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ASSET PURCHASE AGREEMENT
BY AND AMONG
CORPORATE EXPRESS OFFICE PRODUCTS, INC.
ATLANTIC ACQUISITION CORPORATION,
U.S. OFFICE PRODUCTS COMPANY
AND
THE VARIOUS USOP SUBSIDIARIES LISTED THEREIN
DATED AS OF MARCH 5, 2001
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TABLE OF CONTENTS
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ARTICLE 1. DEFINITIONS..........................................................................................1
Section 1.01 Certain Defined Terms.................................................................1
Section 1.02 Other Defined Terms...................................................................9
Section 1.03 Construction.........................................................................11
ARTICLE 2. PURCHASE AND SALE...................................................................................12
Section 2.01 Purchase and Sale of Assets..........................................................12
Section 2.02 Assumption of Liabilities............................................................13
Section 2.03 Purchase Price.......................................................................14
Section 2.04 Working Capital Adjustments..........................................................14
Section 2.05 Allocation of Purchase Price.........................................................18
Section 2.06 Transfer Taxes and Apportioned Obligations...........................................18
Section 2.07 Adjustment for Sales Decline.........................................................19
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF USOP AND THE OTHER SELLERS........................................19
Section 3.01 Organization and Good Standing.......................................................19
Section 3.02 Authorization and Effect of Agreement................................................20
Section 3.03 No Conflict..........................................................................20
Section 3.04 No Third Party Options...............................................................21
Section 3.05 Consents and Governmental Approvals..................................................21
Section 3.06 Title to, Condition and Sufficiency of Assets........................................21
Section 3.07 Assumed Contracts....................................................................21
Section 3.08 Financial Statements.................................................................21
Section 3.09 Absence of Certain Changes or Events.................................................22
Section 3.10 Litigation...........................................................................23
Section 3.11 Compliance with Laws.................................................................23
Section 3.12 Licenses.............................................................................23
Section 3.13 Material Contracts...................................................................24
Section 3.14 Real Property........................................................................25
Section 3.15 Intellectual Property Rights.........................................................28
Section 3.16 Employee Benefit Matters.............................................................28
Section 3.17 Labor Matters........................................................................30
Section 3.18 Subsidiaries.........................................................................30
Section 3.19 Environmental Matters................................................................31
Section 3.20 Tax Matters..........................................................................31
Section 3.21 Insurance............................................................................32
Section 3.22 Customers, Distributors and Suppliers................................................32
Section 3.23 Affiliate Transactions...............................................................32
Section 3.24 Accounts Receivable and Rebates Receivable...........................................32
Section 3.25 Inventory............................................................................33
Section 3.26 Prohibited Payments..................................................................33
Section 3.27 Banking Relationships................................................................33
Section 3.28 Brokers..............................................................................33
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Section 3.29 Full Disclosure......................................................................34
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............................................34
Section 4.01 Organization and Authority of Parent and Purchaser...................................34
Section 4.02 No Conflict..........................................................................34
Section 4.03 Legal Proceedings....................................................................34
Section 4.04 Brokers..............................................................................35
Section 4.05 Financing............................................................................35
ARTICLE 5. ADDITIONAL COVENANTS................................................................................35
Section 5.01 Conduct of Business Prior to the Closing.............................................35
Section 5.02 Access to Information................................................................36
Section 5.03 Confidentiality......................................................................37
Section 5.04 Regulatory and Other Authorizations, Consents; Further Assurances....................37
Section 5.05 Notification of Certain Matters......................................................38
Section 5.06 Cooperation with Financings..........................................................39
Section 5.07 Intentionally Omitted................................................................39
Section 5.08 Certain Employee Benefit Matters.....................................................39
Section 5.09 Publicity............................................................................42
Section 5.10 Acquisition Proposals................................................................43
Section 5.11 Bankruptcy Court Approval............................................................43
Section 5.12 Non-Competition and Non-Solicitation.................................................44
Section 5.13 Transition Services..................................................................45
Section 5.14 Owned Real Estate....................................................................45
ARTICLE 6. CLOSING.............................................................................................46
Section 6.01 Closing..............................................................................46
Section 6.02 Deliveries at Closing................................................................46
Section 6.03 Conditions to Obligations of Sellers.................................................47
Section 6.04 Conditions to Obligations of Parent and Purchaser....................................48
ARTICLE 7. FURTHER AGREEMENTS AND TERMINATION..................................................................50
Section 7.01 Termination Payment..................................................................50
Section 7.02 Bankruptcy Termination Payment.......................................................50
Section 7.03 Termination..........................................................................50
Section 7.04 Procedure and Effect of Termination..................................................52
ARTICLE 8. INDEMNIFICATION.....................................................................................53
Section 8.01 Indemnification......................................................................53
ARTICLE 9. GENERAL PROVISIONS..................................................................................54
Section 9.01 Actions by Sellers...................................................................54
Section 9.02 Expenses.............................................................................55
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Section 9.03 Notices..............................................................................55
Section 9.04 Headings.............................................................................55
Section 9.05 Severability.........................................................................56
Section 9.06 Entire Agreement.....................................................................56
Section 9.07 Assignment...........................................................................56
Section 9.08 No Third-Party Beneficiaries.........................................................56
Section 9.09 Waivers and Amendments...............................................................56
Section 9.10 Specific Performance.................................................................56
Section 9.11 Brokers..............................................................................56
Section 9.12 Governing Law........................................................................57
Section 9.13 Counterparts.........................................................................57
Section 9.14 Joint Obligations of Purchaser and Parent............................................57
EXHIBITS
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Exhibit A - Approval Order
Exhibit B - Sale Procedure Order
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT"), dated as of March 5,
2001, is entered into by and among Corporate Express Office Products, Inc., a
Delaware corporation (the "PARENT"), Atlantic Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent (the "PURCHASER"),
U.S. Office Products Company, a Delaware corporation ("USOP"), and its
Subsidiaries set forth on SCHEDULE 3.18.
WITNESSETH:
WHEREAS, USOP and its Subsidiaries are referred to herein
collectively as "SELLERS," and each is referred to herein individually as a
"SELLER";
WHEREAS, Sellers, operating as US Office Products - North
America ("USOP-NA"), a division of USOP, are engaged in the business of
distributing and selling office supplies and office furniture, and providing
certain "non-core" services such as "break-room," toner cartridge refill and
copying services, in the United States, but excluding any activities of USOP's
USRefresh coffee and vending, XxXxxxxxx'x retail stores, and the Kentwood &
Xxxxxxxx furniture businesses (the "BUSINESS");
WHEREAS, the Sellers desire to sell to Purchaser and Purchaser
desires to purchase from Sellers, all of the assets, rights and properties of
Sellers (subject to certain exceptions specified in this Agreement) relating to
the Business and, in connection with such purchase and sale, Purchaser is
willing to assume certain obligations and liabilities of Sellers, all on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, USOP intends to file, and to cause each of the
Sellers to file, voluntary bankruptcy petitions pursuant to Chapter 11 of Title
11 of the United States Code, 11 U.S.C. Section 101, ET SEQ. (the "BANKRUPTCY
CODE"); and
WHEREAS, the Sellers intend to reorganize their businesses and
affairs pursuant to a plan of reorganization under Chapter 11 of the Bankruptcy
Code and in furtherance of such a plan intend to seek an order of the United
States Bankruptcy Court or such other court exercising jurisdiction over
Sellers' bankruptcy cases (the "BANKRUPTCY COURT") approving this Agreement and
authorizing Sellers to consummate the transactions contemplated hereby.
NOW THEREFORE, in consideration of the premises and of the
mutual agreements and covenants hereinafter set forth, the parties hereto hereby
agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings:
"ACQUISITION PROPOSAL" means any proposal or offer relating to
the Business, other than a proposal or offer by Purchaser or any of its
Affiliates, for (A) any merger, consolidation, share exchange business
combination or other similar transaction with USOP or any of the other Sellers,
(B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of 5% or more of the assets and liabilities of the Business in a single
transaction or series of transactions (whether related or unrelated), (C) any
tender offer or exchange offer for 10% or more of the outstanding shares of
USOP's common stock or
any class of USOP's debt securities or the filing of a registration statement
under the Securities Act of 1933, as amended, in connection therewith, (D)
the acquisition of beneficial ownership or the right to acquire beneficial
ownership of, or the formation of any "group" (as defined under Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) which
beneficially owns or has the right to acquire beneficial ownership of, 10% or
more of the then outstanding shares of any class of USOP's common stock or
any class of Seller's debt securities or (E) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
"ACTION" means any claim, demand, action, suit, lawsuit,
litigation, inquiry, hearing, investigation, notice of a violation, arbitration,
proceeding, appeal or other dispute, whether civil or criminal, administrative
or otherwise, by or before any Governmental Authority or arbitrator.
"AFFILIATE" means, when used with respect to a specified
Person, another Person that, either directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified. With respect to any Person who is a natural person, such
Person's Affiliates shall include any member of such Person's spouse and their
respective siblings, parents and lineal descendents.
"ANCILLARY AGREEMENTS" means the Escrow Agreement and the
Transition Services Agreement.
"ANNUAL FINANCIAL STATEMENTS" means the unaudited consolidated
balance sheets of USOP-NA dated as of April 29, 2000 and April 24, 1999 and the
related unaudited consolidated statements of income for USOP-NA for the fiscal
years then ended.
"ANTITRUST AUTHORITY" means the Antitrust Division of the
United States Department of Justice or the United States Federal Trade
Commission.
"APPROVAL ORDER" means an order or orders of the Bankruptcy
Court in substantially the form attached hereto as EXHIBIT B, with such
modifications as are acceptable to Purchaser, authorizing, among other things,
the sale, transfer and assignment of the Assets to Purchaser in accordance with
the terms and conditions of this Agreement, free and clear of all Encumbrances
other than Assumed Encumbrances, pursuant to, among others, sections 363 and 365
of the Bankruptcy Code.
"ASSUMED ENCUMBRANCES" means (A) Encumbrances for Apportioned
Obligations not yet due and payable as of the Closing Date, (B) statutory
Encumbrances of carriers, warehouse persons, mechanics and material persons and
other Encumbrances imposed by law incurred in the ordinary course of business
for sums not yet due and payable as of the Closing Date to the extent such sums
constitute Assumed Liabilities, (C) encumbrances incurred or deposits made to
secure the performance of tenders, statutory obligations, surety bonds, bids,
leases, government contracts, performance and return of money bonds and similar
obligations, in each case to the extent such encumbrances secure Assumed
Liabilities or Assumed Contracts, (D) purchase money Encumbrances to the extent
they secure Assumed Liabilities, and (E) easements, rights-of-way, restrictions
and other similar charges or Encumbrances on real property, in each case which
do not materially interfere with the ordinary conduct of the Business and do not
materially detract from the value of the property to which such Encumbrance
relates.
"AVERAGE DAILY SALES" means, in respect of any period, the
total sales of the Business for that period, as reported by Sellers, divided by
the number of days that the Business was open for business during such period,
as determined by Sellers; provided that if the last day of the Pre-Closing
Period falls on any day other than the last day in which the Business is open
for business in a fiscal month (such
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month being a "Partial Month"), Average Daily Sales for the pre-Closing
Period shall be calculated excluding the Partial Month. In general, Sellers
are not "open for business" on holidays and weekends.
"BANKRUPTCY RESOLUTION DATE" means the date on which a Final
Order of the Bankruptcy Court has been entered dismissing, closing or otherwise
terminating the Chapter 11 Cases.
"BASE PERIOD" means the four fiscal month period beginning on
October 29, 2000 (which is the first day of Sellers' fiscal month of November
2000) and ending on March 3, 2001 (which is the last day of Sellers' fiscal
month of February 2001).
"BENEFIT ARRANGEMENT" means any employment, consulting,
severance or other similar contract, arrangement or policy (written or oral) and
each plan, arrangement, program, agreement or commitment (written or oral)
providing for insurance coverage (including, without limitation, any
self-insurance arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health or accident benefits (including, without limitation, any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the
Internal Revenue Code providing for the same or other benefits) or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights,
stock purchases or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (A) is not a Welfare Plan, Pension
Plan or Multiemployer Plan, (B) is entered into, maintained, contributed to or
required to be contributed to, as the case may be, by Sellers or under which
Sellers may incur any Liability, and (C) covers (or covered) any employee or
former employee of the Business (with respect to their relationship with such
entity).
"BOOKS AND RECORDS" shall mean all books, records, lists,
ledgers, files, reports, plans, drawings and operating records of every kind
pertaining to the Business or the Assets, business customers, suppliers,
distributors or Personnel, including, without limitation, (A) all corporate
books and records of Sellers, disk or tape files, printouts, runs or other
computer-based information and such Sellers' interest in all computer programs
required to access, and the equipment containing, all such computer-based
information, (B) all product, business and marketing plans, (C) all
environmental control records and (D) all sales, maintenance and production
records.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
New York, New York.
"CHAPTER 11 CASES" means the voluntary cases commenced by
Sellers under Chapter 11 of the Bankruptcy Code.
"CLAIM" means any Action or other claim.
"COLLATERAL AGREEMENTS" shall mean the Xxxx of Sale, the
Assumption Agreement and any other assignment or transfer documents delivered at
Closing.
"CONFIDENTIALITY AGREEMENT" means the letter agreement
previously entered into by Corporate Express, Inc. and USOP, dated September 29,
2000.
"CONTRACT" means, with respect to the Business, any agreement,
contract, lease, note, loan, evidence of Indebtedness, letter of credit,
franchise agreement, undertaking, covenant not to compete, employment agreement,
license, instrument, obligation, commitment, quotation or other executory
commitment to which USOP or any and each other Seller is a party or which
relates to the
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Business or the Assets, and is used exclusively in the Business and which
pursuant to its terms has not expired, terminated or been fully performed by
the parties thereto.
"DIP LOAN" means debtor-in-possession financing or use of cash
collateral arrangements approved by the Bankruptcy Court.
"EMPLOYEE" means any person employed by any Seller immediately
prior to the Closing who becomes an employee of Purchaser as of the Closing,
including persons on leave, vacation, disability or other approved periods of
absence.
"EMPLOYEE PLANS" means all Benefit Arrangements, Multiemployer
Plans, Pension Plans and Welfare Plans.
"ENCUMBRANCE" means, with respect to the Business, any Claim,
encumbrance, pledge, option, charge, easement, security interest, lien, deed of
trust, mortgage, right-of-way, encroachment, building or use restriction,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent or conditional sale
agreement or other title retention agreement or lease in the nature thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any Person which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, or
otherwise required to be aggregated with, any of the Sellers as set forth in
Section 414(b), (c), (m) or (o) of the Internal Revenue Code as of or after the
date of acquisition of such Person by USOP or any of its Affiliates.
"ESCROW AGENT" means an independent escrow agent that is not
an Affiliate of any party that is selected by Purchaser and is reasonably
acceptable to USOP.
"ESCROW AGREEMENT" means an escrow agreement to be entered
into as of the Closing Date by and among Purchaser, USOP and the Escrow Agent in
form and substance reasonably acceptable to USOP and Purchaser. The Escrow
Agreement shall, among other things, provide that (A) on the date that is the
later of (i) six months after the Closing Date and (ii) three (3) Business Days
after the date on which the payment required by SECTION 2.04(B)(i), if any, is
made, the Escrow Amount shall be reduced to an amount equal to the sum of (a)
$25,000,000 plus (b) all pending Claims made by the Purchaser Parties for
indemnification pursuant to SECTION 8.01(A) and (B) on the first anniversary of
the Closing Date the Escrow Amount shall be reduced to an amount equal to all
pending Claims made by the Purchaser Parties for indemnification pursuant to
SECTION 8.01(A).
"ESTIMATED WORKING CAPITAL SHORTFALL" means the excess of the
Minimum Working Capital over the Estimated Closing Date Working Capital.
"ESTIMATED WORKING CAPITAL EXCESS" means the excess of the
Estimated Closing Date Working Capital over the Minimum Working Capital.
"FACILITY" means any real property or facility owned, leased,
operated or used in the operation of the Business by any of the Sellers.
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"FINAL ORDER" means an order or determination by the
Bankruptcy Court (A) that is not reversed, stayed, enjoined, set aside, annulled
or suspended within the deadlines provided by applicable statutes or
regulations, (B) with respect to which no request for stay, motion or petition
for reconsideration, application or request for review, or notice of appeal or
other judicial petition for review has been filed and is pending, and (C) as to
which all deadlines for filing any such request, motion, petition, application,
appeal or notice have expired.
"GAAP" means United States generally accepted accounting
principles in effect from time to time applied consistently throughout the
period involved.
"GOVERNMENTAL AUTHORITY" means any government, any
governmental entity, department, commission, board, agency or instrumentality,
and any court, tribunal, or judicial or arbitral body, whether federal, state,
local or foreign.
"GOVERNMENTAL ORDER" means any order, judgment, injunction,
decree, stipulation, rulings, determination or award entered by or with any
Governmental Authority.
"HANDLING OF SUBSTANCES" means the production, use,
generation, storage, treatment, recycling, disposal or arranging for
disposal, discharge, release or other handling or disposition of Substances.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"IMPROVEMENTS" means any buildings, facilities, parking lots,
other structures and improvements, building systems and fixtures located on or
under any Facility.
"INDEBTEDNESS" means, with respect to the Business, (A)
indebtedness of Sellers or any of them for borrowed money, (B) obligations of
Sellers or any of them evidenced by bonds, notes, debentures, letters of credit,
bankers acceptances or similar instruments, (C) obligations of Sellers or any of
them under capitalized leases, (D) obligations of Sellers or any of them under
conditional sale, title retention or similar agreements or arrangements creating
an obligation of Sellers with respect to the deferred purchase price of property
(other than customary trade credit), (E) interest rate and currency obligation
swaps, xxxxxx or similar arrangements and (F) all obligations of any of the
Sellers to guarantee any of the foregoing types of obligations on behalf of any
Person other than the Sellers.
"INTELLECTUAL PROPERTY RIGHTS" means, with respect to the
Business, all (A) domestic and foreign registrations of trademarks, service
marks, logos, corporate names, protected models, designs, created works, trade
names or other trade rights, (B) pending applications for any such
registrations, (C) rights in or to patents and copyrights and pending
applications, (D) rights to other trademarks, service marks, logos, corporate
names, protected models, designs, data, software, created works, trade names and
other trade rights and all other trade secrets, designs, plans, specifications,
technology, methods, designs, concepts and other proprietary rights, whether or
not registered, and (E) rights under any licenses to use any of the intellectual
property described in clauses (A) to (D) above.
"INTERIM FINANCIAL STATEMENTS" means the unaudited
consolidated balance sheet of USOP-NA as of December 30, 2000 and the related
unaudited consolidated statement of income of USOP-NA for the nine-month
period then ended.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended.
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"INVENTORY" means all of the inventory relating to the
Business which is held for resale, and all of raw materials, works in process,
finished products and supply items relating to the Business, in each case
wherever the same may be located.
"IRS" means the United States Internal Revenue Service.
"KENTWOOD & XXXXXXXX" means the furniture businesses as
conducted by Kentwood Office Furniture, Inc. and Xxxxxxxx Office Furniture
Company, respectively.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order or rule of common law.
"LIABILITIES" shall mean any liability, indebtedness,
obligation, co-obligation, commitment, expense, Claim, deficiency, guaranty or
endorsement of or by any Person of any nature (whether direct or indirect, known
or unknown, absolute or contingent, liquidated or unliquidated, due or to become
due, accrued or unaccrued, matured or unmatured).
"LICENSES" means all of the licenses, permits, certificates of
occupancy and other governmental approvals or authorizations required for the
operation of the Business in compliance with Law as conducted as of the date of
this Agreement and as of the Closing Date.
"LOSSES" of a Person means any and all costs, losses, charges,
Liabilities, obligations, damages (whether actual, punitive or consequential),
lawsuits, actions, judgments, deficiencies, demands, fees, Claims, settlements
and expenses, including, without limitation, interest, penalties, costs of
mitigation, reasonable attorneys' fees and expenses, all amounts paid in the
investigation, defense or settlement of any of the foregoing suffered or
incurred by such Person.
"MATERIAL ADVERSE EFFECT" or "MATERIAL ADVERSE CHANGE" or a
similar phrase means (A) any material adverse effect on, or any material adverse
change with respect to, (i) the business, operations, assets, Liabilities,
condition (financial or otherwise), results of operations of the Business, taken
as a whole, (ii) Sellers' relations (taken as a whole) with their respective
customers, suppliers, distributors or employees to the extent relating to the
Business, or (iii) the right or ability of Sellers' to consummate any of the
transactions contemplated hereby or (B) any event or condition that would, with
the passage of time, the giving or receipt of notice or the occurrence or
nonoccurrence of any other circumstance, action or event, constitute a "Material
Adverse Effect" or a "Material Adverse Change." Notwithstanding the foregoing,
the act of filing the Chapter 11 Cases shall not be deemed, in and of itself, a
Material Adverse Effect or a Material Adverse Change. For the purposes of
SECTIONS 6.04(A), 6.04(K), 7.03(C)(iii) and 7.03(C)(vi), a decline in the sales
of the Business that is not a Material Sales Decline and that does not result
from, directly or indirectly, the untruth or inaccuracy of a representation or
warranty herein or the breach of or the failure to perform or observe any
covenant or agreement herein shall not be deemed to be a Material Adverse Effect
or a Material Adverse Change.
"MATERIAL SALES DECLINE" shall exist where the Weighted
Average Daily Sales (for the Pre-Closing Period) is more than 15% below the
Average Daily Sales for the Base Period.
"MINIMUM WORKING CAPITAL" means $100,000,000.
"MULTIEMPLOYER PLAN" means any "multiemployer plan," as
defined in Section 4001(a)(3) or 3(37) of ERISA, which (A) any Seller or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or since being acquired by USOP or any of its Subsidiaries,
maintained, administered, contributed to or was required to contribute to, or
under which such Seller or any ERISA
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Affiliate may incur any Liability and (B) covers any employee or former
employee of any Seller or any ERISA Affiliate (with respect to their
relationship with any such entity).
"OUTSIDE CLOSING DATE" shall mean July 9, 2001.
"PENSION PLAN" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which any
Seller or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, since being acquired by USOP or any of its
Subsidiaries, maintained, administered, contributed to or was required to
contribute to, or under which such Seller or any ERISA Affiliate may incur any
Liability (including, without limitation, any contingent Liability) and (B)
which covers (or covered) any employee or former employee of the Business (with
respect to their relationship with such entity).
"PERMITTED ENCUMBRANCES" means (A) Encumbrances for Taxes or
governmental charges or Claims (i) not yet due and payable or (ii) being
contested in good faith by appropriate proceedings being diligently pursued, if
a reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor, (B) statutory Encumbrances of landlords,
Encumbrances of carriers, warehouse persons, mechanics and material persons and
other Encumbrances imposed by law incurred in the ordinary course of business
for sums (i) not yet due and payable or (ii) being contested in good faith by
appropriate proceedings being diligently pursued, (C) Encumbrances incurred or
deposits made in connection with workers' compensation, unemployment insurance
and other similar types of social security programs or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return of money bonds and similar
obligations, in each case in the ordinary course of business, consistent with
past practice, (D) purchase money Encumbrances incurred in the ordinary course
of business, consistent with past practice, (E) easements, rights-of-way,
restrictions and other similar charges or Encumbrances on real property, in each
case which do not materially interfere with the ordinary conduct of the Business
and do not materially detract from the value of the property to which such
encumbrance relates, and (F) Encumbrances that do not individually or in the
aggregate materially interfere with Sellers' use and enjoyment of, or materially
impair the value of, the Assets encumbered thereby.
"PERSON" means (A) any natural person, corporation, limited
partnership, general partnership, limited liability company, joint stock
company, joint venture, association, company, trust or other organization and
(B) any Governmental Authority.
"PERSONNEL" means, with respect to the Business, all
employees, officers, directors and independent contractors of, employed by or
contracting with the Sellers and who are (A) exclusively engaged in the Business
or (B) listed on Schedule 1.01. The term "Personnel" shall not include any of
the executive officers or directors of USOP (other than the President of USOP-NA
and the Chief Information Officer of USOP), any employee of any Seller who is
engaged in business activities other than the Business, or any other employee of
USOP.
"POST-CLOSING" means any period or portion thereof that begins
after the Closing Date.
"PRE-CLOSING ENVIRONMENTAL MATTERS" means (A) the Handling of
Substances on or prior to the Closing Date either at, in, on, under or from any
Facility including, without limitation, the effects of such Handling of
Substances on resources, Persons or property within or outside the boundaries of
any Facility, (B) the presence on or prior to the Closing Date of Substances
either at, in, on or under any Facility, regardless of how the Substances came
to rest at, in, on or under such Facility, or the movement or migration of
Substances from any Facility, (C) the failure on or prior to the Closing Date of
any Facility or any operations of any of the Sellers to be in compliance with
any applicable Environmental
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Laws, and (iv) any other act, omission or condition existing with respect to
any Assets or any Facility or operation of any Facility existing or occurring
on or prior to the Closing Date which gives rise to Liability under any
applicable Environmental Laws.
"PRE-CLOSING PERIOD" means the period beginning on March 4,
2001 (which is the first day of Sellers' fiscal month of March 2001) and ending
on the day that is two (2) calendar days prior to the Closing Date. Fiscal March
ends on March 31, 2001, fiscal April begins on April 1 and ends on April 28,
2001, fiscal May begins on April 29 and ends on May 26, 2001, and fiscal June
begins on May 27 and ends on June 30, 2001.
"PURCHASER EXPENSES" shall mean Purchaser's reasonable out of
pocket expenses (including but not limited to reasonable financial advisor's
accountants' or attorney's fees and expenses and filing fees, including, without
limitation, those paid in connection with filings under the HSR Act) incurred in
connection with the negotiation and performance of this Agreement and its due
diligence investigation of Sellers and the Assets in connection with this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" of any Person means any other Person (A) of which
such first Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, more than 50% of the stock or other
equity securities of such other Person, the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of, or otherwise control the business and affairs of, such other Person or
(B) the operations of which are consolidated or combined with such first Person,
pursuant to GAAP, for financial reporting purposes.
"SUBSTANCES" means any toxic, hazardous, or other regulated
wastes, substances, products, pollutants or materials, including, without
limitation, radioactive materials, asbestos, polychlorinated biphenyls, radon,
gas, petroleum and petroleum products.
"SUPERIOR PROPOSAL" means an Acquisition Proposal that the
Board of Directors of USOP has determined in good faith, after consultation with
its advisors, would, if accepted, be no less likely to be consummated than the
transaction proposed by this Agreement, taking into account all legal,
financial, regulatory and other aspects of such Acquisition Proposal and the
Person making such Acquisition Proposal and the similar aspects of the
transaction proposed by this Agreement, and that the Board of Directors of USOP
believes in good faith, after consultation with its outside financial advisor,
would, if consummated, result in a transaction more favorable to USOP from a
financial point of view than the transaction proposed by this Agreement.
"TAX" or "TAXES" means any federal, state, local or foreign
net or gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium (including taxes under Section 59A of the
Internal Revenue Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, offer, registration, value added,
alternative or add-on minimum, estimated or other tax, governmental fee or like
assessment or charge of any kind whatsoever, including any interest, penalty or
addition thereto.
"TAX RETURN" means any return, declaration, report, Claim for
refund, or information, return or statement relating to Taxes and required to be
filed with a Governmental Authority, including any schedule or attachment
thereto, and including any amendments thereof.
-8-
"TREASURY REGULATIONS" means the regulations issued pursuant
to the Internal Revenue Code.
"WEIGHTED AVERAGE DAILY SALES" means:
(A) if the Pre-Closing Period is two (2) fiscal months, the
sum of (i) Average Daily Sales in the first full fiscal month multiplied by .35,
plus (ii) Average Daily Sales in the second fiscal month multiplied by .65;
(B) if the Pre-Closing Period is three fiscal months, the sum
of (i) Average Daily Sales in the first fiscal month multiplied by .1, plus (ii)
Average Daily Sales in the second fiscal month multiplied by .3, plus (iii)
Average Daily Sales in the third fiscal month multiplied by .6; and
(C) if the Pre-Closing Period is four fiscal months, the sum
of (i) Average Daily Sales in the first fiscal month multiplied by .1, plus (ii)
Average Daily Sales in the second fiscal month multiplied by .15, plus (iii)
Average Daily Sales in the third fiscal month multiplied by .30, plus (iv)
Average Daily Sales in the fourth fiscal month multiplied by .45.
If the Pre-Closing Period is longer than four fiscal months, the parties shall
in good faith negotiate an appropriate applicable formula to calculate Weighted
Average Daily Sales.
"WELFARE PLAN" means any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, (a) which any Seller or any ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or under
which such Seller or any ERISA Affiliate may incur any Liability and (b) which
covers (or covered) any employee or former employee of the Business (with
respect to their relationship with such entity).
"WORKING CAPITAL" shall have the meaning given it in SCHEDULE
2.04.
"WORKING CAPITAL RANGE" means $97,000,000 to $103,000,000.
Section 1.02 OTHER DEFINED TERMS. The following terms have the meanings
defined for such terms in the Sections set forth below:
TERM SECTION
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Adjustment Statement 2.04(C)
Aggregate Fair Market Value 2.05
Agreement Preamble
Alternative Termination Amount 7.02
Apportioned Obligations 2.06(B)
Assets 2.01(A)
Assumed Contracts 2.01(A)(iii)
Assumed Leases 3.14(B)(i)
Assumed Liabilities 2.02(A)
Assumption Agreement 6.02(A)(iii)
Bank Assets 3.27
Bankruptcy Code Recitals
Bankruptcy Court Recitals
Bankruptcy Termination Amount 7.02
Xxxx of Sale 6.02(B)(i)
Business Recitals
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TERM SECTION
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CERCLA 3.19(B)
Closing 6.01(A)
Closing Date 6.01(A)
Closing Date Balance Sheet 2.04(B)
COBRA Continuation Coverage 5.08(C)(iii)
Competing Offer 5.11(A)
Consent 3.05
Contested Adjustments 2.04(C)
Contested Adjustment Notice 2.04(C)
Disclosure Schedule Preamble of Article 3
Employment Laws 3.17
Environmental Laws 3.19(A)
Escrow Amount 2.03
Estimated Closing Date Balance Sheet 2.04(A)
Estimated Closing Date Working Capital 2.04(A)
Excluded Assets 2.01(B)
Final Disclosure Schedule 5.05(B)
Financing 4.05
Financing Letter 4.05
Indemnification Threshold 8.01(C)
Indemnified Party 8.01(D)
Indemnifying Party 8.01(D)
Independent Accountant 2.04(C)
Intellectual Property 2.01(A)(v)
Leased Real Property 3.14(B)(i)
Material Contracts 3.13(A)
Original Disclosure Schedule 5.05(B)
Owned Real Property 3.14(A)(i)
Parent Preamble
Purchase Price 2.03
Purchaser Preamble
Purchaser Parties 8.01(A)
Purchaser Savings Plan 5.08(A)(i)
Purchaser Savings Trust 5.08(A)(i)
Purchaser Welfare Plans 5.08(C)(ii)
Retained Liabilities 2.02(B)
Restricted Period 5.12
Restricted Area 5.12
Sale Procedure Order 5.11(A)
Section 7.03(B)(i) Termination Amount 7.02
Seller(s) Recitals
Seller Savings Plan 5.08(A)(ii)
Seller Savings Trust 5.08(A)(ii)
Seller Welfare Plans 5.08(C)(i)
Settlement Amount Certificate 2.04(C)
Settlement Date 2.04(D)
Taxpayer(s) 3.20(A)
Termination Amount 7.01(C)
Transfer Taxes 2.06(A)
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XXXX XXXXXXX
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Transition Services Agreement 5.13
USOP Preamble
Working Capital Collar 2.04(E)(i)
Section 1.03 CONSTRUCTION.
(A) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the singular
or plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; (v) the word "including" shall
mean "including, without limitation;" and (vi) the word "or" shall be
disjunctive but not exclusive.
(B) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications thereto.
(C) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(D) The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against either party.
(E) The annexes, schedules and exhibits to this Agreement are
a material part hereof and shall be treated as if fully incorporated into the
body of the Agreement.
(F) Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified and shall
be counted from the day immediately following the date from which such number of
days are to be counted.
(G) All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
(H) Any reference to "knowledge" or "known" means, (i) with
respect to a Seller, those facts and circumstances actually known, or would be
known after reasonable inquiry, by such Seller's directors, chief executive
officer or president (or in the absence of either, general manager), chief
financial officer (or most senior financial officer), controller, chief
operating officer (or most senior operating officer), and most senior sales
managers, which will also include the directors and executive officers of USOP,
the senior staff of USOP-NA, the Area Managers and Zone Presidents of USOP-NA,
the Zone controllers, and the Zone HR managers of USOP-NA, and, (ii) with
respect to the Parent or Purchaser, those facts and circumstances actually
known, or would be known after reasonable inquiry, by any of the officers of
Parent or Purchaser.
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ARTICLE 2.
PURCHASE AND SALE
Section 2.01 PURCHASE AND SALE OF ASSETS.
(A) Upon the terms and subject to the conditions contained
herein, at the Closing, USOP and each other Seller shall, and USOP shall cause
each other Seller to, sell, convey, transfer, assign and deliver to Purchaser,
and Purchaser shall purchase and accept, all of each such Seller's right, title
and interest in and to the properties and assets exclusively used in, held for
use in or relating to the operation of the Business, free and clear of any and
all Encumbrances (other than Assumed Encumbrances), other than the Excluded
Assets (the "ASSETS"), including, without limitation, all right, title and
interest in and to the following:
(i) all equipment, furniture, fixtures, machinery,
vehicles and other tangible personal property owned by Sellers;
(ii) all real property owned by Sellers;
(iii) all Contracts and all purchase orders
outstanding as of the Closing (the "ASSUMED CONTRACTS");
(iv) all accounts, accounts receivable, rights to
payment and rebates receivable;
(v) all general intangibles and intangible
property, including without limitation, all Intellectual Property Rights (the
"INTELLECTUAL PROPERTY");
(vi) all refunds or, deposits made by any Seller to
any other Person and prepaid expenses;
(vii) all items of Inventory, including, without
limitation, raw materials, work in process, finished goods, supplies and spare
parts;
(viii) all Licenses issued or granted by any
Government Authority;
(ix) all Bank Assets set forth on SCHEDULE 3.27;
(x) all assets reflected on the Closing Date
Balance Sheet delivered pursuant to SECTION 2.04(B); and
(xi) all books, records, files and papers relating
to the foregoing.
(B) Notwithstanding anything contained in this Agreement
to the contrary, the parties expressly acknowledge and agree that Sellers shall
retain, and the Assets shall not include, any of the following assets (the
"EXCLUDED ASSETS"):
(i) cash, cash equivalents, marketable securities
and investments, stock, debt instruments (except to the extent specifically
assumed pursuant to this Agreement), options, and other securities (including
all of the stock or membership interests of all of the Subsidiaries owned by
USOP);
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(ii) the corporate charter, articles of
organization, operating agreement, by-laws, qualifications to conduct business
as a foreign corporation or limited liability company, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock or membership interest
transfer books, blank stock certificates, and other documents relating to the
organization, maintenance, and existence of the Sellers as corporations or
limited liability companies;
(iii) any of the rights of the Sellers under this
Agreement, the Escrow Agreement, or any of the Collateral Agreements or any
order of the Bankruptcy Court relating to this Agreement;
(iv) insurance policies; and
(v) all assets related to the Sellers' businesses
operated as USRefresh, XxXxxxxxx'x, and Kentwood & Xxxxxxxx and all of those
rights, properties, and other assets identified on SECTION 2.01(B)(v) OF THE
DISCLOSURE SCHEDULE;
Section 2.02 ASSUMPTION OF LIABILITIES.
(A) Upon the terms and subject to the conditions contained
herein, at the Closing, the Purchaser shall assume and become responsible for
only the following Liabilities of the Sellers relating to the operation of the
Business and no other Liabilities or obligations (the "ASSUMED LIABILITIES"):
(i) all Liabilities arising from and after the
Closing under the Assumed Contracts (excluding any Liability for any breach
thereof on or prior to the Closing Date);
(ii) all Liabilities set forth on the Closing Date
Balance Sheet delivered pursuant to SECTION 2.04(B);
(iii) Liabilities with respect to Employees or
Employee benefits as provided in SECTION 5.08; and
(iv) all Liabilities with respect to payments not
exceeding the amounts specified on SCHEDULE 2.02(A)(iv).
(B) Notwithstanding anything contained in this Agreement
to the contrary, the parties expressly acknowledge and agree that Purchaser
shall not assume or in any manner whatsoever be liable or responsible for any
Liabilities of any Seller, or any predecessors or Affiliates of the Seller,
other than the Assumed Liabilities. Without limiting the foregoing, the
following Liabilities shall be retained by USOP and each other Seller (the
"RETAINED LIABILITIES"):
(i) all Liabilities with respect to any
Indebtedness;
(ii) all Liabilities of any Seller or any
predecessor or Affiliates of any Seller for Taxes; provided that Apportioned
Obligations and Transfer Taxes shall be paid in the manner set forth in SECTION
2.06;
(iii) all Liabilities arising under any Assumed
Contracts other than those Liabilities specifically assumed by Purchaser
pursuant to SECTION 2.02(A)(i);
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(iv) all Liabilities for cure amounts payable to the
other parties to the Assumed Contracts;
(v) all Liabilities relating to any leased
Facilities of any Seller which, on or prior to the Closing Date, are no longer
used in connection with the operation of the Business;
(vi) all Liabilities with respect to any employees
of any Sellers who have been terminated or who have left a Seller's employ on
or prior to the Closing Date other than to become Employees;
(vii) all Liabilities arising out of or relating to
the Excluded Assets or the use and/or operation thereof;
(viii) all Liabilities for any legal, accounting,
investment banking, brokerage or similar fees or expenses incurred by any
Seller in connection with, resulting from or attributable to the transactions
contemplated by this Agreement;
(ix) all Liabilities of any Seller, or any
predecessor(s) or Affiliate(s) of any Seller, resulting from, caused by or
arising out of, directly or indirectly, the conduct of their respective
businesses or ownership or lease of any of their properties or assets or any
properties or assets previously used by any Seller at any time prior to or on
the Closing Date, including without limitation such of the foregoing (i) as
constitute, may constitute or are alleged to constitute a tort, breach of
contract or violation of requirement of any Law, or (ii) that relate to, result
in or arise out of any Pre-Closing Environmental Matters, including, without
limitation, the existence or imposition of any Liability to remediate or
contribute or otherwise pay any amount under or in respect of any
environmental, superfund or other environmental cleanup or remedial Laws,
occupational safety and health Laws or other Laws;
(x) all Liabilities for all existing Claims arising
out of, resulting from or relating to, directly or indirectly, the Assets
and/or the Business and all Liability for all Claims that arise out of, result
from or relate, directly or indirectly, to the Assets or the Business, in each
case on or prior to the Closing Date; and
(xi) all Liabilities with respect to Employees or
Employee benefits not assumed pursuant to SECTION 2.02(A)(iii) AND (iv)).
Section 2.03 PURCHASE PRICE. In consideration for the sale by each
Seller of the Assets being sold to Purchaser pursuant to this Agreement, at the
Closing, Purchaser shall:
(i) pay to USOP an amount in cash equal to
$250,000,000, subject to adjustment as provided in SECTION 2.04 and SECTION
2.07 (the "PURCHASE PRICE"), minus the Escrow Amount; and
(ii) pursuant to the Escrow Agreement, pay to the
Escrow Agent cash in an amount equal to $37,500,000 (the "ESCROW AMOUNT").
Section 2.04 WORKING CAPITAL ADJUSTMENTS.
(A) PRE-CLOSING ADJUSTMENTS. At least five (5) days prior
to the Closing Date the Sellers shall prepare and deliver to the Purchaser (i)
an estimated unaudited balance sheet for the Business prepared in accordance
with GAAP and reflecting the assets and liabilities in accordance with the
procedures set forth in SCHEDULE 2.04 (the "ESTIMATED CLOSING DATE BALANCE
SHEET") and (ii) an estimated
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calculation of the Closing Date Working Capital for the Business as of the
Closing Date (the "ESTIMATED CLOSING DATE WORKING CAPITAL"), each of which
shall be prepared in the form and otherwise in accordance with the procedures
set forth on SCHEDULE 2.04. To the extent that the Estimated Closing Date
Working Capital is greater or less than the Minimum Working Capital, the
Purchase Price shall be adjusted at Closing as provided in SECTION 2.04(E).
(B) POST-CLOSING ADJUSTMENTS. As soon as practicable after
the Closing Date, but in any event within 90 days after the Closing Date, the
Purchaser shall prepare and deliver to the Sellers (i) an audited balance sheet
for the Business (the "CLOSING DATE BALANCE SHEET") prepared in accordance with
GAAP and reflecting the assets and liabilities in accordance with the
procedures set forth in SCHEDULE 2.04, such Closing Date Balance Sheet to be
audited by a nationally recognized accounting firm reasonably acceptable to the
parties hereto, and (ii) a calculation of the Closing Date Working Capital as
of the close of business on the Closing Date, each of which shall be prepared
by the Purchaser in the form and otherwise in accordance with the procedures
set forth on SCHEDULE 2.04. The Sellers and the Purchaser shall have the right
to dispute the Closing Date Balance Sheet (and any items therein) and the
Closing Date Working Capital calculation and make any proposed adjustments
thereto as provided in SECTION 2.04(C) hereto. To the extent that the Closing
Date Working Capital is greater than or less than the Estimated Closing Date
Working Capital, the difference shall be paid on the Settlement Date as
provided in SECTION 2.04(E).
(C) DISPUTE RESOLUTION PROCEDURES. The Sellers shall have
until thirty (30) days after the delivery of the Closing Date Balance Sheet and
the Closing Date Working Capital calculation, to review such balance sheet and
calculation and propose any adjustments thereto. In the event that the Sellers
do not provide such a notice of disagreement within such thirty-day (30) period
or the Sellers affirmatively notify the Purchaser that they agree with the
calculation of the Closing Date Balance Sheet and the Closing Date Working
Capital, the Sellers shall be deemed to have accepted the Closing Date Balance
Sheet and the calculation of the Closing Date Working Capital delivered by the
Purchaser, which shall be final, binding and conclusive for all purposes
hereunder. All adjustments proposed by the Sellers shall be set out in detail
in a written statement delivered to the Purchaser (the "ADJUSTMENT STATEMENT")
and shall be incorporated into the Closing Date Balance Sheet and taken into
account in the calculation of Closing Date Working Capital, unless the
Purchaser shall object in writing to such proposed adjustments (the proposed
adjustment or adjustments to which Purchaser objects are referred to herein as
the "CONTESTED ADJUSTMENTS" and the Purchaser's objection notice is referred to
herein as the "CONTESTED ADJUSTMENT NOTICE") within thirty (30) days of
delivery by the Sellers to the Purchaser of the Adjustment Statement. If the
Purchaser delivers a Contested Adjustment Notice to the Sellers, the Purchaser
and the Sellers shall use reasonable efforts to resolve their dispute regarding
the Contested Adjustments, but if a final resolution thereof is not obtained
within thirty (30) days after the Purchaser delivers to the Sellers said
Contested Adjustment Notice, the Purchaser and the Sellers shall promptly
retain a nationally recognized independent accounting firm (other than
PricewaterhouseCoopers LLP), acceptable to both the Sellers and the Purchaser
(the "INDEPENDENT ACCOUNTANT") to resolve any remaining disputes concerning the
Contested Adjustments. If the Independent Accountant is retained, then (i) the
Sellers and the Purchaser shall each submit to the Independent Accountant in
writing not later than ten (10) days after the Independent Accountant is
retained their respective positions with respect to the Contested Adjustments,
together with such supporting documentation as they deem necessary or as the
Independent Accountant requests, and (ii) the Independent Accountant shall,
within thirty (30) days after receiving the positions of both the Sellers and
the Purchaser and all supplementary supporting documentation requested by the
Independent Accountant, render its decision as to the Contested Adjustments
(and only with respect to the Contested Adjustments), which decision shall be
final and binding on, and nonappealable by, the Sellers and the Purchaser and
shall be enforceable by Purchaser or Sellers in any court of competent
jurisdiction. The fees and expenses of the Independent Accountant shall be paid
by the party whose estimate of the Closing Date Working Capital is furthest
from the Independent Accountant's calculation of the Closing
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Date Working Capital. The decision of the Independent Accountant shall also
include a certificate of the Independent Accountant setting forth the final
Closing Date Balance Sheet (the "SETTLEMENT AMOUNT CERTIFICATE"). The Closing
Date Balance Sheet shall be deemed to include all proposed adjustments not
disputed by the Purchaser and those adjustments accepted or made by the
decision of the Independent Accountant in resolving the Contested Adjustments.
(D) There shall be a "SETTLEMENT DATE" after the
calculation of the Closing Date Balance Sheet which shall mean the following,
as applicable:
(i) If the Sellers have not timely delivered an
Adjustment Statement to the Purchaser, thirty-five (35) days after the date the
Sellers receives the Closing Date Working Capital calculation;
(ii) If the Sellers have timely delivered an
Adjustment Statement and the Purchaser has not timely delivered a Contested
Adjustment Notice, thirty-five (35) days after the date the Purchaser receives
the Adjustment Statement;
(iii) If the Sellers and the Purchaser have any
disputes regarding Contested Adjustments and they resolve all of those
disputes, five (5) Business Days after such resolution;
(iv) If the Seller and the Purchaser retain an
Independent Accountant pursuant to SECTION 2.04(C) above, five (5) Business
Days after the Independent Accountant delivers the Settlement Amount
Certificate; or
(v) Such other date as shall be agreed between the
Sellers and the Purchaser.
(E) Any pre-Closing adjustment to the Purchase Price
pursuant to SECTION 2.04(A) and any post-Closing adjustment to the Purchase
Price by either USOP or Purchaser pursuant to SECTION 2.04(B) shall be
determined in accordance with the following:
(i) there shall be no adjustment to the Purchase
Price under SECTION 2.04(A) to the extent that either the Estimated Working
Capital Excess or the Estimated Working Capital Shortfall is equal to or less
than three million dollars ($3,000,000) (the "WORKING CAPITAL COLLAR");
(ii) if there is an Estimated Working Capital Excess
greater than the Working Capital Collar, then the Purchase Price paid at
Closing shall be increased by an amount equal to the difference between the
Estimated Working Capital Excess and the Working Capital Collar;
(iii) if there is an Estimated Working Capital
Shortfall greater than the Working Capital Collar, then the Purchase Price paid
at Closing shall be decreased by an amount equal to the difference between the
Working Capital Collar and the Estimated Working Capital Shortfall;
(iv) if there has been an adjustment to the Purchase
Price pursuant to SECTION 2.04(E)(ii) and the Closing Date Working Capital is
within the Working Capital Range, then the amount by which the Purchase Price
was increased pursuant to SECTION 2.04(E)(ii) shall be paid to Purchaser on the
Settlement Date from the Escrow Account in accordance with the terms of the
Escrow Agreement;
(v) if there has been an adjustment to the Purchase
Price pursuant to SECTION 2.04(E)(iii) and the Closing Date Working Capital is
within the Working Capital Range, then Purchaser shall pay to USOP on the
Settlement Date the amount by which the Purchase Price was decreased pursuant
to SECTION 2.04(E)(iii);
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(vi) if there has been an adjustment to the Purchase
Price pursuant to SECTION 2.04(E)(ii) and the Closing Date Working Capital is
less than $97,000,000, then on the Settlement Date the Purchaser shall be paid
from the Escrow Account in accordance with the terms of the Escrow Agreement
the amount by which the Purchase Price was increased pursuant to SECTION
2.04(E)(ii) plus the difference between $97,000,000 and the Closing Date
Working Capital;
(vii) if there has been an adjustment to the Purchase
Price pursuant to SECTION 2.04(E)(iii) and the Closing Date Working Capital is
greater than $103,000,000, then Purchaser shall pay to USOP on the Settlement
Date any amount by which the Purchase Price was decreased pursuant to SECTION
2.04(E)(iii) plus the difference between the Closing Date Working Capital and
$103,000,000;
(viii) if there was an Estimated Working Capital
Excess or if the Estimated Closing Date Working Capital equals the Minimum
Working Capital and the Closing Date Working Capital exceeds the Minimum
Working Capital, then to the extent that the difference between the Closing
Date Working Capital and the Minimum Working Capital exceeds the Working
Capital Collar plus the amount of the increase to the Purchase Price under
SECTION 2.04(E)(ii), if any, then Purchaser shall pay to USOP on the Settlement
Date the amount by which (x) the difference between the Closing Date Working
Capital and the Minimum Working Capital exceeds (y) the Working Capital Collar
plus the amount of the increase to the Purchase Price under SECTION
2.04(E)(ii), if any;
(ix) if there has been an adjustment to the Purchase
Price pursuant to SECTION 2.04(E)(ii) and the Closing Date Working Capital
exceeds the Minimum Working Capital by at least the amount of the Working
Capital Collar but is less than the amount of the increase to the Purchase
Price under SECTION 2.04(E)(ii), then on the Settlement Date the Purchaser
shall be paid from the Escrow Account in accordance with the terms of the
Escrow Agreement the amount by which (x) the amount of the increase to the
Purchase Price under SECTION 2.04(E)(ii) exceeds (y) the difference between the
Closing Date Working Capital and the Minimum Working Capital;
(x) if there was an Estimated Working Capital
Shortfall or if the Estimated Closing Date Working Capital equals the Minimum
Working Capital and the Closing Date Working Capital is less than the Minimum
Working Capital, then to the extent that the difference between the Closing
Date Working Capital and the Minimum Working Capital exceeds the Working
Capital Collar plus the amount of the decrease to the Purchase Price under
SECTION 2.04(E)(iii), if any, then on the Settlement Date the Purchaser shall
be paid from the Escrow Account in accordance with the terms of the Escrow
Agreement the amount by which (x) the difference between the Closing Date
Working Capital and the Minimum Working Capital exceeds (y) the Working Capital
Collar plus the amount of the decrease to the Purchase Price under SECTION
2.04(E)(iii), if any;
(xi) if there has been an adjustment to the Purchase
Price pursuant to SECTION 2.04(E)(iii) and the Closing Date Working Capital is
less than the Minimum Working Capital by at least the amount of the Working
Capital Collar but is less than the amount of the decrease to the Purchase
Price under SECTION 2.04(E)(iii), then on the Settlement Date the Purchaser
shall pay to USOP the amount by which (1) the amount of the decrease to the
Purchase Price under SECTION 2.04(E)(iii) exceeds (2) the difference between
the Closing Date Working Capital and the Minimum Working Capital; and
(xii) in the event that any amount set forth in
clause (iv) through (xi) above, as the case may be, is not paid on the
Settlement Date (unless due to the fault of the party who is to receive such
payment), the party obligated to make such payment shall also pay to the other
party interest on the amount of such payment at a rate of eleven percent (11%)
per annum, which shall accrue from the Settlement Date to the date of actual
payment.
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Section 2.05 ALLOCATION OF PURCHASE PRICE. Purchaser shall prepare
IRS Form 8594 (and, any comparable or similar form under state, local or
foreign law) allocating the Purchase Price (including any adjustments pursuant
to SECTION 2.04) and the amount of the Assumed Liabilities among the Assets in
accordance with Section 1060 of the Internal Revenue Code and shall forward it
(within 120 days) after the Closing to USOP for its approval, which approval
shall not be unreasonably withheld, conditioned or delayed. USOP and Purchaser
will negotiate in good faith to resolve any dispute concerning the allocation.
Purchaser and Sellers shall each file with their respective federal income Tax
Return for the tax year in which the Closing occurs, IRS Form 8594 (and any
comparable or similar form under state, local or foreign law) containing the
information agreed upon by the parties pursuant to the immediately preceding
sentence. Purchaser agrees to report the purchase of the Assets, and Sellers
agree to report the sale of the Assets, on their respective Tax Returns in a
manner consistent with the information agreed upon by the parties pursuant to
this SECTION 2.05 and contained in its IRS Form 8594 (and any comparable or
similar form under state, local or foreign law). Neither Sellers nor Purchaser
shall take a position in any Tax Return, Tax proceeding, Tax audit or otherwise
inconsistent with the information agreed upon by the parties pursuant to this
SECTION 2.05; PROVIDED, HOWEVER, that nothing contained herein shall require
Sellers or Purchaser to contest any proposed deficiency or adjustment by any
Taxing authority which challenges such allocation, or exhaust administrative
remedies before any Taxing authority in connection therewith, and Sellers and
Purchaser shall not be required to litigate before any court (including without
limitation the United States Tax Court), any proposed deficiency or adjustment
by any Taxing authority which challenges such allocation. Sellers and Purchaser
shall give prompt notice to the other of the commencement of any Tax audit or
proceeding or the written assertion of any proposed deficiency or adjustment by
any Taxing authority which challenges such allocation.
Section 2.06 TRANSFER TAXES AND APPORTIONED OBLIGATIONS.
(A) Purchaser and Sellers shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer, sales, use, and stamp
taxes, any transfer, recording, registration and other fees and any similar
taxes that become payable as a direct result of the transactions contemplated
hereby ("TRANSFER TAXES"). The Transfer Taxes that become payable as a result
of the transfers pursuant to this Agreement and as a result of the sale of the
Assets shall be paid 50% by Purchaser and 50% by Sellers. Notwithstanding the
foregoing, the Approval Order shall contain a provision that the sale,
transfer, assignment and conveyance of the Assets to Purchaser hereunder shall
be entitled to the protections afforded under Section 1146(c) of the Bankruptcy
Code.
(B) All real property taxes, personal property taxes and
similar ad valorem obligations levied with respect to the Assets for any Tax
period that includes (but does not end on) the Closing Date (collectively, the
"APPORTIONED OBLIGATIONS") shall be apportioned between the Sellers and
Purchaser based on the number of days of such Tax period up to and including
the Closing Date and the number of days of such Tax period after the Closing
Date. The Sellers shall be liable for the proportionate amount of such Taxes
that is attributable to the portion of the Tax period up to and including the
Closing Date, and Purchaser shall be liable for the proportionate amount of
such taxes that is attributable to the portion of the Tax period beginning
after the Closing Date.
(C) Apportioned Obligations and Transfer Taxes shall be
timely paid, and all applicable filings, reports and returns shall be filed, as
provided by applicable law. If the party required by applicable law to pay any
such Tax is not the party responsible for such Tax under this Agreement, the
paying party shall be entitled to reimbursement from the non-paying party.
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Section 2.07 ADJUSTMENT FOR SALES DECLINE.
(A) If the Weighted Average Daily Sales (for the
Pre-Closing Period) is more than 12.5% but not more than 15% below the Average
Daily Sales for the Base Period, then the Purchase Price shall be reduced in
accordance with the following formula:
Amount of the Purchase Price adjustment (in dollars) = (Average Daily Sales for
the Base Period - Weighted Average Daily Sales for the pre-Closing Period) x
252 x $0.40
(The number 252 represents the number of days that the Business is open for
business during a fiscal year.) The Purchase Price adjustment in this SECTION
2.07 shall be in addition to, and separate from, the adjustment contemplated by
SECTION 2.04.
(B) If there is a Material Sales Decline, and
notwithstanding the fact that such condition may constitute a Material Adverse
Change or Material Adverse Effect, provided that the Purchase Price adjustment
pursuant to this SECTION 2.07(B) does not exceed $50,000,000, Purchaser shall
have the option to elect, in its sole discretion, to waive its right to
terminate this Agreement as a result of the Material Sales Decline and instead
complete the transactions contemplated by this Agreement with a downward
adjustment in the Purchase Price calculated using the formula set forth in
SECTION 2.07(A) above. If Purchaser elects to complete the transactions
contemplated by this Agreement pursuant to the terms of this SECTION 2.07(B),
(i) it shall notify Sellers of such election no more than two days following
the date on which it receives from Sellers the information required by SECTION
6.04(S), and the Purchase Price adjustment under this SECTION 2.07(B) shall be
based upon the information contained therein (without regard to any additional
period of time that occurs prior to the Closing); and (ii) the Sellers shall be
obligated to complete the transactions in accordance with the terms and
conditions of this Agreement. The adjustment under this SECTION 2.07(B) shall
be in lieu of, and not in addition to, the adjustment set forth in SECTION
2.07(A) above. If Purchaser elects to complete the transactions contemplated by
this Agreement pursuant to the terms of this SECTION 2.07(B), it shall not be
entitled to make any indemnity claims against Sellers pursuant to Article 8 in
respect of the Material Sales Decline (provided that the information delivered
to Purchaser pursuant to Section 6.04(S) is true and correct).
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF USOP AND THE OTHER SELLERS
As an inducement to Purchaser and Parent to enter into this
Agreement, Sellers hereby make, jointly and severally, as of the date hereof
and as of the Closing Date, the following representations and warranties to
Purchaser and Parent, except as otherwise set forth in a written disclosure
schedule (the "DISCLOSURE SCHEDULE") delivered by Sellers to Purchaser prior to
the date hereof and attached hereto, and as updated and replaced in accordance
with SECTION 5.05, which contains schedules numbered to correspond to various
sections of this ARTICLE 3 and which sets forth certain exceptions to the
representations and warranties contained in this ARTICLE 3 and certain other
information called for by this Agreement. Unless otherwise specified, (i) each
reference in this Agreement to any numbered schedule is a reference to that
numbered schedule that is included in the Disclosure Schedule and (ii) no
disclosure made in any particular numbered schedule of the Disclosure Schedule
shall be deemed made in any other numbered schedule of the Disclosure Schedule
unless expressly made therein (by cross-reference or otherwise) or unless, and
only to the extent that, it is apparent on the face of such disclosure that
such disclosure contains information that also modifies another representation
and warranty therein.
Section 3.01 ORGANIZATION AND GOOD STANDING. Each Seller has been
duly incorporated or organized, is validly existing and in good standing under
the laws of its respective jurisdiction of organization and has the requisite
corporate or other organizational power and authority to own, operate
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or lease the properties and assets now owned, operated or leased by it and to
carry on its business as currently conducted by such Seller. Each Seller is
duly qualified to do business and is in good standing in each jurisdiction
where the character of its properties owned, operated or leased or the nature
of its activities makes such qualification necessary, except where the failure
to be so qualified, licensed or in good standing would not reasonably be
expected to have a Material Adverse Effect.
Section 3.02 AUTHORIZATION AND EFFECT OF AGREEMENT. Each Seller has
the requisite corporate power and authority to execute and to deliver this
Agreement, the Ancillary Agreements and the Collateral Agreements (as
applicable) to which it will be a party and, in the event the Sale Procedure
Order and the Approval Order are entered by the Bankruptcy Court, to perform
its obligations hereunder and under such Collateral Agreements and the
Ancillary Agreements. The execution and delivery by each Seller of the
Collateral Agreements and the Ancillary Agreements to which it will be a party
have been (or will be at the time of execution thereof) duly authorized by all
necessary corporate or other organizational action on the part of such Seller.
The execution and delivery of this Agreement, and in the event the Sale
Procedure Order and the Approval Order are entered by the Bankruptcy Court, the
performance by each Seller of its obligations hereunder and thereunder and the
consummation by each Seller of the transactions contemplated hereby and
thereby, have been duly authorized by such Seller's Board of Directors (as
applicable) and no other corporate action on the part of any Seller is
necessary to authorize the execution and delivery of this Agreement, the
Ancillary Agreements, the Collateral Agreements or the consummation of the
transactions contemplated hereby or thereby.
This Agreement has been duly and validly executed and
delivered by each Seller and constitutes a valid and binding obligation of each
Seller, enforceable against each Seller in accordance with its terms, subject
(a) to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, including, without limitation, for purposes of this
representation and warranty being made as of the Closing Date, the discretion
of the Bankruptcy Court for so long as the Bankruptcy Court retains
jurisdiction over the Chapter 11 Cases, and (b) as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity), and (c) for purposes of this
representation and warranty being made as of the date hereof (but not for
purposes of this representation and warranty being made as of the Closing
Date), to the commencement of the Chapter 11 Cases and entry of the Approval
Order. The Ancillary Agreements and each of the Collateral Agreements, when
executed and delivered by USOP or any Seller, as applicable, at the Closing,
shall constitute a valid and binding agreement of USOP or such Seller,
enforceable against USOP or such Seller in accordance with its terms, subject
(a) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
moratorium and similar laws affecting creditors' rights and remedies generally,
including, without limitation, the discretion of the Bankruptcy Court for so
long as the Bankruptcy Court retains jurisdiction over the Chapter 11 Cases,
and (b) as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
Section 3.03 NO CONFLICT. The execution and delivery by each Seller
of this Agreement and, in the event the Sellers commence the Chapter 11 Cases
and Approval Order is entered by the Bankruptcy Court, the execution and
delivery of the Ancillary Agreements and the Collateral Agreements and the
performance by each Seller of the transactions contemplated by this Agreement,
the Ancillary Agreements or such Collateral Agreements, as applicable, will
not, (a) conflict with, or result in any violation of, or constitute a default
under (except as a result of the Chapter 11 Cases), or, as applicable, give
rise to the creation of any Encumbrance upon any of the Assets or to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
benefit under, (i) any provision of the certificate of incorporation or bylaws
or other applicable constituent documents of any Seller, (ii) any of the terms,
conditions or provisions of any Contract by which any Seller is bound and (iii)
any Law
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applicable to or binding on any Seller or any of its respective assets, except
in the case of (i), (ii) or (iii), where such conflict, violation, default,
termination, cancellation, Encumbrance, acceleration or loss would not have a
Material Adverse Effect, (b) materially and adversely affect the ability of
Purchaser to own, use or operate the Assets following the Closing in
substantially the same manner as the Assets are presently owned, used or
operated by any Seller, (c) create any Encumbrance on or any right of any third
party to purchase, use or operate, any of the Assets that would result in a
Material Adverse Effect or (d) accelerate or trigger any right or obligation of
any party under any Assumed Contract that would have a Material Adverse Effect.
Section 3.04 NO THIRD PARTY OPTIONS. There are no existing
agreements, options or commitments granting to any Person the right to acquire
any Seller's right, title or interest in or to any of the Assets or any
interest therein.
Section 3.05 CONSENTS AND GOVERNMENTAL APPROVALS. Other than in
connection with the Chapter 11 Cases, the entry of the Sale Procedure Order,
the entry of the Approval Order, the filing of the Premerger Notification and
Report form, and the expiration of the waiting period, under the HSR Act or
under SECTION 3.07, no consent, approval, authorization, License, order or
permit of, or declaration, filing or registration with, or notification to, any
Governmental Authority or any other Person, is required to be made or obtained
by any of the Sellers in connection with the execution, delivery and
performance of this Agreement and the Collateral Agreements and the
consummation of the transactions contemplated hereby and thereby where the
failure to obtain such consent, approval, License, order, permit, or
declaration, or make such filing, registration or notification would not
reasonably be expected to have a Material Adverse Effect (each being a
"CONSENT").
Section 3.06 TITLE TO, CONDITION AND SUFFICIENCY OF ASSETS. Each
Seller has, and at the Closing such Seller shall convey to Purchaser, good,
valid and marketable title to, or valid leasehold interests in, as the case may
be, the Assets held by it, free and clear of all Encumbrances other than
Permitted Encumbrances. The Assets, constituting tangible property, (i) are in
reasonably good operating condition and repair (subject to normal wear) and
have been maintained in the ordinary course of business such that the condition
of such Assets would not materially and adversely affect the ability of
Purchaser to own or use the Assets or operate the Business and (ii) are usable
in the regular and ordinary course of business. The Assets are sufficient for
the continued conduct of the Business after the Closing in substantially the
same manner as conducted prior to Closing. After the Closing, there will be no
assets held by, or services performed by, USOP or any other Seller that relate
to the Business, other than Excluded Assets and assets and services provided
for in the Transition Services Agreement.
Section 3.07 ASSUMED CONTRACTS. The Assumed Contracts are valid and
enforceable in accordance with their terms, subject to applicable bankruptcy,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity. No Seller is, and, to the knowledge of the Seller, no other party
thereto is, in material default in the performance, observance or fulfillment
of any obligation under any Assumed Contract (other than payments or amounts
due thereunder, which shall be paid or discharged by USOP at or prior to the
Closing), and, to the knowledge of the Seller, no event has occurred, which
with or without the giving of notice or lapse of time or the occurrence of any
event, condition or circumstance would constitute a material default
thereunder. None of the Assumed Contracts requires the consent of any party to
its assignment to the Purchaser in connection with the transactions
contemplated hereby except as set forth on SCHEDULE 6.04(I).
Section 3.08 FINANCIAL STATEMENTS.
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(A) Attached as SECTION 3.08(A) OF THE DISCLOSURE
SCHEDULE are true and complete copies of (i) the Annual Financial Statements
and (ii) the Interim Financial Statements. Except as set forth in the notes
thereto, all such financial statements were prepared in accordance with GAAP
and fairly present in all material respects the consolidated financial
condition and results of operations of the Business as of the respective dates
thereof and for the respective periods covered thereby, subject to, in each
case the absence of footnotes and in the case of the Interim Financial
Statements, normally recurring year-end adjustments (the effect of which is
not expected to be material individually or in the aggregate).
(B) None of the Sellers has any material Liabilities
relating to the Business that would be required under GAAP to be reflected in
financial statements (including, without limitation, in footnotes thereto)
other than (i) Liabilities reflected on the Interim Financial Statements (ii)
Liabilities disclosed on SCHEDULE 3.08(B), or (iii) current Liabilities
incurred since December 30, 2000 in the ordinary course of business (none of
which is a Liability resulting from breach of contract, breach of warranty,
tort, infringement or other Claim), consistent with each Seller's past
practice.
Section 3.09 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
December 30, 2000, (x) each Seller and the Business have been operated in the
ordinary course of business consistent with past practice in all material
respects with reasonable efforts to preserve the Business intact, to keep
available the services of the Personnel and to preserve (in the good faith
judgment of the Sellers within the context of the Chapter 11 Cases) the
goodwill of each Seller's suppliers, customers and others having business
relations with such Seller; and (y) there has been no Material Adverse Change.
Without limiting the generality of the foregoing, since December 30, 2000, and
with respect to the Business there has been no:
(A) (i) increase in the compensation payable or to
become payable by each Seller to any of their respective Personnel, except for
normal periodic increases in the ordinary course of business consistent with
past practice (in any event not exceeding 5% of base compensation), (ii)
bonus, incentive compensation, service award or other like benefit granted,
made or accrued, contingently or otherwise, for or to the credit of any of
their Personnel other than pursuant to existing plans, (iii) employee welfare,
pension, retirement, profit-sharing or similar payment or arrangement made or
agreed to or adopted by any Seller for any of their Personnel except pursuant
to the existing Employee Plans described in SECTION 3.16 OF THE DISCLOSURE
SCHEDULE, (iv) new employment agreement entered into which any Seller is a
party other than in the ordinary course of business consistent with past
practice; or (v) compensation and retention plans for management entered into
in connection with the Chapter 11 Cases, except as set forth on SECTION 3.09
TO THE DISCLOSURE SCHEDULE;
(B) addition to or modification of the Employee Plans
applicable to the Business or the Personnel other than (i) contributions made
in accordance with the normal practices of each Seller or (ii) the extension
of coverage to Personnel of each Seller who became eligible after December 30,
2000;
(C) sale, assignment or transfer of any material assets
of any Seller relating to the Business other than the sale of Inventory in the
ordinary course of business;
(D) waiver of any rights of substantial value to any
Seller that constitute Assets;
(E) cancellation, termination or amendment of any
Material Contract, License set forth on SECTION 3.12 OF THE DISCLOSURE
SCHEDULE or other instrument material to the Business that adversely affects
the Sellers or the Business in any material respect;
(F) capital expenditure or any incurring of Liability
therefor by Sellers, other than capital expenditures in accordance with
approved capital expenditure plans, which involve payments that do not
individually exceed $250,000;
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(G) change in accounting methods or practices by
Sellers except such changes required as a result of the Chapter 11 Cases;
(H) revaluation by Seller of any of their respective
assets or properties, including without limitation, writing off notes
receivable or accounts receivable, but excluding the write-off of goodwill and
rebates receivable;
(I) damage, destruction or Loss (whether or not covered
by insurance) materially and adversely affecting the Assets or the Business;
(J) execution, termination, or material amendment of
any lease for real or personal property by any Seller involving annual
payments in excess of $50,000;
(K) payments or any other consideration to customers or
suppliers, other than payments under, and in accordance with the terms of,
Contracts in effect on the date hereof and other payments in the ordinary
course of business consistent with past practice;
(L) mortgage or pledge, or any Encumbrance (other than
any Permitted Encumbrance, the Amended and Restated Guarantee and Collateral
Agreement dated February 2, 2001 between USOP and various lenders, and any
Security and Pledge Agreements of USOP and its Subsidiaries executed in
connection with the Chapter 11 Cases) on any material Asset or group of Assets
that are material in the aggregate; or
(M) any agreement by any Seller to do any of the
foregoing.
Section 3.10 LITIGATION. SECTION 3.10 OF THE DISCLOSURE SCHEDULE
identifies and contains a brief description of (a) any Governmental Order,
other than orders entered by the Bankruptcy Court relating to the Business or
the Assets, and (b) any Action, other than the Chapter 11 Cases, relating to
or affecting the Business or the Assets or the transactions described herein
or contemplated hereby that is currently (i) pending or (ii), to the knowledge
of the Sellers, threatened and would reasonably be expected to have a Material
Adverse Effect if adversely determined. No Seller is in default with respect
to any Action or Governmental Order and there are no unsatisfied judgments or
awards against any Seller or any of the Assets.
Section 3.11 COMPLIANCE WITH LAWS. Each Seller conducts, and at
all times since being acquired by USOP or any of its Subsidiaries has
conducted, the Business in compliance in all material respects with all
applicable Laws. No Seller has received any written notice to the effect that
with respect to the operation of the Business or the ownership of the Assets
(i) such Seller is not currently in material compliance with any applicable
Laws or (ii) any currently existing circumstances are likely to result in a
failure of such Seller to comply with, or a violation by such Seller of, any
Laws, except where such non compliance or violation would not constitute a
Material Adverse Effect. With respect to the Business, no Seller has, since
being acquired by USOP or any of its Subsidiaries, conducted any internal
investigation with respect to any actual, potential or alleged material
violation of any Law by a Seller, or any of its Personnel that would
reasonably be expected to have a Material Adverse Effect.
Section 3.12 LICENSES. SECTION 3.12 OF THE DISCLOSURE SCHEDULE
sets forth a true and correct list of each of the material Licenses held by
each Seller or issued by any Governmental Authority with respect to the
operation of the Business or the use or ownership of any of the Assets. Such
Licenses constitute all of the material Licenses required for the conduct of
the Business in compliance with Law as presently conducted. Each such License
is valid, binding and in full force and effect and no Seller is in default (or
with the giving of notice or lapse of time or the occurrence of any other
condition, event or
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circumstance, would be in default) under any such License in any material
respect. There are no Actions or any other proceedings pending, nor to the
knowledge of any Seller, threatened, that seek the revocation, cancellation,
suspension or adverse modification of any such material License. All required
filings with respect to such Licenses have been timely made and all required
applications for renewal thereof have been timely filed, except for such
filings or applications the failure of which to timely make would not have a
Material Adverse Effect.
Section 3.13 MATERIAL CONTRACTS.
(A) SECTION 3.13 OF THE DISCLOSURE SCHEDULE lists the
following Contracts relating to the Business to which USOP or any other Seller
is a party or by which any of them or their assets may be bound (collectively,
the "MATERIAL CONTRACTS") in effect as of the date of this Agreement:
(i) any Contract (or group of related Contracts
between the same parties) that the Seller reasonably anticipates will involve
annual payments by or to the Seller of more than $200,000;
(ii) any Contract containing covenants limiting
the freedom of the Seller to engage in any line of business or compete with
any Person;
(iii) any distribution, franchise, license, sales,
commission, consulting agency or advertising Contracts (or group of related
Contracts between the same parties) which the Seller reasonably anticipates
will involve annual payments by or to the Seller of more than $100,000 if any
such Contract is not cancelable by the Seller on thirty (30) calendar days' or
less notice without payment, increased cost or penalty;
(iv) any Contract (or group of related Contracts)
(a) relating to Indebtedness of any Seller, (b) under which any Seller has
granted, or may grant, an Encumbrance on any of its Assets or (c) under which
any Seller has incurred any obligations for any performance bonds, payment
bonds, bid bond, surety bonds or other instruments posted or deposited by or
for the benefit of any Seller in connection with the Business;
(v) any Contract (or group of related Contracts
between the same parties), including without limitation any Contract (or group
of related Contracts between the same parties) that shall be executed between
the date hereof and Closing, relating to the sale or disposition of Assets of
any Seller (other than the sale of Inventory in the ordinary course of
business);
(vi) any Contract to which any Zone Managing
Director, Zone President, officer or director of any Seller is bound which in
any manner purports to (a) restrict such Zone Managing Director's, Zone
President's, officer's or director's freedom to engage in any line of business
or any business activity or to compete with any other Person or to use any
information, or (b) assign to any other Person rights to any material
invention, improvement, or discovery by such Zone Managing Director, Zone
President, officer or director;
(vii) any Contract relating to registered
trademarks, service marks, logos, corporate names, protected models, designs,
created works, trade names or other trade rights of the Sellers;
(viii) any joint venture Contract, partnership
agreement, limited liability company opFerating agreement or other Contract
(however named) relating to the Assets or the Business involving a sharing of
profits, losses, or Liabilities by any Seller with any other Person;
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(ix) any Contract providing for payments to or by
any Person or entity based on sales, purchases or profits, other than direct
payments for goods, that the Seller reasonably anticipates will involve annual
payments by or to the Seller of more than $150,000;
(x) any Contract (or group of related Contracts
between the same parties) providing for capital expenditures after the date
hereof in an amount in excess of $250,000 annually;
(xi) any written warranty, guaranty or other
similar undertaking with respect to contractual performance extended by the
Seller other than with respect to Inventory sold in the ordinary course of
business that Seller reasonably anticipates will involve an aggregate
obligation in excess of $50,000;
(xii) any Contract (or group of related Contracts
between the same parties) not entered into in the ordinary course of business
consistent with past practice or under which the consequences of a default or
termination would reasonably be expected to have a Material Adverse Effect on
the Sellers or the Business.
Each Seller has delivered or made available to Purchaser, or will deliver to
Purchaser, or will make available to Purchaser at USOP's headquarters in
Washington, D.C., at or prior to the delivery of the Final Disclosure Schedule,
true, correct and complete copies of all of the Material Contracts listed on
SECTION 3.13(A) OF THE DISCLOSURE SCHEDULE, including all amendments and
supplements thereto.
(B) All outstanding purchase orders issued to Sellers
by customers for goods or services were issued in the ordinary course of
business and contain terms and conditions consistent with past practice.
Section 3.14 REAL PROPERTY.
(A) (i) SECTION 3.14(A)(i) OF THE DISCLOSURE
SCHEDULE describes and lists the name of the record owner of all real property
used in the Business and now owned by any Seller (the "OWNED REAL PROPERTY").
Each of the Sellers has good and marketable fee simple title to all of the
Owned Real Property owned by it, free and clear of all Encumbrances except for
Permitted Encumbrances. There are no leases, subleases, licenses, occupancy
agreements, options, rights, concessions or other agreements or arrangements,
written or oral, granting to any Person an option, right of first refusal or
other right to purchase, or the exclusive right to use or occupy or enjoy any
of the Owned Real Property, nor is any Person other than Sellers currently in
possession or occupancy of any Owned Real Property, except as shown on
SCHEDULE 3.14(A)(i).
(ii) All Improvements owned, leased, or used by
each Seller on the Owned Real Property are in reasonably good condition and
repair in all material respects (normal wear and tear excepted), and such
Improvements (including their rooftops and building systems) are, to the
knowledge of the Sellers, free from material structural defects. Each Seller
has obtained all material Licenses required to be obtained by it from any
Governmental Authority having jurisdiction over any of the Owned Real Property
required for the ownership, occupancy and use of any of the Owned Real
Property by the Seller in the operation of the Business as currently
conducted, and any agreement, easement or other right from any other Person,
necessary to permit the permanent lawful use and operation of the Improvements
and the Owned Real Property or any driveways, roads and other means of egress
and ingress to and from any of the Owned Real Property and each such permit,
agreement, easement or other right is in full force and effect, and there is
no pending, or to the knowledge of the Sellers, threatened proceeding which
could result in the modification or cancellation thereof except, in each case,
for deviations from the foregoing which would not reasonably be expected to
materially impair the continued use of such Owned Real
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Property for the use currently being made thereof. No Improvement, or the
operation or maintenance thereof, violates any restrictive covenant or
easement, the cure or discontinuance of which violation would materially
impair the continued use of such Owned Real Property by the Seller for the use
currently being made thereof.
(iii) To Seller's knowledge, the Owned Real
roperty and the Improvements are sufficiently supplied in all material
respects with utilities and other services as necessary for the operation of
such Owned Real Property and Improvements as currently operated, including
adequate water, storm and sanitary sewer, gas, and electricity. No improvement
or portion thereof is dependent for its access, operation or utility on any
land, building or other improvement not included in the Owned Real Property.
(iv) No Seller has received written notice of any
special assessment in an amount greater than $150,000, individually or in the
aggregate, relating to any Owned Real Property or any portion thereof, and to
the knowledge of the Sellers, no such special assessment is pending or
threatened. There are no pending or, to the knowledge of the Sellers,
threatened condemnation proceedings with respect to any of the Owned Real
Property.
(v) Prior to the date hereof, each Seller has
delivered to Purchaser true and correct copies of all title reports, title
policies and surveys with respect to any of the Owned Real Property.
(vi) All Owned Real Estate Property and the
Improvements thereon, as well as the use thereof, comply with applicable
zoning laws and Sellers are not a nonconforming user pursuant to any of such
laws.
(vii) No Owned Real Property or Improvement
thereon has suffered any fire or other casualty loss that has not been fully
repaired and restored to its original condition prior to the date hereto.
(viii) No portion of the Owned Real Property is
located in a special flood hazard area as designed by any federal governmental
authorities.
(ix) All roads bounding the Owned Real Property
are public roads and the deeds contemplated by SECTION 6.02 are the only
instruments necessary to convey to Purchaser full access to such roads free
and clear of any liens and encumbrances, except for the Permitted Encumbrances.
(x) No Seller is a party to or otherwise bound
by any leasing commission or brokerage agreements with respect to any Owned
Real Property or Assumed Leases (hereinafter defined) for which Parent or
Purchaser or any of their Affiliates will have any liability.
(xi) The Owned Real Property consists of
sufficient land, parking areas, driveways and other improvements and lawful
means of access and utility service to permit the use thereof in the manner
and for the material purposes to which it is presently devoted and is
otherwise suitable and adequate in all material respects for its current use,
operation and occupancy.
(B) (i) SECTION 3.14(B)(i) OF THE DISCLOSURE
SCHEDULE lists all real property (including all land and buildings) which is
leased by any Seller as lessee or sublessee (the "LEASED REAL PROPERTY"). The
Sellers have delivered or made available to Purchaser complete and accurate
copies of the written leases and subleases for all Leased Real Property,
including all amendments and modifications pursuant to which the Sellers lease
the Leased Real Property (the "ASSUMED LEASES"). Except as
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disclosed in SECTION 3.14(B)(ii) OF THE DISCLOSURE SCHEDULE, no Seller has
received notice of, or has knowledge of, condemnation or eminent domain
proceedings pending or threatened against any Leased Real Property. Except as
disclosed in SECTION 3.14(B)(ii) OF THE DISCLOSURE SCHEDULE, no Seller has
received any notice from any city, village or other Governmental Authority of,
or otherwise has any knowledge of, any zoning, ordinance, building, fire or
health code or other legal violation in respect of any Leased Real Property,
other than violations which have been corrected or which, individually or in
the aggregate, would not have a Material Adverse Effect. Other than for
exceptions to the following which are set forth in SECTION 3.14(B)(ii) OF THE
DISCLOSURE SCHEDULE:
(a) Each Seller has good, marketable and
insurable title to the Leased Real Property pursuant
to the Assumed Leases, the Assumed Leases are in full
force and effect and are valid, binding and
enforceable in accordance with their respective
terms;
(b) No material amount payable under any
Assumed Lease is past due beyond any applicable cure
period except those contested as due and owing under
a lease;
(c) Each Seller is in compliance in all
material respects with all covenants, commitments and
obligations on its part to be performed or observed
under such Assumed Lease and is not aware of the
failure by any other party to such Assumed Leases to
comply in all material respects with all of its
commitments and obligations;
(d) No Seller has received any written
notice (i) of a material default (which has not been
cured), offset or counterclaim under any Assumed
Lease, or any other communication calling upon it to
comply with any provision of any Assumed Lease or
asserting noncompliance therewith or asserting that
any Seller has waived or altered its rights
thereunder, and to Sellers' knowledge no event or
condition has happened or presently exists which
constitutes a material default or, after notice or
lapse of time or both, would constitute a material
default under any Assumed Lease on the part of any
Seller or on the part of any other party, or (ii) of
any Action against any party under any Assumed Lease
which if adversely determined would result in such
Assumed Lease being terminated or cut off; and
(e) No Seller has subleased, assigned,
mortgaged, pledged or otherwise encumbered its
interest under any Assumed Lease or entered into any
license, sublease or occupancy agreement with respect
to any Leased Real Property, nor has any such party
entered into any agreement or commitment to take any
such action.
(ii) Each Leased Real Property (a) is in good
operating condition and repair and is structurally sound, with no material
alterations or repairs being required thereto under the terms of the relevant
lease or sublease, applicable law or insurance company requirements; and (b)
to Seller's knowledge, consists of sufficient land, parking areas, driveways
and other improvements and lawful means of access and utility service to
permit the use thereof in the manner and for the material purposes to which it
is presently devoted. Except as set forth in SCHEDULE 3.14(B)(ii), the Sellers
are in exclusive possession and occupancy of the Leased Real Property and no
Leased Real Property is subject to any third party rights or encumbrances
other than the rights of the lessors under the Assumed Leases. There are no
pending or, to the Seller's knowledge, threatened proceedings regarding the
amount of the Taxes on each Seller's leasehold interest in the Leased Real
Property, or relating to condemnation of any portion
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thereof or impact fees, special assessments or similar matters with respect
thereto. No material work is required to be performed on any Leased Real
Property in order to bring such property into compliance with any Assumed
Lease, law or insurance company requirement.
(C) The Owned Real Property and the Leased Real
Property are all of the real property used in the Business as currently
conducted, plus shared facilities described in SCHEDULE 3.14(B)(e). No Seller
owns or holds, or is obligated under or a party to, any contractual agreement
to purchase, acquire, sell, assign or dispose of any real property or interest
therein, nor to lease any real property not shown on SCHEDULE 3.14(B)(i),
other than in ordinary course of business.
Section 3.15 INTELLECTUAL PROPERTY RIGHTS. SECTION 3.15 OF THE
DISCLOSURE SCHEDULE lists each material patent, registered and unregistered
trademark, service xxxx, trade dress, logo, trade name, copyright, mask work
and registration or application for any of the foregoing owned or held by each
Seller and used in the conduct of the Business. The Intellectual Property
constitutes all of the material intellectual property necessary to conduct the
Business in the manner presently conducted. None of the Intellectual Property
owned or used by Sellers is the subject of any pending or, to the knowledge of
USOP or any other Seller, threatened Action. No other Person, to the knowledge
of the Sellers, (i) has the right to use any of the Intellectual Property used
in the conduct of the Business or (ii) is infringing upon any Intellectual
Property owned by the Sellers, or which has been developed by the Sellers for
its proprietary use, and in each case used in the conduct of the Business. No
Seller's use of the Intellectual Property in the conduct of the Business is
infringing upon or otherwise violating the rights of any other Person. No
proceedings have been instituted against or notices received by any Seller
that are presently outstanding alleging that the Seller's use of the
Intellectual Property used in the conduct of the Business infringes upon or
otherwise violates any rights of a third party in or to such Intellectual
Property.
Section 3.16 EMPLOYEE BENEFIT MATTERS.
(A) DISCLOSURE; DELIVERY OF COPIES OF RELEVANT DOCUMENTS
AND OTHER INFORMATION. SECTION 3.16(A) OF THE DISCLOSURE SCHEDULE contains a
complete list of Employee Plans other than oral Benefit Arrangements which are
immaterial individually or in the aggregate. Except as set forth on Schedule
3.16(A), USOP has, or has caused each Seller to have delivered or made
available to Purchaser a true and complete set of copies of (i) all Employee
Plans and related trust agreements, annuity contracts or other funding
instruments; (ii) the latest IRS determination letter obtained with respect to
any such Employee Plan qualified or exempt under Section 401 or 501 of the
Internal Revenue Code; (iii) Forms 5500 and certified financial statements for
the most recently completed three fiscal years for each Employee Plan required
to file such form, together with the most recent actuarial report, if any,
prepared by the Employee Plan's enrolled actuary; (iv) all summary plan
descriptions for each Employee Plan required to prepare, file and distribute
summary plan descriptions; and (v) the form of notification to employees of
the Business of their rights under Section 4980B of the Internal Revenue Code.
(B) REPRESENTATIONS. Except as set forth in SECTION
3.16(B) OF THE DISCLOSURE SCHEDULE:
(i) PENSION PLANS
(a) Neither the Seller nor any ERISA
Affiliate sponsors, maintains, contributes to, nor is the Seller nor any ERISA
Affiliate required to contribute to, nor has the Seller nor any ERISA
Affiliate (while affiliated with USOP) ever contributed to, or been required
to contribute to, a Pension Plan which is subject to title IV of ERISA or
Section 412 of the Internal Revenue Code.
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(b) Each Pension Plan that is intended to
be qualified under Section 401 of the Internal Revenue Code and each related
trust agreement, annuity contract or other funding instrument has been
determined by the IRS to be qualified and tax-exempt under the provisions of
Internal Revenue Code Sections 401(a) and 501(a).
(c) Each Pension Plan and each related
trust agreement, annuity contract or other funding instrument is in material
compliance with its terms and, both as to form and in operation, with the
requirements prescribed by any and all statutes, orders, rules and regulations
which are applicable to such plans, including without limitation ERISA and the
Internal Revenue Code.
(ii) MULTIEMPLOYER PLANS. There are no
Multiemployer Plans, and neither the Seller nor any ERISA Affiliate (while
affiliated with USOP) has ever maintained, contributed to, participated or
agreed to participate in a Multiemployer Plan.
(iii) WELFARE PLANS.
(a) Each Welfare Plan which covers
employees or former employees of any Seller (with respect to their
relationship with such entities) has been maintained, and presently is, in
material compliance with its terms and, both as to form and operation, with
the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Welfare Plan, including without
limitation ERISA and the Internal Revenue Code.
(b) Sellers do not provide retiree, life
or medical benefits coverage other than as required by law.
(c) Each Welfare Plan which is a "group
health plan," as defined in Section 607(1) of ERISA, is in material compliance
with the provisions of Part 6 of Title I, Subtitle B of ERISA and Section
4980B of the Internal Revenue Code.
(iv) BENEFIT ARRANGEMENTS. Each Benefit
Arrangement is in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Benefit Arrangement, including, without limitation, the
Internal Revenue Code.
(v) LITIGATION. There is no action, order, writ,
injunction, judgment or decree outstanding or Claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation relating to
or seeking benefits under any Employee Plan that is pending or, to the
knowledge of the Seller, threatened or anticipated against the Seller or any
ERISA Affiliate other than routine claims for benefits.
(vi) UNPAID CONTRIBUTIONS. Each Seller or its
ERISA Affiliate has made all required contributions under each Employee Plan
for all prior periods or proper accruals have been made and are reflected on
the appropriate balance sheet and Books and Records of the Seller. No Employee
Plan is subject to any tax under Section 511 of the Internal Revenue Code.
(vii) PARACHUTE PAYMENTS. There is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Seller that, individually or collectively, provides for the payment by any
Seller of any amount that is an "excess parachute payment" pursuant to Section
280G of the Internal Revenue Code as a result of Purchaser's acquisition of
the Business.
(viii) NO AMENDMENTS. No Seller or any ERISA
Affiliate has any announced plan or legally binding commitment to create any
additional Employee Plans which are intended to cover
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employees or former employees of the Business or to amend or modify any
existing Employee Plan which covers or has covered employees or former
employees of the Business.
(ix) NO OTHER MATERIAL LIABILITY. No event has
occurred in connection with which Purchaser or any Employee Plan, directly or
indirectly, could be subject to any material Liability (A) under any statute,
regulation or governmental order relating to any Employee Plans or (B)
pursuant to any obligation of the Seller or any ERISA Affiliate to indemnify
any person against Liability incurred under any such statute, regulation or
order as they relate to the Employee Plans.
(x) NO ACCELERATION OR CREATION OF RIGHTS.
Neither the execution and delivery of this Agreement nor any of the Collateral
Agreements by USOP or the other Sellers, as applicable, nor the consummation
of the transactions contemplated hereby or thereby will result in the
acceleration or creation of any rights of any Employee to benefits under any
Employee Plan (including, without limitation, the acceleration of the accrual
or vesting of any benefits under any Pension Plan or the acceleration or
creation of any rights under any severance, parachute or change in control
agreement).
Section 3.17 LABOR MATTERS. (i) no Seller has entered into any
severance or similar arrangement in respect of any present employee of the
Seller that will result in any obligation (absolute or contingent) of
Purchaser to make any payment to any present employee of the Seller following
termination of employment or upon a change of control of the Seller; (ii)
within the preceding 12 months, no Seller has engaged in any unfair labor
practice and there are no complaints against the Seller pending before the
National Labor Relations Board or any similar state or local labor agency by
or on behalf of any employee of any Seller; (iii) no Seller is a party to, or
a participant in any negotiation of, any collective bargaining agreement or
other labor agreement with respect to its employees with any labor
organization, union, group or association, and there are no employee unions
(nor any other similar labor or employee organizations) under federal, state
or local laws, customs or practice; (iv) within the preceding 12 months, there
have been no representation questions, arbitration proceedings, labor strikes,
slow downs or stoppages, grievances or other labor disputes pending or, to the
knowledge of the Seller, threatened with respect to the employees of the
Seller, and no Seller has experienced any attempt by organized labor to cause
the Seller to comply with or conform to demands of organized labor relating to
its employees or to enter into a binding agreement with organized labor that
would cover any or all of its employees; and (v) each Seller is complying in
all material respects with all Laws relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health and plant closings (hereinafter collectively
referred to as the "EMPLOYMENT LAWS"), except for such noncompliance as is
unlikely to result in any material liability to Purchaser.
Section 3.18 SUBSIDIARIES. SECTION 3.18 OF THE DISCLOSURE
SCHEDULE sets forth the name of each Subsidiary of USOP (whether owned,
directly or indirectly, through one or more intermediaries) engaged in the
Business. The following information for each Subsidiary is set forth in
SECTION 3.18 OF THE DISCLOSURE SCHEDULE, if applicable: (i) its name and
jurisdiction of incorporation or organization, (ii) each jurisdiction in which
the conduct of each Subsidiary's business, the ownership or lease of its
properties, require it to be so qualified, and (iii) the location and
description (listed under each Subsidiary) of each (x) Owned Real Property or
(y) Leased Real Property used in the Business by each Subsidiary.
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Section 3.19 ENVIRONMENTAL MATTERS.
(A) (i) Each Seller is and at all times has been in
compliance with all Laws relating to health, safety, pollution or the
environment (including, without limitation, the Handling of Substances or the
presence of Substances on, under or from any real property) ("ENVIRONMENTAL
LAWS"), and (ii) each Seller is in compliance with all of their Licenses
issued under Environmental Laws.
(B) No Seller has received any written request for
information, or been notified that it is a potentially responsible party,
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended ("CERCLA"), or any similar state, local or foreign law
with respect to the Handling of Substances or to any real property, Facility,
or any other location used in connection with the Business of the Seller.
(C) No Seller has received any written notice of any
violation or alleged violation of any Environmental Law.
(D) There are no writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, claims, proceedings or
investigations pending or, to the Seller's knowledge, threatened, relating to
compliance with or Liability under any Environmental Laws affecting the Seller.
(E) None of the Owned Real Property or Leased Real
Property is listed or, to the knowledge of the Seller, proposed for listing on
the "National Priorities List" under CERCLA, or on the Comprehensive
Environmental Response, Compensation and Liability Information System
maintained by the United States Environmental Protection Agency, as updated
through the Closing Date, or any similar state list of sites requiring
investigation or cleanup.
(F) There is no Substance that may pose any material
risk to safety, health or the environment at, on, under, or migrating from any
real property owned, leased or operated by each Seller, currently or in the
past, and there has heretofore been no spillage, discharge, release or
disposal of any such Substance at, on, or under such property in any amount
and of a nature which could reasonably be expected to result in material
Liability to the Seller.
Section 3.20 TAX MATTERS.
(A) USOP and each other Seller (hereinafter sometimes
referred to collectively as the "TAXPAYERS" or individually as a "TAXPAYER")
have duly filed with the appropriate Tax authorities all material Tax Returns
required to be filed by each of them, and such Tax Returns are true, complete,
and correct in all material respects.
(B) Each Taxpayer has duly paid in full all material
Taxes that are due and payable by such Taxpayer, on or before the Closing Date.
(C) There is no audit or other matter in controversy
with respect to any material Taxes due and owing by any Taxpayer, and there is
no Tax deficiency or Claim assessed or, to the knowledge of Sellers, proposed
or threatened against any Taxpayer, other than in respect of any such audit,
controversy, deficiency, assessment, or proposed assessment that is being
contested in good faith, for which adequate reserves have been established in
accordance with GAAP, and which is set forth on SECTION 3.20 OF THE DISCLOSURE
SCHEDULE;
(D) Each Taxpayer has withheld all material Taxes
required to have been withheld and paid by it in connection with amounts paid
or owing to any employee, independent contractor,
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creditor, stockholder, or other third party, and such withheld Taxes have
either been duly paid to the proper Governmental Authority or set aside in
accounts for such purpose;
(E) No material Claim has been made by an authority in
a jurisdiction where a Taxpayer does not file Tax Returns that such Taxpayer
is or may be subject to taxation by that jurisdiction;
(F) None of the Assets of the Taxpayers (i) are
required to be treated as being owned by any other Person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the
Internal Revenue Code, (ii) secures any debt the interest on which is
tax-exempt under Internal Revenue Code Section 103(a), or (iii) is tax-exempt
use property within the meaning of Internal Revenue Code Section 168(h);
(G) Any Seller that is a limited liability company
which is not disregarded as an entity separate from USOP for United States
federal and state income tax purposes is treated, and has been treated since
its formation, as a partnership, and is not, and has never been, treated as an
association taxable as a corporation for United States federal and state
income tax purposes; and
(H) The representations and warranties set forth in
subsections (A), (B), (C), (D) and (E) of this SECTION 3.20 are not applicable
to the extent that the Assets cannot be made subject to Encumbrances for Taxes
and Purchaser cannot be made liable for Taxes relating to the matters
constituting breaches of such representations and warranties.
(I) There are no material Encumbrances for Taxes (other
than for current Taxes not yet due and payable) on the Assets.
Section 3.21 INSURANCE. The Sellers maintain insurance coverage
customary for business similar in scope and size to the Business.
Section 3.22 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS.
SECTION 3.22 OF THE DISCLOSURE SCHEDULE sets forth a complete
and accurate list of the names of USOP-NA's (taken as a whole) (i) twenty-five
(25) largest customers for the fiscal years ended April 24, 1999 and April 29,
2000, as well as year-to-date (through January 27, 2001), showing the
approximate aggregate total sales in dollars by USOP-NA to each such customer
during each such period; and (ii) twenty-four (24) largest suppliers for the
fiscal years ended April 24, 1999 and April 29, 2000, as well as year-to-date
(through January 27, 2001), showing the approximate aggregate total purchases in
dollars by USOP-NA (taken as a whole) from each such supplier during each such
period.
Section 3.23 AFFILIATE TRANSACTIONS. No director, officer,
senior manager or Affiliate of any Seller or member of any such Person's
immediate family (as defined in Instruction 2 to Item 404(a) of Regulation S-K
under the Securities Act of 1933, as amended) owns a greater than 10%
beneficial interest in any material property used by the Sellers or is a party
(or the beneficial owner of a 10% or greater interest in a party) to any
agreement, contract, commitment or transaction with the Seller that involves
an amount in excess of $100,000.
Section 3.24 ACCOUNTS RECEIVABLE AND REBATES RECEIVABLE.
(A) The accounts receivable, unbilled invoices, and
other debts relating to the Business due or recorded in the records and books
of account of each Seller as being due to the Seller (i) represent bona fide
claims of such Seller for sales made, services performed or other valid
consideration
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and will require no other performance by such Seller to render them valid and
enforceable and (ii) are, subject to the reserves reflected on the Closing
Date Balance Sheet, current and collectible in the ordinary course of business
and in any event not later than ninety (90) days after the Closing Date, and
none of such accounts receivable or other debts is subject to any counterclaim
or set-off except to the extent of any such reserve. Since April 29, 2000,
with respect to the Business, no Seller has made any material change in its
credit policies, nor has it materially deviated therefrom.
(B) The rebates receivable relating to the Business due
or recorded in the records and books of account of each Seller as being due to
the Seller (i) represent bona fide claims of such Seller for such rebates and
require no other performance by such Seller to render them valid and
enforceable and (ii) are current and collectible in the ordinary course of
business, and none of such rebates receivable or other debts is subject to any
counterclaim or set-off.
Section 3.25 INVENTORY. All of the Inventory of the Business is
owned by the Sellers free and clear of all Encumbrances except for Permitted
Encumbrances, and such Inventory does not consist of any material amount of
items that are slow-moving, obsolete, damaged or unsalable and do not consist
of any items held on consignment. Except for any reserve for slow-moving,
obsolete, damaged or unsalable Inventory reflected on the Annual Financial
Statements and the Interim Financial Statements and each item of Inventory
reflected thereon had a book value as reflected on such financial statements
equal to the lesser of the Seller's actual cost for such item of Inventory and
the fair market value for such item of Inventory as of the date of such
financial statements.
Section 3.26 PROHIBITED PAYMENTS. No Seller has, directly or
indirectly, (a) made or agreed to make any contribution, payment or gift to
any government official, employee or agent where either the contribution,
payment or gift or the purpose thereof was illegal under the laws of any
federal, state, local or foreign jurisdiction, (b) established or maintained
any unrecorded fund or asset for any purpose or made any false entries on the
Books and Records of such Seller for any reason, (c) made or agreed to make
any contribution, or reimbursed any political gift or contribution made by any
other Person, to any candidate for federal, state, local or foreign public
office or (d) paid or delivered any fee, commission or any other sum of money
or item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which in
any manner relates to the Assets or the Business that such Seller knows or has
reason to believe to have been illegal under any federal, state or local laws
(or any rules or regulations thereunder) of the United States or any other
country having jurisdiction.
Section 3.27 BANKING RELATIONSHIPS. With respect to the
Business, SCHEDULE 3.27 sets forth a complete and accurate description of all
arrangements that each Seller has with any banks, savings and loan
associations or other financial institutions providing for any accounts,
including, without limitation, checking accounts, cash contribution accounts,
safe deposit boxes, borrowing arrangements, certificates of deposit or
otherwise (collectively, the "BANK ASSETS"), indicating in each case account
numbers, if applicable, and the person or persons authorized to act or sign on
behalf of such Seller in respect of any of the foregoing. No person holds any
power of attorney or similar authority from any Seller with respect to such
accounts.
Section 3.28 BROKERS. Except as set forth in SCHEDULE 3.28, no
Broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of USOP, any
Seller or any of their Affiliates for which Parent or Purchaser or any of
their Affiliates will have any Liability.
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Section 3.29 FULL DISCLOSURE. No representation or warranty made
by any Seller in this Agreement and the Final Disclosure Schedule (when the
Final Disclosure Schedule is delivered to and accepted by the Parent and the
Purchaser pursuant to SECTION 5.05(B)) attached to the Agreement or delivered
by any Seller at the Closing to Purchaser in connection with the transactions
contemplated hereby, contains any untrue statement of material fact or omits
to state any material fact necessary in order to make the statement contained
herein not misleading.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Sellers as of the date hereof and as of the Closing Date as
follows:
Section 4.01 ORGANIZATION AND AUTHORITY OF PARENT AND PURCHASER.
(A) Parent and Purchaser are each a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and have all necessary organizational power and
authority to enter into this Agreement, the Ancillary Agreements and into each
Collateral Agreement (as applicable) to which they are a party, to carry out
their obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Parent and
Purchaser of this Agreement, the Ancillary Agreements and of each Collateral
Agreement (as applicable); the performance by Parent and Purchaser of their
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action (including, without limitation, the requisite approval of any
stockholder of Parent and Purchaser) on the part of Parent and Purchaser. This
Agreement has been, and the Ancillary Agreements and each Collateral Agreement
to which either Parent or Purchaser is a party shall be, duly executed and
delivered by Parent or Purchaser, as applicable, and constitutes a legal,
valid and binding obligation of Parent and Purchaser, enforceable in
accordance with its terms, except to the extent such enforceability (a) may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfers and obligations or other similar laws relating to creditors' rights
generally, and (b) is subject to general principles of equity.
Section 4.02 NO CONFLICT. Except as set forth on SCHEDULE 4.02,
the execution and delivery of this Agreement, the Ancillary Agreements and the
Collateral Agreements by Parent and Purchaser does not or will not (as
applicable), and the performance by Parent and Purchaser of the transactions
contemplated by this Agreement, the Ancillary Agreements and such Collateral
Agreements will not, conflict with, or result in any violation of, or
constitute a default under (a) any provision of the certificate of
incorporation or bylaws or any organizational document of Parent or Purchaser,
(b) any of the terms, conditions, or provisions of any material agreement or
other material document by which Parent or Purchaser is bound, or (c) any Law
or order applicable to or binding on Parent or Purchaser. Except as set forth
in SCHEDULE 4.02, and except for the Approval Order and the expiration of the
waiting period under the HSR Act, no Consent is required to be obtained, made
or given (whether pursuant to applicable Law, contract or otherwise) in
connection with the execution and delivery of this Agreement by Parent and
Purchaser or the performance by Parent and Purchaser of the transactions
contemplated hereby.
Section 4.03 LEGAL PROCEEDINGS. There are no Governmental Orders
outstanding and no Actions pending, or to the knowledge of Parent or
Purchaser, threatened against, relating or affecting Parent or Purchaser, or
any of their assets or properties which could reasonably be expected to result
in the issuance of a Governmental Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement, the Ancillary Agreements or by any of the
Collateral Agreements or which could reasonably be expected to have a material
adverse
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effect on the validity or enforceability of this Agreement, Ancillary
Agreements or any of the Collateral Agreements or the ability of Parent and
Purchaser or to perform their obligations hereunder or thereunder.
Section 4.04 BROKERS. No Broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission, in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Purchaser or any of their Affiliates for
which any Seller or any of its Affiliates will have any Liability.
Section 4.05 FINANCING. Parent and Purchaser have delivered to
USOP a complete and correct executed copy of the letter (the "FINANCING
LETTER") issued in connection with the financing of the transaction
contemplated hereby. The financing described in the Financing Letter shall be
referred to herein as the "FINANCING."
ARTICLE 5.
ADDITIONAL COVENANTS
Section 5.01 CONDUCT OF BUSINESS PRIOR TO THE CLOSING.
(A) Between the date of this Agreement and the Closing
Date, each Seller shall conduct the Business in the ordinary course and
consistent with past practice except to the extent prohibited by the
Bankruptcy Court or as otherwise specified in this Agreement. Without limiting
the generality of the foregoing, except (x) for such actions as are expressly
contemplated by this Agreement, and (y) as described in SECTION 5.01 OF THE
DISCLOSURE SCHEDULE, without the prior written consent of Purchaser, with
respect to the Business, USOP shall not, and shall cause each other Seller not
to:
(i) change any accounting methods, principles or
practices or make any Tax election;
(ii) revalue any of the Assets, including,
without limitation, writing off receivables or reserves but excluding the
write-off of goodwill and rebates receivable, other than in the ordinary
course of business;
(iii) establish or increase the benefits payable
under any Pension Plan or Welfare Plan, or otherwise increase the compensation
payable or to become payable to any Personnel, except as may be required by
Law or pursuant to the compensation and retention plans for management entered
into in connection with the Chapter 11 Cases, which plans are set forth on
SECTION 3.09 OF THE DISCLOSURE SCHEDULE;
(iv) enter into, extend, materially modify,
terminate or renew any Assumed Contract;
(v) sell, assign, transfer, convey, lease,
mortgage, pledge or otherwise dispose of or encumber any Assets or any
interests therein, other than sales of Inventory in the ordinary course of
business or the grant of liens, mortgages or pledges in connection with the
DIP Loan;
(vi) acquire by merger or consolidation with, or
merge or consolidate with, or purchase all or substantially all of the assets
of, or otherwise acquire any material assets or business of, any Person or any
other business organization or division thereof;
(vii) fail to expend funds for capital
expenditures or commitments in accordance with the capital expenditure plan;
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(viii) fail to maintain the Assets in substantially
their current state of repair, excepting normal wear and tear, or fail to
replace, consistent with past practice, inoperable, worn-out or obsolete or
destroyed Assets;
(ix) make any material loans or advances to any
Person except for advances to employees for expenses incurred in the ordinary
course of business consistent with the policies of such Seller; PROVIDED that
nothing herein shall preclude USOP from making any loan or advance to a
Subsidiary that is contemplated to be made from the proceeds of the DIP Loan;
(x) collect accounts receivable and pay accounts
payable other than in the ordinary course of business;
(xi) intentionally do any other act which would
cause any representation or warranty of USOP or any other Seller in this
Agreement to become untrue in any material respect; or
(xii) enter into any agreement, or otherwise
become obligated, to do any action prohibited hereunder, except as otherwise
required by the Bankruptcy Court or Bankruptcy Code.
(B) Each Seller agrees that, prior to the Closing, it
shall use its reasonable efforts to preserve substantially intact the
Business, keep available to Purchaser the services of the key Personnel of the
Sellers and, with respect to the Business, preserve the current relationships
of each Seller with the material customers and suppliers of, and other Persons
which have significant business relationships with, each Seller.
(C) For purposes of avoiding doubt, nothing in this
SECTION 5.01 is intended, or shall be deemed, to impose any limitation or
restriction on USOP with respect to activities or matters that are not related
to the Assets or the Business (including, without limitation, USOP's conduct
of the other lines of business in which they are engaged).
Section 5.02 ACCESS TO INFORMATION.
(A) From the date of this Agreement until the Closing,
and in all cases subject to the confidentiality obligations set forth in this
Agreement, upon reasonable notice, the Sellers shall, and shall cause their
respective officers, employees, auditors and agents to, (i) afford the
officers, employees and authorized agents and representatives of Purchaser
reasonable access, during normal business hours, to the offices, properties,
Facilities, real property, Books and Records, (ii) furnish to the officers,
employees and authorized agents and representatives of Purchaser such
additional financial and operating data and other information regarding the
assets, properties, goodwill and business of each Seller (including the work
papers prepared by USOP and its independent auditor in connection with such
auditor's audit of the Annual Financial Statements) and (iii) make available
to Purchaser, the management, employees, officers and directors of the
Sellers, as Purchaser may from time-to-time reasonably request in order to
assist Purchaser in fulfilling its obligations under this Agreement and to
facilitate the consummation of the transactions contemplated hereby. Without
limiting the generality of the foregoing, USOP acknowledges that Purchaser, at
Purchaser's sole cost and expense, shall be entitled to conduct such due
diligence investigation between the date hereof and the Closing as Purchaser
deems necessary or appropriate, so long as all such due diligence shall be
carried out in a manner reasonably intended to avoid material disruption to
the Business, in cooperation with the Sellers' senior officers and managers,
and with due regard to the needs of the Personnel to continue to devote their
primary attention to the operation of the Business (and particularly the
proper service of the customers of the Business). Such due diligence
investigation may include, at the option of Purchaser, (i) "Phase I" and
"Phase II" environmental assessments with respect to the Facilities and such
other analysis, studies and reports with respect to
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environmental matters as Purchaser deems appropriate, (ii) appraisals with
respect to the Assets and (iii) obtaining surveys, title reports and
commitments and title insurance policies with respect to the real property at
the sole cost and expense of Purchaser. USOP agrees to cooperate with
Purchaser in conducting such due diligence review and investigation and to use
commercially reasonable efforts to assist Purchaser in connection with such
due diligence review and investigation, subject to the aforementioned
limitations that are intended to preserve as a priority the reasonable ongoing
management of the Business.
(B) USOP agrees that it shall, and shall cause the
other Sellers to, preserve and keep all Books and Records relating to the
Business in a Seller's possession for a period of at least five (5) years from
the Closing Date. Each party agrees that it will cooperate with and make
available to the other party, during normal business hours, all Books and
Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing Date which
are necessary or useful in connection with any Tax inquiry, audit,
investigation or dispute, any litigation or investigation or any other matter
requiring any such Books and Records, information or employees for any
reasonable business purpose. The party requesting any such Books and Records,
information or employees shall bear all of the out-of-pocket costs and
expenses (including, without limitation, attorneys' fees, but excluding
reimbursement for salaries and employee benefits) reasonably incurred in
connection with providing such Books and Records, information or employees.
USOP may require certain financial information relating to the other Sellers
for periods prior to the Closing Date for the purpose of filing federal,
state, local and foreign Tax Returns and other governmental reports, and
Purchaser agrees to furnish such information at USOP's request and expense.
Section 5.03 CONFIDENTIALITY. The Confidentiality Agreement and
its terms are hereby modified and superseded by this Agreement. All
information received by Purchaser or USOP and their respective representatives
pursuant to the terms of this Agreement or otherwise heretofore provided to
the receiving party in connection with the transactions contemplated hereby
shall be kept in confidence by the receiving party and its representatives and
shall not be used in any manner by such party or its representatives except in
connection with its performance or preparing to perform under this Agreement;
PROVIDED, HOWEVER, that any party hereto may disclose such information to its
legal and financial advisors, lenders, financing sources and their respective
legal advisors and representatives so long as such Persons agree to maintain
the confidentiality of such information in accordance with this SECTION 5.03;
and PROVIDED, FURTHER, that after the Closing, Purchaser shall not be required
to maintain the confidentiality of information obtained prior to Closing about
the Business unless such information relates to continuing obligations of
Sellers under this Agreement, in which case Purchaser shall maintain the
confidentiality of such information after the Closing until after Sellers have
completed the performance of such continuing obligations. If this Agreement
is, for any reason, terminated prior to the Closing, the Confidentiality
Agreement shall continue in full force and effect, without modification (as if
this Agreement had not existed). Upon the Closing, the Confidentiality
Agreement shall be deemed to be terminated and superseded by this Agreement.
Following the Closing, except as otherwise contemplated by this Section 5.03,
Purchaser, USOP and each Seller shall treat such information as confidential,
preserve the confidentiality thereof, not duplicate or use or disclose to any
Person such information and instruct its employees who have had access to such
information to keep confidential and not to use any such information unless
such information (i) is now or is hereafter disclosed, through no act or
omission of the Sellers in a manner making it available to the general public,
(ii) is required by law to be disclosed, or (iii) such information is
disclosed in an Action brought by any party hereto in pursuit of its rights or
in exercise of its remedies hereunder.
Section 5.04 REGULATORY AND OTHER AUTHORIZATIONS, CONSENTS;
FURTHER ASSURANCES. Subject to the terms and conditions herein provided, each
of the parties hereto covenants and agrees to use commercially reasonable
efforts to deliver or cause to be delivered such documents and other papers
and
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to take or cause to be taken such further actions as may be necessary, proper
or advisable under applicable Laws or otherwise to consummate and make
effective the actions contemplated hereby. Without limiting the generality of
the foregoing, each party hereto shall use its commercially reasonable efforts
to (i) obtain all authorizations, Consents (including, as to the Sellers, all
Consents required pursuant to SECTION 6.04(I)), orders and approvals of, and
to give all notices to and make all filings with, all Governmental Authorities
and other third parties that may be or become necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this
Agreement, and each party will cooperate fully with the other parties in
promptly seeking to obtain all such authorizations, Consents, orders and
approvals, giving such notices, and making such filings and (ii) defend and
cooperate with each other in any defending of legal proceedings, whether
judicial or administrative and whether brought derivatively or on behalf of
third parties, challenging this Agreement and/or the agreements referred to
herein or contemplated hereby or the consummation of the transactions
contemplated hereby or thereby. Without limiting the foregoing, each party
shall comply, and shall cause its Affiliates to comply, with the notification
and reporting requirements of the HSR Act. USOP and Purchaser shall each pay
half the cost of any filing required under the HSR Act. Purchaser and Sellers
shall substantially comply with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, by any Antitrust Authority; PROVIDED, HOWEVER, no
party's obligations hereunder shall be deemed to require such party to divest
any assets or properties held by such party or to hold any assets or
properties separately as a condition of obtaining the consent of any Antitrust
Authority to the transactions contemplated hereby. Notwithstanding the
foregoing, neither Purchaser's nor Parent's obligations hereunder shall be
deemed to require Parent or Purchaser to enter into any agreement or other
arrangement for the financing of the transactions contemplated hereby on terms
that are not satisfactory to Purchaser or Parent, in their sole discretion.
Purchaser acknowledges that, for purposes of the foregoing, the terms and
conditions of the Financing Letter are satisfactory to Purchaser, subject to
negotiation and execution of definitive documentation, and Purchaser shall use
its commercially reasonable efforts to negotiate definitive documentation for
the Financing that is consistent with the Financing Letter. No consideration,
whether such consideration shall consist of the payment of money or shall take
any other form, for any consent, waiver or agreement necessary to the
consummation of the transactions contemplated hereby shall be given or
promised by any Seller without the prior written approval of the Purchaser,
unless such consideration shall be paid or given at such Seller's sole cost
and expense without any obligation of the Purchaser or Parent to reimburse
such Seller therefor. The parties hereto acknowledge that time shall be of the
essence in this Agreement and agree not to take any action that will have the
effect of unreasonably delaying, impairing or impeding the receipt of any
required authorizations, Consents, orders or approvals.
Section 5.05 NOTIFICATION OF CERTAIN MATTERS.
(A) Subject to SECTION 5.05(B), from the date hereof
through the Closing, the Sellers shall give prompt notice to Parent and
Purchaser, and Purchaser shall give prompt notice to the Sellers, of (a) the
occurrence, or failure to occur, of any event the occurrence or failure of
which would be likely to cause any of the Sellers' or the Parent's and
Purchaser's respective representations or warranties contained in this
Agreement to be untrue or inaccurate in any material respect and (b) any
material failure of the Sellers, Parent or Purchaser to comply with or satisfy
any of their respective covenants, conditions or agreements to be complied
with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that such
disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement, or to satisfy any condition. Without limiting
the generality of the foregoing, and except with respect to the delivery of
the Final Disclosure Schedule pursuant to SECTION 5.05(B), the parties hereto
agree that a notice given by Sellers to Parent and Purchaser pursuant to (a)
above shall not constitute an amendment to the Disclosure Schedule with
respect to the occurrence, or failure to occur, of the event or events
identified in the notice.
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(B) Notwithstanding subsection 5.05(A), not later than
March 16, 2001, the Sellers shall deliver to Purchaser a Final Disclosure
Schedule (for purposes of this SECTION 5.05, the "FINAL DISCLOSURE SCHEDULE")
with appropriate attachments and exhibits, which Final Disclosure Schedule
shall update the Disclosure Schedule delivered by Sellers as of the date
hereof (such version of the Disclosure Schedule being, for purposes of the
SECTION 5.05, the "ORIGINAL DISCLOSURE SCHEDULE"). The Purchaser shall accept
the Final Disclosure Schedule if the matters included in the Final Disclosure
Schedule which were not included in the Original Disclosure Schedule do not
disclose any facts and circumstances that would permit the Purchaser to
terminate this Agreement pursuant to SECTION 7.03(C)(iv), and otherwise may
accept or reject the Final Disclosure Schedule in its sole discretion. The
Purchaser shall accept the Final Disclosure Schedule by delivering written
notice of such acceptance to the Sellers; PROVIDED that if Purchaser does not
terminate this Agreement pursuant to SECTION 7.03(C)(iv), then the Final
Disclosure Schedule shall be deemed accepted. The Purchaser shall reject the
Final Disclosure Schedule by terminating this Agreement pursuant to SECTION
7.03(C)(iv). If the Purchaser shall accept the Final Disclosure Schedule, the
Final Disclosure Schedule shall become part of this Agreement and shall
replace the Original Disclosure Schedule in its entirety.
Section 5.06 COOPERATION WITH FINANCINGS. Sellers acknowledge
and agree that Parent and Purchaser may use the Annual Financial Statements
and the Interim Financial Statements and other information regarding the
Sellers in connection with financings necessary to consummate the transactions
contemplated hereby. Sellers shall cooperate in a commercially reasonable
manner with Parent and Purchaser prior to the Closing so that Parent and
Purchaser can obtain financing for the transactions contemplated by this
Agreement. The foregoing cooperation of Sellers shall include, but shall not
be limited to, (i) compiling the requisite financial information, (ii)
granting Purchaser and its accountants full and complete access to the Books
and Records and to any Personnel knowledgeable about such Books and Records,
in each case, to the extent reasonably requested by Purchaser, and (iii) using
commercially reasonable efforts to furnish necessary financial information for
interim periods subsequent to December 30, 2000 and prior to the Closing in
connection with such financings.
Section 5.07 INTENTIONALLY OMITTED.
Section 5.08 CERTAIN EMPLOYEE BENEFIT MATTERS.
(A) (i) As soon as is practicable after the Closing
Date, but effective as of such date, Purchaser shall adopt or designate a
401(k) Savings Plan (the "PURCHASER SAVINGS PLAN") and shall establish a trust
pursuant thereto (the "PURCHASER SAVINGS TRUST"). As soon as is practicable
after the Closing Date, Purchaser shall furnish to USOP a determination letter
finding the Purchaser Savings Plan and the Purchaser Savings Trust to be
qualified and tax-exempt under Sections 401(a) and 501(a) of the Internal
Revenue Code.
(ii) As soon as practicable after the USOP's
receipt of a copy of such letter, USOP shall cause the Seller Retirement
Savings Plan (the "SELLER SAVINGS PLAN") and the Seller Retirement Savings
Trust pursuant thereto (the "SELLER SAVINGS TRUST") to transfer to the
Purchaser Savings Plan and Purchaser Savings Trust the accounts under the
Seller Savings Plan and the Seller Savings Trust (including the assets and
Liabilities therein) attributable to all Employees of the Seller. USOP shall
cause all of such accounts to be fully vested upon such transfer. Such
transfer shall be made in the form of cash. Such transfer shall satisfy the
requirements of Code Sections 401(a)(12) and 414(l) and the regulations
pursuant thereto. Prior to such transfer, USOP will provide Purchaser with
such documents and other information as Purchaser shall reasonably request to
assure itself that the Seller's Savings Plan and the Seller's Savings Trust
are qualified and tax-exempt under the provisions of Code Sections 401(a) and
501(a) respectively as of the date of such transfer. Purchaser Savings Plan
shall preserve for the Employees all benefits, rights and features applicable
to such transferred accounts,
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including but not limited to those rights and features protected under Section
411(d)(6) of the Internal Revenue Code. USOP shall provide to Purchaser copies
of such personnel and other records of USOP pertaining to the Employees and
such records of any agent or representative of USOP, in each case pertaining
to the Seller Savings Plan and the Seller Savings Trust and as Purchaser may
reasonably request in order to administer and manage the accounts and assets
transferred to the Purchaser Savings Plan and Purchaser Savings Trust. Upon
such transfer, the Purchaser Savings Plan shall assume the Liabilities with
respect to all amounts transferred from the Seller Savings Plan and the Seller
Savings Trust to the Purchaser Savings Plan and Purchaser Savings Trust in
respect of the Employees. Purchaser and the Seller shall cooperate in the
filing of documents required by the transfer of assets and Liabilities
described herein.
(iii) The Purchaser Savings Plan shall provide to
the Employees all of their benefits accrued under the Seller Savings Plan as
of the date of transfer. The Purchaser Savings Plan shall also provide that an
Employee's period of employment with the Seller, any of their Subsidiaries or
any predecessor thereof (as applicable) for which credit was given under the
Seller Savings Plan shall be given equivalent credit under the Purchaser
Savings Plan to the effect that if any Employee becomes an employee of
Purchaser as of the Closing Date, or thereafter by reason of recall, no
interruption in participation, benefit accrual or vesting service shall be
deemed to have occurred for such Employee under the Purchaser Savings Plan by
reason of the change in employment contemplated by this Agreement.
(B) From and after the Closing Date, Purchaser shall
assume and become solely responsible for any and all post-retirement welfare
benefit coverages and Liabilities of USOP with respect to the former employees
of the Sellers (and their covered dependents and beneficiaries) listed on
SECTION 5.08 OF THE DISCLOSURE SCHEDULE.
(C) (i) From and after the Closing Date and through
December 31, 2001 (or such earlier date as Purchaser may elect), Sellers shall
offer coverage to all Employees under Welfare Plans maintained by Sellers (the
"SELLER WELFARE PLANS"). Upon presentation of invoices indicating the
calculation thereof, Purchaser shall reimburse the Sellers for (a) all direct
expenses for claims paid under such Seller Welfare Plans for the Employees,
net of the amount, if any, reimbursed by Sellers' insurance for such expenses,
and (b) per capita allocation of administrative overhead costs (including but
not limited to out of pocket expenses and insurance coverage) to maintain the
Seller Welfare Plans for the Employees for such period. USOP will attempt in
good faith to arrange for the transfer to Purchaser any assets, insurance
policies or other funding vehicles used to provide coverage for the Employees
under the Seller Welfare Plans.
(ii) Any and all pre-existing condition
limitations and eligibility waiting periods under any Welfare Plans maintained
by Parent and certain Affiliates (the "PURCHASER WELFARE PLAN") shall be
waived with respect to the Employees and their eligible dependents, and
Employees shall be given credit for amounts paid under any Purchaser Welfare
Plan during the same period for purposes of applying deductibles, co-payments
and out-of-pocket maximums as though such amounts had been paid in accordance
with the terms and conditions of the Purchaser Welfare Plans.
(iii) Purchaser shall provide continuation
coverage to Employees and former employees of Sellers (and their covered
dependents and qualified beneficiaries) who are receiving or are eligible to
receive continuation coverage required under Code Section 4980B(f) ("COBRA
CONTINUATION COVERAGE") at the Closing, with respect to whom a qualifying
event occurred prior to the Closing and for which the applicable election
period for COBRA Continuation Coverage has not expired as of the Closing Date,
or with respect to whom a qualifying event occurs as a result of the Closing
of the transaction contemplated by this Agreement in compliance with the
provisions of Code Section 4980B and ERISA
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Section 601 et seq. and shall also provide COBRA Contribution Coverage to any
Employees who remain covered by a Seller Welfare Plan at Purchaser's request.
(iv) Purchaser (a) shall provide disability
benefits under the Purchaser Welfare Plans to Employees (and their covered
dependents and qualified beneficiaries) who are receiving such benefits under
the Welfare Plans as of the Closing Date, with respect to whom a disability
occurred on or prior to the Closing Date, and for whom disability benefits are
still in effect, and (b) shall employ such Employees who return from such
disability on or after the Closing Date on such terms that are provided by
Purchaser to similarly situated Employees at the time such disabled Employee
resumes employment with the Seller.
(v) From and after the Closing Date, each Seller
shall remain responsible for any and all Liabilities with respect to the
Employees or their beneficiaries or dependents that are incurred by such
individuals on or prior to the Closing Date under the applicable Welfare Plans
for health, life, accidental death and dismemberment, supplemental employment
compensation, dental, fringe benefits, expense reimbursement, accident,
sickness and disability benefits. For purposes of this Agreement, (a) a claim
for health benefits (including, without limitation, claims for medical,
prescription drug, dental, and vision care expenses) will be deemed to have
been incurred on the date on which the related medical service was rendered to
the claimant; (b) a claim for sickness or disability benefits will be deemed
to have been incurred on the date such sickness or disability occurs, and (c)
in the case of any claim for benefits other than health benefits (E.G., life
insurance benefits), a claim will be deemed to have been incurred upon the
occurrence of the event giving rise to such claims. Purchaser shall be
responsible for all claims that are incurred by Employees on or after the
Closing Date under the applicable benefit plans, policies or arrangements
providing health, life, accidental death and dismemberment, supplemental
employment compensation, dental, fringe benefits, expense reimbursement,
accident, sickness and disability benefits and which are maintained by
Purchaser.
(D) At or prior to the Closing, Purchaser shall offer
employment, commencing on the Closing Date, to all of the employees
exclusively engaged in the Business at the salary level in effect on the
Closing Date and in accordance with the salary or wage schedules delivered by
USOP to Parent and attached hereto as SCHEDULE 5.08(D), with credit for years
of service, and with benefit plans commensurate to similarly situated
employees of Parent. Purchaser agrees to assume any written employment
agreements covering the Employees, subject to any required consent from the
covered individuals and to indemnify and hold harmless Sellers with respect to
any obligations under such assumed agreements. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement
hereunder shall confer upon any such employees any right to continue in the
employ of, or as a consultant for, the Purchaser, Parent or any of their
Affiliates, or shall interfere with or restrict in any way the rights of the
Purchaser, Parent or any of their Affiliates, which are hereby expressly
reserved, to discharge any such employees at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written employment agreement between the employees and the
Purchaser, Parent or any of their Affiliates.
(E) It is the intention of Sellers and Purchaser to
satisfy the provisions of Section 4204 of ERISA with respect to any obligation
that Sellers may have under any Multiemployer Plan with respect to Employees.
Therefore, Sellers and Purchaser agree as follows:
(i) The Sellers shall use their best efforts to
obtain and furnish to Purchaser at least two (2) Business Days prior to the
Closing Date written representations from all Multiemployer Plans to which the
Sellers contribute with respect to the Business ("Covered Multiemployer
Plans") advising Sellers of their potential complete withdrawal liability with
respect to each such Covered Multiemployer Plan as of the most recent date
practicable before the Closing Date. The following
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provisions of Section 5.08(E) shall then apply so long as the Covered
Multiemployer Plans advise the Sellers of their potential withdrawal liability
which withdrawal liability is equal to or less than $100,000.
(ii) If, as a result of Sellers' cessation of
operations with respect to the Business, Sellers cease (1) operations covered
under any Covered Multiemployer Plan or (2) to have an obligation to
contribute to a Covered Multiemployer Plan under circumstances that would
cause the occurrence of a complete or partial withdrawal by Sellers from such
Covered Multiemployer Plan, then the following provisions shall apply with
respect to such Covered Multiemployer Plan:
(a) Purchaser shall make contributions to
such Covered Multiemployer Plan for substantially the same number of
contribution base units for which USOP or Sellers or both had an obligation to
contribute to the Covered Multiemployer Plan as of the Closing Date;
(b) unless exempt under Pension Benefit
Guaranty Corporation Regulations Sections 4204.11 or 4204.21, Purchaser shall
post a bond, letter of credit or other security, or hold in escrow in favor of
the Covered Multiemployer Plan for a period of five plan years commencing with
the first plan year beginning after the Closing Date in an amount and form
that satisfies the requirements of Section 4204(a)(1)(B) of ERISA; and
(c) in the event that Purchaser withdraws
in a complete or partial withdrawal under Section 4201 of ERISA from a Covered
Multiemployer Plan during the first five years beginning after the Closing
Date, and Purchaser fails to make any withdrawal liability payments when due,
Sellers shall be secondarily liable for any withdrawal liability that Sellers
would have had to the Covered Multiemployer Plan but for the provisions of
this SECTION 5.08(E) and Section 4204 of ERISA, subject, however, to any
limitations on such liability under the Bankruptcy Code or any applicable bar
Orders of the Bankruptcy Code. Nothing in this SECTION 5.08(E) shall
constitute or be construed as an assumption or reaffirmation of any withdrawal
or other liabilities under the Bankruptcy Code.
(F) As of the Closing, Purchaser shall assume the
liability under the USOP Company Executive Deferred Compensation Plan for all
Employees.
(G) To the extent accrued on the Closing Date Balance
Sheet, Purchaser shall assume all vacation, sick and personal days for all
Employees.
(H) The Sellers shall retain liability for all workers
compensation and unemployment claims for employees of the Seller, including
all Employees, arising prior to the Closing.
(I) As of the Closing, Purchaser shall assume all
collective bargaining agreements in effect with respect to all Employees.
Section 5.09 PUBLICITY. The parties hereto shall consult with
each other and shall mutually agree (the agreement of each party not to be
unreasonably withheld or delayed) upon the content and timing of any press
release or other public statements with respect to the transactions
contemplated by this Agreement and shall not issue any such press release or
make any such public statement prior to such consultation and agreement,
except as may be required by applicable Law or by obligations pursuant to any
listing agreement with any securities exchange or any stock exchange
regulations as advised by counsel; PROVIDED, HOWEVER, that each party shall
give prior notice to the other parties of the content and timing of any such
press release or other public statement required by applicable Law or by
obligations pursuant to any listing agreement with any securities exchange or
any stock exchange regulations.
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Section 5.10 ACQUISITION PROPOSALS. From the date hereof until the
earlier of (a) the termination hereof or (b) the filing of Chapter 11 Cases (in
which event the provisions of SECTION 5.11 shall govern), and except as
expressly permitted by the following provisions of this SECTION 5.10, none of
the Sellers shall, nor shall the Sellers authorize or permit any officer,
director or employee of or any investment banker, attorney, accountant or other
advisor or any representative of any Seller to, directly or indirectly, (i)
solicit, initiate or encourage the submission of any Acquisition Proposal;
PROVIDED, HOWEVER, that nothing contained in this SECTION 5.10 shall prohibit
the Board of Directors of USOP from furnishing information to, or entering into
discussions or negotiations with, any Person that makes an unsolicited bona fide
written Acquisition Proposal if, and only to the extent that, (A) such
Acquisition Proposal constitutes a Superior Proposal, or (B) prior to such
action, USOP (x) provides reasonable notice to Purchaser to the effect that it
is taking such actions and (y) receives from such person an executed
confidentiality agreement in reasonably customary form. Prior to providing any
information to or entering into discussions or negotiations with any Person in
connection with an Acquisition Proposal by such person, USOP shall notify
Purchaser of any Acquisition Proposal (including, without limitation, the
material terms and conditions thereof and the identity of the Person making it)
as promptly as practicable after its receipt thereof, and shall provide
Purchaser with a copy of any written Acquisition Proposal or amendments or
supplements thereto, and shall thereafter inform Purchaser on a prompt basis of
the status of any discussions or negotiations with such third party, and any
material changes to the terms and conditions of such Acquisition Proposal, and
shall promptly give Purchaser a copy of any information delivered to such person
which has not previously been reviewed by Purchaser. Following the commencement
of the Chapter 11 Cases, this SECTION 5.10 shall be of no further force and
effect and the solicitation and acceptance of competing offers (including
Acquisition Proposals) shall be governed by SECTION 5.11 and by order of the
Bankruptcy Code.
Section 5.11 BANKRUPTCY COURT APPROVAL.
(A) On or before two (2) Business Days after the commencement
of the Chapter 11 Cases, the Sellers shall file a motion or motions with the
Bankruptcy Court seeking entry of (i) the Approval Order (as defined in SECTION
5.11(D)) approving, INTER ALIA, the sale of the Assets to Purchaser pursuant to
sections 363 and 365 of the Bankruptcy Code, and (ii) an order in substantially
in the form attached hero as EXHIBIT B (with such changes thereto as Purchaser
shall approve in its sole discretion, the "SALE PROCEDURE ORDER"), INTER ALIA,
(a) approving the Termination Amount and the Bankruptcy Termination Amount and
providing that, in the event the obligation of the Sellers to pay Purchaser
either the Termination Amount or the Bankruptcy Termination Amount arises, such
obligation shall constitute an administrative expense under sections 503(b) and
507(a)(1) of the Bankruptcy Code and shall be payable in accordance with the
provisions of SECTION 7.01 or SECTION 7.02 without further order of the
Bankruptcy Court, (b) establishing procedures and deadlines for the submission
and consideration of competing offers, including, without limitation, that (1) a
competing offer to purchase or dispose of the Assets (a "COMPETING OFFER") must
be in substantially the same form as this Agreement, (2) a Competing Offer shall
not be considered to be a higher and better offer unless, at a minimum, such
offer provides for aggregate consideration of at least $15,000,000 in excess of
the Purchase Price (with respect to the initial round of bidding) and of at
least $1,000,000 in excess of the aggregate consideration contained in such
bidder's prior Competing Offer (with respect to each subsequent round of
bidding, if any) and is otherwise a Superior Proposal (except that Seller's
determination of a Superior Proposal with respect to bids in subsequent rounds
of bidding shall not require a new determination by the Board of Directors), (3)
a Competing Offer must be accompanied by a good faith cash deposit of at least
$15,000,000 (to be increased to 10% of the Purchase Price if such Competing
Offer is accepted by Debtors following the Auction), (4) Purchaser shall be
entitled at its option to make a revised offer following such Competing Offer,
and (5) Purchaser shall be entitled to credit bid the amount of the Bankruptcy
Termination Amount against any revised offer Purchaser may make following such
Competing Offer, and (c) scheduling a hearing to consider entry of the Approval
Order and providing that notice of such hearing be given to all
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of Sellers' creditors and interest holders of record and published in the
WALL STREET JOURNAL (National Edition) and is otherwise in accordance with
Bankruptcy Rule 2002. Purchaser and Sellers agree to make promptly any
filings, to take all actions and to use their reasonable best efforts to
obtain entry of the Sale Procedure Order, entry of the Approval Order and any
and all other approvals and orders necessary or appropriate for the
consummation of the transactions contemplated hereby.
(B) Prior to entry of the Approval Order, the Sellers and
Purchaser shall accurately inform the Bankruptcy Court of all material facts of
which they are aware relating to this Agreement and the transactions
contemplated hereby.
(C) If the Approval Order, Sale Procedure Order or any other
orders of the Bankruptcy Court relating to this Agreement shall be appealed by
any Person (or a petition for CERTIORARI or motion for rehearing or reargument
shall be filed with respect thereto), the Sellers agree to take all steps as may
be reasonable and appropriate to defend against such appeal, petition or motion,
and Purchaser agrees to cooperate in such efforts, and each party hereto agrees
to use its reasonable best efforts to obtain an expedited resolution of such
appeal; PROVIDED, HOWEVER, that nothing herein shall preclude the parties hereto
from consummating the transactions contemplated herein if the Approval Order
shall have been entered and has not been stayed and Purchaser, in its sole
discretion, waives in writing the requirement that the Approval Order be a Final
Order.
(D) Prior to Closing, the sale of the Assets to Purchaser
pursuant to this Agreement and the other transactions contemplated by this
Agreement shall have been approved by order of the Bankruptcy Court pursuant to
sections 363 and 365 of the Bankruptcy Code, pursuant to the Approval Order in
substantially the form attached hereto as EXHIBIT B (with such changes thereto
as Purchaser shall approve in its sole discretion), and the Approval Order shall
have become a Final Order. Purchaser and Sellers agree to use their reasonable
best efforts to cause the Bankruptcy Court to enter an Approval Order.
(E) The Sellers shall cooperate reasonably with Purchaser and
its representatives in connection with the Approval Order, the Sale Procedure
Order and the bankruptcy proceedings in connection therewith. Such cooperation
shall include, but not be limited to, consulting with Purchaser at Purchasers'
request concerning the status of such proceeding and providing Purchaser with
copies of requested pleadings, notices, proposed orders and other documents
relating to such proceedings as soon as reasonably practicable prior to any
submission thereof to the Bankruptcy Court. Sellers further covenant and agree
that the terms of any plan submitted by Sellers to the Bankruptcy Court for
confirmation shall not conflict with, supersede, abrogate, nullify, modify or
restrict the terms of this Agreement and the rights of Purchaser hereunder, or
in any way prevent or interfere with the consummation or performance of the
transactions contemplated by this Agreement including, without limitation, any
transaction that is contemplated by or approved pursuant to the Approval Order
and the Sale Procedure Order.
Section 5.12 NON-COMPETITION AND NON-SOLICITATION.
(A) During the "Restricted Period" (as hereinafter defined),
and except for the continuing activities of the businesses of Sellers that are
not part of the Business (as the same are being conducted on the Closing Date),
each Seller agrees not to, and USOP shall cause each of its other Subsidiaries
not to, directly or indirectly, alone or as a partner, officer, director,
employee, consultant, agent, independent contractor, member or stockholder of
any company or Person, engage in any activity in the "Restricted Area" (as
hereinafter defined) which is directly or indirectly in competition with the
products or services being developed, manufactured, marketed, sold or otherwise
provided by the Parent or Purchaser or which is directly or indirectly
detrimental to the business of the Parent or Purchaser or any of their
Affiliates. The foregoing restrictive covenant shall not transfer to, apply to
or otherwise restrict
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any Person who is an existing competitor of the Business who acquires any of
Sellers' businesses that are not part of the Business. The Sellers further
agree that, during the Restricted Period, the Sellers shall not, and USOP
shall cause each of its other Subsidiaries not to, in any capacity, either
separately, jointly or in association with others, directly or indirectly do
any of the following: (a) employ or seek to employ any Person or agent who is
then employed or retained by the Parent or Purchaser or any of their
Affiliates (or who was so employed or retained at any time within the two (2)
years prior to the date the Seller employs or seeks to employ such person);
and (b) solicit, induce, or influence any proprietor, partner, stockholder,
lender, director, officer, employee, joint venturer, investor, consultant,
agent, lessor, supplier, customer or any other Person which has a business
relationship with the Parent or Purchaser or any of their Affiliates, at any
time during the Restricted Period, to discontinue or reduce or modify the
extent of such relationship with the Parent or Purchaser or any of their
Affiliates. The "RESTRICTED PERIOD" shall mean five (5) years after the
Closing Date. The "RESTRICTED AREA" shall mean any geographical area in the
United States where Purchaser or Parent conduct their business.
In the event the covenant in this SECTION 5.12 shall be
determined by a court to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable, and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action. Sellers acknowledge that the breach of
covenants contained in this SECTION 5.12 will cause irreparable damage to the
Purchaser or the Business, the exact amount of which will be difficult to
ascertain, and that the remedies at law for any such breach will be inadequate.
Accordingly, Sellers agree that if any Seller breaches the covenants contained
in this SECTION 5.12, in addition to any other remedy which may be available at
law or equity, Purchaser shall be entitled to specific performance and
injunctive relief, without posting bond or other security.
(B) Between the date of this Agreement and the earlier of
(i) the Closing Date or (ii) the date this Agreement is terminated pursuant to
Section 7.03, Purchaser and Parent shall not, and shall cause their Affiliates
to not, employ or solicit for employment any employees of USOP or any of its
Subsidiaries; PROVIDED, HOWEVER, that nothing herein shall prohibit Parent,
Purchaser, or any of their Affiliates from employing any such employee who
responds to a solicitation of employment directed at the general public.
Section 5.13 TRANSITION SERVICES. Prior to Closing, Sellers and
Purchaser shall enter into a transition agreement (a "TRANSITION SERVICES
AGREEMENT"), on mutually agreeable terms, by which the parties shall provide for
the shared use of any assets (including, without limitation, technology
(including computer networks and e-mail), telephone services, software licenses,
tax, accounting and payroll systems), Contracts (including leases for
Facilities), and employees of Sellers that are now shared between the Business
and any other businesses of Sellers not being sold to Purchaser. In addition,
the Transition Services Agreement shall provide for the manner in which the
parties shall satisfy certain of their obligations under SECTION 5.08.
Section 5.14 OWNED REAL ESTATE. Sellers shall eliminate or satisfy
(A) all Encumbrances and conditions of closing that relate to the Owned Real
Property, except for the Permitted Encumbrances, those Encumbrances that are not
created or consented to by or on behalf of Sellers and that affect the Owned
Real Property on the Closing Date (other than Permitted Encumbrances) that, in
accordance with the terms thereof, may be removed or satisfied by the payment of
a liquidated sum of money only and (B) Encumbrances created or consented to by
Sellers after the date of this Agreement.
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ARTICLE 6.
CLOSING
Section 6.01 CLOSING.
(A) Subject to the terms and conditions of this Agreement,
the sale and purchase of the Assets contemplated hereby shall take place at a
closing (the "CLOSING") to be held at 10:00 a.m., local time, on the third
Business Day following the satisfaction or waiver of all other conditions to the
obligations of the parties set forth in SECTIONS 6.03 AND 6.04, at the offices
of Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other time or on such other date or at such other place as USOP and the
Purchaser may mutually agree upon in writing (the day on which the Closing takes
place being the "CLOSING DATE").
Section 6.02 DELIVERIES AT CLOSING. At the Closing:
(A) Purchaser shall deliver to USOP, to the extent applicable
with respect to the Closing, the items described below in clauses (i), (iii),
(iv) and (v) and, with respect to clause (ii), to the Escrow Agent:
(i) the Purchase Price (less the Escrow Amount) by
wire transfer of immediately available funds to the account or accounts
designated by USOP in a written notice to Purchaser delivered no later than
two (2) Business Days prior to the Closing;
(ii) the Escrow Amount by wire transfer of
immediately available funds, to be held in escrow in accordance with the
Escrow Agreement;
(iii) an assumption agreement pursuant to which
Purchaser assumes at the Closing the Assumed Liabilities being assigned at the
Closing, in form and substance reasonably satisfactory to USOP (the "ASSUMPTION
AGREEMENT"), executed by Purchaser;
(iv) the officer's certificate referenced in SECTION
6.03(C); and
(v) all other documents, certificates, instruments
or writings set forth on SECTION 6.03 or reasonably requested by USOP in
connection herewith.
(B) USOP shall deliver, or cause each Seller to deliver, as
applicable, to Purchaser the items described in clauses (i) through (iv) below,
to the extent applicable with respect to the Closing:
(i) a general xxxx of sale and assignment, in form
and substance reasonably satisfactory to Purchaser (the "XXXX OF SALE"), with
respect to the Assets to be conveyed by USOP and each Seller at the Closing
and any other instruments of transfer, conveyance and assignment reasonably
requested by Purchaser so as to convey to Purchaser good title, free and
clear of all Encumbrances (other than Assumed Encumbrances), to all of each
Seller's right, title and interest in and to the Assets to be conveyed at the
Closing, each executed by each applicable Seller;
(ii) warranty deeds and tax withholding affidavits
satisfying Section 1445(b)(2) of the Internal Revenue Code, each in form and
substance reasonably satisfactory to Purchaser, with respect to any Owned
Real Property transferred by any Seller;
(iii) the officers' certificate referenced in SECTION
6.04(C); and
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(iv) all other documents, certificates, instruments
or writings set forth on SECTION 6.04 or reasonably requested by Purchaser in
connection herewith.
Section 6.03 CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of
the Sellers under this Agreement to consummate the transactions contemplated
hereby to be consummated at the Closing shall be subject to the satisfaction, at
or prior to the Closing, of all the following conditions, any one or more of
which may be waived in writing at the option of USOP:
(A) All representations and warranties of Parent and
Purchaser made in this Agreement or in any exhibit, schedule or document
delivered pursuant hereto shall be true and complete in all respects (with
respect to representations and warranties qualified or limited by
materiality) or in all material respects (with respect to representations and
warranties not so qualified or limited), in each case when made and as of the
Closing Date as if made on and as of that date (other than such representations
or warranties that expressly speak only as of an earlier date).
(B) All of the terms, covenants and conditions to be complied
with and performed by Parent and Purchaser on or prior to the Closing Date shall
have been complied with or performed in all material respects.
(C) USOP shall have received a certificate, dated as of the
Closing Date, executed on behalf of Parent and Purchaser by an authorized
executive officer thereof, certifying in such detail as USOP may reasonably
request that the conditions specified in Section 6.03(A) and Section 6.03(B)
have been fulfilled.
(D) USOP shall have received a true and complete copy,
certified by the Secretary or Assistant Secretary of Parent and Purchaser, of
the resolutions duly and validly adopted by the Board of Directors of Parent and
Purchaser and evidencing their authorization of the execution and delivery of
this Agreement, the Ancillary Agreements and each Collateral Agreement (as
applicable) to which Parent and Purchaser are parties thereto and the
consummation of the transactions contemplated hereby and thereby.
(E) USOP shall have received a certificate of the Secretary
or Assistant Secretary of Parent and Purchaser certifying the names and
signatures of the officers of the Parent and Purchaser authorized to sign
this Agreement, the Ancillary Agreements and each Collateral Agreement (as
applicable) to which they are parties thereto and the other documents to be
delivered hereunder.
(F) USOP shall have received a copy of the Escrow Agreement
executed and delivered by Purchaser and the Escrow Agent.
(G) The waiting period under the HSR Act or any other
applicable competition, merger, control, antitrust Law or similar Law shall have
expired or terminated, and any other Governmental Authorities whose Consent is
required for consummation of the transaction contemplated hereby shall have
issued such consents.
(H) There shall not be in effect any Law or Governmental
Order restraining, enjoining or otherwise preventing consummation of the
transactions contemplated by this Agreement.
(I) The Approval Order shall have been entered and shall have
become a Final Order.
(J) USOP shall have received a copy of the Transition
Services Agreement executed and delivered by Purchaser.
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(K) The form and substance of all instruments and documents
executed and delivered by Purchaser in connection with the Closing shall be
reasonably acceptable to USOP and its counsel.
Section 6.04 CONDITIONS TO OBLIGATIONS OF PARENT AND PURCHASER. The
obligations of Parent and Purchaser under this Agreement to consummate the
transactions contemplated hereby to be consummated at the Closing shall be
subject to the satisfaction, at or prior to the Closing, of all of the following
conditions, any one or more of which may be waived in writing at the option of
Parent or Purchaser, as applicable:
(A) All representations and warranties of Sellers in this
Agreement or in any exhibit, schedule or document delivered pursuant hereto
shall be true and complete in all respects (without regard to, and without
taking into account or giving effect to, any limitations, qualifications or
exceptions as to "materiality," "in all material respects," "Material Adverse
Change," "Material Adverse Effect" and similar concepts or phrases contained
therein) in each case when made and on and as of the Closing Date as if made on
and as of that date (other than any such representations or warranties that
expressly speak only as of an earlier date), except to the extent that such
failure to be so true and complete, either individually or in the aggregate, has
not and would not have a Material Adverse Effect.
(B) All of the terms, covenants and conditions to be complied
with and performed by Sellers on or prior to the Closing Date shall have been
complied with or performed in all material respects.
(C) Parent shall have received a certificate or certificates,
dated as of the Closing Date, executed on behalf of Sellers, each by an
authorized executive officer thereof, certifying in such detail as Parent may
reasonably request that the conditions specified in SECTION 6.04(A) and SECTION
6.04(B) hereof have been fulfilled.
(D) The Parent shall have received a true and complete copy,
certified by the Secretary or an Assistant Secretary of each Seller, of the
resolutions duly and validly adopted by the Board of Directors of such Seller
evidencing its authorization of the execution and delivery of this Agreement,
the Ancillary Agreements and each Collateral Agreement (as applicable) to which
it is a party and the consummation of the transactions contemplated hereby and
thereby.
(E) Parent shall have received a certificate of the Secretary
or an Assistant Secretary of each Seller certifying the names and signatures of
the officers of such Seller authorized to sign this Agreement, the Ancillary
Agreements and each Collateral Agreement to which it is a party and the other
documents to be delivered hereunder.
(F) USOP shall have delivered the opinion of Xxxxxx, Xxxxxx &
Xxxxxxxxx, counsel to USOP, in form and substance reasonably acceptable to the
Parent.
(G) Parent shall have received a copy of the Escrow Agreement
executed by USOP and the Escrow Agent.
(H) The waiting period under the HSR Act or any other
applicable competition, merger, control, antitrust Law or similar Law shall have
expired or terminated, and any other Governmental Authorities whose Consent is
required for consummation of the transactions contemplated hereby shall have
issued such consent.
(I) All Consents described on SCHEDULE 6.04(I) shall have
been obtained (without any limitation, restriction or condition not otherwise
applicable to the applicable Seller being imposed on
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Parent or Purchaser or its ownership or use of any Assets) and Parent shall
have received reasonably acceptable written evidence thereof.
(J) The Approval Order and the Sale Procedures Order shall
have been entered and shall have each become a Final Order, and any other orders
of the Bankruptcy Court with respect to this Agreement shall be in form and
substance reasonably satisfactory to Parent.
(K) No event, events or circumstance shall have occurred
since the date of this Agreement which, independently or together with any
other event, events or circumstance that have occurred, have resulted in or
would result in a Material Adverse Change.
(L) No action, suit or proceeding (including, without
limitation, any proceeding over which the Bankruptcy Court has jurisdiction
under 28 U.S.C. Section 157(b) and (c)) shall be pending or threatened in
writing by or before any Governmental Authority or pending or threatened in
writing by any other party seeking to enjoin, restrain, prohibit or obtain
substantial damages or significant equitable relief in respect of or related to
any of the transactions contemplated by this Agreement, or that would be
reasonably likely to prevent or make illegal the consummation of any
transactions contemplated by this Agreement or that, if adversely determined,
would reasonably be expected to result in a Material Adverse Effect, and any
such actions, suits or proceedings that have theretofore been brought and
determined shall have become Final Orders.
(M) There shall not be in effect any Law or Governmental
Order restraining, enjoining or otherwise preventing consummation of the
transactions contemplated by this Agreement.
(N) Purchaser shall have obtained the Financing in accordance
with the terms of the Financing Letter or shall have obtained other financing in
an aggregate principal amount and on other terms and conditions no less
favorable than those contained in the Financing Letter, such determination with
respect to such other financing to be made by Purchaser in its sole and absolute
discretion.
(O) The consent of the banks and other financial institutions
required under the senior credit facility among Xxxxxxxx, N.V. ("XXXXXXXX") and
the various lenders parties to such credit facility shall have been obtained by
Xxxxxxxx.
(P) Purchaser shall have received from each Seller an
affidavit, stating, under penalty of perjury, that the indicated number is the
Seller's United States taxpayer identification number and that the Seller is not
a foreign person, pursuant to Section 1445(b)(2) of the Internal Revenue Code.
(Q) Purchaser shall have received a copy of the Transition
Services Agreement executed by Sellers.
(R) The form and substance of all instruments and documents
executed and delivered in connection with the Closing shall be reasonably
acceptable to Purchaser and its counsel.
(S) At least one (1) day prior to the Closing Date, Purchaser
shall have received from Sellers a certificate of the Chief Financial Officer of
USOP-NA setting forth the Average Daily Sales for the Base Period and the
Weighted Average Daily Sales for the Pre-Closing Period, together with such
additional supporting information as Purchaser shall reasonably request.
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ARTICLE 7.
FURTHER AGREEMENTS AND TERMINATION
Section 7.01 TERMINATION PAYMENT.
(A) In the event this Agreement is terminated pursuant
to SECTION 7.03(C)(v) or SECTION 7.03(D)(ii) of this Agreement, then in any
such case the Sellers, jointly and severally, shall be obligated to pay
Purchaser, in cash, the sum of $7,500,000 plus an amount (not to exceed
$6,000,000) on account of the Purchaser Expenses.
(B) In the event this Agreement is terminated pursuant
to SECTION 7.03(C)(iii), (in a case in which any Seller is in material default
or material breach of this Agreement, or where a representation or warranty
made as of the date hereof is shown to have been inaccurate as of the date
hereof in the manner described in SECTION 7.03(C)(iii), subject to the other
terms and conditions of SECTION 7.03(C)(iii) regarding such inaccuracy),
SECTION 7.03(C)(iv) or SECTION 7.03(C)(vi) of this Agreement or by USOP
pursuant to SECTION 7.03(B)(iii) of this Agreement, then in any such case the
Sellers, jointly and severally, shall be obligated to pay Purchaser, in cash,
an amount (not to exceed $6,000,000) on account of the Purchaser Expenses.
(C) Any amount payable pursuant to this SECTION 7.01
shall be referred to as the "TERMINATION AMOUNT." The Termination Amount shall
be paid immediately prior to the termination of this Agreement.
Section 7.02 BANKRUPTCY TERMINATION PAYMENT. In the event this
Agreement is terminated pursuant to SECTION 7.03(B)(i) of this Agreement, the
Sellers, jointly and severally, shall be obligated to pay to Purchaser, in
cash, the sum of $7,500,000 plus an amount (not to exceed $6,000,000) on
account of the Purchaser Expenses (such sum being the "SECTION 7.03(B)(i)
TERMINATION AMOUNT"), which amount shall be payable no later than the earlier
of (i) the consummation of the sale (whether in one transaction or a series of
transactions) of either USOP or all or a substantial part of any of the assets
of USOP relating to the Business or all or a substantial part of the Assets to
a Person (or group of Persons) other than Purchaser or an Affiliate of
Purchaser, (ii) the effective date of any plan of reorganization (that is not
a plan of liquidation) confirmed in the Chapter 11 Cases, (iii) the dismissal
of the Chapter 11 Cases, and (iv) the conversion of the Chapter 11 Cases to
cases under Chapter 7 of the Bankruptcy Code. In the event this Agreement is
terminated pursuant to SECTION 7.03(C)(i) or SECTION 7.03(C)(ii) of this
Agreement, then (i) Sellers, jointly and severally, shall be obligated to pay
Purchaser, immediately upon such termination of this Agreement, an amount (not
to exceed $6,000,000) on account of the Purchaser Expenses, and (ii) if, (x)
within twelve (12) months following such termination of this Agreement, USOP
or the other Sellers consummate a sale of either USOP or all or substantially
all the assets of USOP relating to the Business or all or substantially all of
the Assets to a Person (or group of Persons) other than Purchaser or an
Affiliate of Purchaser, or (y) within twenty-four (24) months following such
termination of this Agreement, a Chapter 11 plan for USOP or the other Sellers
is confirmed, then the Sellers, jointly and severally, shall be obligated to
pay to Purchaser, immediately upon the consummation of any such transaction,
an amount equal to $7,500,000 (the sum of the amounts described in clauses (i)
and (ii) above being the "ALTERNATIVE TERMINATION AMOUNT," with the SECTION
7.03(B)(i) Termination Amount and the Alternative Termination Amount being
referred to herein collectively as the "BANKRUPTCY TERMINATION AMOUNT").
Section 7.03 TERMINATION. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(A) by mutual consent of each of USOP and Purchaser;
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(B) by either of USOP or Purchaser (provided that such
party is not then in material breach of any provisions of this Agreement):
(i) if the Bankruptcy Court approves a sale,
transfer or other disposition of USOP or all or substantially all of the
assets of USOP relating to the Business or all or a substantial part of any of
the Assets to a Person (or group of Persons) other than Purchaser or an
Affiliate of Purchaser, PROVIDED, that no termination under this SECTION
7.03(B)(i) shall be effective until the SECTION 7.03(B)(i) Termination Amount
shall have been paid to Purchaser;
(ii) if a Governmental Authority shall have
issued an order, decree or ruling or taken any other action (which order,
decree or ruling the parties hereto shall use their reasonable best efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable; or
(iii) if the Closing shall not have occurred on or
before the Outside Closing Date.
(C) by Purchaser (provided that Purchaser is not then
in material breach of any provision of this Agreement):
(i) if the Sale Procedure Order has not been
entered by the Bankruptcy Court within twenty (20) days of the filing of the
bankruptcy petition by Sellers and, as of the time of such termination of this
Agreement, the Sale Procedure Order has not been entered by the Bankruptcy
Court;
(ii) if the Approval Order has not been entered
by the Bankruptcy Court within seventy (70) days of the filing of the
bankruptcy petition by Sellers and, as of the time of such termination of this
Agreement, the Approval Order has not been entered by the Bankruptcy Court; or
(iii) if a default or breach shall be made by any
Seller with respect to the due and timely performance of any of its covenants
or agreements contained herein, or if its representations or warranties
contained in the Agreement shall have become untrue or inaccurate in any
respect (without regard to, and without taking into account or giving effect
to, any limitations, qualifications or exceptions as to "materiality," "in all
material respects", "Material Adverse Change" and similar concepts or phrases
contained therein) and such defaults, breaches, untruths or inaccuracies,
either individually or in the aggregate, have had or would have a Material
Adverse Effect, if such default, breach, untruth or inaccuracy has not been
cured or waived within ten (10) days after written notice to such Seller
specifying, in reasonable detail, such claimed default, breach or inaccuracy
and demanding its cure or satisfaction;
(iv) no later than the earlier of March 26, 2001
and the day immediately preceding the date scheduled for the hearing on the
Sale Procedure Order, if Purchaser determines, as a result of additional due
diligence review of the Business that (a) any of the representations or
warranties contained in this Agreement were inaccurate in any respect (with
respect to representations and warranties qualified or limited by materiality
or Material Adverse Effect) or in any material respect (with respect to
representations and warranties not so qualified or limited) as of the date of
this Agreement or (b) there exist facts or circumstances with respect to the
business that cause Purchaser, in the exercise of its reasonable judgment, to
conclude that the Assets, Liabilities operations, condition (financial or
otherwise), customers (including, without limitation, each Seller's
relationship with its customers), suppliers, employees or prospects of the
Business vary materially and adversely from Purchaser's
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expectations as of the date of this Agreement based on the information that
had been made available to it up to such time.
(v) if the Chapter 11 Cases are not commenced on
or before the date that is one (1) day following the date of this Agreement
and, as of the time that the terminating party provides the other party with
notice of such termination of this Agreement, the Chapter 11 Cases have not
been commenced;
(vi) if an event or events or circumstance shall
have occurred since the date of this Agreement which, independently or
together with any other event or events or circumstance that have occurred,
have resulted in or would result in a Material Adverse Change; or
(D) by USOP (provided that USOP is not then in material
breach of any provision of this Agreement):
(i) if a material default or breach shall be
made by Purchaser with respect to the due and timely performance of any of its
covenants or agreements contained herein, or if its representations or
warranties contained in the Agreement shall have become inaccurate and such
inaccuracy has had or would be reasonably likely to have a material adverse
effect on the Purchaser, if such default, breach or inaccuracy has not been
cured or waived within ten (10) days after written notice to Purchaser
specifying, in reasonable detail, such claimed default, breach or inaccuracy
and demanding its cure or satisfaction; or
(ii) if prior to the commencement of the Chapter
11 Cases, the Board of Directors of USOP authorizes USOP, subject to complying
with the terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and USOP
notifies Purchaser in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such notice and during
the five-day period after USOP's notice, (a) USOP shall have offered to
Purchaser the opportunity to make such adjustments in the terms and conditions
of its offer such that any third-party Acquisition Proposal no longer
continues to be a Superior Proposal and (b) USOP shall have reasonably
concluded, upon the termination of such five-day period, that any Acquisition
Proposal giving rise to USOP's notice continues to be a Superior Proposal;
PROVIDED, that no termination under this SECTION 7.03(D)(ii) shall be
effective until the Termination Amount shall have been paid to Purchaser.
Section 7.04 PROCEDURE AND EFFECT OF TERMINATION. This Agreement
shall in no event terminate unless and until any and all amounts payable to
Purchaser pursuant to SECTION 7.01 and SECTION 7.02 in connection with such
proposed termination shall have been paid in full to Purchaser. In the event
of termination and abandonment of the transactions contemplated hereby
pursuant to SECTION 7.03, written notice thereof shall forthwith be given to
the other parties to this Agreement and this Agreement shall terminate
(subject to the provisions of this SECTION 7.04) and the transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto. If this Agreement is terminated as provided herein, then:
(A) upon request therefor, each party shall redeliver
all documents, work papers and other material of any other party relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same; and
(B) no party hereto shall have any Liability or further
obligation to any other party to this Agreement resulting from such
termination except (i) that the provisions of SECTION 7.01, SECTION 7.02, and
this SECTION 7.04 shall remain in full force and effect and (ii) no party
waives any Claim
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or right against a breaching party to the extent that such termination results
from the breach by a party hereto of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
ARTICLE 8.
INDEMNIFICATION
Section 8.01 INDEMNIFICATION.
(A) INDEMNIFICATION BY USOP AND THE OTHER SELLERS.
Subject to the limits set forth in this SECTION 8.01, USOP and the other
Sellers agree, jointly and severally, to indemnify, defend and hold Parent or
Purchaser, or their respective officers, directors and affiliates (the
"PURCHASER PARTIES"), harmless from and in respect of any and all Losses that
they may incur arising out of or due to (i) any untruth or inaccuracy of, or
other breach of, any representation or warranty made by the Sellers in or
pursuant to this Agreement, in each case as of the date made or deemed to be
made or required to be true, (PROVIDED that the act of filing the Chapter 11
Cases shall not be deemed, in and of itself, to be an untruth or inaccuracy
of, or other breach of, any such representation or warranty), (ii) any failure
by the Sellers to fulfill any of its covenants or agreements set forth herein
or pursuant to this Agreement or (iii) any Retained Liabilities or Excluded
Assets. Notwithstanding the foregoing, if (x) solely as a result of an order
of the Bankruptcy Court, any representation or warranty made by the Sellers in
or pursuant to this Agreement is rendered untrue or inaccurate (y) such
untruth or inaccuracy, individually or together with all other untruths or
inaccuracies of the representations and warranties made by Sellers in this
Agreement, shall have caused the condition contained in SECTION 6.04(A) not to
be satisfied and (z) notwithstanding clauses (x) and (y) above the Closing
shall have occurred, then the Purchaser Parties shall not be entitled to be
indemnified pursuant to SECTION 8.01(A) for the untruth or inaccuracy
described in clause (x) above.
(B) INDEMNIFICATION BY PURCHASER. Subject to the limits
set forth in this SECTION 8.01, Purchaser agrees to indemnify, defend and hold
the Sellers, their officers, directors and affiliates, harmless from and in
respect of any and all Losses that they may incur arising out of or due to (i)
any untruth or inaccuracy of, or other breach of any representation or
warranty made by Purchaser in or pursuant to this Agreement, in each case as
of the date made or deemed to be made or required to be true, (ii) any Assumed
Liabilities or the ownership and use of the Assets after the Closing, and
(iii) any failure by Purchaser to fulfill any of its covenants or agreements
set forth herein or pursuant to this Agreement.
(C) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
several representations and warranties of the parties contained in this
Agreement or in any instrument delivered pursuant hereto will survive the
Closing Date and will remain in full force and effect thereafter for a period
of one (1) year from the Closing Date, except that (i) the representations and
warranties set forth in SECTIONS 3.01, 3.02, 3.06 AND 4.01 shall survive
without limitation, (ii) the representations and warranties contained in
SECTIONS 3.16, AND 3.20 shall survive until 90 days after the expiration of
the applicable statutes of limitations, and (iii) the representations and
warranties contained in Section 3.19 shall survive until the fifth anniversary
of the Closing Date; PROVIDED, HOWEVER, that such representations or
warranties shall survive beyond such period with respect to any inaccuracy
therein or breach thereof, notice of which shall have been duly given within
such applicable period in accordance with SECTION 8.01(D) hereof. Anything to
the contrary contained in this ARTICLE 8 notwithstanding, no party shall be
entitled to recover under SECTIONS 8.01(A)(i) AND 8.01(B)(i) from the
applicable parties unless and until the total of all Claims for indemnity or
damages with respect to any inaccuracy or breach of any such representations
or warranties exceeds $750,000 (the "INDEMNIFICATION THRESHOLD"), at which
point such Indemnifying Party shall be responsible for all indemnifiable
damages that have arisen in excess of $375,000 and may arise thereafter,
irrespective of the Indemnification Threshold (it being understood) that
indemnifiable damages shall accumulate until such time as they exceed the
Indemnification Threshold, whereupon the party to be indemnified shall be
entitled to seek indemnification for the full amount of such damages, in
excess of
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$375,000). In any event no party shall be entitled to recover under SECTIONS
8.01(A) AND 8.01(B), respectively, from the other more than an amount in the
aggregate equal to the Escrow Amount.
(D) NOTICE AND OPPORTUNITY TO DEFEND. If there occurs
an event which a party (an "INDEMNIFIED PARTY") asserts is an indemnifiable
event pursuant to SECTION 8.01(A) OR 8.01(B), the Indemnified Party shall
notify the other party obligated to provide indemnification (an "INDEMNIFYING
PARTY") promptly. If such event involves (i) any Claim or (ii) the
commencement of any action or proceeding by a third person, the Indemnified
Party shall give such Indemnifying Party prompt written notice of such Claim
or the commencement of such action or proceeding. Such notice shall be a
condition precedent to any Liability of the Indemnifying Party hereunder;
PROVIDED, HOWEVER, that the failure to provide prompt notice as provided
herein will relieve the Indemnifying Party of its obligations hereunder only
if and to the extent that such failure actually materially prejudices the
Indemnifying Party hereunder. In case any such action shall be brought against
any Indemnified Party and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
in the defense of such action and, to the extent that it shall wish, at its
own expense, to assume the defense thereof, with counsel reasonably
satisfactory to the Indemnified Party. In the event the Indemnifying Party
shall assume the defense of such action, (a) the Indemnified Party agrees to
cooperate fully with the Indemnifying Party and its counsel in the defense
against any such asserted Liability and (b) the Indemnified Party shall have
the right to participate (at the Indemnified Party's expense) in the defense
of such asserted Liability. No Indemnifying Party shall consent to the entry
of any judgment or enter into any settlement without the consent of the
Indemnified Party (a) if such judgment or settlement does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a full and unconditional release from all Liability in
respect of such Claim, (b) if such judgment or settlement would result in the
finding or admission of any violation of Law by such Indemnified Party, or (c)
if as a result of such consent or settlement injunctive or other equitable
relief would be imposed against the Indemnified Party or such judgment or
settlement could interfere with or adversely affect the Indemnified Party.
(E) SECURITY FOR THE INDEMNIFICATION OBLIGATION. The
parties hereto agree that subject to the following provisions of this SECTION
8.01(E), any and all Claims for indemnification by Purchaser against the
Sellers (or any of them) hereunder shall be satisfied by Purchaser by recourse
against the Escrow Amount pursuant to the terms of the Escrow Agreement. All
payments for indemnifiable damages made pursuant to this Article 8 shall be
treated as adjustments to the Purchase Price.
(F) EXCLUSIVE REMEDY. The indemnity and other remedies
provided herein shall be the sole and exclusive remedies of the parties
hereto, their Affiliates, successors and assigns with respect to any and all
Claims for Losses sustained or incurred arising out of this Agreement and the
transactions contemplated hereby; PROVIDED, HOWEVER, with respect to Actions
grounded in fraud, deceit or intentional misrepresentation, (i) the right of a
party to be indemnified and held harmless pursuant to this Article 8 shall be
in addition to and cumulative of any other remedy of such party at law or in
equity and (ii) no such party shall, by exercising any remedy available to it
under this Article 8, be deemed to have elected such remedy exclusively or to
have waived any other remedy, whether at law or in equity, available to it
with respect to an Action grounded in fraud, deceit or intentional
misrepresentation.
ARTICLE 9.
GENERAL PROVISIONS
Section 9.01 ACTIONS BY SELLERS. Where any provision of this
Agreement indicates that any Seller shall take any specified action (or
refrain from taking any specified action) or requires any Seller to take any
specified action (or to refrain from taking any specified action), then,
regardless of whether this Agreement specifically provides that USOP shall do
so, USOP shall cause such Seller to take such action
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(or to refrain from taking such action, as applicable). USOP shall be
responsible for the failure of any such Seller to take any such action (or to
refrain from taking any such action, as applicable).
Section 9.02 EXPENSES. Except as otherwise expressly provided
herein, each party shall pay any and all costs and expenses, including,
without limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred by it incident to this Agreement and in preparing to
consummate and in consummating the transactions provided for herein.
Section 9.03 NOTICES. All notices, requests, Claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy, or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this SECTION 9.03:
(A) if to the Sellers:
U.S. Office Products Company
0000 Xxxxxx Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
ATTENTION: Xxxx X. Director, Esq.
FACSIMILE: (000) 000-0000
with copies to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
ATTENTION: Xxxxxx X. Xxxxx, Esq.
FACSIMILE: (000) 000-0000
(B) if to Parent or Purchaser:
Corporate Express Office Products, Inc.
0 Xxxxxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
ATTENTION: Xxxxxx X. Xxxxxx, Esq.
FACSIMILE: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
ATTENTION: Xxxxxx Xxxxx Xxxxx, Esq. and
Xxxxxx X. Flics, Esq.
FACSIMILE: (000) 000-0000
Section 9.04 HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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Section 9.05 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 conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the essential
economic or legal substance of the transactions contemplated hereby is not
affected. 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 possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally contemplated
to the greatest extent possible.
Section 9.06 ENTIRE AGREEMENT. This Agreement (including the
Ancillary Agreements, Collateral Agreements, Disclosure Schedule, and the
other exhibits and annexes hereto) constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, with respect to the
subject matter hereof and except as otherwise expressly provided herein.
Section 9.07 ASSIGNMENT. This Agreement shall not be assigned by
operation of Law or otherwise; PROVIDED, HOWEVER, that without the consent of
USOP, Purchaser may, by providing written notice to USOP, assign this
Agreement and Purchaser's rights and obligations hereunder in whole or in part
to an Affiliate of Purchaser or Parent; PROVIDED THAT such assignment shall
not relieve Purchaser of any of Purchaser's obligations hereunder; PROVIDED,
FURTHER, that nothing herein shall be deemed to prohibit the granting of a
security interest in USOP and Sellers' rights hereunder to USOP's senior
secured bank lenders.
Section 9.08 NO THIRD-PARTY BENEFICIARIES This Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other
person or entity any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 9.09 WAIVERS AND AMENDMENTS. This Agreement may be
amended or modified, and the terms and conditions hereof may be waived, only
by a written instrument signed by the parties hereto or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial exercise of any other right,
power or privilege hereunder, preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder.
Section 9.10 SPECIFIC PERFORMANCE. USOP agrees that the Assets
represent unique property that cannot be readily obtained on the open market
and that Purchaser would be irreparably injured if this Agreement is not
specifically enforced after default. Therefore, Purchaser shall have the right
to specifically enforce performance by the Sellers of their obligations under
this Agreement, and each Seller agrees to waive the defense in any such suit
that Purchaser has an adequate remedy at law and to interpose no opposition,
legal or otherwise, as to the propriety of specific performance as a remedy,
and that Purchaser shall have the right to obtain specific performance of the
terms of this Agreement without being required to prove actual damages, post
bond or furnish other security. In addition, Purchaser shall be entitled to
obtain from any Seller against whom specific performance is granted, court
costs and reasonable attorneys' fees incurred by Purchaser in enforcing its
rights hereunder. As a condition to seeking specific performance, Purchaser
shall not be required to have tendered the consideration payable hereunder but
shall be ready, willing and able to do so.
Section 9.11 BROKERS. USOP hereby agrees to indemnify and hold
harmless Purchaser against any Liability, Claim, Loss, damages or expense
incurred by USOP or any other Seller relating to any fees
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or commissions owed to any broker, finder or financial advisor as a result of
actions taken by USOP or any other Seller. Purchaser hereby agrees to
indemnify and hold harmless USOP against any Liability, Claim, Loss, damage or
expense incurred by Purchaser relating to any fees or commissions owed to any
broker, finder or financial advisor as result of actions taken by Purchaser.
Section 9.12 GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with the Laws of the State of New York. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined by the Bankruptcy Court, and the parties hereto hereby
irrevocably submit to the exclusive jurisdiction of such court in any such
action or proceeding and irrevocably waive the defense of an inconvenient
forum to the maintenance of any such action or proceeding.
Section 9.13 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
Section 9.14 JOINT OBLIGATIONS OF PURCHASER AND PARENT. Parent
hereby agrees that it is jointly and severally liable with Purchaser to USOP
and Sellers for all of the representations, warranties, covenants, indemnities
and obligations of every kind of Purchaser under this Agreement, the
Collateral Agreements and the Escrow Agreement.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
PARENT:
CORPORATE EXPRESS OFFICE PRODUCTS, INC.
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
PURCHASER:
ATLANTIC ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
SELLERS:
U.S. OFFICE PRODUCTS COMPANY
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
[signatures continued on following page]
SIGNATURE PAGE
Asset Purchase Agreement
by and among
U.S. Office Products Company, Atlantic Acquisition Corporation,
Corporate Express Office Products, Inc. and
the various USOP Subsidiaries listed therein
BINDERY SYSTEMS, INC.
CENTRAL TEXAS OFFICE PRODUCTS, INC.
FORTY-FIFTEEN XXXXX REDEVELOPMENT CORPORATION
OE ACQUISITION CORP.
U.S. OFFICE PRODUCTS, CHICAGO DISTRICT, LLC
U.S. OFFICE PRODUCTS, COLORADO DISTRICT, LLC
U.S. OFFICE PRODUCTS, FLORIDA DISTRICT, LLC
U.S. OFFICE PRODUCTS, GEORGIA DISTRICT, LLC
U.S. OFFICE PRODUCTS MID-ATLANTIC DISTRICT, LLC
U.S. OFFICE PRODUCTS, MID-SOUTH DISTRICT, INC.
U.S. OFFICE PRODUCTS, NORTH ATLANTIC DISTRICT, INC.
U.S. OFFICE PRODUCTS, NORTHWEST DISTRICT, LLC
U.S. OFFICE PRODUCTS, SOUTH CENTRAL DISTRICT, INC.
USOP MERCHANDISING COMPANY
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Vice President
SIGNATURE PAGE
Asset Purchase Agreement
by and among
U.S. Office Products Company, Atlantic Acquisition Corporation,
Corporate Express Office Products, Inc. and
the various USOP Subsidiaries listed therein
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
THE SYSTEMS HOUSE, INC.
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Vice President
SIGNATURE PAGE
Asset Purchase Agreement
by and among
U.S. Office Products Company, Atlantic Acquisition Corporation,
Corporate Express Office Products, Inc. and
the various USOP Subsidiaries listed therein
