EXHIBIT 1
ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 16, 2002
AMONG
GENERAL ELECTRIC COMPANY
AND
QUESTRON TECHNOLOGY, INC. AND
THE OTHER SELLERS NAMED HEREIN
Article I DEFINITIONS AND RULES OF CONSTRUCTION.................................................1
1.1 Definitions...........................................................................1
1.2 Rules of Construction................................................................10
Article II PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES.................................10
2.1 Purchase and Sale of Assets..........................................................10
2.2 Assignment and Assumption of Liabilities.............................................13
2.3 Excluded Assets......................................................................13
2.4 No Other Liabilities Assumed.........................................................14
2.5 Deemed Consents and Cures............................................................16
2.6 Obligations in Respect of Required Consents..........................................16
Article III PURCHASE PRICE AND PAYMENT...........................................................17
3.1 Payment of Purchase Price............................................................17
3.2 Further Assurances...................................................................17
Article IV REPRESENTATIONS AND WARRANTIES OF SELLERS............................................17
4.1 Sellers' Representations and Warranties..............................................17
4.2 Validity of Agreement................................................................17
4.3 Organization, Standing and Power.....................................................18
4.4 No Conflicts or Violations...........................................................18
4.5 Balance Sheets.......................................................................18
4.6 Title to Assets; Encumbrances........................................................18
4.7 Employee Benefit Plans...............................................................18
4.8 Labor Matters........................................................................19
4.9 Personnel Matters....................................................................20
4.10 Litigation, Orders...................................................................20
4.11 Government Contracts.................................................................21
4.12 Good Title Conveyed, Etc.............................................................21
4.13 Real Property Assets.................................................................21
4.14 Taxes................................................................................23
4.15 Compliance with Law..................................................................23
4.16 Approvals and Consents...............................................................23
4.17 Cure Amounts.........................................................................24
4.18 Environmental Permits, Licenses, Compliance, Etc.....................................24
4.19 Inventory............................................................................24
4.20 Assets Necessary to Business.........................................................25
4.21 Machinery and Equipment..............................................................25
4.22 Intellectual Property................................................................25
4.23 Insurance............................................................................26
4.24 Accounts Receivable..................................................................26
4.25 Contracts............................................................................26
4.26 Ownership; No Subsidiaries...........................................................27
4.27 Relationships with Customers and Suppliers...........................................27
4.28 Accounts Payable and Other Accrued Expenses..........................................27
4.29 Brokers..............................................................................27
4.30 Information Accurate and Complete; Reliance..........................................27
Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................28
5.1 Organization.........................................................................28
5.2 Authority............................................................................28
5.3 Consents.............................................................................28
5.4 Brokers..............................................................................28
Article VI COVENANTS OF SELLERS; OTHER AGREEMENTS...............................................28
6.1 Consents and Approvals...............................................................28
6.2 Access to Information and Facilities.................................................29
6.3 Conduct of the Business Pending the Closing..........................................29
6.4 Notification of Certain Matters; Schedules...........................................31
6.5 Best Efforts; Transfer of Assets.....................................................31
6.6 Bankruptcy Actions...................................................................32
6.7 Environmental Permits and Approvals..................................................32
6.8 Efforts..............................................................................32
6.9 Exclusivity; No Solicitation of Transactions.........................................33
6.10 Xxxx-Xxxxx-Xxxxxx....................................................................33
6.11 Excluded Assets......................................................................33
Article VII COVENANTS OF PURCHASER...............................................................34
7.1 Assumed Obligations..................................................................34
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7.2 Further Assurances...................................................................34
7.3 Xxxx-Xxxxx-Xxxxxx....................................................................34
Article VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.....................................34
8.1 Warranties True as of Both Present Date and Closing Date; Covenants..................34
8.2 Bankruptcy Condition.................................................................35
8.3 Approvals............................................................................35
8.4 Real Estate Matters..................................................................35
8.5 Bankruptcy Court Approval............................................................36
8.6 Additional Matters...................................................................36
8.7 Material Adverse Change..............................................................36
8.8 Service of Notice....................................................................37
8.9 Litigation...........................................................................37
8.10 Cure Costs...........................................................................37
8.11 Instruments of Conveyance and Transfer; Title........................................37
8.12 HSR Clearance........................................................................37
Article IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.......................................37
9.1 Warranties True as of Both Present Date and Closing Date.............................37
9.2 Approvals............................................................................38
9.3 Bankruptcy Court Approval............................................................38
9.4 Litigation...........................................................................38
9.5 HSR Clearance........................................................................38
Article X CLOSING..............................................................................38
10.1 Closing..............................................................................38
10.2 Deliveries by Sellers................................................................38
10.3 Deliveries by Purchaser..............................................................39
10.4 Form of Instruments..................................................................39
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Article XI TERMINATION; TERMINATION PAYMENT.....................................................39
11.1 Termination..........................................................................39
11.2 Effect of Termination or Breach......................................................41
Article XII ADDITIONAL POST-CLOSING COVENANTS....................................................41
12.1 Employees............................................................................41
12.2 Employee Benefit Plans...............................................................41
12.3 Rights of Third Parties..............................................................42
12.4 Sellers' Cooperation in Hiring of Employees..........................................42
12.5 WARN Act.............................................................................42
12.6 Joint Post-Closing Covenant of Purchaser and Sellers.................................43
12.7 Certain Consents.....................................................................43
12.8 Name Changes.........................................................................43
12.9 Accounts Receivable/Collections......................................................43
12.10 Access to Information................................................................43
Article XIII MISCELLANEOUS........................................................................44
13.1 Expenses.............................................................................44
13.2 Amendment............................................................................44
13.3 Notices..............................................................................44
13.4 Waivers..............................................................................46
13.5 Counterparts and Execution...........................................................46
13.6 Headings.............................................................................46
13.7 APPLICABLE LAW AND JURISDICTION......................................................46
13.8 Binding Nature; Assignment...........................................................46
13.9 No Third Party Beneficiaries.........................................................46
13.10 Tax Matters..........................................................................47
13.11 Construction.........................................................................47
13.12 Public Announcements.................................................................47
13.13 Entire Understanding.................................................................47
13.14 No Survival..........................................................................48
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EXHIBITS
Exhibit A - Earnout Payment
Exhibit B - Xxxx of Sale
Exhibit C - Intellectual Property Assignments
SCHEDULES
Schedule 2.1(a)(v) - Assumed Contracts
Schedule 2.1(a)(vi) - Assumed Owned Real Property
Schedule 2.1(a)(vii) - Assumed Facility Leases
Schedule 2.3(d) - Excluded Assets
Schedule 4.3 - Organization, Standing and Power
Schedule 4.7(a) - Sellers' Benefit Plans
Schedule 4.7(d) - Employee Benefit Plans
Schedule 4.8 - Labor Matters
Schedule 4.9 - Personnel Matters
Schedule 4.10 - Litigation
Schedule 4.13 - Real Property
Schedule 4.14(b) - Taxes
Schedule 4.17 - Cure Amounts
Schedule 4.18(a) - Environmental Permits, Licenses, Compliance, Etc.
Schedule 4.18(b) - Environmental Permits, Licenses, Compliance, Etc.
Schedule 4.18(c) - Environmental Permits, Licenses, Compliance, Etc.
Schedule 4.18(d) - Environmental Permits, Licenses, Compliance, Etc.
Schedule 4.19 - Inventory
Schedule 4.21 - Equipment Lease
Schedule 4.22 - Intellectual Property
Schedule 4.23 - Insurance
Schedule 4.24 - Accounts Receivable
Schedule 4.25 - Contracts
Schedule 4.26 - Subsidiaries
Schedule 4.27 - Customers and Suppliers
Schedule 4.28 - Accounts Payable and Accrued Expenses
Schedule 4.29 - Brokers
Schedule 6.3 - Conduct of the Business Pending the Closing
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of
this 16th day of April 2002, by and between (i) General Electric Company, a New
York corporation ("PURCHASER"), and (ii) Questron Technology, Inc., a Delaware
corporation, and each of its subsidiaries listed on the signature page of this
Agreement (each a "SELLER" and collectively, "SELLERS").
In consideration of the mutual covenants, agreements and
warranties herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
DEFINITIONS AND RULES OF CONSTRUCTION
DEFINITIONS. Unless otherwise defined herein, terms used herein shall
have the meanings set forth below:
"ACQUIRED ASSETS" shall have the meaning set forth in SECTION
0 hereof.
"ACQUISITION PROPOSAL" means a proposal relating to any
merger, consolidation, business combination, sale or other disposition of 20% or
more of the Acquired Assets pursuant to one or more transactions, the sale of
20% or more of the outstanding shares of capital stock of any Seller (including,
without limitation, by way of a tender offer, foreclosure or plan or
reorganization or liquidation but excluding any acquisition on the open market
not involving any agreement with the Sellers) or a similar transaction involving
one or more Third Parties and any Seller.
"AFFILIATE" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities or otherwise.
"AGREEMENT" means this Asset Purchase Agreement, including all
Exhibits and Schedules hereto, as the same may be amended from time to time in
accordance with its terms.
"ALLOCATION" shall have the meaning set forth in SECTION 0
hereof.
"ALTERNATIVE TRANSACTION" means an Acquisition Proposal made
in writing by a Third Party.
"ASSIGNMENT AND ASSUMPTION" shall have the meaning set forth
in SECTION 0 hereof.
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"ASSUMED CONTRACTS" means all Contracts identified in SCHEDULE
2.1(A)(V) attached hereto under the heading "ASSUMED CONTRACTS," other than
those excluded by Purchaser from the Acquired Assets pursuant to SECTION 0.
"ASSUMED EQUIPMENT LEASES" means all Equipment Leases
identified in SCHEDULE 2.1(A)(V) attached hereto under the heading "ASSUMED
EQUIPMENT LEASES," other than those excluded by Purchaser from the Acquired
Assets pursuant to SECTION 0. In all events Assumed Equipment Leases shall
include all capitalized equipment leases, each of which shall be identified on
SCHEDULE 2.L(A)(V) under the heading "Capitalized Equipment Leases", and such
leases may not be excluded by Purchaser.
"ASSUMED EXECUTORY CONTRACTS" means the Assumed Contracts and
the Assumed Leases.
"ASSUMED FACILITIES" means the facilities identified in the
Assumed Facility Leases.
"ASSUMED FACILITY LEASES" means all Facility Leases identified
in SCHEDULE 2.L(A)(VII) hereto, other than those excluded by Purchaser from the
Acquired Assets pursuant to SECTION 0.
"ASSUMED LEASES" means the Assumed Equipment Leases and the
Assumed Facility Leases.
"ASSUMED OBLIGATIONS" shall have the meaning set forth in
SECTION 0 hereof.
"ASSUMED OWNED REAL PROPERTY" means the Owned Real Property
identified in SCHEDULE 2.1(A)(VI) attached hereto, other than those excluded by
Purchaser from the Acquired Assets pursuant to SECTION 0.
"AUCTION" shall mean the auction conducted by Sellers pursuant
to the Bidding Procedures Order on the Auction Date.
"AUCTION DATE" means one day prior to the Sale Hearing.
"AVOIDANCE ACTION" or "AVOIDANCE ACTIONS" shall have the
meaning set forth in SECTION 0 hereof.
"BANKRUPTCY CODE" means title 11 of the United States Code.
"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the District of Delaware.
"BENEFIT PLAN" means any "employee benefit plan" (including,
without limitations, "plans" as defined in ERISA ss.3(3)), profit sharing,
deferred compensation, bonus, stock option, stock purchase, vacation pay,
holiday pay, pension, retirement plans,
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medical and any other form of compensation or benefit plan, program or
arrangement of any kind regardless of whether any such plan is written or oral
or provided under an employment, collective bargaining or other similar
arrangement.
"BIDDING PROCEDURES ORDER" means the order of the Bankruptcy
Court (i) setting a deadline for the filing of objections to the entry of the
Sale Order, (ii) scheduling the Sale Hearing, and (iii) approving the bidding
procedures.
"BOOKS AND RECORDS" means (a) all records and lists of any
Seller pertaining to the Acquired Assets, (b) all records and lists pertaining
to the Business (including, without limitation, merchandise and post-season
analysis reports, marketing analysis reports and creative material) or
customers, suppliers or personnel of any Seller (including, without limitation,
customer lists, mailing lists, e-mail address lists, recipient lists, sales
records, correspondence with customers, customer files and account histories,
supply lists and records of purchases from and correspondence with suppliers),
(c) all product, business and marketing plans of any Seller related to or used
in connection with the Business and (d) all books, ledgers, files, reports,
plans, drawings and operating records of every kind maintained by any Seller
related to or used in connection with the Business, but excluding the originals
of the minute books, stock books and tax returns of any Seller.
"BUSINESS" means the activities carried on by Sellers or any
of their subsidiaries for the purpose of (i) providing supply chain management
solutions and inventory logistics management services for original equipment
manufacturers, including without limitation, offering solutions for the
management and deployment of "C" inventory items, such as fasteners and related
products (I.E., screws, nuts, bolts, washers), (ii) distributing "C" inventory
items and value-added services to original equipment manufacturers, and (iii)
distributing lithium batteries.
"CASH" shall have the meaning set forth in SECTION 0 hereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. ss.9601 ET SEQ.).
"CHAPTER 11 CASES" means the cases commenced by Sellers under
Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court.
"CLAIM" shall have the meaning set forth in section 101(5) of
the Bankruptcy Code.
"CLOSING" means the consummation of the transactions
contemplated herein in accordance with 0 hereof.
"CLOSING DATE" shall have the meaning set forth in SECTION 0
hereof.
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"CODE" means the United States Internal Revenue Code of 1986,
as amended.
"COMPANY INTELLECTUAL PROPERTY" shall have the meaning set
forth in SECTION 0.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality
Agreement, dated March 22, 2002 between Questron Technology, Inc. and Purchaser.
"CONTRACT" means any agreement, contract, commitment or other
binding arrangement or understanding related to the Business, whether written or
oral, to which any Seller is a party and which any Seller is capable of assuming
and assigning.
"COBRA" shall have the meaning set forth in SECTION 1.1(E).
"DESIGNATED FIRM" shall have the meaning set forth in SECTION
0 hereof.
"DOLLARS" or "$" means dollars of the United States of
America.
"EARNOUT PAYMENT" shall have the meaning set forth in EXHIBIT
A hereto.
"EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in
SECTION 0.
"ENVIRONMENTAL LAWS" means all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release, threatened
Release, control, or cleanup of any Hazardous Substances (including without
limitation CERCLA and analogous state laws), each as amended or in effect prior
to, on or after Closing.
"EQUIPMENT LEASES" means the leases set forth in SCHEDULE 0
hereto, pursuant to which any Seller leases, as the lessee, certain equipment
and machinery used in the Business.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all regulations issued thereunder.
"ERISA AFFILIATE" means each entity which is treated as a
single employer with the Company or its Subsidiaries for purposes of Code
ss.414.
"EXCLUDED ASSETS" shall have the meaning set forth in SECTION
0 hereof.
"EXCLUDED CONTRACTS" shall have the meaning set forth in
SECTION 0 hereof.
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"EXCLUDED ENVIRONMENTAL LIABILITIES" means any Liability or
investigatory, corrective or remedial obligation, whenever arising or occurring,
arising under Environmental Laws with respect to the Business, the Acquired
Assets or the Leased Facilities (including without limitation any arising from
the on-site or off-site Release, threatened Release, treatment, storage,
disposal, or arrangement for disposal of Hazardous Substances) whether or not
constituting a breach of any representation or warranty herein and whether or
not set forth on any disclosure schedule hereto, except to the extent that the
facts or circumstances underlying any such Liability or obligation were caused
by the operation of the Business by Purchaser after the Closing Date.
"EXCLUDED LEASES" shall have the meaning set forth in SECTION
0 hereof.
"EXHIBITS" means the exhibits hereto.
"FACILITIES" means the premises at which Sellers conduct the
Business.
"FACILITY LEASES" means the leases set forth in SCHEDULE 4.13
attached hereto under the heading "FACILITY LEASES", pursuant to which any
Seller leases, as the lessee, premises used by such Seller in the conduct of the
Business.
"FINAL ORDER" means an Order as to which the time to file an
appeal, a motion for rehearing or reconsideration (excluding any motion under
F.R.C.P. 60(b)) or a petition for writ of certiorari has expired and no such
appeal, motion or petition is pending.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"GUARANTEED MINIMUM PAYMENT" shall have the meaning set forth
in EXHIBIT A hereto.
"HAZARDOUS SUBSTANCES" means any pollutants, contaminants or
chemicals, and any industrial, toxic or otherwise hazardous materials,
substances or wastes with respect to which liability or standards of conduct are
imposed under any Environmental Laws, including, without limitation, petroleum
and petroleum-related substances, products, by-products and wastes, asbestos,
urea formaldehyde and lead-based paint.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"INDEBTEDNESS" with respect to any Person means any obligation
of such Person for borrowed money, and in any event shall include (a) any
obligation incurred for all or any part of the purchase price of property or
other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the Ordinary Course
of Business, (b) the face amount of all letters of credit issued for the
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account of such Person, (c) obligations (whether or not such Person has assumed
or become liable for the payment of such obligation) secured by Liens, (d)
capitalized lease obligations, (e) all guarantees and similar obligations of
such Person, (f) all accrued interest, fees and charges in respect of any
Indebtedness and (g) all prepayment premiums and penalties, and any other fees,
expenses, indemnities and other amounts payable as a result of the prepayment or
discharge of any Indebtedness.
"INTELLECTUAL PROPERTY" means all of the following in any
jurisdiction throughout the world: (a) patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b)
trademarks, service marks, trade dress, logos, slogans, trade names, internet
domain names and corporate names, together with all goodwill associated
therewith, and applications, registrations and renewals in connection therewith,
(c) copyrights, mask works and copyrightable works, and applications,
registrations and renewals in connection therewith, (d) trade secrets and
confidential business information (including ideas, research and development,
know-how, inventions, formulas, compositions, manufacturing and production
processes and techniques, designs, drawings and specifications), (e) proprietary
computer software (including but not limited to source code, executable code
data, databases and documentation); (f) copies and tangible embodiments of any
of the foregoing in whatever form or medium; and (g) all other intellectual
property.
"INTERIM BALANCE SHEET" shall have the meaning set forth in
SECTION 0 hereof.
"INVENTORY" means all inventory held by any Seller for resale
in the ordinary course of the Business and all raw materials, work in process,
finished products, and similar items with respect to such inventory, in each
case wherever the same may be located.
"KNOWLEDGE OF SELLERS" shall mean the knowledge of any
director or executive officer of Sellers, including facts of which such
directors and officers, in the reasonably prudent exercise of their duties,
should be aware.
"LEASED EQUIPMENT" means all leased machinery, equipment,
computers, tools, vehicles, furniture, furnishings, goods and leasehold
improvements used in the Business and leased by any Seller under Equipment
Leases.
"LEASED FACILITIES" means all leased real property at which
any Seller conducts the Business and which is leased under Facility Leases.
"LIABILITY" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including, without limitation, any liability for Taxes.
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"LIEN" or "LIENS" shall have the meaning set forth in SECTION
0 hereof.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
any event, change, condition or matter that individually or in the aggregate
results in or would reasonably be expected to result in a material adverse
effect or change in the results of operations or condition (financial or
otherwise) or prospects of the Business or the Acquired Assets (taken
individually or as a whole), except the filing of the Chapter 11 Cases and
reasonably anticipated effects thereof.
"MATERIAL CONTRACTS" shall have the meaning set forth in
SECTION 0 hereof.
"NOTICE" means any summons, citation, directive, order, claim,
litigation, proceeding, judgment, letter or other communication, written or
oral, actual or threatened, from the United States Environmental Protection
Agency and any other federal, state, local or foreign agency or authority, or
any other entity or any individual and shall include the imposition of any lien
on property owned, leased, occupied or used by any Seller pursuant to any
Environmental Law.
"ORDER" means any decree, order, injunction, rule, judgment,
consent of or by any court or governmental authority.
"ORDINARY COURSE OF BUSINESS" means the operation of the
Business by Sellers in the usual and ordinary course in a manner substantially
similar to the manner in which Sellers operated prior to the commencement of the
Chapter 11 Cases.
"OWNED EQUIPMENT" means all machinery, equipment, computers,
tools, vehicles, furniture, furnishings, goods and leasehold improvements used
in connection with the Business and owned by any Seller.
"OWNED REAL PROPERTY" means all land and all buildings,
fixtures and other improvements located thereon, and all easements, rights of
way, servitudes, tenements, hereditaments, appurtenances, privileges and other
rights with respect thereto owned by Sellers.
"PERMITS" means all transferable licenses, permits, approvals,
certificates of occupancy, authorizations, operating permits, registrations,
plans and the like relating exclusively to the conduct of the Business for which
consent is obtained.
"PERMITTED LIENS" means (i) statutory liens for current
property Taxes and assessments not yet due and payable, including, without
limitation, liens for AD VALOREM Taxes and statutory liens not yet due and
payable arising other than by reason of any default on the part of any Seller,
and liens for property Taxes being contested in good faith by any Seller by
appropriate proceedings and with respect to which adequate reserves have been
established by any Seller in accordance with GAAP and (ii) imperfections of
title or easements on real property, leasehold estates or personalty that do not
in any material respect detract from the value thereof and do not individually
or in
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the aggregate in any material respect interfere with the present use of the
property subject thereto in the operation of the Business.
"PERSON" means any corporation, partnership, joint venture,
limited liability company, organization, entity, authority or natural person.
"PROCEEDING" shall have the meaning set forth in SECTION 0
hereof.
"PURCHASER" shall have the meaning set forth in the Preamble
hereto.
"PURCHASE PRICE" shall have the meaning set forth in SECTION 0
hereof.
"REGULATION" means any law, statute, regulation, ruling, rule
or Order of, administered or enforced by or on behalf of, any court or
governmental authority.
"REHIRED EMPLOYEES" shall have the meaning set forth in
SECTION 0.
"RELEASE" shall have the meaning set forth in CERCLA.
"SALE HEARING" means the hearing of the Bankruptcy Court to
approve the transactions contemplated by this Agreement.
"SALE ORDER" means the order to be issued by the Bankruptcy
Court pursuant to sections 363 and 365 of the Bankruptcy Code (i) approving this
Agreement and the transactions contemplated hereby, (ii) approving the sale of
the Acquired Assets to Purchaser free and clear of all liens, Claims,
encumbrances and interests pursuant to section 363(f) of the Bankruptcy Code,
(iii) approving the assumption and assignment to Purchaser of the Assumed Leases
and Assumed Contracts, (iv) finding that Purchaser is a good faith purchaser
entitled to the protections of section 363(m) of the Bankruptcy Code, and (v)
confirming that Purchaser is acquiring the Acquired Assets free and clear of the
Unassumed Liabilities and providing for a full release of Purchaser with respect
to the Unassumed Liabilities.
"SCHEDULES" means the schedules hereto.
"SELLER" and "SELLERS" shall have the meaning set forth in the
Preamble hereto.
"SENIOR FACILITY" means that certain Amended and Restated Loan
and Security Agreement, dated as of June 29, 1999, by and among Questron
Technology, Inc., a Delaware corporation, Questron Distribution Logistics, Inc.,
a Delaware corporation, Integrated Material Systems, Inc., an Arizona
corporation, Power Components, Inc., a Pennsylvania corporation, California
Fasteners, Inc., a California corporation, Comp Xxxx, Inc., a Delaware
corporation doing business as Xxxx Distribution Inc., Fas-Tronics, Inc., a Texas
corporation, Fortune Industries, Inc., a Texas corporation, Questron Finance
Corp., a Delaware corporation, Questron Operating Company, Inc., a Delaware
corporation, Action Threaded Products, Inc., an Illinois
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corporation, Action Threaded Products of Georgia, Inc., a Georgia corporation,
Action Threaded Products Of Minnesota, Inc., a Minnesota corporation, Capital
Fasteners, Inc., a North Carolina corporation, each of the lenders that is a
signatory to thereto, Congress Financial Corporation (Florida), a Florida
corporation, as administrative agent, and Ableco Finance LLC, a Delaware limited
liability company as collateral agent, as amended.
"SENIOR LENDERS" means Congress Financial Corporation
(Florida) and Ableco Finance LLC.
"SURVEYS" shall have the meaning set forth in SECTION 0.
"TAX" and, with correlative meaning, "TAXES" means with
respect to any Person (a) all federal, state, local, county, foreign and other
taxes, assessments or other government charges, including, without limitation,
any income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, license,
registration, recording, documentary, conveyancing, gains, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property (real and
personal), environmental or windfall profit tax, custom duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Taxing Authority responsible for the imposition of any such tax
(domestic or foreign) or (b) liability for the payment of any amounts of the
type described in clause (a) above relating to any other Person as a result of
being party to any agreement to indemnify such other Person, being a successor
or transferee of such other Person, or being a member of the same affiliated
consolidated, combined, unitary or other group with such other Person.
"TAX RETURN" means any report, return, claim for refund or
other information supplied or required to be supplied by any Seller to a taxing
authority in connection with Taxes, including any attachments thereto and any
amendments thereof.
"TAXING AUTHORITY" means any governmental authority.
"THIRD PARTY" means any Person other than Sellers, Purchaser
or any of their respective Affiliates.
"TITLE COMMITMENTS" shall have the meaning set forth in
SECTION 0.
"TITLE INSURER" shall have the meaning set forth in SECTION 0.
"TITLE POLICIES" shall have the meaning set forth in SECTION
0.
"TRANSITION PERIOD" shall have the meaning set forth in
SECTION 0.
"UNASSUMED LIABILITIES" shall have the meaning set forth in
SECTION 0 hereof.
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"XXXX XXX" shall have the meaning set forth in SECTION 0
hereof.
RULES OF CONSTRUCTION. Unless the context otherwise clearly indicates, in
this Agreement:
the singular includes the plural;
"includes" and "including" are not limiting;
"may not" is prohibitive and not permissive; and
"or" is not exclusive.
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
PURCHASE AND SALE OF ASSETS.
Subject to the terms and conditions set forth in this Agreement, at the
Closing, Sellers shall sell, contribute, convey, assign, transfer and deliver to
Purchaser, free and clear of all Liens (except for the Assumed Obligations), and
Purchaser shall purchase, acquire and take assignment and delivery of, for the
consideration specified in SECTION 0, all properties, assets, rights, titles and
interests of every kind and nature, owned or leased by Sellers (including
indirect and other forms of beneficial ownership) as of the Closing Date, which
are used in, useful for or otherwise associated with the Business (INCLUDING,
WITHOUT LIMITATION, all assets located on the premises of the Business), whether
tangible or intangible, real or personal and wherever located and by whomever
possessed, including without limitation, all of the following assets but
excluding Excluded Assets pursuant to SECTION 0 (all of the assets to be sold,
assigned, transferred and delivered to Purchaser hereunder herein called the
"ACQUIRED ASSETS"):
all cash (including, without limitation, checking account
balances, certificates of deposit and other time deposits and xxxxx
cash) and marketable and other securities ("CASH"), less $500,000 which
shall be used to pay the cure costs set forth on SCHEDULE 4.17 and any
sales taxes that result from the transaction contemplated hereby and
administer the estate of Sellers after the Closing; PROVIDED, HOWEVER,
that to the extent that immediately prior to the Closing, Sellers have
less than $500,000 in Cash, Purchaser shall pay to Sellers an amount
equal to (i) $500,000 LESS (ii) the amount of Seller's Cash immediately
prior to Closing less (iii) the amount paid by Sellers at or prior to
Closing to pay the cure costs set forth on SCHEDULE 4.17 LESS (iv) the
amount of any sales taxes paid by Sellers at or prior to Closing as a
result of the transactions contemplated hereby LESS (v) the amount of
any administrative expenses paid by Sellers at or prior to Closing
relating to the administration of the estate of Sellers after the
Closing;
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all accounts and notes receivables (whether current or
noncurrent) and all causes of action specifically pertaining to the
collection of the foregoing;
all Tax refunds, rebates, credits or similar items relating to
any period, or portion of any period, on or prior to the Closing Date;
all Intellectual Property, along with all income, royalties,
damages and payments due or payable to Sellers as of the Closing or
thereafter, including, without limitation, damages and payments for
past, present or future infringements or misappropriations thereof, the
right to xxx and recover for past infringements or misappropriations
thereof and any and all corresponding rights that, now or hereafter,
may be secured throughout the world and all copies and tangible
embodiments of any such Intellectual Property in Sellers' possession or
control;
all of Sellers' rights existing under the Assumed Executory
Contracts;
all Assumed Owned Real Property;
all Assumed Facilities and all plants, buildings and other
improvements located on such property, and all easements, licenses,
rights of way, permits and all appurtenances to the Assumed Facility
Leases including, without limitation, all appurtenant rights in and to
public streets, whether or not vacated;
all leasehold improvements and all machinery, equipment
(including all transportation and office equipment), fixtures, trade
fixtures, computer equipment, telephone systems and furniture owned by
Sellers wherever located, including, without limitation, all such items
which are located in any building, warehouse, office or other space
leased, owned or occupied by Sellers or used in connection with the
Business;
all inventories of work in process, semi-finished and finished
goods, stores, replacement and spare parts, packaging materials,
operating supplies, and fuels, owned by Sellers wherever located;
all office supplies, production supplies, spare parts, other
miscellaneous supplies, and other tangible property of any kind
wherever located, including, without limitation, all property of any
kind located in any building, office or other space leased, owned or
occupied by Sellers or in any warehouse where any of Sellers'
properties and assets may be situated;
all customer deposits and advances and prepaid and other
current assets relating to the Business;
16
all claims, deposits, prepayments, warranties, guarantees,
refunds, causes of action, rights of recovery, rights of set-off and
rights of recoupment of every kind and nature (whether or not known or
unknown or contingent or non-contingent), other than those relating
exclusively to Excluded Assets;
the right to receive and retain mail, accounts receivable
payments and other communications relating to the Business;
the right to xxxx and receive payment for products shipped or
delivered and services performed but unbilled or unpaid as of the
Closing;
all Books and Records;
all advertising, marketing and promotional materials and all
other printed or written materials;
all Permits, licenses, certifications and approvals from all
permitting, licensing, accrediting and certifying agencies, and the
rights to all data and records held by such permitting, licensing and
certifying agencies;
all goodwill as a going concern and all other intangible
properties;
all telephone numbers used by Sellers;
all indemnities relating to the Acquired Assets or the
Business prior to the Closing Date;
all rights to proceeds under insurance policies to the extent
related to or payable in connection with any of the Acquired Assets,
the Assumed Obligation or the Business prior to the Closing Date; and
all security deposits relating to Assumed Agreements.
All of the Acquired Assets shall be sold, assigned, transferred, conveyed
and delivered to Purchaser free and clear of all liens (including liens for
Taxes) (other than the Permitted Liens), encumbrances (including, without
limitation, any leasehold interests, licenses or other rights, in favor of a
Third Party or a Seller, to use any portion of the Acquired Assets), Claims,
security interests, of whatever kind or nature, mortgages, pledges,
restrictions, charges, instruments, licenses, encroachments, options, rights of
recovery, judgments, orders and decrees of any court or foreign or domestic
governmental authority, interest, products and Tax (including foreign, federal,
state and local Taxes), in each ease of any kind or nature, whether secured or
unsecured, xxxxxx or inchoate, filed or unfiled, scheduled or unscheduled,
noticed or unnoticed, recorded or unrecorded, contingent or non-contingent,
material or non-material, known or unknown, and including all claims based on
any theory that Purchaser is a successor, transferee or
17
continuation of Sellers or the Business, in each case, other than the Assumed
Obligations expressly assumed herein (each a "LIEN" and collectively the
"LIENS"), whether arising prior to or subsequent to the date of the filing of
the Chapter 11 petitions of Sellers, and in accordance with the terms of the
Sale Order and sections 363(f) and 365 of the Bankruptcy Code.
ASSIGNMENT AND ASSUMPTION OF LIABILITIES.
Subject to the terms and conditions set forth in this Agreement, Purchaser
shall assume from Sellers and thereafter pay, perform or discharge in accordance
with their terms, the following liabilities and obligations of Sellers (all such
liabilities and obligations herein called the "ASSUMED OBLIGATIONS"): executory
obligations first accruing after the Closing under (i) obligations under the
Assumed Facility Leases first arising after the Closing, (ii) obligations under
the Assumed Equipment Leases first arising after the Closing, and (iii)
obligations under the Assumed Contracts first arising after the Closing.
The transactions contemplated by this Agreement shall in no way expand the
rights or remedies of any third party against Purchaser or Sellers as compared
to the rights and remedies which such third party would have had against Sellers
absent Chapter 11 Cases, had Purchaser not assumed such Assumed Obligations.
EXCLUDED ASSETS. Notwithstanding anything to the contrary in this
Agreement, the following assets of Sellers shall be retained by Sellers and are
not being sold or assigned to Purchaser hereunder (all of the following are
referred to collectively as the "EXCLUDED ASSETS"):
any and all rights under this Agreement and avoidance claims or causes of
action arising under the Bankruptcy Code or applicable state law, including,
without limitation, all rights and avoidance claims of Sellers arising under
chapter 5 of the Bankruptcy Code (an "AVOIDANCE ACTION" and collectively the
"AVOIDANCE ACTIONS")
all Owned Real Property other than the Assumed Owned Real Property;
all leases other than the Assumed Leases (the "EXCLUDED LEASES") and all
Contracts other than the Assumed Contracts (the "EXCLUDED CONTRACTS");
any asset set forth on SCHEDULE 2.3(D) hereto; PROVIDED that Purchaser may
amend SCHEDULE 2.3(D) hereto at any time on or before one (1) day prior to the
Closing Date in order to exclude from the definition of Acquired Asset any other
asset, Lease or Contract not otherwise excluded; PROVIDED FURTHER that such
exclusion shall not serve to reduce or otherwise affect the amount of the
Purchase Price.
NO OTHER LIABILITIES ASSUMED. Each Seller acknowledges and agrees that
pursuant to the terms and provisions of this Agreement and under any Contract or
Lease, Purchaser will not assume any obligation of any Seller, other than the
Assumed Obligations. In
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furtherance and not in limitation of the foregoing, neither Purchaser nor any of
its Affiliates shall assume, and shall not be deemed to have assumed, any debt,
Claim, obligation or other liability of any Seller or any of their respective
Affiliates whatsoever (other than the Assumed Obligations), including, but not
limited to the following (collectively, the "UNASSUMED LIABILITIES"):
all obligations, claims, or liabilities of Sellers or any
predecessor(s) or Affiliate(s) of Sellers that relate to any of the Excluded
Assets;
Excluded Environmental Liabilities;
all obligations, claims, or liabilities of Sellers or any
predecessor(s) or Affiliate(s) of Sellers or for which Sellers or any
predecessor(s) or Affiliates of Sellers could be liable relating to Taxes
(including with respect to the Acquired Assets or otherwise) for all periods, or
portions thereof, ending on or prior to the Closing Date including, without
limitation, any Taxes that will arise as a result of the sale of the Acquired
Assets pursuant to this Agreement and any deferred Taxes of any nature;
all obligations, claims, or 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 or otherwise;
all Indebtedness of any Seller or any predecessor(s) or
Affiliate(s) of any Seller, including, but not limited to, Indebtedness of
Sellers pursuant to the Senior Facility;
all obligations of Sellers related to the right to or issuance
of any capital stock or other equity interest of Sellers, including, without
limitation, any stock options or warrants;
all liabilities and obligations from Sellers or any
predecessor(s) or Affiliate(s) of Sellers resulting from, caused by or arising
out of, or which relate to, directly or indirectly, the conduct of the Business
or ownership or lease of any properties or assets or any properties or assets
previously used by Sellers at any time prior to or on the Closing Date, or other
actions, omissions or events occurring prior to the Closing, including, without
limitation, any amounts due or which may become due or owing under the Assumed
Leases or the Assumed Contracts with respect to the period prior to Closing
(other than all cure payments payable in accordance with the terms of this
Agreement), whether known or unknown on the date hereof;
all obligations and liabilities of Sellers or any
predecessor(s) or Affiliate(s) of Sellers resulting from, caused by or arising
out of, or which relate to, directly or indirectly, the conduct of the Business
or ownership or lease of any properties or assets or any properties or assets
previously used by Sellers at any time prior to or on the Closing Date, or other
actions, omissions or events occurring prior to the Closing and which (i)
19
constitute, may constitute or are alleged to constitute a tort, breach of
contract or violation of any law or (ii) relate to any and all Claims, disputes,
demands, actions, liabilities, damages, suits in equity, administrative
proceedings, accounts, costs, expenses, setoffs, contributions, attorneys' fees
and/or causes of action of whatever kind or character ("PROCEEDING") against
Sellers or any predecessor(s) or Affiliate(s) of Sellers, whether past, present,
future, known or unknown, liquidated or unliquidated, accrued or unaccrued,
pending or threatened;
any liability or obligation arising out of any Proceeding
commenced after the Closing and arising out of, or relating to, any occurrence
or event happening prior to the Closing;
all obligations, claims or liabilities (whether known or
unknown) with respect to the employees or former employees, or both, of any
Seller arising from the operation of the Business prior to the Closing,
including, without limitation, payroll, vacation, sick leave, worker's
compensation, unemployment benefits or other compensation of any kind to any
employee, and obligations of any kind including, without limitation, any
liability pursuant to the WARN Act for any action or inaction prior to the
Closing;
any liability or obligation arising under any Employee Benefit
Plan or any other employee benefit plan, program or arrangement at any time
maintained, sponsored or contributed to by Seller or any ERISA Affiliate, or
with respect to which Sellers or any ERISA Affiliate has any liability;
all accounts payable arising prior to the Closing;
any liability or obligation arising out of or relating to
services and/or products of Sellers to the extent provided, manufactured and/or
sold prior to the Closing;
any liability or obligation under any Assumed Executory
Contract which arises after the Closing but which arises out of or related to
any breach that occurred prior to the Closing;
any liability or obligation under any contract, agreement,
lease, mortgage, indenture or other instrument not assumed by Purchaser
hereunder;
any liability or obligation under any employment, severance,
retention or termination agreement with any employee, consultant or contractor
of Sellers;
any liability or obligation arising out of or relating to any
Seller employee grievance whether or not the affected employees are hired by
Purchaser;
any liability or obligation of Sellers to any shareholder or
Affiliate of any Seller;
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any liability or obligation to indemnify, reimburse or advance
amounts to any officer, director, employee or agent of any Seller;
any liability or obligation to distribute to any Seller's
shareholders or otherwise apply all or any part of the consideration received
hereunder;
any liability or obligation arising out of or resulting from
any Seller's non-compliance with any law, ordinance, regulation or treaty;
any liability or obligation of Sellers under this Agreement or
any other document executed in connection herewith;
any liability or obligation of any Seller based upon such
Seller's acts or omissions occurring after the Closing; and
any obligation under the Senior Facility.
The parties acknowledge and agree that disclosure of any obligation or liability
on any Schedule to this Agreement shall not create an Assumed Obligation or
other liability of Purchaser, except where such disclosed obligation has been
expressly assumed by Purchaser as an Assumed Obligation in accordance with the
provisions of SECTION 0 hereof.
DEEMED CONSENTS AND CURES. For all purposes of this Agreement
(including all representations and warranties of Sellers contained herein),
Sellers shall be deemed to have obtained all required consents in respect of the
assignment of any Assumed Contract or Assumed Lease if and to the extent that,
pursuant to the Sale Order or other Bankruptcy Court order, Sellers are
authorized to assume and assign Assumed Contracts and/or Assumed Leases to
Purchaser pursuant to section 365 of the Bankruptcy Code and any applicable cure
cost has been satisfied.
OBLIGATIONS IN RESPECT OF REQUIRED CONSENTS. To the extent that any Assumed
Executory Contract is subject to a cure (pursuant to section 365 of the
Bankruptcy Code), Sellers shall be responsible for paying or providing for such
cure. To the full extent that any cure obligations are asserted against
Purchaser, Sellers agree to pay such amounts and to fully indemnify for and hold
Purchaser harmless from any costs, expenses or other liabilities resulting from
such assertion. Notwithstanding anything in this Agreement to the contrary,
Purchaser, and not Sellers, shall be responsible for any liabilities incurred
prior to Closing and associated with that certain software license agreement
among Questron Technology, Inc. and i2 Technologies, Inc.; PROVIDED, HOWEVER,
nothing herein shall have created, and Purchaser shall not have, an obligation
to assume such contract.
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PURCHASE PRICE AND PAYMENT
PAYMENT OF PURCHASE PRICE.
The aggregate purchase price for the Acquired Assets shall be (i) an amount
in cash equal to $86,700,000 payable to Sellers, at the Closing, in immediately
available funds, by wire transfer to an account or accounts designated by
Sellers, (ii) the amount of the Assumed Obligations and (iii) the Earnout
Payment (including the Guaranteed Minimum Payment), which shall be payable as
and to the extent provided in EXHIBIT A hereto (collectively, the "PURCHASE
PRICE").
The Purchase Price shall be allocated in accordance with SECTION 0.
FURTHER ASSURANCES. From time to time after the Closing and without further
consideration, (i) Sellers, upon the request of Purchaser, shall execute and
deliver such documents and instruments of conveyance and transfer as Purchaser
may reasonably request in order to consummate more effectively the purchase and
sale of the Acquired Assets as contemplated hereby and to vest in Purchaser
title to the Acquired Assets transferred hereunder, and (ii) Purchaser, upon the
request of Sellers, shall execute and deliver such documents and instruments of
contract or lease assumption as Sellers may reasonably request in order to
confirm Purchaser's liability for the obligations assumed hereunder or otherwise
more fully consummate the transactions contemplated by this Agreement.
REPRESENTATIONS AND WARRANTIES OF SELLERS
SELLERS' REPRESENTATIONS AND WARRANTIES. Each Seller hereby jointly and
severally makes the following representations and warranties to Purchaser:
VALIDITY OF AGREEMENT. Subject to any necessary authorization from the
Bankruptcy Court, this Agreement constitutes the valid and binding obligation of
each Seller enforceable in accordance with its terms. The execution and delivery
of this Agreement and the performance by each Seller of its obligations
hereunder, have been duly authorized by the Board of Directors of each Seller
and no further action or approval, corporate or otherwise, except the
above-referenced approval of the Bankruptcy Court, is required to constitute
this Agreement as a binding and enforceable obligation of each Seller.
ORGANIZATION, STANDING AND POWER. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The copies of the certificate or articles of
incorporation and bylaws of each Seller, as previously delivered to Purchaser by
Sellers, are complete and correct copies of such instruments as currently in
effect. Each Seller is duly qualified to do business and is in good standing as
a foreign corporation in all jurisdictions where the character of its
22
properties or the nature of its activities makes such qualification necessary,
except where the failure to obtain such qualification would not reasonably he
expected to have a Material Adverse Effect. SCHEDULE 4.3 sets forth a list of
each such jurisdiction. Subject to any necessary authorization from the
Bankruptcy Court, each Seller has all requisite corporate power and authority to
own, lease and operate its properties, to carry on the Business as now being
conducted and to execute and deliver this Agreement and all writings relating
hereto and, subject to obtaining the Sale Order, to perform its obligations
hereunder and thereunder.
NO CONFLICTS OR VIOLATIONS. Subject to the applicable provisions of
bankruptcy law, the execution and delivery of this Agreement, the consummation
of the transactions herein contemplated, and the performance of, fulfillment of
and compliance with the terms and conditions hereof by Sellers do not and will
not: (i) conflict with or result in a breach of the certificate or articles of
incorporation or the by-laws of any Seller; (ii) violate any statute, law, rule
or regulation, or any order, writ, injunction or decree of any court or
governmental authority, (iii) violate or conflict with or constitute a default
under any agreement, instrument or writing of any nature to which any Seller is
a party or by which any Seller or its assets or properties may be bound, except
to the extent any of the foregoing is not enforceable due to operation of
applicable bankruptcy law or the Sale Order, or (iv) result in the creation or
imposition of any Lien upon any of the Acquired Assets.
BALANCE SHEETS. Sellers have delivered to Purchaser: (a) an audited
consolidated balance sheet of Sellers as of December 31, 2000 and (b) an
unaudited consolidated balance sheet of Sellers as of September 30, 2001 (the
"INTERIM BALANCE SHEET"), including in each case the notes thereto certified by
the chief financial officer of Questron Technology, Inc. Such balance sheets
fairly present the financial condition of Sellers as of their respective dates,
in accordance with GAAP, consistently applied.
TITLE TO ASSETS; ENCUMBRANCES. Except for Permitted Liens and liens
pursuant to the Senior Facility, Sellers have good, valid and marketable title
to all of the Acquired Assets. Since the date of the Interim Balance Sheet, no
Seller has purchased any material amount of assets except in the Ordinary Course
of Business and consistent with past practice. Except for Permitted Liens and
liens pursuant to the Senior Facility, all of the Acquired Assets are free and
clear of any Lien.
EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 4.7(A) sets forth a complete and accurate list of
each Benefit Plan Sellers maintain, contribute to or have any liability or
potential liability to any employee or former employee ("EMPLOYEE BENEFIT
PLAN"). Sellers have made available to Purchaser true and correct copies, if
applicable, of each Employee Benefit Plan. The Employee Benefit Plans are in
compliance with all applicable requirements of ERISA, the Code, and other
applicable laws and have been administered in all material respects in
accordance with their terms and such laws. Each Employee Benefit Plan which is
intended to be qualified within the meaning of Section 401 of the Code has
received a
23
favorable determination letter as to its qualification, and nothing has occurred
that would cause the loss of such favorable determination.
(b) No Employee Benefit Plan is a "MULTIEMPLOYER PLAN" (as
defined in Section 4001 (a)(3) of ERISA) and no Seller nor any ERISA Affiliate
has sponsored or contributed to or has any liability or potential liability to
any multiemployer plan. No Seller nor any ERISA Affiliate has any liability with
respect to any "EMPLOYEE BENEFIT PLAN" (as such term is defined under Section
3(2) of ERISA) that is subject to Section 302 of ERISA or Section 412 of the
Code.
(c) No event or condition has occurred in connection with
which any Seller or any of its ERISA Affiliates could be reasonably likely to be
subject to any material liability, encumbrance or lien with respect to any
Employee Benefit Plan under ERISA, the Code or any other applicable law or under
any agreement or arrangement pursuant to or under which any Seller or any of its
ERISA Affiliates are required to indemnify any person against such liability.
There are no pending or, to the Knowledge of Sellers, threatened claims, suits,
audits or investigations related to any Benefit Plan (other than routine claims
for benefits).
(d) Except as set forth on SCHEDULE 1.1(D), the consummation
of the transactions contemplated by this Agreement (alone or in connection with
any subsequent event, including a termination of employment) will not (i)
accelerate the vesting or payment of any economic benefit provided or made
available to any Seller's employees by such Seller, (ii) increase the amount of
any economic benefit provided or made available to any Seller's employees by
such Seller, or (iii) accelerate or increase the funding obligation of any
Seller with respect to any Employee Benefit Plan.
(e) Sellers have complied with the health care continuation
requirements of Part 6 of Subtitle B of Title I of ERISA ("COBRA"); and neither
Sellers nor any subsidiary has any obligations under any Employee Benefit Plan,
or otherwise, to provide health or life insurance benefits to former employees
of the Company, or any other person, except as specifically required under
COBRA.
LABOR MATTERS. Except as set forth in SCHEDULE 4.8 or except as a result of
any action taken or to be taken by Purchaser:
With respect to the Business, each Seller is in compliance in all material
respects with all applicable laws relating to employment and employment
practices, terms and conditions of employment, and wages and hours, and is not
engaged in any unfair labor practice or unlawful employment practice. In
addition, there are no pending or unremedied grievances or pending or unremedied
unfair labor practices against any Seller with respect to the Business;
No Seller has received notice of any unfair labor practice, charge or
complaint against it before the National Labor Relations Board relating to the
Business and no Seller has, to
24
the Knowledge of Sellers, received notice of any threatened unfair labor
practice charge or complaint before the National Labor Relations Board relating
to the Business;
There is no labor strike, slowdown or work stoppage relating to the
Business pending or, to Knowledge of Sellers, threatened against any Seller with
respect to the Business;
No Seller has experienced any work stoppages or been a party to any
proceedings before the National Labor Relations Board involving any issues for
the three years prior to the date hereof or been a party to any arbitration
proceeding arising out of or under collective bargaining agreements for the
three years prior to the date hereof, in either case, relating to the Business;
and
No Seller has received notice of any charge or complaint against any Seller
before the Equal Employment Opportunity Commission or the Department of Labor or
any state or local agency of similar jurisdiction relating to the Business, and
no Seller has received any notice of any threatened charge or complaint against
any Seller before the Equal Employment Opportunity Commission or the Department
of Labor or any state or local agency of similar jurisdiction relating to the
Business.
PERSONNEL MATTERS. SCHEDULE 4.9 contains an accurate and complete list of
the wage rates, base compensation, and any supplemental or bonus compensation
(including, without limitation, any retention or stay bonus arrangements) for
all persons employed in the Business including: (i) full information about each
Seller's obligations to make current wage or salary payments to employees who
are terminable at will and without notice, and (ii) all other employment-related
commitments that exist, whether oral or in writing, including all collective
bargaining agreements, employment agreements, consulting agreements, independent
contractor agreements, retainers and severance agreements, under which any
Seller has any obligation to provide wages, salary, commissions, or other
compensation, remuneration or benefits to any employee, former employee,
consultant or contractor. No Seller is in default with respect to any material
obligation to any of such employees.
LITIGATION, ORDERS. Except as set forth on SCHEDULE 4.10, there are no
claims, actions, suits, proceedings, investigations or inquiries pending or, to
the Knowledge of Sellers, threatened before any court, arbitrator or
governmental or regulatory official or office, against or affecting the Business
or the Acquired Assets in which the damages sought exceed $10,000 individually
or $100,000 in the aggregate, at law or in equity, before or by any federal,
state, local or foreign governmental authority. No Seller is subject to any
judgment, order or decree entered in any lawsuit or proceeding that has or may
materially and adversely affect its ability to conduct the Business in any area.
GOVERNMENT CONTRACTS. No Seller is a federal contractor or is governed by
Executive Order 11246, the Rehabilitation Act, or the Vietnam Era Veterans
Readjustment Assistance Act.
25
GOOD TITLE CONVEYED, ETC. Sellers have the power and the right to sell,
assign and transfer and Sellers will sell and deliver to Purchaser, and upon
consummation of the transactions contemplated by this Agreement, Purchaser will
acquire good, valid and marketable title to the Acquired Assets, free and clear
of all Liens other than Permitted Liens. This Agreement and the documents
contemplated hereby, when duly executed and delivered by Sellers to Purchaser at
the Closing, will effectively vest in Purchaser good, valid and marketable title
to the Acquired Assets, subject to the Permitted Liens.
REAL PROPERTY ASSETS.
(f) SCHEDULE 4.13 attached hereto sets forth a list of all
Owned Real Property used by Sellers in the operation of Sellers' Business. With
respect to each such parcel of Owned Real Property: (i) such parcel is free and
clear of all encumbrances, except Permitted Liens and liens pursuant to the
Senior Facility; (ii) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any person the right of use or
occupance of any portion of such parcel; and (iii) there are no outstanding
actions or rights of first refusal to purchase such parcel (other than the right
of Purchaser pursuant to this Agreement), or any portion thereof or interest
therein.
(g) All utilities currently servicing the Assumed Owned Real
Property and Leased Facilities are installed, connected and operating, with all
charges paid in full.
(h) All permanent certificates of occupancy and all other
material licenses, permits, authorizations, consents, certificates and approvals
required by all governmental authorities having jurisdiction and the requisite
certificates of the local board of fire underwriters (or other body exercising
similar functions) have been issued for the Assumed Owned Real Property and the
Leased Facilities (and all individual items constituting the Assumed Owned Real
Property and the Leased Facilities), have been paid for, are in full force and
effect, and, are assignable by Seller.
(i) Seller has not received any written notice of any
condemnation proceedings in the nature of eminent domain in connection with any
parcel of the Assumed Owned Real Property and the Leased Facilities.
(j) Seller has not received any written notice of any federal,
state, county, municipal or other governmental plans to change the highway or
road system in the vicinity of the Assumed Owned Real Property and the Leased
Facilities or to restrict or change access from any such highway or road to any
parcel of the Assumed Owned Real Property and the Leased Facilities.
(k) With the exception of the proposed Sale Order, Sellers
have no Knowledge of any agreements, consent orders, decrees, judgments,
licenses, permits, conditions or other directives, issued by a governmental
department or agency or court which relate to the future use of the Assumed
Owned Real Property and the Leased Facilities or require any change in the
present use or operations of the Assumed Owned Real Property and the Leased
Facilities.
26
(l) Sellers have not received any notice from the holder of
any mortgage presently encumbering the Assumed Owned Real Property or the Leased
Facilities, any insurance company which has issued a policy with respect to the
Assumed Owned Real Property or the Leased Facilities or from any board of fire
underwriters (or other body exercising similar functions) claiming any defects
or deficiencies in the Assumed Owned Real Property or the Leased Facilities or
requiring the performance of any repairs, alterations or other work to the
Assumed Owned Real Property or the Leased Facilities.
(m) The operation and use of the buildings and other
improvements constituting the Assumed Owned Real Property or the Leased
Facilities do not violate any zoning, subdivision, building or similar law,
ordinance, order, regulation or recorded plat or any certificate of occupancy
issued with respect to the Assumed Owned Real Property or the Leased Facilities.
(n) (1) Except for the Facility Leases, there are no occupancy
rights, leases or tenancies presently affecting the Leased Facilities; (2)
Sellers have heretofore delivered to Purchaser true and complete copies of each
of the Facility Leases and none of such leases has been amended, modified or
terminated; (3) the Facility Leases are at present and on the date of the
Closing shall be in full force and effect unless any such Facility Lease shall
have expired in accordance with its terms (and not because of any termination or
other acceleration of the stated expiration date thereof); (4) no Seller is in
default under any Facility Lease and, to the Knowledge of Seller, there is no
material unperformed obligation, unsatisfied claim, set-off or counterclaim
against any Seller by any landlord; and (5) there is no option to purchase,
right of first offer, right of first refusal or other provision granting any
Seller or any other person any right to acquire the Leased Facilities.
(o) There are no defects in the buildings, improvements and
structures and fixtures located on or at the Assumed Owned Real Property or at
the Leased Facilities which would materially impair the conduct of the Business
by Purchaser immediately following the Closing. The mechanical, electrical,
plumbing, HVAC and other systems servicing the Assumed Owned Real Property and
the Leased Facilities are in good working order and repair, ordinary wear and
tear excepted, and there are no defects in such systems which could reasonably
be expected to materially impair the conduct of the Business by Purchaser
immediately following the Closing.
TAXES.
Each of Sellers has filed all Tax Returns that it was required to file. All
such Tax Returns were correct and complete in all respects. All Taxes owed by
any of Sellers (whether or not shown on any Tax Return) have been paid. None of
Sellers is the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where any
of Sellers does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction.
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(a) Each of Sellers has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
There is no dispute or claim concerning any Tax Liability of any of Sellers
claimed or raised by any authority in writing. SCHEDULE 4.14(B) lists all
federal, state, local, and foreign income Tax Returns filed with respect to any
of Sellers for taxable periods ended on or after December 31, 1997, indicates
those Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Sellers have delivered to the Buyer correct
and complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any of Sellers since
December 31, 1997.
None of Sellers has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency.
None of the Assumed Liabilities is an obligation to make a payment that
will not be deductible under ss.280G of the Internal Revenue Code of 1986, as
amended. None of Sellers is a party to any Tax allocation or sharing agreement.
None of Sellers (A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was Questron Technology, Inc.) or (B) has any liability for the Taxes of
any Person (other than any of Sellers) under Reg. ss.1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
COMPLIANCE WITH LAW. No Seller has received written notice of any violation
of any law, regulation or order, and is not in default in any respect under any
order, writ, judgment, award, injunction or decree of any court or governmental
agency, applicable to the Acquired Assets or the Business.
APPROVALS AND CONSENTS. Except for the approval of the Bankruptcy Court, no
action, approval, consent or authorization, including, but not limited to, any
action, approval, consent or authorization by any court, governmental agency or
quasi-governmental agency, commission, board, bureau, or instrumentality is
necessary as to Sellers in order to constitute this Agreement as a valid,
binding and enforceable obligation of each Seller in accordance with its terms.
CURE AMOUNTS. SCHEDULE 4.17 sets forth all of the costs of cure to be
satisfied for purposes of the assumption and assignment of the Assumed Executory
Contracts under section 365 of the Bankruptcy Code.
ENVIRONMENTAL PERMITS, LICENSES, COMPLIANCE, ETC.
Except as set forth on SCHEDULE 4.18(A), Sellers have all Permits required
under Environmental Laws for them to conduct the Business as presently conducted
and to own and operate the Acquired Assets and Leased Facilities as presently
owned and operated.
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All such Permits are listed and described on SCHEDULE 4.18(A) with the
respective expiration dates, and they are in full force and effect. No
suspension or cancellation of any of such Permits, is pending, or to the
Knowledge of Sellers, threatened. Except as set forth on SCHEDULE 4.18(A)
Sellers, the Business, the Acquired Assets and the Leased Facilities have
complied with and are in compliance with all such Permits and any Environmental
Laws.
(p) Except as described on SCHEDULE 4.18(B), there are no
facts, events or conditions with respect to the Business or the Acquired Assets
or the Leased Facilities that have given or would give rise to any Liability or
investigatory, corrective or remedial obligation under any Environmental Law.
(q) Except as set forth on SCHEDULE 4.18(C), neither the
Business nor any Seller with respect to the Business, the Acquired Assets or the
Leased Facilities, has received any written or oral notice, report or other
information regarding any actual or alleged violation of Environmental Laws, or
any Liabilities or potential Liabilities, including any investigatory, remedial
or corrective obligations, relating to any of them or their facilities arising
under Environmental Laws.
(r) Except as set forth on SCHEDULE 4.18(D), neither the
Business nor any Seller with respect to the Business, the Acquired Assets or the
Leased Facilities, has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or Released any Hazardous Substance, or
owned or operated any property or facility (and no such property or facility is
contaminated by any Hazardous Substance) in a manner that has given or would
give rise to Liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages or
attorney fees, or any investigatory, corrective or remedial obligations,
pursuant to CERCLA or any other Environmental Laws.
(s) Sellers have provided to Purchaser all environmental
audits, reports and other material environmental documents relating to the
Acquired Assets, Leased Facilities and the current and former operations and
facilities of the Business, which are in their possession, custody or control.
INVENTORY. Each Seller's inventory consists solely of materials and goods
useable or saleable in the Ordinary Course of Business valued at lower of cost
or market less applicable valuation reserves all in accordance with GAAP
consistently applied. No inventory of any Seller is subject to any consignment,
bailment, warehousing or similar agreement, except as set forth on SCHEDULE
4.19.
ASSETS NECESSARY TO BUSINESS. The Acquired Assets constitute all of the
assets, agreements, licenses and properties owned by Sellers (other than the
Excluded Assets) and are all assets, agreements, licenses and properties
necessary in connection with the conduct of the Business.
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MACHINERY AND EQUIPMENT. The machinery and equipment of Sellers used in the
Business is in good operating condition and repair, ordinary wear and tear
excepted.
INTELLECTUAL PROPERTY.
Except as set forth on SCHEDULE 4.22, Sellers own, free and clear of all
Liens, restrictions on limitations regarding use or disclosure other than
pursuant to a written license agreement set forth on SCHEDULE 4.22, and
possesses all right, title and interest in and to, or hold adequate licenses as
set forth on SCHEDULE 4.22 or otherwise possesses all rights necessary to use,
all Intellectual Property used or necessary for the conduct of the Business
including, without limitation all Intellectual Property set forth on SCHEDULE
4.22 (collectively, "COMPANY INTELLECTUAL PROPERTY"). SCHEDULE 4.22 sets forth a
true and complete list and summary description of all material Company
Intellectual Property, including without limitation (i) patented or registered
Intellectual Property and pending patent applications or other applications for
registrations of Intellectual Property; (ii) unregistered trademarks,
unregistered service marks, trade names, corporate names, and Internet domain
names; (iii) material unregistered copyrights; (iv) computer software (other
than commercially available off-the-shelf software purchased or licensed for
less than a total cost of $25,000 in the aggregate); and (v) any other material
Intellectual Property, and including any royalties payable or receivable by any
Seller and, with respect to registered items, contains a list of all
jurisdictions in which such items are registered, the filing or registration
dates thereof and all registration numbers.
Sellers have the sole and exclusive right to use the Company Intellectual
Property in all jurisdictions in which the Business is conducted and the
consummation of the transactions contemplated hereby will not alter or impair
any such rights.
All of the Company Intellectual Property is valid and enforceable, none of
the Company Intellectual Property has been misused, and no claims have been
asserted by any Person challenging or questioning the ownership, validity,
enforceability or use by any Seller of any of the Company Intellectual Property
and, to the Knowledge of Sellers, there is no valid basis for any such claim;
Sellers have not infringed, misappropriated or otherwise conflicted with, and
the operation of Sellers' business as currently conducted will not infringe,
misappropriate or otherwise conflict with any Intellectual Property of any
Person; and, to the Knowledge of Sellers, no Person has infringed,
misappropriated or otherwise conflicted with any of the Company Intellectual
Property and Sellers are not aware of any facts that indicate a likelihood of
the foregoing.
Each Seller has taken all reasonable security measures to protect the
secrecy, confidentiality and value of its trade secrets and other confidential
information and will continue to do so through Closing, so as not to adversely
affect the validity or enforceability thereof.
Sellers have taken all necessary action to maintain and protect all of the
Company Intellectual Property and through Closing will continue to maintain and
protect all of the
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Company Intellectual Property, so as not to adversely affect the validity or
enforceability thereof.
No loss or expiration of any Company Intellectual Property is threatened,
pending or reasonably foreseeable.
Sellers have not agreed to indemnify any third party for or against any
interference, infringement, misappropriation or other conflict with respect to
any Intellectual Property.
INSURANCE. SCHEDULE 4.23 lists all policies of insurance owned or held by
Sellers or insuring the Acquired Assets, including the type and amount of
coverage and the expiration dates of the policies. Except as set forth on
SCHEDULE 4.23, (a) current premiums and any other obligations under such
insurance have been paid and all such policies are valid and enforceable and in
full force and effect on the date hereof, and (b) no Seller has received any
notice within the last 90 days threatening suspension, revocation, modification
or cancellation of any insurance policy or a material increase in any premium in
connection therewith or informing any Seller that any coverage listed on
SCHEDULE 4.23 will or may not be available in the future on substantially the
same terms as not in effect.
ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 4.24, each account
receivable arising from services and/or sales by Sellers, whether or not earned
by Sellers on the date hereof or on the Closing Date, constitutes a bona fide
receivable resulting from a bona fide sale to a customer in the Ordinary Course
of Business on commercially reasonable terms, the amount of which was actually
due on the date thereof
CONTRACTS. SCHEDULE 4.25 of this Agreement contains a complete and accurate
list of all material contracts relating to the operation of the Business
("MATERIAL CONTRACTS"). True and complete copies of each such written Material
Contract (or written summaries of the terms of any such oral contract) have been
made available to Purchaser. Except for defaults with respect to Assumed
Contracts or Assumed Leases (i) that will be cured through the cure payments
listed on SCHEDULE 4.17 attached hereto or (ii) arising solely as a consequence
of the commencement of the Chapter 11 Cases, neither any Seller nor any other
party thereto is in default or breach in any material respect under the terms of
any Material Contract and, to the Knowledge of Sellers, no event or circumstance
has occurred that, with notice or lapse of time or both, would constitute a
default or breach thereunder. No Seller has assigned, delegated or otherwise
transferred to any Person any of its rights, title or interest under any
Material Contract.
OWNERSHIP; NO SUBSIDIARIES. Except as set forth on SCHEDULE 4.26, Sellers
do not have any subsidiaries and do not own, directly or indirectly, any equity
or equity investments in any other entity.
RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS. SCHEDULE 4.27 sets forth a
complete and correct list of the names and addresses of the one-hundred (100)
largest suppliers and one-hundred (100) largest customers of each Seller during
(a) the twelve-month period
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ended on December 31, 2000 and (b) the twelve-month period ended on September
30, 2001, and the total sales to or purchases from such customers or suppliers
made by each Seller during each such twelve-month period. No such supplier or
customer of any Seller has advised any Seller, formally or informally, and, to
the Knowledge of Seller, no such supplier or customer set forth on SCHEDULE 4.27
intends to terminate, discontinue or reduce its business with any Seller by
reason of the transactions contemplated by this Agreement or otherwise;
provided, however, the loss of Solar Turbines as a customer of the Business
shall not be deemed a breach of any representation or warranty set forth in this
Section 0; provided, further, nothing in the foregoing shall relieve Sellers
from their obligation to attempt to maintain such customer and conduct the
Business in Ordinary Course of Business as provided herein.
ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES. Set forth on SCHEDULE 4.28 is
a list of all accounts payable and other accrued expenses of Sellers as of
December 31, 2001 together with the name of each payee, the relationship (if
any) to Sellers, the date each such payment is due and the nature of the
transaction in which it was incurred if other than a trade payable incurred in
the Ordinary Course of Business.
BROKERS. Except as set forth on SCHEDULE 4.29 attached hereto, Sellers have
incurred no liability to any broker, finder or agent with respect to the payment
of any commission regarding the consummation of the transactions contemplated
hereby.
INFORMATION ACCURATE AND COMPLETE; RELIANCE. Without limiting the specific
language of any other representation or warranty herein, all information
furnished or to be furnished by, or on behalf of, Sellers to Purchaser in this
Agreement, in the exhibits or Schedules attached hereto, or otherwise delivered
or disclosed or to be delivered or disclosed by, or on behalf of, Sellers to
Purchaser or any of Purchaser's affiliates is or will be accurate and complete,
includes or will include all material facts required to be stated therein and
does not or will not contain any untrue statement of a material fact or omit any
material fact necessary to make the statements therein not misleading.
Notwithstanding any right of Purchaser fully to investigate the affairs of
Sellers, and notwithstanding any knowledge of facts determined or determinable
by Purchaser pursuant to such investigation or right of investigation, Purchaser
has the right to rely fully upon the representations and warranties of Sellers,
which shall be made as of February 1, 2002 and the date hereof, contained
herein, in the exhibits or the Schedules hereto or in any other document
delivered in connection with the transactions contemplated hereby.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
ORGANIZATION. Purchaser is a corporation validly existing and in good
standing under the laws of its jurisdiction of incorporation or formation and
has the full power and
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authority to execute, deliver and perform this Agreement and to consummate all
transactions contemplated hereby.
AUTHORITY. The execution, delivery and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of Purchaser and do not and
will not violate any provisions of its organizational documents, any applicable
Regulation or any Contract or Order binding upon it. This Agreement constitutes
a valid and binding agreement of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally from
time to time in effect, and to general equitable principles.
CONSENTS. No notice to, filing with, authorization of, exemption by, or
consent of any authority is required in order for Purchaser to consummate the
transactions contemplated hereby.
BROKERS. Purchaser has incurred no liability to any broker, finder or agent
with respect to the payment of any commission regarding the consummation of the
transactions contemplated hereby. Purchaser agrees that if any Claims for
commissions, fees or other compensation, including, without limitation,
brokerage fees, finder's fees, or commissions are ever asserted against
Purchaser or Sellers in connection with this transaction, all such Claims shall
be handled and paid by the party whose actions form the basis of such Claim and
such party shall indemnify (with counsel reasonably satisfactory to the
party(ies) entitled to indemnification) and hold the other harmless from and
against any and all such Claims or demands asserted by any person, firm or
corporation in connection with the transaction contemplated hereby.
COVENANTS OF SELLERS; OTHER AGREEMENTS
CONSENTS AND APPROVALS. Sellers shall use commercially reasonable efforts
(i) to obtain all necessary consents and approvals, as reasonably requested by
Purchaser, to consummate the purchase and sale of the Acquired Assets and the
assignment of the Assumed Obligations, together with any other necessary
consents and approvals to consummate the transactions contemplated hereby,
including, without limitation, obtaining the Sale Order, (ii) to make, as
reasonably requested by Purchaser, all filings, applications, statements and
reports to all authorities that are required to be made prior to the Closing
Date by or on behalf of Sellers or any of their Affiliates pursuant to any
applicable Regulation in connection with this Agreement and the transactions
contemplated hereby and (iii) to obtain, as requested by Purchaser, all required
consents and approvals (if any) necessary to assign and transfer the Permits to
Purchaser at Closing and, to the extent that one or more of the Permits are not
transferable, to assist Purchaser in obtaining replacements therefor. In the
event that certain Permits are not transferable or replacements therefor are not
obtainable on or before the Closing, but such Permits are transferable or
replacements therefor are obtainable after the Closing, Sellers
33
shall continue to use such commercially reasonable efforts in cooperation with
Purchaser after the Closing as may be required to obtain all required consents
and approvals to transfer, or obtain replacements for, such Permits after
Closing and shall do all things necessary to give Purchaser the benefits that
would be obtained under such Permits.
ACCESS TO INFORMATION AND FACILITIES.
Sellers agree that, prior to the Closing Date, Purchaser shall, upon
reasonable notice and so long as such access does not unreasonably interfere
with the business operations of any Seller, upon the prior consent of Seller's
chief executive officer, chief financial officer, controller, or president of
Questron Distribution Logistics, Inc., through its authorized officers,
employees, agents and representatives (including, without limitation, its
counsel and accountants), have reasonable access during normal business hours to
all Facilities and shall be entitled to make such reasonable investigation of
the properties, businesses and operations of Sellers relating to the Business
and such examination of the Books and Records and financial condition of Sellers
relating to the Business as it reasonably requests and to make extracts and
copies to the extent necessary of such books and records; provided that
Purchaser shall be bound by and shall comply with the terms of the
Confidentiality Agreement with respect to Purchaser's ability to use or disclose
any such information; and provided further that no investigation pursuant to
this SECTION 0 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
transactions contemplated by this Agreement.
CONDUCT OF THE BUSINESS PENDING THE CLOSING. Subject to any obligations as
a debtor in possession under the Bankruptcy Code and except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
Purchaser or except as described on SCHEDULE 0 hereto, from the date hereof
until the Closing Date, Sellers shall (i) conduct the Business in the Ordinary
Course of Business (including with respect to the payment of accounts payable to
the fullest extent permissible under the Bankruptcy Code), (ii) use commercially
reasonable efforts to preserve intact the Business, to keep available the
services of the present employees of the Business and to maintain appropriate
levels of Inventory and (iii) not take any action inconsistent with this
Agreement or with the consummation of the Closing. Without limiting the
generality of the foregoing, subject to any obligations as a debtor in
possession under the Bankruptcy Code and except as otherwise expressly
contemplated by this Agreement or with the prior written consent of Purchaser or
except as described on SCHEDULE 6.3 hereto, from the date hereof until the
Closing Date, each Seller shall:
not sell, assign, transfer, convey, pledge, mortgage, lease, license or
otherwise dispose of or encumber any of the Acquired Assets, or any interests
therein, other than in the Ordinary Course of Business and consistent with past
practice;
not make any material change in its methods of management, marketing,
accounting or operating (or practices relating to payments);
34
not take any action which is inconsistent with its obligations under this
Agreement;
maintain the Acquired Assets in good operating condition and repair,
subject to ordinary wear and tear;
continue all of its existing policies of insurance (or comparable
insurance) in full force and effect and at least at such levels as are in effect
on the date hereof, up to and including the Closing (and not cancel any such
insurance or take, or fail to take, any action that would enable the insurers
under such policies to avoid liability for claims arising out of occurrences
prior to the Closing);
not enter into any transaction or make or enter into any contract or
commitment or amend any material contract or commitment which is not in the
Ordinary Course of Business, consistent with past practice;
not grant any increase in the compensation payable or to become payable to
any employee (including, without limitation, retention or stay bonus
arrangements), except such increases as are required by contract and not
contribute or make any commitment to, or representation that it shall,
contribute any amounts to any Employee Benefit Plan of Sellers, or otherwise
alter any such Employee Benefit Plan of Sellers or the funding thereof except as
required by law or by the terms of any such plan as in effect on the date of
this Agreement;
maintain the Books and Records in the usual, regular and ordinary manner
and consistent with past practice;
maintain compliance with all laws, rules and regulations of all federal,
state, local or foreign governmental or regulatory bodies that relate to the
Business and the Acquired Assets;
apply or continue prosecution of applications already submitted for any
Permits required under Environmental Laws for the continued operation of the
Business (as it is currently being operated) up to and after Closing;
not incur any obligation or liability, whether absolute, fixed or
contingent, except in the Ordinary Course of Business and consistent with past
practice;
not sell, transfer, license or otherwise dispose of, or agree to sell,
transfer, license or otherwise dispose of, or permit to lapse any of the
Intellectual Property; and
not terminate, discontinue, close or dispose of any plant, Leased Facility
or business operation of Sellers.
Sellers will not (i) take or agree or commit to take any action that would make
any representation and warranty of Sellers hereunder inaccurate in any material
respect at, or as of any time prior to, the Closing Date or (ii) omit or agree
to omit to take any action
35
necessary to prevent any such representation or warranty from being inaccurate
in any material respect at any such time.
NOTIFICATION OF CERTAIN MATTERS; SCHEDULES.
Sellers shall give notice to Purchaser of (i) the occurrence or
nonoccurrence of any event that would be likely to cause either (A) any
representation or warranty of Sellers contained in this Agreement, or in
connection with the transactions contemplated hereunder, to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Closing or (B) directly or indirectly, any Material Adverse Effect on any of
Sellers, or (ii) any material failure of Sellers to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by them
hereunder. Notwithstanding the foregoing, the delivery of any notice pursuant to
this SECTION 0 shall not (x) be deemed to amend or supplement any of the
Schedules contemplated hereby, (y) be deemed to cure any breach of any
representation, warranty covenant or agreement or to satisfy any condition or
(y) limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Purchaser and Sellers acknowledge that certain of the representations and
warranties of Sellers affirmatively require that Sellers list certain factual
information on the Schedules attached hereto. Sellers shall be permitted to
update such Schedules on or prior to the Closing Date but only with respect to
events or circumstances arising between the date hereof and the Closing Date. No
additional disclosure or update by Sellers pursuant to this SECTION 0 however,
shall be deemed to amend or supplement the schedules attached hereto or to
prevent or cure any misrepresentation, breach of warranty, breach of covenant,
or right of Purchaser to terminate this Agreement.
BEST EFFORTS; TRANSFER OF ASSETS. Sellers will use best efforts to obtain
prompt entry of the Sale Order and Sellers will use commercially reasonable
efforts to timely obtain any consent required for the consummation of the
transactions contemplated by this Agreement.
BANKRUPTCY ACTIONS.
Immediately following the Auction, Sellers shall file with the Bankruptcy
Court the Sale Order approving this Agreement, Sellers' performance under this
Agreement and the assumption and the assignment of the Assumed Executory
Contracts. Sellers shall provide appropriate notice as is required by the
Bankruptcy Code to all parties entitled to notice including, but not limited to,
all parties to Assumed Executory Contracts and all taxing and environmental
authorities in jurisdictions applicable to the Business.
The Assumed Executory Contracts shall be identified (by the date of the
Assumed Executory Contract (if available), the other party to the contract or
lease and the address of such party) on an exhibit attached to a Motion for
Order Authorizing the Assumption and Assignment of Executory Contracts and
Unexpired Leases (which may be included in the Sale Order). Such exhibit shall
set forth the amounts necessary to cure defaults
36
under each of such Assumed Executory Contracts as determined by Sellers based on
Sellers' books and records. Sellers shall, at the written direction of Purchaser
delivered any time prior to the Sale Hearing, remove Assumed Executory Contracts
from the exhibit. In cases in which Sellers are unable to establish that a
default exists, the relevant cure amount shall be set at $0.00. The Sale Order
shall reflect that Purchaser's promise to perform from and after the Closing
under the Assumed Executory Contracts shall be the only adequate assurance of
future performance necessary to satisfy the requirements of section 365 of the
Bankruptcy Code in respect of the assignment to Purchaser of such Assumed
Executory Contracts.
Sellers will provide Purchaser with a reasonable opportunity to review and
comment upon all motions, applications and supporting papers prepared by Sellers
relating to this Agreement (including forms of Orders and notices to interested
parties) prior to the filing thereof in the Chapter 11 Cases. All motions,
applications and supporting papers prepared by Sellers relating to the approval
of this Agreement (including forms of Orders and notices to interested parties)
to be filed on behalf of Sellers after the Auction must be acceptable in form
and substance to Purchaser, in its reasonable discretion.
ENVIRONMENTAL PERMITS AND APPROVALS. Sellers shall, at their sole cost and
expense, promptly and diligently seek to obtain any required Permits, consents,
approvals or waivers under Environmental Laws necessary to consummate the
transactions contemplated by this Agreement and to enable Purchaser to operate
the Business after Closing as it is currently being operated. Sellers shall keep
Purchaser apprised of the actions taken by Sellers pursuant to this SECTION 0,
including providing Purchaser with copies of and the opportunity to approve
(such approval not to be unreasonably withheld) correspondence or other
documents relating to Sellers' obtaining of any such Permits, consents,
approvals or waivers.
EFFORTS. Sellers shall use commercially reasonable efforts to take or cause
to be taken all action and do or cause to be done all things necessary, proper
or advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, to obtain all consents, approvals and
authorizations of third parties, to make all filings with and give all notices
to third parties which may be necessary or required in order to effectuate the
transactions contemplated hereby, and to obtain landlords' estoppels and
landlords' lenders' waivers. Sellers' obligations under this SECTION 0 shall be
deemed to include Sellers' commercially reasonable efforts to assist Purchaser
in obtaining the permits, approvals and certifications Purchaser seeks with
respect to the Acquired Assets or the operations it contemplates at the Assumed
Facilities. Sellers shall use their commercially reasonable efforts to fulfill
or obtain the fulfillment of the conditions set forth in 0 of this Agreement.
EXCLUSIVITY; NO SOLICITATION OF TRANSACTIONS. From the date of the issuance
of the Sale Order and until the Closing Date and provided that Purchaser is
proceeding in good faith to consummate the transactions contemplated hereby in a
timely manner, no Seller or its Affiliates shall discuss, negotiate or
consummate any transaction involving (i) the issuance, redemption, sale or
exchange or other disposition of any equity interest in any
37
Seller or (ii) the sale, exchange, liquidation, reorganization, or other
disposition of all or any part of the Acquired Assets.
XXXX-XXXXX-XXXXXX. As soon as is reasonably practicable following the date
of this Agreement, Sellers shall file or cause to be filed, at Purchaser's own
cost and expense, with the Federal Trade Commission and the United States
Department of Justice any notifications required to be filed under the HSR Act
and the rules and regulations promulgated thereunder with respect to the
transactions contemplated hereby. Sellers shall consult with Purchaser as to the
appropriate time of filing such notifications and shall use their commercially
reasonable efforts to make such filings at the agreed upon time, to respond
promptly to any requests for additional information made by either of such
agencies, and to cause the waiting periods under the HSR Act to terminate or
expire at the earliest possible date after the date of filing. Sellers
acknowledge that notwithstanding anything to the contrary provided herein,
neither Purchaser nor any of its Affiliates shall be required (i) to divest any
of its businesses, product lines or assets, or any of the Acquired Assets, (ii)
to agree to any limitation on the operation or conduct of the Business, or (iii)
to waive any of the conditions to this Agreement set forth in 0.
EXCLUDED ASSETS. Subsequent to the Closing, each Seller jointly and
severally agrees to indemnify and hold Purchaser harmless with respect to the
Excluded Assets.
All of Sellers' covenants set forth in this 0 and under 0
shall survive the Closing.
COVENANTS OF PURCHASER
ASSUMED OBLIGATIONS. Subsequent to the Closing, Purchaser agrees to pay and
perform the Assumed Obligations and shall indemnify and hold Sellers harmless
with respect to the Assumed Obligations.
FURTHER ASSURANCES. Purchaser shall execute such documents and take such
further actions as may be reasonably required to carry out the provisions of
this Agreement and the transactions contemplated hereby. Purchaser shall use
commercially reasonable efforts to fulfill or obtain the fulfillment of the
conditions set forth in 0 of this Agreement.
XXXX-XXXXX-XXXXXX. As soon as is reasonably practicable following the date
of this Agreement, Purchaser shall file or cause to be filed, at Purchaser's
cost and expense, with the Federal Trade Commission and the United States
Department of Justice any notifications required to be filed under the HSR Act
and the rules and regulations promulgated thereunder with respect to the
transactions contemplated hereby. Purchaser shall consult with Sellers as to the
appropriate time of filing such notifications and shall use their commercially
reasonable efforts to make such filings at the agreed upon time, to respond
promptly to any requests for additional information made by either of such
agencies, and to cause the waiting periods under the HSR Act to terminate or
expire at
38
the earliest possible date after the date of filing. Notwithstanding anything to
the contrary provided herein, neither Purchaser nor any of its Affiliates shall
be required (i) to divest any of its businesses, product lines or assets, or any
of the Acquired Assets, (ii) to agree to any limitation on the operation or
conduct of the Business, or (iii) to waive any of the conditions to this
Agreement set forth in 0.
All of Purchaser's covenants set forth in this 0 and under 0
shall survive the Closing.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are, at the
option of Purchaser, subject to satisfaction of the following conditions
precedent on or before the Closing Date (it being agreed that Purchaser shall
not assert any breach of Section 0 and/or Section 0, except to the extent the
aggregate amount of loss and/or damages resulting from or arising out of all
such breaches shall exceed $5,000,000):
WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING DATE; COVENANTS.
Each of the representations and warranties of Sellers contained herein
shall be true and correct in all material respects (except for such changes as
are contemplated by the terms of this Agreement) on and as of the Closing Date
(except for representations and warranties made as of a specified date, which
shall be true and correct as of that date in all material respects) with the
same force and effect as though made on and as of the Closing Date except that
those representations and warranties that are qualified by materiality, Material
Adverse Effect, or similar phrase shall be true and correct in all respects.
Sellers shall have performed and complied in all material respects with the
obligations and covenants required by this Agreement to be performed or complied
with by Sellers on or prior to the Closing Date.
Purchaser shall have been furnished a certificate (dated the Closing Date
and in form and substance reasonably satisfactory to Purchaser) executed by each
Seller certifying as to the fulfillment of the conditions set forth in this
SECTION 0.
BANKRUPTCY CONDITION.
The Sale Order shall have become a Final Order.
Notwithstanding SECTIONS 0 AND 0, nothing in this Agreement shall preclude
Purchaser or Sellers from consummating the transactions contemplated herein if
Purchaser, in its sole discretion, waives the requirement that the Sale Order or
any other Order shall have become Final Orders. No notice of such waiver of this
or any other condition to Closing need be given except to Sellers, it being the
intention of the parties hereto that Purchaser
39
shall be entitled to, and is not waiving, the protection of section 363(m) of
the Bankruptcy Code, the mootness doctrine and any similar statute or body of
law if the Closing occurs in the absence of Final Orders.
APPROVALS. All authorizations, consents, filings and approvals necessary to
permit Sellers to perform the transactions contemplated hereby shall have been
duly obtained, made or given, shall be in form and substance reasonably
satisfactory to Purchaser, shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and shall be in full force and
effect. All terminations or expirations of waiting periods imposed by any
governmental authority necessary for the transactions contemplated under this
Agreement. if any, shall have occurred.
REAL ESTATE MATTERS.
Sellers shall have obtained, in preparation for the Closing, at Sellers'
own cost and expense, and shall have delivered to Purchaser, a commitment for an
ALTA Owners Policy of Title Insurance, for the Assumed Owned Real Property (the
"TITLE COMMITMENTS"), issued by a title insurer satisfactory to Purchaser (the
"TITLE INSURER"), in such amount as Purchaser determines to be the fair market
value (including all improvements thereon), insuring Purchaser's interest in
such parcel as of the Closing, subject only to the Permitted Liens. Sellers
shall deliver at the time of delivery of the Title Commitments, copies of all
documents of record referred to therein. Sellers will provide Purchaser with
title insurance policies ("TITLE POLICIES") on or before the Closing, from the
Title Insurer based upon the Title Commitments. Sellers will deliver to the
Title Insurer all affidavits, GAP undertakings and other title clearance
documents necessary to issue the Title Policies and endorsements thereto. Each
such Title Policy will be dated as of the date of Closing and unless not
available in the any state where Assumed Owned Real Property located (i) insure
title to the applicable parcels of real estate and all recorded easements
benefiting such parcels, subject only to Permitted Liens, (ii) contain an
"extended coverage endorsement" insuring over the general exceptions contained
customarily in such policies, (iii) contain an ALTA Zoning Endorsement 3.1, with
parking (or equivalent), (iv) contain an endorsement insuring that the parcel
described in such Title Policy is the parcel shown on the survey delivered with
respect to such parcel and a survey accuracy endorsement, (v) contain an
endorsement insuring that each street adjacent to such parcel is a public street
and that there is direct and unencumbered pedestrian and vehicular access to
such street from such parcel, (vi) if the real estate covered by such policy
consists of more than one record parcel, contain a "contiguity" endorsement
insuring that all of the record parcels are contiguous to one another, (vii)
contain a tax number endorsement and (viii) contain such other endorsements as
Purchaser and Purchaser's lender may reasonably request.
Sellers have procured, at their own cost and expense, in preparation for
the Closing, and shall have delivered to Purchaser, current surveys of each of
the Assumed Owned Real Property ("SURVEYS"), prepared by a licensed surveyor,
satisfactory to Purchaser, and conforming to 1999 ALTA/ACSM Minimum Detail
Requirements for Urban Land Title Surveys, and such standards as the Title
Insurer may require as a condition to the
40
removal of any survey exceptions from the Title Policy, and certified to
Purchaser, the Senior Lenders and the Title insurer, within twenty-three days of
the Closing Date, in a form satisfactory to such parties.
BANKRUPTCY COURT APPROVAL. The Sale Order shall approve and authorize the
assumption and assignment of the Assumed Contracts and the Assumed Leases, and
the Assumed Contracts and the Assumed Leases shall have been actually assumed
and assigned to Purchaser.
ADDITIONAL MATTERS. Purchaser shall have received such additional
documents, instruments or items of information reasonably requested by it in
respect of any aspect or consequence of the transactions contemplated hereby.
All corporate and other proceedings, and all documents, instruments and other
legal matters in connection with the transactions contemplated by this Agreement
or by the other agreements referred to herein shall be reasonably satisfactory
in form and substance to Purchaser and its counsel.
MATERIAL ADVERSE CHANGE. There shall not have occurred a Material Adverse
Change since December 31, 2001 other than as a consequence of the filing of the
Chapter 11 Cases; provided, however, the loss of Solar Turbines as a customer of
the Business shall not be deemed a Material Adverse Change; provided, further,
nothing in the foregoing shall relieve Sellers from their obligation to attempt
to maintain such customer and conduct the Business in Ordinary Course of
Business as provided herein.
SERVICE OF NOTICE. Immediately after the entry of the Bidding Procedures
Order, Sellers shall serve on all parties to whom service of the Sale Hearing
Notice (as defined in the Bidding Procedures Order) is required under the terms
of the Bidding Procedures Order.
LITIGATION. No action, suit or other proceedings shall be pending before
any court, tribunal or governmental authority seeking or threatening to restrain
or prohibit the consummation of the transactions contemplated by this Agreement,
or seeking to obtain damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree or
regulation of any governmental authority having appropriate jurisdiction.
CURE COSTS. Except as provided in SECTION 0, Sellers shall have paid all
costs of cure to achieve the assumption and assignment of the Assumed Executory
Contracts under section 365 of the Bankruptcy Code.
INSTRUMENTS OF CONVEYANCE AND TRANSFER; TITLE. Sellers shall have delivered
to Purchaser such bills of sale, deeds, endorsements, assignments, and other
good and sufficient instruments of conveyance and transfer, in form and
substance, reasonably satisfactory to Purchaser and its counsel, as are
necessary to vest in Purchaser good and marketable title to all of the interest
of Sellers in the Acquired Assets.
41
HSR CLEARANCE. The waiting period (and any extension thereof) under the HSR
Act applicable to the consummation of the sale of the Acquired Assets
contemplated hereby shall have expired or been terminated.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement are, at the
option of Sellers, subject to the satisfaction of the following conditions
precedent on or before the Closing Date.
WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING DATE. The
representations and warranties of Purchaser contained herein shall be true and
correct in all material respects (except for such changes as are contemplated by
the terms of this Agreement) on and as of the Closing Date (except for
representations and warranties made as of a specified date, which shall be true
and correct as of that date in all material respects) with the same force and
effect as though made by Purchaser on and as of the Closing Date, except those
qualified by materiality shall be true and in all respects. Purchaser shall have
performed and complied, in all material respects, with the obligations and
covenants required by this Agreement to be performed or complied with by
Purchaser on or prior to the Closing Date.
APPROVALS. All authorizations, consents, filings and approvals necessary to
permit Purchaser to perform the transactions contemplated hereby shall have been
duly obtained, made or given, shall be in form and substance reasonably
satisfactory to Sellers, shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and shall be in full force and
effect. All terminations or expirations of waiting periods imposed by any
governmental authority necessary for the transactions contemplated under this
Agreement, if any, shall have occurred, including any waiting period under the
HSR Act.
BANKRUPTCY COURT APPROVAL. The Sale Order shall have been entered on the
docket by the Clerk of the Bankruptcy Court.
LITIGATION. No Order shall have been issued restricting, prohibiting or
staying the consummation of the transactions contemplated by this Agreement.
HSR CLEARANCE. The waiting period (and any extension thereof) under the HSR
Act applicable to the consummation of the sale of the Acquired Assets
contemplated hereby shall have expired or been terminated.
CLOSING
CLOSING. Upon the terms and subject to the satisfaction of the conditions
contained in this Agreement, the closing of the transaction contemplated by this
Agreement (the
42
"CLOSING") will take place at the offices of Weil, Gotshal & Xxxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. New York Time no later than
the first business day after the date on which the conditions set forth in 0 and
0 have been satisfied or waived; or on such other date as Purchaser and Sellers
may determine (the "CLOSING DATE").
DELIVERIES BY SELLERS. At the Closing, Sellers shall deliver or procure
delivery to Purchaser of:
physical possession of all of the Acquired Assets capable of passing by
delivery with the intent that title in such Acquired Assets shall pass by and
upon delivery;
one or more bills of sale, in the form attached hereto as EXHIBIT B,
conveying in the aggregate all of the owned personal property of each Seller
included in the Acquired Assets, duly executed by each Seller;
one or more assignments and assumptions of the Assumed Obligations, in form
and content mutually satisfactory to Purchaser and Sellers (collectively, the
"ASSIGNMENT AND ASSUMPTION"), duly executed by the relevant Seller or Sellers;
a fully executed intellectual property assignments in the forms attached
hereto as EXHIBIT C, each in recordable form to the extent necessary to assign
such rights;
an affidavit from each Seller stating such Seller's taxpayer identification
number and that such Seller is not a foreign person pursuant to section
1445(b)(2) of the Code;
special warranty deeds with respect to each Assumed Owned Real Property, in
form and substance reasonably satisfactory to Purchaser, subject only to the
Permitted Liens and any liens pursuant to the Senior Facility;
Sellers shall deliver the Title Policies to Purchaser;
Seller shall deliver the Surveys to Purchaser;
with respect to the Assumed Facility Leases, any landlord estoppel letters
and landlord waivers, from landlord's lenders, if any, obtained pursuant to
SECTION 0;
certificates of title and title transfer documents to all titled motor
vehicles;
an assignment and assumption agreement with respect to Permits and
warranties in form and substance reasonably acceptable to Purchaser, whereby
Sellers shall assign to Purchaser all of their respective rights in and to any
Permits and warranties relating to the Acquired Assets or the Business, to the
extent such Permits and warranties are assignable;
such other instruments as shall be reasonably requested by Purchaser to
vest in Purchaser title in and to the Acquired Assets in accordance with the
provisions hereof.
43
DELIVERIES BY PURCHASER. At the Closing, Purchaser will deliver the
Assignment and Assumption duly executed by Purchaser and that portion of the
Purchase Price set forth in Section 0(i).
FORM OF INSTRUMENTS. To the extent that a form of any document to be
delivered hereunder is not attached as an Exhibit hereto, such documents shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to Purchaser and Sellers.
TERMINATION; TERMINATION PAYMENT
TERMINATION. This Agreement may be terminated prior to the Closing as
follows:
by mutual written agreement of Purchaser and Sellers;
by either Purchaser or Sellers if there shall be in effect a Final Order
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;
by either Purchaser or Sellers (PROVIDED that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a breach of any of the
representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within thirty days following written
notice to the party committing such breach or which breach, by its nature,
cannot be cured prior to the Closing, and which breach, individually or together
with all other such breaches, would have a Material Adverse Effect on the
Acquired Assets or the Business, in the case of breaches by Sellers, or a
Material Adverse Effect on Purchaser's ability to consummate the transactions
contemplated hereby, in the case of breaches by Purchaser;
by Purchaser if it shall have reasonably determined that one or more
conditions set forth in 0 has not been or cannot be fulfilled or satisfied prior
to the date specified in such condition (if such condition specifies a date by
which such condition must be satisfied);
by Purchaser if any Seller seeks or supports Bankruptcy Court approval of
an Alternative Transaction (other than to or by Purchaser);
by Purchaser if any Seller enters into an Alternative Transaction, or
agrees or determines to enter into an Alternative Transaction;
by Purchaser if any Seller executes and delivers a definitive agreement
with respect to an Alternative Transaction;
by Purchaser if the Bankruptcy Court enters an Order approving any
Alternative Transaction (other than the sale of the Business and the Acquired
Assets to Purchaser);
44
by Purchaser on any day on or after the forty-fifth day following the date
hereof if the Closing shall not have been consummated by such date (or by such
later date as shall be mutually agreed to by Purchaser and Sellers in writing),
unless the Closing has not occurred due to a material failure of Purchaser to
perform or observe its agreement as set forth in this Agreement required to be
performed or observed by it on or before the Closing Date; and
by Sellers if each Seller is in compliance with the terms of the Bidding
Procedures Order and (i) any Seller seeks or supports Bankruptcy Court approval
of an Alternative Transaction, (ii) executes and delivers a definitive agreement
with respect to an Alternative Transaction, or (iii) if the Bankruptcy Court
enters an Order approving any Alternative Transaction (other than the sale of
the Business and the Acquired Assets to Purchaser).
EFFECT OF TERMINATION OR BREACH. If this Agreement is terminated in
accordance with SECTION 0 hereof and the transactions contemplated hereby are
not consummated, this Agreement shall become null and void and of no further
force and effect, except (i) for this SECTION 0, (ii) for the provisions of
SECTIONS 0, 0 and 0 hereof, and (iii) that the termination of this Agreement for
any cause shall not relieve any party hereto from any liability which at the
time of termination had already accrued to any other party hereto or which
thereafter may accrue in respect of any act or omission of such party prior to
such termination.
ADDITIONAL POST-CLOSING COVENANTS
EMPLOYEES.
At Closing, Purchaser shall offer employment to all employees of Sellers,
who are employed by Sellers as of the Closing Date. Any such employee who
accepts such offer of employment shall become employees of Purchasers as of the
Closing Date. Sellers shall be responsible for any and all wages, bonuses,
commissions, employee benefits, retention or stay bonus arrangements, and other
compensation (including all obligations under any Employee Benefit Plans) due to
the employees of the Business arising out of their employment with Sellers prior
to and as of the Closing.
EMPLOYEES AT WILL. Nothing contained in this Agreement shall confer upon
any employee of Sellers who becomes an employee of Purchaser ("REHIRED
EMPLOYEES") any right with respect to continuance of employment by Purchaser,
nor shall anything herein interfere with the right of Purchaser to terminate the
employment of any Rehired Employees at any time, with or without notice, or
restrict Purchaser, in the exercise of its business judgment in modifying any of
the terms or conditions of employment of the Rehired Employees after the
Closing.
45
EMPLOYEE BENEFIT PLANS.
To the extent responsible on the Closing Date, Sellers shall be responsible
for all Benefit Plans and all obligations and liabilities thereunder. Purchaser
shall not assume any Employee Benefit Plans or any obligation or liability
thereunder and Purchaser shall provide benefits to those Rehired Employees which
are comparable in the aggregate to the benefits such Rehired Employees received
from Sellers immediately prior to the Closing Date. Sellers shall indemnify,
defend and hold harmless Purchaser from and against any and all obligations,
claims, or liabilities under any Employee Benefit Plans. With respect to all
claims by current and former employees of Sellers who are or were employed in
the Business arising prior to or as of the Closing under any Employee Benefit
Plans, whether insured or otherwise (including, but not limited to, life
insurance, medical and disability programs), Sellers shall, at their own
expense, honor or cause their respective insurance carriers to honor such
claims, whether made before or after the Closing, in accordance with the terms
and conditions of such Employee Benefit Plans without regard to the employment
by Purchaser of any such employees after the Closing.
As of the Closing Date, Purchaser shall cause each Rehired Employee to be
given credit for his or her service with Sellers (only to the extent such
service is taken into account under any Seller's vacation or sick leave policy,
program or arrangement) for the purpose of determining such Rehired Employee's
vacation and sick leave (on a going-forward basis) in any vacation or sick leave
plan, program or arrangement maintained for Purchaser's employees' benefit on or
after the Closing Date. Notwithstanding the forgoing, Purchaser shall not be
responsible for any accrued liabilities or claims with respect to any vacation
or sick leave earned or accrued by Rehired Employees on or prior to the Closing
Date.
RIGHTS OF THIRD PARTIES. No provision of this Agreement shall be construed
to confer upon or give to any person other than the parties to this Agreement
and their successors or permitted assigns any rights to remedies hereunder.
SELLERS' COOPERATION IN HIRING OF EMPLOYEES. Sellers shall cooperate with
Purchaser and, upon reasonable notice to Seller's chief executive officer, chief
financial officer, controller, or president of Questron Distribution Logistics,
Inc., permit Purchaser a reasonable period prior to the Closing Date (i) to meet
with employees of Sellers (including managers and supervisors) who are employed
in the Business at such times as Purchaser shall reasonably request, (ii) to
speak with such employees' managers and supervisors (in each case with
appropriate authorizations and releases from such employees) who are being
considered for employment by Purchaser, (iii) to distribute to such employees of
Sellers such forms and other documents relating to potential employment by
Purchaser after the Closing as Purchaser may reasonably request, and (iv) to
permit Purchaser's counsel to review personnel files and other relevant
employment information regarding employees of Sellers.
WARN ACT. In respect of notices and payments relating to events occurring
on or prior to the Closing, Sellers shall be responsible for and assume all
liability for any and
46
all notices, payments, fines or assessments due to any government authority,
pursuant to any applicable federal, state or local law, common law, statute,
rule or regulation with respect to the employment, discharge or layoff of
employees by Sellers as of or before the Closing, including but not limited to
the Worker Adjustment and Retraining Notification Act and any rules or
regulations as have been issued in connection with the foregoing (the "WARN
ACT"). Likewise, in respect of notices and payments relating to events occurring
after the Closing, Purchaser shall be responsible and assume all liability for
any and all notices, payments, fines or assessments due to any government
authority, pursuant to any applicable federal, state or local law, common law,
statute, rule or regulation, including but not limited to the WARN Act, with
respect to the employment, discharge or layoff of employees employed by
Purchaser after the Closing.
JOINT POST-CLOSING COVENANT OF PURCHASER AND SELLERS. Purchaser and Sellers
jointly covenant and agree that, from and after the Closing Date, Purchaser and
Sellers will each use commercially reasonable efforts to cooperate with each
other in connection with any action, suit, proceeding, investigation or audit of
the other relating to (a) the preparation of an audit of any Tax Return of any
Seller or Purchaser for all periods prior to or including the Closing Date and
(b) any audit of Purchaser and/or any audit of any Seller with respect to the
sales, transfer and similar taxes imposed by the laws of any state or political
subdivision thereof, relating to the transactions contemplated by this
Agreement. In furtherance hereof, Purchaser and Sellers further covenant and
agree to promptly respond to all reasonable inquiries related to such matters
and to provide, to the extent reasonably possible, substantiation of
transactions and to make available and furnish appropriate documents and
personnel in connection therewith. All costs and expenses incurred in connection
with this SECTION 0 referred to herein shall be borne by the party who is
subject to such action.
CERTAIN CONSENTS. If a consent of a Third Party which is required in order
to assign any Acquired Asset (or Claim, right or benefit arising thereunder or
resulting therefrom) is not obtained prior to the Closing Date, or if an
attempted assignment would be ineffective or would adversely affect the ability
of any Seller to convey its interest in question to Purchaser, Sellers will
cooperate with Purchaser and use commercially reasonable efforts in any lawful
arrangement to provide that Purchaser shall receive the interests of any Seller
in the benefits of such Acquired Asset. If any consent or waiver is not obtained
before the Closing Date and the Closing is nevertheless consummated, each Seller
agrees to continue to use commercially reasonable efforts to obtain all such
consents as have not been obtained prior to such date.
NAME CHANGES. Promptly after the Closing, each Seller shall take all
necessary action to change its name to a name bearing no resemblance to the
names set forth on the signature pages to this Agreement.
ACCOUNTS RECEIVABLE/COLLECTIONS. After the Closing, Sellers shall permit
Purchaser to collect, in the name of Sellers, all accounts receivable
constituting part of the Acquired Assets and to endorse with the name of any
Seller for deposit in Purchaser's account any checks or drafts received in
payment thereof. Sellers shall promptly deliver to Purchaser
47
any cash, checks or other property that they may receive after the Closing in
respect of any accounts receivable or other asset constituting part of the
Acquired Assets.
ACCESS TO INFORMATION. For a period of twenty-four (24) months after the
Closing Date (the "TRANSITION PERIOD"), each party and their representatives
shall have reasonable access to, and each shall have the right to photocopy, all
of the books and records relating to the Business or the Acquired Assets,
including all employee records or other personnel and medical records required
by law, legal process or subpoena, in the possession of the other party to the
extent that such access may reasonably be required by such party in connection
with the Assumed Obligations or the Unassumed Obligations, or other matters
relating to or affected by the operation of the Business and the Acquired
Assets. During the Transition Period, and only to the extent that Purchaser's
operation of the Business is not interrupted in any material respect, Purchaser
agrees to provide Sellers, during ordinary business hours and upon reasonable
notice and at any Seller's request, with reasonable access to employees of
Purchaser for purposes of winding down the estates of Sellers. Such access shall
be afforded by the party in possession of such books and records upon receipt of
reasonable advance notice and during normal business hours; provided, however,
that (A) any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the business of any party or its
affiliates, (B) no party shall be required to take any action which would
constitute a waiver of the attorney-client privilege and (C) no party need
supply the other party with any information which such party is under a legal
obligation not to supply. The party exercising this right of access shall be
solely responsible for any costs or expenses incurred by it pursuant to this
SECTION 0. If the party in possession of such books and records shall desire to
dispose of any such books and records upon or prior to the expiration of such
period, such party shall, prior to such disposition, give the other party a
reasonable opportunity at such other party's expense, to segregate and remove
such books and records as such other party may select.
MISCELLANEOUS
EXPENSES. Each party hereto shall bear its own costs and expenses,
including attorneys' fees, with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, in the event of any action or proceeding to
interpret or enforce this Agreement, the prevailing party in such action or
proceeding (i.e., the party who, in light of the issues contested or determined
in the action or proceeding, was more successful) shall be entitled to have and
recover from the non-prevailing party such costs and expenses (including,
without limitation, all court costs and reasonable attorneys' fees) as the
prevailing party may incur in the pursuit or defense thereof.
AMENDMENT. This Agreement may not be amended, modified or supplemented
except by a written instrument signed by all of the parties to this Agreement.
NOTICES. Any notice, request, instruction or other document to be given
hereunder by a party hereto shall be in writing and shall be deemed to have been
given, (a) when
48
received if given in person, (b) on the date of transmission if sent by telex,
telecopy or other wire transmission (with answer back confirmation of such
transmission), (c) upon delivery, if delivered by a nationally known commercial
courier service providing next day delivery service (such as Federal Express),
or (d) upon delivery, or refusal of delivery, if deposited in the U.S. mail,
certified or registered mail, return receipt requested, postage prepaid:
To Sellers, to: Questron Technology, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
With copies to: Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
and
Kasowitz, Benson, Xxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
To Purchaser, to: General Electric
c/o GE Supply
Xxx Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
With copies to: General Electric
c/o GE Supply
Xxx Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Fax: (000) 000-0000
49
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Simeon Gold
Fax: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
WAIVERS. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
COUNTERPARTS AND EXECUTION. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any counterpart may be
executed by facsimile signature and such facsimile signature shall be deemed an
original.
HEADINGS. The headings preceding the text of the Articles and Sections of
this Agreement and the Schedules hereto are for convenience only and shall not
be deemed part of this Agreement.
APPLICABLE LAW AND JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE DELAWARE PRINCIPLES OF
CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF
VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
BINDING NATURE; ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto without
prior written consent of the other parties (which shall not be unreasonably
withheld or delayed); except (i) that Purchaser may assign any of its rights and
obligations hereunder to any Affiliate or subsidiary of Purchaser (whether
wholly owned or otherwise), (ii) Purchaser may grant a security interest in its
rights and interests hereunder to its lenders, (iii) the rights and interests of
Sellers hereunder may be assigned to a trustee appointed under Chapter 11 or
Chapter 7 of the Bankruptcy Code, (iv) this Agreement may be assigned to any
entity appointed as a successor to Sellers pursuant to a confirmed Chapter 11
plan and (v) as otherwise provided in this Agreement. Nothing contained herein,
express or implied, is intended to
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confer on any Person other than the parties hereto or their successors and
assigns, any rights, remedies, obligations, claims, or liabilities under or by
reason of this Agreement.
NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of
the parties hereto and no provision of this Agreement shall be deemed to confer
upon Third Parties any rights, remedies, Claims or causes of action.
TAX MATTERS.
Any sales, use, purchase, transfer, fixed asset, stamp, documentary stamp,
use or other taxes which may be payable by reason of the sale of the Acquired
Assets under this Agreement or the transactions contemplated herein shall be
borne and timely paid by Sellers.
Purchaser shall, within the later of (i) 120 days after the Closing Date or
(ii) 30 days of the date by which Sellers' tax returns must be filed, prepare
and deliver to Sellers for their consent (which consent shall not be
unreasonably withheld, delayed or conditioned) a schedule allocating the
Purchase Price (and any other items that are required to be treated as Purchase
Price) among the respective Sellers and the Acquired Assets, Assumed Contracts
and Assumed Leases (such schedule, the "ALLOCATION"). If Sellers raise any
objection to the Allocation, Purchaser and Sellers will negotiate in good faith
to resolve such objection(s). Purchaser and Sellers shall report and file all
Tax Returns (including amended Tax Returns and claims for refund) consistent
with the Allocation, and shall take no position contrary thereto or inconsistent
therewith (including, without limitation, in any audits or examinations by any
Taxing Authority or any other proceeding). Purchaser and Sellers shall cooperate
in the filing of any forms (including Form 8594 under section 1060 of the Code)
with respect to such Allocation, including any amendments to such forms required
pursuant to this Agreement with respect to any adjustment to the Purchase Price.
If and to the extent the parties are unable to agree on such Allocation, the
parties shall retain the Designated Firm to resolve such dispute.
Notwithstanding any other provision of this Agreement, the terms and provisions
of this SECTION 0 shall survive the Closing Date without limitation.
CONSTRUCTION. The language used in this Agreement will be deemed to be the
language chosen by the parties to this Agreement to express their mutual intent,
and no rule of strict construction shall be applied against any party. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
PUBLIC ANNOUNCEMENTS. Except as required by law or in connection with the
Chapter 11 Cases, neither Sellers nor Purchaser shall issue any press release or
public announcement concerning this Agreement or the transactions contemplated
hereby without obtaining the prior written approval of the other party(ies)
hereto relating to the contents and manner of presentation and publication
thereof, which approval will not be unreasonably withheld, delayed or
conditioned. Prior to making any public disclosure
51
required by applicable law, the disclosing parties shall give the other party a
copy of the proposed disclosure and reasonable opportunity to comment on the
same.
ENTIRE UNDERSTANDING. This Agreement, the Exhibits and the Schedules hereto
set forth the entire agreement and understanding of the parties hereto in
respect to the transactions contemplated hereby and the Agreement, the Exhibits
and the Schedules hereto supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof and are not intended to
confer upon any other person any rights or remedies hereunder.
NO SURVIVAL. The representations and warranties of Sellers and Purchaser
contained in this Agreement or in any instrument delivered in connection
herewith shall not survive the Closing.
* * * * *
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Purchase Agreement to be executed and delivered on the date
first above written.
PURCHASER:
GENERAL ELECTRIC COMPANY
By:
---------------------------------
Name:
Its:
SELLERS:
QUESTRON TECHNOLOGY, INC.
QUESTRON DISTRIBUTION LOGISTICS, INC.
INTEGRATED MATERIAL SYSTEMS, INC.
POWER COMPONENTS, INC.
FAS-TRONICS, INC.
FORTUNE INDUSTRIES, INC.
ACTION THREADED PRODUCTS, INC.
CAPITAL FASTENERS, INC.
B&G SUPPLY COMPANY, INC.
R.S.D. SALES CO. INC.
CALIFORNIA FASTENERS, INC.
COMPWARE, INC.
QUESTNET COMPONENTS, INC.
QUESTRON FINANCE CORP.
QUESTRON OPERATING COMPANY, INC.
POWER TOO, INC.
ACTION THREADED PRODUCTS OF
GEORGIA, INC.
ACTION THREADED PRODUCTS OF
MINNESOTA, INC.
By:
--------------------------------
Name: Xxx Xxxxxxxx
Title: Chairman and CEO for each
of the above-listed Sellers
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