EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
DATED AS OF MAY 24, 2002
BETWEEN
FIRSTMARK CORP.,
TECSTAR ELECTRO SYSTEMS, INC.,
15251 ▇▇▇ ▇▇▇▇▇▇ ROAD, INC.,
AND
▇▇▇ ▇▇▇▇▇▇, INC.
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION..................................................................1
1.1 Definitions.........................................................................................1
1.2 Rules of Construction...............................................................................7
ARTICLE II PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES..................................................7
2.1 Purchase and Sale of Assets.........................................................................7
2.2 Assignment and Assumption of Liabilities............................................................9
2.3 Excluded Assets....................................................................................10
2.4 No Other Liabilities Assumed.......................................................................10
ARTICLE III PURCHASE PRICE AND PAYMENT..........................................................................12
3.1 Payment of Purchase Price..........................................................................12
3.2 Escrow Agreement...................................................................................12
3.3 Further Assurances.................................................................................13
3.4 Acknowledgement of Adequacy of Purchase Price......................................................13
3.5 Delivery of Closing Cash and Escrow Funds..........................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................13
4.1 Organization and Standing..........................................................................13
4.2 Authorization......................................................................................14
4.3 Financial Statements...............................................................................14
4.4 Absence of Specified Changes.......................................................................14
4.5 Litigation.........................................................................................15
4.6 Intangible Property................................................................................15
4.7 Tax Returns........................................................................................16
4.8 Material Breach....................................................................................16
4.9 Compliance with Law................................................................................16
4.10 Employees.........................................................................................16
4.11 Absence of Undisclosed Liabilities................................................................16
4.12 Material Agreements...............................................................................17
4.13 Representations...................................................................................17
4.14 Title to Assets; Encumbrances.....................................................................17
4.15 Employee Benefit Plans............................................................................17
4.16 Good Title Conveyed, Etc..........................................................................17
4.17 Assets Necessary to Business......................................................................18
4.18 Machinery and Equipment...........................................................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................18
5.1 Authorization......................................................................................18
5.2 Litigation.........................................................................................18
5.3 Sufficient Funds...................................................................................18
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ARTICLE VI COVENANTS OF SELLER AND PARENTS; OTHER AGREEMENTS....................................................18
6.1 Consents and Approvals.............................................................................18
6.2 Commercially Reasonable Efforts....................................................................19
6.3 Bankruptcy Actions.................................................................................19
6.4 Efforts............................................................................................20
6.5 Condition of Assets................................................................................21
6.6 Access.............................................................................................21
6.7 Notice of Developments.............................................................................21
6.8 Survival...........................................................................................21
ARTICLE VII COVENANTS OF PURCHASER..............................................................................21
7.1 Assumed Obligations................................................................................21
7.2 Further Assurances.................................................................................21
7.3 Survival...........................................................................................21
7.4 Efforts............................................................................................21
7.5 Notice of Developments.............................................................................21
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER...................................................22
8.1 Corporate Action...................................................................................22
8.2 Execution and Delivery of Closing Documents........................................................22
8.3 Accuracy of Representations and Warranties.........................................................22
8.4 Certification......................................................................................22
8.5 Bankruptcy Court Approval..........................................................................22
8.6 Insurance..........................................................................................22
8.7 Facility Lease.....................................................................................22
8.8 Release of Liens...................................................................................22
8.9 Employment Agreement...............................................................................22
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER........................................................23
9.1 Execution and Delivery of Closing Documents........................................................23
9.2 Accuracy of Representations and Warranties.........................................................23
9.3 Bankruptcy Court Approval..........................................................................23
9.4 Waiver of Severance................................................................................23
9.5 Insurance..........................................................................................23
ARTICLE X CLOSING...............................................................................................23
10.1 Closing...........................................................................................23
10.2 Deliveries by Seller..............................................................................23
10.3 Deliveries by Purchaser...........................................................................24
10.4 Form of Instruments...............................................................................24
ARTICLE XI TERMINATION..........................................................................................24
11.1 Termination.......................................................................................24
11.2 Termination Fee...................................................................................25
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ARTICLE XII ADDITIONAL POST-CLOSING COVENANTS...................................................................26
12.1 Employees.........................................................................................26
12.2 Employee Benefit Plans............................................................................26
12.3 Joint Post-Closing Covenant of Purchaser and Seller...............................................27
12.4 Certain Consents..................................................................................28
12.5 Name of Purchaser's Business......................................................................28
12.6 Accounts Receivable/Collections...................................................................28
12.7 Access to Information.............................................................................28
12.8 Bankruptcy Protection.............................................................................29
12.9 Durham Pension Plan Dispute.......................................................................29
12.10 Insurance........................................................................................29
ARTICLE XIII MISCELLANEOUS......................................................................................29
13.1 Expenses..........................................................................................29
13.2 Modification; Waiver..............................................................................30
13.3 Notices and Other Communications..................................................................30
13.4 Counterparts......................................................................................31
13.5 Headings..........................................................................................31
13.6 No Third Party Beneficiaries......................................................................31
13.7 APPLICABLE LAW AND JURISDICTION...................................................................31
13.8 Binding Nature; Assignment........................................................................31
13.9 Tax Matters.......................................................................................32
13.10 Construction.....................................................................................32
13.11 Public Announcements.............................................................................32
13.12 Entire Agreement.................................................................................33
13.13 No Survival......................................................................................33
13.14 Enforceability...................................................................................33
13.15 Attorneys' Fees and Other Expenses...............................................................33
13.16 Time.............................................................................................33
13.17 Successors and Assigns...........................................................................33
13.18 Further Assurances...............................................................................33
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EXHIBITS
Exhibit A - Approval Motion
Exhibit B - Facilities Lease
Exhibit C - Form of ▇▇▇▇ of Sale
SCHEDULES
Schedule 1.1 - Permitted Liens
Schedule 2.1(a) - Assumed Equipment Leases; Assumed Contracts: Excluded
Insurance Policies
Schedule 2.1(c) - Acquired Assets
Schedule 2.2 - Assumed Obligations
Schedule 4.3 - Latest Balance Sheets
Schedule 4.5 - Litigation
Schedule 4.7 - Tax Disputes
Schedule 4.8 - Consents and Approvals
Schedule 4.10 - Collective Bargaining Agreements; Employees
Schedule 4.12 - Material Agreements
Schedule 4.15 - Employee Benefit Plans
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ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT is made and entered into as of
this 24th day of May, 2002, by and between (i) Firstmark Corp., a Maine
corporation, or any of its assignees (collectively, the "Purchaser"), (ii)
Tecstar Electro Systems, Inc., a
Delaware corporation ("Seller"), (iii) 15251
▇▇▇ ▇▇▇▇▇▇ Road, Inc., a California corporation, f/k/a Tecstar Power Systems,
Inc., and sole stockholder of Seller ("Immediate Parent"), and (iv) ▇▇▇ ▇▇▇▇▇▇,
Inc., a
Delaware corporation, f/k/a Tecstar, Inc., and sole stockholder of
Immediate Parent ("Ultimate Parent") (Immediate Parent and Ultimate Parent shall
hereinafter be collectively referred to as the "Parents").
In consideration of the mutual covenants, agreements and
warranties herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Definitions. Unless otherwise defined herein, terms used
herein shall have the meanings set forth below:
"Acquired Assets" shall have the meaning set forth in Section
2.1(a) hereof.
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities or otherwise.
"Agent Bank" means Union Bank of California, N.A., as
administrative agent for the Bank Group.
"Agreement" means this
Asset Purchase Agreement, including all
Exhibits and Schedules hereto, as the same may be amended from time to time in
accordance with its terms.
"Allocation" shall have the meaning set forth in Section
13.9(b) hereof.
"Approval Motion" shall have the meaning set forth in Section
6.3(a) hereof.
"Approval Order" means an Order from the Bankruptcy Court, in
form satisfactory to Purchaser and Seller, permitting the Seller and Parents to
execute and consummate this Agreement.
"Assignment and Assumption" shall have the meaning set forth
in Section 10.2(c) hereof.
"Assumed Contracts" means all Contracts identified in Schedule
2.1(a) attached hereto under the heading "Assumed Contracts," other than those
excluded by Purchaser from the Acquired Assets pursuant to Section 2.3(b).
"Assumed Equipment Leases" means all equipment leases
identified in Schedule 2.1(a) attached hereto under the heading "Assumed
Equipment Leases," other than those excluded by Purchaser from the Acquired
Assets pursuant to Section 2.3(b).
"Assumed Executory Contracts" means the Assumed Contracts and
the Assumed Equipment Leases.
"Assumed Obligations" shall have the meaning set forth in
Section 2.2 hereof.
"Bank Group" means Agent and US Bank.
"Bankruptcy Code" means title 11 of the United States Code.
"Bankruptcy Court" means the United States Bankruptcy Court
for the District of
Delaware.
"Benefit Plan" means any "employee benefit plan" (including,
without limitations, "plans" as defined in ERISA Section 3(3)), profit sharing,
deferred compensation, bonus, stock option, stock purchase, vacation pay,
holiday pay, pension, retirement plans, medical and any other form of
compensation or benefit plan, program or arrangement of any kind regardless of
whether any such plan is written or oral or provided under an employment,
collective bargaining or other similar arrangement.
"Books and Records" means (a) all records and lists of Seller
pertaining to the Acquired Assets, (b) all records and lists pertaining to the
Business (including, without limitation, marketing analysis reports and creative
material) or customers, suppliers or personnel of Seller (including, without
limitation, customer lists, mailing lists, e-mail address lists, recipient
lists, sales records, correspondence with customers, customer files and account
histories, supply lists and records of purchases from and correspondence with
suppliers), (c) all product, business and marketing plans of Seller related to
or used in connection with the Business, (d) all websites related to the
Business, (e) all payment orders, invoices and billing records related to the
business, (f) all proposals for new products, markets or business endeavors
currently pending or otherwise, and (g) all books, ledgers, files, reports,
plans, drawings and operating records of every kind maintained by Seller related
to or used in connection with the Business, but excluding (i) all books,
records, ledgers, files, reports, plans, drawings and operating records to the
extent relating to any Excluded Assets or Unassumed Liabilities, (ii) personnel
performance or evaluation records, medical histories or other information which
in Seller's good faith opinion is sensitive or the disclosure of which could
subject Seller to risk of Liability and (iii) the originals of the minute books,
stock books and tax returns and other tax records of Seller.
"Business" means the activities carried on by Seller
immediately prior to the date hereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.).
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"Chapter 11 Case" means the case commenced by Parents under
Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court.
"Claim" shall have the meaning set forth in section 101(5) of
the Bankruptcy Code.
"Closing" means the consummation of the transactions
contemplated herein in accordance with Article X hereof.
"Closing Cash" shall have the meaning set forth in Section 3.1
hereof.
"Closing Date" shall have the meaning set forth in Section
10.1 hereof.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Competing Transaction" means any merger, consolidation, share
exchange, business combination or similar transaction involving Seller or the
acquisition in any manner, directly or indirectly, of a majority equity interest
in any voting securities of, or a substantial portion of the assets of, Seller,
other than the transactions contemplated by this Agreement.
"Contract" means any agreement, contract, commitment or other
binding arrangement or understanding related to the Business, whether written or
oral, to which Seller is a party and which Seller is capable of assuming and
assigning.
"Durham Pension Plan" shall mean that certain defined benefit
pension plan maintained by Seller for the benefit of its eligible employees and
certain retirees.
"Employee Benefit Plan" shall have the meaning set forth in
Section 4.15 hereof.
"Environmental Indemnity" means the undertakings of Honeywell
Inc. related to environmental Liabilities at the Excluded Facilities pursuant to
that certain Purchase and Sale Agreement by and among Honeywell Inc., Electro
Systems, Inc. and ASEC Holdings, Inc., dated as of February 6, 1996.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all regulations issued thereunder.
"Escrow Account" shall have the meaning set forth in Section
3.2 hereof.
"Escrow Agent" shall have the meaning set forth in Section 3.2
hereof.
"Escrow Funds" shall have the meaning set forth in Section 3.2
hereof.
"Escrow Period" shall have the meaning set forth in Section
3.2 hereof.
"Excluded Assets" shall have the meaning set forth in Section
2.3 hereof.
"Excluded Environmental Liabilities" means any Liability or
investigatory, corrective or remedial obligation, whenever arising or occurring,
arising under environmental
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laws with respect to the Business, the Acquired Assets or the Excluded
Facilities (including without limitation any arising from the on-site or
off-site Release, threatened Release, treatment, storage, disposal, or
arrangement for disposal of Hazardous Substances) whether or not constituting a
breach of any representation or warranty herein and whether or not set forth on
any disclosure schedule hereto, except to the extent that the facts or
circumstances underlying any such Liability or obligation were caused by the
operation of the Business by Purchaser after the Closing Date.
"Excluded Facilities" shall have the meaning set forth in
Section 2.3 hereof.
"Excluded Insurance Policies" shall have the meaning set forth
in Section 2.1 hereof.
"Exhibits" means the exhibits hereto.
"Final Order" means an Order as to which the time to file an
appeal, a motion for rehearing or reconsideration (excluding any motion under
F.R.C.P. 60(b)) or a petition for writ of certiorari has expired and no such
appeal, motion or petition is pending.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"Hazardous Substances" means any pollutants, contaminants or
chemicals, and any industrial, toxic or otherwise hazardous materials,
substances or wastes with respect to which Liability or standards of conduct are
imposed under any environmental laws, including, without limitation, petroleum
and petroleum-related substances, products, by-products and wastes, asbestos,
urea formaldehyde and lead-based paint.
"Immediate Parent" shall have the meaning set forth in the
Preamble hereto.
"Indebtedness" with respect to any Person means any obligation
of such Person for borrowed money, and in any event shall include (a) any
obligation incurred for all or any part of the purchase price of property or
other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the Ordinary Course
of Business, (b) the face amount of all letters of credit issued for the account
of such Person, (c) obligations (whether or not such Person has assumed or
become liable for the payment of such obligation) secured by Liens, (d)
capitalized lease obligations, (e) all guarantees and similar obligations of
such Person, (f) all accrued interest, fees and charges in respect of any
Indebtedness and (g) all prepayment premiums and penalties, and any other fees,
expenses, indemnities and other amounts payable as a result of the prepayment or
discharge of any Indebtedness.
"Intellectual Property" means all of the following in any
jurisdiction throughout the world: (a) patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof; (b)
trademarks, service marks, trade dress, logos, slogans, trade names, internet
domain names and corporate names, and applications, registrations and renewals
in connection therewith, excluding the name "Tecstar" and any and all marks,
trade dress, logos and names associated
4
therewith; (c) copyrights, mask works and copyrightable works, and applications,
registrations and renewals in connection therewith; (d) trade secrets and
confidential business information (including ideas, research and development,
know-how, inventions, formulas, compositions, manufacturing and production
processes and techniques, designs, drawings and specifications); (e) proprietary
computer software (including but not limited to source code, executable code
data, databases and documentation); (f) copies and tangible embodiments of any
of the foregoing in whatever form or medium; (g) product certifications,
including without limitation those general certifications and TSO certifications
granted by the United States Federal Aviation Administration; and (h) all other
intellectual property.
"Knowledge of Seller" means the actual knowledge of ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or any director or executive
officer of Seller after reasonable inquiry.
"Latest Balance Sheets" shall have the meaning set forth in
Section 4.3 hereof.
"Lease Reserve Account" shall have the meaning set forth in
Section 3.2 hereof.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including, without limitation, any liability for Taxes.
"Lien" or "Liens" shall have the meaning set forth in Section
2.1(b) hereof.
"Notice" shall have the meaning set forth in Section 3.2(c)
hereof.
"Order" means any decree, order, injunction, rule, judgment,
consent of or by any court or governmental authority.
"Ordinary Course of Business" means the operation of the
Business by Seller in the usual and ordinary course in a manner substantially
similar to the manner in which Seller operated as of April 1, 2002.
"Parents" shall have the meaning set forth in the Preamble
hereto.
"Permits" means all licenses (including without limitation
licenses to use Intellectual Property owned by a Third Party), permits,
approvals, certificates of occupancy, authorizations, operating permits,
registrations, plans and the like relating exclusively to the conduct of the
Business for which consent is obtained or required, including without limitation
all general certifications or TSO certifications either granted to the Seller by
the United States Federal Aviation Administration, but excluding Seller's
license to use the "Tecstar" name.
"Permitted Liens" means (i) mechanic's, materialman's,
carrier's, repairer's and other similar Liens arising or incurred in the
Ordinary Course of Business or that are not yet due and payable or are being
contested in good faith, (ii) rights of third parties arising under the Assumed
Executory Contracts, (iii) restrictions arising under the Permits, (iv) Liens
disclosed on Schedule 1.1, and (v) Liens that do not in any material respect
detract from value of, and do not
5
individually or in the aggregate in any material respect interfere with the
present use of, the property subject thereto in the operation of the Business.
"Person" means any corporation, partnership, joint venture,
limited liability company, organization, entity, authority or natural person.
"Proceeding" means all Claims, disputes, demands, actions,
liabilities, damages, suits in equity, administrative proceedings, accounts,
costs, expenses, setoffs, contributions, attorneys' fees, and/or causes of
action of whatever kind or character.
"Purchase Price" shall have the meaning set forth in Section
3.1(a) hereof.
"Purchaser" shall have the meaning set forth in the Preamble
hereto.
"Purchaser 401(k) Plan" shall mean a new 401(k) savings plan
initiated and maintained by Purchaser after the Closing Date on behalf of the
Rehired Employees.
"Regulation" means any law, statute, regulation, ruling, rule
or Order of, administered or enforced by or on behalf of, any court or
governmental authority.
"Rehired Employees" shall have the meaning set forth in
Section 12.1(c) hereof.
"Release" shall have the meaning set forth in CERCLA.
"Reserved Claims" shall have the meaning set forth in Section
6.3 hereof.
"Schedules" means the schedules hereto.
"Seller" shall have the meaning set forth in the Preamble
hereto.
"Seller 401(k) Plan" shall mean the Tecstar, Inc. Tax Savings
Plan maintained by Seller and Parents for the benefit of Seller's employees.
"Tax" and, with correlative meaning, "Taxes" means with
respect to any Person (a) all federal, state, local, county, foreign and other
taxes, assessments or other government charges, including, without limitation,
any income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, license,
registration, recording, documentary, conveyancing, gains, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, personal property,
environmental or windfall profit tax, custom duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any taxing
authority responsible for the imposition of any such tax (domestic or foreign)
or (b) Liability for the payment of any amounts of the type described in clause
(a) above relating to any other Person as a result of being party to any
agreement to indemnify such other Person, being a successor or transferee of
such other Person, or being a member of the same affiliated consolidated,
combined, unitary or other group with such other Person.
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"Tax Return" means any report, return, claim for refund or
other information supplied or required to be supplied by Seller to a taxing
authority in connection with Taxes, including any attachments thereto and any
amendments thereof.
"Third Party" means any Person other than Seller, Purchaser or
any of their respective Affiliates.
"Transition Period" shall have the meaning set forth in
Section 12.7 hereof.
"Ultimate Parent" shall have the meaning set forth in the
Preamble hereto.
"Unassumed Liabilities" shall have the meaning set forth in
Section 2.4 hereof.
1.2 Rules of Construction. Unless the context otherwise
clearly indicates, in this Agreement:
(a) the singular includes the plural;
(b) "includes" and "including" are not limiting;
(c) "may not" is prohibitive and not permissive; and
(d) "or" is not exclusive.
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
2.1 Purchase and Sale of Assets.
(a) Subject to the terms and conditions set forth in this
Agreement, at the Closing, Seller shall sell, contribute, convey, assign,
transfer and deliver to Purchaser, free and clear of all Liens (except for the
Assumed Obligations and Permitted Liens), and Purchaser shall purchase, acquire
and take assignment and delivery of, for the consideration specified in Section
3.1, all properties, assets, rights, titles and interests of every kind and
nature, owned or leased by Seller (including indirect and other forms of
beneficial ownership) as of the Closing Date, which are used in, useful for or
otherwise associated with the Business (including, without limitation, all
assets located on the premises of the Business), whether tangible or intangible
and wherever located and by whomever possessed, including, without limitation,
all of the following assets but excluding Excluded Assets pursuant to Section
2.3 (all of the assets to be sold, assigned, transferred and delivered to
Purchaser hereunder herein called the "Acquired Assets"):
(i) all cash of Seller immediately prior to the Closing
(including, without limitation, checking account balances,
certificates of deposit and other time deposits and ▇▇▇▇▇ cash);
(ii) all marketable and other securities;
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(iii) all accounts and notes receivables (whether current
or noncurrent) and all causes of action specifically pertaining to the
collection of the foregoing;
(iv) all Intellectual Property and all corresponding
rights that, now or hereafter, may be secured throughout the world and
all copies and tangible embodiments of any such Intellectual Property
in Seller's possession or control;
(v) all of Seller's rights existing under the Assumed
Executory Contracts;
(vi) all machinery, equipment (including all
transportation and office equipment), computer equipment, telephone
systems and furniture used for the Business and owned by Seller
wherever located;
(vii) all inventories of work in process, semi-finished
and finished goods, stores, replacement and spare parts, packaging
materials, operating supplies, and fuels, owned by Seller wherever
located;
(viii) all office supplies, production supplies, spare
parts, other miscellaneous supplies, and other tangible property of
any kind wherever located, including, without limitation, all property
of any kind located in any building, office or other space leased,
owned or occupied by Seller or in any warehouse where any of Seller's
properties and assets may be situated;
(ix) all customer deposits and advances and prepaid and
other current assets relating to the Business;
(x) all claims, deposits, prepayments, warranties,
guarantees, refunds, causes of action, rights of recovery, rights of
set-off and rights of recoupment of every kind and nature (whether or
not known or unknown or contingent or non-contingent) related to the
Acquired Assets and Assumed Obligations;
(xi) the right to receive and retain mail, accounts
receivable payments and other communications relating to the Business;
(xii) the right to ▇▇▇▇ and receive payment for products
shipped or delivered and services performed but unbilled or unpaid as
of the Closing;
(xiii) all Books and Records;
(xiv) all advertising, marketing and promotional materials
and all other printed or written materials;
(xv) all Permits and transferable licenses, certifications
and approvals from all permitting, licensing, accrediting and
certifying agencies, and the rights to all data and records held by
such permitting, licensing and certifying agencies, to the extent
transferable;
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(xvi) all goodwill as a going concern and all other
intangible properties;
(xvii) all telephone numbers, Internet addresses,
websites, web pages and/or domain names used by Seller, other than
those using the "Tecstar" name;
(xviii) all indemnities relating to the Acquired Assets or
the Assumed Obligations prior to the Closing Date;
(xix) all rights to proceeds under insurance policies to
the extent related to or payable in connection with any of the
Acquired Assets or the Assumed Obligations prior to the Closing Date,
other than the insurance policies listed on Schedule 2.1(a) under the
heading "Excluded Insurance Policies;" and
(xx) all security deposits relating to Assumed Executory
Contracts.
(b) Subject to the terms and conditions set forth in this
Agreement, all of the Acquired Assets shall be sold, assigned, transferred,
conveyed and delivered to Purchaser free and clear of all liens (including liens
for Taxes), encumbrances (including, without limitation, any leasehold
interests, licenses or other rights, in favor of a Third Party or a seller, to
use any portion of the Acquired Assets), Claims, security interests, of whatever
kind or nature, mortgages, pledges, restrictions, charges, instruments,
licenses, encroachments, options, rights of recovery, judgments, orders and
decrees of any court or foreign or domestic governmental authority, interest,
products and Tax (including foreign, federal, state and local Taxes), in each
case of any kind or nature, whether secured or unsecured, ▇▇▇▇▇▇ or inchoate,
filed or unfiled, scheduled or unscheduled, noticed or unnoticed, recorded or
unrecorded, contingent or non-contingent, material or non-material, known or
unknown, and including all claims based on any theory that Purchaser is a
successor, transferee or continuation of Seller or the Business, in each case,
other than Permitted Liens and the Assumed Obligations expressly assumed herein
(each a "Lien" and collectively the "Liens"), whether arising prior to or
subsequent to the date of the filing of the Chapter 11 petition of Seller.
(c) A list of each fixed asset having a current value or
historical cost basis in excess of $500.00 shall be set forth on Schedule
2.1(c).
2.2 Assignment and Assumption of Liabilities. Subject to the
terms and conditions set forth in this Agreement, Purchaser shall assume from
Seller and thereafter pay, perform or discharge in accordance with their terms,
the following liabilities and obligations of Seller (all such liabilities and
obligations herein called the "Assumed Obligations"): (i) executory obligations
under the Assumed Equipment Leases, (ii) executory obligations under the Assumed
Contracts, (iii) the trade payables and accrued expenses more specifically
described in Schedule 2.2 and any other trade payables and accrued expenses
incurred in the Ordinary Course of Business, (iv) all obligations of Seller to
its customers to repair or replace defective or malfunctioning products, whether
known or unknown (other than those products sold in connection with the business
sold by Seller to Moog, Inc. in October 2001), (v) liability for product
liability claims arising out of or in connection with injuries or damage to
person or property or economic loss resulting from any Acquired Assets sold by
the Purchaser after the Closing Date, (vi) obligations to pay an amount not to
exceed $61,644 to resolve the North
9
Carolina franchise tax matter set forth in Schedule 4.7 attached hereto, (vii)
obligations to pay an amount not to exceed the amount set forth in that certain
side letter of even date herewith to settle or otherwise resolve the dispute
with Unisys set forth in Schedule 4.5 attached hereto regarding the Durham
Pension Plan, (viii) all liabilities of Seller as set forth in the Latest
Balance Sheets; and (ix) all other liabilities and obligations with respect to
the Acquired Assets or Assumed Obligations arising after the Closing Date.
2.3 Excluded Assets. Notwithstanding anything to the contrary
in this Agreement, the following assets of Seller shall be retained by Seller
and are not being sold or assigned to Purchaser hereunder (all of the following
are referred to collectively as the "Excluded Assets"): (a) any and all rights
under this Agreement and the consideration delivered to Seller hereunder;
(b) all leases other than the Assumed Leases and all Contracts
other than the Assumed Contracts;
(c) The land, fixtures and improvements thereon located at the
Seller's principle place of business at ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the vacant parking lot owned by the Seller on ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Excluded Facilities");
(d) all books, records, ledgers, files, reports, plans,
drawings and operating records to the extent relating to any Excluded Assets or
Unassumed Liabilities and the minute books, stock books and tax returns and
other tax records of Seller.
(e) all Tax refunds, Tax rebates, Tax credits or similar items
of Seller;
(f) equipment used in the Business and owned or paid for by
Third Parties wherever located; and
(g) all claims and rights of Seller with respect to any
Excluded Assets.
2.4 No Other Liabilities Assumed. Seller acknowledges and
agrees that pursuant to the terms and provisions of this Agreement and under any
Contract, Purchaser will not assume any obligation of Seller, other than the
Assumed Obligations. In furtherance and not in limitation of the foregoing,
neither Purchaser nor any of its Affiliates shall assume, and shall not be
deemed to have assumed, any debt, Claim, obligation or other Liability of Seller
or any of its Affiliates whatsoever (other than the Assumed Obligations),
including, but not limited to the following, but in each case except to the
extent constituting Assumed Obligations (collectively, the "Unassumed
Liabilities"):
(a) all obligations, claims, or liabilities of Seller or any
predecessor(s) or Affiliate(s) of Seller that relate to any of the Excluded
Assets;
(b) Excluded Environmental Liabilities;
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(c) all obligations, claims, or liabilities of Seller or any
predecessor(s) or Affiliate(s) of Seller or for which Seller or any
predecessor(s) or Affiliates of Seller could be liable relating to Taxes
(including with respect to the Acquired Assets or otherwise) for all periods, or
portions thereof, ending prior to the Closing Date and any deferred Taxes of any
nature;
(d) all obligations, claims, or liabilities for any legal,
accounting, investment banking, brokerage, real estate appraisal, consulting or
similar fees or expenses incurred by Seller in connection with, resulting from
or attributable to the transactions contemplated by this Agreement or otherwise;
(e) all Indebtedness of Seller or any predecessor(s) or
Affiliate(s) of Seller, including any Indebtedness owed by Seller to Parents or
any other Affiliate;
(f) all obligations of Seller related to the right to or
issuance of any capital stock or other equity interest of Seller, including,
without limitation, any stock options or warrants;
(g) all liabilities and obligations, including any and all
Proceedings, of Seller or any predecessor(s) or Affiliate(s) of Seller resulting
from, caused by or arising out of the conduct of the Business or ownership or
lease of any properties or assets by Seller at any time prior to the Closing
Date, or other actions, omissions or events occurring prior to the Closing
(other than all cure payments payable in accordance with the terms of this
Agreement), whether past, present, future, known or unknown, liquidated or
unliquidated, accrued or unaccrued, pending or threatened;
(h) any Liability or obligation arising out of or relating to
services and/or products of Seller to the extent sold prior to the Closing;
(i) any Liability or obligation under any Assumed Executory
Contract which arises after the Closing but which arises out of any breach that
occurred prior to the Closing;
(j) any Liability or obligation under any contract, agreement,
lease, mortgage, indenture or other instrument not assumed by Purchaser
hereunder;
(k) any Liability or obligation under any employment,
severance, retention or termination agreement with any employee, consultant or
contractor of Seller;
(l) any Liability or obligation of Seller to any shareholder
or Affiliate of Seller;
(m) any Liability or obligation to indemnify, reimburse or
advance amounts to any officer, director, employee or agent of Seller;
(n) any Liability or obligation to distribute to Seller's
shareholders or otherwise apply all or any part of the consideration received
hereunder;
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(o) any Liability or obligation arising out of or resulting
from Seller's non-compliance with any law, ordinance, regulation or treaty;
(p) any Liability or obligation of Seller under this Agreement
or any other document executed in connection herewith; and
(q) any Liability or obligation of Seller based upon Seller's
acts or omissions occurring after the Closing.
The parties acknowledge and agree that disclosure of any obligation or Liability
on any Schedule to this Agreement shall not create an Assumed Obligation or
other Liability of Purchaser, except where such disclosed obligation has been
expressly assumed by Purchaser as an Assumed Obligation in accordance with the
provisions of Section 2.2 hereof.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Payment of Purchase Price.
(a) The aggregate purchase price for the Acquired Assets shall
be (i) a wire transfer of immediately available funds equal to $3,300,000.00
(the "Closing Cash") payable to Seller directly to Agent Bank as provided in
Section 3.5 hereof, plus (ii) $250,000.00 to be deposited into an escrow account
and $50,000 to be deposited into a lease reserve account in accordance with
Section 3.2 hereof (collectively, the "Purchase Price").
(b) The Purchase Price shall be allocated in accordance with
Section 13.9(b).
3.2 Escrow Agreement. On the Closing Date, Seller shall
establish an escrow account (the "Escrow Account") and a lease reserve account
("Lease Reserve Account") with Union Bank of California, N.A., as escrow agent
(the "Escrow Agent"), pursuant to the following terms and conditions:
(a) Deposits. The total amount to be deposited by Purchaser
into the Escrow Account shall be $250,000.00, and the total amount to be
deposited by Purchaser into the Lease Reserve Account shall be $50,000, each to
be paid out of the Purchase Price.
(b) Escrow Period. The Escrow Account shall remain open for a
period of three (3) months following the Closing Date (the "Escrow Period");
provided, however, the Escrow Period shall end on such earlier date that the
balance of the Escrow Account equals zero dollars.
(c) Lease Reserve Period. The Lease Reserve Account shall
remain open for so long as the Facilities Lease remains in effect.
(d) Distribution of Funds. The funds held in the Escrow
Account may be distributed to the Purchaser upon written notice (the "Notice")
to the Escrow Agent of actual amounts incurred by Purchaser in connection with
(i) payment of amounts greater than $61,664 to resolve North Carolina franchise
tax apportionment issue set forth in Schedule 4.7 attached
12
hereto or (ii) the settlement or other resolution of the dispute with Unisys set
forth in Schedule 4.5 attached hereto regarding the Durham Pension Plan to the
extent the settlement amount exceeds the amount set forth in that certain side
letter of even date herewith. The funds held in the Lease Reserve Account may be
distributed upon Notice to the Escrow Agent to pay for costs incurred by Seller
under the Facilities Lease as more particularly described therein. Any Notice to
the Escrow Agent shall include actual receipts of expenses and shall be signed
by Purchaser and Seller. Upon receipt of the Notice, the Escrow Agent shall
promptly distribute the amount of funds as set forth in the Notice. At the end
of the Escrow Period and upon termination or expiration of the Facilities Lease,
any funds remaining in the Escrow Account or Lease Reserve Account, respectively
(the "Escrow Funds"), shall be distributed to Agent for the benefit of Bank
Group as provided in Section 3.5 hereof.
(e) Expenses. All costs and expenses related to the creation,
operation and maintenance of the Escrow Account shall be borne equally by Seller
and Purchaser. All costs and expenses related to the creation, operation and
maintenance of the Lease Reserve Account shall be borne entirely by Seller.
3.3 Further Assurances. From time to time after the Closing
and without further consideration, (i) Seller, upon the request of Purchaser,
shall execute and deliver such documents and instruments of conveyance and
transfer as Purchaser may reasonably request to consummate more effectively the
purchase and sale of the Acquired Assets as contemplated hereby and to vest in
Purchaser title to the Acquired Assets transferred hereunder, and (ii)
Purchaser, upon the request of Seller, shall execute and deliver such documents
and instruments of contract or lease assumption as Seller may reasonably request
to confirm Purchaser's Liability for the obligations assumed hereunder or
otherwise more fully consummate the transactions contemplated by this Agreement.
3.4 Acknowledgement of Adequacy of Purchase Price. Seller,
Parents, and Purchaser acknowledge that the Purchase Price equals or exceeds the
fair market value of the Acquired Assets. Furthermore, Seller, Parents, and
Purchaser acknowledge that the Purchase Price constitutes reasonably equivalent
value in exchange for the Acquired Assets.
3.5 Delivery of Closing Cash and Escrow Funds. On the Closing
Date, in accordance with the Approval Order and subject to Bankruptcy Court
approval, which approval will be sought by Parents and Seller, Purchaser shall
pay the Closing Cash directly to Agent Bank for the benefit of the Bank Group.
Purchaser further shall pay any Escrow Funds released from the Escrow Account at
the end of the Escrow Period (pursuant to Section 3.2(d) hereof) directly to the
Agent Bank for the benefit of the Bank Group.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants that as of the date hereof:
4.1 Organization and Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has all requisite corporate power and authority to own and
lease all property owned and leased by it, to enter into
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this Agreement and to carryout the provisions hereof, to sell the Acquired
Assets, and to conduct its business as currently conducted. Subject to the
approval of the Bankruptcy Court, Seller has all authority, power and capacity
to enter into and perform the terms of this Agreement and the transactions
contemplated hereby. Neither the nature of Seller's business nor of its property
makes any qualification to transact business as a foreign corporation necessary
in any jurisdiction where the failure to do so would be materially adverse,
except for the State of North Carolina, where Seller is so qualified.
4.2 Authorization. The execution, delivery and performance of
this Agreement and the sale of the Acquired Assets have been duly authorized by
all requisite corporate action and do not result in a breach or violation of any
contract, or order or law to which Seller is subject, except for those breaches
or violations that would not have a material adverse effect on the Business.
This Agreement constitutes a valid and binding obligation of Seller, enforceable
in accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally. To the Knowledge of Seller,
except as set forth in Schedule 4.8 attached hereto, no consent, permit or
approval of, filing with or notice to any governmental agency or any other
Person (whether or not governmental in character) including without limitation
to Third Party clients or customers, has been or is required to be obtained,
made or given by Seller in connection with the execution and delivery of this
Agreement and the contracts to be entered into pursuant hereto or the
performance of and compliance with this Agreement and such contracts.
4.3 Financial Statements. Prior to and as a condition to
Closing, Seller shall have made available for Purchaser's inspection and
approval, all financial books and records of Seller for the prior three (3)
fiscal years, including without limitation, the balance sheet of Seller as of
the most recent fiscal year end and as of the most recent quarter and as of the
most recent month then ended (the "Latest Balance Sheets"). Schedule 4.3
contains copies of the Latest Balance Sheets. All such financial statements (a)
have been prepared in accordance with GAAP throughout the periods indicated
(provided, however, interim financial statements do not include footnotes), (b)
present in all material respects the financial position of Seller as of the
respective dates indicated and the results of its operations for the respective
periods indicated (provided, however, interim financial statements are subject
to normal recurring adjustments), and (c) were prepared from the books and
records of Seller, which books and records are complete and correct, in all
material respects, and accurately reflect the transactions of and other events
applicable to Seller.
4.4 Absence of Specified Changes. Since April 30, 2002, there
has not been any:
(a) change in the financial condition, assets or results of
operation of Seller that is materially adverse;
(b) transaction by Seller except in the Ordinary Course of
Business as conducted through that date;
14
(c) destruction or loss of or damage to any property of
Seller, whether or not covered by insurance, that is materially adverse;
(d) entering into or assumption of any material contract or
obligation by Seller, except in the Ordinary Course of Business, and none of
which contracts entered into in the Ordinary Course of Business is materially
adverse;
(e) change in the management of Seller, including without
limitation, any termination, replacement or reassignment of any officer of
Seller;
(f) increase in the salary or other compensation payable or to
become payable by Seller to any of its officers, directors, employees or
contractors, or the declaration, payment or commitment or obligation of any kind
for the payment of a bonus or other additional salary or compensation to any
such individual other than in the Ordinary Course of Business;
(g) sale, lease or other disposition or transfer or any
property of Seller, except for sales in the Ordinary Course of Business, which
are not materially adverse;
(h) amendment or termination known to Seller of any contract
or license to which Seller is a party or by which it or any of its property may
be bound, except in the Ordinary Course of Business (which amendments and
terminations are not materially adverse);
(i) waiver or release of any right or claim of Seller, except
in the Ordinary Course of Business;
(j) dividend or any acquisition or retirement by Seller of any
of its outstanding capital stock;
(k) loss of any significant customer which is materially
adverse; or
(l) agreement or commitment by Seller to do any of the things
described in the preceding clauses (a) through (j).
4.5 Litigation. Except as set forth in Schedule 4.5 attached
hereto, there is no action, proceeding or investigation that is pending or
threatened by Seller or, to the Knowledge of Seller, against (i) Seller, (ii)
its business or assets, or (iii) any of its officers, directors or employees.
4.6 Intangible Property. Seller owns or possesses rights to
all patents, patent applications, trademarks, inventions, franchises, licenses,
Permits, copyrights, know-how, trade secrets, trademarks and other information
and authorizations adequate for the operation of its business as currently
conducted. To the Knowledge of Seller, the business of Seller as conducted does
not infringe on or conflict with the known proprietary rights (including but not
limited to patents, trade secrets and licenses) of others. To the Knowledge of
Seller, no Person has ever claimed that Seller has infringed such rights. To the
Knowledge of Seller, Seller's employees have not and Seller's contractors have
not improperly used and are not making improper use of any confidential
information or trade secrets of others and have not improperly disclosed any
15
confidential information of Seller. Seller has taken reasonable steps to
preserve the confidentiality of its trade secrets.
4.7 Tax Returns. Seller, or Parent on Seller's behalf, has
timely filed all federal, state and other tax returns which are required to be
filed and has paid all Taxes which are reflected as due and payable. Except as
set forth in Schedule 4.7 attached hereto, there have been no disputes with or
audits by any taxing authority relating to any of the said returns and to the
Knowledge of Seller there is no proposed Liability for any Taxes presently due
or due in the future, other than in the Ordinary Course of Business.
4.8 Material Breach. Seller is not and will not be, by virtue
of entering into this Agreement and performing the transactions contemplated
hereunder, in violation or breach of any of the terms, conditions or provisions
of Seller's Articles of Incorporation or its Bylaws. Assuming the consents and
approvals set forth on Schedule 4.8 are obtained, Seller's entering into this
Agreement and performance of the transactions contemplated hereunder will not
violate any statute, law, rule or regulation, or any order, writ, injunction or
decree of any court or governmental authority, violate or conflict with or
constitute a default under any agreement, instrument or writing of any nature to
which Seller is a party or by which Seller or its assets or properties may be
bound, except to the extent any of the foregoing is not enforceable due to
operation of applicable bankruptcy law, or result in the creation or imposition
of any Lien upon any of the Acquired Assets or except in any case as would not
have a material adverse effect on the Seller or the Business.
4.9 Compliance with Law. Seller (i) is not, in a manner that
is materially adverse, in violation of any law to which it or any of its
property is subject and which is known to, or should be known to Seller; and
(ii) has not failed to obtain any material license, Permit, franchise or other
governmental authorization that is necessary to the ownership of its property or
to the conduct of its business as currently conducted. Seller has never applied
for any such authorization that was not ultimately granted except where failure
to obtain such authorization would not have a material adverse effect on the
Business. Seller has filed all notices, reports, and other material required to
be filed with any government agency of which it knows.
4.10 Employees. Except as set forth in Schedule 4.10, Seller
does not have any collective bargaining agreements with any of its employees.
There are no material grievances or claims pending or, to the Knowledge of
Seller, threatened between Seller and any of its employees, past or present,
with respect to any matters relating to past or present employment with Seller.
Schedule 4.10 contains a current list of all of Seller's employees, their years
of service, their current salaries and other employment benefits.
4.11 Absence of Undisclosed Liabilities. Set forth in the
Latest Balance Sheets or accruing in the Ordinary Course of Business (consistent
with past practices) since the Latest Balance Sheets, neither Seller nor any of
its property is subject to any Indebtedness, Liability, claim, obligation or
responsibility, fixed or contingent, liquidated or unliquidated, secured or
unsecured, whether or not appropriate to be shown as a Liability in a financial
statement, which has been asserted against Seller or is known to Seller.
16
4.12 Material Agreements. Schedule 4.12 contains a true and
complete list of each contract to which Seller is subject which has an unexpired
term of one (1) month or more, and of the following contracts in force as of the
Closing: (i) each employment agreement, consulting agreement, executive
compensation plan, profit sharing plan, pension plan, bonus plan, deferred
compensation agreement, retirement plan, stock option or stock purchase plan and
other Benefit Plan entered into or adopted by Seller, (ii) each contract, if
any, affecting the rights of any holder of outstanding securities of Seller,
(iii) each contract relating to the raising of funds, whether by the making of a
loan, borrowing of money, issuance of any debt or securities or otherwise, (iv)
each guaranty by Seller of the obligation of any other Person or entity, (v)
each contract for services or other contract under which patent rights, trade
secrets or other proprietary information is granted to Seller or by Seller to
third parties and (vi) each lease agreement for office, manufacturing or other
equipment. There are no contracts that are materially adverse, to which Seller
is a party, which are not included in Schedule 4.12. Seller has not materially
breached any terms of any such contracts and, to the best Knowledge of Seller,
no other parties thereto have materially breached their obligations thereunder.
4.13 Representations. No representation or warranty made by
Seller in this Agreement contains any untrue statements of a material fact or
omits to state a fact necessary to make the statements of facts contained herein
and therein not misleading.
4.14 Title to Assets; Encumbrances. Except for Permitted
Liens, Seller has good, valid and indefeasible title to all of the Acquired
Assets. Since the date of the Latest Balance Sheet, Seller has not purchased any
material amount of assets except in the Ordinary Course of Business and
consistent with past practice, whether for inventory or other purposes. Except
for Permitted Liens, all of the Acquired Assets are free and clear of any Lien.
4.15 Employee Benefit Plans. Schedule 4.15 sets forth a
complete and accurate list of each Benefit Plan Seller maintains, contributes to
or for which Seller has any Liability or potential Liability to any employee or
former employee ("Employee Benefit Plan"). Seller has made available to
Purchaser true and correct copies, if applicable, of each Employee Benefit Plan.
Except as set forth in Schedule 4.15, the Employee Benefit Plans are in material
compliance with all applicable requirements of ERISA, the Code, and other
applicable laws and have been administered in all material respects in
accordance with their terms and such laws. Each Employee Benefit Plan which is
intended to be qualified within the meaning of section 401(a) of the Code has
received a favorable determination letter as to its qualification, and nothing
has occurred that would cause the loss of such favorable determination.
4.16 Good Title Conveyed, Etc. Subject to entry of the
Approval Order by the Bankruptcy Court and assuming the consents and approvals
set forth on Schedule 4.8 are obtained, Seller will at the Closing have the
power and the right to sell, assign and transfer and Seller will sell and
deliver to Purchaser, and upon consummation of the transactions contemplated by
this Agreement, Purchaser will acquire good and valid title to the Acquired
Assets, free and clear of all Liens other than Permitted Liens. This Agreement
and the documents contemplated hereby, when duly executed and delivered by
Seller to Purchaser at the Closing, will effectively vest in Purchaser good and
valid title to the Acquired Assets, subject to the Permitted Liens.
17
4.17 Assets Necessary to Business. The Acquired Assets
constitute all of the assets, agreements, licenses and properties owned by
Seller (other than the Excluded Assets) and are all assets, agreements, licenses
and properties necessary in connection with the conduct of the Business as
currently conducted.
4.18 Machinery and Equipment. The machinery and equipment of
Seller used in the Business is in good operating condition and repair, ordinary
wear and tear excepted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1 Authorization. Purchaser has all authority, power and
capacity to enter into and perform the terms of this Agreement and the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement have been duly authorized, and do not result in any breach or
violation of any contract, order or law to which Purchaser is subject or the
terms of the charter documents that govern Purchaser. This Agreement constitutes
a valid and binding obligation of Purchaser, enforceable in accordance with its
terms. To the best of Purchaser's knowledge, no consent, permit or approval of,
filing with or notice to any governmental agency or any other Person (whether or
not governmental in character) has been or is required to be obtained, made or
given by Purchaser in connection with the execution and delivery of this
Agreement and the contracts to be entered into pursuant hereto or the
performance of and compliance with this Agreement and such contracts.
5.2 Litigation. There is no action, proceeding or
investigation that is pending or threatened, to the knowledge of Purchaser,
against the Purchaser that would effect Purchaser's ability to perform under
this Agreement.
5.3 Sufficient Funds. The Purchaser currently has available
and will have available on the Closing Date sufficient funds to enable it to
consummate the transactions contemplated hereby. Purchaser has sufficient
resources to operate the Business after the Closing Date. Subsequent to the
Closing Date, Purchaser will be solvent, and will be able to pay its debts as
they become due.
ARTICLE VI
COVENANTS OF SELLER AND PARENTS; OTHER AGREEMENTS
6.1 Consents and Approvals. Seller shall use commercially
reasonable efforts (and Purchaser shall cooperate with Seller) (i) to obtain all
necessary consents and approvals, as reasonably requested by Purchaser, to
consummate the purchase and sale of the Acquired Assets and the assignment of
the Assumed Obligations, together with any other necessary consents and
approvals to consummate the transactions contemplated hereby, including, without
limitation, obtaining the Approval Order, (ii) to make, as reasonably requested
by Purchaser, all filings, applications, statements and reports to all
authorities that are required to be made prior to the Closing Date by or on
behalf of Seller or any of its Affiliates pursuant to any applicable Regulation
in connection with this Agreement and the transactions contemplated hereby and
(iii) to obtain, as requested by Purchaser, all required consents and approvals
(if any) necessary
18
to assign and transfer the Permits to Purchaser at Closing and, to the extent
that one or more of the Permits are not transferable, to assist Purchaser in
obtaining replacements therefor. In the event that certain Permits are not
transferable or replacements therefor are not obtainable on or before the
Closing, but such Permits are transferable or replacements therefor are
obtainable after the Closing, Seller shall continue to use such commercially
reasonable efforts in cooperation with Purchaser after the Closing as may be
required to obtain all required consents and approvals to transfer, or obtain
replacements for, such Permits after Closing and shall use commercially
reasonable efforts to do all things necessary to give Purchaser the benefits
that would be obtained under such Permits. Nothing in this Agreement shall be
construed to require Seller or Purchaser to pay any consideration to any party
in order to obtain a consent.
6.2 Commercially Reasonable Efforts.
(a) Seller will use commercially reasonable efforts (and
Purchaser shall cooperate with Seller) to obtain: (i) the entry of the Approval
Order, and (ii) any other consent required for the consummation of the
transactions contemplated by this Agreement as soon as practicable.
(b) Purchaser and Seller will use mutually commercially
reasonable efforts to negotiate and execute all Exhibits, and approve any
revisions to the Schedules hereto, on or prior to the Closing Date.
6.3 Bankruptcy Actions.
(a) As soon as reasonably practicable, Parents shall file with
the Bankruptcy Court a motion, in the form attached hereto as Exhibit A, seeking
Bankruptcy Court approval of the Parents' execution and consummation of this
Agreement.
(b) Upon the Closing and except as provided herein, Parents,
on behalf of their bankruptcy estates, hereby agree to, in consideration of the
Purchase Price, release Purchaser, the Seller (except for the Reserved Claims,
as hereinafter defined) and the Acquired Assets from any and all claims, liens,
encumberances and causes of action the Parents, their respective bankruptcy
estates, or both could assert against Purchaser, the Seller or the Acquired
Assets arising in connection with any of the Parents' prior dealings with
Seller, the transactions contemplated by this Agreement or the Parents' Chapter
11 Case. Such releases will release any and all claims or causes of action of
any nature (exclusive of Parents' equity rights as a shareholder of Seller)
which any one or more of the Parents could assert (a) against Seller and the
Acquired Assets (or, on account of or derivatively through Seller, against its
successors or assigns), directly or indirectly, whether known or unknown,
including without limitation any intercompany claims, any claims arising under
any written, oral or implied contract, any claims or causes of action arising
under any promissory notes or other commercial paper, any claims or causes of
action for contribution, reimbursement or indemnity however arising, any claims
or causes of action arising from any express or implied warranty or
representation, any claims or causes of action vested in the Parents' respective
bankruptcy estates by virtue of the Bankruptcy Code or the commencement of the
Parents' Chapter 11 Case, any claims or causes of action sounding in tort,
strict liability, negligence, misrepresentation, alter ego, inadequate
capitalization of either Seller or any of the Parents, fraud, or otherwise, and
(b) against
19
Purchaser, directly or indirectly, whether known or unknown, including without
limitation any claims arising under any written, oral or implied contract (other
than this Agreement), any claims or causes of action arising under any
promissory notes or other commercial paper, any claims or causes of action for
contribution, reimbursement or indemnity however arising, any claims or causes
of action arising from any express or implied warranty or representation (other
than this Agreement), any claims or causes of action sounding in tort, strict
liability, negligence, misrepresentation, alter ego, inadequate capitalization
of either Seller or any of the Parents, fraud, or otherwise, and, in each case
under (a) and (b), any claims or causes of action that have arisen since the
beginning of time or at any time thereafter through and including the Closing
Date. It is intended that the foregoing releases by the Parents shall be fully
binding on them, their respective bankruptcy estates, and any party claiming
through them, to the fullest extent permitted by law. It also is intended that
the foregoing releases shall not release Seller from any obligation of Seller to
Parents arising from the Reserved Claims, either as a creditor or a shareholder.
The Reserved Claims shall include (to the exclusion of any and all other claims)
any and all claims, liens, encumbrances and causes of action with respect to (x)
any intercompany debt, (y) any right of subrogation or other rights of either
Parent with respect to guaranties for obligations of Seller, and (z) any of the
Excluded Assets or Unassumed Liabilities, and Parents shall have no recourse
whatsoever on or on account of the Reserved Claims either against Purchaser or
the Acquired Assets. Notwithstanding the foregoing, and subject to Section 8.8
of this Agreement, nothing in this Section 6.3 shall be deemed to be a release
of any liens that Union Bank of California, N.A., U.S. Bank or Westar Capital
LLC may have on the assets of Seller.
(c) Seller shall additionally release Purchaser and the
Acquired Assets from any and all claims, liens, encumbrances, and causes of
action the Seller could assert against Purchaser or the Acquired Assets,
directly or indirectly, whether known or unknown, including without limitation
any claims arising under any written, oral or implied contract (other than this
Agreement or the Facilities Lease), any claims or causes of action arising under
any promissory notes or other commercial paper, any claims or causes of action
for contribution, reimbursement or indemnity however arising, any claims or
causes of action arising from any express or implied warranty or representation
(other than this Agreement or the Facilities Lease), any claims or causes of
action sounding in tort, strict liability, negligence, misrepresentation, alter
ego, inadequate capitalization of either Seller or any of the Parents, fraud, or
otherwise, and any claims or causes of action that have arisen since the
beginning of time or at any time thereafter through and including the Closing
Date. It is intended that the foregoing releases by the Seller shall be fully
binding on it, any prospective bankruptcy estate, and any party claiming through
it, to the fullest extent permitted by law.
6.4 Efforts. Seller and Parents shall use commercially
reasonable efforts to take or cause to be taken all action and do or cause to be
done all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including, without limitation, to obtain all
consents, approvals and authorizations of third parties, to make all filings
with and give all notices to third parties which may be necessary or required to
effectuate the transactions contemplated hereby. Seller's obligations under this
Section 6.4 shall be deemed to include Seller's commercially reasonable efforts
to assist Purchaser in obtaining the Permits Purchaser seeks with respect to the
Acquired Assets or the operations it contemplates in
20
connection with the Business. Seller shall use commercially reasonable efforts
to fulfill or obtain the fulfillment of the conditions set forth in Article VIII
of this Agreement.
6.5 Condition of Assets. Seller shall maintain and keep the
Acquired Assets in as good repair, working order and condition as of the date
hereof, except for ordinary wear and tear.
6.6 Access. Seller and Parents shall continue to provide
Purchaser with access during reasonable business hours to inspect and review all
books, records, contracts, documents, equipment and facilities of Seller.
6.7 Notice of Developments. Seller shall give prompt written
notice to Purchaser of all material adverse developments causing a breach of any
of Seller's representations and warranties hereunder or developments adversely
effecting Seller's ability to perform its obligations hereunder.
6.8 Survival. All of Seller's covenants set forth in this
Article VI, to the extent applicable after the Closing Date, and under Article
XII shall survive the Closing.
ARTICLE VII
COVENANTS OF PURCHASER
7.1 Assumed Obligations. Subsequent to the Closing, Purchaser
agrees to pay and perform the Assumed Obligations.
7.2 Further Assurances. Purchaser shall execute such documents
and take such further actions as may be reasonably required to carry out the
provisions of this Agreement and the transactions contemplated hereby. Purchaser
shall use commercially reasonable efforts to fulfill or obtain the fulfillment
of the conditions set forth in Article IX of this Agreement.
7.3 Survival. All of Purchaser's covenants set forth in this
Article VII, to the extent applicable after the Closing Date, and under Article
XII shall survive the Closing.
7.4 Efforts. Purchaser shall use commercially reasonable
efforts to take or cause to be taken all action and do or cause to be done all
things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement. Purchaser's obligations under this Section 7.4
shall be deemed to include Purchaser's commercially reasonable efforts to assist
Seller in obtaining the consents and approvals necessary to effectuate the
transactions contemplated hereby. Purchaser shall use commercially reasonable
efforts to fulfill or obtain the fulfillment of the conditions set forth in
Article IX of this Agreement.
7.5 Notice of Developments. Purchaser shall give prompt
written notice to Seller of all material adverse developments causing a breach
of any of Purchaser's representations and warranties hereunder or developments
adversely effecting Purchaser's ability to perform its obligations hereunder.
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are, at the
option of Purchaser, subject to satisfaction of the following conditions
precedent on or before the Closing Date:
8.1 Corporate Action. All corporate and other proceedings and
actions to be taken by Seller in connection with the transactions contemplated
hereby, and all certificates, agreements, instruments and documents mentioned
herein to be completed by Seller shall be completed prior to the Closing.
8.2 Execution and Delivery of Closing Documents. Seller shall
have executed and delivered, and shall have caused other parties to execute and
deliver, as appropriate, all documents to be delivered by Seller as set forth in
Section 10.2 hereof necessary for the Closing.
8.3 Accuracy of Representations and Warranties. The
representations and warranties made by the Seller in Article IV hereof shall
have been true and correct in all material respects on the date hereof, and
shall be true and correct as of the Closing in all material respects with the
same force and effect as if they had been made on and as of the date of the
Closing.
8.4 Certification. Seller shall have delivered to Purchaser a
certificate certifying to the fulfillment of the conditions specified in
Sections 8.2, 8.3, 8.5, 8.7, and 8.8.
8.5 Bankruptcy Court Approval. The Approval Order shall
approve and authorize the Parents' execution and consummation of this Agreement.
8.6 Insurance. Purchaser shall have procured insurance
policies providing substantially the same coverage at substantially the same
cost as currently held by Seller or Parent to cover the Business and the
Acquired Assets for the time period following the Closing Date.
8.7 Facility Lease. Seller shall have leased the Excluded
Facilities to the Purchaser, such lease to commence immediately following the
Closing and be substantially in the form attached hereto as Exhibit B.
8.8 Release of Liens. Parents and Seller shall have obtained
in favor of Seller a release of all Liens encumbering the Acquired Assets and a
waiver all security interests in the Acquired Assets held by Union Bank of
California, N.A., U.S. Bank and Westar Capital II, LLC. Such release documents
shall be delivered by the Bank Group and Westar Capital II, LLC in advance of
the Closing Date to representatives of Pillsbury Winthrop LLP, Los Angeles,
California to be held in escrow pending Closing. Pillsbury Winthrop LLP shall
make such release documents available for inspection by Purchaser prior to the
Closing Date but shall not deliver such release documents to Purchaser until the
Agent Bank has received confirmation of receipt of the Closing Cash.
8.9 Employment Agreement. The Purchaser shall have entered
into an employment agreement with ▇▇▇ ▇▇▇▇▇ on terms satisfactory to the
Purchaser, which shall include a waiver of ▇▇. ▇▇▇▇▇'▇ rights under any
retention or severance arrangement with Seller.
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at the
option of Seller, subject to the satisfaction of the following conditions
precedent on or before the Closing Date.
9.1 Execution and Delivery of Closing Documents. Purchaser
shall have executed and delivered, and shall have caused other parties to
execute and deliver, as appropriate, all documents to be delivered by Purchaser
necessary for the Closing.
9.2 Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in Article V hereof shall have
been true and correct in all material respects as of the date hereof, and shall
be true and correct as of the Closing in all material respects with the same
force and effect as if they had been made on and as of the date of the Closing;
and Purchaser shall have performed all obligations and conditions herein
required to be performed or observed by Purchaser at or prior to the Closing.
9.3 Bankruptcy Court Approval. The Approval Order shall have
been executed by the Bankruptcy Court and entered on the docket by the Clerk of
the Bankruptcy Court.
9.4 Waiver of Severance. Seller shall have obtained waivers of
any and all rights to retention or severance benefits related to the
transactions contemplated hereby from any employee of Seller holding such
rights.
9.5 Insurance. Purchaser shall have added Seller as a
co-insured party under the Purchaser's insurance policy or policies covering
aircraft products liability.
ARTICLE X
CLOSING
10.1 Closing. Upon the terms and subject to the satisfaction
of the conditions contained in this Agreement, the closing of the transaction
contemplated by this Agreement (the "Closing") will take place at the offices of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C. at 5400 Renaissance Tower, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. Central Standard Time on June 18, 2002; or at
such other date and place as Purchaser and Seller may determine (the "Closing
Date").
10.2 Deliveries by Seller. At the Closing, Seller shall
deliver or procure delivery to Purchaser of:
(a) physical possession of all of the Acquired Assets capable
of passing by delivery with the intent that title in such Acquired Assets shall
pass by and upon delivery;
(b) one or more bills of sale, in the form attached hereto as
Exhibit C, conveying in the aggregate all of the owned personal property of
Seller included in the Acquired Assets, duly executed by Seller;
23
(c) one or more assignments and assumptions of the Assumed
Obligations, in form and content mutually satisfactory to Purchaser and Seller
(collectively, the "Assignment and Assumption"), duly executed by Seller;
(d) certificates of title and title transfer documents to all
titled motor vehicles;
(e) an assignment and assumption agreement with respect to
Permits and warranties in form and substance reasonably acceptable to Purchaser,
whereby Seller shall assign to Purchaser all of its rights in and to any Permits
and warranties relating to the Acquired Assets or the Business, to the extent
such Permits and warranties are assignable; and
(f) such other instruments as shall be reasonably requested by
Purchaser to vest in Purchaser title in and to the Acquired Assets in accordance
with the provisions hereof.
10.3 Deliveries by Purchaser. At the Closing, Purchaser will
deliver (i) the Assignment and Assumption duly executed by Purchaser, and (ii)
the Purchase Price.
10.4 Form of Instruments. To the extent that a form of any
document to be delivered hereunder is not attached as an Exhibit hereto, such
documents shall be in form and substance, and shall be executed and delivered in
a manner, reasonably satisfactory to Purchaser and Seller.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated prior to
the Closing as follows:
(a) by mutual written agreement of Purchaser and Seller;
(b) by either Purchaser or Seller if there shall be in effect
a Final Order restraining, enjoining or otherwise prohibiting the consummation
of the transactions contemplated hereby;
(c) by either Purchaser or Seller (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of any other party, which breach is not cured within ten
(10) days following written notice to the party committing such breach or which
breach, by its nature, cannot be cured prior to the Closing, and which breach,
individually or together with all other such breaches, would have a material
adverse effect on the Acquired Assets or the Business, in the case of breaches
by Seller, or a material adverse effect on Purchaser's ability to consummate the
transactions contemplated hereby, in the case of breaches by Purchaser;
(d) by Purchaser, provided Purchaser is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein, if it shall have reasonably determined that one or more conditions set
forth in Article VIII has not been or
24
cannot be fulfilled or satisfied prior to the date specified in such condition
(if such condition specifies a date by which such condition must be satisfied);
(e) by Seller, provided Seller is not then in material breach
of any representation, warranty, covenant or other agreement contained herein,
if it shall have reasonably determined that one or more conditions set forth in
Article IX has not been or cannot be fulfilled or satisfied prior to the date
specified in such condition (if such condition specifies a date by which such
condition must be satisfied);
(f) by Purchaser or Seller on any day on or after August 1,
2002, if the Closing shall not have been consummated by such date (or by such
later date as shall be agreed to by Purchaser and Seller in writing), unless the
Closing has not occurred due to a material failure of the Purchaser or Seller,
as the case may be, to perform or observe its agreement as set forth in this
Agreement required to be performed or observed by it on or before the Closing
Date; and
(g) by Seller if the Board of Directors of Seller determines
in good faith that a Competing Transaction is more favorable to Seller and its
stockholders than the transactions contemplated hereby.
11.2 Termination Fee.
(a) In the event that this Agreement shall be terminated by
(i) Purchaser pursuant to Section 11.1(c), for reasons other than (x) a
materially adverse change in the Business after the date hereof caused by events
outside of the control of Seller or (y) Purchaser's material breach of any
representation, warranty, covenant or other agreement contained herein, or (ii)
by Seller pursuant to Section 11.1(c), for reasons other than Seller's material
breach of any representation, warranty, covenant or other agreement contained
herein, the non-terminating party shall pay to the terminating party $62,500 to
reimburse the terminating party expenses incurred in connection with the
negotiation, diligence review, preparation and consummation of the transactions
contemplated hereby.
(b) In the event that this Agreement shall be terminated by
Seller pursuant to Section 11.1(g) and the Seller enters into such Competing
Transaction within twelve (12) months of the date of such termination, Seller
shall pay to Purchaser at the closing of the Competing Transaction $500,000 plus
all expenses actually incurred by Purchaser in connection with the negotiation,
diligence review, preparation and consummation of transactions contemplated
hereby.
(c) The parties hereto acknowledge that failure to consummate
the transactions contemplated hereby would have a material adverse effect on the
respective businesses of Seller and Purchaser. In the event that Seller or
Purchaser terminates this Agreement after the Approval Order has been issued by
the Bankruptcy Court and the Seller has obtained the consent of Union Bank of
California, N.A., U.S. Bank and Westar Capital, LLC. to release all liens
encumbering the Acquired Assets, the non-terminating party shall have the right,
in addition to any other rights at law or in equity, to enforce specific
performance of terminating party's obligations under this Agreement.
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ARTICLE XII
ADDITIONAL POST-CLOSING COVENANTS
12.1 Employees.
(a) At Closing, Purchaser shall offer employment to certain of
employees of Seller who are employed by Seller as of the Closing Date, including
but not limited to ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇ ▇▇▇▇▇. Any employee who
accepts such offer of employment shall become an employee of Purchaser as of the
Closing Date. Purchaser shall not take any actions with respect to employees
that would result in any notification or other requirements with respect to the
federal Worker Adjustment And Retraining Notification Act.
(b) Nothing contained in this Agreement shall confer upon any
employee of Seller who becomes an employee of Purchaser ("Rehired Employees")
any right with respect to continuance of employment by Purchaser, nor shall
anything herein interfere with the right of Purchaser to terminate the
employment of any Rehired Employees at any time, with or without notice, or
restrict Purchaser, in the exercise of its business judgment in modifying any of
the terms or conditions of employment of the Rehired Employees after the
Closing.
12.2 Employee Benefit Plans.
(a) Durham Pension Plan.
(1) As of the Closing Date, the Purchaser will adopt and
assume the Durham Pension Plan. From and after the Closing Date, the Purchaser
assumes and will pay, perform, and discharge all liabilities, debts, and
obligations of Seller (whether actual or contingent and whether existing on the
Closing Date or arising thereafter) accrued or incurred in respect of the Durham
Pension Plan including, without limitation, (i) the funding of all benefits of
whatever nature payable to any person under the Durham Pension Plan
(irrespective of date of retirement, disability, or other termination of
service) and (ii) the payment of any amount necessary to satisfy the minimum
funding standards under Section 412 of the Code for the plan year of the Durham
Pension Plan in which the Closing Date occurs.
(2) As of the Closing Date, the Purchaser will be substituted
for Seller as the plan sponsor under the Durham Pension Plan. Seller will make
any amendments to the Durham Pension Plan necessary to effect such substitution
and will provide notice of such change to participants, beneficiaries and
persons providing services to the Durham Pension Plan. As of the Closing Date,
the Purchaser will adopt such corporate resolutions and take such other actions
as is necessary to effect assumption of the Durham Pension Plan.
(3) As soon after the Closing as is possible, Seller will
supply the Purchaser with (i) all records in Seller's possession concerning
participation, vesting, accrual of benefits, payment of benefits, and elective
forms of benefits under the Durham Pension Plan, and (ii) any other information
in Seller's possession reasonably requested by the Purchaser that is necessary
or appropriate for the administration of the Durham Pension Plan.
(4) Seller will file with the Internal Revenue Service on a
timely basis the annual report on form 5500 for the Durham Pension Plan for the
plan year ended
26
December 31, 2001. Purchaser will file with the Internal Revenue Service on a
timely basis the annual report on form 5500 for the Durham Pension Plan for the
plan year ending December 31, 2002 and subsequent plan years.
(5) The employment of any of the employees of the Seller who
are employed by the Seller as of the Closing Date will not be deemed to have
been terminated for purposes of the Durham Pension Plan solely by reason of the
sale of the assets of Seller to the Purchaser.
(b) Purchaser shall assume and adopt all other Employee Benefit Plans
(with the exception of the Seller 401(k) Plan, subject to Section 12.2(d)
hereof) or any obligation or Liability thereunder. With respect to all claims by
current and former employees of Seller who are or were employed in the Business
arising prior to or as of the Closing under any Employee Benefit Plans, whether
insured or otherwise (including, but not limited to, life insurance, medical and
disability programs), Purchaser shall cause its insurance carriers to honor such
claims, whether made before or after the Closing, in accordance with the terms
and conditions of such Employee Benefit Plans without regard to the employment
by Purchaser of any such employees after the Closing.
(c) Purchaser shall be responsible for any accrued liabilities or
claims with respect to any vacation or sick leave earned or accrued by Rehired
Employees on or prior to the Closing Date.
(d) Effective as of the Closing Date, Seller and Parents will take all
steps necessary to see that all Rehired Employees participating in the Seller
401(k) Plan become fully vested in their account balances under the Seller
401(k) Plan. Additionally, as of the Closing Date, all Rehired Employees
participating in the Seller 401(k) Plan will be considered to have terminated
employment with Seller for purposes of the Seller 401(k) Plan and will be
entitled to receive their respective benefits under the Seller 401(k) Plan
either as lump sum distributions or as direct rollovers to an eligible ▇▇▇ or
other retirement plan. The Rehired Employees participating in the Seller 401(k)
Plan will be offered the opportunity to enroll in the Purchaser 401(k) Plan as
promptly as practicable after the Closing Date and be given the opportunity to
transfer their balances from the Seller 401(k) Plan to the Purchaser 401(k) Plan
as direct rollovers. Such Purchaser 401(k) Plan will not accept any transfers of
assets from the Seller 401(k) Plan other than direct rollovers.
(e) Purchaser will be responsible for making continuation coverage
under Code Section 4980B and Sections 601-608 of ERISA ("COBRA") available to
any Rehired Employee and any eligible spouse or dependent who experiences a
"qualifying event," as defined in Code Section 4980B(f)(3) on or after the
Closing Date and, as of the Closing Date, to any employee of the Seller and any
eligible spouse or dependent who experienced a "qualifying event," as defined in
Code Section 4980B(f)(3), on or before the Closing Date.
12.3 Joint Post-Closing Covenant of Purchaser and Seller. Purchaser and
Seller jointly covenant and agree that, from and after the Closing Date,
Purchaser and Seller will each use commercially reasonable efforts to cooperate
with each other in connection with any action, suit, proceeding, investigation
or audit of the other relating to (a) the preparation of an audit of
27
any Tax Return of Seller for all periods prior to or including the Closing Date
and (b) any audit of Purchaser and/or any audit of Seller with respect to the
sales, transfer and similar Taxes imposed by the laws of any state or political
subdivision thereof, relating to the transactions contemplated by this
Agreement. In furtherance hereof, Purchaser and Seller further covenants and
agrees to promptly respond to all reasonable inquiries related to such matters
and to provide, to the extent reasonably possible, substantiation of
transactions and to make available and furnish appropriate documents and
personnel in connection therewith. All costs and expenses incurred in connection
with this Section 12.3 referred to herein shall be borne by the party who is
subject to such action.
12.4 Certain Consents. If a consent of a Third Party which is required
to assign any Acquired Asset (or Claim, right or benefit arising thereunder or
resulting therefrom) is not obtained prior to the Closing Date, or if an
attempted assignment would be ineffective or would adversely affect the ability
of Seller to convey its interest in question to Purchaser, Seller will cooperate
with Purchaser and use commercially reasonable efforts in any lawful arrangement
to provide that Purchaser shall receive the interests of Seller in the benefits
of such Acquired Asset. If any consent or waiver is not obtained before the
Closing Date and the Closing is nevertheless consummated, Seller agrees to
continue to use commercially reasonable efforts to obtain all such consents as
have not been obtained prior to such date.
12.5 Name of Purchaser's Business. Purchaser shall not use any
references to the name "Tecstar" or any trade dress or logos related thereto on
any assets, correspondence or marketing materials used in connection with the
Business (other than as necessary to effectuate the transactions contemplated
hereby).
12.6 Accounts Receivable/Collections. After the Closing, Seller shall
permit Purchaser to collect, in the name of Seller, all accounts receivable
constituting part of the Acquired Assets and to endorse with the name of Seller
for deposit in Purchaser's account any checks, drafts, money transfers or bank
wires received in payment thereof. To the extent that the consent of any Third
Party is necessary to effectuate the transactions contemplated by this Section
12.6, Parents and Seller shall continue to use commercially reasonable efforts
to obtain such consent. Seller shall promptly deliver to Purchaser any cash,
checks or other property that it may receive after the Closing in respect of any
accounts receivable or other asset constituting part of the Acquired Assets.
12.7 Access to Information.
(a) For a period of twelve (12) months after the Closing Date (the
"Transition Period"), each party and their representatives shall have reasonable
access to, and each shall have the right to photocopy, all of the books and
records relating to the Business or the Acquired Assets, including all employee
records or other personnel and medical records required by law, legal process or
subpoena, in the possession of the other party to the extent that such access
may reasonably be required by such party in connection with the Assumed
Obligations or the Unassumed Obligations, or other matters relating to or
affected by the operation of the Business and the Acquired Assets. During the
Transition Period, Purchaser agrees to provide Seller, during ordinary business
hours and upon reasonable notice and at Seller's request, with reasonable access
to employees of Purchaser for purposes of winding down the estates of Seller.
28
Such access shall be afforded by the party in possession of such books and
records upon receipt of reasonable advance notice and during normal business
hours; provided, however, that (A) any such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operation of the
business of any party or its Affiliates, (B) no party shall be required to take
any action which would constitute a waiver of the attorney-client privilege and
(C) no party need supply the other party with any information which such party
is under a legal obligation not to supply. The party exercising this right of
access shall be solely responsible for any costs or expenses incurred by it
pursuant to this Section 12.7. If the party in possession of such books and
records shall desire to dispose of any such books and records upon or prior to
the expiration of such period, such party shall, prior to such disposition, give
the other party a reasonable opportunity at such other party's expense, to
segregate and remove such books and records as such other party may select.
(b) If Purchaser or any of its Affiliates receives any Excluded Asset
or any proceeds or other amount payable in respect of any Excluded Asset, such
Excluded Asset, proceeds or other amount shall be received and held in trust for
the benefit of Seller and remitted to Seller as promptly as practicable.
Purchaser further agrees to deliver to Seller a copy of any notices,
correspondence or other writings received by Purchaser or any of its Affiliates
to the extent applicable to any Excluded Asset or Unassumed Liability.
12.8 Bankruptcy Protection. In the event Seller seeks bankruptcy
protection under any chapter of Title 11 of the United States Code, Seller shall
delay the filing of any bankruptcy petition for a period of at least 90 days
after Closing. Furthermore, Seller and Parents shall each use their best efforts
to dissuade any Third Party from commencing any involuntary bankruptcy
proceedings against Seller under any chapter of Title 11 of the United States
Code for a period of at least 90 days after Closing.
12.9 Durham Pension Plan Dispute. Seller shall use its commercially
reasonable efforts to settle or otherwise resolve prior to the Closing Date the
dispute with Unisys set forth on Schedule 4.5 attached hereto regarding the
Durham Pension Plan. On and after the Closing Date, Purchaser, as succeeding
plan sponsor, shall assume the rights to negotiate and settle the dispute with
Unisys; provided, however, that Purchaser shall not settle such dispute without
the consent of Seller, such consent not to be unreasonably withheld.
12.10 Insurance. Purchaser shall ensure that Seller is included as a
co-insured party under the Purchaser's insurance policy or policies covering
aircraft products liability until the sooner of (i) the date of the liquidation,
dissolution and winding up of Seller or (ii) April 30, 2003.
ARTICLE XIII
MISCELLANEOUS
13.1 Expenses. Each of the parties shall pay all of his, her or its own
costs and expenses relating to this transaction; provided, however, it is the
intent of the parties hereto that none of the Acquired Assets shall be used by
Seller or Parents to pay any costs or expenses incurred by Parents or Seller and
that any and all costs and expenses actually paid by Seller or
29
Parents out of the Acquired Assets shall reduce the Purchase Price by an amount
equal to the amount of such costs and expenses so paid.
13.2 Modification; Waiver. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
supplement, modification, or amendment of this Agreement or any waiver of any
provision contained herein shall be binding unless executed in writing by all
the parties to be bound thereby.
13.3 Notices and Other Communications. Every notice or other
communication required or contemplated by this Agreement shall be in writing and
shall be sent either by (a) personal delivery, (b) a nationally recognized
overnight delivery service that provides written "proof of delivery", or (c)
certified mail, postage prepaid, return receipt requested, addressed to the
party for whom intended at the addresses indicated below following each party's
name or at such other address as the intended recipient previously shall have
designated by written notice to the other party. Notice by certified mail shall
be effective on the date it is officially recorded as delivered to or refused by
the intended recipient by return receipt.
SELLER: Tecstar Electro Systems, Inc.
c/o ▇▇▇ ▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: 626/▇▇▇-▇▇▇▇
Tel: 626/▇▇▇-▇▇▇▇
WITH A COPY TO: Union Bank of California, N.A.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 213/▇▇▇-▇▇▇▇
Tel: 213/▇▇▇-▇▇▇▇
PURCHASER: Firstmark Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Fax: 804/▇▇▇-▇▇▇▇
Tel: 804/▇▇▇-▇▇▇▇
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WITH A COPY TO: Firstmark Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 512/▇▇▇-▇▇▇▇
Tel: 512/▇▇▇-▇▇▇▇
PARENTS: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: 626/▇▇▇-▇▇▇▇
Tel: 626/▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: 626/▇▇▇-▇▇▇▇
Tel: 626/▇▇▇-▇▇▇▇
13.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which taken
together shall constitute one and the same instrument.
13.5 Headings. The subject headings of the Sections and Paragraphs of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
13.6 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and no provision of this Agreement shall be deemed
to confer upon Third Parties any rights, remedies, Claims or causes of action
(except as to the rights of the Agent Bank and the Bank Group to receive the
Closing Cash and the Escrow Funds as provided herein).
13.7 APPLICABLE LAW AND JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE
(REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
DELAWARE
PRINCIPLES OF CONFLICTS OF LAW) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO
MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
13.8 Binding Nature; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without prior written consent of the other parties (which
31
shall not be unreasonably withheld or delayed); except (i) that Purchaser may
assign any of its rights and obligations hereunder to any Affiliate or
subsidiary of Purchaser (whether wholly owned or otherwise), (ii) Purchaser may
grant a security interest in its rights and interests hereunder to its lenders
or other creditors, and (iii) as otherwise provided in this Agreement. Nothing
contained herein, express or implied, is intended to confer on any Person other
than the parties hereto or their successors and assigns, any rights, remedies,
obligations, claims, or liabilities under or by reason of this Agreement.
13.9 Tax Matters.
(a) Any sales, use, purchase, transfer, fixed asset, stamp, documentary
stamp, use or other Taxes which may be payable by reason of the sale of the
Acquired Assets under this Agreement or the transactions contemplated herein
shall be equally borne and timely paid by Seller and Purchaser.
(b) Purchaser shall, within the sooner of (i) 60 days after the Closing
Date or (ii) 30 days of the date by which Seller's tax returns must be filed,
prepare and deliver to Seller for its consent (which consent shall not be
unreasonably withheld, delayed or conditioned) a schedule allocating the
Purchase Price (and any other items that are required to be treated as Purchase
Price) among the Acquired Assets, Assumed Contracts and Assumed Equipment Leases
(such schedule, the "Allocation"). If Seller raise any objection to the
Allocation, Purchaser and Seller will negotiate in good faith to resolve such
objection(s). Purchaser and Seller shall report and file all Tax Returns
(including amended Tax Returns and claims for refund) consistent with the
Allocation, and shall take no position contrary thereto or inconsistent
therewith in any audits or examinations by any taxing authority; provided,
however, that in the event of a dispute, no party shall be obligated to file Tax
Returns consistent with the Allocation until the dispute is resolved or until
the accounting firm referenced below shall have rendered its determination on
the Allocation. Purchaser and Seller shall cooperate in the filing of any forms
(including Form 8594 under section 1060 of the Code) with respect to such
Allocation, including any amendments to such forms required pursuant to this
Agreement with respect to any adjustment to the Purchase Price. If and to the
extent the parties are unable to agree on such Allocation, the parties shall
retain a nationally recognized accounting firm that is reasonably acceptable to
Purchaser and Seller and which has no material relationship with Purchaser,
Seller or their respective Affiliates or other material conflict to resolve such
dispute. Such firm shall determine the Allocation within 30 days and such
Allocation shall be final and binding on Seller and Purchaser. Notwithstanding
any other provision of this Agreement, the terms and provisions of this Section
13.9(b) shall survive the Closing Date without limitation.
13.10 Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to this Agreement to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
13.11 Public Announcements. Except as required by law or in connection
with the Chapter 11 Case, neither Seller nor Purchaser shall issue any press
release or public announcement concerning this Agreement or the transactions
contemplated hereby without
32
obtaining the prior written approval of the other party(ies) hereto relating to
the contents and manner of presentation and publication thereof, which approval
will not be unreasonably withheld, delayed or conditioned. Prior to making any
public disclosure required by applicable law, the disclosing parties shall give
the other party a copy of the proposed disclosure and reasonable opportunity to
comment on the same.
13.12 Entire Agreement. This Agreement represents the entire agreement
of the parties with respect to the subject matter hereof and supersedes and
replaces any prior agreements or understandings with respect to such subject
matter, including but not limited to the Letter of Intent dated May 3, 2002, but
excluding the confidentiality agreement entered into by the parties hereto.
13.13 No Survival. Representations and warranties of Seller and
Purchaser contained in this Agreement or in any instrument delivered in
connection herewith shall not survive the Closing.
13.14 Enforceability. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable, the remainder of this
Agreement shall remain effective and enforceable as to all other terms and
conditions.
13.15 Attorneys' Fees and Other Expenses. In the event any legal action
or other proceeding is brought in connection with any of the terms of this
Agreement or for the enforcement of this Agreement, the prevailing party shall
be entitled to recover its reasonable expenses, attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
13.16 Time. Time is of the essence with respect to this Agreement and
the performance by the parties hereunder.
13.17 Successors and Assigns. This Agreement shall inure to the benefit
of, and shall be binding upon, the assigns, successors in interest, personal
representatives, estates, heirs, and legatees of each of the parties hereto.
13.18 Further Assurances. At any time following the execution of this
Agreement, each party agrees to execute and/or deliver such instruments or
documents as may be reasonably requested by any other party to effectuate fully
the purposes of this Agreement and vest in each party the rights and interests
conferred upon such party under this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Asset
Purchase Agreement to be executed and delivered on the date first above written.
PURCHASER:
FIRSTMARK CORP.
By: /s/ H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
--------------------------------------------------
Name: H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
------------------------------------------------
Title: Chairman, President and CEO
-----------------------------------------------
SELLER:
TECSTAR ELECTRO SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
Title: Vice President
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PARENTS:
15251 ▇▇▇ ▇▇▇▇▇▇ ROAD, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
▇▇▇ ▇▇▇▇▇▇, INC.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
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34
