EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Between
CHAPTER 7 TRUSTEE FOR THE BANKRUPTCY ESTATE OF READ-RITE
CORPORATION, A DELAWARE CORPORATION,
as the Trustee
and
RR(US) ACQUISITION CORPORATION,
A DELAWARE CORPORATION
as the Purchaser
Dated as of July 24, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS .......................................................................... 1
Section 1.1. Specific Definitions ........................................................ 1
Section 1.2. Other Definitional Provisions ............................................... 7
ARTICLE II THE PURCHASE AND SALE OF PURCHASED ASSETS ............................................ 7
Section 2.1. Purchase and Sale of Purchased Assets ....................................... 7
Section 2.2. Excluded Assets ............................................................. 9
Section 2.3. Assumed Liabilities ......................................................... 10
Section 2.4. Excluded Liabilities ........................................................ 12
Section 2.5. Employees ................................................................... 12
Section 2.6. Taxes ....................................................................... 13
Section 2.7. Consideration for the Purchased Assets ...................................... 13
Section 2.8. Closing ..................................................................... 13
Section 2.9. Options ..................................................................... 13
Section 2.10. Deliveries at Closing ....................................................... 15
Section 2.11. Supplemental Order .......................................................... 16
Section 2.12. Additional Consideration .................................................... 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE ........................................ 16
Section 3.1. Authority ................................................................... 16
Section 3.2. Brokers and Finders ......................................................... 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ...................................... 17
Section 4.1. Authority ................................................................... 17
Section 4.2. No Application of HSR ....................................................... 17
Section 4.3. Organization, Standing and Power ............................................ 17
Section 4.4. Litigation .................................................................. 17
Section 4.5. Consents and Approvals ...................................................... 17
Section 4.6. Brokers and Finders ......................................................... 18
Section 4.7. "AS IS" Transaction ......................................................... 18
ARTICLE V COVENANTS ............................................................................ 18
Section 5.1. Access and Information ...................................................... 18
Section 5.2. Sale Motion ................................................................. 19
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TABLE OF CONTENTS
(continued)
PAGE
Section 5.3. Deposit ..................................................................... 19
Section 5.4. Conduct of Business ......................................................... 19
Section 5.5. Bankruptcy Court Approval ................................................... 20
Section 5.6. Further Assurances .......................................................... 20
Section 5.7. Post-Closing Access to Information .......................................... 20
Section 5.8. Confidential Information .................................................... 21
Section 5.9. Closing ..................................................................... 21
Section 5.10. No Individual Liability ..................................................... 21
Section 5.11. Non-Purchased Assets ........................................................ 21
ARTICLE VI CONDITIONS TO CLOSING ................................................................ 22
Section 6.1. Conditions to Obligations of the Purchaser .................................. 22
Section 6.2. Conditions to Obligations of Trustee ........................................ 24
ARTICLE VII TERMINATION .......................................................................... 24
Section 7.1. Termination ................................................................. 24
Section 7.2. Notice of Termination ....................................................... 25
Section 7.3. Abandonment ................................................................. 25
Section 7.4. Deposit Refund .............................................................. 25
ARTICLE VIII MISCELLANEOUS ........................................................................ 25
Section 8.1. Purchase Price Allocation ................................................... 25
Section 8.2. Benefit; Risk of Loss ....................................................... 25
Section 8.3. Survival of Representations and Warranties .................................. 26
Section 8.4. Amendment and Waiver ........................................................ 26
Section 8.5. Expenses .................................................................... 26
Section 8.6. Assignment .................................................................. 26
Section 8.7. Entire Agreement ............................................................ 27
Section 8.8. Fulfillment of Obligations .................................................. 27
Section 8.9. Parties in Interest; No Third Party Beneficiaries ........................... 27
Section 8.10. Schedules ................................................................... 27
Section 8.11. Headings .................................................................... 27
Section 8.12. Notices ..................................................................... 27
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TABLE OF CONTENTS
(continued)
PAGE
Section 8.13. No Strict Construction ...................................................... 29
Section 8.14. General ..................................................................... 29
Section 8.15. Severability ................................................................ 29
Section 8.16. Indemnification for Breach of Section 4.2 ................................... 29
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SCHEDULES
---------
Schedule 1.1(a)(i) Assigned Contracts (including leased
equipment, executory contracts designated for
assignment, cure amounts)
Schedule 1.1(a)(ii) Additional Contracts
Schedule 1.1(b)(i) Equipment (owned as to which TCP and Lenders
hold a senior lien)
Schedule 1.1(b)(ii) Equipment (owned as to which parties other than TCP
and Lenders hold a senior lien)
Schedule 1.1(c) Intellectual Property, including all patents, patent
applications and invention disclosures (including
description, number, application number or docket
number, as the case may be)
Schedule 2.2 Excluded Contracts
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EXHIBITS
--------
Exhibit A Option Agreements
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of July 24, 2003, by and between XXXXX X. XXXXXXXX, Xx., in his capacity as
TRUSTEE for the Bankruptcy Estate of READ-RITE CORPORATION, a Delaware
corporation (the "TRUSTEE"), and RR(US) ACQUISITION CORPORATION, a Delaware
corporation (the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Trustee is the chapter 7 Trustee for the Bankruptcy Estate of
Read-Rite Corporation, a Delaware corporation (the "COMPANY");
WHEREAS, the Company commenced a case under chapter 7, title 11 of the
United States Code (the "BANKRUPTCY CODE") on June 17, 2003 (the "PETITION
DATE") by filing a voluntary petition (the "PETITION") initiating a case, Case
No. 03-43576 RN-7 (the "CASE") under Chapter 7 of the Bankruptcy Code in the
United States Bankruptcy Court for the Northern District of California Oakland
Division (the "BANKRUPTCY COURT"), thereby creating the estate (the "BANKRUPTCY
ESTATE") in accordance with Bankruptcy Code section 541 et seq.;
WHEREAS, prior to the Petition Date, the Company was in the business of
designing, manufacturing and marketing magnetic recording heads as gimbal
assemblies and incorporating multiple head gimbal assemblies into head stack
assemblies, which were incorporated into computer disk drives (the "BUSINESS").
Since the Petition Date, the Business has been in "idle" mode. The Bankruptcy
Estate includes, among other things, a leasehold interest in that certain wafer
fabrication facility (the "FREMONT FACILITY") located at 00000 Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxx, certain equipment owned by the Bankruptcy Estate, certain
equipment subject to contracts denominated as leases, the capital stock of
certain direct subsidiaries of the Company, and certain patents, patent
applications and other intellectual properties related to the Business; and
WHEREAS, the Trustee desires to sell, assign, transfer, convey and deliver
to the Purchaser, and to cause the Bankruptcy Estate to sell, assign, transfer,
convey and deliver to the Purchaser, and the Purchaser desires to purchase,
acquire and assume from the Trustee and the Bankruptcy Estate, all property,
contracts and other assets of the Company and the Bankruptcy Estate (other than
the Excluded Assets), including those relating to the Business, free and clear
of all Liens, Claims and Interests, as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Specific Definitions. As used in this Agreement, the
following terms shall have the meanings specified below:
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable, including any
unbilled accounts receivable.
"ACTIONS OR PROCEEDINGS" shall mean any actions, causes of action, claims,
suits, proceedings, pleadings, investigations, charges, complaints or demands.
"ADDITIONAL CONTRACTS" shall have the meaning set forth in Section 2.3(e).
"AFFILIATE," as applied to any Person, shall mean any other Person
directly or indirectly controlling, controlled by or under common control with
such Person.
"AGREEMENT" shall mean this Agreement and all Schedules and Exhibits
hereto.
"APPROVAL" shall mean any approval, authorization, consent, license,
franchise, order or permit of or by, notice to, or filing or registration with,
a Person.
"ASSIGNED CONTRACTS" shall mean the Contracts listed on Schedule
1.1(a)(i), including any Additional Contracts placed on Schedule 1.1(a)(i) in
accordance with Section 2.3(e) and any Later Discovered Contracts placed on
Schedule 1.1(a)(i) in accordance with Section 2.3(f); provided that any Excluded
Contract listed on Schedule 2.2 shall not be an Assigned Contract.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 2.3.
"AVOIDANCE ACTIONS" shall mean all rights or causes of action arising
under sections 506(c), 510, 544, 545, 547, 548, 549, 550, 551 and 553 of the
Bankruptcy Code and all defenses and rights of offset/recoupment relating to
proofs of claim asserted or deemed asserted in the Case, provided that any of
the foregoing with respect to any Affiliate of the Company shall not be deemed
Avoidance Actions.
"BANKRUPTCY CODE" shall have the meaning set forth in the preamble.
"BANKRUPTCY ESTATE" shall have the meaning set forth in the recitals.
"BANKRUPTCY COURT" shall have the meaning set forth in the recitals.
"BUSINESS" shall have the meaning set forth in the recitals.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day
on which banks in New York, New York or Los Angeles, California are authorized
or obligated by law or executive order to close.
"CASE" shall have the meaning set forth in the recitals.
"CLAIM" shall have the meaning set forth in Bankruptcy Code section
101(5).
"CLOSING" shall have the meaning set forth in Section 2.8.
"CLOSING DATE" shall have the meaning set forth in Section 2.8.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended and the
regulations thereunder.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
2.1(h).
"CONTRACT" shall mean each instrument, contract, license and other
agreement, including real property leases, operating leases, capital leases,
unexpired leases of personal property and other leases, including executory
contracts and unexpired leases as such terms are used in section 365 of the
Bankruptcy Code.
"CONTRACT DETERMINATION DATE" shall have the meaning set forth in Section
2.3.
"CROSS-LICENSES" shall mean each instrument, contract, license and other
agreement, pursuant to which (a) a third party holds or held a license to
Intellectual Property of the Bankruptcy Estate or the Company and (b) the
Bankruptcy Estate or the Company holds or held a license to Intellectual
Property of such third party. Nothing herein shall act as a waiver or otherwise
prejudice any rights of the Purchaser or the Bankruptcy Estate with respect to
the assignability or non-assignability of any Cross-License identified in
subsection (b) of the preceding sentence, each of which is hereby reserved and
preserved.
"CURE FINDING" shall have the meaning set forth in Section 2.3(b).
"EQUIPMENT" shall mean (a) all building operating systems and equipment,
other systems and equipment (including all phone and security systems and
equipment), furniture, furnishings, fixtures, trade fixtures and improvements
and other supplies, including without limitation the equipment set forth in
Schedule 1.1(b)(i) and Schedule 1.1(b)(ii), and (b) any and all guaranties,
warranties and similar rights with respect thereto (to the maximum extent
transferable under the Bankruptcy Code).
"EQUIPMENT PRICE" shall have the meaning set forth in Section 2.7(c).
"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.2.
"EXCLUDED CONTRACTS" shall have the meaning set forth in Section 2.2.
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section 2.4.
"FINAL ORDER" means an order or judgment of the Bankruptcy Court, or other
court of competent jurisdiction, entered on the docket of such court, that has
not been reversed, rescinded, stayed, modified or amended, that is in full force
and effect, and with respect to which: (a) the time to appeal, seek review or
rehearing, or petition for certiorari has expired and no timely filed appeal or
petition for review, rehearing, remand or certiorari is pending; or (b) any
appeal taken or petition for certiorari filed has been resolved by the highest
court to which the order or judgment was appealed or from which review,
rehearing or certiorari was sought.
"GOVERNMENTAL DIRECTIVE" shall mean any order, directive, writ, judgment,
award, injunction or decree by any Governmental Entity affecting the Business.
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"GOVERNMENTAL ENTITY" shall mean any court, tribunal, governmental or
regulatory authority, agency, department, commission, instrumentality, body or
other governmental entity of the United States of America or any State or
political subdivision thereof or any court or arbitrator.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"INFRINGEMENT CLAIM" shall mean any claim, right of action, cause of
action, counterclaim, right of offset or recoupment of any kind and nature,
whenever and however arising, whether imposed by agreement, understanding, Law,
equity or otherwise, and the proceeds thereof, whether or not such claim or
right has been asserted, threatened or filed, arising from or relating to any
Intellectual Property, whether such claim arises under contract, tort, statute,
common law, equity or otherwise, and all claims for actual, consequential,
punitive or other damages and other relief arising from the foregoing.
"INTERIM PERIOD" shall mean the period between the date hereof and the
Closing Date (or the earlier termination of this Agreement in accordance with
its terms).
"INTELLECTUAL PROPERTY" shall mean all of the following whether patented
or patentable or not and whether or not such items have been reduced to written,
computer-readable or other tangible form and irrespective of where any of the
same were issued, are pending or exist that are owned by, issued to or licensed
by any Person (in or under their own name or the name of any other Person):
United States and foreign patents of any description and applications therefor,
utility models and utility model applications (whether owned or licensed),
including any equivalents, divisionals, continuations, continuations-in-part,
re-issues, registrations, additions or extensions thereof, as well as any
further patents, patent applications, utility models and utility model
applications (whether owned or licensed); United States (federal, state and
common law) and foreign trademarks and other trade names, service marks, logos,
labels, trade dress, advertising and package designs, and other trade rights
(and all goodwill associated with the foregoing), whether or not registered and
all applications therefor; United States and foreign copyrights, whether or not
registered and all applications therefor (including copyrights in computer
software and computer software documentation, source code and systems
documentation), all other rights relating to computer software, Web sites, and
domain name registrations; know-how, trade secrets, mask works, business leads,
research and results thereof, technology, techniques, data, methods, processes,
instructions, drawings and specifications, inventions, discoveries,
improvements, designs, processes, formulae, recipes, shop rights and license
agreements; chain of title documents, engineering design and manufacturing
process files, invention conception and reduction to practice documents
(including notebooks, specifications, and other engineering records), all
agreements of every kind and character granting or licensing any of the
foregoing or any rights thereto; all other intellectual property rights of any
kind or nature; all rights, claims and causes of action relating to any of the
foregoing, including all rights, claims or causes of action for past
infringement or misappropriation (including all Infringement Claims); and any
and all documents and information of any type or description relating to any of
the foregoing. Without limiting the generality of the foregoing, the definition
of Intellectual Property shall include any foreign
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counterparts, divisions, substitutions, reexaminations, continuations,
continuation-in-part, reissues, patents of additions, renewals and extensions of
any of the foregoing.
"INTELLECTUAL PROPERTY LICENSE RIGHTS" shall mean any rights of a
non-debtor party in, to or under any Intellectual Property of the Bankruptcy
Estate as such rights existed on the Petition Date, to the extent such rights
would be enforceable against the Trustee or the Bankruptcy Estate under section
365(n) of the Bankruptcy Code.
"INTERESTS" shall mean any and all "interests" as such term is used in
section 363(f) of the Bankruptcy Code, provided that for the purposes of this
Agreement such term shall not include Intellectual Property License Rights.
"INVENTORY" shall mean all inventories owned or held by a Person, wherever
located. For purposes hereof, inventories shall include packaging, finished
goods, raw materials, supplies, work in process, spare parts and other
miscellaneous items of tangible property normally considered a part of
"inventory" under GAAP.
"LATER DISCOVERED CONTRACT" shall mean any Contract of the Bankruptcy
Estate not listed on Schedule 1.1(a)(i) or Schedule 2.2 as of the date of this
Agreement.
"LIABILITY" shall mean any debt, liability, commitment and guaranty,
warranty or obligation of any kind, character or nature whatsoever, whether
known or unknown, secured or unsecured, accrued, fixed, absolute, potential,
contingent or otherwise, and whether due or to become due.
"LAW" shall mean any law, rule, regulation, code, plan, judgment or other
restriction of any court, arbitrator or Governmental Entity.
"LIEN" shall have the meaning set forth in Bankruptcy Code section
101(37).
"OPTION AGREEMENT(S)" shall have the meaning set forth in Section 2.9.
"OPTION COMPANIES" shall have the meaning set forth in Section 2.9.
"OPTION HOLDER" shall have the meaning set forth in Section 2.9.
"OPTIONS" shall have the meaning set forth in Section 2.9.
"PERSON" shall mean any individual, corporation, partnership (general or
limited), limited liability company, firm, joint venture, association,
joint-stock company, trust, estate, unincorporated organization or Governmental
Entity.
"PETITION" shall have the meaning set forth in the recitals.
"PETITION DATE" shall have the meaning set forth in the recitals.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.7.
"PURCHASED ASSETS" shall have the meaning set forth in Section 2.1.
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"PURCHASED ASSET PRICE" shall have the meaning set forth in Section 5.2.
"PURCHASER" shall have the meaning set forth in the preamble.
"READ RITE HOLDING" shall have the meaning set forth in Section 2.9.
"READ RITE HOLDING OPTION" shall have the meaning set forth in Section
2.9.
"READ-RITE INTERNATIONAL" means Read-Rite International, a Cayman Islands
corporation and a wholly-owned subsidiary of the Company.
"READ-RITE INTERNATIONAL OPTION" shall have the meaning set forth in
Section 2.9.
"RECORDS" shall have the meaning set forth in Section 2.1(h).
"RELATED DOCUMENT" shall mean those documents executed in connection with
the consummation of the transaction contemplated by this Agreement.
"RESTRICTED CONTRACT" shall mean any Contract that the Trustee may not
assume and assign to Purchaser pursuant to section 365(c)(1) of the Bankruptcy
Code absent the consent of the non-debtor party thereto, as determined by Final
Order.
"SALE MOTION" shall mean the motion of the Trustee to approve this
Agreement, enter the Sale Order and waive the ten-day stay on enforcement of the
Sale Order in accordance with Bankruptcy Rules 6004(g) and 6006(d).
"SALE ORDER" shall have the meaning set forth in Section 6.1.
"STOCK CERTIFICATE(S)" shall mean the original certificate representing
the capital stock of the specified entity, or, in the event that Trustee is
unable, after reasonable efforts, to locate such original certificate, an
affidavit signed by the Trustee certifying that such original certificate has
been lost and covenanting to deliver such original certificate to Purchaser in
the event that such original certificate is eventually found by or delivered to
Trustee.
"SUNWARD TECHNOLOGIES" shall have the meaning set forth in Section 2.9.
"SUNWARD TECHNOLOGIES OPTION" shall have the meaning set forth in Section
2.9.
"SUPPLEMENTAL MOTION" shall have the meaning set forth in Section 2.3(e).
"SUPPLEMENTAL ORDER" shall have the meaning set forth in Section 2.3(e).
"TAX" or "TAXES" shall mean any and all federal, state, county, local,
foreign and other taxes, assessments, duties or charges of any kind whatsoever,
including, without limitation, franchise, income, sales, use, ad valorem, gross
receipts, value added, profits, license, minimum, alternative minimum,
environmental, withholding, payroll, employment, excise, property, customs and
occupation taxes, and any interest, fine, penalty, addition to tax and other
amounts imposed with respect thereto.
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"TAX RETURNS" shall mean all returns, reports, forms, estimates,
information returns and statements (including any related or supporting
information) filed or required to be filed with any taxing authority in
connection with the determination, assessment, collection or administration of
any Taxes.
"TCP" means Xxxxxxxxxx Capital Partners, LLC in its capacity as
"Administrative Agent" for certain parties (the "LENDERS").
"TEN DAY WAIVER" shall have the meaning set forth in Section 5.5(b).
"TRANSFER" shall mean any sale, transfer, conveyance, assignment, delivery
or other disposition, and "Transfer" or "Transferred," used as a verb, shall
each have a correlative meaning.
"TRUSTEE" has the meaning set forth in the recitals.
Section 1.2. Other Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The words and phrases "including," and "including, but not
limited to," when used in this Agreement shall mean "including, without
limitation".
(c) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(d) The terms "dollars" and "$" shall mean United States dollars.
(e) The term "commercially reasonable" shall mean, in addition to
its general use and meaning, with respect to any matter involving litigation or
disputes involving or requiring a ruling from the Bankruptcy Court, the
preparation and filing of any motions or papers, including supporting affidavits
or declarations and any reply or objection papers as required or permitted, in a
manner reasonably calculated to achieve the intended result. When used in
respect of the obligations of the Trustee, "commercially reasonable" efforts
shall also require appropriate consultation with the Purchaser in the
preparation of the any such motions or papers.
ARTICLE II
THE PURCHASE AND SALE OF PURCHASED ASSETS
Section 2.1. Purchase and Sale of Purchased Assets. Upon the terms and
subject to the conditions set forth herein, on the Closing Date, the Trustee
shall transfer and cause the Bankruptcy Estate to Transfer to the Purchaser, and
the Purchaser shall purchase and accept from the Trustee and the Bankruptcy
Estate, free and clear of (i) all Liens, Claims and Interests against the
Bankruptcy Estate and (ii) any Liens, Claims or Interests of an entity other
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than the Bankruptcy Estate, all of the Trustee's and all of the Bankruptcy
Estate's right, title, and interest in, to and under all of the assets,
property, rights and claims of the Bankruptcy Estate, wherever located, real,
personal or mixed, whether tangible or intangible, other than the Excluded
Assets, including without limitation all of the Bankruptcy Estate's right, title
and interest in, to and under the following (collectively, the "PURCHASED
ASSETS"):
(a) any Equipment, including without limitation the Equipment on
Schedules 1.1(b)(i) and 1.1(b)(ii);
(b) the Assigned Contracts;
(c) any Intellectual Property and any tangible embodiments thereof,
including without limitation the Intellectual Property listed on Schedule
1.1(c), but excluding any Confidential Information;
(d) any business licenses and permits of the Bankruptcy Estate,
including those used in the operation of the Business, to the extent
transferable to the Purchaser;
(e) any claims, deposits, security deposits and other security,
prepayments, prepaid assets, refunds (including tax refunds), causes of action,
rights of recovery, rights of setoff and rights of recoupment as of the Closing
Date, including all rights, claims, credits, suits, actions or demands against
any Affiliate of the Company;
(f) any warranties of third parties on any Purchased Assets;
(g) to the extent assignable by the Trustee to the Purchaser,
property damage, but NOT liability, insurance coverage under the Bankruptcy
Estate's insurance policies and insurance contracts covering any loss or damage
to any of the Purchased Assets that occurred at any time prior to the Closing
Date together with any claim, action or other right the Bankruptcy Estate may
have for insurance coverage under such policies and contracts that relates to
any such loss or damage, and, regardless of whether or not such claims or
coverage are assignable, any proceeds received from any such policy or contract
from and after the Closing Date pertaining to such time period (it being
understood that insurance coverage for, and claims relating to, any Excluded
Assets are being retained by the Bankruptcy Estate);
(h) any books of account, ledgers, financial, accounting and Tax
records and all general and personnel records, files, invoices, customers' and
suppliers' lists, other distribution and mailing lists, price lists, reports,
plans, advertising materials, catalogues, billing records, sales and promotional
literature, manuals, and customer and supplier correspondence (the "RECORDS")
that pertain to the Purchased Assets provided that the Purchaser shall make such
Records available to the Trustee (or any other party acquiring property from the
Bankruptcy Estate) upon reasonable requests and subject to execution of a
confidentiality agreement reasonably acceptable to the Purchaser; provided that
Records do not include any confidential or propriety information, or trade
secrets, contained in any form or medium, that the Bankruptcy Estate is
prohibited from transferring to a third party pursuant to an agreement or
confidentiality obligation that is enforceable against the Trustee
("CONFIDENTIAL INFORMATION");
(i) any Accounts Receivable;
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(j) any Inventory;
(k) any cash, cash equivalents, securities and investments,
including, but not limited to, any and all cash, check, money order, wire
transfer or other deposits;
(l) any litigation claims, rights and causes of action, excluding
any litigation claims, rights and causes of action against TCP, the Lenders or
any directors, officers or employees of the Bankruptcy Estate;
(m) any rights to refunds or return of Taxes;
(n) to the extent transferable by applicable law and provided that
such inclusion would not subject the Purchaser to any Liabilities under any
Excluded Contract, all rights under any Contract under which the counterparty or
counterparties agree or have agreed not to compete with the operations or
property of the Company or of the Bankruptcy Estate or agree or have agreed to
keep confidential information regarding the Company or the Bankruptcy Estate,
without regard to whether any such Contract is an Excluded Contract; and
(o) all goodwill associated with the Purchased Assets.
Section 2.2. Excluded Assets. Notwithstanding anything to the contrary in
this Agreement, the Purchased Assets shall not include any assets excluded by
the terms of this Section 2.2 (the "EXCLUDED ASSETS"), such Excluded Assets
consisting in their entirety of the Bankruptcy Estate's right, title and
interest in, to and under the following:
(a) the consideration paid by Purchaser to Trustee pursuant to this
Agreement;
(b) all Contracts of the Bankruptcy Estate that the Purchaser places
on Schedule 2.2 prior to the Contract Determination Date (the "EXCLUDED
CONTRACTS"), subject to the provisions of Section 2.1(n);
(c) any bids and deposits received from any Person other than the
Purchaser or its agents or representatives in connection with the proposed sale
of any of the Purchased Assets and any analyses prepared by or on behalf of the
Trustee of any bids for the Business or any portion thereof, or any materials
relating to the negotiations with any potential bidder;
(d) all Avoidance Actions;
(e) any assets of any employee benefit plan of the Company or the
Bankruptcy Estate and any rights under any such plan or any contract, agreement
or arrangement between any employee or consultant and the Company or the
Bankruptcy Estate;
(f) any Confidential Information;
(g) the capital stock of any direct subsidiary of the Company,
except with respect to rights under the Option Agreements;
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(h) all bank and other deposit accounts of the Trustee;
(i) except as set forth in Section 2.1(g), all insurance policies
and insurance contracts insuring property of the Bankruptcy Estate, or any
Purchased Asset;
(j) all rights, claims, credits, suits, actions or demands against
TCP or the Lenders or any officer or director of the Bankruptcy Estate;
(k) all Records of the Trustee or the Bankruptcy Estate required by
Law to be retained; provided that the Trustee shall permit the Purchaser to copy
the same (except for those Records, or portion thereof, that are Confidential
Information) at the Purchaser's expense (without reduction in the Purchase
Price); and
(l) any assets of the Bankruptcy Estate otherwise included in the
definition of Purchased Assets that may be designated by Purchaser as "Excluded
Assets" in the Purchaser's sole discretion, prior to the Contract Determination
Date.
Section 2.3. Assumed Liabilities.
(a) Subject to the terms and conditions of this Agreement, at and as
of the Closing Date, the Purchaser shall assume and agree to pay, perform,
discharge and satisfy when due in accordance with their terms (i) all
Liabilities under any of the Assigned Contracts accruing, arising out of or
relating to periods from and after the Closing Date; and (ii) all cure payments
for all Assigned Contracts as determined by a Cure Finding for such Assigned
Contracts. The Sale Order shall provide that the assumption and assignment to
Purchaser of the Assigned Contracts set forth on Schedule 1.1(a)(i) as in effect
on the date hereof is approved, subject only to (i) payment by Purchaser of all
cures as determined by a Cure Finding and (ii) the Purchaser's right to exclude
any Contract from the definition of Assigned Contracts in accordance with the
terms of this Section 2.3. For purposes of clarification, unless the Sale Order
provides that the sixty (60) day period under section 365(d)(1) is extended for
cause until the Contract Determination Date, then the Trustee shall use his
commercially reasonable efforts to obtain an order from the Court extending the
sixty (60) day period under section 365(d)(1) for cause until the Contract
Determination Date.
(b) The term "CURE FINDING" as used herein shall mean a finding by
the Bankruptcy Court in a Final Order determining the amount required to be paid
to cure any outstanding defaults under an Assigned Contract so that the Trustee
may assume and assign such Contract to Purchaser pursuant to section 365 of the
Bankruptcy Code. The Trustee shall use his commercially reasonable efforts to
ensure that the Sale Order includes the Cure Findings as set forth on Schedule
1.1(a)(i) hereto for each Contract thereon. Upon objection by the non-debtor
party to any such Contract the Trustee shall either settle the objection of such
party (subject to approval of the Purchaser if such settlement sets a higher
Cure Finding than the amount set forth on Schedule 1.1(a)(i) for such Contract)
or shall litigate such objection under such procedures as the Bankruptcy Court
shall approve and proscribe. The Purchaser shall be responsible for tendering
any cure amounts for each Assigned Contract as determined by a Cure Finding for
such Contract, and, subject to Purchaser's right to exclude Contracts from the
Assigned Contracts in accordance with Section 2.3, Purchaser shall pay such cure
amounts as of the
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Contract Determination Date. The Sale Order shall provide that the Purchaser may
take any action and file any motions or other papers with respect to a Cure
Finding required to be taken by the Trustee pursuant to this Section 2.3(b) in
place and in the name of the Trustee or that the Purchaser shall pay the legal
fees of the Trustee involved in any such litigation.
(c) The Purchaser shall have the right to include or exclude any
Contract (other than the lease for the Fremont Facility) from the list of
Assigned Contracts at any time prior to the date that is sixty (60) days
following the Closing Date or, if such date does not fall on a Business Day, the
next succeeding Business Day (the "CONTRACT DETERMINATION DATE"). Excluded
Contracts shall be deemed excluded by their placement by Purchaser on Schedule
2.2 at any time prior to the Contract Determination Date.
(d) In the event the Sale Order does not include a Cure Finding with
respect to any Assigned Contract, then the Contract Determination Date for such
Contract shall be deemed to be and shall be extended until the date that is five
(5) Business Days after the date that the Bankruptcy Court makes a Cure Finding
for such Contract (if such date would be after the date that would otherwise be
the Contract Determination Date).
(e) The Trustee shall move the court for entry of an order (the
"SUPPLEMENTAL ORDER") pursuant to a motion (the "SUPPLEMENTAL MOTION") to assume
and assign to Purchaser any additional Contracts (including the Contracts set
forth on Schedule 1.1(a)(ii), the "ADDITIONAL CONTRACTS") as identified by
Purchaser that, for any reason, are not assumed and assigned to Purchaser
pursuant to the Sale Order, with the same effect as if such Contracts had been
Assigned Contracts under the Sale Order, including setting a proposed cure
amount and seeking a Cure Finding therefor. The Sale Order shall provide that a
motion to assume and assign an Additional Contract shall be on notice only to
the Purchaser and to the non-debtor party or parties to such Contract. If the
non-debtor party to any such Additional Contract objects to the assumption and
assignment of such Contract or to the Trustee's proposed cure amount, then the
Trustee shall either settle the objection of such party (subject to approval of
the Purchaser) or shall litigate such objection under such procedures as the
Bankruptcy Court shall approve and proscribe. The Contract Determination Date
for any Additional Contract shall be deemed to be and shall be extended until
the later of (i) the date that is sixty (60) days after the date that such
Additional Contract is placed by the Trustee on Schedule 1.1(a)(i); and (ii) the
date that is three (3) Business Days after the date that the Bankruptcy Court
makes a Cure Finding for such Contract (in each case if such date would be after
the date that would otherwise be the Contract Determination Date). The Sale
Order shall provide that the Purchaser may take any action and file any motions
or other papers with respect to an Additional Contract required to be taken by
the Trustee pursuant to this Section 2.3(e) in place and in the name of the
Trustee or that the Purchaser shall pay the legal fees of the Trustee involved
in any such litigation.
(f) In the event that either the Trustee or the Purchaser discovers
the existence of any Later Discovered Contracts, then such party shall notify
the other party of such Contracts as soon as reasonably possible. At the request
of the Purchaser (which must be given within three (3) Business Days of the date
of the notice in the preceding sentence), the Trustee shall place any Later
Discovered Contracts on Schedule 1.1(a)(i) hereto and shall move to assume and
assign such Contracts to the Purchaser with the same effect as if such Contracts
had been so scheduled originally, including setting a proposed cure amount. The
Sale Order shall
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provide that a motion to assume and assign a Later Discovered Contract shall be
on notice only to the Purchaser and to the non-debtor party or parties to such
Contract. If the non-debtor party to any such Later Discovered Contract objects
to the assumption and assignment of such Contract or to the Trustee's proposed
cure amount, then the Trustee shall either settle the objection of such party
(subject to approval of the Purchaser) or shall litigate such objection under
such procedures as the Bankruptcy Court shall approve and proscribe. The
Contract Determination Date for any Later Discovered Contract shall be deemed to
be and shall be extended until the later of (i) the date that is sixty (60) days
after the date that such Later Discovered Contract is placed by the Trustee on
Schedule 1.1(a)(i); and (ii) the date that is three (3) Business Days after the
date that the Bankruptcy Court makes a Cure Finding for such Contract (in each
case if such date would be after the date that would otherwise be the Contract
Determination Date). The Sale Order shall provide that the Purchaser may take
any action and file any motions or other papers with respect to a Later
Discovered Contract required to be taken by the Trustee pursuant to this Section
2.3(f) in place and in the name of the Trustee or that the Purchaser shall pay
the legal fees of the Trustee involved in any such litigation.
(g) The Trustee shall have no obligation to seek or obtain the
consent of any non-debtor party to a Restricted Contract for purposes of
sections 363(f) or 365(f) of the Bankruptcy Code. If any non-debtor party to a
Restricted Contract objects to the assumption and assignment of such Contract,
the Purchaser agrees that if such non-debtor party does not consent to the
assumption of such Contract on or before the Contract Determination Date, then
such Contract shall be and shall be deemed to be an Excluded Contract without
any adjustment to the Purchase Price.
Section 2.4. Excluded Liabilities. Except for the Assumed Liabilities, the
Purchaser shall not assume, and shall have no liability or obligation for any
other Liabilities of the Trustee, the Company or the Bankruptcy Estate, as a
successor in interest or otherwise, including, without limitation (except to the
extent expressly included in the Assumed Liabilities) any Liability arising out
of, or related to, any (i) employee or consultant of the Trustee, the Company or
the Bankruptcy Estate, including any Liability with respect to any key employee
retention plans, any Liability with respect to or arising from any "employee
benefit plan" (as defined in section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended), any Liability with respect to the Worker
Adjustment and Retraining Notification (WARN) Act and any Liability with respect
to COBRA Coverage for employees or consultants of the Trustee, the Company or
the Bankruptcy Estate terminated prior to or as part of the consummation of the
transactions set forth in this Agreement; (ii) any severance payable to any
employee or consultant of the Trustee, the Company or the Bankruptcy Estate;
(iii) any costs or expenses incurred in connection with, or related to, the
administration of the Case, including without limitation, any accrued
professional fees and expenses of attorneys, accountants, financial advisors and
other professional advisors related to the Case, as well as the Trustee's fees
and expenses; (iv) Liabilities under any warranty, guaranty or similar
obligation of the Trustee, the Company or the Bankruptcy Estate arising from or
relating to any acts or transactions prior to the Closing Date; (v) Liabilities
arising under any and all Excluded Contracts; or (vi) Liabilities to the extent
relating to the Excluded Assets (collectively, the "EXCLUDED LIABILITIES").
Section 2.5. Employees. As of the Closing, the Trustee shall terminate any
remaining employees of the Company and the Bankruptcy Estate, including any
former
12
employees of the Debtor retained by the Bankruptcy Estate at the behest of the
Trustee as consultants or otherwise for the purpose of maintaining the Purchased
Assets, and Purchaser shall offer employment to no fewer than six hundred (600)
former employees of the Company in the United States.
Section 2.6. Taxes. Any sales, use, purchase, transfer, stamp, or
documentary stamp Taxes which may be payable by reason of the sale of the
Purchased Assets, under this Agreement for the transactions contemplated herein
and any and all claims, charges, interest or penalties assessed, imposed or
asserted in relation to any such Taxes, shall be the responsibility and
obligation of and timely paid by the Purchaser. In no event shall any party to
this Agreement be responsible for the income taxes of any other party that arise
as a consequence of the transactions consummated hereunder.
Section 2.7. Consideration for the Purchased Assets. Purchaser shall
furnish the following consideration for and on account of the Purchased Assets
(which, collectively, shall constitute the "PURCHASE PRICE"):
(a) Assumption of Assumed Liabilities; plus
(b) Cash in the amount of eighty seven million dollars ($87,000,000)
for and on account of all Purchased Assets other than the Equipment listed in
Schedule 1.1(b)(ii); plus
(c) Cash in the amount of $500,000 for the Equipment on Schedule
1.1(b)(ii) in which Citicorp Vendor Finance, Inc. holds a senior, first priority
lien and cash in the amount of $7,600,000 for the Equipment on Schedule
1.1(b)(ii) in which Xxxxxx Financial Leasing or GE Capital Funding (as assignee
of Xxxxxx Financial Leasing) holds a senior, first priority lien (together, the
"EQUIPMENT PRICE").
Section 2.8. Closing. Upon the terms and subject to the conditions hereof,
the closing of the transactions contemplated hereby (the "CLOSING") shall take
place at the offices of Xxxxxx Xxxx, Esq., Xxxxxx & Xxxx LLP, Embarcadero Center
West, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, at 10:00
a.m., local time on the second Business Day following the satisfaction or waiver
(subject to applicable Law) of the conditions precedent specified in Article VI
(other than those conditions that by their nature are to be fulfilled only at
the Closing, but subject to the fulfillment or waiver (subject to applicable
Law) of such conditions) or at such other time and place as the parties hereto
may mutually agree (such date, the "CLOSING DATE").
Section 2.9. Options.
(a) Prior to the Closing, the Trustee shall execute and deliver each
of the Option Agreements attached hereto as Exhibit A (each an "OPTION
AGREEMENT" and collectively, the "OPTION AGREEMENTS") by which it grants to the
Purchaser or its successors or assigns (the "OPTION HOLDER"), the following
options:
(i) an option to purchase all of the capital stock of
Read-Rite International, including any securities that are or may become
exercisable for or
13
convertible into capital stock of Read-Rite International (the "READ-RITE
INTERNATIONAL OPTION")
(ii) an option to purchase all of the capital stock of Read
Rite Holding Company, a Delaware corporation ("READ RITE HOLDING"),
including any securities that are or may become exercisable for or
convertible into capital stock of Read Rite Holding (the "READ RITE
HOLDING OPTION"); and
(iii) an option to purchase all of the capital stock of
Sunward Technologies International, a Hong Kong company ("SUNWARD
TECHNOLOGIES" and collectively with Read-Rite International and Read Rite
Holding, the "OPTION COMPANIES"), including any securities that are or may
become exercisable for or convertible into capital stock of Sunward
Technologies (the "SUNWARD TECHNOLOGIES OPTION" and collectively with the
Read-Rite International Option and the Read Rite Holding Option, the
"OPTIONS").
(b) Prior to the Closing, the Trustee shall deliver to Option Holder
one or more Stock Certificates representing in the aggregate all of the shares
of capital stock of each of the Option Companies, along with duly executed and
notarized stock powers (or other appropriate share transfer document) with
respect to each Stock Certificate, endorsed in blank. In the event that Company
or any Affiliate of Company owns any securities that are or may become
exercisable for or convertible into capital stock of any of the Option
Companies, the Trustee shall also, prior to the Closing, deliver or cause to be
delivered to Option Holder the original instrument(s) evidencing such
securities, duly endorsed in blank and notarized for transfer. Prior to the
Closing, the Trustee shall also have delivered to Purchaser one or more Stock
Certificates representing in the aggregate all of the shares of capital stock of
Read-Rite (Thailand) Co., Ltd. (other than the 12 shares held by individuals)
and all of the shares of capital stock of Read-Rite (Malaysia) Sdn. Bhd. If any
of the Option Agreements have not been exercised prior to their expiration, the
Purchaser shall cause Option Holder to return to the Trustee all Stock
Certificates, securities and related stock powers (or other appropriate share
transfer document) delivered to Option Holder pursuant to this Section 2.9 with
respect to such unexercised Option Agreement (which, with respect to the
Read-Rite International Option Agreement, shall also include the Stock
Certificates of Read-Rite (Thailand) Co., Ltd. and Read-Rite (Malaysia) Sdn.
Bhd. delivered by Trustee to Option Holder hereunder). In the event that an
Option has expired unexercised, Trustee shall take all actions necessary to
abandon its ownership interest in the underlying Option Company.
(c) At the request of the Purchaser, in addition to granting any of
the Options to the Option Holder, the Trustee shall enter into a mutually
acceptable proxy agreement allowing the Purchaser to vote all of the shares or
other ownership interests in the applicable Option Company.
(d) In order to protect the value of the Options, the Trustee shall,
at all times from and after the date hereof until the exercise by Option Holder
of such Options, cause the Company and the Bankruptcy Estate to retain all
beneficial and record interest to all of the outstanding capital stock of each
of the Option Companies (excluding the interest held by Option Holder pursuant
to the Option Agreements) and shall not pledge or otherwise encumber any of
14
the securities of the Option Companies. Without limiting the foregoing, and
except as required or contemplated as part of the transactions hereunder, the
Trustee shall not, prior to the earlier of (1) the exercise of an Option or (2)
the abandonment by the Trustee pursuant to Section 2.9(b) of its ownership
interest in such Option Company, cause any of the Option Companies to take any
of the following actions without the prior written consent of Option Holder: (i)
sell, encumber or otherwise dispose of any its assets other than in the ordinary
course of its business consistent with past practices; or (ii) amend its charter
documents or bylaws; or (iii) issue, sell, redeem or acquire for value, or agree
to do so, any of its capital stock or debt obligations; or (iv) agree to or make
any commitment to take any actions prohibited by this Section 2.9.
Section 2.10. Deliveries at Closing.
(a) At the Closing, the Trustee shall deliver, or cause to be
delivered, to Purchaser, the following:
(i) a xxxx of sale and assignment to transfer title to the
Purchaser of the Purchased Assets, without representation, recourse or
warranty, express or implied;
(ii) the Trustee's and the Bankruptcy Estate's rights of
possession and control of the Purchased Assets, on an as-is and where-is
basis, to Purchaser or such Affiliate of Purchaser which is designated by
Purchaser in accordance with Section 8.6 herein, including the provision
of any keys, access codes, passwords or the like required to gain and
enjoy such possession and control as are in the control of the Trustee;
and
(iii) such other duly executed documents, instruments and
certificates as may be necessary or appropriate to be delivered by the
Trustee as shall be reasonably necessary to transfer to Purchaser all of
the Trustee's and the Bankruptcy Estate's right, title and interest in, to
and under all of the Purchased Assets in accordance with this Agreement,
including but not limited to assignment documents perfecting Purchaser's
ownership of Intellectual Property in forms reasonably acceptable to
Purchaser, the executed Option Agreements and the Stock Certificates
required to be deliver by Section 2.9(b).
(b) At the Closing, the Purchaser shall deliver, or cause to be
delivered, to the Trustee or the third parties designated by the Trustee the
following:
(i) an amount of cash equal to the portion of the Purchase
Price referred to in Sections 2.7(b) and (c) (less the amount of the
Deposit held by the Trustee) by wire transfer of immediately available
same day funds to an account or accounts designated by the Trustee;
(ii) to the Trustee as escrow agent for the benefit of the
non-debtor parties to the Assigned Contracts, an amount of cash equal to
the cure costs set forth on Schedule 1.1(a)(i), or such other cure amounts
as may be determined by the Bankruptcy Court, pending the Purchaser's
final determination of Assigned Contracts pursuant to the terms of Section
2.3; and
15
(iii) such other duly executed documents, instruments and
certificates as may be necessary or appropriate to be delivered by
Purchaser pursuant to this Agreement.
Section 2.11. Supplemental Order. The parties agree to use commercially
reasonable efforts to ensure that the Supplemental Order shall provide that (i)
the sale of the Purchased Assets shall be free and clear of all Intellectual
Property License Rights (provided that the Supplemental Order provides that the
Bankruptcy Estate shall have no liability for any claims of the holders of such
Intellectual Property License Rights arising as a result of any such free and
clear sale), (ii) the failure of any party to object to the Supplemental Motion
shall be deemed to be consent to the relief requested therein for purposes of
sections 363(f) and 365(f) of the Bankruptcy Code, (iii) if any Cross-License is
rejected pursuant to section 365(a) of the Bankruptcy Code then, for purposes of
section 365(n) of the Bankruptcy Code, the "royalty" with respect to the
non-debtor party's Intellectual Property License Rights thereunder is and shall
be any grant of license or other rights by the non-debtor party to Intellectual
Property of the non-debtor party required by the Cross-License and that, if the
Cross Licensee elects to keep its Intellectual Property License Rights under
section 365(n)(1)(B) of the Bankruptcy Code, then such royalties shall be owed
to Purchaser upon transfer of the Bankruptcy Estate's Intellectual Property to
the Purchaser, and (iv) any party making an election to retain any Intellectual
Property License Rights pursuant to section 365(n)(1)(B) of the Bankruptcy Code
must make such election by written declaration to the Trustee, the Bankruptcy
Court and the Purchaser within five (5) Business Days of receipt of notice of
the rejection of the applicable Contract.
Section 2.12. Additional Consideration. Upon the Supplemental Order
becoming a Final Order, Purchaser shall pay additional consideration of $500,000
in cash to the Trustee.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE
The Trustee hereby represents and warrants to the Purchaser as follows:
Section 3.1. Authority. Subject to entry of the Sale Order, the Trustee
has the power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and this Agreement has been
duly executed and delivered by the Trustee and constitutes the valid and binding
agreement of the Trustee, enforceable in accordance with its terms.
Section 3.2. Brokers and Finders. No broker, finder, consultant or
intermediary is entitled to a broker's, finder's or similar fee or commission in
connection with the transactions contemplated by this Agreement or upon the
consummation of the transactions contemplated hereby, or if the Closing does not
occur, as a result of any actions or agreements of the Trustee or the Bankruptcy
Estate or his or its agents.
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Trustee as follows:
Section 4.1. Authority. The Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and any Related Documents to
which it is or will be a party and to consummate the transactions contemplated
hereby and thereby to be performed by it. All corporate proceedings and actions
on the part of the Purchaser required by Law, its certificate of incorporation,
bylaws, this Agreement and the Related Documents to which it is or will be a
party, the performance of the obligations hereunder and thereunder to be
performed by it and the consummation of the transactions contemplated hereby and
thereby have been duly taken, and no other corporate proceedings or actions on
the part of the Purchaser is necessary. This Agreement is, and each of the
Related Documents to which the Purchaser is or will be a party will upon
execution be, a valid and binding agreement enforceable against the Purchaser in
accordance with its terms, subject to bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance and similar laws affecting the enforcement of
creditor's rights generally.
Section 4.2. No Application of HSR. No filing will be required under HSR
in connection with the transactions contemplated hereunder, and this
representation and warranty shall survive until the twelve (12) month
anniversary of the Closing.
Section 4.3. Organization, Standing and Power. The Purchaser (a) is a
corporation duly organized, validly existing and in good standing under the Laws
of the state of its incorporation; (b) has all requisite corporate power and
authority to own, lease or operate the assets it now owns, leases or operates
and to carry on the business now being conducted by it; (c) is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
ownership or use of its assets or conduct of its business requires it to be so
qualified or licensed and in good standing except where any such failure to be
so qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on the Purchaser, and (d) is solvent,
has adequate capital, and has the financial wherewithal or committed financial
resources to meet the Purchaser's obligations hereunder and perform under the
Assigned Contracts.
Section 4.4. Litigation. No Actions or Proceedings are pending or, to the
knowledge of the Purchaser, threatened against the Purchaser which seeks to
delay or prevent the consummation of, or which would materially adversely affect
the Purchaser's ability to consummate, the transactions contemplated by this
Agreement.
Section 4.5. Consents and Approvals. The execution and delivery of this
Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby will not: (a) violate any provision of the
articles of incorporation, bylaws, certificate of formation or operating
agreement of the Purchaser; (b) violate any Law applicable to the Purchaser; or
(c) require Purchaser to make any filing with, obtain any permit, consent,
license or approval of, or give any notice to, any Governmental Entity except,
in the case of clauses (a), (b) and (c), for such violations, filings, permits,
consents, licenses, approvals,
17
notices, breaches or conflicts which would not be reasonably likely to prohibit
Purchaser from consummating the transactions contemplated by this Agreement or
the Related Documents to which it is a party or performing its obligations
hereunder and thereunder.
Section 4.6. Brokers and Finders. No broker, finder, consultant or
intermediary is entitled to a broker's, finder's or similar fee or commission in
connection with the transactions contemplated by this Agreement or upon the
consummation of the transactions contemplated hereby, or if the Closing does not
occur, and Purchaser shall indemnify and hold harmless the Trustee from and
against any liability with respect to any and all such fees and commissions
arising out of any claimed retention by the Purchaser of a broker or finder in
connection with the transactions contemplated by this Agreement.
Section 4.7. "AS IS" Transaction. The Purchaser hereby acknowledges and
agrees that, except as otherwise expressly provided in this Agreement, the
Trustee makes no representations or warranties whatsoever, express or implied,
with respect to any matter relating to the Business or to the Purchased Assets
(including, without limitation, income to be derived or expenses to be incurred
in connection with the Business or the Purchased Assets, the physical condition
of any personal or real property comprising a part of the Purchased Assets or
which is the subject of any Assigned Contract to be assumed by the Purchaser at
the Closing Date, the environmental condition or other matter relating to the
physical condition of any real property or improvements which are the subject of
any assigned lease to be assumed by the Purchaser at the Closing Date, the
zoning of any such real property or improvements, the value or transferability
of the Purchased Assets (or any portion thereof), the terms, amount, validity or
enforceability of any Assumed Liabilities, or the merchantability or fitness of
the Purchased Assets). Without in any way limiting the foregoing, the Trustee
hereby disclaims any warranty (express or implied) of merchantability or fitness
for any particular purpose as to any portion of the Purchased Assets. The
Purchaser further acknowledges that the Purchaser has conducted an independent
inspection and investigation of the physical condition of the Purchased Assets,
as the Purchaser deemed necessary or appropriate and that in proceeding with its
acquisition of the Purchased Assets the Purchaser is doing so based solely upon
such independent inspections and investigations, but subject to the satisfaction
or waiver of the closing conditions specified herein. Accordingly, if the
Closing occurs, the Purchaser will accept the Purchased Assets at the Closing
Date "AS IS," "WHERE IS," and "WITH ALL FAULTS," subject to the provisions of
this Agreement and the Sale Order providing that the sale of the Purchased
Assets is free and clear of all Liens, Claims and Interests.
ARTICLE V
COVENANTS
Section 5.1. Access and Information. Upon reasonable notice and during
customary business hours, or otherwise as mutually agreed to by the parties, the
Trustee will afford the Purchaser and its counsel, accountants and other
representatives reasonable access to documents and information concerning the
Purchased Assets and to the Fremont Facility; provided that the Purchaser shall
not be given access to any Confidential Information. The Purchaser agrees that
its completion and satisfaction of any due diligence review of the
18
Purchased Assets or of the Fremont Facility is not a condition to the
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement.
Section 5.2. Sale Motion. Provided that the Bankruptcy Court determines
that Purchaser is the "winning bidder", the Trustee shall promptly move the
Bankruptcy Court for entry of the Sale Order.
Section 5.3. Deposit. Trustee acknowledges its receipt of an initial
deposit of $800,000 deposited by Purchaser with the Trustee on July 15, 2003
(the "INITIAL DEPOSIT") as well as a supplemental deposit of $16,000,000
deposited by Purchaser with the Trustee on July 22, 2003 (the "SUPPLEMENTAL
DEPOSIT" and collectively with the Initial Deposit, the "DEPOSIT"). Trustee has
retained and shall continue to retain the Deposit in a segregated interest
bearing account. Provided that the Bankruptcy Court determines that Purchaser is
the "winning bidder", the Purchaser shall increase the Deposit to 20% of the
Purchase Price within one Business Day of the date of the entry by the
Bankruptcy Court of the Sale Order. The Deposit shall be credited against the
Purchase Price, returned to the Purchaser, or retained by the Trustee, in
accordance with the terms of this Agreement.
Section 5.4. Conduct of Business. To the extent he may do so within the
constraints of any applicable funding stipulation with TCP and other interested
parties, the Trustee agrees that during the Interim Period, he will:
(a) use his commercially reasonable efforts to maintain the
Purchased Assets in substantially the same manner as conducted during the period
from the Petition Date to the date hereof and to maintain the Purchased Assets
(to the extent such assets constitute tangible property) in good repair, subject
to normal wear and tear;
(b) pay any required filing, processing or other fee, and use
commercially reasonable efforts to maintain the validity of the Company's or the
Bankruptcy Estate's rights in, to or under any Intellectual Property;
(c) use commercially reasonable efforts to maintain the Equipment
included in the Purchased Assets in "idle" mode, so that chemicals and solvents
may continue to pass through such Equipment, and to continue to hold and
maintain such Equipment and any and all clean rooms or similar facilities
included in the Purchased Assets in the same manner and condition as such were
held and maintained at the inspection thereof conducted by Purchaser on or about
June 27, 2003;
(d) while a Contract is identified as an Assigned Contract on
Schedule 1.1(a)(i), not move the Bankruptcy Court to reject such Contract and
oppose any motion to compel rejection of such Contract;
(e) use commercially reasonable efforts to maintain all licenses and
permits of the Bankruptcy Estate, including those used in the operation of the
Business; and
(f) not do any of the following: (i) sell, encumber or otherwise
dispose of any of the Purchased Assets other than in the ordinary course of its
business consistent with past practices; (ii) amend the charter documents or
bylaws of the Company; or (iii) issue,
19
sell, redeem or acquire for value, or agree to do so, any of the capital stock
or debt obligations of the Company.
Section 5.5. Bankruptcy Court Approval.
(a) The Trustee shall use his commercially reasonable efforts to
have this Agreement and the transactions contemplated hereby approved by the
Bankruptcy Court in their entirety.
(b) The Trustee shall use his commercially reasonable efforts to
ensure that the Sale Order provides for all necessary and customary findings and
holdings, including: (i) each of the specific provisions that is a condition to
the Purchaser's obligations to close pursuant to Section 6.1(d); (ii) time is of
the essence and a prompt closing is necessary to preserve the value of the
Purchased Assets; and (iii) the ten day automatic stays under Bankruptcy Rules
6004(g) and 6006(d) are waived for cause (the "TEN DAY WAIVER").
(c) The Purchaser shall reasonably but promptly cooperate with the
Trustee in providing any information and evidence that may be reasonably
required to demonstrate to the Bankruptcy Court's satisfaction (i) the
Purchaser's good faith under section 363(m) of the Bankruptcy Code such that the
reversal or modification on appeal of the Sale Order shall not affect the
validity of the sale of the Purchased Assets as contemplated hereunder, and (ii)
adequate assurance of future performance of all Assigned Contracts to the extent
required pursuant to section 365(f)(2)(b) of the Bankruptcy Code.
Section 5.6. Further Assurances. At any time from and after the Closing
Date, at the Purchaser's expense, each of the Trustee and the Purchaser shall
promptly execute, acknowledge and deliver any other assurances or documents
reasonably requested by Purchaser or the Trustee, as the case may be, and
necessary for the Purchaser or the Trustee, as the case may be, to satisfy its
obligations hereunder or to obtain the benefits contemplated hereby and the
Trustee shall cooperate with Purchaser in connection with the disposition of the
Purchased Assets hereunder. In the event that Purchaser is unable to secure the
Trustee's signature on any document reasonably required by Purchaser relating to
the perfection of Purchaser's rights in or Purchaser's enforcement of its rights
under Intellectual Property, then, subject to the Purchaser obtaining approval
of the Court therefor, the Purchaser and its duly authorized officers and agents
shall be deemed designated and appointed as the agents and attorneys-in-fact to
act for and on behalf and instead of the Trustee, to execute and file any such
document and to do all other lawfully permitted acts to further the purposes of
the foregoing with the same legal force and effect as if executed by Trustee.
Section 5.7. Post-Closing Access to Information. The Purchaser and the
Trustee acknowledge that, subsequent to the Closing, each may need access to
information, documents or computer data in the control or possession of the
other, and the Trustee may need access to the Purchased Assets for purposes of
administering the Bankruptcy Estate, concluding the transactions contemplated
herein and for audits, investigations, compliance with governmental
requirements, regulations and requests, and the prosecution or defense of
third-party claims. Accordingly, the Purchaser agrees that, to the extent
permitted by applicable Law and subject to the terms hereof, at the sole cost
and expense of the Trustee, it will make available
20
to the Trustee and its agents, independent auditors and/or Governmental Entity
such documents and information as may be available relating to the Purchased
Assets in respect of periods prior to the Closing Date and will permit the
Trustee to make copies of such documents and information. The Trustee may not
assign this access right to any third party, without the Purchaser's written
consent which may be granted or withheld in the Purchaser's sole and absolute
discretion. Trustee agrees that, at the sole cost and expense of the Purchaser,
the Trustee will make available to the Purchaser and its agents, independent
auditors and/or Governmental Entity such documents and information as may be in
the possession of such the Trustee relating to the Purchased Assets in respect
of periods prior to the Closing Date and will permit the Purchaser to make
copies of such documents and information (provided that the foregoing shall not
apply to any Confidential Information). Without limiting the generality of the
foregoing, the Trustee will cooperate fully with the Purchaser from and after
the Closing Date to ensure that Schedule 1.1(a)(i) sets forth a complete list of
Assigned Contracts.
Section 5.8. Confidential Information. In the event that, notwithstanding
the terms of this Agreement, the Purchaser or any of the Purchaser's agents,
officers, directors, employees, principals, or partners receives Confidential
Information, the Purchaser shall promptly return any and all such Confidential
Information to the Trustee or shall destroy such Confidential Information and
shall promptly and fully indemnify the Trustee and the Bankruptcy Estate against
any loss, claim, liability, obligation, damage, assessment, judgment, cost and
expense (including, without limitation, reasonable attorneys', consultants' and
accountants' fees and costs and expenses reasonably incurred in investigating,
preparing, defending against or prosecuting any Actions or Proceeding or
settling any such Action or Proceeding (subject to the approval of the Purchaser
in its sole discretion)) with respect to any transfer to the Purchaser or any
use of or failure to destroy any Confidential Information by the Purchaser.
Section 5.9. Closing. The parties agree to use all commercially reasonable
efforts to ensure the satisfaction of the conditions set forth in Article VI so
as to enable the parties to effect the Closing on or prior to July 28, 2003 or,
in the event that the Sale Order does not contain the Ten Day Waiver, August 5,
2003.
Section 5.10. No Individual Liability. The Purchaser agrees that nothing
in this Agreement will impose or lead to personal liability on the part of the
Trustee or its agents, whether due to the representations and warranties made
herein or otherwise.
Section 5.11. Non-Purchased Assets. In the event that the Purchaser elects
to exclude any Contract from the Assigned Contracts in accordance with Section
2.3 hereof, then (a) the Purchaser shall indemnify the Bankruptcy Estate for (i)
the amount accrued under such Contract, if any, from the date of this Agreement
(or, in the case of a Later Discovered Contract, the date such Contract was
placed on Schedule 1.1(a)(i) to the date of rejection of such Contract (provided
that the Trustee uses commercially reasonable efforts to reject or move to
reject such Contract within five (5) Business Days of the date such Contract
becomes an Excluded Contract) and (ii) the amount of any recovery from the
collateral securing the claims of TCP and the Lenders to which the Trustee would
otherwise be entitled to under section 506(c) of the Bankruptcy Code for the
period between commencement of the Case and the date of this Agreement; in each
case provided that such amount shall first be determined by Final Order to be an
administrative expense of the Bankruptcy Estate; and (b) the Sale Order shall
provide that the
21
Purchaser may take any action and file any motions or other papers with respect
to the rejection of an Excluded Contract pursuant to the preceding Section
5.11(a) in place and in the name of the Trustee or that the Purchaser shall pay
the legal fees of the Trustee involved in any such rejection. To the extent that
the Trustee is unable to transfer any Equipment listed on Schedule 1.1(b)(ii) to
the Purchaser free and clear of all Liens, Claims and Interests, or to the
extent that the Sale Order does not permit such transfer, or with respect to any
Excluded Assets, in each case either because the holder of such Liens, Claims
and Interests objects to such transfer or for any other reason, then the Trustee
agrees that upon request from the Purchaser he shall use his commercially
reasonable efforts to provide the use and benefits of such assets to the
Purchaser pursuant to a lease or other alternate arrangement, and that the
Purchase Price shall be adjusted downward in an amount equal to the amount of
the Purchase Price allocated thereto in Section 2.7(c). Provided that the
Purchaser obtains the use and benefits of such assets pursuant to a lease or
other alternate arrangement, the adjustment to Purchase Price referenced in the
preceding sentence shall be the Purchaser's sole remedy in the event that the
Trustee is unable to transfer any of the Equipment listed on Schedule 1.1(b)(ii)
to the Purchaser free and clear of all Liens, Claims and Interests, or to the
extent that the Sale Order does not permit such transfer.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1. Conditions to Obligations of the Purchaser. The obligations
of the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction or waiver by the Purchaser in writing on or
prior to the Closing Date of each of the following conditions:
(a) Representations; Covenants. Each of the representations and
warranties of the Trustee contained in this Agreement shall be true and correct
when made in all respects and as of the Closing Date, and the Trustee shall have
performed in all material respects any covenant made by the Trustee under this
Agreement; provided that notwithstanding anything to the contrary contained in
this Agreement, the Purchaser's sole remedy if the Trustee fails to perform any
covenant hereunder in any material respect, or any representation or warranty of
the Trustee hereunder is incorrect, is to terminate this Agreement.
(b) No Injunction; Absence of Certain Litigation. No preliminary or
permanent injunction issued by any court of competent jurisdiction restraining,
prohibiting or staying the Sale Order or the transaction contemplated hereby
shall be in effect. No court or any other Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
or non-appealable judgment which prohibits the consummation of the Closing.
(c) Sale Order. The Bankruptcy Court shall have entered an order
approving this Agreement and the consummation of the transactions contemplated
hereby in their entirety (the "SALE ORDER") on or before July 25, 2003. In
addition, if the Sale Order does not contain the Ten Day Waiver then no stay of
the Sale Order shall have been entered by a court of competent jurisdiction on
or before August 5, 2003.
22
(d) Form of Sale Order. The Sale Order shall be in a form reasonably
acceptable to Purchaser approving the transactions contemplated hereby and the
terms and conditions of this Agreement, and it shall provide for all necessary
and customary findings and holdings, including at minimum the following: (i) the
Trustee has adequately marketed the Purchased Assets, and all interested
parties, potential bidders and parties who hold Liens, Claims or Interests in
the Purchased Assets have received proper and adequate notice of the sale in
accordance with the Bankruptcy Code and applicable orders of the Court,
including any bidding procedures order; (ii) the Trustee is authorized to
consummate the transactions contemplated under this Agreement and his decision
to do so is a proper exercise of his business and fiduciary duties; (iii) the
Purchaser's bid is the best offer for the Purchased Assets, the sale to the
Purchaser is in the best interests of the Bankruptcy Estate and its creditors
and provides the best reasonably achievable outcome therefor, and the terms of
this Agreement are fair and reasonable and provide fair value for the Purchased
Assets; (iv) except as provided herein, the Purchased Assets shall be sold free
and clear of (A) all Liens, Claims and Interests against the Bankruptcy Estate
and (B) any Lien, Claim or Interest in the Purchased Assets of an entity other
than the Bankruptcy Estate, but in both instances other than the Assumed
Liabilities, with such Liens, Claims and Interests to attach to the
consideration to be received by the Trustee in the same priority and subject to
the same defenses and avoidability, if any, as before the Closing, and the
Purchaser would not enter into this Agreement or purchase the Purchased Assets
otherwise; (v) the Trustee's assumption and assignment of the Contracts listed
on Schedule 1.1(a)(i) as of the date of this Agreement, is approved on the terms
provided in this Agreement, and the Purchaser has provided adequate assurances
of future performance thereunder; (vi) the Purchaser is a good faith purchaser
entitled to the protections afforded by Bankruptcy Code section 363(m) such that
the reversal or modification on appeal of the Sale Order shall not affect the
validity of the sale of the Purchased Assets as contemplated hereunder,
negotiations have been fair and arm's-length and no party has engaged in any
conduct that would cause the sale to be affected under Bankruptcy Code section
363(n); and (vii) the Purchaser shall have no obligations under any Liabilities
of the Company or the Bankruptcy Estate other than the Assumed Liabilities and
its obligations under this Agreement.
(e) Options. The Trustee shall have executed each of the Option
Agreements and granted each of the Options to the Option Holder, and the Stock
Certificates representing the capital stock of Read-Rite International,
Read-Rite (Thailand) Co., Ltd., Read-Rite (Malaysia) Sdn. Bhd., Read Rite
Holding and Sunward Technologies, along with stock powers as specified in
Section 2.9 herein shall have been delivered to Purchaser, all in accordance
with Section 2.9 herein. The Options shall be fully valid and exercisable in
accordance with their terms.
(f) Certificates. The Trustee shall have delivered to the Purchaser
a certificate of the Trustee certifying that the conditions set forth in this
Section 6.1 have been satisfied.
(g) Miscellaneous. No order shall have been entered in the Case
providing for the rejection of any Contract other than a Restricted Contract or
a Contract designated by the Purchaser as an Excluded Contract. The Trustee
shall not have abandoned or otherwise relinquished his or the Bankruptcy
Estate's interest in any material property designated
23
by the Purchaser as a Purchased Asset, other than assets disposed of or
abandoned in the ordinary course of business consistent with past practice.
Section 6.2. Conditions to Obligations of Trustee. The obligation of the
Trustee to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver in writing by the Trustee on or prior to
the Closing Date of each of the following conditions:
(a) Purchase Price. Trustee has received the portion of the Purchase
Price referred to in Sections 2.7(b) and (c) in cash.
(b) Representations; Covenants. Each of the representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct when made in all respects and as of the Closing Date, and the Purchaser
shall have performed in all material respects any covenant made by the Purchaser
under this Agreement; provided that notwithstanding anything to the contrary
contained in this Agreement, the Trustee's sole remedy if the Purchaser fails to
perform any covenant hereunder in any material respect, or any representation or
warranty of the Purchaser hereunder is incorrect, is to terminate this
Agreement.
(c) No Injunction; Absence of Certain Litigation. No preliminary or
permanent injunction issued by any court of competent jurisdiction restraining,
prohibiting or staying the Sale Order or the transaction contemplated hereby
shall be in effect.
(d) Payment of Cure Costs. At the Closing, the Purchaser shall have
paid or placed into escrow the cure costs (as determined by a Cure Finding) for
all Assigned Contracts listed on Schedule 1.1(a)(i) as of the Closing Date.
(e) Certificates. The Purchaser shall have delivered to the Trustee
a certificate of the Purchaser certifying that the conditions set forth in this
Section 6.2 have been satisfied.
(f) Sale Order. The Bankruptcy Court shall have entered the Sale
Order. If the Ten Day Waiver is not included in the Sale Order, no stay of the
Sale Order shall have been obtained before the eleventh day following entry of
the Sale Order.
ARTICLE VII
TERMINATION
Section 7.1. Termination. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) by mutual written consent of the Trustee and the Purchaser; or
24
(b) by Purchaser by written notice to the Trustee if any one or more
conditions to the obligations of Purchaser to consummate the transactions
contemplated by this Agreement as set forth in Section 6.1 have not been
satisfied by August 5, 2003;
(c) by Trustee by written notice to the Purchaser if any one or more
conditions to the obligations of the Trustee to consummate the transactions
contemplated by this Agreement as set forth in Section 6.2 have not been
satisfied by August 5, 2003;
(d) by the Purchaser or the Trustee if there has been a material
misrepresentation or material breach on the part of the other party in its
representations, warranties or covenants set forth herein that is not cured on
or before August 5, 2003.
Section 7.2. Notice of Termination. In the event of any termination
pursuant to this Article VII, written notice thereof setting forth the reasons
therefor shall promptly be given to the other parties and the transactions
contemplated by this Agreement shall be terminated, without further action by
any party.
Section 7.3. Abandonment. If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Article VII,
this Agreement shall become void and have no further force or effect, except for
the provisions regarding expenses and return of the Deposit. Notwithstanding the
preceding sentence, nothing in this Article VII shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.
Section 7.4. Deposit Refund. In the event this Agreement is terminated,
the Deposit shall be refunded to the Purchaser subject to any applicable right
of setoff or recoupment.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Purchase Price Allocation. Except with respect to the
Equipment specified in Schedule 1.1(b)(ii) (as to which the allocation of
consideration shall be the Equipment Price), the Purchaser shall determine, and
shall notify the Trustee of same within 15 days following the Closing Date, (i)
the amount of the total consideration transferred by the Purchaser in exchange
for the remaining Purchased Assets, which amount will consist of the Purchase
Price plus the amount of the Assumed Liabilities, and (ii) the allocation of
such total consideration among the remaining Purchased Assets and Assumed
Liabilities in accordance with their relative fair market values in the manner
required by section 1060 of the Code, the regulations thereunder and any
applicable provisions of any other Law. The Trustee shall notify the Purchaser
of any objection within 30 days following receipt of such allocation. In any
event, the allocation shall be agreed to between the parties by no later than 60
days after the Closing Date.
Section 8.2. Benefit; Risk of Loss. Upon consummation of the Closing, the
Purchaser will receive the benefits of the Purchased Assets and accrue the
obligations of the
25
Assumed Liabilities (including the Assigned Contracts), from and after 12:01
a.m. on the Closing Date and as of such time, the risk of loss of the Purchased
Assets shall be deemed transferred from the Bankruptcy Estate to the Purchaser.
Section 8.3. Survival of Representations and Warranties. Provided the
Closing occurs, the representations and warranties and the covenants required to
be performed prior to the Closing Date contained in this Agreement shall
terminate as of the Closing Date; provided that the representation of Purchaser
set forth in Section 4.2 shall survive until the twelve month anniversary of the
Closing Date. All covenants and indemnification obligations required to be
performed after the Closing Date shall survive the Closing Date.
Section 8.4. Amendment and Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Trustee and the Purchaser, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party or parties in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 8.5. Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the parties shall bear their own respective expenses (including,
but not limited to, all compensation and expenses of counsel, financial
advisors, consultants, actuaries and independent accountants) incurred in
connection with this Agreement and the transactions contemplated hereby.
Section 8.6. Assignment. This Agreement and the rights and obligations of
the parties hereunder shall not be assigned, delegated or otherwise transferred,
by the Purchaser or by the Trustee; provided, however, that the Purchaser may
assign its rights and obligations hereunder in whole or in part to an Affiliate
or a lender or other financing source of the Purchaser or to a party from whom
the Purchaser intends to lease the subject assets; provided that (i)
notwithstanding any such assignment the Purchaser shall remain liable for all
performance required under this Agreement, (ii) if the Purchaser assigns all of
its rights hereunder, such assignee shall assume all obligations of the
Purchaser hereunder and (iii) if the Purchaser assigns its purchase rights with
respect to a portion (but not all) of the Purchased Assets, then the Trustee's
sole obligation to the assignee shall be to convey title to such portion of the
Purchased Assets to such assignee on the Closing Date in the manner prescribed
by this Agreement, subject to satisfaction of all conditions expressly provided
in this Agreement, and such assignee shall not be deemed a beneficiary of, and
shall have no right to assert any other claim arising from, any other covenant,
representation or warranty of the Trustee under this Agreement, all such rights
being deemed reserved to the original named Purchaser hereunder. The Trustee
agrees to enter into such amendments to, or restatements of, this Agreement and
the exhibits hereto as may be reasonably required to give effect to this Section
8.6, so long as such amendments or restatements do not adversely affect the
rights of the Trustee hereunder or thereunder.
26
Section 8.7. Entire Agreement. This Agreement (including all Schedules
hereto) contains the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
Section 8.8. Fulfillment of Obligations. Any obligation of any party to
any other party under this Agreement, which obligation is performed, satisfied
or fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
Section 8.9. Parties in Interest; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
the Purchaser, the Trustee and the Bankruptcy Estate, or their successors or
permitted assigns, any rights or remedies under or by reason of this Agreement;
provided that in the event the Trustee declines to timely exercise any rights
hereunder, such rights may be exercised by TCP.
Section 8.10. Schedules. Each of the parties hereto shall (a) give prompt
notice to the other party of the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or warranty
by such party contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Closing Date and shall promptly deliver to
the other party an amended or supplemental Schedule to such representation or
warranty; and (b) give prompt notice to the other party of any failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder or under any Related Document;
provided, however, that the delivery of any notice pursuant to this Section 8.10
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice. No notification under this Section 8.10 shall be
deemed to cure any breach or default or event of default or render any
representation or warranty complete or accurate.
Section 8.11. Headings. The section and paragraph headings and table of
contents contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.
Section 8.12. Notices. Any notice required to be given to the Trustee
under this Agreement shall be furnished contemporaneously to TCP. All notices
hereunder shall be deemed given if in writing and delivered personally, sent by
facsimile (confirm receipt), by registered or certified mail (return receipt
requested) or nationally recognized overnight courier to the parties at the
following addresses (or at such other addresses as shall be specified by like
notice):
27
if to the Trustee:
Xxxxx X. Xxxxxxxx Xx., Esq.
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Facsimile: (925)
with a copy to:
Xxxxxx Xxxx, Esq.
Xxxxxx & Xxxx LLP
Embarcadero Center West
000 Xxxxxxx Xxxxxx, 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
plus
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxx Capital Partners, LLC
00000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
and
Xxx X. Xxxxxxxxx, Esq.
Klee, Tuchin, Xxxxxxxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
and
Xxxx X. Xxxxxx
Xxxxxxx XxXxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Direct Fax: (000) 000-0000
if to Purchaser:
RR(US) Acquisition Corporation
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000 fax
28
with a copy to:
Xxx Xxxxxx. Esq.
Western Digital Corporation
00000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000 fax
Xxxxxxxx X. Xxxxxx, Esq.
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Any notice given by mail shall be effective when received.
Section 8.13. No Strict Construction. Notwithstanding the fact that this
Agreement has been drafted or prepared in all or in part by one of the parties,
the parties confirm that both they and their respective counsel have reviewed,
negotiated and adopted this Agreement as the joint agreement and understanding
of the parties, and the language used in this Agreement shall be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction construing ambiguities against the draftsperson
shall be applied against any Person.
Section 8.14. General. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without reference to the
choice of law principles thereof. Venue and jurisdiction for any legal action
concerning this Agreement will be in the Bankruptcy Court. Time is of the
essence in respect of each and every term, covenant and agreement included in
this Agreement. This Agreement and any amendments hereto may be executed by
facsimile and in one or more counterparts, each of which shall be deemed to be
an original by the parties executing such counterpart, but all of which shall be
considered one and the same instrument.
Section 8.15. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or part thereof, not essential to the commercial
purpose of this Agreement, or the application thereof to any person or entity or
any circumstance, is illegal, invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability.
Section 8.16. Indemnification for Breach of Section 4.2. Purchaser shall
indemnify and hold harmless the Trustee from and against any liability with
respect to a breach of Purchaser's representation in Section 4.2.
29
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as of the date first written above.
THE TRUSTEE:
XXXXX X. XXXXXXXX, XX.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
--------------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Trustee
THE PURCHASER:
RR(US) ACQUISITION CORPORATION
By: /s/ D. Xxxxx Xxxxxx
--------------------------------------
Name: D. Xxxxx Xxxxxx
Title: Authorized Representative
The undersigned, as primary obligor and not as surety, hereby irrevocably,
independently and unconditionally (a) guarantees to the Trustee (i) the due and
punctual payment of each payment required to be made by Purchaser under the
Asset Purchase Agreement including, without limitation, indemnities, fees, costs
and expenses, whether primary, secondary, direct, contingent, fixed or otherwise
of Purchaser thereunder, and (ii) the due and punctual performance and
observance of, and compliance with, all covenants, agreements and obligations of
Purchaser (all such obligations referred to in clauses (i) and (ii) being
collectively referred to as the "GUARANTEED OBLIGATIONS"); and (b) indemnifies
and holds the Trustee harmless for any and all costs and out-of-pocket expenses
(including reasonable attorney's fees, expenses and disbursements) incurred by
the Trustee in enforcing any rights under this Guaranty. This Guaranty is, and
shall be construed to be, an absolute, unlimited and continuing guaranty of
payment and performance of the Guarantied Obligations when due, and not of
collectibility. This Guaranty is not conditioned or contingent upon the Trustee
proceeding first against Purchaser, or any other potentially liable party, to
enforce its obligations under the Asset Purchase Agreement or seeking to enforce
any other right or remedy to which the Trustee is or may be entitled under or in
connection with the Asset Purchase Agreement, and the Trustee shall not be
required to take any actions or proceedings of any kind against Purchaser or any
other potentially liable party for the Guaranteed Obligations. For purposes of
this Guaranty, all sums owing by Purchaser shall be deemed to have become
immediately due and payable hereunder at the same time such sums become due and
payable under the Asset Purchase Agreement. The obligations of Guarantor set
forth in this Guaranty shall not be released, discharged or in any way affected
(in whole or in part) by any of the following: (i) any amendment or modification
to
the Guaranteed Obligations or the Asset Purchase Agreement; (ii) any lack of
validity, legality or enforceability of the Asset Purchase Agreement; provided,
that any such provision that is invalid, illegal or unenforceable, or any such
provision that is rendered invalid, illegal or unenforceable by any such
provision, shall not constitute a Guaranteed Obligation; (iii) any material
change in the time, manner or place of payment or performance of, or in any
other term of, any or all of the Guaranteed Obligations, or any other extension,
compromise or renewal of any Guaranteed Obligation; (iv) any voluntary or
involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation, dissolution, winding up or similar proceeding with
respect to Purchaser. In addition to the foregoing, the Trustee shall have the
right, from time to time and at any time, in its sole discretion and without any
notice to or consent from Guarantor, and without affecting, impairing or
discharging, in whole or in part, the liability of Guarantor hereunder, to grant
extensions of time and other indulgences of any kind to Purchaser, and to
compromise, release, substitute, exercise, enforce or fail or refuse to exercise
or enforce any claims, rights or remedies of any kind which the Trustee may
have, at any time, against Purchaser or the Guarantor, endorser or other party
liable for Purchaser's debts or any collateral thereof, whether under the Asset
Purchase Agreement, this Guaranty or otherwise. The Guarantor hereby waives (i)
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Guaranteed Obligations and this Guaranty and (ii) any requirement
that the Trustee protect, secure, perfect or insure any security interest or
lien (if any), or any property subject thereto, or exhaust any right or take any
action against the Trustee or any other Person (including any other guarantor)
or any collateral (if any) securing the payment and performance of any
Guaranteed Obligations.
WESTERN DIGITAL CORPORATION
By: /s/ D. Xxxxx Xxxxxx
--------------------------------------
Name: D. Xxxxx Xxxxxx
Title: Authorized Representative
-2-
Exhibit A - Options Agreements
OPTION AGREEMENT
This option (this "OPTION") is issued on July __, 2003, by XXXXX X.
XXXXXXXX, XX., in his capacity as TRUSTEE for the Bankruptcy Estate of READ-RITE
CORPORATION, a Delaware corporation (the "TRUSTEE"), to WESTERN DIGITAL
(FREMONT), INC., a Delaware corporation formerly known as RR(US) ACQUISITION
CORPORATION, (WESTERN DIGITAL (FREMONT), INC. and any subsequent assignee or
transferee hereof are hereinafter referred to collectively as "OPTION HOLDER" or
"OPTION HOLDERS").
Reference is made to that certain Asset Purchase Agreement, dated as of
July __, 2003, by and between Trustee and RR(US) Acquisition Corporation (the
"ASSET PURCHASE AGREEMENT"). Capitalized terms used but not defined herein shall
have the meaning given such terms in the Asset Purchase Agreement. As an
inducement to Option Holder to enter into the Asset Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Trustee hereby grants to Option Holder the right to
purchase, at any time after the date hereof and on or before 5:00pm PST on the
180th day following the Closing, 101 ordinary shares of Read-Rite International,
a Cayman Islands corporation ("READ-RITE INTERNATIONAL"), representing all of
the outstanding capital stock of Read-Rite International. The exercise price to
be paid by Option Holder to exercise this Option is $1.00.
This Option will be deemed to have been exercised immediately prior to the
close of business on the date of its surrender by Option Holder to the Trustee
for exercise, along with payment of the exercise price by cash or check, all
delivered to the Trustee at the address for the Trustee as set forth in the
Asset Purchase Agreement. The Option Holder, upon exercise of this Option, will
be treated for all purposes as the holder of record of such shares as of the
close of business on the date the Option Holder is deemed to have exercised this
Option.
This Option may be transferred, in whole or in part to any person or
business entity by presentation of this Option to the Trustee with written
instructions for such transfer. Upon such presentation for transfer, the Trustee
shall promptly execute and deliver a new option or options in the form hereof in
the name of the transferee or transferees and in the denominations specified in
such instructions. Upon receipt by the Trustee of evidence reasonably
satisfactory to him of the loss, theft or destruction of this Option, and of
indemnity or security reasonably satisfactory to him, or upon surrender of this
Option if mutilated, the Trustee will make and deliver a new option of like
tenor, in lieu of this Option. This Option shall be promptly canceled by the
Trustee upon the surrender hereof in connection with any transfer or
replacement.
The Trustee will not avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Trustee, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such action as may be necessary or
appropriate in order to protect the Option Holder's rights under this Option
against impairment. Without limiting the foregoing, the Trustee shall not cause
Read-Rite International to take any of the following actions without the prior
written consent of Option Holder: (i) sell, encumber or otherwise dispose of any
its assets other than in the ordinary course
1
of its business consistent with past practices; or (ii) amend its charter
documents or bylaws; or (iii) issue, sell, redeem or acquire for value, or agree
to do so, any of its capital stock or debt obligations; or (iv) agree to or make
any commitment to take any actions prohibited by this paragraph.
This Option shall be governed by, and construed in accordance with, the
laws of the State of California without reference to the choice of law
principles thereof. Venue and jurisdiction for any legal action concerning this
Option will be in the Bankruptcy Court.
[Remainder of Page Intentionally Left Blank]
2
IN WITNESS WHEREOF, the Trustee has caused this Option to be duly executed
as of the day and year first written above.
TRUSTEE:
----------------------------------------
XXXXX X. XXXXXXXX, XX.
3
OPTION AGREEMENT
This option (this "OPTION") is issued on July __, 2003, by XXXXX X.
XXXXXXXX, XX., in his capacity as TRUSTEE for the Bankruptcy Estate of READ-RITE
CORPORATION, a Delaware corporation (the "TRUSTEE"), to WESTERN DIGITAL
(FREMONT), INC., a Delaware corporation formerly known as RR(US) ACQUISITION
CORPORATION, (WESTERN DIGITAL (FREMONT), INC. and any subsequent assignee or
transferee hereof are hereinafter referred to collectively as "OPTION HOLDER" or
"OPTION HOLDERS").
Reference is made to that certain Asset Purchase Agreement, dated as of
July __, 2003, by and between Trustee and RR(US) Acquisition Corporation (the
"ASSET PURCHASE AGREEMENT"). Capitalized terms used but not defined herein shall
have the meaning given such terms in the Asset Purchase Agreement. As an
inducement to Option Holder to enter into the Asset Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Trustee hereby grants to Option Holder the right to
purchase, at any time after the date hereof and on or before 5:00pm PST on the
one year anniversary of the Closing, ______ shares of the _________ of Sunward
Technologies International, a Hong Kong company ("SUNWARD TECHNOLOGIES"),
representing all of the outstanding capital stock of Sunward Technologies. The
exercise price to be paid by Option Holder to exercise this Option is $1.00.
This Option will be deemed to have been exercised immediately prior to the
close of business on the date of its surrender by Option Holder to the Trustee
for exercise, along with payment of the exercise price by cash or check, all
delivered to the Trustee at the address for the Trustee as set forth in the
Asset Purchase Agreement. The Option Holder, upon exercise of this Option, will
be treated for all purposes as the holder of record of such shares as of the
close of business on the date the Option Holder is deemed to have exercised this
Option.
This Option may be transferred, in whole or in part to any person or
business entity by presentation of this Option to the Trustee with written
instructions for such transfer. Upon such presentation for transfer, the Trustee
shall promptly execute and deliver a new option or options in the form hereof in
the name of the transferee or transferees and in the denominations specified in
such instructions. Upon receipt by the Trustee of evidence reasonably
satisfactory to him of the loss, theft or destruction of this Option, and of
indemnity or security reasonably satisfactory to him, or upon surrender of this
Option if mutilated, the Trustee will make and deliver a new option of like
tenor, in lieu of this Option. This Option shall be promptly canceled by the
Trustee upon the surrender hereof in connection with any transfer or
replacement.
The Trustee will not avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Trustee, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such action as may be necessary or
appropriate in order to protect the Option Holder's rights under this Option
against impairment. Without limiting the foregoing, the Trustee shall not cause
Sunward Technologies to take any of the following actions without the prior
written consent of Option Holder: (i) sell, encumber or otherwise dispose of any
its assets other than in the ordinary course of its business consistent with
past practices; or (ii) amend its charter documents or bylaws; or (iii) issue,
sell, redeem or acquire for value, or agree to do so, any of its capital stock
or debt
1
obligations; or (iv) agree to or make any commitment to take any actions
prohibited by this paragraph.
This Option shall be governed by, and construed in accordance with, the
laws of the State of California without reference to the choice of law
principles thereof. Venue and jurisdiction for any legal action concerning this
Option will be in the Bankruptcy Court.
[Remainder of Page Intentionally Left Blank]
2
IN WITNESS WHEREOF, the Trustee has caused this Option to be duly executed
as of the day and year first written above.
TRUSTEE:
----------------------------------------
XXXXX X. XXXXXXXX, XX.
3
OPTION AGREEMENT
This option (this "OPTION") is issued on July __, 2003, by XXXXX X.
XXXXXXXX, XX., in his capacity as TRUSTEE for the Bankruptcy Estate of READ-RITE
CORPORATION, a Delaware corporation (the "TRUSTEE"), to WESTERN DIGITAL
(FREMONT), INC., a Delaware corporation formerly known as RR(US) ACQUISITION
CORPORATION, (WESTERN DIGITAL (FREMONT), INC. and any subsequent assignee or
transferee hereof are hereinafter referred to collectively as "OPTION HOLDER" or
"OPTION HOLDERS").
Reference is made to that certain Asset Purchase Agreement, dated as of
July __, 2003, by and between Trustee and RR(US) Acquisition Corporation (the
"ASSET PURCHASE AGREEMENT"). Capitalized terms used but not defined herein shall
have the meaning given such terms in the Asset Purchase Agreement. As an
inducement to Option Holder to enter into the Asset Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Trustee hereby grants to Option Holder the right to
purchase, at any time after the date hereof and on or before 5:00pm PST on the
one year anniversary of the Closing, 100 shares of the common stock of Read Rite
Holding Company, a Delaware corporation ("READ RITE HOLDING"), representing all
of the outstanding capital stock of Read Rite Holding. The exercise price to be
paid by Option Holder to exercise this Option is $1.00.
This Option will be deemed to have been exercised immediately prior to the
close of business on the date of its surrender by Option Holder to the Trustee
for exercise, along with payment of the exercise price by cash or check, all
delivered to the Trustee at the address for the Trustee as set forth in the
Asset Purchase Agreement. The Option Holder, upon exercise of this Option, will
be treated for all purposes as the holder of record of such shares as of the
close of business on the date the Option Holder is deemed to have exercised this
Option.
This Option may be transferred, in whole or in part to any person or
business entity by presentation of this Option to the Trustee with written
instructions for such transfer. Upon such presentation for transfer, the Trustee
shall promptly execute and deliver a new option or options in the form hereof in
the name of the transferee or transferees and in the denominations specified in
such instructions. Upon receipt by the Trustee of evidence reasonably
satisfactory to him of the loss, theft or destruction of this Option, and of
indemnity or security reasonably satisfactory to him, or upon surrender of this
Option if mutilated, the Trustee will make and deliver a new option of like
tenor, in lieu of this Option. This Option shall be promptly canceled by the
Trustee upon the surrender hereof in connection with any transfer or
replacement.
The Trustee will not avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Trustee, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such action as may be necessary or
appropriate in order to protect the Option Holder's rights under this Option
against impairment. Without limiting the foregoing, the Trustee shall not cause
Read Rite Holding to take any of the following actions without the prior written
consent of Option Holder: (i) sell, encumber or otherwise dispose of any its
assets other than in the ordinary course of its business consistent with past
practices; or (ii) amend its charter documents or bylaws; or (iii) issue, sell,
redeem or acquire for value, or agree to do so, any of its capital stock or debt
1
obligations; or (iv) agree to or make any commitment to take any actions
prohibited by this paragraph.
This Option shall be governed by, and construed in accordance with, the
laws of the State of California without reference to the choice of law
principles thereof. Venue and jurisdiction for any legal action concerning this
Option will be in the Bankruptcy Court.
[Remainder of Page Intentionally Left Blank]
2
IN WITNESS WHEREOF, the Trustee has caused this Option to be duly executed
as of the day and year first written above.
TRUSTEE:
----------------------------------------
XXXXX X. XXXXXXXX, XX.
3
