing Law ........................................................................ 31
Section 10.9 Submission to Jurisdiction ........................................................... 31
Section 10.10 Counterparts ......................................................................... 31
Section 10.11 Incorporation of Exhibits ............................................................ 31
Section 10.12 Entire Agreement ..................................................................... 31
Section 10.13 Remedies ............................................................................. 31
Section 10.14 Headings ............................................................................. 31
SCHEDULES
Schedule 1.1(a) Major Customers
Schedule 2.1 Purchased Assets
Schedule 2.2 Excluded Assets
Schedule 2.3 Assumed Liabilities
Schedule 2.5(a) Executory Contracts, Intellectual Property Agreements and Cure Amounts
Schedule 2.5(b) Real Property Leases and Cure Amounts
Schedule 2.5(c) Personal Property Leases and Cure Amounts
Schedule 3.2 Accounts Receivable Calculation
Schedule 5.2 Governmental Consents; Compliance with Corporate Documents
Schedule 5.3(a) Trademarks
Schedule 5.3(b) Intellectual Property Licenses
Schedule 5.3(c) Exceptions to Intellectual Property Title
Schedule 5.3(d) Impediments to Intellectual Property Registration
Schedule 5.3(f) Impairment of Intellectual Property Rights
Schedule 5.3(h) Intellectual Property Rights Indemnities
Schedule 5.5 Required Consents
Schedule 5.6 Litigation
Schedule 5.7 Compliance with Laws and Court Orders
Schedule 5.9 Permitted Liens
Schedule 7.1 Conduct of Business
Schedule 7.7 Allocation of Purchase Price
Schedule 7.7(a) Taxing Authorities
EXHIBITS
Exhibit A Form of Assumption Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Interim Order
Exhibit D Form of Sale Order
ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (this "Agreement") is made and entered
into as of this 16th day of October, 2003 by and between Metatec, Inc., an
Ohio
corporation ("Seller"), and MTI Acquisition Corp., a Delaware corporation (the
"Buyer").
WHEREAS, Seller's business consists of providing digital information
distribution solutions including (a) optical technology, CD-ROM and DVD
manufacturing and packaging and (b) Internet-based electronic commerce, secure
online software and information distribution technologies and supply chain
management solutions (collectively, the "Business");
WHEREAS, Seller is preparing to file a Chapter 11 bankruptcy petition
pursuant to Title 11 of the United States Code, 11 U.S.C. Section 101, et seq.;
WHEREAS, Buyer is a wholly owned subsidiary of ComVest Investment
Partners II LLC ("ComVest") which holds claims against Seller that are secured
by substantially all of Seller's assets pursuant to certain Debt Instruments (as
defined below);
WHEREAS, in connection with the Chapter 11 Case (as defined below)
Seller has requested that ComVest arrange for the provision of post-petition
financing in the form of a revolving debtor-in-possession loan (the "DIP Loan")
in an amount of up to $5,000,000, of which a portion will be used to satisfy a
portion of the outstanding indebtedness under Seller's prepetition Debt
Instruments (as defined below); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, substantially all of Seller's assets of the Business, including
principally receivables, inventory, equipment, contracts, intellectual property,
real property interests, intangibles and other assets, as more particularly set
forth herein, free and clear of all Encumbrances (as defined below), and to
assume from Seller the Assumed Liabilities, but no other liabilities, pursuant
to the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 (a) Definitions. As used in this Agreement, the following
terms have the meanings specified in this Section 1.1(a).
"Accounts Receivable" means all accounts receivable, notes and other
amounts receivable and owed to Seller on account of the Business arising out of,
or related to, the sale of goods and/or the provision of services related to the
Business, together with all security and collateral therefor and all interest
and unpaid financing charges accrued thereon as of the Closing Date.
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"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, Affiliate means the power of one or
more such other Person to direct the affairs of the specified Person by reason
of ownership of voting stock, contract or otherwise.
"Assumed Agreements" means all contracts, agreements, personal property
leases, licenses, commitments, understandings and instruments related to the
Business listed on Schedule 2.5(a), Schedule 2.5(b) or Schedule 2.5(c) attached
hereto, as amended from time to time as contemplated in Section 2.5(d).
"Assumption Agreement" means the Assumption Agreement to be executed
and delivered by Buyer and Seller at the Closing, substantially in the form of
Exhibit A attached hereto.
"Assumed KERP Liabilities" means Seller's obligations under a key
employee retention plan or similar arrangement with employees, but only to the
extent and only as to those employees specifically designated by Buyer as set
forth on Schedule 2.3.
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C.
Sections 101, et seq.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Southern District of
Ohio or such other court having competent jurisdiction over
the Chapter 11 Case.
"Xxxx of Sale" means the Xxxx of Sale to be executed and delivered by
Seller to Buyer at the Closing, substantially in the form of Exhibit B attached
hereto.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in New York,
New York.
"Buyer's Representatives" means the Buyer's accountants, employees,
counsel, financial advisors and other authorized representatives.
"Chapter 11 Case" means Seller's case commenced under Chapter 11 of the
Bankruptcy Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means the Information (as defined in the
Confidentiality Agreement) furnished to Buyer's Representatives pursuant to the
Confidentiality Agreement and subject to the confidentiality provisions thereof,
and the confidential information relating to Buyer provided to Seller by Buyer.
"Confidentiality Agreement" means the Confidentiality Agreement by and
between Commonwealth Associates, L.P., ("Commonwealth") and Seller, dated July
2, 2003. Commonwealth is an Affiliate of Buyer, and the terms and provisions of
such Confidentiality Agreement are binding upon Buyer.
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"Debt Instruments" means that certain Second Amended and Restated Loan
Agreement dated as of February 8, 2002 by and among Seller (as borrower
thereunder), The Huntington National Bank and Bank One, N.A. (as original
lenders thereunder) and the Huntington National Bank (as administrative agent
thereunder), and all related notes, security agreements, guaranties, lockbox
agreements, collateral assignment agreements, escrow and technology escrow
agreements in connection therewith purchased by ComVest and assigned to Buyer.
"Encumbrances" means with respect to every property and asset, all
rights and interests including, without limitation, mortgages, hypothecations,
pledges, liens, claims (including causes of action, options and rights of first
and last offer and refusal), charges, security interests, conditional and
installment sale agreements, activity and use limitations, conservation
easements, servitudes, deed restrictions, equitable and legal interests,
exceptions to title, licenses, leases, security interests, adverse claims,
irregularities and imperfections of title, encumbrances and charges of every
kind.
"Environmental Law" means all federal, state and local laws, statutes,
codes, regulations, rules, ordinances and judicial and administrative orders and
decrees pertaining to (i) the use, handling, storage, transportation and
disposal of Hazardous Material, or (ii) the protection of human health and the
environment. "Hazardous Material" means every hazardous and toxic substance,
product, material or waste that is or becomes regulated by the United States
government, the State of
Ohio, and any local governmental authority. The term
"Hazardous Material" includes (i) any substance, product, waste or other
material of any nature whatsoever which is or becomes listed, regulated, or
addressed pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; (ii) "medical waste" as defined by law; (iii)
"radioactive waste" as defined by law; (iv) petroleum; and (v) asbestos.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Agreements" means those contracts, agreements, personal
property leases, licenses, permits, authorizations, consents, registrations,
commitments, understandings or instruments which are not expressly designated by
Buyer as an Assumed Agreement.
"Final Order" means an order of the Bankruptcy Court that is not
subject to review, reargument, reconsideration or appeal, and as to which the
time to seek review, reargument, reconsideration or appeal has expired or has
been rendered moot.
"Governmental Authority" means each federal, municipal, state, local or
foreign governmental, administrative or regulatory authority, department,
agency, commission or body.
"Intellectual Property" means those patents and patent applications,
registered copyrights and copyright applications, trademarks, trademark
applications, tradenames, trade dress, logos and service marks and Internet
domain names and URL addresses, related to the Business listed on Schedule 2.1.
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"Intellectual Property Agreements" means all (i) licenses of
intellectual property to Seller and (ii) licenses of Intellectual Property
Rights by Seller to third parties that are related to the Business, listed on
Schedule 2.5(a).
"Intellectual Property Rights" means all patents, patent applications
and other patent rights (including any divisions, continuations,
continuations-in-part, requests for continued examinations, substitutions, or
reissues and reexaminations thereof, whether or not any such applications are
modified, withdrawn or resubmitted), trademarks, trademark applications, trade
dress, service marks, corporate names, Internet domain names, URL addresses,
trade names, brand names, service names, mask works, assumed names, logos,
inventions, trade secrets, designs, technology, know-how, processes, procedures,
techniques, methods, inventions, proprietary data, formulae, research and
development data, computer software programs and other intangible property,
copyrights (including all variants thereof and any registration or applications
for registration of any of the foregoing and non-registered copyrights),
including all files, manuals, documentation and source and object codes related
to any of the foregoing, or any other similar type of proprietary intellectual
property right (whether or not patentable or subject to copyright, mask work or
trade secret protection), in each case which is owned, licensed or used by
Seller primarily for use in the Business.
"Interim Order" means the order approving the Bidding Procedures,
Break-up Fee and Expense Reimbursement entered by the Bankruptcy Court,
substantially in the form of Exhibit C attached hereto
"Inventory" means the inventories, including inventory reserves, raw
materials, work-in-process and finished products and goods of Seller related to
and/or used in the Business, including, without limitation, all supplies,
materials, spare parts and replacement parts related to the Business listed on
Schedule 2.1.
"Knowledge" means, as to a particular matter, the knowledge of (i) with
respect to Buyer, its chief executive officer, its chief financial officer or
its general counsel, in each case following reasonable investigation, and (ii)
with respect to Seller, the chief executive officer, the chief financial officer
or its general counsel, in each case following reasonable inquiry and
investigation.
"Leased Personal Property" means that personal property related to the
Business which is the subject of the Personal Property Leases listed on Schedule
2.5(c).
"Leased Real Property" means that real property related to the Business
which is the subject of the Real Property Leases listed on Schedule 2.5(b).
"Licensed Intellectual Property" means all intellectual property
related to the Business licensed to Seller pursuant to the Intellectual Property
Agreements listed on Schedule 2.5(a).
"Major Customer" means each of the customers listed on Schedule 1.1(a).
"material adverse change" or "material adverse effect" means, when used
in reference to the Business, any change, effect, event, circumstance,
occurrence or state of facts that is, or which reasonably could be expected to
be, materially adverse to the business, assets, liabilities,
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condition (financial or otherwise), cash flows or results of operations of the
Business including, without limitation, the Seller's loss of, or the material
deterioration of relations with, a Major Customer of the Business; provided,
however, that the following shall not be taken into account or given effect,
either individually or in the aggregate, in determining whether there has
occurred or there reasonably could be expected to occur, or whether there exists
a change, effect, event, circumstance, occurrence or state of facts that is or
which reasonably could be expected to be, a material adverse change or a
material adverse effect: (i) any change, effect, event, circumstance, occurrence
or state of facts relating to the United States economy in general (but only to
the extent not constituting or arising from a banking moratorium) and (ii) any
change, effect, event, circumstance, occurrence or state of facts directly
relating to and arising out of the public announcement of the Chapter 11 Case or
the performance of this Agreement and the transactions contemplated hereby.
"Permitted Liens" means statutory liens for current Taxes or
assessments not yet due or delinquent and Encumbrances in favor of Buyer or its
Affiliates, all as set forth on Schedule 5.9.
"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, syndicate, group, trust, association or
other organization or entity or government, political subdivision, agency or
instrumentality of a government.
"Personal Property Leases" means those personal property leases related
to the Business listed on Schedule 2.5(c).
"Petition Date" means the date on which Seller commences the Chapter 11
Case.
"Real Property Leases" means those real property leases related to the
Business listed on Schedule 2.5(b).
"Sale Hearing" means the hearing at which the Bankruptcy Court
considers final approval of the Sale Motion.
"Sale Motion" means a motion, in form and substance reasonably
satisfactory to Buyer, brought by Seller in the Chapter 11 Case seeking entry of
the Sale Order in the Bankruptcy Court.
"Sale Order" means a Final Order approving this Agreement entered by
the Bankruptcy Court, substantially in the form of Exhibit D attached hereto.
"Schedules" means the Schedules listed in the Table of Contents hereto,
dated as of the date hereof and as may be updated from time to time pursuant to
Section 7.11, and forming a part of this Agreement.
"Seller's Benefit Plans" means all of Seller's agreements and plans
which are presently in effect and under which Seller, with respect to employees
of Seller engaged in the Business, has any outstanding, present or future
obligation or liability, or under which any such employee has any present or
future rights to benefits, including, but not limited to, (a) any employee
benefit plan as defined in Section 3(3) of ERISA, or (b) any other pension,
profit sharing, retirement, stock purchase, stock option, other equity-based
incentive, bonus, performance, vacation,
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termination, retention, severance, disability, hospitalization, medical, life
insurance, or other employee benefit plan, program, policy, instrument or
arrangement.
"Seller's Representatives" means Seller's accountants, employees,
counsel, financial advisors and other authorized representatives.
"Tax" and "Taxes" means all taxes, charges, fees, levies, penalties or
other assessments of any kind whatsoever imposed by any federal, provincial,
municipal, state, local or foreign taxing authority, including any interest,
penalties or additions attributable thereto that are related to the Business.
"Tax Return" means any return, report, information return or other
document (including any related or supporting information) required to be
supplied to any Governmental Authority with respect to Taxes.
"Trade Letters of Credit" means all outstanding letters of credit
issued on behalf of Seller to trade creditors in connection with the Business.
(b) Each of the terms set forth below shall have the meaning ascribed
thereto in the following Section:
Definition Location
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"Agreement" Preamble
"Allocation" Section 7.7(e)
"Assumed Contract" Section 2.1(a)
"Assumed Liabilities" Section 2.3
"Auction" Section 7.9
"Interim Order" Section 7.8(a)
"Break-Up Fee" Section 7.10
"Business" Preamble
"Buyer" Preamble
"Closing Date" Section 4.1
"Closing" Section 4.1
"COBRA Liability" Section 2.4(h)
"Competing Bidder" Section 7.0
"Contracts" Section 2.2
"Cure Amounts" Section 2.5(g)
"Cure Expenses" Section 2.5(f)
"Cure Payments" Section 2.5(e)
"DIP Loan" Preamble
"DOL" Section 2.4(h)
"ERISA Affiliate" Section 2.4(h)
"Escrow Holder" Section 3.2
"Estimated Cure Payment" Section 3.2
"Excluded Liabilities" Section 2.4
"Expense Reimbursement" Section 7.10
"Facility" Section 7.1(c)
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"Facility Lease" Section 7.1(c)
"Financing Order" Section 8.2(d)
"Improvements" Section 2.1(c)
"Intangible Property" Section 2.1(e)
"IRS" Section 2.4(h)
"Personal Property" Section 2.1(d)
"Purchase Price" Section 3.1
"Purchased Assets" Section 2.1
"Qualifying Competing Bid" Section 7.9
"Receivables" Section 2.1(f)
"Regulatory Approvals" Section 7.6(a)
"Scheduled Intellectual Property" Section 5.3(a)
"Seller" Preamble
"Stated Purchase Price" Section 7.9
"Termination Date" Section 9.1(f)
"Third-Party Sale" Section 7.10
"Transaction Taxes" Section 7.7(a)
Section 1.2 Construction. The terms "hereby," "hereto,"
"hereunder" and any similar terms as used in this Agreement, refer to this
Agreement in its entirety and not only to the particular portion of this
Agreement where the term is used. The term "including," when used herein without
the qualifier, "without limitation," shall mean "including, without limitation."
Wherever in this Agreement the singular number is used, the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders, and vice versa, as the context shall require. The word "or" shall not
be construed to be exclusive. Provisions shall apply, when appropriate, to
successive events and transactions. Unless otherwise indicated, references to
Articles and Sections refer to Articles and Sections of this Agreement.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of Assets. Upon the terms and subject to
the conditions contained in this Agreement, at the Closing, Seller shall sell,
assign, convey, transfer and deliver to Buyer, and Buyer shall, by payment of
the Purchase Price, purchase and acquire from Seller, free and clear of all
Encumbrances (except for Permitted Liens), all of the right, title and interest
of Seller in and to the following assets, wherever located (collectively, the
"Purchased Assets"):
(a) to the extent assignable under the Bankruptcy Code or to the
extent assignment is consented to by the third party or third parties to such
agreements, Seller's rights under any customer purchase orders and all Assumed
Agreements, Intellectual Property Agreements, Personal Property Leases and Real
Property Leases expressly designated by the Buyer on Schedule 2.1, Schedule
2.5(a), Schedule 2.5(b) or Schedule 2.5(c) and any exhibits to such schedules
(collectively, the "Assumed Contracts");
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(b) all of Seller's right, title and interest in, to and under
all Intellectual Property Rights owned, licensed or used by Seller primarily in
the Business (including the goodwill of the Business in which any of the
Intellectual Property Rights are used), and expressly designated on Schedule 2.1
and Schedule 2.5(a);
(c) any improvements located on the Leased Real Property, but in
all events only to the extent, if any, of Seller's interest in the same
(collectively, the "Improvements");
(d) all of those items of equipment and tangible personal
property owned by Seller and listed on Schedule 2.1, and any other tangible
personal property acquired by Seller after the date hereof but prior to the
Closing Date which is used in the Business and expressly designated by the Buyer
as a Purchased Asset (collectively, the "Personal Property"), provided that the
Personal Property shall not include the Inventory;
(e) all intangible personal property owned or held by Seller
listed on Schedule 2.1, and any other intangible personal property acquired by
Seller after the date hereof but prior to the Closing Date and expressly
designated by the Buyer as a Purchased Asset, but in all cases only to the
extent of Seller's interest therein and only to the extent transferable,
together with originals and/or copies of all customer and supplier lists and all
other books, records and like items pertaining to the Business (collectively,
the "Intangible Property");.
(f) all Accounts Receivable and, subject to Section 2.2, all
causes of action relating or pertaining to the foregoing (collectively, the
"Receivables");
(g) all Inventory;
(h) all cash, cash equivalents, prepaid expenses, deposits and
reserves;
(i) all equity interests in the entities listed on Schedule 2.1
and not including equity of Seller; and
(j) all goodwill associated with the Purchased Assets, together
with the right to represent to third parties that Buyer has acquired and is
operating the Business formerly operated by Seller.
Section 2.2 Excluded Assets. Notwithstanding any provision herein to
the contrary, the Purchased Assets shall not include (i) those items excluded
pursuant to the provisions of Section 2.1 above; (ii) Inventory sold by Seller
in the ordinary course of the Business prior to the Closing Date; (iii) any
lease, rental agreement, contract, agreement, license or similar arrangement
(collectively, the "Contracts", each a "Contract") which terminates or expires
prior to the Closing Date in accordance with its terms or in the ordinary course
of the Business; (iv) all preference or avoidance claims and actions of the
Seller, including, without limitation, all such claims and actions arising under
Sections 544, 547, 548, 549, and 550, respectively, of the Bankruptcy Code
provided, however, that Buyer shall acquire and retain the benefit of any lien
on a Purchased Asset avoided under the foregoing Sections of the Bankruptcy Code
pursuant to Section 7.14 herein, if and to the extent that such lien relates to
an Assumed Contract; (v) the Seller's rights under this Agreement, and all cash
and non-cash consideration payable or deliverable to the Seller pursuant to the
terms and provisions hereof; (vi) claims and causes of
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action with respect to or arising in connection with (A) any Contract which is
not assigned to Buyer at the Closing, or (B) any item of tangible or intangible
property not acquired by Buyer at the Closing; (vii) Seller's right, title and
interest to the assets set forth on Schedule 2.2: and (vii) common stock of
Seller.
Section 2.3 Assumed Liabilities. On the Closing Date, Buyer shall
execute and deliver to Seller the Assumption Agreement pursuant to which Buyer
shall assume and agree to pay, perform and discharge when due only those
liabilities and obligations of Seller including, without limitation, Seller's
obligation under the DIP Loan and the Assumed KERP Liabilities (collectively the
"Assumed Liabilities") set forth on Schedule 2.3 (and no others), in accordance
with the respective terms and subject to the respective conditions thereof.
Section 2.4 Excluded Liabilities. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge or be responsible or liable for
any indebtedness, Taxes, warranties, representations, indemnity agreements,
rebates, offsets, vendor margin guarantees, liabilities, chargebacks,
allowances, discounts, duties or obligations of Seller other than the Assumed
Liabilities (collectively, the "Excluded Liabilities"). The Excluded Liabilities
include all Taxes of Seller attributable to the Purchased Assets and the
Business with respect to any period or portion thereof that ends on or prior to
the Closing Date, provided that, for this purpose, with respect to any such
Taxes that are payable with respect to a taxable period that begins before the
Closing Date and that ends after the Closing Date, the portion of such Taxes
allocable to the portion of such taxable period ending on the Closing Date shall
equal the amount of such Taxes for such taxable period, multiplied by a
fraction, the numerator of which is the number of days in the portion of such
taxable period ending on the Closing Date and the denominator of which is the
number of days in the entire taxable period. Notwithstanding any provision in
this Agreement or any other writing to the contrary, Excluded Liabilities shall
further include, without limitation:
(a) all liabilities and obligations arising out of any action,
suit, claim, inquiry, proceeding or investigation pending or threatened as of,
or arising out of or relating to any event or condition occurring or existing
prior to, the Closing;
(b) all liabilities and obligations arising out of or relating to
any violation of any law, rule, writ, regulation, judgment, injunction, order or
decree occurring or arising out of or relating to any event or condition
occurring or existing prior to the Closing;
(c) all liabilities and obligations for (i) all costs and
expenses incurred or owed in connection with the administration of the Chapter
11 Case (including the fees and expenses of attorneys, accountants, financial
advisors, consultants and other professionals retained by Seller, the creditors'
committee, the postpetition lenders or the prepetition lenders incurred or owed
in connection with the administration of the Chapter 11 Case) and (ii) all costs
and expenses of Seller in connection with the transactions contemplated under
this Agreement, and any contracts, instruments and actions related thereto;
(d) all liabilities and obligations for or relating to
indebtedness for borrowed money (other than under the DIP Loan and the Assumed
KERP Liabilities);
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(e) all liabilities and obligations relating to an Excluded
Asset;
(f) other than as required by Section 2.5, all liabilities,
commitments and obligations that arise (whether under the Assumed Contracts or
otherwise) with respect to the Purchased Assets or the use thereof prior to the
Closing or that relate to periods prior to the Closing or are to be observed,
paid, discharged or performed prior to the Closing (in each case, including all
liabilities that result from, relate to or arise out of tort or other product
liability claims);
(g) any and all of Seller's Benefit Plans or any liability with
respect to Seller's Benefit Plans or Seller's Benefit Plans of any other entity
("ERISA Affiliate") related to Seller under Section 414(b), (c), (m) and (o) of
the Code, including, but not limited to, the following: (i) any excise tax,
penalty tax, monetary sanction or fine related to Seller's Benefit Plans or any
employee benefit plans of an ERISA Affiliate of Seller that may be imposed by
the Department of Labor ("DOL"), Internal Revenue Service ("IRS") or any other
governmental agency; (ii) any obligation to provide health care continuation
coverage as set forth in Title I, Part 6 of ERISA and Code Section 4980B ("COBRA
Liability") related to Seller's Benefit Plans or any employee benefit plans of
an ERISA Affiliate of Seller (except to the extent applicable law imposes COBRA
Liability on Buyer); (iii) any required contributions or underfunding
liabilities which may exist for Seller's Benefit Plans or any employee benefit
plans of an ERISA Affiliate of Seller; (iv) any prohibited transactions as
defined in Section 406 of ERISA or Section 4975 of the Code which may have
occurred; (v) any action, suit, grievance or other manner of litigation, or
claim with respect to the assets thereof or any of the employee benefit plans or
administration or payment of benefits thereunder, which is pending or threatened
against or with respect to any of the employee benefit plans, Seller, any ERISA
Affiliate or any fiduciary, as such term is defined in Section 3(21) of ERISA,
including, but not limited to, any action, suit, grievance or other manner of
litigation, or claim regarding conduct that allegedly interferes with the
attainment of rights under Seller's Benefit Plans or any employee benefit plans
of an ERISA Affiliate of Seller; (vi) any liability for failure to comply with
ERISA or the Code for any action or failure to act in connection with the
administration, operation or investment of Seller's Benefit Plans or any
employee benefit plans of an ERISA Affiliate of Seller; and (vii) any action,
suit, grievance or other manner of litigation, or claim with respect to Seller's
Benefit Plans or any employee benefit plans of an ERISA Affiliate of Seller by
the DOL, IRS or any other governmental agency;
(h) all liabilities or obligations for fraud, breach,
misfeasance, malfeasance, or under any other theory relating to Seller's
conduct, performance or nonperformance under any agreement;
(i) all liabilities and obligations of any kind under any
contract that is not an Assumed Contract;
(j) any liability or obligation under any Environmental Laws
known to Seller prior to Closing; and
(k) any liability or obligation under the Workers Adjustment and
Retraining Notification Act or similar laws.
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Section 2.5 Assumption of Certain Leases and Other Contracts. The Sale
Order shall provide for the assumption by Seller, and the Sale Order shall, to
the extent permitted by law, provide for the assignment by Seller, to Buyer,
effective upon the Closing, of the Assumed Contracts on the following terms and
conditions:
(a) At the Closing, Seller shall assume and assign to Buyer, and
Buyer shall assume, the executory contracts, Intellectual Property Agreements
and Cure Amounts or Estimated Cure Payments designated as Purchased Assets on
Schedule 2.5(a).
(b) At the Closing, Seller shall assume and assign to Buyer, and
Buyer shall assume, the Real Property Leases and Cure Amounts or Estimated Cure
Payments designated as Purchased Assets on Schedule 2.5(b).
(c) At the Closing, Seller shall assume and assign to Buyer, and
Buyer shall assume, the Personal Property Leases and Cure Amounts or Estimated
Cure Payments designated as Purchased Assets on Schedule 2.5(c).
(d) The Assumed Contracts are identified by the date of the
Assumed Contracts (if available), the other party or parties to the Assumed
Contract and the address of such party or parties (if available), as the case
may be, and the other material terms thereof. To the extent any such information
is set forth on Schedule 2.5(a), Schedule 2.5(b) or Schedule 2.5(c), as the case
may be, and is later determined by Seller to be inaccurate in any material
respect, Seller shall promptly notify Buyer of any such inaccuracy. Schedule
2.5(a), Schedule 2.5(b) or Schedule 2.5(c), as the case may be, sets forth the
estimated amounts necessary to cure defaults, if any, under each of the Assumed
Contracts as determined by Seller based on Seller's books and records, subject
to amendment by Seller, after notice to Buyer, from time to time until the
Closing Date. From and after the date hereof until the commencement of the
Auction, (a) Buyer shall have the right to make such additions and deletions to
the list of Assumed Contracts as Buyer may elect in its sole discretion, and (b)
Buyer and Seller shall negotiate in good faith to agree upon any revisions to
Schedule 2.2 and Schedule 2.3.
(e) If there exists on the Closing Date any default under an
Assumed Contract, Buyer shall be responsible for the payment of all amounts
necessary to cure such default pursuant to Section 365(b)(1) of the Bankruptcy
Code as a condition precedent to the assumption and assignment of such Assumed
Contract (the "Cure Payments").
(f) Buyer shall be solely responsible for all costs and expenses
necessary in connection with providing adequate assurance of future performance
with respect to any of the Assumed Contracts under Section 365(b)(1) of the
Bankruptcy Code (the "Cure Expenses," and together with the Cure Payment,
collectively, the "Cure Amounts").
(g) Seller shall use its commercially reasonable efforts to
obtain an order of the Bankruptcy Court to assign the Assumed Contracts to
Buyer. In the event Seller is unable to assign any such Assumed Contract to
Buyer pursuant to an order of the Bankruptcy Court, Seller shall use its
commercially reasonable efforts to obtain, or cause to be obtained, prior to the
Closing Date, all written consents necessary to convey to Buyer the benefit of
such Assumed Contract.
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ARTICLE III
PURCHASE PRICE; ESCROW; ESCROW CURE AMOUNTS
Section 3.1 Purchase Price. In consideration for the Purchased Assets,
and subject to the terms and conditions of this Agreement, and the entry and
effectiveness of the Sale Order, at the Closing, Buyer shall assume the Assumed
Liabilities (including the DIP Loan and the Assumed KERP Liabilities), assume
the Assumed Contracts, and pay to Seller (the "Purchase Price"), an aggregate
amount, subject to reduction as set forth below, equal to $10,000,000 consisting
of:
(a) $9,000,000 in the form of a partial credit bid pursuant to
Section 363(k) of the Bankruptcy Code based upon Buyer's claim arising pursuant
to the Debt Instruments (subject to reduction if that certain irrevocable letter
of credit No. OSB.000031 issued on July 26, 1999 naming Seller as account party
expires or is terminated or extinguished by agreement of the parties or
otherwise prior to the Closing with no funds drawn thereunder); and
(b) $1,000,000 in cash payable to Seller.
On the Closing Date, Buyer shall pay and deliver to Seller the cash portion of
the Purchase Price, by wire transfer of immediately available U.S. funds.
Section 3.2 Cure Amounts. At the Closing, Buyer shall provide funds to
Seller (by wire transfer of immediately available U.S. funds) in an amount equal
to the Cure Amounts. Seller shall pay all Cure Payments and Cure Expenses owed
to third parties promptly (but in any event within five (5) Business Days) after
receipt thereof from Buyer. In the event the amount of a Cure Payment related to
an Assumed Agreement is not known on the Closing Date, Buyer and Seller shall
estimate in good faith the amount of the Cure Payment (an "Estimated Cure
Payment") and such Estimated Cure Payment shall be placed into an escrow account
with an escrow agent, financial institution or company (the "Escrow Holder")
mutually designated by Seller and Buyer. If an Estimated Cure Payment is more
than the Cure Payment when the amount is known, the excess shall be returned to
Buyer and if the Estimated Cure Payment is less than the Cure Payment when the
amount is known, Buyer shall pay the additional funds to Seller by wire transfer
in immediately available U.S. funds. In the event that the amount of a Cure
Payment is disputed between Buyer and the third party to the Assumed Agreement,
the amount of such Cure Payment will be determined by the Bankruptcy Court.
ARTICLE IV
THE CLOSING
Section 4.1 Time and Place of the Closing. Upon the terms and subject
to the satisfaction of the conditions contained in Article VIII of this
Agreement, the closing of the sale of the Purchased Assets and the assumption of
the Assumed Liabilities and Assumed Contracts contemplated by this Agreement
(the "Closing") shall take place at the offices of Xxxxx & Xxxxxxxxx LLP, 00
Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx, at 10:00 a.m. (local time) no later than the
fifth (5th) Business Day following the date on which the conditions set forth in
Article VIII have been satisfied (other than the conditions with respect to
actions the respective parties hereto will take at the Closing itself) or, to
the extent permitted, waived in writing, or at such other place and
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time as Buyer and Seller may mutually agree. The date and time at which the
Closing actually occurs is herein referred to as the "Closing Date."
Section 4.2 Deliveries by Seller. At or prior to the Closing (or as
specifically provided in this Section 4.2), Seller shall deliver the following
to Buyer:
(a) the Xxxx of Sale, duly executed by Seller;
(b) all consents including, without limitation the Required
Consents, waivers and approvals obtained by Seller with respect to the sale,
assignment, conveyance, transfer and delivery of the Purchased Assets and the
consummation of the transactions required in connection with the sale of the
Purchased Assets contemplated by this Agreement, to the extent specifically
required hereunder;
(c) the certificate contemplated by Section 8.2(c);
(d) certified copies of the resolutions duly adopted by Seller's
board of directors authorizing the execution, delivery and performance of this
Agreement and each of the other transactions contemplated hereby;
(e) the Assumption Agreement, duly executed by Seller and all
such other instruments of assignment or conveyance as shall be reasonably
necessary to transfer to Buyer all of Seller's right, title and interest in, to
and under all of the Purchased Assets in accordance with this Agreement (to be
delivered as of the close of business on the Closing Date); and
(f) certified copies of the Sale Order and a true and correct
copy of the Bankruptcy Court docket for the Chapter 11 Case in the form
available from the Bankruptcy Court on the day immediately preceding the Closing
Date.
Section 4.3 Deliveries by Buyer. At or prior to the Closing (or as
specifically provided in this Section 4.3), Buyer shall deliver the following to
Seller:
(a) the Purchase Price in accordance with Section 3.3, and
Section 3.4 and Section 3.5;
(b) certified copies of Buyer's Certificate of Incorporation and
Bylaws, each as in effect as of the Closing;
(c) certified copies of the resolutions duly adopted by Buyer's
board of directors authorizing the execution, delivery and performance of this
Agreement and each of the other transactions contemplated hereby;
(d) the Assumption Agreement, duly executed by Buyer, and all
such other instruments of assumption as shall be reasonably necessary for Buyer
to assume the Assumed Liabilities in accordance with this Agreement (to be
delivered as of the close of business on the Closing Date);
(e) the Cure Amounts in accordance with Section 3.5; and
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(f) the certificate contemplated by Section 8.3(b).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 5.1 Organization and Standing: Authority Relative to this
Agreement. Seller is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite power and authority to own, lease and operate its respective
properties and to carry on the Business as now being conducted. Seller is
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which the nature of its business
requires such qualification. Subject to the approval of this Agreement by the
Bankruptcy Court, Seller has all corporate power to execute and deliver this
Agreement and, upon entry and effectiveness of the Sale Order, will have all
corporate authority necessary to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
board of directors and no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Seller, and assuming that this Agreement constitutes a valid and
binding agreement of Buyer, and, subject to the entry and effectiveness of the
Sale Order, constitutes a valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms.
Section 5.2 Consents and Approvals; No Violation; Title to Assets.
Except as described on Schedule 5.2 and except to the extent excused by or made
unenforceable as a result of the filing of the Chapter 11 Case and except for
the entry and effectiveness of the Sale Order, neither the execution and
delivery of this Agreement nor the sale by Seller of the Purchased Assets
pursuant to this Agreement will conflict with or result in any breach of any
provision of Seller's Certificate of Incorporation or Bylaws; or require any
consent, approval, grant, concession, agreement, franchise, license,
authorization or permit of, or filing with or notification to, any Governmental
Authority which has not otherwise been obtained or made. Seller has good and
valid title to the Purchased Assets and, at the Closing Buyer, pursuant to the
Sale Order, shall acquire all of Seller's right, title and interest in, to and
under (subject to such being assumed and assigned in accordance with Section
2.1), all of the Purchased Assets, in each case free and clear of all
Encumbrances except for Permitted Liens.
Section 5.3 Intellectual Property. To Seller's Knowledge:
(a) Schedule 5.3(a) contains a true and complete list of each
trademark (including service marks and logos), corporate name, trade name,
domain name, patent, subscriber list, registered copyright and any material
third party computer software other than "shrink-wrap" and similar
widely-available binary code and commercial end-user licenses that are available
for less than $5,000 (including any registrations or applications for
registration of any of the foregoing) owned, licensed or used by Seller for use
primarily in the Business as of the date hereof, which schedule indicates
whether the right is owned or licensed and by which
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Seller and, if licensed, the name of the third party licensor (the "Scheduled
Intellectual Property"). With respect to the Scheduled Intellectual Property,
such schedule also specifies, to the extent applicable, (i) the jurisdictions in
which such rights are registered or in which an application for registration has
been filed; (ii) the registration or application numbers; and (iii) with respect
to the trademarks, the renewal dates.
(b) Other than "shrink-wrap" and similar widely-available binary
code and commercial end-user licenses that are available for less than $5,000,
Schedule 5.3(b) sets forth a list of all licenses, sublicenses and other
agreements as to which Seller is a party, is used or held by Seller primarily
for use in the Business, and pursuant to which any person is authorized to use
any Intellectual Property Rights owned, licensed or used by Seller.
(c) Seller has good and marketable title to or a valid license to
use all Intellectual Property Rights owned, licensed or used by Seller, free and
clear of any Encumbrance other than any Permitted Liens. None of such
Intellectual Property Rights has been adjudged invalid or unenforceable in whole
or part, and all such Intellectual Property Rights are valid and enforceable.
Seller has taken reasonable steps in accordance with normal industry practice to
maintain and protect the owned Intellectual Property Rights and its rights in
the licensed Intellectual Property Rights, including payment of applicable
maintenance fees (except as set forth on Schedule 5.3(c)) and filing of
applicable statements of use. Except as set forth in Schedule 5.3(c), the use by
Seller of the Scheduled Intellectual Property does not infringe, misappropriate
or otherwise violate the rights of any other person and, no other person is
infringing, misappropriating or otherwise violating any such Intellectual
Property Rights.
(d) With respect to pending applications and applications for
registration of the Scheduled Intellectual Property, Seller and its affiliates
are not aware of any reason that could reasonably be expected to prevent any
such application or application for registration from being granted with
coverage substantially equivalent to the latest amended version of the pending
application or application for registration, except as set forth in Schedule
5.3(d). None of the trademarks and applications for trademarks included in the
Scheduled Intellectual Property has been the subject of an opposition or
cancellation procedure.
(e) Seller has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of all confidential
Intellectual Property Rights owned, licensed or used by Seller. None of the
Scheduled Intellectual Property, the value of which is contingent upon
maintaining the confidentiality thereof, has been disclosed other than (x) to
employees, representatives and agents of Seller all of whom are bound by written
confidentiality agreements substantially in the form previously disclosed to
Buyer and (y) to third parties bound by written confidentiality agreements.
(f) The consummation of the transactions contemplated by this
Agreement will not alter, impair or extinguish any Intellectual Property Rights
owned, licensed or used by Seller. Except as set forth in Schedule 5.3(f), there
exist no restrictions on the disclosure, use or transfer of any such owned
Intellectual Property Rights.
(g) Except as set forth in Schedule 5.3(g), Seller has not given
an indemnity in connection with any Intellectual Property Rights to any person.
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(h) Except as set forth in Schedule 5.3(h), none of Seller and
any of its affiliates has infringed, misappropriated or otherwise violated any
Intellectual Property Rights of any third person. Except as set forth in
Schedule 5.3(h), there is no material claim, action, suit, investigation or
proceeding pending against, or threatened against or affecting, the Business or
the Purchased Assets or any present or former officer, director or employee (in
their capacity as such) of Sellers (i) based upon, or challenging or seeking to
deny or restrict, the rights of Seller in any of the Intellectual Property
Rights owned, licensed or used by Seller, (ii) alleging that the use of any such
Intellectual Property Rights or any services provided or processes used do or
may infringe, misappropriate or otherwise violate any Intellectual Property
Right of any third party or (iii) alleging that Seller or any affiliate of
Seller infringed, misappropriated or otherwise violated any Intellectual
Property Right of any third party.
Section 5.4 Brokers. Except as to Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
or as is otherwise disclosed in the Chapter 11 Case, no Person is entitled to
any brokerage, financial advisory, finder's or similar fee or commission payable
by Seller or any of its respective Affiliates in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller. Such fees shall be paid in full by Seller.
Section 5.5 Required Consents. Schedule 5.5 sets forth each agreement,
contract or other instrument binding upon Seller requiring a consent or other
action by any person as a result of the execution, delivery and performance of
this Agreement, unless such document can be assumed and assigned without such
consent under the Bankruptcy Code, except such consents or actions which, if not
obtained or taken, would not individually or in the aggregate, have a material
adverse effect on the Purchased Assets and Assumed Liabilities, taken together,
or on the Business (the "Required Consents").
Section 5.6 Litigation. Schedule 5.6 contains a complete and accurate
list of all legal actions, suits and proceedings related to the Business or the
Purchased Assets pending as of the date hereof against Seller. Except as
described in Schedule 5.6, there is no action, suit, investigation or proceeding
(or any basis therefor) pending against, or to Seller's Knowledge, threatened
against or affecting, the Business, any Purchased Asset before any court or
arbitrator or any governmental body, agency or official which, individually or
is the aggregate, could reasonably be expected to be material to the Purchased
Assets and Assumed Liabilities, taken together, or the Business, or which in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
Section 5.7 Compliance with Laws and Court Orders. Except as set forth
in Schedule 5.7, Seller is not in violation of and has not violated, and to the
Knowledge of Seller is not under investigation or inquiry with respect to and
has not been threatened to be charged with or given notice of any violation of,
any law, rule, regulation, judgment, injunction, order or decree applicable to
the Business or the Purchased Assets, except for violations that have not had
and could not reasonably be expected to be material to the Purchased Assets and
Assumed Liabilities, taken together, or the Business.
Section 5.8 Disclaimer of Other Representations and Warranties. EXCEPT
AS EXPRESSLY SET FORTH IN THIS ARTICLE V, SELLER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF
16
ANY OF ITS ASSETS (INCLUDING THE PURCHASED ASSETS), LIABILITIES OR OPERATIONS,
INCLUDING, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY SET FORTH IN THIS ARTICLE V, BUYER IS PURCHASING THE PURCHASED
ASSETS ON AN "AS-IS, WHERE-IS" BASIS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER
THAN THE PURCHASED ASSETS, AND NONE SHALL BE IMPLIED AT LAW OR IN EQUITY. THE
FOREGOING PROVISION DOES NOT AFFECT THE VALIDITY OF THE REPRESENTATIONS AND
WARRANTIES PRIOR TO CLOSING, IT BEING THE INTENTION OF EACH OF THE PARTIES
(SELLER, ON THE ONE HAND, AND, BUYER, ON THE OTHER) THAT THE ACCURACY OF THE
REPRESENTATIONS AND WARRANTIES IS A CONDITION PRECEDENT TO THE OTHER PARTY'S
OBLIGATIONS HEREUNDER.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 6.1 Authority Relative to this Agreement. Buyer is a
corporation formed, validly existing and in good standing under the laws of the
jurisdiction of its formation and has the requisite power and authority to own,
lease and operate its respective properties and carry on its business as now
being conducted. Buyer has all corporate power and authority necessary to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the board of directors of Buyer and no other corporate proceedings
on the part of Buyer are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer, and, assuming that this Agreement constitutes a
valid and binding agreement of Seller, constitutes a valid and binding agreement
of Buyer, enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
Section 6.2 Consents and Approvals; No Violation. Except for the entry
and effectiveness of the Sale Order, neither the execution and delivery of this
Agreement by Buyer, nor the purchase by Buyer of the Purchased Assets and the
assumption by Buyer of the Assumed Liabilities and the Assumed Contracts
pursuant to this Agreement will: (a) conflict with or result in any breach of
any provision of Buyer's Certificate of Incorporation or Bylaws; (b) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority which has not otherwise been obtained or made; or
(c) result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any
material note, bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Buyer is a party or by which any of its assets
may be bound, except for such defaults (or rights of termination, cancellation
or acceleration) as to which requisite waivers or consents have been obtained.
17
Section 6.3 Legal Proceedings and Judgments. There are no material
claims, actions, proceedings or investigations pending or, to Buyer's Knowledge,
threatened against or relating to Buyer before any court or other Governmental
Authority acting in an adjudicative capacity that could have a material adverse
effect on Buyer's ability to consummate the transactions contemplated hereby.
Section 6.4 Brokers. Except for FTI Consulting, Inc., no Person is
entitled to any brokerage, financial advisory, finder's or similar fee or
commission payable by Buyer or any of its Affiliates in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer.
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.1 Conduct of Business. (a) Except as (1) described on
Schedule 7.1, and (2) required by any order of the Bankruptcy Court, the
Bankruptcy Code, and any order or agreement related to the use of cash
collateral or postpetition financing, during the period commencing on the date
of this Agreement and ending on the Closing Date, Seller shall (i) operate the
Business in the usual, regular and ordinary course, (ii) other than as permitted
in writing by Buyer, endeavor to preserve in all material respects the Business,
the Purchased Assets, and its employees, (iii) endeavor to preserve, in all
material respects, the goodwill and relationships with customers, suppliers and
others having business dealings with the Business, in each case, taking into
account Seller's status as a debtor under Chapter 11 of the Bankruptcy Code, and
(iv) take reasonable measures to protect the confidentiality of and avoid
disclosure to business competitors of Seller's trade secrets, confidential and
proprietary customer and supplier information, pricing information, and
marketing, sales and other business strategies, taking into account Seller's
intention to seek to obtain the highest and best price for the Purchased Assets
as described in Section 7.9.
(b) Prior to the Closing Date Seller shall not sell, lease (as
lessor), transfer or otherwise dispose of any of the Purchased Assets other than
in the ordinary course of business.
(c) With respect to the Leased Real Property, Seller agrees that,
(i) between the date of this Agreement and the Closing Date, Seller shall (A)
maintain the Leased Real Property in substantially the same condition as exists
on the date hereof, reasonable wear and tear excepted, (B) operate the Leased
Real Property in compliance with all applicable laws, rules, regulations and
codes in all material respects, (C) maintain in full force and effect all
property and liability insurance policies on the Leased Real Property in effect
as of the date hereof and (D) afford Buyer and Buyer's Representatives
reasonable access during normal business hours to the Leased Real Property and
all agreements, books, records and other documents and data of Seller related
thereto (E) continue to pay rent for Seller's Dublin,
Ohio facility (the
"Facility") and (F) not seek, or acquiesce in any efforts by others, and will
oppose any such efforts, to reject the lease for the Facility ("Facility
Lease"); provided, however, that notwithstanding the foregoing, Seller may seek
or agree to a rejection of the Facility Lease after the Closing if, and
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only if, Buyer is permitted to use and occupy the Facility without interruption
or interference for a period of up to six (6) months after the Closing to
operate the Business while implementing a relocation of the Business, and during
which time Buyer will provide funding to pay all Seller's obligations and
expenses under the Facility Lease. Between the date of this Agreement and the
date Buyer, if necessary, completes a relocation of the Business, Seller shall
take all commercially reasonable steps to maintain Buyer's uninterrupted use and
occupancy of the Facility.
(d) During the period commencing on the date of this Agreement
and ending on the Closing Date, Seller covenants that it will not, absent the
written consent of Buyer, (i) in the case of the Accounts Receivable, change the
terms of such Accounts Receivable in a manner that is inconsistent with current
practices or (ii) in the case of all sales subsequent to the date hereof,
provide for any customer or type of customer terms for sales that are
inconsistent with current practices for such customer or type of customer.
Section 7.2 Access to Information; Maintenance of Records. (a) Between
the date of this Agreement and the Closing Date, Seller shall, during ordinary
business hours, upon reasonable notice, (i) give Buyer and Buyer's
Representatives reasonable access to all books, records, offices and other
facilities constituting the Purchased Assets, (ii) permit Buyer to make such
reasonable inspections thereof as Buyer may reasonably request to continue its
due diligence, (iii) furnish Buyer with a schedule of all current employees of
Seller involved in the Business together with a description of each such
employee's job duties, years of service and compensation, (iv) permit Buyer to
monitor Buyer's collateral and Seller's compliance with its obligations under
the Seller Debt Instruments, and (v) furnish Buyer with such other financial and
operating data and other information with respect to the Business as Buyer may
from time to time reasonably request; provided, however, that (A) any such
access shall be conducted in such a manner so as not to interfere unreasonably
with the operation of the Business and shall be at the expense of Buyer, and (B)
Seller shall not be required to take any action which would constitute a waiver
of the attorney-client privilege.
(b) Buyer and Seller acknowledge that they are bound by the
Confidentiality Agreement. All information furnished to, or obtained by Buyer,
or any of Buyer's Representatives pursuant to this Agreement, shall be subject
to the provisions of the Confidentiality Agreement and shall be treated as
Confidential Information for all purposes of the Confidentiality Agreement.
(c) Between the Closing Date and the later of (x) the sixth
anniversary of the Closing Date and (y) the date of entry of an order or final
decree of the Bankruptcy Court closing the Chapter 11 Case, or if converted to a
case under Chapter 7 of the Bankruptcy Code, an order of the Bankruptcy Court
closing such case, Seller and Seller's Representative shall have reasonable
access to all of the books and records relating to the Business or the Purchased
Assets, including all information pertaining to the Assumed Contracts, in the
possession of Buyer to the extent that such access may reasonably be required by
Seller in connection with the Assumed Liabilities or the Excluded Liabilities,
or other matters relating to or affected by the operation of the Business and
the Purchased Assets. Such access shall be afforded by Buyer upon receipt of
reasonable advance notice and during normal business hours; provided, however,
that (i) any such access shall be conducted in such a manner as not to interfere
unreasonably with
19
the operation of the business of Buyer or its Affiliates, and (ii) Buyer shall
not be required to take any action which would constitute a waiver of the
attorney-client privilege, and (iii) Buyer need not supply Seller with any
information which Buyer is under a legal obligation not to supply. Seller shall
be solely responsible for any costs or expenses incurred by it pursuant to this
Section 7.2(c). If Buyer shall desire to dispose of any such books and records
upon or prior to the expiration of such period, Buyer shall, prior to such
disposition, give Seller a reasonable opportunity at Seller's expense, to
segregate and remove such books and records as Seller may select.
Section 7.3 Expenses. Except to the extent specifically provided
herein, in the Interim Order, or in the Sale Order, whether or not the
transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the party incurring such costs and expenses.
Section 7.4 Further Assurances. (a) Subject to the terms and conditions
of this Agreement, each of the parties hereto shall use commercially reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the sale of the Purchased
Assets in accordance with this Agreement, including using commercially
reasonable best efforts to ensure timely satisfaction of the conditions
precedent to each party's obligations hereunder. Neither Seller, on the one
hand, nor Buyer, on the other hand, shall, without the prior written consent of
the other party take any action which would reasonably be expected to prevent or
materially impede, interfere with, or delay the transactions contemplated by
this Agreement, other than as may be required by and is consistent with
procedures approved by the Bankruptcy Court in the Interim Order. From time to
time, on or after the Closing Date, Seller shall, at Buyer's expense, execute
and deliver such documents to Buyer as Buyer may reasonably request in order to
more effectively vest in Buyer Seller's title to the Purchased Assets, subject
to Permitted Liens. From time to time after the date hereof, Buyer shall, at
Seller's expense, execute and deliver such documents to Seller as Seller may
reasonably request in order to more effectively consummate the sale of the
Purchased Assets and the assumption and assignment of the Assumed Liabilities
and the Assumed Contracts in accordance with this Agreement.
(b) In the event that any Purchased Asset shall not have been
conveyed to Buyer at the Closing, Seller shall use its commercially reasonable
best efforts to convey such Purchased Asset to Buyer as promptly as is
practicable after the Closing.
Section 7.5 Public Statements. Seller and Buyer shall consult with each
other prior to issuing any public announcement, statement or other disclosure
with respect to this Agreement or the transactions contemplated hereby, except
that each party may make disclosures with respect to this Agreement and the
transactions contemplated hereby to the extent required by law or by the rules
or regulations of any securities exchange or commission or the Bankruptcy Code
and other applicable bankruptcy laws and rules, and to the extent and under the
circumstances in which such party is expressly permitted by the Confidentiality
Agreement to make disclosures of Confidential Information, in each case after
providing the other party with advance notice of its intent to make such
disclosure.
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Section 7.6 Governmental Authority Approvals and Cooperation. (a)
Governmental Authority Approvals. Seller and Buyer shall each use their
commercially reasonable best efforts to cooperate with each other in determining
and making any filings, notifications and requests for approval required to be
made and received prior to the Closing under applicable law or regulation
(collectively, the "Regulatory Approvals"). In connection with any Regulatory
Approvals, neither Buyer nor Seller will, and Buyer and Seller will use their
commercially reasonable efforts to cause their officers, directors, partners or
other Affiliates not to, take any action which could reasonably be expected to
materially and adversely affect the submission of any required filings or
notifications or the grant of any such approvals.
(b) Cooperation. Subject to any restrictions under applicable
laws, rules or regulations, each party hereto (i) shall promptly inform each
other of any communication from any Governmental Authority concerning this
Agreement, the transactions contemplated hereby and any filing, notification or
request for approval related thereto and (ii) shall permit the other party
hereto to review in advance any proposed written communication or information
submitted to any such Governmental Authority in response thereto. In addition,
neither Seller nor Buyer shall agree to participate in any meeting with any
Governmental Authority in respect of any filings, investigation or other inquiry
with respect to this Agreement, the transactions contemplated hereby or any such
filing, notification or request for approval related thereto unless, to the
extent not prohibited by any such Governmental Authority, it consults with the
other party hereto in advance and, gives the other party hereto the opportunity
to attend and participate thereat, in each case to the maximum extent
practicable. Subject to any restrictions under applicable laws, rules or
regulations, Seller and Buyer shall furnish Buyer or Seller, as the case may be,
with copies of all correspondence, filings and communications (and memoranda
setting forth the substance thereof) between it and its Affiliates and their
respective representatives on the one hand, and the Governmental Authority or
members of its staff on the other hand, with respect to this Agreement, the
transactions contemplated hereby (excluding documents and communications which
are subject to preexisting confidentiality agreements and to the attorney-client
privilege or work product doctrine) or any such filing, notification or request
for approval related thereto. Seller and Buyer shall also furnish the other
party hereto with such necessary information and assistance as such other party
and its Affiliates may reasonably request in connection with its preparation of
necessary filings, registration or submissions of information to the
Governmental Authority in connection with this Agreement, the transactions
contemplated hereby and any such filing, notification or request for approval
related thereto. Seller and Buyer shall prosecute all required requests for
approval with all necessary diligence and otherwise use their respective
commercially reasonable efforts to obtain the grant thereof as soon as possible.
Section 7.7 Taxes.
(a) Taxes Related to Purchase of Assets. The parties recognize
and acknowledge that, because the sale, transfer, assignment and delivery of the
Purchased Assets is being made in contemplation of and in connection with
Seller's plan of reorganization, they may be exempt under section 1146(c) of the
Bankruptcy Code and the Sale Order from state and local transfer, recording,
stamp or other similar transfer taxes (collectively "Transaction Taxes") that
may be imposed by reason of the transactions contemplated by this Agreement;
provided, however, that if Transaction Taxes are assessed for any reason, Buyer
shall pay all such
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Transaction Taxes to those taxing authorities listed on Schedule 7.7(a) along
with any recording and filing fees, if applicable. Buyer and Seller agree to
cooperate to determine the amount of Transaction Taxes payable in connection
with the transactions contemplated under this Agreement. At the Closing, Buyer
and Seller shall remit to each other such properly completed resale exemption
certificates and other similar certificates or instruments as are applicable to
claim available exemptions from the payment of sales, transfer, use or other
similar taxes under applicable law. Buyer and Seller will cooperate in preparing
such forms and will execute and deliver such affidavits and forms as are
reasonably requested by the other party. Seller shall, if necessary, and Buyer
shall cooperate with Seller to seek any determination of the exemption from
Transaction Taxes through submitting any dispute thereof to the state or local
government unit charged with responsibility for collection or determination of
the disputed tax pursuant to Bankruptcy Code Section 1146(d).
(b) No Withholding. Buyer shall pay the Purchase Price free and
clear of withholding or deduction for any Taxes.
(c) FIRPTA Certification. Seller shall deliver to Buyer a
certification to the extent required under Section 1445 of the Code in
accordance with the Treasury Regulations thereunder.
(d) Allocation of Taxes. Buyer shall be liable for and shall be
allocated all Taxes in respect of the Purchased Assets with respect to taxable
periods (or portions thereof) that end after the Closing.
(e) Allocation of Purchase Price. Buyer and Seller shall (i)
attempt in good faith, within thirty (30) days after the Closing, in the general
form set forth on Schedule 7.7, to agree on the allocation of the sum of the
Purchase Price, the Cure Amounts and the Assumed Liabilities (and any
adjustments thereof) among the Purchased Assets as of the Closing Date (the
"Allocation") in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder and (ii) cooperate in connection with the preparation of
Internal Revenue Service Form 8594 for its timely filing. Except as otherwise
required by applicable law, Buyer and Seller shall report for all Tax purposes
all transactions contemplated by this Agreement in a manner consistent with the
Allocation, if any, and shall not take any position inconsistent therewith in
any Tax Return, in any refund claim, in any litigation or otherwise.
(f) Cooperation. Buyer and Seller agree to furnish or cause to be
furnished to each other, as promptly as practicable, such information and
assistance relating to Seller's operations as is reasonably necessary for the
preparation and filing of any Tax Return, for the preparation for and proof of
facts during any tax audit, for the preparation for any tax protest, for the
prosecution or defense of any suit or other proceeding relating to tax matters
and for the answer of any governmental or regulatory inquiry relating to tax
matters.
Section 7.8 Submission for Bankruptcy Court Approval. (a) On the
Petition Date (or as soon thereafter as is reasonably practicable), Seller shall
file a motion or motions and supporting papers seeking (i) the entry of an order
approving all relevant bidding procedures ("Bidding Procedures") including the
Break-Up Fee and Expense Reimbursement set forth pursuant to Section 7.9 and
Section 7.10 substantially in the form of Exhibit C hereto (the
22
"Interim Order"), and (ii) entry of the Sale Order. The Interim Order and the
Sale Order may, at Seller's option, be sought under one combined set of motion
papers, which shall be in form and substance reasonably acceptable to Buyer. All
parties hereto shall use their commercially reasonable best efforts to have the
Bankruptcy Court enter the Interim Order as soon as practicable following the
filing of the motion therefor. Seller shall give appropriate notice under the
Bankruptcy Code of the request for such relief, including such additional notice
as the Bankruptcy Court shall direct, and provide appropriate opportunity for
hearing, to all parties entitled thereto, of all motions, orders, hearings, or
other proceedings relating to this Agreement or the transactions contemplated
hereby.
(b) Seller and Buyer shall consult with one another regarding
pleadings which either of them intends to file, or positions either of them
intends to take before the Bankruptcy Court in connection with, or which might
reasonably affect the Bankruptcy Court's approval of, the Interim Order or the
Sale Order. Seller shall promptly provide Buyer and its counsel with copies of
all notices, filings and orders of the Bankruptcy Court (and other courts) that
Seller has in its possession pertaining to the motion for approval of the
Interim Order, the Sale Order or any other order related to any of the
transactions contemplated by this Agreement.
(c) If the Interim Order, the Sale Order or any other orders of
the Bankruptcy Court relating to this Agreement or the transactions contemplated
hereby, shall be appealed by any Person (or if any petition for certiorari or
motion for reconsideration, amendment, clarification, modification, vacation,
stay, rehearing or reargument shall be filed with respect to the Interim Order,
Sale Order or other such order), subject to rights otherwise arising from this
Agreement, Seller and Buyer shall cooperate in taking such steps to prosecute
diligently such appeal, petition or motion and Seller and Buyer shall use their
commercially reasonable efforts to obtain an expedited resolution of any such
appeal, petition or motion.
Section 7.9 Bidding Procedures. Buyer and Seller acknowledge that
Seller must take reasonable steps to demonstrate that it has sought to obtain
the highest and best price for the Purchased Assets and the consummation of the
transactions contemplated by this Agreement, including giving notice thereof to
Seller's creditors and other interested parties, providing information about the
Business to prospective bidders (subject to appropriate confidentiality
agreements), entertaining higher and better offers from such prospective
bidders, and, in the event that additional qualified prospective bidders desire
to bid for the Purchased Assets, conducting an auction (the "Auction"). To be
considered by Seller, an initial competing bid from a prospective third-party
bidder ("Competing Bidder") must, (a) exceed the Stated Purchase Price set forth
in Section 3.1, without adjustment (the "Stated Purchase Price") by more than
$1,000,000, (b) be accompanied by (i) a cash deposit in an amount not less than
$500,000 and (ii) evidence of the bidder's ability, financial and otherwise, to
close a transaction under this Agreement without delay, and (c) be on terms that
are no more burdensome to the Seller's bankruptcy estate than those under this
Agreement including, without limitation, that the Competing Bidder will assume
the Assumed KERP Liabilities and Seller's obligations under the DIP Loan and
repay any amounts outstanding at Closing. A competing bid meeting the foregoing
conditions shall be deemed to be a "Qualifying Competing Bid." In the event that
Seller receives a Qualifying Competing Bid from one or more Competing Bidders,
and Seller selects and announces a Qualifying Competing Bid as the highest and
best offer for the Purchased Assets (such bid or any subsequently selected bid
being the "Prevailing Bid"), any
23
subsequent bid to acquire the Purchased Assets, as well as any subsequent
competing bid thereafter (in either case, a "Subsequent Bid"), must, at a
minimum, (a) be from either Buyer or a Competing Bidder that previously
submitted a Qualifying Competing Bid, (b) be in an amount that exceeds the then
Prevailing Bid by an amount not less than $250,000. In the event that a
Qualifying Competing Bid is selected as the Prevailing Bid, Buyer agrees to keep
its offer under this Agreement, or any Subsequent Bid made by Buyer, open
pending a closing of a sale to an entity other than Buyer. The Interim Order
shall further state that Buyer shall have the right, in any subsequent competing
bid, to credit bid up to the amount of its claim owing pursuant to the Debt
Instruments pursuant to section 363(k) of the Bankruptcy Code.
Section 7.10 .Break-Up Fee; Expense Reimbursement. If Buyer is not the
successful bidder following the Auction, Buyer is not then in material breach of
any provision of this Agreement, Buyer has not terminated this Agreement and a
sale of all or a material part of the Purchased Assets is consummated with a
party or parties other than Buyer (a "Third-Party Sale"), then Buyer will be
entitled to receive, as a "break-up fee" out of the proceeds of the consummated
sale, an amount equal to $250,000 (the "Break-Up Fee"), plus Buyer's reasonable
out of pocket expenses, including the fees and expenses of Buyer's attorneys and
other professionals and advisors incurred since September 15, 2003 in connection
with the negotiation, execution and consummation of this Agreement (which
expenses shall not exceed $250,000) (the "Expense Reimbursement"). Payment of
the Break-Up Fee shall be made by wire transfer of immediately available U.S.
funds to an account designated by Buyer from the proceeds of a Third-Party Sale,
with such payment to be made immediately upon the consummation of such
Third-Party Sale. The Expense Reimbursement shall be earned by Buyer immediately
upon the entry of the Interim Order and payable to Buyer immediately upon the
earliest to occur of (i) a closing of a sale of the Purchased Assets to a
Competing Bidder or (ii) the effective date of a confirmed chapter 11 or chapter
7 plan that does not involve a sale of the Purchased Assets to Buyer. If the
events described in clauses (i) and (ii) above occur on the same date, the
Expense Reimbursement shall be payable to Buyer on such date. The Expense
Reimbursement will not be payable in any event if Buyer acquires the Purchased
Assets from Seller as contemplated by this Agreement. The Break-Up Fee and
Expense Reimbursement shall be allowed as an administrative expense pursuant to
section 503(b)(1)(A) of the Bankruptcy Code entitled to the priority set forth
in section 507(a)(1) of the Bankruptcy Code.
Section 7.11 Buyer's Release of Claim to Cash Portion of Purchase
Price. To the extent that Buyer or any of its Affiliates, or their respective
successors or assigns, has or asserts a claim in the Chapter 11 Case or holds
any Encumbrance which would attach or transfer to the proceeds of the sale
contemplated by this Agreement or any Third Party Sale, Buyer (on its own behalf
and on behalf of any such Affiliates, successors and assigns) shall not seek to
satisfy or recover such claim or Encumbrance from (a) the cash portion of the
Purchase Price set forth in Section 3.1(b) of this Agreement or (b) the cash
portion of the proceeds of any Third Party Sale up to $1,000,000 of such
proceeds; provided, however, that Buyer may seek to recover such claim or
Encumbrance from any and all proceeds of a Third Party Sale in excess of
$1,000,000.
Section 7.12 Revisions to Schedules. Up to and including the Closing
Date, Seller reserves the right to revise the Schedules to this Agreement.
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Section 7.13 Employment of Employees. Buyer currently expects to
employ, at its option, certain of the employees of Seller related to the
Business. Seller shall permit such employees to be available to interview with
Buyer concerning prospective employment with Buyer and, at Buyer's option, Buyer
shall be permitted to make offers of employment, or a consulting or independent
contracting relationship, to such persons at any time and from time to time
prior to the Closing. Buyer may, in Buyer's sole discretion, negotiate a
compensation (salary and benefits) package with employees related to the
Business. Buyer shall negotiate in good faith to provide certain members of
Buyer's senior management with an options package for the purchase of stock of
the Buyer at an exercise price to be determined. Nothing in this Agreement is
intended to confer upon any employee of Seller any rights or remedies,
including, without limitation, any rights of employment of any nature or kind
whatsoever.
Section 7.14 Commencement of Avoidance Actions. Seller shall commence
and prosecute to conclusion avoidance actions, as reasonably directed by Buyer
and at Buyer's expense, to avoid liens on Purchased Assets related to Assumed
Contracts as contemplated by Section 2.2 above.
Section 7.15 Name Change. Promptly, but in no event later than 30 days,
after the Closing, Seller agrees (a) to change the name of Seller to some other
name not using the word "METATEC" and (b) after the Closing, until papers are
duly filed with the applicable Governmental Authorities to effect such name
changes, not to use the name of Seller in any way for the purpose of selling or
marketing any product or service or otherwise in any manner which does or might
compete with Buyer or, in any other way which, in the Buyer's judgment, could be
detrimental to Buyer's enjoyment of the rights and goodwill it sought when it
paid for and acquired the assets of Seller, except as expressly agreed by Buyer
in its sole discretion.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Each Party's Obligations to Effect the
Closing. The respective obligations of each party to effect the sale and
purchase of the Purchased Assets shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
(a) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
transactions contemplated hereby shall have been issued and remain in effect
(each party agreeing to use its commercially reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted by any Governmental Authority which prohibits the consummation
of the sale of the Purchased Assets;
(b) the Bankruptcy Court shall have entered the Interim Order and
such Interim Order shall be in full force and effect and shall not have been
stayed, modified, reversed or amended (except if modified or amended with the
written consent of Seller and Buyer); and
(c) the Bankruptcy Court shall have entered the Sale Order
substantially in the form of Exhibit D hereto and such Sale Order shall be in
full force and effect and shall not have
25
been stayed, modified, reversed or amended (except if modified or amended with
the written consent of Seller and Buyer).
Section 8.2 Conditions to Obligations of Buyer. The obligation of Buyer
to effect the purchase of the Purchased Assets and the assumption of the Assumed
Liabilities and Assumed Contracts contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) Seller shall have performed and complied in all material
respects with the covenants contained in this Agreement which are required to be
performed and complied with by Seller on or prior to the Closing Date and the
representations and warranties of Seller which are set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement (except to the extent that any such representation and warranty is
qualified as to materiality, in which case such representation and warranty
shall be true and correct in all respects) and as of the Closing Date (except to
the extent that any such representation or warranty speaks as of a particular
date, in which case such representations and warranties shall be true and
correct in all respects as of such other date) as though made at and as of the
Closing Date;
(b) There shall not be or exist any change, effect, event,
circumstance, occurrence or state of facts that has a material adverse effect or
a material adverse change in the Purchased Assets or in the business condition
(financial or otherwise), results of operations, cash flows or prospects of the
Business;
(c) Buyer shall have received a certificate from the chief
executive officer of Seller, dated as of the Closing Date, to the effect that,
to the best of such chief executive officer's knowledge, the conditions set
forth in Sections 8.2(a) and 8.2(b) have been satisfied;
(d) the Bankruptcy Court shall have entered an order (the
"Financing Order") no later than October 22, 2003 approving the DIP Loan and
authorizing Seller to borrow up to an additional $5,000,000 to satisfy a portion
of the outstanding indebtedness under the Debt Instruments and to fund
operations pending the Closing in accordance with a budget approved by Buyer;
(e) the Sale Order provides that any and all of the Encumbrances
(other than Permitted Liens) on the Purchased Assets shall, upon Closing, attach
only to the proceeds of such Purchased Assets and not to the Purchased Assets;
(f) At or before the commencement of the Auction, Buyer shall
notify Seller whether Buyer has elected to (i) seek an assignment of, or has
made other arrangement for the continued use and occupancy of the Facility Lease
beyond the six months after the Closing set forth in Section 7.1(c) or (ii)
relocate the Business provided that Buyer may use and occupy the Facility for up
to six months as set forth in Section 7.1(c) until such time as Buyer completes
a relocation of the Business; and
(g) Buyer shall have received the other items to be delivered to
it pursuant to Section 4.2.
26
Any condition specified in this Section 8.2 may be waived by Buyer; provided
that no such waiver shall be effective against Buyer unless it is set forth in a
writing executed by Buyer.
Section 8.3 Conditions to Obligations of Seller. The obligation of
Seller to effect the sale of the Purchased Assets contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) Buyer shall have performed and complied in all material
respects with the covenants contained in this Agreement which are required to be
performed and complied with by Buyer on or prior to the Closing Date and the
representations and warranties of Buyer which are set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement (except to the extent that any such representation and warranty is
qualified as to materiality, in which case such representation and warranty
shall be true and correct in all respects) and as of the Closing Date (except to
the extent that any such representation or warranty speaks as of a particular
date, in which case such representations and warranties shall be true and
correct in all respects as of such other date) as though made at and as of the
Closing Date;
(b) Seller shall have received a certificate from an authorized
officer of Buyer, dated as of the Closing Date, to the effect that, to the best
of such officer's knowledge, the conditions set forth in Section 8.3(a) have
been satisfied; and
(c) Seller shall have received the other items to be delivered to
it pursuant to Section 4.3.
Any condition specified in this Section 8.3 may be waived by Seller; provided
that no such waiver shall be effective against Seller unless it is set forth in
a writing executed by Seller.
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, by written notice promptly
given to the other parties hereto, at any time prior to the Closing Date by:
(a) mutual written consent of Seller and Buyer;
(b) Seller, if there has been a material violation or breach by
Buyer of any covenant, representation or warranty made by it contained in this
Agreement which has prevented the satisfaction of any condition to the
obligations of Seller to effect the Closing and such violation or breach has not
been cured by Buyer within ten (10) Business Days of receipt of written notice
thereof or is waived by Seller;
(c) Seller or Buyer, if (i) there shall be any law or regulation
that makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited or (ii) consummation of the transactions contemplated
hereby would violate any nonappealable final order, decree or judgment of (A)
the Bankruptcy Court or (B) any court or Governmental Authority having competent
jurisdiction;
27
(d) Seller, if the Bankruptcy Court enters an order approving a
Third-Party Sale, and Buyer, upon the closing of such Third-Party Sale;
(e) Buyer or Seller, if the Sale Order has not been entered by
the Bankruptcy Court within sixty (60) days after the entry of the Interim Order
on the docket of the Bankruptcy Court; provided that Buyer or Seller, as the
case may be, shall not be entitled to terminate this Agreement pursuant to this
Section 9.1(e) if the failure to obtain such approval within such time period
results primarily from such party itself having materially breached any
representation, warranty or covenant contained in this Agreement;
(f) Buyer or Seller, if the Closing shall not have occurred on or
prior to December 19, 2003 (the "Termination Date"); provided, that Buyer or
Seller, as the case may be, shall not be entitled to terminate this Agreement
pursuant to this Section 9.1(f) if the failure of the Closing to occur on or
prior to such date results primarily from such party itself having materially
breached any representation, warranty or covenant contained in this Agreement;
(g) Buyer, if the Financing Order has not been entered by the
Bankruptcy Court within seven (7) days after the commencement of the Chapter 11
Case or, subject to Buyer's consent, as soon thereafter as the Bankruptcy Court
can hear the motion to approve the Financing Order;
(h) Buyer, if the entry of the Interim Order shall not have
occurred within seven (7) days after the commencement of the Chapter 11 Case or,
subject to Buyer's consent, as soon thereafter as the Bankruptcy Court can hear
the motion to approve the Interim Order; or
(i) Buyer, if there has been a material violation or breach by
Seller of any covenant, representation or warranty made by it contained in this
Agreement which has prevented the satisfaction of any condition to the
obligations of Buyer to effect the Closing and such violation or breach has not
been cured by Seller within ten (10) Business Days of receipt of written notice
thereof or is waived by Buyer.
Section 9.2 Procedure and Effect of Termination. Upon termination of
this Agreement pursuant to Section 9.1, this Agreement shall be void and of no
effect, without any liability on the part of any party hereto or any
stockholders, directors or officers thereof; provided, however, such termination
shall not affect the liability of any party for the breach of any provision of
this Agreement or the liability of Buyer for covenants contained in Section
7.11. If this Agreement is terminated as provided herein: (i) all filings,
applications and other submissions made pursuant to this Agreement, to the
extent practicable, shall be withdrawn from the agency or other Person to which
they were made; and (ii) Confidential Information from Seller shall be returned
to Seller, and all Confidential Information from Buyer shall be returned to
Buyer.
Section 9.3 Extension; Waiver. At any time prior to the Closing,
Seller, on the one hand, or Buyer, on the other hand, may (i) extend the time
for the performance of any of the obligations or acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto, (iii) waive
compliance with any of the agreements of the other party contained herein or
28
(iv) waive any condition to its obligations hereunder. Any agreement on the part
of Seller, on the one hand, or Buyer, on the other hand, to any such extension
or waiver shall be valid only if set forth in a written instrument signed on
behalf of Seller or Buyer, as applicable.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of Seller and Buyer.
Section 10.2 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with any
obligation, covenant or condition herein may be waived by the party or parties
entitled to the benefits thereof only by a written instrument signed by the
party or parties granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, or condition shall not operate
as a waiver of, or estoppel with respect to any subsequent or other failure.
Section 10.3 Survival. The parties hereto agree that the
representations and warranties contained in this Agreement shall not survive the
Closing hereunder, and neither of the parties nor any of their respective
officers, directors, representatives, employees, advisors or agents shall have
any liability to the other after the Closing for any breach thereof. The parties
hereto agree that only the covenants contained in this Agreement to be performed
at or after the Closing Date shall survive the Closing hereunder, and each party
hereto shall be liable to the other after the Closing Date for any breach
thereof.
Section 10.4 No Impediment to Liquidation. Nothing herein shall be
deemed or construed as to limit, restrict or impose any impediment to Seller's
right to liquidate, dissolve and wind-up its affairs and to cease all business
activities and operations at such time as it may determine following the
Closing.
Section 10.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given (i) when personally
sent/delivered, by facsimile transmission (with hard copy to follow) or sent by
reputable express courier or (ii) five (5) days following mailing by registered
or certified mail postage prepaid and return receipt requested. Unless another
address is specified in writing, notices, demands and communications to Seller
and Buyer shall be sent to the addresses indicated below:
If to Seller, to:
Metatec, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxx 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxxxxxx X. Xxxxx
with a copy (which shall not constitute notice pursuant to this Section 10.5)
to:
00
Xxxxx & Xxxxxxxxx XXX
Xxxxxxx Xxxxxx, Xxxxx 0000
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxxxxxx, XX, Esq.
If to Buyer, to:
MTI Acquisition Corp.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Fax : 000-000-0000
Attention: Xxxxxx Blue
with a copy (which shall not constitute notice pursuant to this Section 10.5)
to:
Xxxxxxxxx Traurig, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Facsimile: 212-801-6400
Attention: Xxxx X. Xxxxxxxx, Esq.
Section 10.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns and with respect to Seller,
any entity that may succeed to substantially all the assets of Seller, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by Buyer hereto, including by operation of law, without the
prior written consent of Seller; provided, however, that this Agreement shall be
assignable by Buyer, without the prior written consent of Seller, to an
Affiliate of Buyer, so long as Buyer shall continue to remain obligated
hereunder. Any assignment of this Agreement or any of the rights, interests or
obligations hereunder in contravention of this Section 10.6 shall be null and
void and shall not bind or be recognized by Seller or Buyer.
Section 10.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as
30
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
Section 10.8 Governing Law. This Agreement shall be governed by the
laws of the State of
Ohio, without giving effect to the principles of conflicts
of laws thereof.
Section 10.9 Submission to Jurisdiction. Unless and to the extent
otherwise specifically provided herein, the parties hereto irrevocably submit to
the exclusive jurisdiction of the Bankruptcy Court (or any court exercising
appellate jurisdiction over the Bankruptcy Court) over any dispute arising out
of or relating to this Agreement or any other agreement or instrument
contemplated hereby or entered into in connection herewith or any of the
transactions contemplated hereby or thereby. Each party hereby irrevocably
agrees that all claims in respect of such dispute or proceedings may be heard
and determined in such courts. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute or proceeding brought
in such courts or any defense of inconvenient forum in connection therewith.
Section 10.10 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 10.11 Incorporation of Exhibits. All Schedules and all Exhibits
attached hereto and referred to herein are hereby incorporated herein by
reference and made a part of this Agreement for all purposes as if fully set
forth herein.
Section 10.12 Entire Agreement. This Agreement (including all Schedules
and all Exhibits) and the Confidentiality Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto.
Section 10.13 Remedies. Subject to Section 10.3, Seller and Buyer
hereby acknowledge and agree that money damages may not be an adequate remedy
for any breach or threatened breach of any of the provisions of this Agreement
and that, in such event, Seller or its respective successors or assigns, or
Buyer or its successors or assigns, as the case may be, may, in addition to any
other rights and remedies existing in their favor, apply to the Bankruptcy Court
or any other court of competent jurisdiction for specific performance,
injunctive and/or other relief in order to enforce or prevent any violations of
this Agreement.
Section 10.14 Headings The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
* * * * *
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written by their respective officers
thereunto duly authorized.
SELLER:
METATEC, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
BUYER:
MTI ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: President
