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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 20, 1996
COMPTRONIX CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware 0-17743 63-0860282
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(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
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Three Maryland Farms, Suite 140, Nashville, Tennessee 37027
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (615) 377-3330
Not Applicable
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On September 20, 1996, Comptronix Corporation (the "Company") entered
into a definitive Asset Purchase Agreement, by and between the Company and
Sanmina Corporation (the "Agreement"), pursuant to which Sanmina Corporation
will purchase substantially all assets of the Company. The estimated purchase
price range for the assets, which is based on a formula in the definitive
agreement, is $20 million to $22 million, payable in cash. Consummation of the
acquisition is subject to a number of conditions, including the completion of
due diligence by Sanmina, the approval of the Bankruptcy Court that has
jurisdiction in Comptronix's Chapter 11 case, and expiration of the applicable
waiting period under the Hart-Scott-Rodino Act. A copy of the Agreement and the
Press Release, dated September 20, 1996, concerning the proposed acquisition
are attached hereto as Exhibit 2 and Exhibit 99, respectively.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPTRONIX CORPORATION
Date: September 24, 1996 By: /s / E. Townes Duncan
-----------------------------------
E. Townes Duncan
Chairman of the Board
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EXHIBIT INDEX
Item Description
2 Asset Purchase Agreement by and between Comptronix
Corporation and Sanmina Corporation dated September 20,
1996.
99 Press Release dated September 20, 1996
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
COMPTRONIX CORPORATION
AND
SANMINA CORPORATION
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ARTICLE 1.
PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Assignment of Contracts, Leases and Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4. No Other Liabilities Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5. Assignment of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2.
CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Transfer and Similar Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4. Inventory Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5. Accounts Receivable Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3.
CLOSING: OBLIGATIONS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2. Obligations of the Parties at and after the Closing . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2. Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4. Title to Properties: Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5. Shelter Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6. Equipment and Other Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7. No Undisclosed Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9. Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11. Product and Service Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.12. Employees and Fringe Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13. Certain Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.14. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.15. Orders, Commitments and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.16. Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.17. Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.18. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.19. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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4.20. Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.21. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.23. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES BY BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4. Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1. Conduct of Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2. Access: Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5. Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.7. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.8. Accounting and Audit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.9. Further Assurances; Higher and Better Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.10. Breakup Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.11. Approval of this Agreement; Other Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.2. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.3. Management Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.4. Accounting and Audit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 8.
CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.2. Performance by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.3. Certificate of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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8.4. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.7. Shelter Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.8. Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.9. Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.10. Waiting Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.11. Finality and Effectiveness of Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.12. Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.13. Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 9.
CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2. Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.3. Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.4. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.5. Assumption of Shelter Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.6. Waiting Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.7. Finality and Effectiveness of Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 10.
EFFECT OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.1. Nonsurvival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 11.
EFFECTIVENESS AND TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1. Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 12.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.2. Assignability: Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.3. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4. Entire Agreement: Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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12.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into this 20th day of September, 1996 between Comptronix Corporation, a
Delaware corporation, as debtor and debtor-in-possession, ("Seller"), and
Sanmina Corporation, a Delaware corporation ("Buyer").
RECITALS
WHEREAS, Seller is a debtor-in-possession in proceedings for
reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Section
Section 101 et seq. (the "Bankruptcy Code") currently pending in the United
States Bankruptcy Court for the Middle District of Tennessee (the "Bankruptcy
Court"); and
WHEREAS, Seller desires to sell to Buyer at the Closing, as
hereinafter defined, and Buyer desires to purchase from Seller certain assets,
as more fully described herein, associated with Seller's contract assembly and
manufacturing business (the "Business") upon and subject to the terms and
conditions contained in this Agreement. It is intended that Buyer shall
purchase the Business from the Seller free and clear of liens, encumbrances and
interests pursuant to 11 USC Section 363(f) and that Buyer's execution and
delivery of this Agreement and the purchase of the assets pursuant to this
Agreement shall be deemed to be in good faith for the purposes of 11 USC
Section 363(m).
NOW, THEREFORE, IN CONSIDERATION of the premises and of the mutual
representations, warranties and covenants which are made and to be performed by
the respective parties, it is agreed as follows:
ARTICLE 1.
PURCHASE AND SALE OF ASSETS
1.1. PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall sell, transfer,
convey, assign and deliver to Buyer and Buyer shall purchase, acquire and
accept from Seller the following described assets associated with the Business,
wherever located (collectively, the "Assets"):
(a) Real Property. All real estate, together with all
buildings, fixtures and appurtenances thereto identified in Schedule 1.1(a)
hereto (collectively, the "Real Property");
(b) Equipment. All capital equipment, including machinery
and equipment, tools, dies, fixtures, furniture, furnishings, plant and office
equipment and vehicles used in connection with the Business, including without
limitation all such items listed on Schedule 1.1 (b) hereto (collectively, the
"Equipment");
(c) Inventory. All Inventory, including supplies, raw
materials, work-in-process, spare parts, finished goods and returned material,
both useable and excess, obsolete and damaged, used in connection with the
Business, including without limitation all such items listed on Schedule 1.1(c)
hereto (collectively, the "Inventory");
(d) Prepaid Items. All prepaid rent, prepaid property
taxes, prepaid supplies, advances and other prepaid expenses (other than
prepaid insurance) and deposits (other than the Company's Workers' Compensation
deposit) and deferred charges attributable to the contracts and
<PAGE> 7
commitments of Seller which are to be assigned to Buyer under this Agreement
listed on Schedule 1.1(d) hereto (collectively the "Prepaid Items");
(e) Accounts Receivable. All outstanding accounts
receivable of, and any credit, rebate or refund which may be payable to, Seller
arising out of or relating to the Business, including without limitation all
such items listed on Schedule 1.1(e) hereto (collectively, the "Accounts
Receivable");
(f) Records. All of Seller's transferable books and
records relating to the Business (collectively, the "Records"); and
(g) Technology. All engineering and production designs,
drawings, formulae, technology, trade secrets, know-how and other similar data
(collectively, the "Technology").
1.2. ASSIGNMENT OF CONTRACTS, LEASES AND OTHER ASSETS. Subject to
the terms and conditions set forth in this Agreement, Seller will assign and
transfer to Buyer, effective as of the Closing, all of Seller's right, title
and interest in and to, and Buyer will take assignment of and assume, the
following rights, interests and obligations that are used or arise in
connection with or relate to the operation of the Business (and all of the
following shall be deemed included in the term "Assets" as used herein):
(a) Shelter Agreement. That certain Shelter Agreement,
dated December 11, 1995, by and between Offshore International, Inc. and
Seller, relating to Seller's business and operations located in the Guaymas,
Mexico area (the "Shelter Agreement");
(b) Equipment and Other Personal Property Leases. Leases
of equipment, machinery, installations, vehicles and other personal property
listed on Schedule 1.2(b) hereto (the "Equipment and Other Personal Property
Leases");
(c) Seller Purchase Orders. Purchase orders, contracts
and agreements listed on Schedule 1.2(c) hereto for the purchase of goods,
materials and services (collectively, the "Seller Purchase Orders");
(d) Customer Purchase Orders. Purchase orders, contracts
and agreements for the sale of goods and services listed on Schedule 1.2(d)
hereto, all of which shall be purchase orders that have been released by the
customer for production (collectively, the "Customer Purchase Orders");
provided, however that the assumption of any Customer Purchase Order shall be
conditioned upon the individual review and acceptance by Buyer of such Customer
Purchase Order prior to the Closing Date, and if any such Customer Purchase
Order is not assumed it shall be excluded from the Customer Purchase Orders for
all purposes hereunder;
(e) Other Contracts. All other contracts listed on
Schedule 1.2(e) (collectively, the "Other Contracts"); and
(f) Permits and Licenses. Permits and licenses used in
the operation of the Business listed on Schedule 1.2(f) hereto.
2
<PAGE> 8
1.3. ASSUMED LIABILITIES. At and effective as of the Closing, Buyer
shall assume, and agree to pay, perform, fulfill and discharge, the following
obligations of Seller relating to, or arising in connection with, the Business
(the "Assumed Liabilities"):
(a) Accrued but unpaid liabilities from and after the
Closing Date of Seller which Seller requests Buyer to, and Buyer elects, in its
sole discretion, to assume, all (except in the case of payables invoiced after
such date) as listed on Schedule 1.3(a) hereto (the "Accrued Liabilities"); and
(b) Obligations which are required to be performed, and
which accrue, after the Closing under the following contracts: (A) the Shelter
Agreement; (B) the Equipment and Other Personal Property Leases; (C) the Seller
Purchase Orders; (D) the Customer Purchase Orders; and (E) the Other Contracts.
1.4. NO OTHER LIABILITIES ASSUMED. Anything in this Agreement to
the contrary notwithstanding, Buyer shall not assume, and shall not be deemed
to have assumed, any debt, claim, obligation, commitments, or other liability
of Seller or any other person or entity whatsoever other than as specifically
provided in Section 1.3. All such nonassumed liabilities and obligations shall
be and remain the obligations of Seller or such other party as may be obligated
with respect thereto, as the case may be.
1.5. ASSIGNMENT OF CONTRACTS. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign, and the Assets shall not include, any claim, contract, instrument,
agreement, license, lease, commitment, sales order, purchase order or any claim
or right, or any benefit arising thereunder or resulting therefrom, if an
attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach thereof or in any way affect the rights of Buyer or
Seller thereunder. It shall be a condition to the transfer of any contract or
similar right to Buyer under this Agreement, including without limitation the
Assumed Liabilities, that any required consent of any third party to such
transfer or assignment be delivered at the Closing.
ARTICLE 2.
CONSIDERATION
2.1. PURCHASE PRICE. The purchase price ("Other Assets Purchase
Price") for the Assets other than Inventory and Accounts Receivable shall be
$7,100,000, plus the assumption of the Assumed Liabilities. The purchase price
for Inventory (the "Inventory Purchase Price") shall be determined in
accordance with Section 2.4 and the purchase price for Accounts Receivable (the
"Accounts Receivable Purchase Price") shall be determined in accordance with
Section 2.5.
2.2. PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall deliver
to Seller a wire transfer of immediately available funds (in United States
dollars) equal to the sum of (i) the Other Assets Purchase Price, (ii) the
Inventory Advance (as defined below) and (iii) the Accounts Receivable Purchase
Price, as determined in accordance with the terms of this Agreement. On the
15th calendar day after the Closing (or the first business day following such
15th calendar day, if such 15th calendar day is not a business day) (the
"Inventory Payment Date"), Buyer shall deliver to Seller a wire transfer of
immediately available funds (in United States dollars) equal to the remainder
of the Inventory Purchase Price, as determined in accordance with the terms of
this Agreement. The Inventory Advance shall equal (i) $7.9 million less the
Accounts Receivable Purchase Price in the event that the aggregate Inventory
Purchase Price, as determined pursuant to the provisions of this Agreement as
of a date not less than 15
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nor more than 20 days prior to the Closing Date equals or exceeds such amount
or (ii) the amount of the aggregate Inventory Purchase Price as determined
pursuant to the provisions of this Agreement as of a date not less than 15 nor
more than 20 days prior to the Closing Date in the event such aggregate
Inventory Purchase Price is less than such amount.
2.3. TRANSFER AND SIMILAR TAXES. Buyer and Seller agree to divide
among themselves equally all sale, transfer and similar taxes ("Transfer
Taxes") relating to the sale and purchase of the Assets pursuant to this
Agreement. Buyer and Seller shall cooperate to minimize all such Transfer
Taxes. In connection herewith, the Purchase Price, the Accounts Receivable
Purchase Price and the Inventory Purchase Price shall be adjusted to reflect
the respective share of the Transfer Taxes payable by Buyer and Seller. Such
adjustment and any related payments from Seller to Buyer or vice versa shall be
made within 30 days of the Closing Date.
2.4. INVENTORY PURCHASE PRICE. Immediately following the Closing,
Buyer will commence a physical inventory (the "Post Closing Inventory") of the
Inventory. Such Post Closing Inventory shall be reviewed by Buyer's independent
auditors. The Inventory Purchase Price shall be an amount equal to eighty
percent (80%) of the amount of Allocated Inventory, as determined by the Post
Closing Inventory. For purposes of determining Inventory Valuation, all
Inventory items will be valued at the lower of cost or market.
For purposes hereof, the following definitions shall apply:
"Allocated Inventory" shall mean Inventory existing at the Closing
Date that will be consumed in completing Customer Purchase Orders transferred
to Buyer hereunder. For purposes hereof, in the event that Buyer does not
assume, pursuant to Section 1.2(d) hereof, any Customer Purchase Order, any
Inventory relating to such items shall not be deemed Allocated Inventory and
shall be deemed Excess and Unallocated Inventory hereunder. Notwithstanding the
foregoing, the following items of Inventory shall be deemed to be Excess and
Unallocated Inventory and shall not be deemed Allocated Inventory: (i)
Inventory relating to Customer Purchase Orders placed by Systech that are based
on forecasts and are not supported by firm orders, (ii) Inventory relating to
Customer Purchase Orders placed by Teloquint that are based on forecasts and
are not supported by firm orders and (iii) Inventory relating to Customer
Purchase Orders placed by Highway Master for amount in excess of 100 product
units per week over a period of one year.
"Excess and Unallocated Inventory" shall mean Inventory existing at
the Closing Date that will not be consumed in completing Customer Purchase
Orders transferred to Buyer hereunder, as well as all inventory purchased for
customer contracts that are no longer in effect and all other obsolete or
slow-moving inventory. For purposes hereof, in the event that Buyer does not
assume, pursuant to Section 1.2(d) hereof, any Customer Purchase Order, any
Inventory relating to such items shall not be deemed Allocated Inventory and
shall be deemed Excess and Unallocated Inventory hereunder. Excess and
Unallocated Inventory will be transferred to Buyer pursuant to this Agreement.
Buyer shall provide Seller with copies of documentation relating to
the Post Closing Inventory, including copies of the Post Closing Inventory
Review performed by Buyer's independent auditors. If desired by Seller, Buyer
(and, if requested, Buyer's independent auditors) will meet with
representatives of Seller to review the methodologies used in the Post Closing
Inventory and in calculating the Inventory Purchase Price.
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2.5. ACCOUNTS RECEIVABLE PURCHASE PRICE. Seller shall, on the
business day prior to the Closing Date, deliver to Buyer an updated Schedule
1.1(e) as of such date, which updated Schedule 1.1(e) shall list all Accounts
Receivable and their respective invoice dates. Such updated Schedule 1.1(e)
shall be reviewed by Buyer's independent auditors. The Accounts Receivable
Purchase Price shall be the sum of the purchase price with respect to Current
Accounts Receivable (as defined below) and the purchase price with respect to
Non-Current Accounts Receivable (as defined below), each determined as follows:
(a) The purchase price with respect to Current Accounts Receivable
shall be equal to ninety percent (90%) of the amount of Current Accounts
Receivable; and
(b) The purchase price with respect to Non-Current Accounts
Receivable shall be equal to twenty-five percent (25%) of the amount of
Non-Current Accounts Receivable.
For purposes hereof, the following definitions shall apply:
"Current Accounts Receivable" shall mean Accounts Receivable whose
invoice date is less than ninety (90) days before the Closing Date.
"Non-Current Accounts Receivable" shall mean Accounts Receivable whose
invoice date is ninety (90) days or more before the Closing Date (net of
accounts receivable reserves existing on August 29, 1996).
ARTICLE 3.
CLOSING: OBLIGATIONS OF THE PARTIES
3.1. CLOSING DATE. The closing (the "Closing") shall take place and
be effective for all purposes at 12:00 noon, local time, on the first business
day following fulfillment or waiver of the conditions specified herein at the
offices of Bass, Berry & Sims PLC, First American Center, Nashville, Tennessee,
or, if earlier, on the next business day after the Order (as defined below)
becomes final, or at such other time and place as the parties hereto mutually
agree (the "Closing Date").
For the purposes of this Agreement, the "Order" shall mean a final
order of the Bankruptcy Court approving this Agreement, authorizing, pursuant
to Section 363, Section 365 and other applicable sections of the Bankruptcy
Code, all of the transactions and agreements contemplated hereby, and
determining that the Agreement is in good faith. For purposes hereof, an order
of the Bankruptcy Court becomes "final" if such order is not stayed, vacated or
otherwise rendered ineffective, when (i) all applicable periods for appeal of
such order shall have passed without an appeal therefrom having been taken, or
(ii) if any such appeal shall have been taken, such appeal shall have been
dismissed and all applicable periods for further appeal of such order shall
have passed.
3.2. OBLIGATIONS OF THE PARTIES AT AND AFTER THE CLOSING.
(a) At the Closing, Buyer shall deliver to Seller (or
Seller's agent):
(i) the Other Assets Purchase Price, Accounts
Receivable Purchase Price and Inventory
Advance as specified in Article 2;
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(ii) an executed copy of the Assignment and
Assumption Agreement, on substantially the
terms set forth on Schedule 3.2(a)(ii) hereto
(the "Assignment and Assumption Agreement");
(iii) a copy of resolutions of the Board of
Directors of Buyer, certified by Buyer's
Secretary or Assistant Secretary, authorizing
the execution, delivery and performance of
this Agreement and the other documents
referred to herein to be executed by Buyer,
and the consummation of the transactions
contemplated hereby;
(iv) a certificate of Buyer certifying as to the
accuracy of Buyer's representations and
warranties at and as of the Closing and that
Buyer has performed or complied with all of
the covenants, agreements, terms, provisions
and conditions to be performed or complied
with by Buyer at or before the Closing;
(v) an executed copy of an assignment of the
Shelter Agreement; and
(vi) such other certificates and documents as
Seller or its counsel may reasonably request.
(b) At the Closing, Seller will deliver to Buyer:
(i) such deeds, bills of sale, endorsements,
assignments, motor vehicle titles and other
good and sufficient instruments of conveyance
and transfer, in form and substance
reasonably satisfactory to Buyer, as shall be
effective to vest in Buyer all of Seller's
title to and interest in the Assets, all of
Seller's contracts and commitments, books,
records and other data relating to the
Assets, Business and operation thereof
(except minute and stock books and similar
corporate records and any other documents and
records which Seller is required by law to
retain in its possession), and,
simultaneously with such delivery, will take
such steps as may be necessary to put Buyer
in actual possession and operating control of
the Assets and the Business;
(ii) copy of resolutions of the Board of Directors
of Seller, certified by Seller's Secretary,
authorizing the execution, delivery and
performance of this Agreement and the other
documents referred to herein to be executed
by Seller, and the consummation of the
transactions contemplated hereby;
(iii) an executed copy of the Assignment and
Assumption Agreement;
(iv) executed copies of all consents of third
parties necessary in connection with the
transfer of any of the Assets or any of the
Assumed Liabilities to the Buyer;
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(v) title certificates and transfer documents
suitable for recordation for any vehicles and
for any other assets for which title is
recorded in any governmental office;
(vi) releases of all security interests, liens and
encumbrances relating to any of the Assets
(other than interests of the lessor in the
Facility, leased Equipment and other leased
personal property comprising the Assets);
(vii) preliminary title insurance policy
commitments and on-the-ground ALTA full
certified surveys, as required to delete all
survey exceptions in the preliminary title
commitments, for the Real Property, and, as
soon as practicable after Closing, title
insurance policies with such endorsements as
may be required by Buyer insuring good and
marketable title to the Real Property with
only such exceptions as are set forth in
Schedule 4.5 hereto;
(viii) an executed copy of an assignment of the
Shelter Agreement;
(ix) such other certificates and documents as
Buyer or its counsel may reasonably request.
(c) On the Inventory Payment Date, Buyer shall deliver to
Seller (or Seller's agent):
(i) the balance of the Inventory Purchase Price
not included in the Inventory Advance as specified in Section
2;
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller, except as otherwise hereafter expressly limited, hereby
represents and warrants as follows:
4.1. AUTHORIZATION. Seller has full corporate power and authority
to enter into this Agreement and perform its obligations hereunder and carry
out the transactions contemplated hereby. Upon satisfaction of the conditions
set forth in Sections 8 and 11.1 hereof, this Agreement shall constitute the
valid and binding agreement of Seller, enforceable against Seller in accordance
with its terms.
4.2. ORGANIZATION, GOOD STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller has full corporate power and authority to
carry on the Business as now conducted and possesses all governmental and other
permits, licenses and other authorizations to own, lease or operate the Assets
as now owned, leased and operated and to carry on the Business as presently
conducted.
4.3. ASSETS. The Assets constitute all the assets owned, leased or
used by Seller which are in any way necessary to the continued operation of the
Business as now being conducted. Except as set forth in Schedule 4.19 with
respect to items of obsolete materials and materials of below standard quality,
the Assets are in good condition and working order (ordinary wear and tear
excepted) and are suitable for use in the Business in the manner in which they
are currently being used. Except as set forth
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on Schedule 4.3 hereto, all such plants, structures, machinery and equipment
which are a part of the Assets conform in all material respects to applicable
health, sanitation, fire and related laws and regulations, safety, labor,
zoning and building laws and ordinances; and, except as set forth on Schedule
4.3 hereto, Seller has not received any notification within the last three
years of any violation of any applicable ordinance or regulation of building,
zoning or other law, in respect of such plants, structures, properties or
operations. The Seller Purchase Orders, the Customer Purchase Orders and the
Other Contracts are, and upon assumption and assignment to Buyer pursuant to
the Order and this Agreement will be, in full force and effect and are valid
and binding obligations of the parties thereto, and neither Seller nor, to the
knowledge of Seller after reasonable inquiry, any of the other parties thereto
is in default under any of the foregoing. The Prepaid Items have been fully
paid and no additional payments are required with respect to any of such items
for the time period for which they have been paid. Except as set forth in
Schedule 4.3 hereto, with respect to deposits comprising part of the Prepaid
Items, Seller has taken no action nor do any circumstances exist that would
impair the ability of Buyer to recover such deposits at such time as they are
due to be refunded.
4.4. TITLE TO PROPERTIES: ENCUMBRANCES. Seller has good, valid and
marketable title to, or valid leasehold interests in, all of the Assets
constituting real property or tangible personal property and Seller has full
right to sell, convey, transfer, assign and deliver any and all of its right,
title and interest in and to such Assets, free and clear of any mortgage,
pledge, lien, security interest, conditional sale agreement, encumbrance or
charge of any kind, except (i) as set forth on Schedule 4.4 hereto, including
equipment and other leases set forth on such Schedule, (ii) mechanics',
carriers', workmen's, repairmen's and other like liens arising or incurred in
the ordinary course of business and which will be satisfied prior to Closing,
(iii) liens for taxes and other governmental charges which are not yet due and
payable, (iv) other imperfections of title which do not, individually or in the
aggregate, materially impair the continued use and operation of the Assets in
the Business, as presently conducted and (v) as to real property, (A)
easements, covenants, rights-of-way and other similar restrictions of record
(B) zoning, building and other similar restrictions and (C) liens, encumbrances
and similar restrictions placed by any landlord or third party on leased
property or property over which Seller has easement rights, which do not
materially affect the rights of Seller with respect thereto (all the foregoing,
collectively, "Permitted Liens"). With respect to real property, all
encumbrances of the nature referred to in clause (v) above shall be set forth
on Schedule 4.4 hereto.
4.5. SHELTER AGREEMENT. The Shelter Agreement (a correct and
complete copy of which has been delivered to Buyer) contains a complete and
accurate legal description of the real property which Seller occupies pursuant
to the Shelter Agreement, the approximate square footage covered thereunder,
the current basic annual rental or minimum monthly royalties with respect
thereto. The Shelter Agreement is valid, subsisting and in full force and
effect, and neither Seller nor landlord, nor to the knowledge of Seller after
reasonable inquiry any other party thereto, is in default of any of its
obligations thereunder. Except as set forth in Schedule 4.5 hereto, no consent
to the consummation of the transactions contemplated by this Agreement is
required from the lessor. All buildings located at the Guaymas, Mexico facility
are in a good state of repair. To Seller's knowledge, all buildings at the
Guaymas, Mexico facility conform in all material respects to all applicable
ordinances, regulations and zoning laws. Seller's contract rights under the
Shelter Agreement are free and clear of any mortgage, pledge, lien, security
interest, lease, encumbrances or charge of any kind, other than mortgages,
pledges, liens, security interests, leases, encumbrances and charges granted by
or in respect of the interests of lessors or other third parties, which do not
materially affect the rights of Seller.
4.6. EQUIPMENT AND OTHER PERSONAL PROPERTY LEASES. Schedule 1.1(b)
hereto sets forth a correct and complete list of all of the Equipment. The
Equipment and Other Personal Property Leases
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listed in Schedule 1.2(b) hereto include all leases by Seller of any item of
personal property used by Seller in connection with the operation of the
Business. Except as set forth in Schedule 4.6 hereto, all of the equipment and
personal property leased by Seller under the Equipment and Other Personal
Property Leases is currently used by Seller in the ordinary course of the
Business. Seller has delivered to Buyer correct and complete copies of all
Equipment and Other Personal Property Leases. The Equipment and Other Personal
Property Leases are valid, subsisting and in full force and effect, and neither
Seller nor, to the knowledge of Seller after reasonable inquiry any other party
thereto, is in default of any of its obligations under any of such leases.
Except as set forth in Schedule 4.6, no consent to the consummation of the
transactions contemplated by this Agreement is required from the lessors of any
of the Equipment or Other Personal Property.
4.7. NO UNDISCLOSED LIABILITY. Except as set forth on Schedule 4.7
hereto, Seller does not have any liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise and whether due or to become
due (including, without limitation, liabilities for taxes and interest,
penalties and other charges payable with respect thereto) in respect of the
Assets or the Business.
4.8. ABSENCE OF CERTAIN CHANGES. Except as and to the extent set
forth on Schedule 4.8 hereto, since August 29, 1996, Seller has not:
(a) suffered any material adverse change in the Assets,
the Assumed Liabilities, the Business or its prospects;
(b) made any material change in the Business or
operations or in the manner of conducting the Business other than changes in
the ordinary course of business;
(c) incurred any material obligations or liabilities
(whether absolute, accrued, contingent or otherwise and whether due or to
become due) in respect of the Business, except items incurred in the ordinary
course of business and consistent with past practice;
(d) written down the value of any Inventory, except for
immaterial write-downs and write-offs made in the ordinary course of business,
consistent with past practice and at a rate no greater than during the twelve
(12) months ended December 31, 1995;
(e) canceled any other debts or claims, or waived any
rights, of substantial value;
(f) sold, transferred, conveyed, encumbered or granted
any security interest in any of the Assets (whether real, personal or mixed,
tangible or intangible), except in the ordinary course of business and
consistent with past practice;
(g) granted any increase in the compensation of any
officer, director, employee or agent of the Business (including, without
limitation, any increase pursuant to any bonus, pension, profit sharing or
other plan or commitment), except normal wage and salary increases for
employees in the ordinary course of business and consistent past practice, or
adopted any such plan or other arrangements; and no such increase, or the
adoption of any such plan or arrangement, is planned or required;
(h) made any capital expenditures or commitments in
excess of $100,000 in the aggregate for replacements or additions to property,
plant, equipment or intangible capital assets of the Business;
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(i) made any material change in any method of accounting
or accounting practice;
(j) agreed, whether in writing or otherwise, to take any
action described in this Section 4.8.
4.9. COMPLIANCE WITH APPLICABLE LAW. Seller has in the past duly
complied and is presently duly complying, in all material respects, in the
conduct of the Business and the ownership of the Assets with all material
applicable laws, whether statutory or otherwise, rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities (federal,
state, local or otherwise) (collectively, "laws"). Seller has not received any
notice of, or notice of any investigation of, a possible violation of any
applicable laws, or any other law or requirement relating to or affecting the
operations or properties of Seller. Notwithstanding the foregoing, the
representations of Seller with respect to environmental matters shall be as set
forth in Section 4.13.
4.10. LITIGATION. Except as set forth on Schedule 4.10, there are no
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Seller, threatened by or against, or otherwise affecting the
Business at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, agency, instrumentality or
authority. Seller does not know or have any reason to know of any basis for any
such claim, action, suit, proceeding or investigation. No claim, action, suit,
proceeding or investigation set forth in Schedule 4.10, could, if adversely
decided, have a material adverse effect on the condition (financial or
otherwise), Assets, liabilities, earnings or prospects of the Business.
4.11. PRODUCT AND SERVICE WARRANTIES. Except as described on
Schedule 4.11 hereto, Seller has not given or made any warranties to third
parties with respect to any products supplied or services performed in respect
of the Business which may still be in effect at any time after the date hereof,
except for warranties imposed by law. Except as described on Schedule 4.11,
there have been no claims or investigations made with respect to any product or
service warranties which have not been fully settled and resolved or any
unresolved warranty claims. Seller does not know or have any reason to know of
any basis for any other claim or investigation.
4.12. EMPLOYEES AND FRINGE BENEFIT PLANS.
(a) Schedule 4.12 identifies all consulting or employment
agreements and other agreements with individual consultants or employees of the
Business to which Seller is a party and which are either currently effective or
will become effective at the Closing Date, as well as any employee handbooks,
policy manuals and job application forms used by Seller in the Business. Copies
of all such written agreements have been delivered to Buyer. Also shown on
Schedule 4.12 are the names and dates of hire of each regular employee of the
Business and each such person's rate of compensation and accrued vacation pay.
(b) Schedule 4.12 contains a complete list of "Plans"
consisting of each:
(i) "employee welfare benefit plan," as defined
in Section 3(1) of the Employee Retirement Income Security Act of 1974
("ERISA"), which is maintained or administered by Seller in respect of the
Business, or to which Seller contributes, and which covers any employee or
former employee of the Business or under which Seller has any liability (a
"Welfare Plan");
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(ii) "employee benefit plan," as defined in
Section 3(3) of ERISA, which is maintained in respect of the Business in
connection with any trust described in Section 501(c)(9) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code");
(iii) "employee pension benefit plan," as defined
in Section 3(2) of ERISA which is maintained or administered by Seller in
respect of the Business, or to which Seller contributes, and which covers any
employee or former employee of the Business or under which Seller has any
liability (a "Pension Plan"); and
(iv) employment, severance or other similar
contract, arrangement or policy (written or oral) and each plan or arrangement
(written or oral) providing for insurance coverage (including self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or deferred
compensation, profit sharing, bonuses, stock options, stock appreciation
rights, stock purchases or other forms of incentive compensation or
post-retirement insurance, compensation or benefits in respect of the Business
which (a) is not a Welfare Plan or Pension Plan, (b) is entered into,
maintained, contributed to or required to be contributed to, as the case may
be, by Seller or under which Seller has any liability, and (c) covers any
employee or former employee of the Business (collectively, "Benefit
Arrangements").
(c) Except as set forth in Schedule 4.12, Seller does not
contribute to or have any liability in respect of the Business to the Pension
Benefit Guaranty Corporation or any other person, plan or entity under or with
respect to (i) a Pension Plan subject to Title IV of ERISA or Section 412 of
the Internal Revenue Code, (ii) a multiemployer pension plan, as defined in
Section 3(37) of ERISA or (iii) a Welfare Plan. Seller does not, in respect of
the Business, maintain a Welfare Plan providing health or medical benefits for
retired employees.
(d) With respect to the Plans: A copy of each Plan and
any amendment(s) thereto, together with (i) any written descriptions or
summaries thereof, (ii) all trust agreements, insurance contracts, annuity
contracts or other funding instruments, and (iii) the last two annual reports
(IRS Form 5500 Series, together with all required schedules) prepared in
connection with any such Plan have been forwarded to Buyer. None of the Plans
listed on Schedule 4.12 which are Welfare Plans provide for continuing benefits
or coverage after termination or retirement from employment, except with
respect to any "group health plan" as defined in Internal Revenue Code Section
4980B(g) and ERISA Section 607. With respect to any Plan which is a "group
health plan," as so defined, Seller warrants that in all "qualified events"
(including those resulting from the transaction contemplated by this Agreement)
occurring prior to or on the Closing Date, Seller has or will offer to its
eligible employees and their "qualified beneficiaries" the opportunity to elect
continuation coverage under ERISA Section 602 to the extent required by ERISA
Sections 601-607 and will provide that coverage, if elected, at no expense to
Buyer.
(e) There is no Benefit Arrangement covering any employee
or former employee of the Business that, individually or collectively, could
give rise to the payment of an amount that would not be deductible pursuant to
the terms of Sections 280G or 162 of the Internal Revenue Code.
(f) Neither Seller nor any "affiliate" of Seller (as
defined in ERISA) has ever participated in or withdrawn from a multi-employer
plan as defined in Section 4001(a)(3) of Title IV of ERISA, and Seller has not
incurred and does not owe any liability as a result of any partial or complete
withdrawal by any employer from such a multi-employer plan as described under
Sections 4201, 4203, or 4205 of ERISA.
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(g) To the knowledge of Seller after reasonable inquiry,
no employee of the Business is obligated under any agreement or judgment that
would conflict with such employee's obligation to use his best efforts to
promote the interests of the Business or would conflict with the Business as
conducted or proposed to be conducted. To the knowledge of Seller after
reasonable inquiry, no employee of the Business is in violation of the terms of
any employment agreement or any other agreement relating to such employee's
relationship with any previous employer and no litigation is pending or
threatened with regard thereto.
4.13. CERTAIN ENVIRONMENTAL MATTERS.
Definitions:
"Hazardous Material" is any material or substance that is
prohibited or regulated by any Environmental Law or that has been designated by
any Governmental Authority to be radioactive, toxic, hazardous or otherwise a
danger to health, reproduction or the environment.
"Governmental Authority" is any local, state, provincial,
federal, or international governmental authority or agency which has had or now
has jurisdiction over any portion of the subject matter of this Agreement, any
Business Facility or the Seller.
"Business Facility" is any property including the land, the
improvements thereon, the groundwater thereunder and the surface water thereon,
that is or at any time has been owned, operated, occupied, controlled or leased
by Seller in connection with the operation of the Business.
"Disposal Site" is a landfill, disposal agent, waste hauler or
recycler of Hazardous Materials.
"Environmental Laws" are all applicable laws, rules,
regulations, orders, treaties, statutes, and codes promulgated by any
Governmental Authority which prohibit, regulate or control any Hazardous
Material or any Hazardous Material Activity, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
the Resource Recovery and Conservation Act of 1976, the Federal Water Pollution
Control Act, the Clean air Act, the Hazardous Materials Transportation Act, the
Clean Water Act, comparable laws, rules, regulations, orders, treaties,
statutes, and codes of other Governmental Authorities, the regulations
promulgated pursuant to any of the foregoing, and all amendments and
modifications of any of the foregoing, all as amended to date.
"Hazardous Materials Activity" is the transportation,
transfer, recycling, storage, use, treatment, manufacture, removal,
remediation, release, exposure of others to, sale, or distribution of any
Hazardous Material or any product containing a Hazardous Material.
"Environmental Permit" is any approval, permit, license,
clearance or consent required to be obtained from any private person or any
Governmental Authority with respect to a Hazardous Materials Activity which is
or was conducted by the Business.
Environmental Representations: Except as set forth in Schedule
4.13, Seller hereby represents and warrants that:
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(a) Condition of Property: As of the Closing, except in
compliance with Environmental Laws in a manner that could not reasonably be
expected to subject the Seller to liability, no Hazardous Materials are present
on any Business Facility and, to the knowledge of Seller after reasonable
inquiry, no Hazardous Materials are present on any Business Facility currently
owned, operated, occupied, controlled or leased by Seller or were present on
any other Business Facility at the time it ceased to be owned, operated,
occupied, controlled or leased by Seller. Except as set forth in Schedule 4.13,
there are no underground storage tanks, asbestos which is friable or likely to
become friable or PCBs present on any Business Facility currently owned,
operated, occupied, controlled or leased by Seller or as a consequence of the
acts of Seller or its agents.
(b) Hazardous Materials Activities: Seller has conducted all
Hazardous Material Activities relating to the Business in compliance in all
material respects with all applicable Environmental Laws. To the knowledge of
Seller after reasonable inquiry, the Hazardous Materials Activities of Seller
prior to the Closing have not resulted in the exposure of any person to a
Hazardous material in a manner which has or will cause an adverse health effect
to said person.
(c) Permits: Schedule 4.13 accurately describes all of the
Environmental Permits currently held by the Seller and relating to the Business
and the Environmental Permits listed on Schedule 4.13 are all of the
Environmental Permits necessary for the continued conduct of any Hazardous
Material Activity of Seller relating to the Business as such activities are
currently being conducted, except for those permits the absence of which could
not reasonably be expected to result in a material adverse effect on the
Business. All such Environmental Permits are valid and in full force and
effect. Seller has complied in all material respects with all covenants and
conditions of any Environmental Permit which is or has been in force with
respect to its Hazardous Materials Activities. To the best knowledge of the
Seller, no circumstances exist which could cause any Environmental Permit to be
revoked, modified, or rendered non-renewable upon payment of the permit fee.
All Environmental Permits and all other consents and clearances required by any
Environmental Law or any agreement to which the Seller is bound as a condition
to the performance and enforcement of this Agreement, including without
limitation, all so-called "ECRA" environmental clearances required by any
Governmental Authority have been obtained or will be obtained prior to the
Closing at no cost to Buyer.
(d) Environmental Litigation: Except as disclosed on
Schedule 4.13, no action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the best of the Seller's
knowledge threatened, concerning or relating to any Environmental Permit or any
Hazardous Materials Activity of the Seller relating to the Business, or any
Business Facility currently owned, operated, occupied, controlled or leased by
Seller, or to the best of Seller's knowledge, pending or threatened with
respect to any other Business Facility.
(e) Offsite Hazardous Material Disposal: To the knowledge of
Seller after reasonable inquiry, Seller has transferred or released Hazardous
Materials only to those Disposal Sites described on Schedule 4.13; and no
action, proceeding, liability or claim exists or is threatened against any
Disposal Site or against the Seller with respect to any transfer or release of
Hazardous Materials relating to the Business to a Disposal Site which could
reasonably be expected to subject the Seller to liability.
(f) Environmental Liabilities: Seller is not aware of any
fact or circumstance, which could result in any environmental liability which
could reasonably be expected to result in a material adverse effect on the
business or financial status of the Business.
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(g) Reports and Records: Seller has delivered to Buyer or
made available for inspection by Buyer and its agents and employees all records
in Seller's position concerning the Hazardous Materials Activities of the
Seller relating to the Business and all environmental audits and environmental
assessments of any Business Facility conducted at the request of, or otherwise
in the possession of the, Seller. Seller has complied with all environmental
disclosure obligations imposed by applicable law upon Seller with respect to
this transaction by.
4.14. CONTRACTS. Schedule 4.14 is a list of contracts as provided
below relating to the Business, the Assets and the Assumed Liabilities. Seller
has delivered to Buyer correct and complete copies of each listed document.
Schedule 4.14 and Schedules 1.2(a), 1.2(b), 1.2(c), 1.2(d) and 1.2(e) together
include all the contracts to which Seller is a party or by which it is bound
and which relate to the Business or the operation thereof, the Assets or the
Assumed Liabilities.
4.15. ORDERS, COMMITMENTS AND RETURNS. The aggregate of all accepted
and unfilled orders for the sale of Business merchandise entered into by Seller
does not exceed an amount which can reasonably be expected to be filled in the
ordinary course of business on a schedule which will maintain satisfactory
customer relationships, and the aggregate of all contracts or commitments for
the purchase of Business products by Seller does not exceed an amount which is
reasonable for its anticipated volumes of the Business (all of which orders,
contracts and commitments were made in the ordinary course of business). As of
the date of this Agreement, there are no asserted, or if unasserted,
sustainable, claims to return merchandise of Seller by reason of alleged
overshipments, defective merchandise, breach of warranty or otherwise. There is
no merchandise in the hands of customers under any understanding that such
merchandise is returnable other than pursuant to the standard returns policy
set forth in Seller's contracts. Seller does not know or have reason to believe
that either the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby will result in any cancellations or
withdrawals of accepted and unfilled orders for the sale of Business
merchandise.
4.16. CUSTOMERS. Schedule 4.16 contains a correct and complete list
of all customers and accounts of Seller in respect of the Business (the
"Customers"). Seller also has provided to Buyer such other records and
documentation regarding the Customers as Buyer has reasonably requested to
inform and assist Buyer in the transition of the Customers' accounts to Buyer.
Seller has not received any information from any Customer whose name appears on
Schedule 4.16 that such Customer will not continue as a customer of the
Business after the Closing.
4.17. SUPPLIERS. Schedule 4.17 hereto contains an accurate and
complete list of the names and addresses of the 10 largest suppliers from whom
Seller has purchased supplies during the past fiscal year. Seller has not
received any indication from any supplier whose name appears on such list (or
otherwise has any reason to believe) that such supplier will not continue as a
supplier of Buyer after the Closing.
4.18. LABOR MATTERS. There are no collective bargaining agreements
in effect between Seller and labor unions or organizations representing any
employees of the Business. Except as and to the extent set forth in Schedule
4.18, (i) to Seller's knowledge, Seller is in compliance with all federal,
state and local laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (ii) there is no unfair labor practice complaint against Seller
pending or, to the knowledge of Seller, threatened before the National Labor
Relations Board or the United States Department of Labor; (iii) there is no
labor strike, dispute, slowdown or stoppage in progress or, to the knowledge of
Seller, threatened against or involving Seller; (iv) no question concerning
representation has been raised or, to the knowledge of Seller, is threatened
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respecting the employees of the Business; (v) no grievance or arbitration
proceeding is pending and, to the knowledge of Seller, no claim therefor
exists; (vi) no private agreement restricts Seller from relocating, closing or
terminating any of its operations or facilities; and (vii) Seller has not in
the past three years experienced any labor strike, dispute, slowdown, stoppage
or other labor difficulty.
4.19. INVENTORY. The Inventory is of good and merchantable quality
and are usable and saleable in the ordinary course of the Business, except for
items of obsolete materials and materials of below standard quality, all of
which have been written down to realizable market value or for which adequate
reserves have been provided. Schedule 4.19 identifies all such obsolete or
below standard quality materials and sets forth the realizable market values to
which such items have been written down. Except as set forth on Schedule 4.19
hereto, Seller is not under any liability or obligation with respect to the
return of inventory or merchandise in the possession of wholesalers, retailers
or other customers.
4.20. PROFESSIONAL FEES. Except as set forth on Schedule 4.20
hereto, Seller has not done anything to cause or incur any liability or
obligation for investment banking, brokerage, finders, agents or other fees,
commissions, expenses or charges in connection with the negotiation,
preparation, execution or performance of this Agreement or the consummation of
the transactions contemplated hereby, and Seller does not know of any claim by
anyone for such a fee, commission, expense or charge.
4.21. TAXES. All United States, foreign, state and local tax returns
and reports required to be filed to date with respect to the operations of the
Business have been accurately prepared and duly filed, or an extension
therefrom has been duly obtained, and, except for taxes contested in good faith
and disclosed in Schedule 4.21, all taxes payable have been paid when due;
there is no examination or audit known to Seller or any claim, asserted
deficiency or assessment for additional taxes in progress, pending, or
threatened, nor is there any reasonable basis for the assertion of any such
claim, deficiency or assessment; no material special charges, penalties, fines,
liens, or similar encumbrances have been asserted against Seller in connection
with the operation of the Business with respect to payment of or failure to pay
any taxes which have not been paid or resolved without further liability to
Seller. Seller has not executed or filed with any taxing authority any
agreements extending the period for assessment or collection of any taxes in
connection with the operation of the Business. Proper amounts have been
withheld by Seller from the Business's employees' compensation payments for all
periods in compliance with the tax withholding provisions of applicable federal
and state laws.
4.22. CONSENTS AND APPROVALS. Seller has, or will have by Closing,
obtained all consents, approvals, authorizations or orders of third parties,
including governmental authorities, necessary for the authorization, execution
and performance of this Agreement by Seller.
4.23. FULL DISCLOSURE. Neither this Agreement, nor any Schedule,
exhibit, list, certificate or other instrument and document furnished or to be
furnished by Seller to Buyer pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact required to be
stated herein or therein or necessary to make the statements and information
contained herein or therein not misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer hereby represents and warrants to Seller as follows:
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5.1. AUTHORIZATION. Buyer has full corporate power and authority to
enter into this Agreement and perform its obligations hereunder and carry out
the transactions contemplated hereby. The Board of Directors of Buyer has taken
all action required by law, its Articles of Incorporation, its Bylaws and
otherwise to authorize the execution and delivery by Buyer of this Agreement
and the consummation by Buyer of the transactions contemplated hereby. This
Agreement constitutes a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.
5.2. ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.
5.3. NO VIOLATION. The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated hereby
will not, (a) violate any provision, or result in the creation of any lien or
security interest under, any agreement, indenture, instrument, lease, security
agreement, mortgage or lien to which Buyer is a party or by which it is bound;
(b) violate any provision of Buyer's Articles of Incorporation or Bylaws; (c)
violate any order, arbitration award, judgment, writ, injunction, decree,
statute, rule or regulation applicable to Buyer; or (d) violate any other
contractual or legal obligation or restriction to which Buyer is subject.
5.4. PROFESSIONAL FEES. Buyer has not done anything to cause or
incur any liability for investment banking, brokerage, finders, agents or other
fees, commissions, expenses or charges in connection with the negotiation,
preparation, execution and performance of this Agreement or the consummation of
the transactions contemplated hereby, and Buyer does not know of any claim by
anyone for such a commission or fee.
5.5. CONSENTS AND APPROVALS. Buyer has obtained all consents,
approvals, authorizations or orders of third parties, including governmental
authorities, necessary for the authorization, execution and performance of this
Agreement by Buyer. Except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), and as otherwise contemplated by this
Agreement, the execution, delivery and performance by Buyer of this Agreement
require no action by or in respect of, or filing with, any governmental body,
agency or official.
5.6. FULL DISCLOSURE. Neither this Agreement, nor any certificate
or other instrument or document furnished or to be furnished by Buyer to Seller
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact required to be stated herein or therein or
necessary to make the statements and information contained herein or therein
not misleading.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER
Seller agrees that from the date hereof until the Closing, and
thereafter if so specified, to fulfill the following covenants and agreements
unless otherwise consented to by Buyer in writing:
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6.1. CONDUCT OF BUSINESS PENDING THE CLOSING.
(a) Seller will take such action as may be necessary to
maintain, preserve, renew and keep in full force and effect the existence,
rights and franchises of Seller relating to the Business, to preserve the
business organizations of Seller relating to the Business intact, to keep
available to Buyer Seller's officers and employees, and to preserve for Buyer
the present relationships of Seller with its suppliers and customers and others
having business relationships relating to the Business with it.
(b) Seller will not do or omit to do any act, or permit
any act or omission to act, which may cause a breach of any material contract,
commitment or obligation of Seller in respect of the Business, or any breach of
any representation, warranty, covenant or agreement made by Seller herein.
(c) Seller will duly comply in all material respects with
all laws applicable to the Business and all laws, compliance with which is
required for the valid consummation of the transactions contemplated by this
Agreement.
(d) Seller will not (i) enter into or extend any labor
contract in respect of the Business with any hourly-paid employees or any union
or (ii) agree to take any such action.
(e) Seller will not terminate or modify any lease,
license, permit, contract or other agreement in respect of the Business to
which it is a party.
(f) Seller will not mortgage, pledge or subject to lien
or any other encumbrance, any of the Assets.
(g) Seller will not enter into any transaction involving
the Business and more than $100,000 or a commitment extending more than six (6)
months.
(h) Except as set forth in Section 6.10, Seller will not
enter into any transaction outside the ordinary course of the Business.
(i) Seller will not enter into any agreement to do any of
the foregoing.
(j) Seller will maintain existing security measures at
the Facility and the Real Property and will not remove any of the Assets from
the Facility or the Real Property.
6.2. ACCESS: FURTHER ASSURANCES.
(a) After the execution of this Agreement and continuing
until the Closing, Seller shall permit Buyer and its counsel, accountants,
engineers and other representatives full access during normal business hours to
all of the directors, officers, facilities, properties, books, contracts,
commitments and records of or relating to the Business (including without
limitation, the right to conduct any physical count of inventory of the
Business or otherwise be present at or participate in any such occurrence at
any time prior to the Closing) and will furnish Buyer and its representatives
during such period with all such information concerning Seller's affairs and
such copies of such documents relating thereto, as Buyer or its representatives
may reasonably request.
(b) At any time and from time to time after the Closing,
at Buyer's request and without further consideration, Seller will execute and
deliver such other instruments of sale, transfer,
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conveyance, assignment, and delivery and confirmation and take such action as
Buyer may reasonably deem necessary or desirable in order more effectively to
transfer, convey and assign to Buyer and to place Buyer in possession and
control of, and to confirm Buyer's title to, the Assets and the Business, and
to assist Buyer in exercising all rights and enjoying all benefits with respect
thereto.
6.3. SCHEDULES. Seller shall have the continuing obligation to
supplement or amend promptly the Schedules being delivered pursuant to this
Agreement with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in these Schedules.
6.4. CONFIDENTIALITY. Seller will not issue any press release or
other public disclosure relating to this Agreement or the transactions
contemplated hereby without the approval of Buyer (which approval shall not be
unreasonably withheld), and the request for such approval shall be accompanied
by the text of the proposed disclosure and Buyer shall be provided with a
reasonable opportunity for it and its counsel to review such text.
6.5. RESTRICTIVE COVENANTS. Seller agrees that it will not,
directly or indirectly, for a period of three (3) years after the Closing Date,
own, operate, manage, control or participate in the ownership, management,
operation or control of, any contract manufacturing plant located within a 200
mile radius of Guntersville, Alabama, or, for a period of two (2) years after
the Closing Date, solicit existing customers of the Business to whom the
Business currently provides goods or services (the "Customers"). Seller
recognizes and acknowledges that the ascertainment of damages in the event of a
breach of this Section 6.5 would be difficult, and agrees that Buyer, in
addition to all other remedies it may have, shall have the right to injunctive
relief if there is such a breach.
6.6. CONSENTS AND APPROVALS. Seller shall, in a timely, accurate
and complete manner, take all necessary corporate and other action and obtain
and deliver at the Closing all consents, approvals, permits, licenses and
amendments of agreements required of Seller to carry out the transactions
contemplated in this Agreement.
6.7. EMPLOYEES. Buyer shall have no obligation to hire any of the
employees of Seller involved in the operation of the Business. Buyer shall, at
least five (5) days prior to the Closing Date, provide Seller with a list of
such employees that it desires to hire following the Closing. Seller shall be
solely responsible for all costs, liabilities, obligations and expenses
associated with the termination of the employees of Seller that Buyer does not
hire; provided, however, Seller shall promptly give notice to its employees
under the Federal Worker Adjustment, Retraining and Notification Act (the "WARN
Act") and in the event that the Closing takes place prior to expiration of the
WARN Act notice period then Buyer shall be responsible for any liability under
the WARN Act for wages through the notice period. Seller shall also be
responsible for all salary, vacation, benefits (including without limitation
all benefits arising under the Plans and Benefit Arrangements described in
Section 4.13 and Schedule 4.13) and other compensation to all employees
(including employees being hired by Buyer) through the Closing Date. Buyer
agrees that all employees hired by Buyer shall be grandfathered for seniority
purposes.
6.8. ACCOUNTING AND AUDIT MATTERS. Seller shall provide Buyer, to
the extent reasonably requested by Buyer, with copies of (i) historical
financial information relating to the Business, (ii) work papers of Seller's
independent auditors relating to the Business, (iii) access for Buyer and its
independent auditors to other accounting books and records of Seller relating
to the Business, all to the extent that Buyer and its independent auditors
reasonably request the foregoing in connection with preparation of
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financial statements required by the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, Regulation S-X promulgated
thereunder and other accounting and auditing rules, regulations and policies of
the Securities and Exchange Commission. Seller shall provide the foregoing for
so long as required by the parties to comply with the laws, rules and
regulations referred to above.
6.9. FURTHER ASSURANCES; HIGHER AND BETTER OFFERS. Seller agrees
that prior to the Closing it will use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under the Bankruptcy Code and other applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings (including, but not limited to: (i) obtaining the Order; and (ii)
filings required pursuant to the HSR Act). Until the Order, as it relates to
this Agreement and the transactions contemplated hereby, shall become
effective, the obligations of Seller under this Section 6.9 and to consummate
the transactions contemplated hereby shall be subject to Seller's right to
receive and accept offers for all or any portion of the Business which it shall
deem a higher and better offer or which it may otherwise be compelled to accept
under the Bankruptcy Code or otherwise applicable law. If Seller receives an
offer for such a transaction, or obtains information that such an offer is
likely to be made, it will immediately notify Buyer. Furthermore, Seller shall
not accept such an offer unless the value of the consideration to be received
by Seller pursuant to such offer is at least $500,000 greater than the Purchase
Price as reasonably estimated by Seller in accordance with the provisions of
this Agreement (the "Overbid Requirement").
6.10. BREAKUP FEE. Seller shall pay to Buyer the sum of $250,000 as
liquidated damages in immediately available funds upon either: (a) the
consummation of the acquisition of the Business by a party other than Buyer; or
(b) the approval by the Bankruptcy Court of a plan of reorganization under
Chapter 11 of the Bankruptcy Code for Seller that does not contemplate the
transactions contemplated by this Agreement (either a "Breakup Event").
6.11. APPROVAL OF THIS AGREEMENT; OTHER APPROVAL. No later than two
business days following the execution and delivery of this Agreement by Seller
and Buyer, Seller will file with the Bankruptcy Court a motion (the "Approval
Motion") and form of order of the Bankruptcy Court (the "Approval Order") for
the approval by the Bankruptcy Court of this Agreement and the sale to Buyer in
accordance with the terms hereof of the Assets free and clear of liens pursuant
to Section 363(f) of the Bankruptcy Code and the assumption and assignment to
Buyer pursuant to Section 365(f) of the contracts, leases and other assets set
forth in Section 1.2. The Approval Motion shall be in form and substance
satisfactory to Buyer and the Approval Order shall be in substantially the form
of Schedule 6.11(a) annexed hereto.
Prior to the filing of the Approval Motion and the Approval Order, but
following the execution and delivery of this Agreement by Seller and Buyer,
Seller shall file with the Bankruptcy Court a motion and form of order of the
Bankruptcy Court for the approval by the Bankruptcy Court of the Overbid
Requirement and the Breakup Fee (which motion and declaration shall be in form
and substance satisfactory to Buyer and which order shall be in substantially
the form of Schedule 6.11(b) annexed hereto). Seller will thereafter take all
reasonable actions necessary to cause the hearing in respect of such motion,
declaration and form of order to be held prior to the hearing in respect of the
Approval Order and will further take all reasonable actions necessary to have
an order in substantially the form included in Schedule 6.11(b) hereto (and
otherwise reasonably satisfactory in form and substance to Buyer) to be entered
upon such motion and declaration and prior to the entry of the Approval Order
and
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to cause such order to remain in full force and effect and not be stayed,
reversed, modified or amended in any respect.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer agrees that from the date hereof until the Closing, unless
otherwise consented to by Seller in writing, it will fulfill the following
covenants and agreements:
7.1. CONFIDENTIALITY.
(a) In the event the transactions contemplated by this
Agreement are not consummated, for any reason, Buyer promptly will return to
Seller all records and information provided to Buyer from Seller, and Buyer
will treat all such records and information as confidential.
(b) Buyer will not issue any press release or other
similar public disclosure relating to this Agreement or the transactions
contemplated hereby without the approval of Seller (which approval shall not be
unreasonably withheld), and the request for such approval shall be accompanied
by the text of the proposed disclosure and Seller shall be provided with a
reasonable opportunity for it and its counsel to review such text.
7.2. CONSENTS AND APPROVALS. Buyer shall, in a timely, accurate and
complete manner, take all necessary corporate and other action and obtain and
deliver at Closing all consents, approvals, permits, licenses and amendments of
agreements required of Buyer to carry out the transactions contemplated in this
Agreement.
7.3. MANAGEMENT ARRANGEMENTS. Buyer may, in its discretion, enter
into such employment or consulting agreements with key members of management of
Seller that Buyer desires to retain following the Closing. The terms of any
such agreements entered into by Buyer shall be as agreed upon by Buyer and each
member of Seller's management with whom such agreements are entered into.
7.4. ACCOUNTING AND AUDIT MATTERS. Buyer shall provide Seller,
to the extent reasonably requested by Seller, with copies of (i) historical
financial information relating to the Business, (ii) work papers of Buyer's
independent auditors relating to the Business, (iii) access for Seller and its
independent auditors to other accounting books and records of Buyer relating to
the Business, all to the extent that Seller and its independent auditors
reasonably request the foregoing in connection with preparation of financial
statements required by the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, Regulation S-X promulgated thereunder and
other accounting and auditing rules, regulations and policies of the Securities
and Exchange Commission. Buyer shall provide the foregoing for so long as
required by the parties to comply with the laws, rules and regulations referred
to above.
ARTICLE 8.
CONDITIONS TO BUYER'S OBLIGATIONS
All obligations of Buyer hereunder are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
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8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Seller in this Agreement and the statements contained in the
Schedules attached hereto or in any instrument, list, certificate or writing
delivered by Seller pursuant to this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of the Closing.
8.2. PERFORMANCE BY SELLER. Seller shall have performed and
complied with all covenants, agreements, obligations and conditions required by
this Agreement to be so complied with or performed.
8.3. CERTIFICATE OF SELLER. Seller shall have delivered to Buyer a
certificate, dated the Closing Date, certifying as to the fulfillment of the
conditions specified in Sections 8.1 and 8.2 hereof.
8.4. CLOSING DELIVERIES. All other documents and items specified in
this Agreement to be delivered by Seller at the Closing shall be so delivered,
and shall be in form and substance satisfactory to Buyer and its counsel.
8.5. CONSENTS AND APPROVALS. Buyer shall have received from Seller
executed counterparts of all consents required for the consummation of the
transactions contemplated hereby, including without limitation all consents of
third parties relating to the Assets or the Assumed Liabilities, all of which
consents shall be in form and substance satisfactory to Buyer and its counsel.
8.6. LITIGATION. Except as set forth in Schedule 4.11, on the date
of the Closing, Seller shall not be a party to, nor will there otherwise be
pending or threatened, any judicial, administrative, or other action,
proceeding or investigation which, if adversely determined might, in the
opinion of Buyer, have a material adverse effect upon the Business, Buyer or
the transactions contemplated hereby; and there shall be no lawsuits pending
against Seller, or Buyer seeking to enjoin, prohibit, restrain or otherwise
prevent the transactions contemplated hereby.
8.7. SHELTER AGREEMENT. Seller shall have assigned its rights to
the Shelter Agreement pursuant to an assignment agreement in the form set forth
as Schedule 8.7 hereto (the "Assignment of Shelter Agreement").
8.8. DUE DILIGENCE. Buyer shall have completed to its satisfaction
a review of the Assets, the Business and any matters identified on the
Schedules being delivered pursuant to Articles 1 and 4 of this Agreement. In
this regard, Buyer shall have obtained, investigated and approved, in its
reasonable discretion, such reports and information concerning (i) the use,
storage, transport or manufacture of Hazardous Materials by Seller at the
Business Facility, (ii) exposure of employees of the Business to Hazardous
Materials, (iii) the Hazardous Materials disposal practices of Seller with
respect to the Business, (iv) the presence or absence of Hazardous Materials on
the Business Facility, and (v) the likelihood that Hazardous Materials on
property in the vicinity of the Business Facility could migrate onto the
Business Facility (collectively, the "Environmental Matters"). Prior to
Closing, Buyer and its consultants and other representatives (i) shall have the
right to enter upon any Business Facility for the purpose of conducting such
inspections and tests and taking such soil and groundwater samples as Buyer or
its consultants or representatives shall deem necessary, and (ii) shall have
access to all records in Seller's possession or obtainable by Buyer or its
consultants or representatives from regulatory authorities relating to the
Environmental Matters. In this regard, Buyer shall have the right, but not the
obligation, to retain such environmental consultants as Buyer shall deem
desirable to assist it in evaluating the Environmental Matters.
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8.9. EFFECTIVENESS OF AGREEMENT. This Agreement shall have become
effective in accordance with Section 11.1.
8.10. WAITING PERIODS. All waiting or notice periods applicable to
the transactions contemplated by this Agreement under the HSR Act and the WARN
Act shall have expired.
8.11. FINALITY AND EFFECTIVENESS OF ORDER. The Order shall have
become final and shall continue to be in full force and effect and all
conditions contemplated by the Order to consummation of the transactions
contemplated by this Agreement shall have been satisfied and the Overbid
Requirement set forth in Section 6.10 hereof and the Breakup Fee set forth in
Section 6.11 hereof shall have been approved, without modification or
condition, by an order of the Bankruptcy Court, which order shall have become
final (as that term is defined in Section 3.1 hereof).
8.12. INJUNCTION. There shall not be any statute, rule or regulation
promulgated or enacted which makes it illegal for Seller to sell the Assets or
for the Buyer to assume the Assumed Liabilities or any order or judgment
enjoining Seller from selling the Assets and transferring the Assumed
Liabilities, in each case on the basis contemplated by this Agreement.
8.13. ABSENCE OF MATERIAL ADVERSE CHANGES. From the date of this
Agreement to the time of the Closing, there shall have occurred no material
adverse change to the business or financial condition of Seller. For the
purposes of this Section 8.13, the loss by Seller of any customer which
accounted for ten percent (10%) or more of Seller's revenue for the three
months ended August 31, 1996, shall be considered such a material adverse
change.
ARTICLE 9.
CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
9.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Buyer in this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
9.2. PERFORMANCE. Buyer shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be so
complied with or performed.
9.3. OFFICER'S CERTIFICATE. Buyer shall have delivered to Seller a
Certificate, dated the Closing Date, certifying as to the fulfillment of the
conditions specified in Sections 9.1 and 9.2 hereof.
9.4. CLOSING DELIVERIES. All other documents and items specified in
this Agreement to be delivered by Buyer at the Closing shall be so delivered,
and shall be in form and substance satisfactory to Seller and its counsel.
9.5. ASSUMPTION OF SHELTER AGREEMENT. Buyer shall have assumed the
Shelter Agreement pursuant to the Assignment of Shelter Agreement.
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9.6. WAITING PERIODS. All waiting or notice periods applicable to
the transactions contemplated by this Agreement under the HSR Act and the WARN
Act shall have expired.
9.7. FINALITY AND EFFECTIVENESS OF ORDER. The Order shall have
become final and shall continue to be in full force and effect and all
conditions contemplated by the Order to consummation of the transactions
contemplated by this Agreement shall have been satisfied and the Overbid
Requirement set forth in Section 6.10 hereof and the Breakup Fee set forth in
Section 6.11 hereof shall have been approved, without modification or
condition, by an order of the Bankruptcy Court, which order shall have become
final (as that term is defined in Section 3.1 hereof).
ARTICLE 10.
EFFECT OF REPRESENTATIONS AND WARRANTIES
10.1. NONSURVIVAL. The representations and warranties by the parties
contained in this Agreement or in any certificate delivered pursuant hereto
shall not survive, and shall terminate contemporaneous with, the Closing.
ARTICLE 11.
EFFECTIVENESS AND TERMINATION OF AGREEMENT
11.1. EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective if and only if all of the following shall have occurred:
(a) this Agreement and the transactions contemplated
hereby shall have been approved by the Board of Directors of Seller and Buyer;
provided that, notwithstanding the foregoing, the provisions of Section 6.4 and
Section 7.1 shall be effective immediately upon execution and delivery of this
Agreement.
11.2. TERMINATION OF AGREEMENT. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual written agreement of Seller and Buyer.
(b) By Buyer, if there has been a material violation or
breach by Seller of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in writing, or if any of
the conditions set forth in Article 8 hereof (including, without limitation,
the due diligence closing condition set forth in Section 8.8) have not been
satisfied by the Closing or have not been waived in writing by Buyer.
(c) By Seller, if there has been a material violation or
breach by Buyer of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in writing, or if any of
the conditions set forth in Article 9 hereof have not been satisfied by the
Closing or have not been waived in writing by Seller.
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(d) By either Buyer or Seller, if the transactions
contemplated by this Agreement shall not have been consummated on or before
November 20, 1996.
(e) By either Buyer or Seller, immediately prior to the
occurrence of a Breakup Event (as defined in Section 6.11); provided that
Seller may not terminate the Agreement pursuant to this provision unless
Seller, contemporaneous with such termination, enters into a definitive
agreement for or consummates the transaction constituting the Breakup Event.
(f) By either Buyer or Seller if the Approval Motion is
denied.
11.3. EFFECT OF TERMINATION. If this Agreement shall be terminated
pursuant to Section 11.2, all further obligations of Seller and Buyer under
this Agreement shall terminate without further liability of any party hereto or
its stockholders, directors or officers, except for those further obligations
of the Seller and Buyer under Section 6.4, Section 6.11 and Section 7.1 hereof.
ARTICLE 12.
MISCELLANEOUS
12.1. EXPENSES. All fees and expenses incurred by Seller, including
without limitation legal fees and expenses, in connection with this Agreement
will be borne by Seller and all fees and expenses incurred by Buyer, including
without limitation, legal fees and expenses, in connection with this Agreement
will be borne by Buyer.
12.2. ASSIGNABILITY: PARTIES IN INTEREST. Neither Buyer nor Seller
may assign, transfer or otherwise dispose of any of its rights hereunder
without the prior written consent of the other party. Any such assignee shall
assume all of Assignor's duties, obligations and undertakings hereunder, but
the assignor shall remain liable thereunder. All the terms and provisions of
this Agreement shall be binding upon, shall inure to the benefit of and shall
be enforceable by the respective heirs, successors, assigns and legal or
personal representatives of the parties hereto.
12.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price for the
Assets shall be allocated as set forth in Schedule 12.3 attached hereto and
made a part hereof. The parties hereto agree to follow such allocation for
Federal and State income tax purposes.
12.4. ENTIRE AGREEMENT: AMENDMENTS. This Agreement, including the
exhibits, Schedules, lists and other documents and writings referred to herein
or delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by all parties or their respective heirs, successors, assigns or legal
personal representatives. Any condition to a party's obligations hereunder may
be waived but only by a written instrument signed by the party entitled to the
benefits thereof. The failure or delay of any party at any time or times to
require performance of any provision or to exercise its rights with respect to
any provision hereof, shall in no manner operate as a waiver of or affect such
party's right at a later time to enforce the same.
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12.5. HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretations of this Agreement.
12.6. SEVERABILITY. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
12.7. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered in person, by electronic facsimile transmission, cable,
telegram, telex, or other standard form of telecommunications, by overnight
courier or registered or certified mail, postage prepaid, return receipt
requested as follows:
If to Seller:
Comptronix Corporation
Three Maryland Farms, Suite 140
Brentwood, Tennessee 37027
Attention: E. Townes Duncan, President and Chief Executive Officer
Facsimile: (615) 377-3993
with a copy to:
F. Mitchell Walker, Jr., Esq.
John Bailey, Esq.
Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238-2700
Facsimile: (615) 742-6298
If to Buyer:
Sanmina Corporation
355 East Trimble Road
San Jose, California 95131
Attention: Randy W. Furr, President and Chief Operating Officer
Facsimile: (408) 943-1401
with a copy to:
Christopher D. Mitchell
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Facsimile: (415) 493-6811
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
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12.8. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to its conflict of laws rules.
12.9. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, with the same effect as if the signatories executing
the several counterparts had executed one counterpart; provided, however, that
the several executed counterparts shall together have been signed by Buyer and
Seller. All such executed counterparts shall together constitute one and the
same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by duly authorized officers of Buyer and Seller on the date first
above written.
BUYER:
SANMINA CORPORATION
By: /s/ Jure Sola
-------------------------------------
Jure Sola
Chairman and Chief Executive Officer
SELLER:
COMPTRONIX CORPORATION
By: /s/ E. Townes Duncan
-------------------------------------
E. Townes Duncan
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 99
COMPTRONIX CORPORATION ANNOUNCES DEFINITIVE AGREEMENT
FOR SALE OF SUBSTANTIALLY ALL OF ITS ASSETS
BRENTWOOD, Tenn. (September 20, 1996) - Comptronix Corporation (OTC Bulletin
Board:CMPX) today announced today that it has signed a definitive agreement
with Sanmina Corporation pursuant to which Sanmina will acquire substantially
all of the assets of Comptronix Corporation. The estimated purchase price range
for the assets, which is based on a formula in the definitive agreement, is $20
million to $22 million, payable in cash. Consummation of the acquisition is
subject to a number of conditions, including the completion of due diligence by
Sanmina, the approval of the Bankruptcy Court that has jurisdiction in
Comptronix's Chapter 11 case and expiration of the applicable waiting period
under the Hart-Scott-Rodino Act.
Based on the estimated purchase price, Comptronix expects that its
secured creditors will be fully repaid and that its unsecured creditors will
receive approximately 10 cents on the dollar for claims such as unsecured debt
(including the Company's convertible debt) and trade payables. Because
Comptronix's unsecured creditors will not be fully repaid, applicable
bankruptcy rules prevent holders of Comptronix's preferred stock or common
stock from receiving any value.
E. Townes Duncan, Chairman and Chief Executive Officer of Comptronix
said, "We believe that the best way to preserve the value of Comptronix's
business is a sale of the Company. Sanmina is a strong, financially sound
company with the wherewithal to consummate this acquisition on a timely basis
and continue the operations of Comptronix's facilities. Given the uncertainties
associated with operating a business in bankruptcy, we believe that this
transaction will preserve the value of the business and maintain the confidence
of the Comptronix's customers, employees and suppliers."
Mr. Duncan continued, "While we regret that our unsecured creditors
will not be fully repaid and equity holders will not receive any value in a
plan of reorganization, we nevertheless believe that the sale of the Company
represents our only viable alternative. We believe that it was important to
take this action promptly before any further diminution in value of the
Company's assets and business."
Comptronix expects to file a motion promptly with the Bankruptcy Court
for consideration of the proposed transaction. Comptronix will also seek
approval of provisions in the definitive agreement relating to a breakup fee
and overbid requirement. In general, those provisions provide that Comptronix
will pay Sanmina a breakup fee of $250,000 if Comptronix consummates a
transaction with a third party or completes a stand-alone plan of
reorganization. The overbid requirement provides that if Comptronix accepts an
offer from a third party, then that offer must be at least $500,000 higher than
Comptronix's reasonable estimate of the aggregate purchase price in the Sanmina
transaction.
Comptronix Corporation provides contract manufacturing services to
original equipment manufacturers in the electronics industry at its ISO 9002
registered facilities in Guntersville, Alabama, and at its Empalme, Sonora,
Mexico, facility. It specializes in assembling printed circuit boards and
system level "Box Build" products, as well as providing engineering, order
fulfillment and other services, for customers requiring strict quality control
and prompt, responsive service.
