EXHIBIT 2.1
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EXECUTION VERSION
ASSET PURCHASE AGREEMENT
BY AND AMONG
PRESSTEK, INC.,
SILVER ACQUISITIONS CORP.,
PARAGON CORPORATE HOLDINGS, INC.,
A.B. DICK COMPANY,
INTERACTIVE MEDIA GROUP, INC.
AND
A.B. DICK COMPANY OF CANADA, LTD.
DATED AS OF JULY 13, 2004
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "AGREEMENT") is entered into as of
July 13, 2004, by and among Presstek, Inc., a Delaware corporation ("PLATINUM"),
Silver Acquisitions Corp., a Delaware corporation ("Purchaser"), Paragon
Corporate Holdings, Inc., a Delaware corporation ("PARENT"), A.B. Dick Company,
a Delaware corporation and a wholly-owned subsidiary of Parent ("SELLER"), A.B.
Dick Company of Canada, Ltd., a Canada corporation and wholly-owned subsidiary
of Seller ("CANADA SUB") and Interactive Media Group, Inc., an Ohio corporation
and a wholly-owned subsidiary of Parent ("IMG" and together with Canada Sub and
Seller, the "Sellers"). Platinum, Purchaser, Parent and the Sellers may be
referred to herein individually as a "PARTY" or collectively as the "PARTIES."
RECITALS
WHEREAS, Seller expects to file, pursuant to the terms of this
Agreement, in the United States Bankruptcy Court for the District of Delaware
(the "BANKRUPTCY COURT"), a petition in bankruptcy under Chapter 11 of the
Bankruptcy Code (as hereinafter defined);
WHEREAS, the Sellers currently wish to sell, transfer, convey, assign
and deliver to Purchaser, in accordance with Sections 363 and 365 and the other
applicable provisions of the Bankruptcy Code, all of the Assets (as hereinafter
defined), together with the Assumed Liabilities (as hereinafter defined), of
Seller upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Purchaser wishes to purchase and take delivery of such Assets
and Assumed Liabilities upon such terms and subject to such conditions; and
WHEREAS, the Parties expect that the Assets will be sold pursuant to a
Sale Order (as hereinafter defined) of the Bankruptcy Court approving such sale
under Section 363 of the Bankruptcy Code and such Sale Order will include the
assumption and assignment of certain executory contracts, unexpired leases and
liabilities thereunder under Section 365 of the Bankruptcy Code and the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS AND USAGE OF CERTAIN TERMS
1.1 Definitions. For purposes of this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1:
"ACCOUNTS RECEIVABLE" means (i) all trade accounts receivable and other
rights to payment from customers of Seller or its Subsidiaries and the full
benefit of all security for such accounts or rights to payment, including all
trade accounts receivable representing amounts receivable in respect of goods
shipped or products sold or services rendered to customers of Seller or its
Subsidiaries, and (ii) all other accounts or notes receivable of Seller or its
Subsidiaries and the full benefit of all security for such accounts or notes,
and (iii) any claim, remedy or other right related to any of the foregoing.
"AFFILIATE" means with respect to any Person, any Person which directly
or indirectly, Controls, is Controlled by, or is under common Control with, such
Person.
"ANCILLARY AGREEMENTS" means either of or both the "Seller Ancillary
Agreements" and the "Platinum Ancillary Agreements" as the context requires.
"BANKRUPTCY ACTION" means the occurrence of any of the following events
with respect to any Seller: (i) the appointment of a receiver, trustee or
liquidator for all or a substantial part of its assets; (ii) the making of a
general assignment for the benefit of creditors; (iii) the filing of any
petition or commencement of any proceeding for any relief under any bankruptcy
or insolvency laws, or any laws relating to the relief of debtors, readjustment
of indebtedness, reorganizations, compositions, or extensions; or (iv) the
filing against it of any petition or the commencement of any proceeding against
it for any relief under any bankruptcy or insolvency laws, or any laws relating
to the relief of debtors, readjustment of indebtedness, reorganizations,
compositions or extensions.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Section 101, et seq., as amended, or any successor thereto, and any rules and
regulations promulgated thereunder.
"BANKRUPTCY COURT" has the meaning set forth in the preface above.
"BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure, as
amended, or any successor rules.
"BREACH" means any breach of, or any inaccuracy in, any representation
or warranty or any breach of, or failure to perform or comply with, any covenant
or obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"BUSINESS" means the business conducted by the Sellers on the date
hereof.
"BUSINESS DAY" means any day other than (i) Saturday or Sunday or (ii)
any other day on which banks in New York, New York are permitted or required to
be closed.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Service, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
reasonably acceptable to the DIP Lenders) and not listed in Credit Watch
published by Standard & Poor's Corporation; (iii) commercial paper, other than
commercial paper issued by the Seller or its Subsidiaries, maturing no more than
ninety (90) days after the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 or P-1 from either Standard &
Poor's Corporation or Xxxxx'x Investors Service, Inc. (or, if at any time
neither Standard & Poor's Corporation nor Xxxxx'x Investors Service, Inc. shall
be rating such obligations, then the highest rating; from such other nationally
recognized rating services reasonably acceptable to the DIP Lenders); (iv)
domestic and Eurodollar certificates of deposit or time deposits or bankers'
acceptances maturing within ninety (90) days after the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or Canada
having combined capital and surplus of not less than $500,000,000; (v)
repurchase obligations of the type referred to in clauses (i) through (iv)
above; and (vi) money market
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and mutual funds substantially all of whose assets are comprised of securities
of the types described in clauses (i) through (v) above and cash.
"CHAPTER 11 CASE" means the voluntary case which will be commenced by
Seller under Chapter 11 of the Bankruptcy Code pursuant to this agreement and
the Bankruptcy Court.
"CLOSING DATE" means the date on which the Closing actually takes
place.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPETING BID" has the meaning set forth in Section 8.3(c) hereof.
"COMPETING BIDDER" has the meaning set forth in Section 8.3(c) hereof.
"CONFIDENTIAL INFORMATION" means any and all of the following
information of Seller or its Subsidiaries, Parent, Purchaser or Platinum that
has been or may hereafter be disclosed in any form, whether in writing, orally,
electronically, or otherwise, or otherwise made available by observation,
inspection or otherwise by either party (Purchaser and Platinum on the one hand
or Seller and Parent collectively on the other hand) or its representatives
(collectively, a "DISCLOSING PARTY") to the other party or its representatives
(collectively, a "RECEIVING PARTY"):
(a) all information that is a trade secret under applicable
trade secret or other law;
(b) all information concerning product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current, and planned
research and development, current and planned manufacturing or distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer hardware,
software and computer software and database technologies, systems, structures
and architectures;
(c) all information concerning the business and affairs of the
Disclosing Party (which includes historical and current financial statements,
financial projections and budgets, tax returns and accountants' materials,
historical, current and projected sales, capital spending budgets and plans,
business plans, strategic plans, marketing and advertising plans, publications,
client and customer lists and files, Contracts, the names and backgrounds of key
personnel, and personnel training techniques and materials, however documented),
and all information obtained from review of the Disclosing Party's documents or
property or discussions with the Disclosing Party regardless of the form of the
communication; and
(d) all notes, analyses, complications, studies, summaries,
and other material prepared by the Receiving Party to the extent containing or
based, in whole or in part, on any information included in the foregoing.
"CONTRACT" means, with respect to any Person, any written agreement,
contract, subcontract, lease, license, sublicense, understanding, arrangement,
instrument, note, guaranty, indemnity, representation, warranty, deed,
assignment, power of attorney, purchase order, work order, commitment, covenant,
obligation, promise or undertaking of any nature to which such Person is a party
or by which its properties or assets may be bound.
"CONTROL" (including with correlative meaning, Controlled by and under
common Control with) shall mean, with respect to any Person, the possession,
directly or indirectly, of the power to direct or
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cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by Contract or otherwise.
"DIP FINANCING" means that certain $7,000,000 senior secured loan
facility dated July 13, 2004 between Seller as borrower and KeyBank, N.A. as
agent for the DIP Lenders.
"DIP LENDERS" means KeyBank, N.A. and Platinum.
"EFFECTIVE TIME" means 11:59 p.m. on the Closing Date.
"ENCUMBRANCE" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest,
mortgage, right of way, easement, encroachment, servitude, right of first
option, right of first refusal or similar restriction, including any restriction
on use, voting (in the case of any security or equity interest), transfer,
receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwaters, drinking
water supply, stream sediments, ambient air (including indoor air), plant and
animal life, and any other environmental medium or natural resource.
"ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
any Environmental Law or Occupational Safety and Health Law, which either
results from a notice or claim by a Governmental Authority or other Third Party
or application of any Environmental Law or Occupational Safety and Health Law,
including those consisting of or relating to:
(a) any environmental, health, or safety matter or condition (including
on-site or off-site contamination, safety and health matters, and regulation of
chemical substances or products);
(b) fine, penalty, judgment, award, settlement, legal or administrative
proceeding, damage, loss, claim, demand or response, remedial, or inspection
cost or expense arising under any Environmental Law or Occupational Safety and
Health Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment, or other remediation or response
actions ("CLEANUP") required by any Environmental Law or Occupational Safety and
Health Law and for any natural resource damages; or
(d) any other compliance, corrective, or remedial measures required
under any Environmental Law or Occupational Safety and Health Law.
The terms "REMOVAL," "REMEDIAL," and "RESPONSE ACTION" include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA") and "remediation standard" means a numerical standard that
defines the concentrations of Hazardous Materials that are permitted to remain
without liability in any environmental media after completion of all
investigation, remediation and/or containment of a release of Hazardous
Materials.
"ENVIRONMENTAL LAW" means any applicable environmental or health and
safety related Legal Requirement, including those requiring or relating to:
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(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or Hazardous Materials, violations of
discharge limits, or other prohibitions and the commencements of activities,
such as resource extraction or construction, that could have significant impact
on the Environment;
(b) preventing or reducing to acceptable levels the release of
Hazardous Materials into the Environment, including such discharges, emissions
and releases under permits and licenses issued by a Governmental Authority;
(c) reducing the quantities, preventing the discharge, emission or
release, or minimizing the hazardous characteristics of wastes that are
generated and complying with waste disposal and recycling requirements;
(d) assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) assuring that any Hazardous Materials are properly containerized,
used and stored;
(f) protecting resources, species, or ecological amenities;
(g) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(h) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(i) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting self
appointed representatives of the public interest to recover for injuries done to
public assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any entity which is a member of: (i) a
"controlled group of corporations", as defined in Section 414(b) of the Code;
(ii) a group of entities under "common control", as defined in Section 414(c) of
the Code; or (iii) an "affiliated service group", as defined in Section 414(m)
of the Code, or treasury regulations promulgated under Section 414(o) of the
Code, any of which includes Seller or any Subsidiary of Seller.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FACILITIES" means any real property, leasehold or other interest in
real property currently owned or operated by any Person including the Tangible
Personal Property currently being used or operated by Seller or its Subsidiaries
at the respective locations of the Real Property specified in Section 3.13.
Notwithstanding the foregoing, for purposes of Sections 3.24 and 11.6,
"FACILITIES" shall mean any real property, leasehold or other interest in real
property currently or formerly owned or operated by Seller or its Subsidiaries,
including the Real Property and Tangible Personal Property being used or
operated by Seller or its Subsidiaries at the respective locations of the Real
Property specified in Section 3.13.
"FINAL ORDER" shall mean an order or judgment, the operation or effect
of which is not stayed, and as to which order or judgment (or any revision,
modification or amendment thereof), the time to
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appeal or seek review or rehearing has expired, and as to which no appeal or
petition for review or motion for reargument has been taken or been made and is
pending for argument.
"GAAP" means U.S. generally accepted accounting principles, applied on
a consistent basis from period to period.
"GOVERNMENTAL AUTHORITY" means any: (a) nation, state, commonwealth,
province, territory, county, municipality or district; (b) federal, state,
local, municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any governmental division,
department, agency, commission, instrumentality, official, organization, unit,
body or entity and any court or other tribunal).
"GOVERNMENTAL AUTHORIZATION" any approval, consent, ratification,
waiver, license, permit or authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Authority or
pursuant to any Legal Requirement.
"GROUND LEASE" means any long term lease of land in which most of the
rights and benefits comprising ownership of the land and the improvements
thereon or to be constructed thereon, if any, are transferred to the tenant for
the term thereof.
"GROUND LEASE PROPERTY" means any land, improvements and appurtenances
subject to a Ground Lease in favor of Seller or its Subsidiaries.
"INVENTORIES" all inventories of the Seller or its Subsidiaries,
wherever located, including all finished goods, work in process, raw materials,
spare parts and all other materials and supplies to be used or consumed by
Seller or its Subsidiaries in the production of finished goods.
"INVESTMENT" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (ii) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (iii) any direct or indirect loan, advance (other than prepaid expenses,
accounts receivable, advances to employees and similar items made or incurred in
the ordinary course of business as presently conducted) or capital contribution
by that Person to any other Person, including all indebtedness to such Person
arising from a sale of property by such Person other than in the ordinary course
of its business. The amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto less the amount of any return
of capital or principal to the extent such return is in cash with respect to
such Investment without any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such Investment.
"KNOWLEDGE" when used with respect to any entity, means the actual
knowledge of the directors and executive officers of such entity after due
inquiry, and when used with respect to Seller shall also mean the actual
knowledge of the directors and officers of Parent after due inquiry and when
used with respect to Purchaser, shall also mean the actual knowledge of the
executive officers of Platinum after due inquiry.
"LAND" means all parcels and tracts of land in which Seller or any of
its Subsidiary has an ownership interest.
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"LEASE" means any Real Property Lease or any lease or rental agreement,
license, right to use or installment and conditional sale agreement to which
Seller or any Subsidiary is a party and any other Seller Contract pertaining to
the leasing or use of any Tangible Personal Property.
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational, or other constitution, law, ordinance,
by-law, principle of common law, regulation, statute, or treaty.
"LIABILITY" with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person.
"LIMITED" means A.B.Dick UK Limited, a wholly-owned subsidiary of
Seller organized in the United Kingdom.
"MATERIAL ADVERSE EFFECT" means
(a) if Seller shall fail to recognize a minimum of (i)
$8,200,000 in revenue from its U.S. operations (or $11,000,000 on a
consolidated basis) for the month of July, 2004, (ii) $8,750,000 in
revenue from its U.S. operations (or $11,500,000 on a consolidated
basis) for the month of August, 2004 and (iii) $9,750,000 in revenue
from its U.S. operations (or $12,750,000 on a consolidated basis) for
the month of September, 2004, measured in each case in accordance with
GAAP; but excluding in each case any "Material Adverse Effect" arising
from or related to the outbreak of civil unrest, hostilities, terrorist
activities, or war (whether or not formally declared) which causes, in
a measurable manner, the Material Adverse Effect, or
(b) any inability of the Seller to transfer to the Purchaser,
and the Purchaser to acquire, the Assets, or
(c) any material increase or other material adverse change in
the nature of the Assumed Liabilities, taken as a whole.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, including the Occupational Safety and
Health Act, and any program, whether governmental or private (such as those
promulgated or sponsored by industry associations and insurance companies),
designed to provide safe and healthful working conditions.
"ORDER" any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Authority or arbitrator.
"PERMITTED ENCUMBRANCE" means the encumbrances identified on Section
2.1 of the Seller Disclosure Schedule, together with the following: (i) any
liens of mechanics, suppliers, vendors, materialmen, laborers, employees,
repairmen and other like liens arising in the ordinary course of Seller's
business securing obligations which are not due and payable or the amount or
validity of which is being contested in good faith by appropriate proceedings if
and to the extent that an adequate reserve shall have been made therefor on
Seller' balance sheet; (ii) liens incurred or deposits to secure the performance
of surety and appeal bonds, bids, leases, performance and return money bonds and
similar obligations, in
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each case in the ordinary course of business, consistent with past practice as
and to the extent that adequate reserves have been made therefor on Seller'
balance sheet; (iii) purchase money liens incurred in the ordinary course of
business, consistent with past practice as and to the extent that adequate
reserves have been made therefor on Seller' balance sheet; and (iv) with respect
to Real Property, privileges, easements, rights of way, licenses, covenants,
zoning and other restrictions of record, which individually or in the aggregate,
do not affect the current uses or marketability of the Real Property.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or any
government or any agency or political subdivision thereof.
"PETITION DATE" means the date on which the Seller files the Chapter 11
Case.
"PROCEEDING" any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private).
"REAL PROPERTY" means the Land and improvements and all appurtenances
thereto and any Ground Lease Property.
"REAL PROPERTY LEASE" means any Ground Lease or Space Lease.
"RECORD" means any information that is inscribed on a tangible medium
or that is stored in an electronic or other medium and is retrievable in
perceivable form.
"RELEASE" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing, or
dumping into the Environment.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of capital stock of,
partnership interest of or other equity interest of Seller or its Subsidiaries
now or hereafter outstanding (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of capital stock of, partnership interest of or other
equity interest of, Seller or its Subsidiaries now or hereafter outstanding,
(iii) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to, any permitted subordinated indebtedness, (iv) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of capital stock of, partnership interest of or other equity
interest of, Seller or its Subsidiaries now or hereafter outstanding, or (v) any
other payment or distribution made by Sellers to Parent or to another Affiliate
of Sellers (other than inter-company loans permitted under the DIP Financing).
"SALE ORDER" shall mean one or more orders of the Bankruptcy Court, in
form and substance reasonably satisfactory to Platinum, and Purchaser and
consistent with the terms of this Agreement, (i) authorizing the sale of the
Assets to Purchaser, free and clear of any and all Liens, (ii) finding that
Purchaser is a good faith purchaser of the Assets under Section 363(m) of the
Bankruptcy Code and that the provisions of Section 363(n) of the Bankruptcy Code
have not been violated, (iii) approving the assignment to and assumption by
Purchaser of the Assumed Contracts and declaring that all Assumed Contracts are
valid and binding and in full force and effect, (iv) determining that Purchaser
is not a successor to Seller or otherwise liable for any of the Retained
Liabilities or Excluded Assets and
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permanently enjoining each and every holder of any of the Retained Liabilities
or Excluded Assets from commencing, continuing or otherwise pursuing or
enforcing any remedy, claim, cause of action or encumbrance against Purchaser or
the Purchased Assets related thereto, and (v) the consummation of the
transactions contemplated herein.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES LAWS" means the Securities Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC and any other Governmental Authority promulgated
thereunder.
"SEC" means the United States Securities and Exchange Commission.
"SELLER CONTRACT" means any Contract: (a) to which Seller or its
Subsidiaries is a party; or (b) by which Seller or its Subsidiaries or any of
their assets is bound or subject to any obligation.
"SELLER DISCLOSURE SCHEDULE" means that Disclosure Schedule dated as of
the date hereof and provided by Parent and Seller to Platinum and Purchaser
simultaneously with the execution and delivery of this Agreement.
"SPACE LEASE" means any lease or rental agreement pertaining to the
occupancy of any improved space on any Land.
"SECURITIES" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or any certificates of interest, shares,
or participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the DIP Financing.
"SELLER EMPLOYEE PLANS" means, collectively, (i) each "employee benefit
plan", as defined in Section 3(3) of ERISA; and (ii) all other written or formal
plans, enforceable policies or practices or Contracts involving direct or
indirect compensation or benefits (including any employment Contracts entered
into between Seller or any Subsidiary of Seller and any employee of Seller or
any Subsidiary of Seller) currently or previously maintained, contributed to or
entered into by Seller or any Subsidiary of Seller under which Seller or any
Subsidiary of Seller of any ERISA Affiliate has any present or future Liability.
"SUBSIDIARY" means, when used with reference to any Person, any
corporation more than fifty percent (50%) of the outstanding voting securities
of which, or any partnership, limited liability company, joint venture or other
entity more than fifty percent (50%) of the total equity interest of which, is
directly or indirectly owned or Controlled by such Person.
"TANGIBLE PERSONAL PROPERTY" means all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned or leased by a Person (wherever located and whether or not carried on
such Person's books), together with any express or implied warranty by the
manufacturers or Seller or lessors of any item or component part thereof, and
all maintenance records and other documents relating thereto.
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"THIRD PARTY" means a Person that is not a party to this Agreement or
an Affiliate of a party to this Agreement.
"THIRD PARTY CLAIM" means any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
"THREAT OF RELEASE" mean a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the Environment which may
result from such Release.
1.2 Usage
(a) Interpretation. In this Agreement, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) references to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are not prohibited by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument
means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof;
(v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision of any
Legal Requirement means that provision of such Legal Requirement from time to
time in effect and constituting the substantive amendment, modification,
codification, replacement and reenactment of such section or other provision;
provided, however, that the foregoing shall not apply in instances in which the
Legal Requirement refers to a specific date, time or period;
(vi) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and not to any
particular Article, Section or other provision thereof;
(vii) "including" (and with correlative meaning
"include") means including without limiting the generality of any description
preceding such term;
(viii) "or" is used in the inclusive sense of "and/or";
(ix) with respect to the determination of any period of
time, "from" means "from and including" and "to" means "to but excluding";
(x) references to documents, instruments or agreements
shall be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto, and
(xi) all references to "dollars" or "$" shall mean U.S.
dollars.
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(b) Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used therein shall be interpreted and all
accounting determinations thereunder shall be made in accordance with GAAP.
(c) Legal Representation of the Parties. This Agreement was
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof.
2. SALE AND TRANSFER OF ASSETS; CLOSING
2.1 Assets to be Sold. Upon the terms and subject to the
conditions set forth in this Agreement, effective as of the Effective Time,
Sellers shall sell, convey, assign, transfer and deliver to Purchaser, free and
clear of all Encumbrances other than the Permitted Encumbrances (including those
set forth on Schedule 2.1), and Purchaser shall purchase and acquire from
Sellers, Sellers' right, title and interest in and to all of Sellers' property
and assets, real, personal or mixed, tangible and intangible, of every kind and
description, wherever located, including the following (but excluding the
Excluded Assets (as defined below)):
(a) all Real Property and Real Property Leases described in
Section 2.1(a) of the Seller Disclosure Schedule currently owned or leased by
Seller or any of its Subsidiaries (the "ASSUMED REAL ESTATE"), but excluding the
Real Property and Real Property Leases relating to Seller's facilities in
Rexdale, Ontario and Henrietta, New York (together, the "EXCLUDED REAL ESTATE
INTERESTS");
(b) all Tangible Personal Property of Seller and its
Subsidiaries, including those items described in Schedule 2.1(b) of the Seller
Disclosure Schedule;
(c) all Inventories of Sellers and their Subsidiaries;
(d) all Accounts Receivable of Sellers and their Subsidiaries,
including all intercompany receivables due to Seller;
(e) all Seller Contracts set forth on Schedule 2.1(e) of the
Seller Disclosure Schedule, and all other Seller Contracts and outstanding
offers or solicitations made by or to Seller to enter into any Contract after
the date hereof that are made in accordance with the provisions of this
Agreement, in each case which are assignable by their terms or with respect to
which consent to assignment is obtained (the "ASSUMED SELLER CONTRACTS");
(f) all Governmental Authorizations and all pending
applications therefor or renewals thereof, in each case to the extent
transferable to Purchaser, including those listed in Section 3.5(c) of the
Seller Disclosure Schedule;
(g) all data and Records related to the operations of Seller,
including client and customer lists and Records, referral sources, research and
development reports and Records, production reports and Records, service and
warranty Records, equipment logs, operating guides and manuals, financial and
accounting Records, creative materials, advertising materials, promotional
materials, studies, reports, correspondence and other similar documents and
Records (all in the state in which such records and information presently
exists) and, subject to Legal Requirements, copies of all personnel Records and
other Records described in Section 2.2(m);
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(h) all of the intangible rights and property of Seller,
including Intellectual Property Rights (as defined in Section 3.15), good-will,
telephone and telecopy numbers to the extent transferable, and e-mail addresses,
websites and listings and those items listed in Section 3.15(b) of the Seller
Disclosure Schedule;
(i) All rights (including all Intellectual Property Rights) of
the Seller in and to the trademarks, service marks, trade names, trade dress and
other names and brand identifiers held or used by any of the Seller or its
Subsidiaries, including, without limitation, the name "A.B. Dick Company," "A.B.
Dick Company of Canada, Ltd." and "A.B. Dick UK Limited" and the applications
and registrations therefore identified in Section 3.15(b) of the Seller
Disclosure Schedule (collectively, the "MARKS"), and further including all
filings associated therewith and all specimens, samples, illustrations and
files, correspondence, records or other documentation arising from or relating
to such registrations, applications, and filings;
(j) all insurance benefits, including rights and proceeds,
arising from or relating to the Assets or the Assumed Liabilities prior to the
Effective Time, unless expended in accordance with this Agreement;
(k) all claims of Seller against third parties relating to the
Assets, whether xxxxxx or inchoate, known or unknown, contingent or
non-contingent;
(l) all rights of Seller relating to deposits and prepaid
expenses, claims for refunds and rights to offset in respect thereof which are
not excluded under Section 2.2(g);
(m) all of the capital stock of Limited; and
(n) certain assets of Canada Sub, as more fully described on a
schedule to be provided by Purchaser prior to the Closing.
All of the foregoing property and assets are herein referred to collectively as
the "ASSETS".
Notwithstanding the foregoing, the transfer of the Assets pursuant to
this Agreement shall not include the assumption of any Liability in respect
thereof unless the Purchaser expressly assumes such Liability pursuant to
Section 2.4(a).
2.2 Excluded Assets Notwithstanding anything to the contrary
contained in Section 2.1 or elsewhere in this Agreement, the following assets of
Seller (collectively, the "EXCLUDED ASSETS") are not part of the sale and
purchase contemplated hereunder, are excluded from the Assets, and shall remain
the property of Seller after the Closing:
(a) all cash and cash equivalents;
(b) except for Limited, the shares of capital stock of each
Subsidiary of Seller;
(c) all of the Seller Contracts listed in Schedule 3.21 of the
Seller Disclosure Schedule, with the specific exception of the Assumed Seller
Contracts described in Section 2.1(e) (the "EXCLUDED SELLER CONTRACTS");
(d) all current claims for refund of Taxes and other
governmental charges of whatever nature;
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(e) all rights in connection with and assets of the Seller
Employee Plans);
(f) all rights of Seller under this Agreement, the Xxxx of
Sale, the Assignment and Assumption Agreement and the Escrow Agreement;
(g) the Excluded Real Property Interests and all Governmental
Authorizations relating exclusively to the operation of such Real Property;
(h) personal property and assets expressly designated in
Schedule 2.2(h) of the Seller Disclosure Schedule;
(i) any prepaid or current assets relating to directors' fees,
affiliate company charges and bank fees and charges;
(j) claims against third parties to the extent related solely
to any Excluded Asset or Excluded Liabilities;
(k) all insurance policies, including all rights, benefits and
proceeds thereunder (except to the extent specified in Section 2.1(j) and (k));
(l) Seller's corporate seals, stock Record books, corporate
Record books containing minutes of meetings of directors and stockholders; Tax
returns and Records, books of account and ledgers and such other Records having
to do solely with the Seller's organization or stock capitalization or Excluded
Assets or Excluded Liabilities;
(m) all personnel Records and other Records that Seller is
required by law to retain in its possession; and
(n) Seller's claims, causes of action, choices of action and
rights of recovery pursuant to Sections 544 through 550 and Section 553 of the
Bankruptcy Code and any other avoidance action under any other applicable
provisions of the Bankruptcy Code.
2.3 Consideration. The consideration for the Assets (the "PURCHASE
PRICE") will be Forty Million Dollars ($40,000,000), which is payable in cash
and by converting any amount of principal, interest or any other obligation
(including, without limitation, fees or costs) which is owed by Seller or Parent
to Platinum or its Affiliates on account of the DIP Financing, and the
assumption of the Assumed Liabilities as provided in Section 2.4.
2.4 Liabilities.
(a) Assumed Liabilities. Subject to Section 2.4(b) and
effective as of the Effective Time, Purchaser shall assume and become
responsible for and shall thereafter pay, perform, and discharge in accordance
with their terms the following Liabilities of Seller (the "ASSUMED
LIABILITIES"):
(i) Any liability arising after the Effective Time under
the Assumed Real Estate Leases;
(ii) any Liability to Seller's customers under written
warranty agreements in the forms disclosed in Section 3.17 of the Seller
Disclosure Schedule given by Seller to its customers in the ordinary course of
business prior to the Effective Time;
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(iii) any Liability arising after the Effective Time
under the Assumed Seller Contracts; and
(iv) any Liability of Seller described on Schedule
2.4(a)(iv)of the Seller Disclosure Schedule.
(b) Retained Liabilities. The Retained Liabilities shall
remain the sole responsibility of and shall be retained by Seller. "RETAINED
LIABILITIES" shall mean every Liability of Seller and every Liability of any
Subsidiary of Seller, other than the Assumed Liabilities, including:
(i) any Liability arising out of or relating to products
of Seller to the extent manufactured or sold prior to the Effective Time other
than to the extent assumed under Section 2.4(a)(ii), (iii), or (iv);
(ii) any Liability for Taxes, including (A) any Taxes
arising as a result of Seller's, Limited's or any Subsidiary's operation of its
business or ownership of the Assets prior to the Effective Time, (B) subject to
Section 12.1, any Taxes that will arise as a result of the sale of the Assets
pursuant to this Agreement and (C) any deferred Taxes of any nature;
(iii) any Liability under any Seller Contract (other than
the Assumed Seller Contracts) and including without limitation any Liability
arising out of or relating to Seller's credit facilities, trade payables,
indebtedness for money borrowed, amounts due to Affiliates or any security
interest related thereto;
(iv) any Environmental, Health and Safety Liabilities, in
each case relating to a period or occurrence prior to the Effective Time
relating to Seller or its predecessors, Subsidiaries or Affiliates, the
operation of the Business, or the leasing, ownership or operation of any Real
Property, including, without limitation any such liabilities related to any Real
Property listed on Schedule 3.13(c) of the Seller Disclosure Schedule;
(v) any Liability under the Seller Employee Plans or
relating to payroll, vacation, sick leave, worker's compensation, unemployment
benefits, pension benefits, employee stock option or profit-sharing plans,
health care plans or benefits, or any other employee plans or benefits of any
kind for Seller's employees or former employees, or both;
(vi) any Liability under any employment, severance,
retention or termination agreement with any employee of Seller or any of its
Affiliates;
(vii) any Liability arising out of or relating to any
employee grievance whether or not the affected employees are hired by Purchaser;
(viii) any Liability of Seller to any Affiliate of
Seller;
(ix) any Liability to indemnify, reimburse or advance
amounts to any officer, director, employee or agent of Seller, Parent or any
Subsidiary;
(x) any Liability to distribute or otherwise apply all of
any part of the consideration received hereunder;
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(xi) any Liability arising out of any Proceeding pending
as of the Effective Time, whether or not set forth in the Seller Disclosure
Schedule;
(xii) any Liability of Seller under this Agreement or any
other document executed in connection with the transactions contemplated hereby;
(xiii) any Liability of Seller based upon Seller's acts
or omissions occurring after the Effective Time; and
(xiv) any Liability of Seller not specifically described
above but which may otherwise be set forth in Schedule 2.4(b).
2.5 Deposit. An xxxxxxx money deposit (the "DEPOSIT") in the
amount of Two Million Dollars ($2,000,000) shall be paid by Purchaser on the
entry of the Sale Procedures Order (as defined in Section 8.1) into an escrow
account in accordance with customary escrow agreement (the "ESCROW AGREEMENT").
The Deposit shall be applied to the Purchase Price payable by Purchaser on the
Closing Date. If this Agreement shall be terminated by any Party hereto pursuant
to Sections 11.1(a), (b), (c), (d), (e)(B), (f) or (g), or in the event that a
Person other than Purchaser or an Affiliate of Purchaser purchases all or any
portion of the Assets, then the Deposit shall be returned to Purchaser. If this
Agreement shall be terminated by Seller pursuant to Section 11.1(e)(A), hereof,
the Deposit shall be paid to Seller. Notwithstanding any other provision to the
contrary contained herein, the Deposit shall be the sole and exclusive remedy of
Seller against Platinum and Purchaser under this Agreement.
2.6 Tax Allocation of Purchase Price. Purchaser and Seller agree
that the Purchase Price shall be allocated among the Assets in accordance with
an allocation to be prepared by Purchaser and agreed upon by Seller and Parent,
which agreement shall not be unreasonably withheld. Such allocation shall be in
accordance with Section 1060 of the Code and the applicable Treasury Regulations
promulgated thereunder and such other laws as may be applicable to the Assets of
Canada Sub. Purchaser and Seller shall report and file all of their respective
Tax Returns (including amended Tax Returns and claims for refund) consistent
with such allocation, and shall take no position contrary thereto or
inconsistent therewith (including, without limitation, in any audits or
examinations by any taxing authority or in any other proceedings). Purchaser and
Seller shall cooperate in the filing of any forms (including Forms 8594) with
respect to such allocation. Notwithstanding any other provisions of this
Agreement, the foregoing agreement shall survive the Closing Date without
limitation, and shall not be an admission of and shall not be evidence of the
value of any of the Assets in the Seller's Chapter 11 Case or any other related
proceeding, and shall be for Tax purposes only; provided, however, that the
portion of the Purchase Price allocated to the Assets to be purchased from IMG
or from Canada Sub shall be paid directly to those entities.
2.7 Closing. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place at the offices of XxXxxxxxx Will &
Xxxxx LLP in Boston, Massachusetts commencing at 9:00 a.m. local time on the
Monday following the satisfaction or waiver of all conditions to the obligations
of the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as Purchaser and Seller may mutually
determine (the "CLOSING Date"). The Parties shall use their commercially
reasonable efforts to consummate the transactions contemplated hereby within
fifteen (15) calendar days after the Bankruptcy Court has entered the Sale Order
approving such sale to Purchaser.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER
In connection with this Section 3, all representations and warranties
of Seller set forth in the following Sections 3.1 through 3.28 shall apply to
both IMG and to Seller. Except as set forth in the Seller Disclosure Schedule
delivered to Platinum and Purchaser herewith, the parts of which are numbered to
correspond to the Section numbers of this Agreement and which thereby qualify
the corresponding representations and warranties contained in this Article 3,
Seller hereby represents and warrants to Platinum and Purchaser, subject to the
effects of the anticipated filing of the Chapter 11 Case, as follows:
3.1 Organization and Good Standing. Seller and each Subsidiary of
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority, and all requisite qualifications to do business
as a foreign corporation, to conduct its business in the manner in which its
business is currently being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority or
qualifications would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on Seller. All jurisdictions in which
Seller and each Subsidiary of Seller is duly qualified or registered to do
business as a foreign corporation is listed on Section 3.1 of the Seller
Disclosure Schedule. Seller has delivered or made available to Platinum a true
and correct copy of its certificate of incorporation and bylaws and similar
governing instruments of each of its Subsidiaries, each as amended to date
(collectively, the "SELLER CHARTER DOCUMENTS"), and each such instrument is in
full force and effect. Neither Seller nor any Subsidiary is in violation of any
of the provisions of the Seller Charter Documents.
3.2 Subsidiaries and Guaranties. Each of Seller's Subsidiaries are
listed on Section 3.2 of the Seller Disclosure Schedule, each of which is
directly or indirectly wholly-owned by Seller. Except as set forth in Section
3.2 of the Seller Disclosure Schedule, Seller does not have any other
Subsidiaries or any interest, direct or indirect, in any corporation,
partnership, joint venture, limited liability company or other business entity.
Section 3.2 of the Seller Disclosure Schedule indicates the jurisdiction of
organization of each entity listed therein and Seller's direct or indirect
equity interest therein.
3.3 [Intentionally Omitted]
3.4 Power, Authorization and Non-Contravention.
(a) Seller and each Subsidiary of Seller has the requisite
corporate power, legal capacity and authority to: (i) carry on its business as
now conducted; (ii) own, operate and lease its properties in the manner in which
its properties are currently owned, used and leased; (iii) perform its
obligations under all Seller Contracts constituting Assets to be purchased under
Section 2.1, and (iv) upon entry of the Sale Order (as defined in Section
8.1(b)) enter into and perform its obligations under this Agreement and all
agreements to which it is or will be a party that are required to be executed
pursuant to or in connection with this Agreement (the "SELLER ANCILLARY
AGREEMENTS"); except in the case of clause (iii) of this Section 3.4 where the
failure to have such power, capacity or authority would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Seller, the Business or the Assets. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate and stockholder action on the part of
Seller. The written consent of Parent, as the sole stockholder of Seller, a
certified copy of which has previously been delivered to Purchaser, is
sufficient for the approval of the transactions contemplated hereby by Seller's
stockholders and no other approval of any holder of any
16
securities of Seller is required in connection with the consummation of the
transactions contemplated hereby.
(b) No consent, approval, Order or authorization of, or
registration, declaration or filing with any Governmental Authority or other
Person, is required to be obtained or made by Seller or any Subsidiary of Seller
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for: (i) the
consents set forth in Section 3.4(b) of the Seller Disclosure Schedule, (ii)
such consents, approvals, Orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
Securities (or related) Laws and the Antitrust Filings and (iii) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to Seller, Platinum or Purchaser or
prevent, alter or materially delay the consummation of the transactions
contemplated hereby.
(c) Upon entry of the Sale Order, this Agreement and the
Seller Ancillary Agreements are, or when executed and delivered by Seller and
Canada Sub and the other parties thereto will be, valid and binding obligations
of Seller and Canada Sub (to the extent a party thereto) enforceable against
Parent, Seller and Canada Sub (to the extent a party hereto) in accordance with
their respective terms, except as to the effect, if any, of (i) applicable
bankruptcy, insolvency, moratorium, reorganization, or other similar laws
affecting the rights of creditors generally and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies; provided,
however, that the Seller Ancillary Agreements will not be effective until the
earlier of the Effective Time or the date provided for therein.
3.5 No Violation of Charter Documents and Contracts; Compliance
with Legal Authorizations; Governmental Authorizations.
(a) Neither the execution and delivery of this Agreement or
any Seller Ancillary Agreement, nor the consummation of the transactions
provided for herein or therein will conflict with, or (with or without notice or
lapse of time, or both) result in a termination, Breach, impairment or violation
of any provision of the Seller Charter Documents, as currently in effect, except
as set forth in Section 3.5 of the Seller Disclosure Schedule, or any material
Assumed Seller Contract.
(b) Except as set forth in Section 3.5(b) of the Seller
Disclosure Schedule:
(i) Each of Seller and each Subsidiary of Seller is, and,
to Seller's knowledge, at all times since January 1, 2000 has been, in material
compliance with each Legal Requirement that is or was applicable to it or to the
conduct of operation of its business or the ownership or use of any of the
Assets;
(ii) no event has occurred or circumstance currently
exists that (with or without notice or lapse of time) constitutes or will result
in a violation by Seller or any Subsidiary of Seller of, or a failure on the
part of Seller or any Subsidiary of Seller to comply with, any applicable
material Legal Requirement; and
(iii) Each of Seller and each Subsidiary of Seller has
not received, at any time since January 1, 2000, any written notice or, to
Seller's knowledge, other communication from any Governmental Authority or any
other Person regarding any actual, alleged, possible, or potential violation of,
or failure to comply by Seller or any Subsidiary of Seller with, any applicable
material Legal Requirement.
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(c) Section 3.5(c) of the Seller Disclosure Schedule contains
a complete and accurate list of each material Governmental Authorization that
are collectively necessary to permit Seller to lawfully conduct and operate its
business in the manner it currently conducts and operates its business and to
permit Seller to own and use the Assets in the manner in which it currently owns
and uses such Assets. To Seller's knowledge, each Governmental Authorization
listed or required to be listed in Section 3.5(c) of the Seller Disclosure
Schedule is valid and in full force and effect. Except as set forth in Section
3.5(c) of the Seller Disclosure Schedule:
(i) Each of Seller and each Subsidiary of Seller is, and
at all times since January 1, 2000 has been, in full compliance with all of the
material terms and requirements of each Governmental Authorization identified or
required to be identified in Section 3.5(c) of the Seller Disclosure Schedule;
(ii) To Seller's knowledge, no event has occurred since
January 1, 2000 or circumstance currently exists that (with or without notice or
lapse of time) (A) constitutes or will result directly or indirectly in a
violation of or a failure to comply with any material term or requirement of any
Governmental Authorization listed or required to be listed in Section 3.5(c) of
the Seller Disclosure Schedule, or (B) will result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to be listed
in Section 3.5(c) of the Seller Disclosure Schedule;
(iii) Seller has not received, at any time since January
1, 2000, any written notice or, to Seller's knowledge, other communication from
any Governmental Authority or any other Person regarding (A) any actual,
alleged, possible, or potential violation of or failure to comply by Seller or
any Subsidiary of Seller with any term or requirement of any Governmental
Authorization listed or required to be listed in Section 3.5(c) of the Seller
Disclosure Schedule, or (B) any actual, proposed, possible, or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization listed or required to be listed
in Section 3.5(c) of the Seller Disclosure Schedule; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Section 3.5(c) of the Seller Disclosure Schedule have been duly filed on a
timely basis with the appropriate Governmental Authorities, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Authorities, except to the extent that such failure would not have
a Material Adverse Effect on Seller.
3.6 Documents and Disclosures.
(a) Seller has made available to Platinum for examination true
and complete copies of all documents and information listed in the Seller
Disclosure Schedule, as well as (i) Seller's minute book containing all records
of all proceedings, consents, actions and meetings of the stockholders, the
Board of Directors and any committees of the Board of Directors of Seller; (ii)
all Governmental Authorizations, permits, Orders and consents issued by any
regulatory agency or other Governmental Authority with respect to Seller and
(iii) all of the foregoing documents and information with respect to the
Subsidiaries.
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(b) There has not been any violation of any of the provisions
of the Seller Charter Documents, or of any resolution adopted by the
stockholders or boards of directors, of Seller or any Subsidiary of Seller, and
to Seller's knowledge, no event has occurred and is continuing, and no condition
or circumstance exists, that likely would (with or without notice and/or lapse
of time) constitute or result directly or indirectly in such a violation.
(c) The books of account, stock records, minute books and
other records of Seller and its Subsidiaries: (i) are in all material respects
true and complete, (ii) have been maintained in accordance with reasonable
business practices and (iii) accurately and fairly reflect in all material
respects the transactions and dispositions of the assets of Seller and its
Subsidiaries.
3.7 Seller Financial Statements. Included in Section 3.7 of the
Seller Disclosure Schedule are the consolidated financial statements of Seller
(including, in each case, any related notes thereto) for the fiscal years ended
December 31, 2002 and 2003 (the "SELLER FINANCIAL STATEMENTS") and for the
three-month period ended March 31, 2004 and each: (i) was prepared in accordance
with GAAP (except as may be indicated in the notes thereto); (ii) fairly present
in all material respects the consolidated financial position of Seller and the
Subsidiaries as at the respective dates thereof and the consolidated results of
Seller's operations and cash flows for the periods indicated, except that the
unaudited interim financial statements do not contain any footnotes and were or
are subject to normal and recurring year-end adjustments and (iii) contain no
adverse opinion or disclaimer of opinion and except as set forth in Section 3.7
of the Seller Disclosure Schedule were not qualified or modified as to
uncertainty, audit scope or accounting principal. Except as set forth on Section
3.7 of the Seller Disclosure Schedule, since December 31, 2003 (the "BASE
BALANCE DATE"), neither Seller nor any Subsidiary has any Liabilities required
under GAAP to be set forth on a balance sheet (absolute, accrued, contingent or
otherwise) except for Liabilities incurred since the Base Balance Sheet Date in
the ordinary course of business consistent with past practices which are not,
individually or in the aggregate, material to the business, results of
operations or financial condition of Seller and the Subsidiaries taken as a
whole and Liabilities incurred in connection with this Agreement. There has been
no change in Seller's accounting policies during the periods covered by the
Seller Financial Statements, except as described in the notes to the Seller
Financial Statements. Seller has no material debt, Liability or obligation of
any nature, whether accrued, absolute, contingent or otherwise, and whether due
or to become due, that is not reflected, reserved against or disclosed in the
Seller Financial Statements or under Section 3.7 of the Seller Disclosure
Schedule, except for those that may have been incurred after the Base Balance
Sheet Date in the ordinary course of Seller's business, consistent with past
practice and that are in an aggregate amount not to exceed $50,000, and (ii)
those that occur after the date of this Agreement in compliance with this
Agreement or with the express written consent of Platinum.
3.8 Internal Control Over Financial Reporting. Seller has
implemented a process, designed by, or under the supervision of, Seller's
principal executive and principal financial officers, and effected by Seller's
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of the preparation of financial statements
in accordance with GAAP and includes those policies and procedures that: (i)
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of Seller and its
Subsidiaries; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of Seller and its Subsidiaries are
being made only in accordance with authorizations of management and directors of
Seller and its Subsidiaries; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of Seller's assets.
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3.9 Accounts Receivable. The Accounts Receivable shown in the
December 31, 2003 balance sheet contained in the Seller Financial Statements
(the "BASE BALANCE SHEET") and which constitute Assets to be purchased under
Section 2.1 arose in the ordinary course of business consistent with past
practice. Allowances for doubtful accounts and warranty returns are adequate and
have been prepared in accordance with GAAP and in accordance with the past
practices of Seller and its Subsidiaries. The Accounts Receivable of Seller and
its Subsidiaries constituting Assets to be purchased under Section 2.1 arising
after the Base Balance Sheet Date and prior to the Closing Date arose or will
arise in the ordinary course of business consistent with past practice. To the
knowledge of Seller, the Accounts Receivable are not subject to any material
claim of offset, recoupment, setoff or counter-claim and it has no knowledge of
any specific facts or circumstances (whether asserted or unasserted) that could
give rise to any such claim in any such case, except to the extent otherwise
reflected in the allowances for doubtful accounts as provided for in the Base
Balance Sheet or, with respect to Accounts Receivable arising after the Base
Balance Sheet Date and prior to the Closing Date, as determined in the ordinary
course of business consistent with the past practices of Seller and its
Subsidiaries. Except as set forth in Section 3.9 of the Seller Disclosure
Schedule, no material amount of Accounts Receivable are contingent upon the
performance by Seller or any of its Subsidiaries of any obligation or Contract
other than normal warranty repair and replacement and other than products'
progress bills in the ordinary course of business consistent with past practice.
No Person has any Encumbrance on any of such Accounts Receivable and no
agreement for deduction or discount has been made with respect to any of such
Accounts Receivable. Section 3.9 of the Seller Disclosure Schedule sets forth an
aging of Accounts Receivable of Seller and its Subsidiaries in the aggregate and
by customer, and indicates the amounts of allowances for doubtful accounts and
warranty returns and Section 3.9 of the Seller Disclosure Schedule sets forth
such amounts of Accounts Receivable which are subject to asserted warranty
claims known to Seller by information regarding asserted warranty claims known
to Seller made within the last year, including the type and amounts of such
claims. Except as set forth on Section 3.9 of the Seller Disclosure Schedule,
Seller has no Accounts Receivable from any person, firm or corporation which is
affiliated with Seller or from any director, officer or employee or Affiliate of
Seller, Parent or any Subsidiary of Seller.
3.10 [Intentionally Omitted]
3.11 Litigation. Except as set forth in Section 3.11 of the Seller
Disclosure Schedule, there is no Proceeding pending against Seller or any of its
Subsidiaries, nor, to Seller's knowledge, is any Proceeding threatened against
Seller or any of its Subsidiaries before any Governmental Authority or
arbitrator that, if determined adversely to Seller or any of its Subsidiaries,
may reasonably be expected to have a Material Adverse Effect on Seller, the
Business or the Assets. There is no material unsatisfied adverse Order of a
Governmental Authority or arbitrator outstanding against Seller or any of its
Subsidiaries. There is no Proceeding pending as to which Seller has received
notice of assertion against Seller, which in any manner could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement.
3.12 Taxes.
(a) Seller and each Subsidiary of Seller has timely filed all
material federal, state, local and foreign returns, reports, estimates,
information statements or other documents or information ("RETURNS") required to
be supplied to any "Tax" (as defined below) authority relating to "Taxes" (as
defined below) required to be filed by or on behalf of Seller, and each
Subsidiary of Seller. Such Returns are true, correct and complete in all
material respects. Seller and each Subsidiary of Seller has paid all material
Taxes required to be paid, has made all necessary estimated Tax payments, and
has no Liability for Taxes in excess of the amount so paid, except to the extent
adequate reserves have been
20
established in the Seller Financial Statements or, with respect to Taxes that
are not yet due on or prior to the date of this Agreement and which have become
due thereafter, adequate reserves have been established by Seller and each
Subsidiary of Seller prior to the Closing Date.
(b) Seller and each Subsidiary of Seller has withheld and paid
all material Taxes required by applicable Legal Requirement to be withheld and
paid in connection with any amounts paid or owing to any employee, independent
producer or contractor, creditor, stockholder, or other Third Party.
(c) To Seller's knowledge, no claim has ever been made by a
Governmental Authority in a jurisdiction where Seller or any Subsidiary of
Seller does not file Tax Returns that Seller, or any Subsidiary of Seller is or
may be subject to Taxation by that jurisdiction.
(d) Except as set forth in Section 3.12(d) of the Seller
Disclosure Schedule, neither Seller nor any Subsidiary of Seller is party to or
has any obligation under any Tax-sharing, Tax indemnity or Tax allocation
agreement or arrangement.
For the purposes of this Agreement, "TAX" or "TAXES" refers to
(i) any and all federal, state, local and foreign Taxes, assessments and other
governmental charges, duties, impositions and Liabilities relating to Taxes,
including Taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property Taxes, together
with all interest, penalties and additions imposed with respect to such amounts,
(ii) any Liability for payment of any amounts of the type described in clause
(i) as a result of being a member of an affiliated, consolidated, combined or
unitary group, and (iii) any Liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another Person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts and including
any Liability for Taxes of a predecessor entity.
3.13 Sufficiency of Assets; Title to Properties.
(a) The Assets constitute all of the assets, tangible and
intangible, of any nature whatsoever, necessary to operate the Business in the
manner presently operated by Seller and includes substantially all of the
operating assets of Seller, subject to any Excluded Assets or Retained
Liabilities.
(b) Seller and each of the Subsidiaries have good and
marketable title to all of their respective Assets as shown on the Base Balance
Sheet, or with respect to leased Assets, valid leasehold interests in, or with
respect to licensed Assets, valid licenses to use, free and clear of all
Encumbrances (other than Permitted Encumbrances). The machinery and equipment
included in the Assets are in all material respects in good condition and
repair, normal wear and tear excepted, and all Leases of Real Property or
Tangible Personal Property to which Seller or any Subsidiary of Seller is a
party are fully effective and afford Seller or such Subsidiary peaceful and
undisturbed possession of the subject matter of the Lease. To Seller's
Knowledge, neither Seller nor any Subsidiary is in violation of any zoning,
building, or safety ordinance, regulation or requirement or other Legal
Requirement applicable to the operation of owned or leased properties, and
Seller has not received any notice of such violation with which it has not
complied or had waived.
(c) Section 3.13(c) of the Seller Disclosure Schedule sets
forth the addresses and uses of all Real Property that Seller, its predecessors,
Affiliates or the Subsidiaries own, lease or sublease or have ever owned, leased
or subleased since January 1, 2003. All Leases of Real Property or Tangible
Personal Property constituting Assets to which Seller or any Subsidiary of
Seller is a party are
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effective and afford Seller peaceful and undisturbed possession of the subject
matter of the Lease. As a result of the transactions contemplated by this
Agreement, Purchaser will obtain a valid ownership or leasehold interest in all
Tangible Personal Property that Seller or its Subsidiaries currently own or
lease and all Real Property that Seller or its Subsidiaries currently own or
lease, as of the date of this Agreement, (subject to any Real Property retained
by Seller or its Subsidiaries as Excluded Assets), in each case free and clear
of all title defects and Encumbrances of any kind, except (i) Permitted
Encumbrances; (ii) mechanics', carriers', workers' and other similar liens
arising in the ordinary course of business, and (iii) liens for current Taxes
not yet due and payable.
3.14 Absence of Certain Changes or Events. Excluding the effect of
filing and administration of the Chapter 11 Case, since the Base Balance Sheet
Date, Seller and the Subsidiaries have carried on their business in the ordinary
course substantially in accordance with the procedures and practices in effect
on the Base Balance Sheet Date.
(a) To Seller's knowledge, except as set forth under Section
3.14 of the Seller Disclosure Schedule, since the Base Balance Sheet Date there
has not been with respect to Seller or any Subsidiary of Seller:
(i) any change, event, circumstance or effect, which by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has had or would reasonably be expected to have
a Material Adverse Effect on Seller or on Seller's or its Subsidiaries' ability
to conduct the Business as presently conducted, or that is reasonably likely to
impede the performance by Seller of its obligations under this Agreement or any
of the Seller Ancillary Agreements;
(ii) any Encumbrance placed on any of the properties of
Seller or any Subsidiary except Permitted Encumbrances;
(iii) any Liability incurred by Seller or any Subsidiary
of Seller other than trade accounts payable and other Liabilities arising in the
ordinary course of business;
(iv) any purchase, license, sale or other disposition, or
any agreement or other arrangement for the purchase, license, sale or other
disposition, of any of the Assets other than in the ordinary course of business
and consistent with past practice or which do not exceed in the aggregate
$50,000 through the date of this Agreement;
(v) any material damage, destruction or loss of any
material property or asset, whether or not covered by insurance;
(vi) any material labor dispute or material claim of
unfair labor practices;
(vii) any increase in the compensation payable or to
become payable to any of Seller's or any of its Subsidiary's officers, employees
or agents earning compensation at an anticipated annual rate in excess of
$50,000, or any bonus payment or arrangement made to or with any of such
officers, employees, consultants or agents; or any increase in the compensation
payable or to become payable to any of Seller's or any of its Subsidiary's other
officers, employees, consultants or agents (other than normal annual raises for
non-officers in the ordinary course of business consistent with past practice)
or any bonus payment or arrangement made to or with any of such officers,
employees or agents other than normal bonuses or
22
compensation increases granted prior to the date of this Agreement as disclosed
under Section 3.14 of the Seller Disclosure Schedule;
(viii) any termination or resignation of any executive
officer of Seller or any Subsidiary of Seller; or
(ix) any loss of one or more material customers of Seller
or any Subsidiary of Seller, which, individually or in the aggregate, account
for more than five percent (5%) of the consolidated revenues of Seller and its
Subsidiaries as of the Base Balance Sheet Date.
(b) Except as set forth under Section 3.14 of the Seller
Disclosure Schedule, since the Base Balance Sheet Date neither Seller nor any
Subsidiary of Seller has:
(i) amended their certificates of incorporation, bylaws
or any other organizational document of a Subsidiary of Seller;
(ii) made any material payment or discharged any material
Encumbrance or Liability of Seller or any Subsidiary;
(iii) incurred any material obligation or Liability to
any of their employees, officers, directors, stockholders or Affiliates, or any
loans or advances made to any of its employees, officers, directors,
stockholders or Affiliates, except normal compensation and reasonable travel
related expense allowances payable to employees, officers or directors;
(iv) declared, set aside or paid any dividend on, or made
any other distribution in respect of, their capital stock, or made any changes
in any rights, preferences, privileges or restrictions of any of their
outstanding capital stock;
(v) effected or been a party to any transaction relating
to a merger, consolidation, sale of all or substantially all of their assets, or
similar transaction; or accepted or otherwise entered into any Acquisition
Proposal (as defined in Section 5.6);
(vi) executed, amended, relinquished, terminated or
failed to renew any material Contract constituting an Asset, lease, transaction
or legally binding commitment other than in the ordinary course of their
business (nor has there been any written or oral indication or assertion by the
other party thereto of its desire to so amend, relinquish, terminate or not
renew any such Contract, lease transaction or legally binding commitment);
(vii) deferred the payment of any accounts payable
outside the ordinary course of business or provided any discount, accommodation
or other concession outside the ordinary course of business in order to
accelerate or induce the collection of any receivable;
(viii) incurred indebtedness for borrowed money, entered
into any capital lease or guaranteed any such indebtedness other than in the
ordinary course of their business, and not in excess of $50,000 in the
aggregate; or
23
(ix) entered into any other material transaction or taken
any other material action outside the ordinary course of their business (other
than as disclosed in Section 3.14 of the Seller Disclosure Schedule).
3.15 Intellectual Property.
(a) Definition. As used herein, the term "INTELLECTUAL
PROPERTY RIGHTS" shall mean all worldwide industrial and intellectual property
rights, including, patents, patent applications, patent rights, trademarks
(registered and/or at common law), trademark applications, trade names, service
marks, service xxxx applications, URLs, works of authorship, copyrights,
copyright registrations and applications for registration, mask work rights,
moral rights, franchises, licenses, inventories, know-how, trade secrets,
customer lists, proprietary information, proprietary processes and formulae,
databases and data collections, all source and object code, algorithms,
architecture, structure, display screens, layouts, inventions, development tools
and all documentation and media constituting, describing or relating to the
above, including, manuals, memoranda and records.
(b) Ownership of Intellectual Property. Seller and each
Subsidiary of Seller owns all right, title and interest in, or has license to
use (sufficient for the conduct of its business as presently conducted), all
Intellectual Property Rights used in or reasonably necessary to the conduct of
its business as presently conducted including the business of the development,
design, maintenance, sale, licensing, installation and use of Seller and its
Subsidiary products and the sale of commercial services using such Intellectual
Property Rights (with such Intellectual Property Rights being hereinafter
collectively referred to as the "SELLER IP RIGHTS"). To Seller's Knowledge,
except as set forth in Section 3.15(b) of the Seller Disclosure Schedule, Seller
and its Subsidiaries have the exclusive, unrestricted, worldwide right to
design, develop, use, reproduce, manufacture, sell, license and distribute all
of its products and services (such products and services being set forth under
Section 3.15(b) of the Seller Disclosure Schedule and hereinafter collectively
referred to as the "SELLER PRODUCTS AND SERVICES") except where the failure to
have such right would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Seller. Except as set forth under
Section 3.15(b) of the Seller Disclosure Schedule, neither Seller nor any
Subsidiary of Seller has granted any reseller, distributor, sales
representative, original equipment manufacturer, value added reseller or other
third party any right to reproduce, manufacture, sell, license or distribute any
of its products or services in any market segment or geographic location and
which right is continuing as of the date of this Agreement. Set forth under
Section 3.15(b) of the Seller Disclosure Schedule is a true and complete list of
all copyright, mask work, trademarks, service marks, trade names, trade dress
and other names and brand identifiers held or used by the Seller and trademark
registrations and applications and all patents and patent applications for
Seller IP Rights owned or exclusively licensed by Seller or its Subsidiaries.
Seller is not aware of any loss, cancellation, termination or expiration of any
such registration or patent except as set forth on Section 3.15(b) of the Seller
Disclosure Schedule. To Seller's knowledge, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a material Breach of any instrument or
agreement governing any Seller IP Right, will not cause forfeiture or
termination or give rise to a right of forfeiture or termination of any Seller
IP Right or materially impair the right of Seller to use, sell or license any
Seller IP Right or portion thereof except where such breach, forfeiture,
termination or impairment would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Seller, the Business
or the Assets.
(c) No Violation of Rights of Others. To Seller's knowledge,
the business of Seller and each Subsidiary of Seller and the design,
development, use, manufacture, sale, license or
24
provision of any Seller Product and Service does not, and the use, manufacture,
sale, license or provision of any Seller Product or Service after the Effective
Time will not cause Seller or any Subsidiary of Seller to infringe or violate
any of the Intellectual Property Rights of any other Person. Neither Seller nor
any Subsidiary of Seller has received any written or oral claim or notice of
infringement or potential infringement of the Intellectual Property Rights of
any other Person. To Seller's Knowledge, neither Seller nor any Subsidiary of
Seller is using any confidential information or trade secrets of any Third
Party, including, but not limited to, any past or present employees or their
respective past employers. To Seller's knowledge, there are no royalties,
honoraria, fees or other payments payable by Seller or any Subsidiary of Seller
to any Person by reason of the ownership, use, license, sale, or disposition of
the Seller IP Rights (other than as set forth under Section 3.15(b) of the
Seller Disclosure Schedule.
(d) Protection of Rights. Seller has taken all commercially
reasonable steps designed to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, all Seller IP Rights. To the
knowledge of Seller, there is no material unauthorized use, infringement or
misappropriation of any Seller IP Rights by any Third Party, including, to the
knowledge of Seller, any Seller employee or Subsidiary of Seller employee.
Seller has made available to Platinum copies of all agreements that Seller has
with its officers, employees and consultants regarding the protection of
proprietary information and the assignment to Seller of all Intellectual
Property Rights arising from the services performed for Seller or any Subsidiary
by such Persons.
3.16 Conformity of Products and Services. Except as set forth in
Section 3.16 of the Seller Disclosure Schedule, all Seller Products and Services
delivered or provided by Seller or any Subsidiary of Seller to customers on or
prior to the Closing Date conform in all material respects (to the extent
required in Contracts with such customers) to applicable contractual
commitments, express and implied warranties, product specifications and product
documentation and to any representations provided to customers, and neither
Seller nor any Subsidiary of Seller has any material Liability (and, to Seller's
knowledge, there is no legitimate basis for any present or future Proceeding
against Seller or any Subsidiary giving rise to any material Liability relating
to the foregoing Contracts) for replacement or repair thereof or other damages
in connection therewith in excess of any reserves therefore reflected on the
Base Balance Sheet, or, with respect to any such material Liability arising
after the Base Balance Sheet Date and prior to the Closing Date, such reserves
as determined in accordance with GAAP and in accordance with the past practices
of Seller and its Subsidiaries.
3.17 Product and Service Warranties. Set forth on Section 3.17 of
the Seller Disclosure Schedule are the standard written forms of product and
service warranties and guarantees utilized by Seller or any Subsidiary of Seller
as of the date of this Agreement with respect to the Seller Products and
Services. To Seller's knowledge, except as set forth on Section 3.17 of the
Seller Disclosure Schedule, during a period of three (3) years prior to the
Closing Date, neither Seller nor any Subsidiary of Seller has made any other
written material warranties (which remain in effect) with regard to Seller
Products and Services. There are not existing or threatened in writing, product
liability, warranty or other similar claims against Seller or any Subsidiary of
Seller alleging that any Seller Products and Services are defective or fail to
meet any product or service warranty except for such claims (i) that would not,
individually or in the aggregate, be expected to have a Material Adverse Effect
on Seller, or (ii) Liability which is not in excess of any reserves therefor
reflected on the Base Balance Sheet or, with respect to any such material
Liability arising after the Base Balance Sheet Date and prior to the Closing
Date, such reserves as determined in accordance with GAAP and in accordance with
the past practices of Seller and its Subsidiaries. Except as set forth on
Section 3.17 of the Seller Disclosure Schedule, there are (a) no inherent design
defects or systemic or chronic problems in any Seller Products and Services that
are known to Seller or any Subsidiary of Seller and (b) no Liabilities that are
known to Seller or any Subsidiary of Seller for warranty or other claims or
returns with respect to any Seller
25
Products and Services relating to any such defects or problems in excess of any
reserves therefor reflected on the Base Balance Sheet or, with respect to any
such material Liability arising after the Base Balance Sheet Date and prior to
the Closing Date, such reserves as determined in accordance with GAAP and in
accordance with the past practices of Seller and its Subsidiaries.
3.18 List of Certain Employees; Suppliers and Customers.
(a) Section 3.18(a) of the Seller Disclosure Schedule sets
forth a detailed description of all compensation, including salary, bonus and
deferred compensation paid or payable, for each officer, employee, consultant
and independent contractor of Seller and the Subsidiaries who individually
received compensation in excess of $50,000 for the fiscal year ended December
31, 2003 or is anticipated to receive compensation in excess of $50,000 for the
fiscal year ending December 31, 2004.
(b) Section 3.18(b) of the Seller Disclosure Schedule sets
forth a list of all suppliers, licensors and vendors of Seller or the
Subsidiaries to whom, since January 1, 2003, Seller or the Subsidiaries made
payments aggregating $50,000 or more, showing, with respect to each, the name,
address and dollar value involved. No such supplier, licensor or vendor has
canceled or otherwise terminated or materially reduced its business with Seller
or the Subsidiaries or materially and adversely modified its relationship with
Seller or the Subsidiaries nor, to the knowledge of Seller, does any supplier,
licensor or vendor, have any plan or intention to do so.
(c) Section 3.18(c) of the Seller Disclosure Schedule sets
forth the name of each customer or distributor of Seller or the Subsidiaries who
accounted for more than two percent (2%) of the revenues of Seller for the
fiscal year(s) ending December 31, 2002 and December 31, 2003 (the "CUSTOMERS")
showing with respect to each, the name, address and dollar value involved.
Except as set forth in Section 3.18(c) of the Seller Disclosure Schedule,
between December 31, 2002 and the date of this Agreement, no Customer of Seller
or the Subsidiaries has canceled or otherwise terminated its relationship with
Seller or the Subsidiaries, or not renewed or accepted any maintenance
agreements, or has decreased materially its purchases of Seller Products and
Services. No Customer has, to the knowledge of the Seller, any plan or intention
to terminate, to cancel or otherwise materially and adversely modify its
relationship with Seller or the Subsidiaries or to decrease materially or limit
its purchase or distribution of Seller Products and Services.
3.19 Disabling Codes. To Seller's knowledge, the software used in
the Seller Products and Services are free of any disabling codes or instructions
(a "DISABLING CODE"), and any virus or other intentionally created, undocumented
contaminant (a "CONTAMINANT"), that may, or may be used to, access, modify,
delete, damage or disable the Systems (as defined below) or that may result in
damage thereto. Software obtained from Third Party suppliers is, to Seller's
knowledge, free of any Disabling Codes or Contaminants that may, or may be used
to, access, modify, delete, damage or disable any of the Systems (as defined
below) or that might result in damage thereto. Seller has taken commercially
reasonable steps and implemented commercially reasonable procedures to ensure
that its internal computer systems (consisting of hardware, software, databases
or embedded control systems, "SYSTEMS") are free from Disabling Codes and
Contaminants. To Seller's knowledge, except as may be set forth in Section 3.19
of the Seller Disclosure Schedule, Seller has in place appropriate disaster
recovery plans, procedures and facilities and has taken all reasonable steps to
safeguard its Systems and restrict unauthorized access thereto.
26
3.20 Compliance with Laws. Seller and each Subsidiary of Seller has
complied, or prior to the Closing Date will have complied, and is or will be at
the Closing Date in compliance, in all material respects, with all Legal
Requirements, and all Orders applicable to Seller or any Subsidiary, or to the
Assets, properties and business of Seller or any Subsidiary, except where the
failure to comply with any such Legal Requirements would not, individually or in
the aggregate reasonably be expected to have a Material Adverse Effect on
Seller, the Business or the Assets.
Seller and each Subsidiary has received all material permits, approvals
and Governmental Authorizations from, and has made all material filings with,
Third Parties, including Governmental Authorities, that are necessary to the
conduct of its business as presently conducted.
3.21 Agreements and Commitments. Except as set forth under Section
3.21 of the Seller Disclosure Schedule and delivered or made available by Seller
to Platinum on or prior to the Closing Date, as of the date hereof, neither
Seller nor any Subsidiary of Seller is a party or subject to any agreement,
obligation or commitment that is material to Seller, its financial condition or
business or which is described below, including but not limited to the
following:
(a) any Contract providing for payments by or to Seller or any
Subsidiary of Seller in an amount with respect to any single transaction, or
series of related transactions, of (i) $50,000 or more in the ordinary course of
business or (ii) $25,000 or more not in the ordinary course of business;
(b) any Contract to which Seller or any Subsidiary of Seller
is a party (i) with respect to Seller IP Rights licensed or transferred to any
Third Party (other than standard agreements with customers arising in the
ordinary course of business consistent with past practice, the forms of which
have been delivered to Platinum or its counsel); and (ii) pursuant to which a
Third Party has licensed or transferred any Intellectual Property Rights to
Seller or any Subsidiary of Seller reasonably necessary for the conduct of its
business as of the date hereof (except for commercially available,
non-customized software sold at retail and not embedded in Seller Products and
Services or sub-licensed to customers of Seller or its Subsidiaries);
(c) any agreement by Seller or any Subsidiary of Seller to
encumber, transfer or sell any material rights in or with respect to any Seller
IP Rights except non-exclusive software licenses;
(d) any Contract providing for development of technology for
Seller which technology (i) is used or incorporated in any Seller Products or
Services currently distributed or performed by Seller or any Subsidiary of
Seller or (ii) is anticipated to be used or incorporated in any planned products
or services of Seller or a Subsidiary of Seller, or any Contract that requires
Seller to perform specified development work for a Third Party.
(e) any Contract currently in force for hosting, data center,
transaction processing or other services related to Seller's website;
(f) any agreement for the sale or lease of Tangible Personal
Property involving more than $50,000 per year;
(g) any dealer, distributor, sales representative, original
equipment manufacturer, value added remarketer or other agreement for the
distribution of Seller's Products or Services (other than standard agreements
arising in the ordinary course of business consistent with past practice, the
forms of which have been delivered to Platinum or its counsel);
27
(h) any franchise agreement;
(i) any Contract granting most favored nation pricing and/or
terms to any customer, licensee, purchaser, reseller, promoter or remarketer of
any of Seller or its Subsidiaries' products or services;
(j) any joint venture Contract or arrangement or any other
agreement that involves a sharing of profits with other Persons or the payment
of royalties to any other Person;
(k) any instrument evidencing indebtedness for borrowed money
by way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise, except for trade indebtedness or any
advance to any employee of Seller or of any Subsidiary of Seller incurred or
made in the ordinary course of business, and except as disclosed in the Seller
Financial Statements;
(l) any Contract containing covenants purporting to limit
Seller's or any of its Subsidiary's freedom to compete in any line of business
in any geographic area or to sell products or services to a specific entity;
(m) any Contract currently in force to provide source code to
any Third Party for any product or technology;
(n) any Contract for the employment of any officer, employee
or consultant of Seller or any Subsidiary of Seller or any other type of
Contract or understanding with any officer, employee or consultant of Seller or
any Subsidiary of Seller that is not immediately terminable by Seller or the
Subsidiary of Seller without cost or liability;
(o) any Contract for consulting or similar services with a
term of more than sixty (60) days and which is not terminable without penalty
with notice of sixty (60) days or less; or
(p) any other material Contract entered into outside the
ordinary course of business.
To Seller's knowledge, all agreements, obligations and
commitments listed in Section 3.21 of the Seller Disclosure Schedule, are valid
and in full force and effect, and except as expressly noted, a true and complete
copy of each has been delivered or made available to Platinum. Except as noted
on Section 3.21 of the Seller Disclosure Schedule, neither Seller nor, to the
knowledge of Seller, any other party, is in material Breach of or default under
any material term of any such agreement, obligation or commitment except where
such breach or default would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Seller, the Business or the
Assets. Neither Seller nor any Subsidiary of Seller has any liability for
renegotiation of government Contracts or sub-Contracts which individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
Seller, the Business or the Assets.
3.22 Employees.
(a) General Compliance. Seller and each of the Subsidiaries is
in compliance in all material respects with all applicable Legal Requirements
and Contracts relating to employment, employment practices, wages, hours, and
terms and conditions of employment, including, but not limited to, employee
compensation matters, and to Seller's Knowledge has, correctly classified
employees as exempt employees and non-exempt employees under the Fair Labor
Standards Act.
28
Except as set forth under Section 3.22(a) of the Seller Disclosure Schedule,
neither Seller nor any Subsidiary of Seller has employment or consulting
Contracts currently in effect that are not terminable at will (other than
agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions). To Seller's Knowledge and
except as set forth in Section 3.22 of the Seller Disclosure Schedule, all
independent contractors have been properly classified as independent contractors
for the purposes of federal and applicable state Tax laws, laws applicable to
employee benefits and other applicable laws. All employees of Seller or any
Subsidiary of Seller located in the United States are legally permitted to be
employed by Seller or such Subsidiary in the United States of America. Seller
will have no liability to any employee or to any organization or any other
entity as a result of the termination of any employee leasing arrangement.
(b) Good Labor Relations. Seller and each of the Subsidiaries:
(i) has never been since January 1, 2000, and is not now, subject to a union
organizing effort; (ii) is not subject to any collective bargaining agreement
with respect to any of its employees; (iii) is not subject to any other Contract
with any trade or labor union, employees' association or similar organization;
and (iv) has no current labor disputes and has had no material labor disputes or
claims of unfair labor practices since January 1, 2000. Seller and the
Subsidiaries have good labor relations, and have no knowledge of any facts
indicating that the consummation of the transactions contemplated hereby will
have a Material Adverse Effect on such labor relations. Between January 1, 2003
and the date of this Agreement, to Seller's knowledge, no executive officer of
Seller or any of its Subsidiaries, or material number of other employees of
Seller or any of its Subsidiaries, has given notice that such employee intends
to terminate his or her employment with Seller or any such Subsidiary. As of the
date of this Agreement, Seller has no knowledge that any key personnel or other
employees intend to leave its or a Subsidiary's employment. There are no
controversies pending or, to Seller's knowledge, threatened, between Seller or
any Subsidiary and any of their employees that would be reasonably likely to
result in Seller incurring any material Liability that could reasonably be
expected to result in a Material Adverse Effect on Seller.
(c) Employee Plans. Section 3.22(c) of the Seller Disclosure
Schedule identifies each Seller Employee Plans. Copies of all other Seller
Employee Plans (and, if applicable, related trust agreements) and all related
documents, amendments and material written interpretations (including summary
plan descriptions) thereto have been delivered or made available to Platinum or
its counsel, together with, to the extent applicable, the two most recent annual
reports (Form 5500, including, if applicable, Schedule B thereto) prepared in
connection with any such Seller Employee Plan. No "prohibited transaction," as
defined in Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any Seller Employee Plan which is covered by Title I of ERISA which
would result in a material Liability to Seller, excluding transactions effected
pursuant to a statutory or administrative exemption. Nothing done or omitted to
be done and no transaction or holding of any asset under or in connection with
any Seller Employee Plan has or will make Seller, any Subsidiary or any Seller
or Subsidiary officer or director subject to any material Liability under Title
I of ERISA or Liability for any material Tax or penalty pursuant to Sections
4972, 4975, 4976 or 4979 of the Code or Section 502 of ERISA. Except as set
forth in Section 3.22(c) of the Seller Disclosure Schedule, no Seller Employee
Plans will be subject to any surrender fees or service fees upon termination
other than the normal and reasonable administrative fees associated with the
termination of benefit plans. All contributions due from Seller or any
Subsidiary with respect to any of the Seller Employee Plans have been made as
required under such plans and, to the extent applicable, ERISA, other than
contributions accrued in the ordinary course of business consistent with past
practice, all of which have been paid or will be paid when and as required or,
if not required to be made, have been accrued on the Seller Financial
Statements. Seller and each of the Subsidiaries has performed in all material
respects all obligations required to be performed by it under each Seller
Employee
29
Plan, and each Seller Employee Plan has been maintained materially in compliance
with its terms and with the requirements prescribed by any and all Legal
Requirements, which are applicable to such Seller Employee Plans. All
individuals who, pursuant to the terms of any Seller Employee Plans, are
entitled to participate in any Seller Employee Plan, currently are participating
in such Seller Employee Plan or have been offered an opportunity to do so.
Except as set forth under Section 3.22(c) of the Seller Disclosure Schedule, to
Seller's knowledge, no employee of Seller or any of its Subsidiaries, and no
Person subject to any health plan of Seller or any of its Subsidiaries has made
medical claims through such health plan during the 12 months preceding the date
hereof for more than $50,000 in the aggregate for which Seller is responsible.
(d) Pension Plans. All Seller Employee Plans which
individually or collectively would constitute an "employee pension benefit
plan", as defined in Section 3(2) of ERISA (collectively, the "SELLER PENSION
PLANS"), are identified as such under Section 3.22(d) of the Seller Disclosure
Schedule. Any Seller Pension Plan which is intended to be qualified under
Section 401(a) of the Code (a "SELLER 401(A) PLAN") has received a favorable
determination from the Internal Revenue Service with respect to its tax exempt
status. No Seller Pension Plan constitutes, or has since the enactment of ERISA
constituted, a "multiemployer plan," as defined in Section 3(37) of ERISA. No
Seller Pension Plans are subject to Title IV of ERISA. Seller has delivered to
Platinum or its counsel a complete and correct copy of the most recent Internal
Revenue Service determination letter with respect to each Seller 401(a) Plan, if
any exists.
(e) Benefit Arrangements. Section 3.22(e) of the Seller
Disclosure Schedule lists each employment, severance (including all
post-employment liabilities) or other similar Contract or policy and each
Contract providing for insurance coverage (including any self-insured
arrangements), workers' benefits, vacation benefits, severance benefits,
disability benefits, death benefits, hospitalization benefits, retirement
benefits, deferred compensation, profit-sharing, bonuses, stock options, stock
purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or benefits for
employees, consultants or directors which: (i) is not a Seller Employee Plan;
(ii) is entered into, maintained or contributed to by Seller or any Subsidiary;
and (iii) covers any employee or former employee or independent contractor or
consultant of Seller or any Subsidiary. Such Contracts and policies as are
described in this Section 3.22(e) are herein referred to collectively as the
"SELLER BENEFIT ARRANGEMENTS." Each Seller Benefit Arrangement has been
maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, Orders, rules and regulations which are
applicable to such Seller Benefit Arrangement. Seller has delivered to Platinum
or its counsel a complete and correct copy or description of each Seller Benefit
Arrangement. All individuals who, pursuant to the terms of any Seller Benefit
Arrangement, are entitled to participate in any such Seller Benefit Arrangement,
are currently participating in such Seller Benefit Arrangement or have been
offered an opportunity to do so and have declined.
(f) Benefit Changes. Except as set forth in Section 3.22(f)
of the Seller Disclosure Schedule since January 1, 2003, there has been no
amendment to, written interpretation or announcement (whether or not written) by
Seller or any Subsidiary of Seller relating to, or change in employee
participation or coverage under, any Seller Employee Plan or Seller Benefit
Arrangement that would increase materially the expense of maintaining such
Seller Employee Plan or Seller Benefit Arrangement in the future.
(g) COBRA Compliance. Seller and, to the extent applicable,
each of the Subsidiaries has complied in all material respects prior to the date
hereof, with the continuation coverage requirements of Section 4980B of the Code
and the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), Sections 601 through 608 of ERISA, the American with Disabilities Act
of 1990, as amended, and the Family Medical Leave Act of 1993, as
30
amended, and the regulations thereunder, and no material Tax payable on account
of Section 4980B of the Code has been incurred with respect to any current or
former employees (or their beneficiaries) of Seller or any Subsidiary.
(h) No Violation of Contracts. To the knowledge of Seller, no
employee or consultant of Seller or any Subsidiary of Seller is in violation of
any term of any employment Contract, patent disclosure agreement,
non-competition agreement, or any other Contract, or any restrictive covenant
relating to the right of any such employee to be employed by Seller or any
Subsidiary of Seller, or to use Intellectual Property Rights of others. To
Seller's knowledge, the mere fact of employment of any Seller or Subsidiary
employee does not subject Seller to any Liability other than for compensation
and benefits earned in the ordinary course of business.
3.23 Relationships with Affiliates. Except as disclosed in Section
3.23 of the Seller Disclosure Schedule, neither Parent nor any Affiliate of
Parent (except Seller) has, or since January 1, 2001 has had, any interest in
any property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to Seller's business. Neither Seller nor
Parent nor any Affiliate of any of them owns, or since January 1, 2001 has
owned, of record or as a beneficial owner, an equity interest or any other
financial or profit interest in any Person that has (a) had business dealings or
a material financial interest in any transaction with Seller other than business
dealings or transactions disclosed in Section 3.23 of the Seller Disclosure
Schedule, each of which has been conducted in the ordinary course of business
with Seller at substantially prevailing market prices and on substantially
prevailing market terms, or (b) engaged in competition with Seller with respect
to any line of the Seller Products and Services (a "COMPETING BUSINESS") in any
market presently served by Seller, except for ownership of less than one percent
(1%) of the outstanding capital stock of any Competing Business with securities
listed on any national or regional securities exchange or that have been
registered under Section 12(g) of the Exchange Act. Except as set forth in
Section 3.23 of the Seller Disclosure Schedule, neither Seller nor Parent nor
any Affiliate of any of them is a party to any Contract with, or has any claim
or right against, Seller or any Subsidiary of Seller.
3.24 Environmental Matters.
(a) For the purposes of this Agreement, the terms "DISPOSAL,"
"RELEASE," and "THREATENED RELEASE" shall have the definitions assigned thereto
by CERCLA. For the purposes of this Agreement, "HAZARDOUS MATERIALS" shall mean
any hazardous or toxic substance, material or waste which is or becomes prior to
the Closing regulated under, or defined as a "hazardous substance," "pollutant,"
"contaminant," "toxic chemical," "hazardous material," "toxic substance" or
"hazardous chemical" under: (i) CERCLA; (ii) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (iii) the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; (iv)
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (v) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.; (vi)
regulations promulgated under any of the above statutes; or (vii) any other
applicable federal, state or local statute, ordinance, rule or regulation that
has a scope or purpose similar to those identified above. For purposes of this
Agreement, the term "HAZARDOUS ACTIVITY" means the distribution, generation,
handling, importing, management, manufacturing, processing, production,
refinement, Release, storage, transfer, transportation, treatment, or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into the
Environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities.
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(b) To Seller's Knowledge, as of the Closing, except in
compliance with Environmental Laws or in a manner that could not reasonably be
expected to subject Seller or any Subsidiary of Seller to material Liability, no
Hazardous Materials are present on or under any Facility currently owned,
operated, or leased by Seller, any predecessor, any Subsidiary of Seller or any
former subsidiary, or were present on any other Facility at the time it ceased
to be owned, operated or leased by Seller, any predecessor, any Subsidiary of
Seller or any former subsidiary. Neither Seller nor any Person for whose conduct
it is or may be held responsible, or to the knowledge of Seller, any other
Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to any Facility or any other property or assets (whether
real, personal, or mixed) in which Seller has or had an interest except in full
compliance with all applicable Environmental Laws.
(c) To Seller's knowledge, except as set forth on Section
3.24 of the Seller Disclosure Schedule during the time that Seller, any
predecessor, Subsidiary of Seller or any former subsidiary has owned or leased
a Facility:
(i) there have been no disposals, releases or threatened
releases of Hazardous Materials on, from or under such Facility;
(ii) no Hazardous Materials have been transported from
such Facilities to any site or facility now listed or proposed for listing on
the National Priorities List, at 40 C.F.R. Part 300, or any list with a similar
scope or purpose published by any state authority; and
(iii) there has been no litigation, proceeding or
administrative action brought, threatened in writing against Parent, Seller, any
predecessor of Seller, any Subsidiary of Seller or any former subsidiary, or any
settlement reached by Parent, Seller, any predecessor of Seller, any Subsidiary
of Seller or any former subsidiary with, any party or parties alleging the
presence, disposal, release or threatened release of any Hazardous Materials on,
from or under any of such Facility or that otherwise relates to Hazardous
Activity.
(d) Except as set forth in Section 3.24(d) of the Seller
Disclosure Schedule, Seller has no knowledge of any presence, disposals,
releases or threatened releases of Hazardous Materials on, from or under any of
Facility that may have occurred prior to Seller, a Subsidiary of Seller or
former subsidiary having taken possession of any of such Facility.
(e) Seller has delivered to Purchaser true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller pertaining to Hazardous Materials or Hazardous Activities
in, on, or under the Facilities, or concerning compliance by Seller or any other
Person for whose conduct it is or may be held responsible, with Environmental
Laws.
3.25 [Intentionally Omitted].
3.26 Board of Directors, Officers and Key Personnel. Section 3.26
of the Seller Disclosure Schedule accurately sets forth, as of the date of this
Agreement: (a) the name and title of each of Seller's officers and its
Subsidiaries' officers; (b) the name and title of supervisory, developmental or
other key personnel of Seller and its Subsidiaries; and (c) the name, principal
occupation and address of each member of Seller's board of directors and its
Subsidiaries' boards of directors.
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3.27 Insurance. Seller and each Subsidiary of Seller maintains,
fire and casualty, workers compensation, general liability, business
interruption and product liability insurance (which current policies are listed
under Section 3.27 of the Seller Disclosure Schedule) which it believes to be
reasonably prudent for similarly sized and similarly situated businesses.
Section 3.27 of the Seller Disclosure Schedule sets forth all material claims
made under insurance policies since January 1, 2001 and the premiums that apply
with respect to such insurance policies as of the date of this Agreement.
3.28 Accuracy of Disclosure. To Seller's knowledge, this Agreement,
its Schedules, and any of the certificates or documents to be delivered by
Seller or Parent to Platinum under this Agreement, taken together, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein and therein, in light
of the circumstances under which such statements were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF PLATINUM AND PURCHASER
Except as set forth in the Platinum Disclosure Schedule, the parts of
which are numbered to correspond to the Section numbers of this Agreement and
which thereby qualify the corresponding representations and warranties contained
in this Article 4, each of Platinum and Purchaser, where applicable, hereby
represents and warrants jointly and severally to Seller as follows:
4.1 Organization and Good Standing. Each of Platinum and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority, and all requisite qualifications to do business as a
foreign corporation, to conduct its business in the manner in which its business
is currently being conducted, except where the failure to be so organized,
existing or in good standing or to have such power, authority or qualifications
would not, individually or in the aggregate, could be reasonably expected to
have a material adverse effect on Platinum. Platinum has delivered or made
available to Seller a true and correct copy of its and Purchaser's certificate
of incorporation and bylaws, each as amended to date (collectively, the
"PLATINUM CHARTER DOCUMENTS"), and each such instrument is in full force and
effect. Platinum is not in violation of any of the provisions of the Platinum
Charter Documents. Platinum has delivered or made available to Seller all
proposed or considered amendments to the Platinum Charter Documents.
4.2 Power, Authorization and Non-Contravention.
(a) Each of Platinum and Purchaser has the corporate power,
legal capacity and authority to (i) carry on its business as now conducted; (ii)
own, operate and lease its properties in the manner in which its properties are
currently owned, used and leased; (iii) perform its obligations under Contracts
to which Platinum or any of its Subsidiaries is a party or bound, enter into and
perform its obligations under this Agreement, and all agreements to which
Platinum or Purchaser is or will be a party that are required to be executed
pursuant to this Agreement (the "PLATINUM ANCILLARY AGREEMENTS"); except in the
case of clauses (i), (ii) and (iii) of this Section 4.2 where the failure to
have such power, capacity or authority would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on Platinum
or Purchaser. The execution, delivery and performance of this Agreement and the
Platinum Ancillary Agreements have been duly and validly approved and authorized
by Platinum's Board of Directors and Purchaser's Board of Directors, as
applicable. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate and stockholder action on the part of Platinum and Purchaser. The
written consent of Platinum, as the sole stockholder of Purchaser, a certified
copy of which has previously been delivered to Seller, is sufficient for the
approval, and no
33
other approval of any holder of any securities of Platinum is required in
connection with the consummation of the transactions contemplated hereby.
(b) No consent, approval, Order or authorization of, or
registration, declaration or filing with any Governmental Authority or other
Person is required to be obtained or made by Platinum or Purchaser in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing with the SEC of a
Current Report on Form 8-K with respect to the purchase of the Assets in
accordance with the Exchange Act, (ii) such consents, approvals, Orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state Securities (or related) Laws, and (iii)
such other consents, authorizations, filings, approvals and registrations which
if not obtained or made would not be material to Platinum or Purchaser or
prevent, alter or materially delay the consummation of the transactions
contemplated hereby.
(c) This Agreement and the Platinum Ancillary Agreements are,
or when executed by Platinum and Purchaser (as applicable) and the other parties
thereto will be, valid and binding obligations of Platinum and Purchaser, to the
extent a party thereto, enforceable against Platinum and Purchaser, to the
extent a party thereto in accordance with their respective terms, except as to
the effect, if any, of (i) applicable bankruptcy and insolvency, moratorium,
reorganization or other similar laws affecting the rights of creditors generally
and (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies.
4.3 No Violation of Charter Documents, Contracts or Laws. Neither
the execution and delivery of this Agreement or any Platinum Ancillary
Agreement, nor the consummation of the transactions provided for herein or
therein, will conflict with, or (with or without notice or lapse of time, or
both) result in a termination, Breach, impairment or violation of: (a) any
provision of the Platinum Charter Documents, as currently in effect; (b) any
material Contract to which Platinum or any of its Subsidiaries is a party or
bound; or (c) any federal, state, local or foreign judgment, writ, decree,
Order, statute, rule or regulation applicable to Platinum any Subsidiary of
Platinum or any of their respective assets or properties.
4.4 Financing. Platinum has a commitment letter, as attached to
Section 4.4 of the Platinum Disclosure Schedule, for a credit facility (the
"CREDIT FACILITY") which, if funded in accordance with its terms, together with
available cash on hand, will provide sufficient funds to deliver the Purchase
Price and all associated costs and expenses to Parent and to consummate the
transactions contemplated by this Agreement.
4.5 Accuracy of Disclosure. This Agreement, its Schedules, and any
of the certificates or documents to be delivered by Platinum or Purchaser to
Seller or Parent under this Agreement, taken together, do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained herein and therein, in light of the
circumstances under which such statements were made, not misleading.
5. SELLER COVENANTS
5.1 Advice of Changes. During the period from the date of this
Agreement until the earlier to occur of (a) the Effective Time or (b) the
termination of this Agreement in accordance with the provisions of Article 11
hereof, Seller will promptly advise Platinum in writing of: (i) the discovery by
Seller of any event, condition, fact or circumstance occurring on or prior to
the date of this Agreement that would render any representation or warranty by
Seller contained in this Agreement untrue or inaccurate in any material respect;
(ii) any event, condition, fact or circumstance occurring subsequent to the date
of this Agreement that would render any representation or warranty by Seller
contained in this Agreement, if made on or as of the date of such event or the
Closing Date (provided that representations and warranties which are confined to
a specific date shall speak as of that date), untrue or
34
inaccurate in any material respect; (iii) any Breach of any covenant or
obligation of Seller pursuant to this Agreement or any Ancillary Agreement; (iv)
any event, condition, fact or circumstance that may make the timely satisfaction
of any of the conditions set forth in Article 10 impossible or unlikely; and (v)
any Material Adverse Effect on Seller.
5.2 Conduct of Business. During the period from the date of this
Agreement until the earlier to occur of (a) the Effective Time or (b) the
termination of this Agreement in accordance with the provisions of Article 11
hereof, Seller and each of its Subsidiaries shall, except as contemplated by
this Agreement or to the extent that Platinum shall otherwise consent in writing
(which consent shall not be unreasonably withheld or delayed), carry on the
Business in the usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and in compliance in all material respects with
all applicable Legal Requirements and, subject to orders of the Bankruptcy Court
and otherwise to the requirements of the Bankruptcy Code, pay its debts and
Taxes when due, pay or perform other material obligations when due, and use all
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) make available the
services of its present officers, (iii) preserve its relationships with
customers, suppliers, licensors, licensees, and others with which it has
business dealings, (iv) maintain the Assets in good working condition and repair
according to the standards it has maintained as of the date of this Agreement,
subject only to ordinary wear and tear, and (v) keep in full force all insurance
policies identified under Section 3.27 of the Seller Disclosure Schedule and
obtain, renew or extend any insurance required for the Business and the Assets.
In addition, during that period, Seller will promptly notify Platinum of any
material event involving the operation of the Business or the Assets consistent
with the agreements contained herein.
In addition, during the period from the date of this Agreement
until the earlier to occur of (a) the Effective Time or (b) the termination of
this Agreement in accordance with the provisions of Article 11 hereof, except as
provided otherwise herein or as approved or recommended by Platinum in writing,
Seller and its Subsidiaries will not, without the prior written consent of
Platinum, which consent shall not be unreasonably withheld or delayed:
(a) sell, lease, license, encumber or otherwise dispose of any
of the Assets which individually or in the aggregate, are material to the
Business or which have a book value in excess of $50,000, other than sales of
products to customers and resellers on commercially reasonable terms effected in
the ordinary course of business consistent with past practice;
(b) incur any indebtedness for money borrowed (other than the
DIP Financing), enter into any capital leases or guarantee any such indebtedness
or capital of another Person or enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement having
the economic effect of any of the foregoing, which obligations, liabilities or
indebtedness exceed $50,000 in the aggregate
(c) except as required under agreements existing as of the
date of this Agreement or as set forth under Section 5.2(c) of the Seller
Disclosure Schedule, grant or pay any bonus, royalty, severance or termination
pay or increased salary or other compensation to any officer, director,
employee, consultant or agent of Seller or enter into any new employment
agreement or a consulting agreement which provides for payment of more than
$50,000 annually with any such Person, or enter into any new agreement or plan
of the type described in Sections 3.22(c) or 3.22(e);
35
(d) enter into, amend, modify or terminate any Assumed Seller
Contract, except in the ordinary course of business consistent with past
practice and to the extent such action would not require disclosure under
Section 3.14, or waive, release, compromise or assign any material rights or
claims;
(e) issue or sell any shares of the capital stock of any class
of any Subsidiary of Seller or any other of such Subsidiary's securities, or
issue, grant or create any securities exercisable for or convertible into such
securities;
(f) acquire or agree to acquire by merging or consolidating
with, or by purchasing any equity interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership, limited
liability company, association or other business organization or division
thereof; or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the Business or enter into any joint
ventures, partnerships or limited liability companies, or enter into strategic
relationships or alliances, which are material, individually or in the
aggregate, to the Business;
(g) make or permit to be made any capital expenditures, or
make or commit or commit or agree to make any payments that would be classified
as expenses under GAAP in each case which exceed $50,000 in any one transaction
or the terms of which transactions are not in the ordinary course of business
consistent with past practice;
(h) materially change its business practices or policies with
respect to the Seller Products and Services or its customers;
(i) materially revalue any of its assets or, except as
required by GAAP, make any change in accounting methods, principles or
practices, or agree to any material audit assessment by any Tax authority or
make any Tax election;
(j) lend any amount to any Person, other than loans made to
Subsidiaries of Seller that will be repaid in full prior to the Effective Time,
in an amount not to exceed $50,000, and advances for reasonable travel related
expenses which are incurred in the ordinary course of business consistent with
past practice, not material in amount, which travel related expenses shall be
documented by receipts for the claimed amounts in accordance with past practice;
(k) make any material payments outside the ordinary course of
business consistent with past practice;
(l) take any action which would have a Material Adverse
Effect on Seller other than as contemplated herein;
(m) declare or make any Restricted Payments;
(n) directly or indirectly, make or own any Investment,
except:
(i) Investments in Cash Equivalents;
(ii) Investments by any Subsidiary existing on the Filing
Date; or
36
(iii) Investments received (but not purchased) in
connection with the bankruptcy or reorganization of a customer of Seller or any
Subsidiary or received in settlement of delinquent obligations of or disputes
with the customers of Seller or any Subsidiary in the ordinary course of
business.
(o) agree to do, or permit a Subsidiary to do or agree to do,
any of the things described in the preceding clauses 5.2(a) through (n).
5.3 Regulatory Approvals. Seller will execute and file, or join in
the execution and filing, of any application or other document that may be
necessary in order to obtain any Governmental Authorization, which may be
reasonably required, or which Platinum may reasonably request, in connection
with the consummation of the transactions provided for in this Agreement. Seller
will use all commercially reasonable efforts to obtain or assist Platinum in
obtaining all such Governmental Authorizations.
5.4 Necessary Consents. Seller will use all commercially
reasonable efforts to obtain such written consents and take such other actions
as may be necessary or appropriate for Seller, in addition to those set forth in
Section 5.3, to allow the consummation of the transactions provided for herein
and to facilitate and allow Platinum to carry on Seller's Business after the
Closing Date, including the obtaining of any consents required to assign the
Assumed Seller Contracts to Purchaser.
5.5 Securities Laws. Seller shall use all reasonable efforts to
assist Platinum to the extent necessary to comply with the Securities Laws of
all jurisdictions applicable in connection transactions contemplated by this
Agreement.
5.6 Litigation. Seller will notify Platinum in writing promptly
after learning of any Proceeding by or before any Governmental Authority
initiated or threatened against Parent or Seller relating to the Business or the
Assets or for the purpose or with the effect of enjoining or preventing the
consummation of any of the transactions contemplated by this Agreement, or
which, if adversely determined, would be reasonably expected to have a Material
Adverse Effect on Seller, the Business, the Assets or the Assumed Liabilities.
If Parent or Seller becomes subject to a review by the Internal Revenue Service
or any other Taxing agency or authority for periods prior to the Closing Date,
and such review has the potential to materially affect the Liability of Platinum
or any Subsidiary of Platinum for any Taxes due with respect to a Taxable period
ending after the Closing Date, Parent or Seller (as the case may be) shall keep
Platinum informed on a regular basis of the nature of such Proceedings and shall
consider in good faith any recommendations made by Platinum as to the conduct
and settlement of such Proceedings. In no event will Parent or Seller enter into
any settlement or other stipulation with respect to any such review without the
written consent of Platinum, which consent will not be unreasonably withheld.
5.7 Notification of Employee Problems. Parent or Seller will
promptly notify Platinum if any of Parent's or Seller's officers becomes aware
that any of the key personnel listed under Section 3.26 of the Seller Disclosure
Schedule intends to leave Seller's employ.
5.8 Satisfaction of Closing Conditions. Seller will use its
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent which are set forth in Article 10 on or before the Closing.
Subject to the terms and conditions of this Agreement, Seller will use its
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated, and, without limiting the generality of the
foregoing, to obtain all consents and
37
authorizations of Third Parties and to make all filings with, and give all
notices to, Third Parties that may be necessary or reasonably required on its
part in order to effect the transactions contemplated hereby.
5.9 Confidentiality. Seller and Parent agree that Seller, Parent
and their respective officers, directors, agents and representatives, will hold
in strict confidence, and will not use or disclose, any Confidential Information
or proprietary data obtained from Purchaser or Platinum with respect to
Purchaser or Platinum except for the purpose of evaluating, negotiating and
completing the transactions contemplated hereby. Information generally known in
Platinum's industry or which has been disclosed to Seller or Parent by Third
Parties which have a right to do so shall not be deemed Confidential Information
or proprietary data for purposes of this Agreement. If the transactions
contemplated by this Agreement are not consummated, Seller and Parent will
return to Platinum (or certify that they have destroyed) all copies of such
Confidential Information and proprietary data, including, but not limited to
financial information, customer lists, business and corporate records,
worksheets, test reports, Tax returns, lists, memoranda, and other documents
prepared by or made available to Seller in connection with the transactions
contemplated hereby.
5.10 Change of Name. On or before the Closing Date, Seller shall
(i) amend the Seller Charter Documents and take all other actions necessary to
change its name to one sufficiently dissimilar to Seller's present name, in
Purchaser's judgment, to avoid confusion; and (ii) take all actions requested by
Purchaser to enable Purchaser to change its name to Seller's present name. In
addition, from and after the Effective Time, none of Seller or its Subsidiaries
shall use the present name of Seller or its Subsidiaries, or any variation
thereof.
5.11 Access to Information. During the period from the date of this
Agreement until the earlier to occur of (a) the Effective Time or (b) the
termination of this Agreement in accordance with the provisions of Article 11
hereof, subject to the terms and conditions hereof relating to the
confidentiality and use of confidential and proprietary information, and subject
to compliance with applicable Legal Requirement (including, but not limited to,
antitrust laws) Seller will provide Platinum and its agents with reasonable
access, during regular business hours, to the files, books, records and offices
of Seller and the Subsidiaries, including, without limitation, any and all
information relating to Seller and Subsidiary Taxes, commitments, Contracts,
Leases, licenses, real, personal and intangible property (including any
Intellectual Property Rights), and financial condition. Seller will cause its
accountants to cooperate with Platinum and its agents in making available all
financial information reasonably requested, including, without limitation, the
right to examine all working papers pertaining to all financial statements
prepared or audited by such accountants.
5.12 Canadian Employee Matters. Prior to the Closing Date, Seller
or Canada Sub shall terminate such employees of Canada Sub as shall be set forth
on a schedule to be provided to Seller not later than ten (10) days prior to the
Effective Time; provided, however, that such number of terminated employees
shall not be greater than forty-nine (49). Seller agrees that it or Canada Sub
shall be responsible for any severance or termination obligations of Canada Sub
with respect to any such terminated employees, that such employees shall be
terminated in a manner so as to prevent Purchaser from incurring any liability
with respect to such terminations (including without limitation, all payments
required by applicable labor or employment standards legislation) and Seller
shall also terminate any and all Seller Employee Plans prior to Closing as
directed by Platinum or Purchaser.
6. COVENANTS OF PLATINUM AND PURCHASER
6.1 Advice of Changes. During the period from the date of this
Agreement until the earlier to occur of (a) the Effective Time and (b) the
termination of this Agreement in accordance with
38
the provisions of Article 11 hereof, Platinum and Purchaser will promptly advise
Seller in writing of: (i) the discovery by Platinum or Purchaser of any event,
condition, fact or circumstance occurring on or prior to the date of this
Agreement that would render any representation or warranty by Platinum or
Purchaser contained in this Agreement untrue or inaccurate in any material
respect; (ii) any event, condition, fact or circumstance occurring subsequent to
the date of this Agreement that would render any representation or warranty by
Platinum or Purchaser contained in this Agreement, if made on or as of the date
of such event or the Closing Date (provided that the representations and
warranties which are confined to a specific date shall speak only as of such
date), untrue or inaccurate in any material respect; (iii) any Breach of any
covenant or obligation of Platinum pursuant to this Agreement or any Ancillary
Agreement; (iv) any event, condition, fact or circumstance that may make the
timely satisfaction of any of the conditions set forth in Article 9 impossible
or unlikely; and (v) any material adverse effect on Platinum.
6.2 Regulatory Approvals. Platinum will execute and file, or join
in the execution and filing of, any application or other document that may be
necessary in order to obtain any Governmental Authorization, which may be
reasonably required, or which Seller may reasonably request, in connection with
the consummation of the transactions provided for in this Agreement. Platinum
will use commercially reasonable efforts to obtain all such Governmental
Authorization.
6.3 Litigation. Platinum will notify Seller in writing promptly
after learning of any Proceeding threatened or pending for the purpose or with
the probable effect of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement, or which would be reasonably
expected to have a material adverse effect on Platinum.
6.4 Satisfaction of Conditions Precedent. Upon the terms and
subject to the conditions of this Agreement, Platinum will use commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Article 9 on or before the Closing Date. Upon
the terms and subject to the conditions of this Agreement, Platinum will use
commercially reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of Third Parties and to
make all filings with, and give all notices to, Third Parties that may be
necessary or reasonably required on its part in order to effect the transactions
provided for herein.
6.5 Confidentiality. Purchaser and Platinum agree that, unless and
until the Closing has been consummated. Purchaser, Platinum and their officers,
directors, agents and representatives, will hold in strict confidence, and will
not use or disclose, any Confidential Information or proprietary data obtained
from Seller or its Subsidiaries with respect to Seller or its Subsidiaries
except for the purpose of evaluating, negotiating and completing the
transactions contemplated hereby. Information generally known in Seller's
industry or which has been disclosed to Purchaser or Platinum by Third Parties
which have a right to do so shall not be deemed Confidential Information or
proprietary data for purposes of this Agreement. If the transactions
contemplated by this Agreement are not consummated, Purchaser and Platinum will
return to Seller (or certify that they have destroyed) all copies of such
Confidential Information and proprietary data, including, but not limited to
financial information, customer lists, business and corporate records,
worksheets, test reports, Tax returns, lists, memoranda, and other documents
prepared by or made available to Purchaser and Platinum in connection with the
transactions contemplated hereby.
6.6 Office Space. For a period of six (6) months after the Closing
Date, or such longer or shorter period of time as Purchaser and Seller shall
mutually agree, Purchaser shall provide Seller with reasonable office space at
the former headquarters of Seller located in Niles, IL consisting of one (1)
39
office for use by Seller in administering the remainder of the Chapter 11 Case.
Purchaser shall not be obligated to provide Seller with any secretarial staff,
computer access or other support services, except access to an external
telephone line, as needed.
7. ADDITIONAL COVENANTS
7.1 Non-Competition, Non-Solicitation and Non-Disparagement.
(a) Non-Competition. For a period of five (5) years after the
Closing Date, neither Seller nor Parent shall, anywhere in the world, directly
or indirectly invest in, own, manage, operate, finance, control, advise, or
render services to, or guarantee the obligations of, any Person engaged in or
planning to become engaged in the Business or any business that competes with
the Business; provided, however, that Seller or Parent may purchase or otherwise
acquire up to (but not more than) five percent (5%) of any class of the
securities of any Person (but may not otherwise participate in the activities of
such Person) if such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the Exchange
Act.
(b) Non-Solicitation. For a period of five (5) years after
the Closing Date, neither Seller nor Parent shall, directly or indirectly:
(i) solicit the business of any Person who is an active
customer of Purchaser; or
(ii) cause, induce or attempt to cause or induce any
customer, supplier, licensee, licensor, franchisee, employee, consultant or
other business relation of Seller on the Closing Date or within the year
preceding the Closing Date to cease doing business with Purchaser, to deal with
any competitor of Purchaser, or in any way interfere with its relationship with
Purchaser.
(c) Non-Disparagement. After the Closing Date, the Parties
will not disparage the other parties or any of their respective shareholders,
directors, officers, employees or agents.
(d) Modification of Covenant. If a final Order of a
Governmental Authority of competent jurisdiction determines that any term or
provision contained in Section 7.1(a) through (c) is invalid or unenforceable,
then the parties agree that the court or tribunal will have the power to reduce
the scope, duration, or geographic area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision. This Section 7.1 will be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. This Section
7.1 is reasonable and necessary to protect and preserve Purchaser's legitimate
business interests and the value of the Assets and to prevent any unfair
advantage being conferred on Seller or Parent.
7.2 Further Assurances. Parent and Seller agree that if, at any
time before or after the Effective Time, Platinum considers or is advised that
any further deeds, assignments or assurances are reasonably necessary or
desirable to vest, perfect or confirm in Purchaser's assumption of the Assumed
Liabilities, Parent and Seller shall execute and deliver all such proper deeds,
assignments and assurances and do all other things reasonably necessary to vest,
perfect or confirm title to such property or rights in Purchaser and take all
such other lawful and reasonably necessary action to carry out the purposes of
this Agreement. In addition, from and after the Closing Date, Seller agrees that
it will (i) remit to Purchaser
40
all checks or payments received by it subsequent to the Effective Time which
constitute Purchaser's assumption of the Assumed Liabilities s and (ii) collect
any and all insurance proceeds resulting from claims relating to the business
which constitutes Purchaser's assumption of the Assumed Liabilities and remit
such sums directly to Purchaser. Platinum and Purchaser agree that if, at any
time before or after the Effective Time, Seller considers or is advised that any
further instruments of assumption or assurances are reasonable necessary or
desirable to confirm Purchaser's assumption of the Assumed Liabilities, Platinum
and Purchaser shall execute and deliver all such proper instruments and
assurances and do all other things reasonably necessary to confirm Purchaser's
assumption of the Assumed Liabilities, and take all such other lawful and
reasonably necessary action to carry out the purposes of this Agreement.
7.3 Filings. The parties agree that, based upon the current facts
known to them, no Antitrust Filings (as hereinafter defined) nor Other Filings
(as hereinafter defined) are required. Notwithstanding the foregoing, in the
event that Antitrust Filings (as hereinafter defined) or Other Filings (as
hereinafter defined) are required, as promptly as practicable after the date of
this Agreement, each of Parent, N.E.S. Investment Co., Sellers and Platinum will
prepare and file (i) with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice Notification and
Report Forms relating to the transactions contemplated herein if required by the
HSR Act, as well as comparable notification forms required by the merger
notification or control laws and regulations of any other applicable
jurisdiction (the "ANTITRUST FILINGS") and (ii) any other filings required to be
filed by them under the Exchange Act, the Securities Act or any other Federal,
state or foreign laws relating to the transactions contemplated by this
Agreement (the "OTHER FILINGS"). Parent, Sellers and Platinum each shall
promptly supply the other with any information which may be required in order to
effectuate any filings pursuant to this Section 7.3. Neither Platinum nor any of
its Affiliates on the one hand, nor Parent nor any of its Affiliates on the
other hand, shall be under any obligation to make proposals, execute or carry
out agreements or submit to orders providing for the sale or other disposition
or holding separate (through the establishment of a trust or otherwise) of any
assets or categories of assets of such party or any of its Affiliates, or
imposing or seeking to impose any limitation on the ability of Platinum or any
of its Affiliates or subsidiaries on the one hand or Parent or any of its
Affiliates or subsidiaries on the other hand, to conduct their business or own
such assets or to acquire, hold or exercise full rights of ownership of the
Assets to be acquired.
8. BANKRUPTCY PROCEDURES, ETC.
8.1 Motion and Notice Regarding Approval of Bid Procedures. On or
before July 15, 2004, Seller shall file a motion (the "SALE PROCEDURES MOTION")
and give sufficient notice in accordance with the requirements of the Bankruptcy
Code and Bankruptcy Rules seeking Bankruptcy Court approval of sale and bidding
procedures consistent with the terms of this Section 8, including, without
limitation, the Termination Fee described in Section 8.10 and the Expense
Reimbursement described in Section 8.9, and Seller shall seek prompt entry of an
order of the Bankruptcy Court granting the Sale Procedures Motion (the "SALE
PROCEDURES ORDER"), which approves bid procedures substantially similar to those
requested in the Sale Procedures Motion after sufficient notice has been given.
Upon approval of the sale and bidding procedures, Seller shall distribute a copy
of the Sale Procedures Order (in the form of notice approved by the Bankruptcy
Court) to all entities who have expressed an interest in acquiring the Assets.
8.2 Motion and Notice Regarding Sale of Acquired Assets and
Assumption and Assignment of Certain Acquired Assets. On or before July 15,
2004, Seller shall file a motion (the "SALE MOTION") and give sufficient notice
in accordance with the requirements of the Bankruptcy Code and Bankruptcy Rules
seeking Bankruptcy Court approval pursuant to Bankruptcy Code Section 363 of (1)
a sale of the Assets to the Purchaser, and (2) to the extent required under the
Bankruptcy Code or other
41
applicable law, approval pursuant to Bankruptcy Code Section 365 of assumption
and assignment of certain of the Assets in accordance with the terms and
conditions of this Agreement, Seller shall seek prompt entry of an order of the
Bankruptcy Court granting the Sale Motion (the "SALE ORDER") after sufficient
notice has been given.
8.3 No Talk/No Shop Provision. From the date of this Agreement
through the approval or non-approval of Sale Procedures Order by the Bankruptcy
Court, Seller shall cease any and all activities, discussions or negotiations
with any parties with respect to the sale of Seller's Assets or business and
neither Seller nor its employees, consultants, agents or representatives shall
solicit, accept or in any way seek to further any offer to purchase any Assets
of Seller, or any other entity to be formed through the restructuring of Seller
or take any other action inconsistent with the transactions contained in this
Agreement.
8.4 Determination of "Qualifying Bidder" Status. In order to
participate in the bidding process and be deemed a "Qualifying Bidder,"1 each
bidder other than the Purchaser, must, on or before the Bid Deadline (defined
below) deliver to counsel to the Seller, Benesch, Friedlander, Xxxxxx & Aronoff
LLP, 0000 XX Xxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000, Attn: H.
Xxxxxxx Xxxxxxxx, Esq. ("BFCA"):
(a) an xxxxxxx money deposit in the amount of 10% of the
gross amount of the purchase price set forth in such bid (the "QUALIFIED BIDDER
DEPOSIT") by cashier's or certified check (made payable to the Seller) or wire
transfer of immediately available fund, which deposit shall be held by an escrow
agent selected by Seller in accordance with the terms of an escrow agreement to
be provided by Seller;
(b) a written offer or group of offers (a "QUALIFYING BID")
that:
i. states that such Qualifying Bidder offers to
purchase the Assets upon the terms and conditions as
substantially set forth in this Agreement or through
a merger or alternative structure on such different
or additional terms as appropriate and desirable,
for such transaction structure (which terms and
conditions shall be no less favorable to Seller as
the terms and conditions contained in the
Agreement);
ii. states that such Qualifying Bidder is prepared to
enter into a legally binding purchase and sale
agreement for the acquisition of the Assets on terms
and. conditions no less favorable to Seller than the
terms and conditions contained in the Agreement;
iii. states that such Qualifying Bidder is financially
capable of consummating a transaction substantially
similar to the transactions contemplated by this
Agreement;
iv. contains such financial and other information that
will allow Seller to make a reasonable determination
as to the Qualifying Bidder's financial and other
capabilities to consummate the transactions
contemplated;
-----------------------
1 The Purchaser will be deemed a Qualifying Bidder and the Agreement
constitutes a Qualifying Bid for all purposes.
42
v. is likely to result in a value to Seller that is
more than the aggregate of the value of the sum of:
(1) the Purchase Price; plus (2) $1,200,000 (the
maximum amount of the Termination Fee; plus: (C)
$500,000 (the maximum amount of the Expense
Reimbursement); plus (D) $400,000;
vi. does not contain any due diligence or financing
contingencies of any kind; and
vii. contains evidence that the bidder has received debt
and/or equity funding commitments sufficient in the
aggregate to finance the purchase of the assets
proposed to be acquired, which evidence may include,
without limitation, evidence of sources of equity or
debt financing for payment of the purchase price,
copies of commitment letters, and the identity of
contact persons at the financing institutions issues
such commitment letters.
At Seller's sole discretion, bids that do not substantially conform to the
foregoing and the procedures set forth in the Sales Procedures Order may not be
accepted. Seller shall have the right to negotiate with any bidder with respect
to clarification or enhancement of such bidder's bid.
8.5 Requests for Information: All potential bidders shall be
required to submit any requests for information with respect to Seller's
Businesses or Assets or requests for access to Seller's employees, management or
officers and directors to discuss Seller's businesses or Assets directly to
Candlewood Partners ("CANDLEWOOD"), the Seller's financial consultants, and in
no event shall any bidders be granted any such access other than by means of
access through Candlewood. From the date of the approval of the Bidding
Procedures Order, (1) if Seller supplies any information regarding Seller's
Business to a potential bidder not heretofore given to Purchaser, Seller shall
further provide Purchaser with a copy of such information within 24 hours of
providing that information to any other potential bidder; and (2) with respect
to any bid, term sheet, or written expression of interest by any other party for
any Asset or Assets of Seller, or any other reorganization proposal, submitted
prior to the Bid Deadline (defined below), Seller shall provide Purchaser with
prompt notice of such proposal and a copy of such proposal within 48 hours of
Seller's receipt thereof.
8.6 Bid Deadline.
(a) All Qualifying Bids must be submitted to BFCA so as to be
received not later than 5:00 p.m. (prevailing Eastern Time) on September 21,
2004 (the "BID DEADLINE"). After the expiration of the Bid Deadline, BFCA shall
promptly provide copies of all bids received to (i) Seller's Delaware counsel,
(ii) Purchaser's Delaware counsel, (iii) Xxxx X. Xxxx, III XxXxxxxxx Will &
Xxxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 and Xxxxxxx X. Xxxxxx,
XxXxxxxxx Will & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
(iv) counsel for KeyBank N.A., Xxxx X. Xxxxxx, Esq., Xxxxxxxx Xxxx LLP, 0000 Xxx
Xxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000.
(b) If Seller does not receive any Qualifying Bids by the Bid
Deadline, counsel for Seller shall report the same to the Bankruptcy Court and
Seller shall proceed to seek prompt entry of the Sale Order authorizing
consummation of the transactions contemplated by this Agreement.
8.7 Auction. In the event that Seller timely receives one or more
Qualifying Bids other than the bid of Purchaser, Seller shall conduct an auction
(the "AUCTION"). The Auction will take place no later than 10:00 a.m.
(prevailing Eastern time) on September 27, 2004 at the offices of Benesch,
43
Xxxxxxxxxxx, Xxxxxx & Aronoff LLP in Cleveland, Ohio or at such other place,
date and time as may be designated in writing by the Seller. The Auction shall
be governed by the following procedures:
(a) only Seller, representatives of KeyBank, N.A.,
representatives of the Creditors' Committee, if any, and any Qualifying Bidders
(and the professionals for each of the foregoing) shall be entitled to attend
and be heard at the Auction;
(b) only the Qualifying Bidders shall be entitled to make any
subsequent bids at the Auction;
(c) the Qualifying Bidders shall appear in person at the
Auction, or through a duly authorized representative;
(d) bidding shall commence at an amount of the highest
Qualifying Bid submitted by the Qualifying Bidders prior to the Auction;
(e) Qualifying Bidders may then submit successive bids;
(f) the minimum bidding increment shall be $200,000; and
(g) the Auction shall continue until there is only one offer
that the Seller determines, subject to Bankruptcy Court approval, is the highest
and/or best Qualifying Bid (the "PREVAILING BID"). In making this decision,
Seller shall consider without limitation the amount of the purchase price, the
form of consideration being offered, the likelihood of the Bidder's ability to
close a transaction and, the timing thereof, and the net benefit to Seller's
estate. The Qualifying Bidder that submits the Prevailing Bid shall become the
"PREVAILING BIDDER," and shall have such rights and responsibilities of the
purchaser, as set forth in the applicable asset purchase agreement. Within one
(1) day after adjournment of the Auction, the Prevailing Bidder shall complete
and execute all agreements, contracts, instruments or other documents evidencing
and containing the terms and conditions upon which the Prevailing Bid was made.
8.8 Sale Hearing. The Prevailing Bid (or if no Qualifying Bid
other than that of Purchaser is received, the offer made by Purchaser) will be
subject to approval by the Bankruptcy Court. The Sale Hearing (as defined
herein) shall be held not later than September 30, 2004 and may be adjourned
from time to time without further notice to creditors or parties in interest
other than by announcement of the adjournment in open court on the date
scheduled for the Sale Hearing.
8.9 Expense Reimbursement: In the event of a termination of this
Agreement pursuant to Sections 11.1(d)(B) and (C) only, Seller will reimburse
the Purchaser for all actual out-of-pocket costs and expenses (including
professional fees) reasonably incurred by Platinum and Purchaser in connection
with the transactions contemplated by the Agreement, up to a maximum of $500,000
(the "Expense Reimbursement").
8.10 Termination Fee: In the event of a termination of this
Agreement pursuant to Sections 11.1(d)(B) and (C) only, Seller will be obliged
to pay Purchaser an amount equal to $1,200,000, plus the Expense Reimbursement
(the "TERMINATION FEE"). The Termination Fee shall be due and payable in
accordance with Paragraph 11.2 herein. Seller's obligation to pay the
Termination Fee shall be given administrative expense priority pursuant to 11
U.S.C. Section 507(a)(1).
44
8.11 Defense of Orders. Seller, at its sole cost and expense, shall
defend the Sale Procedures Order and the Sale Order in the event that Purchaser
elects, in its sole discretion, to close the purchase of the Assets
notwithstanding the pendency of any motion for reconsideration or appeal of such
Orders and shall promptly reimburse Purchaser for its reasonable attorneys' fees
and costs in entering an appearance and in participating in such reconsideration
or appeal.
9. CONDITIONS TO OBLIGATIONS OF SELLER
Seller's and Parent's obligations hereunder are subject to the
fulfillment or satisfaction, on and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Seller, but only in
writing signed on behalf of Seller by an authorized officer):
9.1 Accuracy of Representations and Warranties. Each of the
representations and warranties of Platinum and Purchaser set forth in Article 4
of this Agreement shall be true and correct in all material respects (or in all
respects, to the extent any such representation and warranty is already
qualified by materiality) on and as of the date hereof and on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except that to the extent such
representations and warranties address matters only as of a particular date,
such representations and warranties shall, to such extent, be true and correct
as of the date hereof and on and as of such particular date as if made on and as
of such particular date.
9.2 Covenants. Platinum and Purchaser shall have performed and
complied in all material respects with all of its covenants contained in Article
6 on or before the Closing Date.
9.3 Absence of Material Adverse Effect. No material adverse effect
with respect to Platinum shall have occurred since May 31, 2004 and be
continuing but excluding any material adverse effect arising from or related to
the public announcement of the transactions contemplated by this Agreement or
the DIP Financing, the outbreak of civil unrest, hostilities, terrorist
activities, or war (whether or not formally declared) which causes, in a
measurable manner, the material adverse effect.
9.4 Compliance with Law. There shall be no Order by any
Governmental Authority or any other fact or circumstance, which would prohibit
or render illegal the transactions contemplated by this Agreement.
9.5 Government Consents. There shall have been obtained at or
prior to the Closing Date such permits or authorizations, and there shall have
been taken such other actions, as may be required to consummate the sale of
Assets by any regulatory authority having jurisdiction over the Parties and the
actions herein proposed to be taken, including but not limited to satisfaction
of all requirements under applicable Securities Laws and state "Blue Sky" or
securities laws.
9.6 Absence of Litigation. No litigation or proceeding shall be
pending which could reasonably be expected to have the effect of enjoining or
preventing the consummation, or altering the terms, of any of the transactions
provided for in this Agreement. No litigation or proceeding shall be pending
which could reasonably be expected to have a material adverse effect on Platinum
that has not been previously disclosed to Seller herein.
9.7 Sale Order. The Bankruptcy Court shall have entered the Sale
Order, which shall be a Final Order.
45
9.8 Other Deliveries. Purchaser shall have delivered to Seller and
Parent and/or their designee, as the case may be, the Assignment and Assumption
Agreement and any Assignment and Assumption of Lease, each duly executed by
Purchaser.
10. CONDITIONS TO OBLIGATIONS OF PLATINUM
The obligations of Platinum hereunder are subject to the fulfillment or
satisfaction on, and as of the Closing, of each of the following conditions (any
one or more of which may be waived by Platinum, but only in a writing signed on
behalf of Platinum by its Chief Executive Officer or Chief Financial Officer):
10.1 Accuracy of Representations and Warranties. Each of the
representations and warranties of Parent and Seller set forth in Article 3 of
this Agreement shall be true and correct in all material respects (or in all
respects, to the extent any such representation and warranty is already
qualified by materiality) on and as of the date hereof and on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except that, to the extent such
representations and warranties address matters only as of a particular date,
such representations and warranties shall, to such extent, be true and correct
on and as of the date hereof and on and as of such particular date as if made on
and as of such particular date.
10.2 Covenants. Seller shall have performed and complied in all
material respects with all of its covenants contained in Article 5 on or before
the Closing Date, and Platinum shall have received a certificate to such effect
executed on behalf of Seller by the President, Chief Executive Officer or Chief
Financial Officer of Seller.
10.3 Absence of Material Adverse Effect. No Material Adverse Effect
with respect to Seller shall have occurred since the date of this Agreement and
be continuing.
10.4 Compliance with Law. There shall be no Order by any
Governmental Authority, or any other fact or circumstance, which would prohibit
or render illegal the transactions contemplated by this Agreement.
10.5 Government Consents. There shall have been obtained at or
prior to the Closing Date such material permits or authorizations and there
shall have been taken such other action, as shall be reasonably required to
consummate the sale of Assets by any Governmental Authority having jurisdiction
over the parties and the actions herein proposed to be taken, including but not
limited to material satisfaction of all requirements under applicable federal
and state Securities Laws.
10.6 Third-Party Consents; Assignments; Other Documents. Subject to
the provisions of Sections 363 and 365 of the Bankruptcy Code, Platinum shall
have received: (a) duly executed copies of all material Third-Party consents,
approvals, assignments, waivers, authorizations, permits or other certificates
set forth on Section 3.4(b) of the Seller Disclosure Schedule; and, to the
extent necessary, (b) any other written consents, assignments, waivers,
authorizations or other certificates where, in the case of this clause (b), the
failure to have received the same would have a Material Adverse Effect on the
Assets or the business to be conducted with the Assets by Purchaser, including
any consents required to assign any of the Assumed Seller Contracts which are
individually or in the aggregate material to Seller.
10.7 [Intentionally Omitted]
46
10.8 Indemnity. Parent, Sellers and their Affiliates shall have
assigned to Platinum and its Affiliates all rights they have relating to the
Assets under that certain Stock Purchase Agreement dated as of December 19, 1996
between GEC Incorporated and Paragon Corporate Holdings, Inc. and other
documents executed in connection therewith.
10.9 Absence of Litigation. No litigation or proceeding shall be
pending which could reasonably be expected to have the effect of enjoining or
preventing the consummation, or altering the terms, of any of the transactions
provided for in this Agreement. No litigation or proceeding shall be pending
which could reasonably be expected to have a Material Adverse Effect on Seller,
the Assets, the Assumed Liabilities or the business to be conducted with the
Assets by Purchaser.
10.10 Sale Order. The Bankruptcy Court shall have entered the Sale
Order, which shall be a Final Order. Notwithstanding the foregoing, nothing in
this Agreement shall preclude Sellers from consummating the transactions
contemplated herein if Purchaser, in its sole discretion, waives the requirement
that the Sale Order shall have become a Final Order. No notice of such waiver of
this condition or any other condition to the Closing need be given except to
Seller, it being the intention of the Parties that Purchaser shall be entitled
to, and is not waiving, the protection of Section 363(m) of the Bankruptcy Code,
the mootness doctrine and any similar statute or body of law if the Closing
occurs in the absence of the Sale Order becoming a Final Order.
10.11 Other Deliveries. Seller shall have delivered to Purchaser and
Platinum the following:
(a) a customary xxxx of sale for all of the Assets which are
Tangible Personal Property (the "XXXX OF Sale"), duly executed by Seller and/or
its Subsidiaries;
(b) a customary assignment of all of the Assets which are
intangible personal property, which assignment shall also contain Purchaser's
undertaking and assumption of the Assumed Liabilities (the "ASSIGNMENT AND
ASSUMPTION AGREEMENT"), executed by Seller and/or its Subsidiaries;
(c) for each interest in Real Property identified on Section
3.13(c) of the Seller Disclosure Schedule which is not one of the Excluded Real
Estate Interests, a recordable quitclaim deed, a customary Assignment and
Assumption of Lease or such other appropriate document or instrument of
transfer, as the case may require, and in the case of the Excluded Real Estate
Interests, a lease or sublease, as the case may require, to Purchaser for $1 for
six months, each in form and substance satisfactory to Purchaser and its counsel
and executed by Seller and/or its Subsidiaries;
(d) customary assignments of all Seller IP Rights and
customary separate assignments of all registered trademarks, servicemarks,
patents and copyrights, and all applications therefore executed by Seller and/or
its Subsidiaries; and
(e) such other xxxxx, xxxx of sale, assignments, certificates
of title, documents and other instruments of transfer and conveyance as may
reasonably be requested by Purchaser, each in form and substance satisfactory to
Purchaser and its legal counsel and executed by Seller and/or its Subsidiaries.
10.12 Accounts Receivable and Inventory. (i) At the Effective Time,
the sum of accounts receivable and inventory, less deferred revenue, of Seller
and Canada Sub shall be at least
47
$22,700,00 on a cumulative basis, and (ii) Limited shall have $5,400,000 in net
assets (including the intercompany payable due Seller of $1,600,000), in each
case measured in accordance with GAAP.
10.13 Financial Statements. Seller shall have delivered a copy of
its unaudited financial statements for the period ended June 30, 2004 reviewed
by Ernst & Young LLP, or another national or regional accounting firm registered
with the Public Company Accounting Oversight Board (the "REVIEWER") and
certified by its chief financial officer and an appropriate executive officer of
Parent as being prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto). Purchaser and Platinum shall have the sole right to approve and accept
the Reviewer and the terms of such firm's engagement, such approval and
acceptance not to be unreasonably withheld. Seller also shall have delivered a
draft of (i) such Seller financial statements and audit report which, if the
transaction contemplated by this Agreement is consummated, shall contain no
adverse opinion or disclaimer of opinion or qualification or modification as to
uncertainty, accounting principal, or audit scope, in such form (audited or
unaudited), as will be required in order for Platinum to comply with Form 8-K
under the rules of the Securities and Exchange Commission (the "UPDATED
FINANCIAL STATEMENTS") and (ii) the consent of the Reviewer to file the audited
Updated Financial Statements as part of a filing with the SEC by Platinum,
assuming the consummation of such transaction.
11. TERMINATION
11.1 Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(a) Purchaser and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) Purchaser may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing in the event (A) Seller has
within the then previous ten (10) business days given Purchaser any notice
pursuant to Section 5.1 above and (B) the development that is the subject of the
notice has caused the representations and warranties in Section 3 above to not
be true and correct in all material respects, (except to the extent that any
such representation or warranty is qualified by terms such as "material" and
"Material Adverse Effect," in which case if such development that is the subject
of the notice has caused the representation or warranty in Section 3 above to
not be true and correct in all respects) and such result has not been cured
within fifteen (15) days of the date of such notice;
(c) Purchaser may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing (A) in the event Seller has
Breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, Purchaser has notified Seller of the Breach,
and the Breach has continued without cure for a period of fifteen (15) days
after the notice of Breach or (B) if the Closing shall not have occurred on or
before October 15, 2004, by reason of the failure of any condition precedent
under Section 10 hereof (unless the failure results primarily from Purchaser
itself Breaching any representation, warranty, or covenant contained in this
Agreement);
(d) Purchaser or Seller may terminate this Agreement by giving
written notice to the other party at any time prior to Closing (A) if the Sale
Procedures Order shall not have been entered by the Bankruptcy Court within
forty-five (45) days following the Petition Date, (B) (i) in the event Seller
has accepted or selected, and the Bankruptcy Court shall have approved, the bids
or bids (including a credit bid) of any Person or Persons other than Purchaser
or any of its Affiliates to purchase
48
all or any portion of the businesses and Assets of Seller and (ii) such
transaction or transactions contemplated by any such bid or bids shall have been
consummated, or (C) in the event that Seller withdraws its support for the
transactions contemplated by this Agreement and seeks to have a stand alone plan
of reorganization approved by the Bankruptcy Court;
(e) Seller may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing (A) in the event Purchaser
has Breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, Seller have notified Purchaser of the
Breach, and the breach has continued without cure for a period of fifteen (15)
days after the notice of Breach or (B) if the Closing shall not have occurred on
or before October 15, 2004, by reason of the failure of any condition precedent
under Section 9 hereof (unless the failure results primarily from Seller
Breaching any representation, warranty, or covenant contained in this
Agreement);
(f) Seller may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing if the Sale Order shall not
have been entered by the Bankruptcy Court on or before October 15, 2004;
(g) (A) Purchaser may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing but within two (2)
business days following July 15, 2004 if the Petition Date is not on or before
July 15, 2004; (B) to the extent that Purchaser does not terminate this
Agreement within such two (2) day period pursuant to Section 11.1(g)(A) above,
Purchaser may terminate this Agreement by giving written notice to Seller at any
time prior to the Closing but within two (2) business days following August 27,
2004 if the date of entry of the Sales Procedure Order is not on or before
August 27, 2004; (C) to the extent that Purchaser does not terminate this
Agreement within such two (2) day period pursuant to Section 11.1(g)(B) above,
Purchaser may terminate this Agreement by giving written notice to Seller at any
time prior to the Closing but within two (2) business days following September
30, 2004 if the date of entry of the Sales Order is not on or before September
30, 2004; and (D) to the extent that Purchaser does not terminate this Agreement
within such two (2) day period pursuant to Section11.1(g)(C) above, Purchaser
may terminate this Agreement by giving written notice to Seller at any time
prior to the Closing but within two (2) business days following October 15, 2004
if the Closing Date is not on or before October 15, 2004.
11.2 Termination Fee. In the event that this Agreement is
terminated by Purchaser or Seller pursuant to either Section 11.1(d)(B) or (C)
hereof, then Seller shall pay to Purchaser the Termination Fee upon the
consummation of the transaction by Seller and such other Person, in the event of
a termination pursuant to Section 11.1(d)(B), or upon the submission by Seller
of a stand alone plan of reorganization with the Bankruptcy Court, in the event
of a termination pursuant to Section 11.1(d)(C), and Seller shall have no other
liability under this Agreement to Purchaser or any of its Affiliates (other than
for return of the Deposit and payment of the Termination Fee).
11.3 Effect of Termination. Except as provided for in Section 11.2
and except for the return of the Deposit to Purchaser as a result of a
termination of this Agreement pursuant to Sections 11.1(a), (b), (c), (d),
(e)(B), (f) or (g), in the event that this Agreement is terminated by either
Party then said termination shall be the sole remedy of the parties hereto with
respect to Breaches of any covenant, representation, or warranty contained in
this Agreement and none of the Parties hereto nor any of their respective
directors, officers, members, or Affiliates, as the case may be, shall have any
liability or further obligation to the other party or any of their respective
directors, officers, members, or Affiliates, as the case may be, pursuant to
this Agreement, except upon a willful Breach by a Party (in which case that
non-Breaching Party shall have all rights and remedies existing at law or in
equity). Upon any
49
termination of this Agreement pursuant to Section 11.1, all Confidential
Information of either Party shall be returned to the other Party.
12. TAXES.
12.1 Taxes Related To Assets and Assumed Liabilities. All sales,
use, gross-receipts, transfer, gains, excise, value-added or other similar Taxes
in connection with the transfer of the Assets and the assumption of the Assumed
Liabilities, and delivery of the Assets, and all recording and filing fees that
may be imposed by reason of the sale, transfer, assignment of the Assets and
that are not exempt under Section 1146(c) of the Bankruptcy Code shall be paid
fifty percent (50%) by Purchaser and fifty percent (50%) by Seller on or prior
to their due date.
(a) Purchaser shall be liable for and pay all Taxes applicable
to the Assets and Assumed Liabilities that are attributable to Taxable years or
periods beginning on the Closing Date and with respect to any Straddle Period,
the portion of such Straddle Period beginning on the Closing Date. For purposes
of this Agreement, "STRADDLE PERIOD" shall mean any Taxable period beginning on,
or before and ending after the Closing Date.
12.2 Tax Refunds. Any Tax refunds (including any interest related
thereto) received by Purchaser, its Affiliates or successors relating to Taxes
that Seller has paid shall be for the account of Seller, and Purchaser shall pay
over to Seller any such amount within ten (10) business days of receipt thereof.
Purchaser shall include with its remittance to Seller copies of any
correspondence, documents, or other materials received or transmitted by
Purchaser with respect to the Tax refund. Seller shall be entitled to request
that Purchaser, at Seller's expense, file for and obtain any Tax refunds with
respect to Tax periods or portions thereof ending on or before the Closing Date
(with respect to the relevant Purchased Asset).
12.3 Cooperation on Tax Matters. Seller and Purchaser shall (and
shall cause their respective Affiliates to) cooperate fully with each other and
make available or cause to be made available to each other for consultation,
inspection and copying (at such other Party's expense) in a timely fashion such
personnel, Tax data, relevant Tax Returns or portions thereof and filings,
files, books, records, documents, financial, technical and operating data,
computer records and other information as may be reasonably required (i) for the
preparation by such other Party of any Tax Returns or (ii) in connection with
any Tax audit or proceeding including one Party (or an Affiliate thereof) to the
extent such Tax audit or proceeding relates to or arises from the transactions
contemplated by this Agreement.
12.4 Retention of Tax Records. After the Closing Date and until the
expiration of all statutes of limitation applicable to Seller's liabilities for
Taxes, Purchaser shall retain possession of all accounting, business, financial
and Tax records and information that (i) relate to the Assets and are in
existence on the Closing Date and (ii) come into existence after the Closing
Date but relate to the Assets before the Closing Date, and Purchaser shall give
Seller notice and an opportunity to retain any such records in the event that
Purchaser determines to destroy or dispose of them during such period. In
addition, from and after the Closing Date, Purchaser shall provide to Seller and
its Affiliates (after reasonable notice and during normal business hours and
without charge to Seller or their Affiliates) access to the books, records,
documents and other information relating to the Assets as Seller may reasonably
deem necessary to (i) properly prepare for, file, prove, answer, prosecute and
defend any Tax Return, claim, filing, tax audit, tax protest, suit, proceeding
or answer or (ii) administer or complete any cases under chapter 11 of the
Bankruptcy Code of or including Seller. Such access shall include reasonable
access to any computerized information systems that contain data regarding the
Assets.
50
12.5 GST Election. Each of the Purchaser and Canada Sub represents
and warrants to the other that it is, or will be prior to the Closing Date, a
registrant under Part X of the EXCISE TAX ACT ("ETA") and each covenants and
agrees to make the joint election contemplated by Subsection 167(1) of the ETA,
if available, and the Purchaser hereby covenants and agrees to file the joint
election with the Minister of National Revenue with its Goods and Services Tax
("GST") return for its reporting period in which the transactions contemplated
by this Agreement take place. If it is determined that GST is payable by the
Purchaser in respect of the supply of property contemplated by this Agreement,
then the Purchaser agrees to remit all such tax payable and Canada Sub shall
reimburse Purchaser for 50% of the GST in accordance with Section 12.1.
13. MISCELLANEOUS
13.1 Entire Agreement. This Agreement, the Ancillary Agreements and
the Schedules hereto constitute the entire understanding and agreement of the
Parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the Parties with respect to the
subject matter hereof. The express terms hereof control and supersede any course
of performance or usage of trade inconsistent with any of the terms hereof.
13.2 Assignment; Binding Upon Successors and Assigns. Neither Party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other Party hereto; provided however, that Purchaser may
assign its rights to acquire the Assets in whole or in part to an Affiliate.
This Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
13.3 No Third Party Beneficiaries. No provisions of this Agreement
are intended, nor will be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, stockholder, partner, employee of any Party hereto or any other
Person unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
13.4 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between the
Parties hereto. No Party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other Party. No Party will have the
power to control the activities and operations of any other, and the Parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No Party will have any power or
authority to bind or commit any other. No Party will hold itself out as having
any authority or relationship in contravention of this Section.
13.5 [Intentionally Omitted]
13.6 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to affect
the intent of the parties hereto. The parties further agree to replace such
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
13.7 Section Headings. A reference to an Article, Section or
Schedule will mean an Article or Section in, or a Schedule to, this Agreement,
unless otherwise explicitly set forth. The titles
51
and headings in this Agreement are for reference purposes only and will not in
any manner limit the construction of this Agreement. For the purposes of such
construction, this Agreement will be considered as a whole.
13.8 Amendment, Extension and Waivers. At any time prior to the
Effective Time, Platinum, Purchaser, Parent and Seller may, to the extent
legally allowed:
(a) extend the time for performance of any of the obligations
of the other party;
(b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant thereto; and
(c) waive compliance with any of the agreements, covenants or
conditions for the benefit of such party contained herein. Any term or provision
of this Agreement may be amended. Any agreement to any amendment, extension or
waiver will be valid only if set forth in writing and signed by the party to be
bound. The waiver by a party of any Breach hereof or default in the performance
hereof will not be deemed to constitute a waiver of any other default or any
succeeding Breach or default. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The Agreement may be amended by the
parties hereto at any time.
13.9 Public Announcement. Except to the extent required to comply
with Article 8 hereof, no Party hereto shall issue any press release or
otherwise make any statements to any Third-Party with respect to this Agreement
or the transactions contemplated hereby other than with the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. Prior to the issuance of any announcement of this Agreement and the
transactions contemplated hereby by any Party, such Party will consult with the
other party regarding the content of such announcement and obtain such other
Party's reasonable approval of such press release. Notwithstanding the
foregoing, either Party may issue such announcements, and make such other
disclosures regarding this Agreement or the transactions contemplated hereby, as
it determines are required under applicable Legal Requirements or any listing or
trading agreement concerning its publicly traded securities.
13.10 Governing Law. The validity of this Agreement the construction
of its terms, and the interpretation and enforcement of the rights and duties of
the parties of this Agreement will be exclusively governed by and construed in
accordance with the internal laws of the State of New York as applied to
agreements entered into solely between residents of and to be performed entirely
in the State of New York, without reference to that body of law relating to
conflicts of law or choice of law.
13.11 Jurisdiction; Venue; Waiver of Jury Trial.
(a) Each of the Parties to this Agreement hereby agrees that
the Bankruptcy Court shall have exclusive jurisdiction to hear and determine any
claims or disputes between the parties hereto pertaining directly or indirectly
to this Agreement, and all documents, instruments and agreements executed
pursuant hereto or thereto, or to any matter arising herefrom (unless otherwise
expressly provided for herein or therein). To the extent permitted by law, each
party hereby expressly submits and consents in advance to such jurisdiction in
any action or proceeding commenced by any of the other parties hereto in any of
such courts, and agrees that service of such summons and complaint or other
process or papers may be made by registered or certified mail addressed to such
party at the address to which notices are to be sent pursuant to this Agreement.
Each of the parties waives any claim that the Bankruptcy Court is an
inconvenient forum or an improper forum based on lack of venue. The choice of
forum set forth in this Section 12.12 shall not be deemed to preclude the
enforcement of any judgment obtained in such forum or the taking of any action
to enforce the same in any other appropriate jurisdiction.
52
(b) Each party hereto hereby waives, to the fullest extent
permitted by applicable Legal Requirement, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Agreement. Each party hereto (a) certifies that no
representative, agent or attorney of the other party has represented, expressly
or otherwise, that the other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section.
13.12 Notices. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally or by mail or express delivery, postage prepaid, and will be deemed
given upon actual delivery or, if mailed by registered or certified mail, on the
third business day following deposit in the mails, addressed as follows:
If to Platinum or Purchaser:
Presstek, Inc.
00 Xxxxxxxxx Xx.
Xxxxxx, XX 00000
Attention: President
Phone: (000) 000-0000
with a copy to: XxXxxxxxx, Will & Xxxxx
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxx III, P.C.
Phone: (000) 000-0000
If to Parent or any Seller:
c/o A.B. Dick Company
0000 Xxxxxxxx Xxx.
Xxxxx, XX 00000
Attention: President
Phone: (000) 000-0000
with a copy to: Benesch, Friedlander, Xxxxxx & Aronoff LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: H. Xxxxxxx Xxxxxxxx, Esq.
Phone: (000) 000-0000
or to such other address as the party in question may have
furnished to the other party by written notice given in accordance with this
Section 13.12.
13.13 Time is of the Essence. The parties hereto acknowledge and
agree that time is of the essence in connection with the execution, delivery and
performance of this Agreement.
13.14 Counterparts. This Agreement may be executed in counterparts,
each of which will be an original as regards any Party whose name appears
thereon and all of which together will
53
constitute one and the same instrument. This Agreement will become binding when
one or more counterparts hereof, individually or taken together, bear the
signatures of all Parties reflected hereon as signatories.
13.15 Nonsurvival of Representations and Warranties: None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Closing. This Section 13.15 shall
not limit any covenant or agreement of the Parties contained in this Agreement
or in any instrument delivered pursuant to this Agreement which by its terms
applies or contemplates performance in whole or in part after the Effective
Time.
13.16 Disclosure Schedule. The parties hereto acknowledge and agree
that any disclosure contained in a specific numbered section of Seller's
Disclosure Schedule shall be deemed to have been disclosed for purposes of other
numbered sections only to the extent such disclosure is specifically cross
referenced on the relevant section of Seller's Disclosure Schedule.
13.17 Release. In consideration of the covenants, mutual promises
and other consideration set forth herein, (i) Sellers and Parent, for themselves
and for their heirs, assigns, agents, principals, officers, directors,
subsidiaries, Affiliates, shareholders, employees, insurers, successors and
assigns, as the case may be (collectively, the "Seller Parties"), hereby release
the Platinum Parties (as hereinafter defined) from any and all actions, causes
of action, suits, debts, sums of money, claims and demands of any kind or
description whatsoever in law or in equity which any of the Seller Parties now
have or which the same may have arising out of any matter from the beginning of
the world up to and including the date of this Agreement, and (ii) Platinum and
Purchaser, for themselves and for their heirs, assigns, agents, principals,
officers, directors, subsidiaries, Affiliates, shareholders, employees,
insurers, successors and assigns, as the case may be (the "Platinum Parties"),
hereby release each of the Seller Parties from any and all actions, causes of
action, suits, debts, sums of money, claims and demands of any kind or
description whatsoever in law or in equity which any of the Platinum Parties now
have or which the same may have arising out of any matter from the beginning of
the world up to and including the date of this Agreement. Notwithstanding the
foregoing, the Parties hereto are not hereby releasing any rights they may have
to enforce the provisions of this Agreement or of the DIP Financing against each
other.
13.18 Bulk Sales Waiver. The Purchaser hereby waives compliance by
Canada Sub with the provisions of the BULK SALES ACT (ONTARIO) or similar
applicable legislation of any other province of Canada (the "BULK SALES ACT"),
and in consideration hereof, Canada Sub agrees to indemnify the Purchaser from
any claims that maybe asserted against it by any creditor of Canada Sub, or any
other Person, by reason of the Purchaser not having required Canada Sub to
comply with the BULK SALES ACT or by reason of the waiver aforesaid, provided
that Canada Sub shall have no liability pursuant to this Section 13.18 for any
claims with respect to any debts or obligations which were agreed to be assumed
by the Purchaser pursuant to this Agreement or any Ancillary Agreements
delivered pursuant hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties hereto have executed this Asset
Purchase Agreement as of the date first above written.
PRESSTEK, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
SILVER ACQUISITIONS CORP.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President Finance,
Chief Financial Officer
and Treasurer
PARAGON CORPORATE HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
A.B. DICK COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
A.B. DICK COMPANY OF CANADA LTD.
By: /s/ Xxxxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: General Manager
INTERACTIVE MEDIA GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
