<PAGE> 1
UNITED STATES 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: November 15, 1996
(Date of earliest event reported: November 1, 1996)
Commission File Number: 0-21272
SANMINA CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 77-0228183
(State of incorporation or organization) (IRS Employer I.D. No.)
355 East Trimble Road, San Jose, California 95131
(Address of principal executive offices)
(408) 435-8444
(Registrant's telephone number, including area code)
<PAGE> 2
Item 2. Acquisition and Disposition of Assets
On November 1, 1996, Registrant acquired the Guntersville, Alabama and
Guaymas, Mexico assets and operations (the "Business") of Comptronix Corporation
("Comptronix") for a cash purchase price of $17.6 million. The Business provides
contract manufacturing services to original equipment manufacturers in the
electronics industry.
-2-
<PAGE> 3
Item 7. Financial Statements and Exhibits
(a) Financial Statements and Pro Forma Financial Information
It is impracticable to provide the required financial statements as of
the filing of this report. Registrant expects that audited and pro forma
financial statements required under this item will be filed within 60 days after
the date on which this Form 8-K is required to be filed.
(b) Exhibits
2 Asset Purchase Agreement ("Agreement") between
Sanmina Corporation and Comptronix Corporation dated
September 20, 1996 and Addendum thereto dated
November 1, 1996. Pursuant to Item 601(b)(2) of
Regulation S-K, the schedules and exhibits referred
to in the Agreement are omitted. The Registrant
hereby undertakes to furnish supplementally a copy of
any omitted schedule to the Commission upon request.
-3-
<PAGE> 4
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.
SANMINA CORPORATION
By: /s/ Randy W. Furr
_____________________________
Randy W. Furr,
President
and Chief Operating Officer
Date: November 15, 1996
-4-
<PAGE> 5
EXHIBIT INDEX
Exhibit No. Description
2 Conformed Copy of Asset
Purchase Agreement between
Sanmina Corporation and
Comptronix Corporation and Addendum thereto
(schedules and exhibits omitted pursuant to
Item 601(b)(2) of Regulation S-K).
-5-
<PAGE> 1
EXHIBIT 2
ADDENDUM TO ASSET PURCHASE AGREEMENT RELATING TO REAL ESTATE
MATTERS
This Addendum dated November 1, 1996 to Asset Purchase Agreement dated
September 20, 1996 (the "Agreement") is entered into by and between Sanmina
Corporation, a Delaware corporation (the "Buyer") and Comptronix Corporation, a
Delaware corporation (the "Seller"). Capitalized terms not defined herein shall
have the meanings ascribed to them in the Agreement.
WHEREAS, the Agreement provided that Buyer would purchase from Seller,
and take title to, certain real property consisting principally of two
electronics contract manufacturing facilities located in Guntersville, Alabama
(the "Real Property").
WHEREAS, Buyer desires to leave title to the Real Property with the
Guntersville, Alabama Industrial Board (the "Board") and to lease such Real
Property from the Board under the terms of existing leases between the Board and
Comptronix.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Real Property will be transferred to Buyer through an assignment
of the existing leases between the Board and Comptronix, which assignment will
occur at the Closing pursuant to the Agreement.
2. In lieu of the document deliveries relating to the Real Property set
forth in the Agreement, the parties will deliver at Closing the documents set
forth on the Real Property closing documents list set forth in the letter dated
October 31, 1996, from Marc E. Gottschalk to Charles Hare and Chicago Title
Company, a copy of which is attached hereto as Exhibit 1.
3. This Addendum shall be governed by the general provisions of the
Agreement.
SANMINA CORPORATION
By:___________________________
Randy W. Furr,
President and Chief Operating Officer
COMPTRONIX CORPORATION
By:___________________________
E. Townes Duncan,
President
<PAGE> 2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
COMPTRONIX CORPORATION
AND
SANMINA CORPORATION
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. - PURCHASE AND SALE OF ASSETS
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
2.1. Purchase Price......................................................................................4
2.2. Payment of Purchase Price...........................................................................4
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
3.1. Closing Date........................................................................................6
3.2. Obligations of the Parties at and after the Closing.................................................6
ARTICLE 4. - REPRESENTATIONS AND WARRANTIES BY SELLER
4.1. Authorization.......................................................................................8
4.2. Organization, Good Standing and Qualification.......................................................8
4.3. Assets..............................................................................................9
4.4. Title to Properties: Encumbrances..................................................................9
4.5. Shelter Agreement...................................................................................9
4.6. Equipment and Other Personal Property Leases.......................................................10
4.7. No Undisclosed Liability...........................................................................10
4.8. Absence of Certain Changes.........................................................................10
4.9. Compliance with Applicable Law.....................................................................11
4.10. Litigation.........................................................................................11
4.11. Product and Service Warranties.....................................................................12
4.12. Employees and Fringe Benefit Plans.................................................................12
4.13. Certain Environmental Matters......................................................................14
4.14. Contracts..........................................................................................16
4.15. Orders, Commitments and Returns....................................................................16
4.16. Customers..........................................................................................16
</TABLE>
-i-
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
4.17. Suppliers..........................................................................................16
4.18. Labor Matters......................................................................................16
4.19. Inventory..........................................................................................17
4.20. Professional Fees..................................................................................17
4.21. Taxes..............................................................................................17
4.22. Consents and Approvals.............................................................................17
4.23. Full Disclosure....................................................................................18
ARTICLE 5. - REPRESENTATIONS AND WARRANTIES BY BUYER
5.1. Authorization......................................................................................18
5.2. Organization and Good Standing.....................................................................18
5.3. No Violation.......................................................................................18
5.4. Professional Fees..................................................................................18
5.5. Consents and Approvals.............................................................................18
5.6. Full Disclosure....................................................................................19
ARTICLE 6. - COVENANTS AND AGREEMENTS OF SELLER
6.1. Conduct of Business Pending the Closing............................................................19
6.2. Access: Further Assurances.........................................................................20
6.3. Schedules..........................................................................................20
6.4. Confidentiality....................................................................................20
6.5. Restrictive Covenants..............................................................................20
6.6. Consents and Approvals.............................................................................21
6.7. Employees..........................................................................................21
6.8. Accounting and Audit Matters.......................................................................21
6.9. Further Assurances; Higher and Better Offers.......................................................21
6.10. Breakup Fee........................................................................................22
6.11. Approval of this Agreement; Other Approval.........................................................22
ARTICLE 7. - COVENANTS AND AGREEMENTS OF BUYER
7.1. Confidentiality....................................................................................23
7.2. Consents and Approvals.............................................................................23
7.3. Management Arrangements............................................................................23
7.4. Accounting and Audit Matters.......................................................................23
</TABLE>
-ii-
<PAGE> 5
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
ARTICLE 8. - CONDITIONS TO BUYER'S OBLIGATIONS
<S> <C>
8.1. Representations and Warranties.....................................................................23
8.2. Performance by Seller..............................................................................24
8.3. Certificate of Seller..............................................................................24
8.4. Closing Deliveries.................................................................................24
8.5. Consents and Approvals.............................................................................24
8.6. Litigation.........................................................................................24
8.7. Shelter Agreement..................................................................................24
8.8. Due Diligence......................................................................................24
8.9. Effectiveness of Agreement.........................................................................25
8.10. HSR Waiting Periods................................................................................25
8.11. Finality and Effectiveness of Order................................................................25
8.12. Injunction.........................................................................................25
8.13. Absence of Material Adverse Changes................................................................25
ARTICLE 9. - CONDITIONS TO SELLER'S OBLIGATIONS
9.1. Representations and Warranties.....................................................................25
9.2. Performance........................................................................................25
9.3. Officer's Certificate..............................................................................26
9.4. Closing Deliveries.................................................................................26
9.5. Assumption of Facility Lease.......................................................................26
ARTICLE 10. - EFFECT OF REPRESENTATIONS AND WARRANTIES
10.1. Nonsurvival........................................................................................26
ARTICLE 11. - EFFECTIVENESS AND TERMINATION OF AGREEMENT
11.1. Effectiveness of Agreement........................................................................26
11.2. Termination of Agreement..........................................................................26
11.3. Effect of Termination.............................................................................27
</TABLE>
-iii-
<PAGE> 6
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 12. - MISCELLANEOUS
12.1. Expenses...........................................................................................27
12.2. Assignability: Parties in Interest.................................................................27
12.3. Allocation of Purchase Price.......................................................................27
12.4. Entire Agreement: Amendments.......................................................................28
12.5. Headings...........................................................................................28
12.6. Severability.......................................................................................28
12.7. Notices............................................................................................28
12.8. Governing Law......................................................................................29
12.9. Counterparts.......................................................................................29
</TABLE>
-iv-
<PAGE> 7
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. Sections
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,
<PAGE> 8
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 and deferred charges attributable to the contracts and 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 _____,
by and between _____ 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"); [provided, however,
that Buyer will assume up to a maximum of $_____ of Seller Purchase Orders for
items that will not be consumed in filling Customer Purchase Orders transferred
to Buyer hereunder (unless Seller provides letters from customers assuming
responsibility for such unallocated items);]
-2-
<PAGE> 9
(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 firm purchase orders that have been released by the customer for
production and none of which shall be based on sales forecasts or other
estimates of customer requirements that have not yet been released for
production or converted to firm purchase orders (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.
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
-3-
<PAGE> 10
the Assumed Liabilities, that any required consent of any third party to such
transfer or assignment be delivered at the Closing.
-4-
<PAGE> 11
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 and (ii)
the Inventory/Receivables Advance (as defined below). 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 "Accounts Receivable
Payment Date"), Buyer shall deliver to Seller a wire transfer of immediately
available funds (in United States dollars) equal to the remainder of 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/Receivables Advance shall equal (i)
[$7.9 million] in the event that the aggregate Inventory Purchase Price and
Accounts Receivable 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 equals or exceeds $7.9 million or (ii) the amount of the aggregate
Inventory Purchase Price and Accounts Receivable 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 and Accounts Receivable Purchase Price is less than
$7.9 million.
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
-5-
<PAGE> 12
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 amounts 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.
2.5. ACCOUNTS RECEIVABLE PURCHASE PRICE. Seller shall, on 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
-6-
<PAGE> 13
(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.
-7-
<PAGE> 14
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 Tuesday, October
22, 1996 at the offices of Bass, Berry & Sims, 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 as specified
in Section 2.1;
(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
-8-
<PAGE> 15
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;
-9-
<PAGE> 16
(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 Accounts Receivable Payment Date, Buyer shall
deliver to Seller (or Seller's agent):
(i) the balance of the Accounts Receivable
Purchase Price not included in the
Inventory/Receivables Advance as specified in
Section 2;
(d) 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/Receivables
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.
-10-
<PAGE> 17
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 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,
-11-
<PAGE> 18
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 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:
-12-
<PAGE> 19
(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;
(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
-13-
<PAGE> 20
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");
(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");
-14-
<PAGE> 21
(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.
-15-
<PAGE> 22
(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.
(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,
-16-
<PAGE> 23
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:
(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
-17-
<PAGE> 24
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.
(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
-18-
<PAGE> 25
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
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
-19-
<PAGE> 26
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
-20-
<PAGE> 27
Buyer hereby represents and warrants to Seller as follows:
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.
-21-
<PAGE> 28
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:
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.
-22-
<PAGE> 29
(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, 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 deliver the Schedules required to be
delivered pursuant to this Agreement not later than the fifth business day
following execution of this Agreement. 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.
-23-
<PAGE> 30
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. 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 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").
-24-
<PAGE> 31
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 one
business day 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.
Immediately prior to or simultaneous with the filing of the Approval
Motion, the Approval Declaration 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, declaration 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 Exhibit 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 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.
-25-
<PAGE> 32
(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:
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
-26-
<PAGE> 33
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
-27-
<PAGE> 34
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.
8.9. EFFECTIVENESS OF AGREEMENT. This Agreement shall have become
effective in accordance with Section 11.1.
8.10. HSR WAITING PERIODS. All waiting periods applicable to the
transactions contemplated by this Agreement under the HSR 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.
-28-
<PAGE> 35
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 FACILITY LEASE. Buyer shall have assumed the
Facility Lease pursuant to the Assignment of Facility Lease Agreement.
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.
-29-
<PAGE> 36
(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.
(d) By Buyer, if the Schedules have not been delivered to Buyer
by the fifth business day following execution of this Agreement or if the
Schedules, when delivered or as supplemented prior to the Closing Date, are not
in form and substance acceptable to Buyer.
(e) By either Buyer or Seller, if the transactions contemplated
by this Agreement shall not have been consummated on or before October 31, 1996.
(f) 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.
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
-30-
<PAGE> 37
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.
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:
-31-
<PAGE> 38
F. Mitchell Walker, Esq.
John Bailey, Esq.
Bass, Berry & Sims
First American Center
Nashville, Tennessee 37238
Facsimile: (615)782-6298
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.
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.
-32-
<PAGE> 39
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:_________________________________________
Jure Sola
Chairman and Chief Executive Officer
SELLER:
COMPTRONIX CORPORATION
By:_________________________________________
E. Townes Duncan
President and Chief Executive Officer
-33-
