<PAGE>
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: APRIL 9, 1999
(Date of earliest event reported)
______________________________
MITY-LITE, INC.
(Exact name of registrant as specified in its charter)
UTAH 0-23898 87-0448892
(State or other (Commission file (I.R.S. employer
jurisdiction of number) identification no.)
incorporation or
organization)
1301 West 400 North
Orem, Utah 84057
(Address of principal executive offices)
(801) 224-0589
(Registrant's telephone number, including area code)
______________________________
<PAGE> 1
Item 2. Acquisition or Disposition of Assets.
On April 6, 1999, Mity-Lite, Inc., a Utah corporation (the
"Registrant"), issued the press release attached hereto as Exhibit 99.3,
announcing it would acquire certain assets and obligations of The CenterCore
Group, Inc. ("CenterCore"), a privately-owned designer, manufacturer and
marketer of call center furniture. The transaction closed on April 9, 1999.
Two wholly owned subsidiaries of Mity-Lite completed the transactions
contemplated in the Asset Purchase Agreement and the Subordinated Debt
Assignment Agreements as well as certain other related transactions. C Core,
Inc., a Utah corporation, purchased the accounts receivable, inventory,
machinery and equipment, intellectual property and certain other assets of
The CenterCore for an estimated $5.0 million. The final purchase price will
be determined based on asset values at closing and will be adjusted dollar
for dollar for increases and/or decreases in the closing book values of
accounts receivable, inventory, and machinery and equipment. C Core will
continue to design and market call center furniture under the CenterCore
name. Product manufacturing will be transitioned to DO Group, Inc., a 49.9
percent owned affiliate of Mity-Lite.
BOCCC, Inc., also a Utah corporation and wholly owned subsidiary of
Mity-Lite, purchased the outstanding subordinated debt obligations of
CenterCore for $0.5 million. The outstanding subordinated debt obligations
of CenterCore totaled approximately $2.0 million at closing.
Cash from Mity-Lite's general working capital was used to fund the
purchases.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired. Financial statements for
The CenterCore Group, Inc., required in connection with the acquisition of
substantially all of CenterCore's assets, will be filed by amendment within
60 days of when this Report on Form 8-K is required to be filed.
(b) Pro Forma Financial Information. Pro forma financial information
required in connection with the acquisition of substantially all of assets of
The CenterCore Group, Inc. will be filed by amendment within 60 days of when
this Report on Form 8-K is required to be filed.
(c) Exhibits. See Index to Exhibits incorporated herein in its entirety
by this reference.
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MITY-LITE, INC.
(Registrant)
By: /s/ Bradley T Nielson
Bradley T Nielson
Date: April 23, 1999 Its: Chief Financial Officer
INDEX TO EXHIBITS
2.10 Asset Purchase Agreement dated as of April 9, 1999, by and
among The CenterCore Group, Inc., a Delaware Corporation, Fleet
Capital Corporation, a Rhode Island Corporation, and C Core, Inc.,
a Utah Corporation and wholly owned subsidiary of Mity-Lite, Inc.
2.11 Form of Assignment Agreement by and among BOCCC, Inc., a Utah
Corporation and wholly owned subsidiary of Mity-Lite, Inc., and
various parties holding subordinated debt instruments of The
CenterCore Group, Inc. This form of Assignment Agreement is
substantially the same agreement that was signed by BOCCC, Inc.
and nine different subordinated debt holders.
99.3 Mity-Lite, Inc. Press Release (April 6, 1999)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April 9,
1999, is by and among The CenterCore Group, Inc., a Delaware corporation (the
"Debtor"), Fleet Capital Corporation, a Rhode Island corporation (the
"Secured Party"), and C Core, Inc., a Utah corporation (the "Purchaser").
RECITALS
A. The Debtor is engaged in the business of manufacturing and marketing
call center furniture, office system furniture and accessories (the
"Business").
B. The Secured Party has declared Debtor to be in default on certain
obligations to the Secured Party.
C. Pursuant to a secured party sale of the assets of the Debtor under
Section 9-504 of the New Jersey Uniform Commercial Code, the Secured Party
will sell and assign to the Purchaser, substantially all of the tangible and
intangible assets of the Debtor for the consideration, on the terms and
subject to the conditions hereinafter set forth.
D. The Debtor, consistent with its statutory and contractual
obligations to the Secured Party, has agreed to enter into this Agreement (i)
to assist the Secured Party in its disposition of its collateral and (ii) to
maximize the recovery for creditors of the Debtor.
AGREEMENTS
In consideration of the recitals and the mutual promises, covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. In addition to the capitalized terms
elsewhere defined herein, the following terms, when used herein, shall have
the following meanings:
"Adjusted Cash Purchase Price" means the Estimated Cash Purchase Price,
as increased or decreased pursuant to Section 2.5(f).
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person. For
purposes of this Agreement, the term "Affiliates", includes, but is not
limited to, a Person's shareholders, directors, and officers, any of their
respective Affiliates and the members of their immediate families.
"Agreement" means this Asset Purchase Agreement, as it may be amended in
accordance with its terms from time to time.
"Appraisal" means that certain appraisal of the Debtor conducted by
National Valuations, Inc., dated November 20, 1998.
"Arbitrator" means an independent certified public accountant selected
by mutual agreement of the Debtor and the Purchaser.
"Assigned Contracts" means (a) all outstanding sales orders, sales
contracts and customer purchase orders of the Debtor on the Closing Date and
(b) those contracts listed on Schedule 3.1.6(a) hereto, all of which are to
be assigned to the Purchaser at the Closing.
"Bill of Sale" has the meaning specified in Section 4.2.7(a) hereof.
"Business" has the meaning specified in Recital A hereof.
"Business Real Estate" has the meaning specified in Section 3.1.4
hereof.
"Cash Collateral Providers" means collectively, Apollo Group, Inc., Paul
V. Allegretto, Chris I. Grigoriou, Michael I. Grigoriou and Brian M. Murphy.
"Certificate of Amendment" has the meaning specified in Section 5.1.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" means the date specified in Section 2.4 hereof upon which
the Closing shall occur.
"Closing Date A/R Aging Report" means a detailed aged trial balance of
all accounts receivable of the Debtor existing as of the Closing Date,
specifying the names, addresses, and face value, dates of invoices and due
dates for each account debtor obligated on an account receivable so listed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Conditions Precedent" means all of the conditions precedent specified
in Sections 4.1, 4.2 and 4.3 hereof.
"Debtor" means The CenterCore Group, Inc., a Delaware corporation.
"Employee Leasing Agreement" means that certain Employee Leasing
Agreement between the Purchaser and the Debtor, in the form of Exhibit D
attached hereto.
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"Environmental Laws" means all federal, state, local and foreign laws,
ordinances and rules of common law relating to environmental, safety, or
health matters, including those relating to fines, orders, injunctions,
penalties, damages, contribution, cost recovery compensation, losses, or
injuries resulting from the release or threatened release of Hazardous
Substances and the generation, use, storage, transportation, or disposal of
Hazardous Substances in any manner applicable to the Debtor or its assets,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. section 1801 et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. section 1251 et
seq.), the Clean Air Act (42 U.S.C. section 7401 the Toxic Substances Control
Act of 1976 (15 U.S.C. section 2601 et seq.), the Safe Drinking Water Act (42
U.S.C. section 300f - section 300j-11 et seq.), the Occupational Safety and
Health Act of 1970 (29 U.S.C. section 651 et seq.), and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. section 11001 et seq.),
each as heretofore and hereafter amended or supplemented, and any analogous
present or future federal, state, local or foreign statutes, rules, and
regulations promulgated thereunder or pursuant thereto, and any other present
or future law, ordinance, rule, regulation, permit, order, or directive
addressing environmental, safety or health issues, of or by the federal or
foreign government, any state or political subdivision thereof, or any
agency, court, or body of the federal or foreign government or any state or
political subdivision thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agreement (Cash Collateral)" means that certain Escrow Agreement
between the Purchaser and the Cash Collateral Providers, in the form of
Exhibit A attached hereto.
"Escrow Agreement (Debtor)" means that certain Escrow Agreement between
the Purchaser and the Debtor, in the form of Exhibit B attached hereto.
"Escrow Agreement (Holdback)" means that certain Escrow Agreement
between the Purchaser and the Debtor, in the form of Exhibit C attached
hereto.
"Escrow Amount (Cash Collateral)" means $600,000.
"Escrow Amount (Debtor)" means $430,000.
"Escrow Amount (Holdback)" means $750,000.
"Estimated Cash Purchase Price" means $4,570,000.
"Excluded Assets" has the meaning set forth in Section 2.2 hereof.
"Fixed Asset Report" has the meaning set forth in Section 2.5(d) hereof.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
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"GSA Contracts" means the General Services Administration contracts No.
GS-29F-0145G and No. GS-29F-0225G.
"Hazardous Substances" means (a) any chemical, material or substance
defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "medical waste," "toxic pollutants,"
"contaminants," "pollutants," "toxic substances," or words of similar import
under any applicable Environmental Law, (b) any oil, petroleum, petroleum
product or petroleum derived substance, any flammable substances or
explosives, any radioactive materials, (c) asbestos and asbestos containing
materials in any form which are or could become friable, (d) radon gas, urea
formaldehyde, lead-based paint, dielectric fluid, and polychlorinated
biphenyls, and (e) any other chemical, material or substance which is
prohibited, limited, or regulated by any governmental authority.
"Indebtedness" means (a) all indebtedness of the Debtor for borrowed
money, whether current or funded, secured or unsecured, (b) all indebtedness
of the Debtor for the deferred purchase price of any assets or services,
(c) all indebtedness of the Debtor created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
the Debtor (even though the rights and remedies of the seller or lender under
such agreement in the event of a default may be limited to repossession or
sale of such property), (d) all indebtedness of the Debtor secured by a
purchase money mortgage or property of the Debtor or other lien to secure all
or part of the purchase price of property of the Debtor subject to such
mortgage or lien, (e) all obligations of the Debtor under leases which shall
have been or must be, in accordance with GAAP, recorded as capital leases in
respect of which the Debtor is liable as lessee, (f) any liability of the
Debtor in respect of banker's acceptances or letters of credit, (g) any
indebtedness, whether or not assumed by the Debtor, secured by Liens on
property acquired by the Debtor at the time of acquisition thereof and
(h) all indebtedness of the type referred to in clause (a), (b), (c), (d),
(e), (f) or (g) above which is directly or indirectly guaranteed by the
Debtor or which the Debtor has agreed (contingently or otherwise) to purchase
or otherwise acquire or in respect of which the Debtor has otherwise assured
a creditor against loss.
"Inventory" means all raw materials, work in progress or finished goods
of the Debtor.
"Inventory Report" has the meaning specified in Section 2.5(c) hereof.
"Latest Balance Sheet" has the meaning specified in Section 3.1.7
hereof.
"Liens" means any mortgage, trust, deed, pledge, charge, security
interest, lien, claim or encumbrance of any kind whatsoever.
"Lockbox Account" means the lockbox account maintained by the Debtor in
connection with the Debtor's obligations to the Secured Party, and the
lockbox arrangement with respect thereto.
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"Person" means a natural person, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization or other entity, or a governmental entity or any
department, agency or political subdivision thereof.
"Proprietary Rights" means all (a) patents, patent applications, patent
disclosures and inventions, (b) trademarks, service marks, trade dress, trade
names and corporate names and registrations and applications for registration
thereof, (c) copyrights (registered or unregistered) and registrations and
applications for registration thereof, (d) computer software, data, databases
and documentation, (e) trade secrets and other confidential information
(including, but not limited to, ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial and marketing plans and
customer and supplier lists and information, (f) other intellectual property
rights and (g) copies and tangible embodiments thereof (in whatever form or
medium).
"Purchase Price" means the Adjusted Cash Purchase Price plus the Escrow
Amount (Debtor).
"Purchased Accounts Receivable" means all accounts receivable of the
Debtor outstanding as of the Closing.
"Purchased Accounts Receivable Value" means the gross value of the
Debtor's accounts receivable shown on the Closing Date A/R Aging Report,
minus (i) the amount of the Debtor's Closing Date accounts receivable
accrual, which shall mean the amount of the Debtor's accounts receivable as
of the Closing Date for direct installations to be performed by the Debtor
but not yet completed, (ii) the amount of the Debtor's accounts receivable as
of the Closing Date for installations to be performed by indirect dealers of
the Debtor but not yet completed, (iii) the amount of the Debtor's commission
offsets as of the Closing Date, which shall mean the amount of the Debtor's
total accounts payable and accrued commissions to indirect dealers that are
directly offsetable against accounts receivable due from such dealers related
to customers for whom installation fees and commissions have accrued, and
(iv) $290,000, representing an allowance for bad debts and service orders.
"Purchased Accounts Receivable Value Report" has the meaning specified
in Section 2.5(b) hereof.
"Purchased Assets" has the meaning specified in Section 2.1 hereof,
subject to Section 2.2 hereof.
"Purchased Fixed Assets" means that certain machinery and equipment of
the Debtor described in the Appraisal, having an aggregate orderly
liquidation value of $705,905.
"Purchased Inventory" means all Inventory as of the Closing.
"Purchased Inventory Value" means the aggregate book value of the
Purchased Inventory as of the Closing Date as established by the Inventory
Report, minus an allowance of $402,200.
<PAGE> 6
"Purchaser" means C Core, Inc., a Utah corporation.
"Secured Party Minimum Payout" has the meaning specified in Section
2.5(a) hereof.
"Subordinated Debt Purchaser" means BOCCC, Inc. a Utah corporation.
"Subsidiary" means, with respect to any Person, any corporation,
association or other Person of which securities or other ownership interest
representing fifty percent (50%) or more of the ordinary voting power are, at
the time as of which any determination is being made, owned or controlled by
such first Person or one or more of its Subsidiaries or such first Person and
one or more of its Subsidiaries.
"Third Party Consents" has the meaning specified in Section 3.1.6(b).
"WARN Act" has the meaning specified in Section 2.6.
SECTION 1.2 Rules of Construction. The following provisions shall be
applied wherever appropriate herein:
(a) "herein", "hereby", "hereunder", "hereof" and other equivalent
words shall refer to this Agreement as an entirety and not solely to the
particular portion of this Agreement in which any such word is used;
(b) all definitions set forth herein shall be deemed applicable
whether the words defined are used herein in the singular or the plural;
(c) wherever used herein, any pronoun or pronouns shall be deemed
to include both the singular and plural and to cover all genders;
(d) all accounting terms not specifically defined herein shall be
construed in accordance with GAAP;
(e) neither this Agreement nor any other agreement, document or
instrument referred to herein or executed and delivered in connection
herewith shall be construed against either party as the principal
draftsperson hereof or thereof;
(f) all references or citations in this Agreement to statutes or
regulations or statutory or regulatory provisions shall, when the context
requires, be considered citations to such statutes, regulations or provisions
as in effect from time to time, including any successor statutes, regulations
or provisions directly or indirectly superseding such statutes, regulations
or provisions;
(g) any references herein to a particular Section, Article,
Exhibit or Schedule means a Section or Article of, or an Exhibit or Schedule
to, this Agreement unless another agreement is specified; and
(h) the Exhibits and Schedules attached hereto are incorporated
herein by reference and shall be considered part of this Agreement.
<PAGE> 7
ARTICLE II
SALE AND PURCHASE OF ASSETS
SECTION 2.1 Assets to be Sold. Upon the terms and subject to the
conditions herein set forth, on the Closing Date, the Secured Party shall
sell, convey, assign, transfer and deliver to the Purchaser, and the
Purchaser shall purchase from the Secured Party for the consideration
hereinafter set forth all of the right, title and interest of the Debtor in
and to:
(a) Accounts: all accounts, contract rights, chattel paper,
instruments, and documents owned by the Debtor or in which the Debtor has any
interest;
(b) Inventory: all of the Debtor's Inventory, including, but not
limited to, all goods intended for sale or lease by the Debtor, or for
display or demonstration; all work in process, all raw materials and other
materials and supplies of every nature and description used or which might be
used in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing, or furnishing of such goods or otherwise used
or consumed in the Debtor's business; and all documents evidencing any
General Intangibles relating to any of the foregoing;
(c) Equipment: all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles, and other tangible personal property
(other than Inventory) of every kind and description used in the Debtor's
operations or owned by the Debtor or in which the Debtor has an interest,
wherever located, and all parts, accessories, and special tools; and
(d) General Intangibles: all personal property of the Debtor
(including things in action) other than goods, accounts, chattel paper,
documents, instruments, and money.
The Debtor acknowledges that the foregoing includes the Debtor's right, title
and interest in and to all the assets of the Debtor owned on and as of the
Closing, other than the Excluded Assets, whether tangible, intangible, real,
personal, fixtures or mixed including, but not limited to, the Debtor's
supplies, Proprietary Rights, goodwill, licenses, permits, approvals and
authorizations and business and technical records (including proprietary and
other records), the Lockbox Account and all amounts received pursuant to the
lockbox arrangement therefor and deposits therein, the Purchased Accounts
Receivable, the Purchased Inventory, the Debtor's rights under all Assigned
Contracts and the Debtor's right, title and interest in and to the name "The
CenterCore Group, Inc.". The assets of the Debtor described in this Section
2.1 are hereinafter collectively referred to as the "Purchased Assets".
<PAGE> 8
SECTION 2.2 Excluded Assets. The term "Purchased Assets" shall not
include the following (the "Excluded Assets"): the Business Real Estate, the
Debtor's corporate existence, certificate of incorporation, corporate seals,
minute books, stock books and other corporate records, the Debtor's cash on
hand and cash equivalents other than deposits in the Lockbox Account and all
amounts received pursuant to the lockbox arrangement therefor, the Debtor's
rights under all contracts and agreements other than Assigned Contracts and
all other assets of the Debtor identified on Schedule 2.2 attached hereto.
SECTION 2.3 Consideration. As consideration for the Purchased Assets
at the Closing, the Purchaser shall:
(i) Pay to the Secured Party the Estimated Cash Purchase Price
(which shall not be less than the Secured Party Minimum Payout), payable by
wire transfer to an account designated by the Secured Party;
(ii) Deposit the Escrow Amount (Debtor) in the escrow account
established pursuant to the Escrow Agreement (Debtor); and
(iii) Assume on the Closing Date and thereafter satisfy and
discharge the Debtor's liabilities, obligations and contractual commitments
first to be performed after the Closing Date under the Assigned Contracts;
provided, however, that any such assumption by the Purchaser of an Assigned
Contract shall become effective if, and at such time as, the Purchaser
receives all consents, certifications, qualifications and approvals
(including, but not limited to, all Third Party Consents) necessary to
perform the liabilities, obligations and contractual commitments under such
Assigned Contract. Except as expressly provided in this subsection (iii),
the Purchaser will neither assume nor be deemed to have assumed any
liabilities, obligations, Indebtedness or contractual commitments of the
Debtor. Without limiting the generality of the foregoing, the Purchaser does
not assume any liabilities or Indebtedness of the Debtor (including, but not
limited to, any obligation of the Debtor for severance or other benefits to
or for the benefit of employees of the Debtor, pursuant to any benefit plans
of the Debtor, or otherwise, to any lender to the Debtor or to any taxing
authority).
SECTION 2.4 Closing. The Closing shall take place at the offices of
Hopkins & Sutter, Three First National Plaza, Suite 4100, Chicago, Illinois,
at 10:00 a.m. local time on April 9, 1999 unless otherwise agreed to in
writing by the Secured Party, the Purchaser and the Debtor. The date on
which the Closing actually occurs is referred to as the "Closing Date."
SECTION 2.5 Post-Closing Adjustment. (a) As promptly after the
Closing as reasonably practicable and, in any event, within two (2) days
after the Closing, after using the Estimated Cash Purchase Price for the
satisfaction in full and complete discharge (except to the extent the Secured
Party later may be required to disgorge any portion of the Secured Party
Minimum Payout) of all principal, interest and fee and related claims of the
Secured Party against the Debtor (less a 2.5% discount) (such amount, the
"Secured Party Minimum Payout"), the Secured Party shall (i) use the
remaining portion of the Estimated Cash Purchase Price, if any, to deposit
the Escrow Amount (Holdback) into the escrow account established pursuant to
the Escrow Agreement (Holdback) and (ii) pay any balance remaining thereafter
to the Debtor.
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(b) Within three (3) business days after the Closing, the Debtor shall
deliver to the Purchaser the Closing Date A/R Aging Report. Within twenty-
one (21) calendar days after the Closing, the Debtor shall deliver to the
Purchaser a report setting forth in detail the Debtor's calculation of the
Purchased Accounts Receivable Value (the "Purchased Accounts Receivable Value
Report").
(c) As promptly after the Closing as reasonably practicable, the Debtor
and its representatives shall conduct a physical inventory at the Debtor's
plant and prepare and deliver to the Purchaser within fourteen (14) calendar
days after the Closing a report of such inventory, which shall contain the
Debtor's determination of the Purchased Inventory Value as of the Closing
Date (the "Inventory Report"). The inventory will be conducted by the Debtor
and its representatives and may be observed by representatives of the
Purchaser, including Purchaser's independent certified public accountants.
(d) As promptly after the Closing as reasonably practicable, the
Purchaser and its representatives shall conduct an inventory at the Debtor's
plant of those Purchased Fixed Assets having an individual value in excess of
$1,000 as reflected on the Appraisal. Within fourteen (14) calendar days
after the Closing, the Purchaser shall prepare and deliver to the Debtor a
report of such inventory, which shall contain the Purchaser's determination
of those Purchased Fixed Assets that are located at the Debtor's plant in
Plainfield, New Jersey (the "Fixed Asset Report"). The inventory will be
conducted by the Purchaser and its representatives and may be observed by
representatives of the Debtor.
(e) Within seven (7) calendar days after (i) receipt by the Purchaser
of each of the Closing Date A/R Aging Report, the Purchased Accounts
Receivable Value Report and the Inventory Report, or (ii) receipt by the
Debtor of the Fixed Asset Report, the party that received such report (the
"Notifying Party") shall notify the party that prepared such report (the
"Preparing Party") in writing of any objection to such report, indicating
those matters as to which it objects and the reasons for such objections.
Any dispute with respect to any of the Closing Date A/R Aging Report, the
Purchased Accounts Receivable Value Report, the Inventory Report or the Fixed
Asset Report which is not resolved by the parties hereto within seven (7)
calendar days after the Notifying Party notifies the Preparing Party of its
objections shall be submitted to the Arbitrator for resolution and the
parties hereto shall cooperate in connection therewith to the end that any
such dispute shall be resolved as soon as practicable and in any event no
later than sixty (60) calendar days after the Closing Date. The fees and
expenses, if any, of the Arbitrator shall be shared equally by the Debtor and
the Purchaser. If the parties succeed in resolving any dispute by
negotiation, or if the Arbitrator renders a decision, then the revised
statement as agreed to by the parties or as determined by the Arbitrator
shall be deemed to be the Closing Date A/R Aging Report, the Purchased
Accounts Receivable Value Report, the Inventory Report or the Fixed Asset
Report, as the case may be, and shall be binding upon the parties.
<PAGE> 10
(f) (i) If the Purchased Accounts Receivable Value as of the
Closing Date as determined based on the Purchased Accounts Receivable Value
Report exceeds $3,094,000, the Purchaser shall pay an amount equal to such
excess to the Debtor. Alternatively, if the Purchased Accounts Receivable
Value as of the Closing Date as determined based on the Purchased Accounts
Receivable Value Report is less than $3,094,000, the Purchaser shall be
entitled to recover such shortfall from the funds in the escrow account
established pursuant to the Escrow Agreement (Holdback).
(ii) If the Purchased Inventory Value as of the Closing Date as
determined based on the Inventory Report exceeds $1,200,000, the Purchaser
shall pay an amount equal to such excess to the Debtor. Alternatively, if
the Purchased Inventory Value as of the Closing Date as determined based on
the results of the Inventory Report is less than $1,200,000, the Purchaser
shall be entitled to recover such shortfall from the funds in the escrow
account established pursuant to the Escrow Agreement (Holdback).
(iii) If the Fixed Asset Report determines that any Purchased
Fixed Asset described in the Appraisal with a value in excess of $1,000 is
not present at the Debtor's plant, the Purchaser shall be entitled to recover
the value of such Purchased Fixed Asset as set forth in the Appraisal from
the funds in the escrow account established pursuant to the Escrow Agreement
(Holdback).
(g) After the adjustments to the Estimated Cash Purchase Price have
been made pursuant to Section 2.5(f), the funds remaining in the escrow
account established pursuant to the Escrow Agreement (Holdback) shall be
disbursed to the Debtor, for further distribution by the Debtor to its
creditors.
SECTION 2.6 Employees. The Debtor shall be responsible for all
obligations under the Worker Adjustment and Retraining Notification Act (the
"WARN Act") and any state counterpart thereof in connection with or resulting
from the transactions contemplated hereby. At the Closing, the Debtor and
the Purchaser shall enter into the Employee Leasing Agreement, pursuant to
which the Purchaser shall be entitled to use certain employees of the Debtor
for the period and on the terms set forth in the Employee Leasing Agreement.
SECTION 2.7 Cash Collateral. Upon receipt of the consideration
pursuant to Section 2.3(i), the Secured Party, at the direction of the Cash
Collateral Providers, shall release the cash collateral held by the Secured
Party pursuant to the Amended and Restated Cash Collateral Agreement dated
October 12, 1998, and deposit the Cash Collateral Amount into the escrow
account established pursuant to the Escrow Agreement (Cash Collateral).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Debtor. To induce
the Purchaser to enter into this Agreement and to consummate the transactions
contemplated hereby, the Debtor hereby represents and warrants to the
Purchaser that:
<PAGE> 11
3.1.1 Organization and Power of the Debtor. The Debtor is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Debtor has the power and authority to own
its properties, carry on the Business and to consummate the transactions
contemplated hereby.
3.1.2 Authorization and Enforceability. All action on the part of
the Debtor, its directors and shareholders necessary for the authorization,
execution, delivery and performance by the Debtor of this Agreement, and the
consummation of the transactions contemplated hereby, has been taken. This
Agreement has been duly executed by the Debtor and is a legal, valid and
binding obligation of the Debtor, enforceable against the Debtor in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors' rights generally or
by the availability of equitable remedies.
3.1.3 Title to and Condition of Assets. Subject to the rights of
the Secured Party, the Debtor has good title to all the Purchased Assets,
free and clear of all Liens, other than the Liens granted in favor of the
Secured Party and Liens described on Schedule 3.1.3. To the best of the
Debtor's knowledge, there are no conditions or events which would materially
prevent continued normal operation or use of the Purchased Assets or would
otherwise adversely affect the use of the Purchased Assets as currently
employed by the Debtor. The Purchased Assets are in good operating
condition, ordinary wear and tear excepted (where appropriate) and are
adequate for the present uses thereof. Since February 28, 1999, the Debtor
has not suffered an extraordinary loss or knowingly waived any right of
material value with respect to the Purchased Assets or suffered any material
damage, destruction or casualty loss with respect to the Purchased Assets,
whether or not covered by insurance.
3.1.4 Business Real Estate. Schedule 3.1.4 lists all real
property, and improvements relating to, leased or used by the Debtor in the
conduct or operation of the Business (the "Business Real Estate"). The
Debtor does not own any real property.
3.1.5 Taxes. Except as set forth on Schedule 3.1.5, to the best
of the Debtor's knowledge, the Debtor has duly filed all tax reports and
returns (including, but not limited to, all federal, state, local and foreign
income tax, franchise tax, gross receipts, sales tax, use tax, occupational
tax, wage and payroll tax and real and personal property tax returns)
required to be filed by the Debtor (which reports and returns were true and
correct in all material respects) and has duly paid all taxes and other
charges (including, but not limited to, customs duties) owed by the Debtor
to, or claimed to be due from the Debtor by, any federal, state, local or
foreign taxing authority, in each case the failure of which to file or pay
would create or result in a Lien on any of the Purchased Assets. To the best
of the Debtor's knowledge, the Debtor has withheld all taxes and other
amounts required to be withheld by it by any federal, state, local or foreign
taxing authority, the failure of which to withhold would create or result in
a Lien on any of the Purchased Assets. All deficiencies, if any, proposed or
indicated as a result of any examinations have been paid or settled,
including any state, local or foreign taxes and other amounts resulting
therefrom, the failure of which to pay or settle would create or result in a
Lien on any of the Purchased Assets.
<PAGE> 12
3.1.6 Contracts. (a) Attached hereto as Schedule 3.1.6(a) is a
true and correct list of all Assigned Contracts. Accurate and complete
copies of all such contracts (including written summaries of any oral
contract) have heretofore been made and delivered to the Purchaser. All
Assigned Contracts are valid and in full force and effect. The Debtor is not
in default, and has not been notified by any other party that it is in
default, under any Assigned Contract and, to the best of the Debtor's
knowledge, no other party to any Assigned Contract is in default thereunder.
(b) Attached hereto as Schedule 3.1.6(b) is a true, correct
and complete list of all Third Party Consents required to assign the rights
of the Debtor under the Assigned Contracts to the Purchaser as of the
Closing, and no consent of any other Person is required (the "Third Party
Consents").
3.1.7 Accounts Receivable. The accounts receivable of the Debtor
shown on the unaudited balance sheet of the Debtor as of February 28, 1999
(the "Latest Balance Sheet") or arising in the ordinary course of business
after February 28, 1999, represent bona fide receivables due to the Debtor
reduced by estimated uncollectible accounts, are reasonable, are recorded
correctly on the books and records of the Debtor, and are based upon the
Debtor's past experience. Since the date of the Latest Balance Sheet, the
Debtor has not canceled (or accelerated) or agreed to cancel (or accelerate)
any receivable of the Debtor except in the ordinary course of business. The
Purchased Accounts Receivable Value Report shall be true and correct in all
respects. The Debtor makes no representation as to the collectibility of any
of its accounts receivable.
3.1.8 Litigation. Except as set forth on Schedule 3.1.8 and except
for claims threatened by creditors or vendors of the Debtor, there are no
claims, actions, suits, proceedings or investigations pending or, to the best
of the Debtor's knowledge, threatened against the Debtor relating to any of
the Purchased Assets or the Business before any court or any administrative,
governmental or regulatory body or authority, domestic or foreign. Neither
the Debtor nor any of its officers, directors, shareholders, agents or
employees is subject to any order, judgment, injunction or decree relating to
any of the Purchased Assets or the Business. Except as set forth on Schedule
3.1.8, No complaint has been filed, and there is no pending or, to the best
of the Debtor's knowledge, threatened proceeding or investigation, involving
an alleged violation of any federal, state, local or foreign law relating to
any of the Purchased Assets or the Business and, to the best of the Debtor's
knowledge, there is no basis for any such claim, action, suit, proceeding,
investigation, order, judgment, injunction, decree or complaint.
<PAGE> 13
3.1.9 Environmental Matters. Except as set forth on Schedule
3.1.9, to the best of the Debtor's knowledge, (a) the Debtor has complied,
and is currently in compliance, in all material respects with all, and
neither the Debtor nor any assets owned, leased or operated by the Debtor
(including, without limitation, the Business Real Estate or any part thereof)
are in violation of any, Environmental Laws, (b) the Debtor has obtained and
complied in all material respects with all necessary permits, licenses and
other approvals required by Environmental Laws for the operation of the
Business, and (c) there are no pending or, to the best of the Debtor's
knowledge, threatened actions, claims, suits or investigations against the
Debtor in connection with the Business or involving any assets owned, leased
or operated by the Debtor in connection with the Business (including, but not
limited to, the Business Real Estate or any part thereof) under any of the
Environmental Laws, and the Debtor has not received any notice in any form of
such pending or threatened actions, claims, suits or investigations.
3.1.10 Absence of Conflicts. Neither the execution and delivery
of either this Agreement or any other agreement or instrument referred to in
this Agreement between the parties hereto, nor the consummation of the
transactions provided for herein or therein, or the fulfillment by the Debtor
or the Secured Party of the terms hereof or thereof, will (a) conflict with
or result in a breach of any provision of the Debtor's certificate of
incorporation or by-laws or (b) result in a conflict or default or give rise
to any right of termination, cancellation or acceleration under any of the
terms, conditions or provisions of any Assigned Contract.
3.1.11 Governmental Consents. Except as set forth on
Schedule 3.1.11 attached hereto, all consents, approvals, qualifications,
licenses, orders or authorizations of, or filings with or other action by,
any local, state, federal or foreign governmental authority required in
connection with the Debtor's valid execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
have been obtained or made.
3.1.12 Employee Benefit Plans. Except as set forth on
Schedule 3.1.12 attached hereto, the Debtor is not obligated under or a party
to any qualified or non-qualified profit-sharing, deferred compensation,
bonus, stock option, stock ownership, stock purchase, phantom stock, pension,
multiemployer, employment, consulting, retirement, welfare, cafeteria or
incentive plan, agreement or practice, or any plan or agreement or practice
providing for "fringe benefits" to its employees, including, but not limited
to, vacation, sick leave, salary continuation, service awards, severance pay,
welfare, medical, hospitalization, disability, life insurance, other
insurance plans, or related benefits. The Debtor acknowledges and agrees
that the Purchaser is neither assuming nor agreeing to be bound by (a) any of
the Debtor's employee benefit plans, as said term is defined in Section 3(3)
of ERISA, (b) any of the Debtor's qualified or non-qualified profit-sharing,
deferred compensation, bonus, stock option, stock ownership, stock purchase,
phantom stock, pension, multiemployer, employment, consulting, retirement,
welfare, cafeteria or incentive plans, agreements or practices, (c) any plan
or agreement or
<PAGE> 14
practice providing for "fringe benefits" to the Debtor's employees,
including, but not limited to, vacation, sick leave, salary continuation,
service awards, severance pay, welfare, medical, hospitalization, disability,
life insurance, other insurance plans, or related benefits, or (d) any
obligations or liabilities with respect to any of the foregoing.
3.1.13 Books and Records. All files, records and incidental
documentation of the Debtor (including, but not limited to, all contracts,
computer records, general ledgers, books and records, customer lists,
contract information, credit records and other information maintained by the
Debtor) with respect to the Debtor or the Purchased Assets are kept in the
ordinary course of business in accordance with the Debtor's customary
business practice.
3.1.14 Corporate Names. The Debtor has not used or is not
currently using any corporate or fictitious name other than "The CenterCore
Group, Inc."
3.1.15 Licenses and Permits. To the best of the Debtor's
knowledge, attached hereto as Schedule 3.1.15 is a complete and accurate list
and description of all licenses, permits and other authorizations of
governmental authorities, domestic and foreign, and other third Persons used
and held by the Debtor in the conduct of the Business. To the best of the
Debtor's knowledge, except for the licenses, permits, and authorizations set
forth and described on Schedule 3.1.15 attached hereto, all of which are held
by the Debtor, the ownership or use of the Purchased Assets neither requires
nor is dependent on any license, permit or other authorization, written or
oral. The Debtor has not received any notice (nor, to the best of the
Debtor's knowledge, is there any reason to believe) that revocation is being
considered with respect to any of such licenses, permits or authorizations.
3.1.16 Insurance. Attached hereto as Schedule 3.1.16 is a true
and correct description of all insurance maintained by the Debtor relating to
the Purchased Assets or the Business, including policy amounts and terms.
Except as set forth on Schedule 3.1.16, all such policies are in full force
and effect, all premiums due thereon have been paid, and the Debtor has
complied in all material respects with the provisions of its respective
policies. There is no default with respect to any provision contained in any
such policy, and there has not been any failure to give any notice or present
any claim under any such policy in a timely fashion or in the manner or
detail required by the policy. The Debtor has maintained, and currently
maintains, all insurance required by law or contract in connection with, or
otherwise necessary for, the operation of the Business as conducted by the
Debtor, including, but not limited to, workmen's compensation insurance.
<PAGE> 15
3.1.17 Proprietary Rights. (a) Schedule 3.1.17 sets forth a
complete and correct list of: (i) all patented or registered Proprietary
Rights, if any, owned or used by the Debtor relating to the Business; (ii)
all pending patent applications or applications for registration of
Proprietary Rights filed by the Debtor relating to the Business; (iii) all
trade names and unregistered trademarks and service marks owned or used by
the Debtor relating to the Business; (iv) all material unregistered
copyrights (including, but not limited to, computer programs, databases, and
documentation related thereto) and mask works owned or used by the Debtor
relating to the Business; and (v) all licenses or similar agreements or
arrangements for the Proprietary Rights (other than licenses for commercially
available software and databases) to which the Debtor is a party and relating
to the Business, either as licensee or licensor, in each case identifying the
subject Proprietary Rights and the parties thereto.
(b) (i) The Debtor owns and possesses all right, title and
interest in and to, or has a valid and enforceable license to use, the
Proprietary Rights necessary for the operation of the Business as currently
conducted, subject only to the Liens in favor of the Secured Party; (ii) no
claim by any third Person contesting the validity, enforceability, use or
ownership of any of the Proprietary Rights by the Debtor has been made, is
currently outstanding or, to the best of the Debtor's knowledge, is
threatened, and there are no grounds for the same; (iii) the loss or
expiration of any Proprietary Right is not pending or threatened or
reasonably foreseeable; (iv) the Debtor has not received any notices of, nor
is the Debtor aware of any facts which indicate a likelihood of, any
infringement or misappropriation by, or conflict with, any third Person with
respect to the Proprietary Rights (including, but not limited to, any demand
or request that the Debtor license any rights from a third Person); and (v)
the Debtor has not infringed, misappropriated or otherwise conflicted with
any intellectual property rights or other rights of any third Persons, and
the Debtor is not aware of any infringement, misappropriation or conflict
which will occur as a result of the continued operation of the Business by
the Purchaser after the Closing.
3.1.18 Compliance with Laws. Except as set forth on Schedule
3.1.18, to the best of the Debtor's knowledge, the Debtor has complied in all
material respects with all laws, ordinances, requirements, regulations, rules
or orders applicable to the Business, the Purchased Assets or the Business
Real Estate. The Debtor is not subject to any continuing court or
administrative order, writ, injunction or decree, applicable specifically to
it or to the Purchased Assets or the Business, and, to the best of the
Debtor's knowledge, is not in default with respect to any order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental department, commission, board, agency or instrumentality,
domestic or foreign. Except as set forth on Schedule 3.1.18, no notices of
any violations of any laws, rules, regulations or ordinances relating to any
of the Purchased Assets, the Business or the Business Real Estate have been
received by the Debtor, and the Debtor has not received any notice from any
federal, state, local or foreign governmental agency that any of the
Purchased Assets, the Business Real Estate or the products sold or services
provided by the Business are not in compliance with or do not meet the
standards of all applicable laws, rules, regulations and ordinances.
<PAGE> 16
3.1.19 Fees and Commissions. Other than Stump & Company, whose
fee will be paid by the Debtor, the Debtor has not retained any finder,
broker, agent, financial advisor or other intermediary in connection with the
transactions contemplated by this Agreement.
3.1.20 Inventory. The Inventory shown on the Latest Balance Sheet
was owned by the Debtor on the date of the Latest Balance Sheet, and, since
the date of the Latest Balance Sheet, the Debtor has not sold or otherwise
disposed of, or acquired, any Inventory except in the ordinary course of
business consistent with past practice (without limiting the generality of
the foregoing, the Debtor has not shipped Inventory except in bona fide
arm's-length transactions in the ordinary course of business consistent with
past practice). The Purchased Inventory was manufactured in accordance with
all applicable laws and regulations. The value at which the Inventory is
carried on the books and records of the Debtor was determined in a manner
consistent with Debtor's past policies and procedures, consistently applied,
and reflects the normal and customary inventory valuation policy utilized by
the Debtor. The Purchased Inventory consists of items which are of
merchantable quality and are commercially salable in the ordinary course of
business.
3.1.21 Debt to the Purchaser. There are currently no outstanding
amounts owed by the Debtor to the Purchaser, and the sale of the Purchased
Assets pursuant to this Agreement was not made for any antecedent debt of the
Debtor to the Purchaser or any Affiliate of the Purchaser.
SECTION 3.2 Representations and Warranties of the Purchaser. To induce
the Debtor to enter into this Agreement and to consummate the transactions
contemplated hereby, the Purchaser hereby represents and warrants to the
Secured Party and the Debtor that:
3.2.1 Organization and Power of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Utah. The Purchaser has the corporate power and
authority to enter into this Agreement and to perform the transactions
contemplated herein.
3.2.2 Authorization and Enforceability. All corporate action on
the part of the Purchaser and its shareholders and directors necessary for
the authorization, execution, delivery and performance by the Purchaser of
this Agreement, and the consummation of the transactions contemplated hereby,
has been taken. This Agreement has been duly executed by the Purchaser and
is a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally or by the availability of equitable
remedies.
3.2.3 Consents. All consents, approvals, qualifications or
authorizations of, or filings with, or other action by, any local, state,
federal or foreign governmental authority required in connection with the
Purchaser's valid execution, delivery and performance of this Agreement have
been obtained or made.
<PAGE> 17
3.2.4 Absence of Conflicts. The execution and delivery by the
Purchaser of this Agreement and all other agreements and instruments to be
executed and delivered by the Purchaser in connection herewith, the
consummation by the Purchaser of the transactions provided for herein and
therein and contemplated hereby or thereby, and the fulfillment by the
Purchaser of the terms hereof and thereof, will not (a) conflict with or
result in a breach of any provision of the articles of incorporation of the
Purchaser or (b) violate any law, judgment, order, writ, injunction, decree,
statute, rule or regulation of any court, administrative agency, authority,
department or other governmental entity applicable to the Purchaser.
3.2.5 Fees and Commissions. Neither the Purchaser nor any Person
acting on behalf of the Purchaser has retained any finder, broker, agent,
financial advisor or other intermediary in connection with the transactions
contemplated by this Agreement.
SECTION 3.3 Representations and Warranties of the Secured Party. To
induce the Purchaser to enter into this Agreement and to consummate the
transactions contemplated hereby, the Secured Party hereby represents and
warrants to the Purchaser that:
3.3.1 Organization and Power of the Secured Party. The Secured
Party is a corporation duly organized, validly existing and in good standing
under the laws of the State of Rhode Island. The Secured Party has the
corporate power and authority to enter into this Agreement and to perform the
transactions contemplated herein.
3.3.2 Authorization and Enforceability. All corporate action on
the part of the Secured Party and its shareholders and directors necessary
for the authorization, execution, delivery and performance by the Secured
Party of this Agreement, and the consummation of the transactions
contemplated hereby, has been taken. This Agreement has been duly executed
by the Secured Party and is a legal, valid and binding obligation of the
Secured Party, enforceable against the Secured Party in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency
or other laws affecting creditors' rights generally or by the availability of
equitable remedies.
3.3.3 No Violation. The execution and delivery by the Secured
Party of this Agreement and all other agreements and instruments to be
executed and delivered by the Secured Party in connection herewith, the
consummation by the Secured Party of the transactions provided for herein and
therein and contemplated hereby or thereby, and the fulfillment by the
Secured Party of the terms hereof and thereof, will not violate any law,
judgment, order, writ, injunction, decree, statute, rule or regulation of any
court, administrative agency, authority, department or other governmental
entity applicable to the Secured Party.
<PAGE> 18
SECTION 3.4 Survival of Representations and Warranties. The
representations and warranties made by the Debtor under Sections 3.1.5, 3.1.9
and 3.1.12 hereof shall survive the Closing and the consummation of the
transactions provided for herein and shall remain effective, notwithstanding
any investigation or access to information at any time by or on behalf of any
party hereto, for a period equal to the applicable statute of limitations
period. All other representations and warranties made by the Debtor and the
Purchaser shall survive the Closing and the consummation of the transactions
provided for herein and shall remain effective, notwithstanding any
investigation or access to information at any time by or on behalf of any
party hereto, until the first anniversary of the Closing Date.
ARTICLE IV
CONDITIONS TO THE CLOSING
SECTION 4.1 Conditions to Obligations of Each Party. The obligation
of the Debtor, the Secured Party and the Purchaser to consummate the
transactions contemplated by this Agreement shall be subject to the
fulfillment of each of the following conditions:
4.1.1 No Injunction. On the Closing Date, there shall be no
action, suit, proceeding, injunction, order or decree of any nature in or of
any court or governmental agency or body of competent jurisdiction that is
pending or in effect that challenges, restrains or prohibits the consummation
of the transactions contemplated by this Agreement.
4.1.2 Regulatory Authorizations. Other than with respect to the
GSA Contracts and any notices and approvals required by the State of New
Jersey pursuant to the New Jersey Industrial Site Recovery Act, all consents,
approvals, authorizations and orders of federal, state, local and foreign
governmental and regulatory authorities necessary to consummate the
transactions contemplated by this Agreement shall have been obtained.
SECTION 4.2 Conditions to Obligations of the Purchaser. The obligation
of the Purchaser to consummate the transactions contemplated by this
Agreement is subject to the fulfillment of each of the following conditions:
4.2.1 Representations and Warranties; Performance. (a) The
representations and warranties set forth in this Agreement made by the Debtor
shall be true and correct in all material respects; (b) the Debtor shall have
performed all obligations and complied with all covenants and agreements
required to be performed or to be complied with by it under this Agreement in
all material respects; and (c) the Purchaser shall have received a
certificate dated the Closing Date and signed by the Vice President of the
Debtor to all such effects and such other matters as the Purchaser shall have
reasonably requested.
4.2.2 Consents. The Third Party Consent described on Schedule
3.1.6 as "Consent of Mellon Bank to assignment of Lockbox Agreements", shall
have been obtained and delivered to the Purchaser.
4.2.3 Secretary's Certificate. At the Closing, the Debtor shall
have delivered to the Purchaser copies of each of the following, in each case
certified to be in full force and effect on the Closing Date by the Secretary
of the Debtor:
<PAGE> 19
(i) the certificate of incorporation of the Debtor as of
the Closing, certified by the Secretary of State of the State of Delaware as
of a date not more than ten (10) days prior to the Closing Date;
(ii) the by-laws of the Debtor; and
(iii) resolutions of the Board of Directors of the Debtor,
the form and substance of which are reasonably satisfactory to the Purchaser,
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
4.2.4 Good Standing Certificates. At the Closing, the Debtor
shall have delivered to the Purchaser a certificate of good standing with
respect to the Debtor as of a date not more than ten (10) days prior to the
Closing from the Secretary of State of the State of Delaware.
4.2.5 No Adverse Litigation. As of the Closing Date, except for
claims threatened by creditors or vendors of the Debtor and except as
disclosed on Schedule 3.1.8, no suit, action or claim shall have been
instituted, threatened, taken or presented which results or reasonably may be
expected to result (a) in any or all of the transactions contemplated hereby
being enjoined or declared unlawful or (b) in the Purchaser being deprived of
its interest, in whole or in part, in any of the Purchased Assets or the
Business Real Estate.
4.2.6 Delivery of the Purchased Assets. At the Closing, the
Debtor shall make available to the Purchaser legal and actual possession of
the Purchased Assets, together with any keys, key cards, combinations, access
devices, alarm systems and related codes and other rights of access to the
Purchased Assets.
4.2.7 Additional Deliveries. At the Closing, the Debtor and the
Secured Party, as applicable, will also deliver (or cause to be delivered)
the following items to the Purchaser:
(a) a bill of sale and assignment, in substantially the form
attached hereto as Exhibit E (the "Bill of Sale"), conveying the Purchased
Assets to the Purchaser, executed and delivered by the Secured Party;
(b) one or more assignment agreements, each in a form
acceptable to the Purchaser, executed and delivered by the Secured Party with
respect to the assignment of certain of the Proprietary Rights;
(c) the Employee Leasing Agreement;
(d) the Certificate of Amendment; and
(e) such other documents as may be reasonably necessary to
consummate the transactions contemplated by this Agreement.
<PAGE> 20
4.2.8 Escrow Agreements. As of Closing, (a) the Purchaser and
the Debtor shall have entered into the Escrow Agreement (Debtor), (b) the
Purchaser and the Cash Collateral Providers shall have entered into the
Escrow Agreement (Cash Collateral) and the Escrow Amount (Cash Collateral)
shall be deposited into the escrow account established pursuant to the Escrow
Agreement (Cash Collateral) from cash collateral released by the Secured
Party and (c) the Purchaser and the Debtor shall have entered into the Escrow
Agreement (Holdback).
4.2.9 Employees. The Debtor shall have delivered all notices
required by the WARN Act relating to a "plant closing" and/or "mass layoff"
(as such terms are defined in the WARN Act).
4.2.10 Proceedings and Documents. As of the Closing Date, all
corporate and other proceedings in connection with the transactions
contemplated hereby, and all documents and instruments incident to such
transactions, shall be reasonably satisfactory in form and substance to the
Purchaser, and the Purchaser shall have received at or prior to the Closing
all such documents as it shall have requested.
SECTION 4.3 Conditions Precedent to Obligations of the Debtor and the
Secured Party. The obligation of the Debtor and the Secured Party to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment on or prior to the Closing Date of each of the following
conditions:
4.3.1 Representations and Warranties; Performance. (a) The
representations and warranties set forth in this Agreement made by the
Purchaser shall be true and correct in all material respects; (b) the
Purchaser shall have performed all obligations and complied with all
covenants and agreements required to be performed or to be complied with by
it under this Agreement in all material respects; and (c) the Debtor and the
Secured Party shall have received a certificate dated the Closing Date and
signed by the president of the Purchaser to all such effects and such other
matters as either the Debtor or the Secured Party shall have reasonably
requested.
4.3.2 Secretary's Certificate. At the Closing, the Purchaser
shall have delivered to the Debtor and the Secured Party copies of
resolutions of the Board of Directors of the Purchaser authorizing the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, certified to be in full force and effect on the Closing
Date by the Secretary of the Purchaser.
4.3.3 Additional Deliveries. At the Closing, the Purchaser will
also deliver (or cause to be delivered) the following items to the Debtor:
(a) the Escrow Agreement (Cash Collateral);
(b) the Escrow Agreement (Debtor);
(c) the Escrow Agreement (Holdback); and
(d) the Employee Leasing Agreement.
<PAGE> 21
4.3.4 Proceedings and Documents. As of the Closing Date, all
corporate and other proceedings in connection with the transactions
contemplated hereby, and all documents and instruments incident to such
transactions, shall be reasonably satisfactory in form and substance to the
Debtor and the Secured Party, and the Debtor and the Secured Party shall have
received at or prior to the Closing all such documents as they shall have
requested.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 Name Change of the Debtor. Immediately after the Closing,
the Debtor shall amend its certificate of incorporation so as to change its
name to a dissimilar name not utilizing the phrase "The CenterCore Group,
Inc." or any variation thereof and shall forever cease and refrain from
utilizing, or doing business as or under, or otherwise exploiting, the name
"The CenterCore Group, Inc." or any variations thereof. The Debtor shall
deliver to the Purchaser at the Closing a certificate of amendment to the
certificate of incorporation of the Debtor, duly executed by the appropriate
officers of the Debtor and in an appropriate form for effectuating the
foregoing and for filing in the State of Delaware, for filing by the
Purchaser after the Closing (the "Certificate of Amendment").
SECTION 5.2 Post-Closing Consents. The Debtor agrees to use its best
efforts, and to cooperate with the Purchaser in efforts, to obtain all Third
Party Consents which, despite the best efforts of the Debtor, have not been
obtained prior to the Closing, including, but not limited to, Third Party
Consents relating to the GSA Contracts.
SECTION 5.3 Purchased Accounts Receivable. (a) The Debtor shall
furnish the Purchaser with a complete list of all Purchased Accounts
Receivable at the Closing Date. If either the Debtor or the Secured Party
receives any payments with respect to the Purchased Accounts Receivable, it
shall deliver such payment in the form received to the Purchaser within two
days of its receipt thereof. Neither the Debtor nor the Secured Party shall
have any claims, defenses or rights to set-off with respect to any such
payments. Neither the Debtor nor the Secured Party shall endorse or deposit
any checks or other instruments received in payment of the Purchased Accounts
Receivable. Any money received by the Debtor from any Person who is liable
for any of the Purchased Accounts Receivable, whether such Person has other
liabilities or obligations to the Debtor, shall be delivered to the Purchaser
to be applied first against such Purchased Accounts Receivable before any
other payment by such Person to the Debtor.
(b) In furtherance of paragraph (a) above and not in limitation
thereof, the Debtor, effective upon the Closing Date, hereby constitutes and
appoints the Purchaser and its successor and assigns as the attorney-in-fact
of the Debtor with full power of substitution, to execute, sign, endorse, or
deliver, in the Debtor's name, notes, checks, drafts or other instruments for
the payment of money and receipts or any other document necessary to
evidence, collect, or otherwise realize upon any Purchased Accounts
Receivable and to institute and prosecute, in the name of the Debtor or the
<PAGE> 22
Purchaser but on behalf of and for the benefit of the Purchaser, and at the
expense of the Purchaser, all proceedings and actions which the Purchaser may
deem desirable to collect, assert or enforce any claim, right or title of any
kind in and to the Purchased Accounts Receivable, and to defend and
compromise any and all actions, suits or proceedings which the owner of the
Purchased Accounts Receivable is entitled to defend or compromise. The
Debtor agrees that the foregoing powers are coupled with an interest and are
and shall be irrevocable by the Debtor in any manner and for any reason
(including the dissolution of the Debtor).
SECTION 5.4 Indemnification of the Purchaser. (a) The Debtor shall
indemnify the Purchaser and each of its Subsidiaries and its Affiliates,
successors and assigns (collectively, the "Indemnified Parties") and hold
each of the Indemnified Parties harmless from and defend them each against
any and all actions, suits, proceedings, demands, judgments, losses, costs,
liabilities, damages and expenses, including, but not limited to, reasonable
out-of-pocket attorneys' and accountants' fees and disbursements
(collectively, "Damages"), resulting from or arising out of (i) any material
breach or inaccuracy of any of the representations, warranties, covenants or
agreements of the Debtor set forth in this Agreement or in any exhibit,
schedule or other document delivered pursuant hereto, (ii) the performance of
any service or the sale of any product prior to the Closing by the Debtor,
(iii) the Debtor's ownership and operation of the Business, the Purchased
Assets or the Business Real Estate on or prior to the Closing Date, (iv) any
liability to any third Person under any Environmental Law arising out of any
act or occurrence prior to the Closing Date relating to any of the Purchased
Assets, the Business or the Business Real Estate, (v) the non-compliance with
ERISA in any respect by the Debtor or any Affiliate of the Debtor, (vi) any
liability of the Debtor to any taxing authority or unemployment commission or
agency, (vii) any claim made against the Purchaser in respect of any failure
to comply with any "bulk sales" law applicable to the transactions
contemplated by this Agreement, including, but not limited to, Section 22(c)
of the New Jersey State Sales and Use Tax Act and Section 15 of the New
Jersey Business Personal Property Tax Act, (viii) any liability under the
WARN Act as a result of the transactions contemplated hereby and by the
Employee Leasing Agreement, (ix) the Purchaser's claim or defense of any
claim, in each case resolved in favor of the Purchaser, regarding the amounts
held in the escrow account established pursuant to the Employee Leasing
Agreement, which dispute arises prior to or after the filing of any voluntary
or involuntary bankruptcy by the Debtor; and (x) any liability of the Debtor
not expressly assumed by the Purchaser pursuant to this Agreement; provided,
however, that the Debtor shall have no obligation to indemnify any of the
Indemnified Parties for any Damages related to any decrease in the value of
the Purchased Assets after the Closing Date.
(b) The Debtor shall also indemnify the Indemnified Parties and
hold each of the Indemnified Parties harmless from and defend them each
against any and all Damages resulting from or arising out of any claim that
(i) the Purchased Assets were transferred to the Purchaser with actual intent
to hinder, delay, or defraud any creditor of the Debtor on the Closing Date
or any entity that became a creditor of the Debtor after the Closing Date, or
(ii) the Purchaser paid less than reasonably equivalent value in exchange for
the Purchased Assets.
<PAGE> 23
(c) If any third Person asserts any claim against any Indemnified
Party for which indemnification is sought pursuant to the preceding sentence,
such Indemnified Party shall (if practicable under the circumstances) afford
the Debtor a reasonable opportunity to participate in the defense against
such claim, and if the Debtor admits to being obligated under any such claim
which is solely for monetary damages as against the Indemnified Parties, the
Debtor may assume the defense against such claim, in the name of any or all
of the Indemnified Parties, at the expense of the Debtor and with counsel
selected by the Debtor and reasonably satisfactory to the Purchaser. Each of
the Indemnified Parties shall have the right, if any of them elects, to
participate in the defense against any such claim through counsel of its own
choice and at its own expense; provided, however, that the Debtor shall bear
the expense of one counsel for the Indemnified Parties if (i) the Debtor
shall not have promptly assumed the defense against such claim or (ii) such
claim involves litigation with a third Person in connection with which one or
more of the Indemnified Parties is a party and, in the reasonable opinion of
counsel for any of such Indemnified Parties, it could constitute a conflict
of interest for counsel selected by the Debtor to represent such Indemnified
Parties in such litigation. In the event of any litigation with a third
Person in connection with any such claim, the Purchaser agrees to cooperate
with the Debtor and to make all relevant books, records and documents in its
possession available to the Debtor, or their duly authorized representatives,
upon written request, for inspection and copying. Nothing contained in this
Section 5.4 shall be construed to limit the rights of any parties to
discovery in any proceeding under the procedural rules relevant to such
proceeding. The provisions of this Section 5.4 shall not foreclose any
rights or remedies the Purchaser may have to specifically enforce any of the
provisions of this Agreement. No right of indemnification hereunder shall be
affected by any delay in giving notice to the Debtor unless, and then only to
the extent that, the rights and remedies of the Debtor shall have been
prejudiced as a result of the delay in giving such notice. Neither the
Purchaser nor any other Indemnified Party may settle or otherwise compromise
a claim for which indemnity is being sought under this Section 5.4 without
the prior written consent of the Debtor, which consent shall not be
unreasonably withheld. No right or remedy conferred in this Section 5.4 is
intended to be exclusive of any other right or remedy available, now or
hereafter, at law, in equity or otherwise.
(d) The indemnification in favor of the Purchaser contained in
Section 5.4(a) shall not be effective until the aggregate amount of all
Damages indemnified against under Section 5.4(a) exceeds $100,000 (the
"Basket Amount"), in which case such indemnification shall be required with
respect to all such Damages included in the Basket Amount.
<PAGE> 24
(e) Notwithstanding anything to the contrary contained in this
Agreement, the indemnification obligations of the Debtor pursuant to
subsection (a) above shall be satisfied first from the funds held pursuant to
the Escrow Agreement (Debtor), and after all funds held pursuant to such
agreement have been disbursed, the Indemnified Parties shall be entitled to
enforce such indemnification obligations directly against the Debtor. In
addition, notwithstanding anything to the contrary contained in this
Agreement, the indemnification obligations of the Debtor pursuant to
subsection (b) above shall be satisfied first from the funds held pursuant to
the Escrow Agreement (Cash Collateral) and second from the funds held
pursuant to the Escrow Agreement (Debtor), and after all funds held pursuant
to such agreements have been disbursed, the Indemnified Parties shall be
entitled to enforce such indemnification obligation directly against the
Debtor.
SECTION 5.5 Indemnification of the Debtor. (a) The Purchaser shall
indemnify the Debtor and each of its Subsidiaries and Affiliates, successors
and assigns (collectively, the "Debtor Indemnified Parties") and hold each of
the Debtor Indemnified Parties harmless from and defend them each against any
Damages resulting from or arising out of (i) any material breach or
inaccuracy of any of the representations, warranties, covenants or agreements
of the Purchaser set forth in this Agreement or in any exhibit, schedule or
other document delivered pursuant hereto, and (ii) the Purchaser's ownership
and use of the Purchased Assets and its occupancy of the Business Real
Estate, in each case after the Closing Date, including, but not limited to,
the Purchaser's performance of its assumed obligations under the Assigned
Contracts.
(b) If any third Person asserts any claim against any Debtor
Indemnified Party for which indemnification is sought pursuant to the
preceding sentence, such Debtor Indemnified Party shall (if practicable under
the circumstances) afford the Purchaser a reasonable opportunity to
participate in the defense against such claim, and if the Purchaser admits to
being obligated under any such claim which is solely for monetary damages as
against the Debtor Indemnified Parties, the Purchaser may assume the defense
against such claim, in the name of any or all of the Debtor Indemnified
Parties, at the expense of the Purchaser and with counsel selected by the
Purchaser and reasonably satisfactory to the Debtor. Each of the Debtor
Indemnified Parties shall have the right, if any of them elects, to
participate in the defense against any such claim through counsel of its own
choice and at its own expense; provided, however, that the Purchaser shall
bear the expense of one counsel for the Debtor Indemnified Parties if (i) the
Purchaser shall not have promptly assumed the defense against such claim or
(ii) such claim involves litigation with a third Person in connection with
which one or more of the Debtor Indemnified Parties is a party and, in the
reasonable opinion of counsel for any of such Debtor Indemnified Parties, it
could constitute a conflict of interest for counsel selected by the Purchaser
to represent such Debtor Indemnified Parties in such litigation. In the
event of any litigation with a third Person in connection with any such
claim, the Debtor agrees to cooperate with the Purchaser and to make all
relevant books, records and documents in its possession available to the
Purchaser, or their duly authorized representatives, upon written request,
for inspection and copying. Nothing contained in this Section 5.5 shall be
<PAGE> 25
construed to limit the rights of any parties to discovery in any proceeding
under the procedural rules relevant to such proceeding. The provisions of
this Section 5.5 shall not foreclose any rights or remedies the Debtor may
have to specifically enforce any of the provisions of this Agreement. No
right of indemnification hereunder shall be affected by any delay in giving
notice to the Purchaser unless, and then only to the extent that, the rights
and remedies of the Purchaser shall have been prejudiced as a result of the
delay in giving such notice. Neither the Debtor nor any other Debtor
Indemnified Party may settle or otherwise compromise a claim for which
indemnity is being sought under this Section 5.5 without the prior written
consent of the Purchaser, which consent shall not be unreasonably withheld.
No right or remedy conferred in this Section 5.5 is intended to be exclusive
of any other right or remedy available, now or hereafter, at law, in equity
or otherwise.
(c) The indemnification in favor of the Debtor contained in
Section 5.5(a) shall not be effective until the aggregate amount of all
Damages indemnified against under Section 5.5(a) exceeds $25,000 (the "Debtor
Basket Amount"), in which case such indemnification shall be required with
respect to all such Damages included in the Debtor Basket Amount.
SECTION 5.6 Use of Proceeds. The Debtor agrees to use the net proceeds
received from the Secured Party after the Closing to pay the Debtor's
obligations and liabilities to the Debtor's creditors and employees and to
pay any fees and expenses of the Debtor in connection with the preparation,
execution and negotiation of this Agreement and the transactions contemplated
hereby and the wind-up of the Debtor's business following the Closing.
SECTION 5.7 Audited Financial Statements. (a) As soon as reasonably
practicable after the Closing, and in any event within thirty (30) calendar
days of the Closing, the Debtor shall deliver to the Purchaser audited
financial statements of the Debtor for the fiscal year ended December 31,
1998 and (b) upon request of the Purchaser the Debtor shall deliver to the
Purchaser a consent from the Debtor's certified public accountants to the
inclusion of such financial statements in a filing on Form 8-K to be made by
Mity-Lite, Inc. with the Securities and Exchange Commission.
SECTION 5.8 Industrial Site Recovery Act Filing. If not received prior
to the Closing, the Debtor shall obtain, as soon as possible after the
Closing, a negative declaration from the State of New Jersey relating to the
Debtor's filing pursuant to the New Jersey Industrial Site Recovery Act.
SECTION 5.9 State Sales Tax Compliance. After the Closing, the
Purchaser and the Debtor shall take all such actions as are necessary to
comply with all applicable state tax laws relating to the transfer of assets
in bulk, to the extent such actions were not taken prior to the Closing.
SECTION 5.10 Fairness Opinion. Within 30 days after the Closing, the
Debtor shall deliver to the Purchaser a fairness opinion from an investment
bank reasonably acceptable to the Purchaser.
<PAGE> 26
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Transfer Taxes. The Debtor shall pay all transfer, sales
and similar taxes and recording and filing fees with respect to the transfer
of the Purchased Assets.
SECTION 6.2 Successors and Assigns. This Agreement will bind and inure
to the benefit of the respective successors and assigns of the parties
hereto, whether so expressed or not.
SECTION 6.3 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.
SECTION 6.4 Notices. Any notices required, permitted or desired to be
given hereunder shall be delivered personally, sent by overnight courier or
mailed, registered or certified mail, return receipt requested, to the
following addresses, and shall be deemed to have been received on the day of
personal delivery, one business day after deposit with an overnight courier
or three (3) business days after deposit in the mail:
If to the Purchaser, to:
C Core, Inc.
c/o Mity-Lite, Inc.
1301 West 400 North
Orem, Utah 84057
Attention: Bradley Nielson
with a copy to:
Hopkins & Sutter
Suite 4100
Chicago, Illinois 60602
Attention: Emily K. Neuberger, Esq.
If to the Debtor, to:
The CenterCore Group, Inc.
1 Captain Thomson Lane
Hingham, Massachusetts 02043
Attention: Brian M. Murphy
with a copy to:
Reid and Riege, PC
One State Street
Hartford, Connecticut 06103
Attention: Robert Sattin, Esq.
<PAGE> 27
If to the Secured Party, to:
Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, Connecticut 06033
Attention: Timothy Broderick
with a copy to:
Brown, Rudnick, Freed & Gessmer
One Financial Center
Boston, Massachusetts 02111
Attention: Jeffrey L. Jonas, Esq.
or to such other address as any party may specify in a written notice given
to the other parties hereto.
SECTION 6.5 Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement and the Exhibits and Schedules
hereto shall be governed by the internal law, and not the law of conflicts,
of the State of Delaware and the performance of the obligations imposed by
this Agreement shall be governed by the laws of the State of Delaware
applicable to contracts made and wholly to be performed in such state;
provided, however, that all questions concerning the construction, validity
and interpretation of the Bill of Sale shall be governed by the internal law,
and not the law of conflicts, of the State of New Jersey.
SECTION 6.6 Exhibits and Schedules. All Exhibits and Schedules hereto
are an integral part of this Agreement.
SECTION 6.7 Final Agreement. This Agreement, together with those
documents expressly referred to herein, constitute the final agreement of the
parties concerning the matters referred to herein, and supersede all prior
agreements and understandings.
SECTION 6.8 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute
one instrument.
SECTION 6.9 Waiver. At any time prior to the Closing Date, any party
hereto may extend the time for the performance of or waive compliance with
any of the obligations or other acts of any other party contained herein or
waive any inaccuracies in the representations or warranties of the other
party contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. Except as otherwise
expressly provided herein, the provisions of this Agreement may be amended
only by the written agreement of the parties hereto. Any waiver, consent or
approval of any kind or character on the part of either party hereto with
respect to any provisions or conditions of this Agreement must be made in
writing and shall be effective only to the extent specifically set forth in
such instrument.
<PAGE> 28
SECTION 6.10 Further Assurances. From time to time following the
Closing, the Debtor and the Secured Party shall promptly execute and deliver,
or cause to be executed and delivered, to the Purchaser such other
instruments of conveyance and transfer as the Purchaser may reasonably
request or as may be otherwise reasonably necessary to more effectively
convey and transfer to, vest in, or assign to the Purchaser the Purchased
Assets or the Assigned Contracts.
SECTION 6.11 Fees and Expenses. Except as otherwise expressly provided
herein, each of the Debtor and the Purchaser will bear all of its own
expenses in connection with the preparation, execution and negotiation of
this Agreement and the transactions contemplated hereby.
SECTION 6.12 Acknowledgement. The Debtor, the Secured Party, the
Purchaser and the Subordinated Debt Purchaser acknowledge that immediately
prior to the Closing, the Subordinated Debt Purchaser is purchasing the
outstanding subordinated debt of the Debtor held by each of Core
Technologies, Inc. (f/k/a CenterCore, Inc.) (which represents all outstanding
secured subordinated debt), JGFS, Inc., Grigoriou Family Limited Partnership,
Paul V. Allegretto, Brian M. Murphy, Grant M. Wilson, Michael I. Grigoriou,
John E. Moravec and Richard G. Fownes. The Subordinated Debt Purchaser
acknowledges and agrees to the disbursement of the Purchase Price in
accordance with this Agreement, notwithstanding the provisions of Section 9-
504 of the New Jersey Uniform Commercial Code and, in all respects, releases
the Secured Party in this regard.
SECTION 6.13 Renouncements of Rights. (a) The Debtor freely and
knowingly renounces and/or waives any and all rights in connection with the
Secured Party's disposition of certain of its collateral (as described in the
Bill of Sale) pursuant to the secured party sale contemplated by the Bill of
Sale, including, without limitation, rights to notification and to redeem,
and any and all related and ancillary rights with respect thereto, whether
under the New Jersey Uniform Commercial Code or otherwise. The Debtor
acknowledges and agrees that the Secured Party may so conduct a secured party
sale pursuant to the New Jersey Uniform Commercial Code (including, without
limitation, Section 9-504). The Debtor consents in all respects to such
secured party sale and acknowledges and agrees that it is, in all respects,
commercially reasonable (including, without limitation, as to price). The
Debtor acknowledges and agrees that the Secured Party has not accepted the
property described in the Bill of Sale in satisfaction of the Debtor's
obligations.
(b) The Subordinated Debt Purchaser freely and knowingly renounces
and/or waives any and all rights to notification in connection with the
Secured Party's disposition of certain of its collateral (as described in the
Bill of Sale) pursuant to the secured party sale contemplated by the Bill of
Sale.
<PAGE> 29
SECTION 6.14 Secured Party's Limited Participation. The Secured Party
is entering into this Agreement solely as an accommodation to the Debtor and
the Purchaser. The Secured Party's only representations and warranties are
set forth in Section 3.3 hereof. Notwithstanding anything herein to the
contrary, the terms and conditions of sale shall be solely as set forth in
the Bill of Sale (which is attached hereto as Exhibit D). Upon (a) delivery
of the Bill of Sale and the assignment agreements with respect to certain of
the Proprietary Rights, and (b) the fulfillment of the Secured Party's
obligations described in Section 2.5(a), Section 2.7 and Section 5.3(a)
hereof, the Secured Party shall have no further obligations hereunder or
otherwise to any other parties hereto.
The parties hereto have executed this Asset Purchase Agreement on the
date first set forth above.
C CORE, INC.
/s/ Gregory L. Wilson
By: Gregory L. Wilson
Its: Chairman
THE CENTERCORE GROUP, INC.
/s/ Brian M. Murphy
By: Brian M. Murphy
Its: Vice President
FLEET CAPITAL CORPORATION
/s/ Brian M. Corsini
By: Brian M. Corsini
Its: Senior Vice President
For purposes of Sections 6.12 and 6.13(b) only:
BOCCC, INC.
/s/ Gregory L. Wilson
By: Gregory L. Wilson
Its: President
<PAGE> 30
EXHIBITS AND SCHEDULES
Exhibits
Exhibit A Escrow Agreement (Cash Collateral)
Exhibit B Escrow Agreement (Debtor)
Exhibit C Escrow Agreement (Holdback)
Exhibit D Employee Leasing Agreement
Exhibit E Bill of Sale
Schedules
Schedule 2.2 Excluded Assets
Schedule 3.1.3 Liens
Schedule 3.1.4 Business Real Estate
Schedule 3.1.5 Taxes
Schedule 3.1.6(a) Assigned Contracts
Schedule 3.1.6(b) Third Party Consents
Schedule 3.1.8 Litigation
Schedule 3.1.9 Environmental Matters
Schedule 3.1.11 Governmental Consents
Schedule 3.1.12 Employee Benefit Plans
Schedule 3.1.15 Licenses and Permits
Schedule 3.1.16 Insurance
Schedule 3.1.17 Proprietary Rights
Schedule 3.1.18 Compliance with Laws
ASSIGNMENT AGREEMENT
This Assignment Agreement ("Agreement") is made by and between (fill in
the blank)("Seller") and BOCCC, Inc. ("Buyer") as of April 9, 1999
("Agreement Date").
1. Definitions
1.1 In this Agreement:
"Affiliate" means "affiliate" as defined in either (a) Bankruptcy Code
section 101(2) or (b) Rule 144 of the Securities Act.
"Assigned Rights" means all right, title, and interest of Seller in, to,
and under all of the following:
(a) the Loan and all other amounts funded by or payable to Seller
under the Credit Documents, and all obligations owed to Seller arising in
connection therewith;
(b) the Credit Documents;
(c) all claims (including "claims" as defined in Bankruptcy Code
section 101(5)), suits, causes of action, and any other right of Seller,
whether known or unknown, against Borrower or any of its agents,
representatives, contractors, advisors, or any other Entity that in any way
is based upon, arises out of, or is related to, any of the foregoing,
including, to the extent permitted under applicable law, all claims
(including contract claims, tort claims, malpractice claims, and claims under
any law governing the purchase and sale of, or indentures for, securities),
suits, causes of action, and any other right of Seller against any attorney,
accountant, financial advisor, or other Entity arising under or in connection
with the Credit Documents;
(d) all cash, securities, or other property, and all setoffs and
recoupments, received, applied, or effected by or for the account of Seller
under the Loan and other extensions of credit under the Credit Documents
(whether for principal, interest, fees, reimbursement obligations, or
otherwise) after the Agreement Date, including all distributions obtained by
or through redemption, consummation of a plan of reorganization,
restructuring, liquidation, or otherwise of Borrower, Guarantor, or the
Credit Documents, and all cash, securities, interest, dividends, and other
property that may be exchanged for, or distributed or collected with respect
to, any of the foregoing;
(e) all Guarantees and all Collateral and security of any kind for
or in respect of the foregoing;
(f) the economic benefit of permanent repayments of principal
received by Seller from and after the Agreement Date; and
<PAGE> 2
(g) all proceeds of the foregoing.
"Assumed Obligations" means Seller's obligations and liabilities
(excluding, for the avoidance of doubt, the Retained Obligations) with
respect to, or in connection with, the Assigned Rights relating to facts,
events, or circumstances arising or occurring on and after the Closing Date.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, 11 U.S.C.
section 101 et seq.
"Borrower" means The CenterCore Group, Inc., a Delaware corporation.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which commercial banks are not authorized or required by law to be
closed in the City of New York.
"Closing Date" means the later of the date on which (a) the Parties
execute and deliver this Agreement and (b) Seller receives the Purchase
Price.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any property, whether real or personal, tangible or
intangible, of whatever kind and wherever located, whether now owned or
hereafter acquired or created, in or over which an Encumbrance has been, or
is purported to have been, granted to or for the benefit of the Seller under
the Credit Documents.
"Credit Documents" means the Subordinated Note and all Guarantees,
security agreements, mortgages, deeds of trust, letters of credit,
reimbursement agreements, and all other documents and agreements to which the
Seller is a party in its or his individual capacity, executed and delivered
in connection with the Subordinated Note.
"Distribution" means any payment or other distribution of cash
(including interest), notes, securities, or other property (including
Collateral) or proceeds under or in respect of the Assigned Rights.
"Encumbrance" means any: (a) mortgage, pledge, lien, security interest,
charge, hypothecation, right of setoff, right of counterclaim, right of
recoupment, or other encumbrance, security agreement, security arrangement,
or adverse claim of any kind; (b) purchase or option agreement or put
arrangement; (c) subordination agreement or arrangement; or (d) agreement to
create or effect any of the foregoing.
"Entity" includes individual, partnership, corporation, limited
liability company, association, estate, trust, business trust, and
Governmental Authority.
<PAGE> 3
"Federal Funds Rate" means, for any date, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates set by the
Federal Reserve Bank of New York on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by The Wall Street Journal
(Eastern Edition), or, if such rate is not so published for any day that is a
Business Day, the average (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Parties from three Federal funds brokers of recognized standing selected by
the Parties. For a day that is not a Business Day, the Federal Funds Rate
shall be the rate applicable to federal funds transactions on the immediately
preceding day for which such rate is reported.
"Governmental Authority" means any federal, state, or other governmental
department, agency, institution, authority, regulatory body, court, or
tribunal, foreign or domestic, and includes arbitration bodies, whether
governmental, private, or otherwise.
"Guarantor" means an entity providing a Guaranty.
"Guaranty" means a guaranty of any of Borrower's obligations under the
Subordinated Note, including Borrower's obligations in connection with the
Loan.
"Impairment" means any claim, counterclaim, setoff, defense, action,
demand, litigation (including administrative proceedings or derivative
actions), Encumbrance, right (including expungement, avoidance, reduction,
contractual or equitable subordination, or otherwise) or defect, the effect
of which is, or would be, materially and prejudicially to affect the Assigned
Rights in whole or in part.
"Loan" means the loan made under the Subordinated Note.
"Operative Documents" means this Agreement, and any agreement,
instrument, or other document executed and delivered by either Party in
connection with this Agreement.
"Party" means Buyer or Seller, as applicable.
"Pre-Closing-Date Accruals" means all interest and commitment, facility,
and letter of credit and other similar fees payable to Seller under the
Subordinated Note that accrue during the period before (but excluding) the
Closing Date.
"Purchase Price" means $(fill in the blank).
"Retained Obligations" means all obligations and liabilities of Seller
to the Borrower with respect to the Loan or arising out of or related to the
Credit Documents, other than the Assumed Obligations, and includes, without
limitation, Seller's obligations and liabilities that relate to facts,
events, or circumstances arising or occurring before the Closing Date.
"Securities Act" means the Securities Act of 1933, 15 U.S.C. section 77a
et seq., and the rules and regulations promulgated under it.
<PAGE> 4
"Set-Off" means the set-off against the Subordinated Note by the
Borrower of $(fill in the blank), which represents amounts owed by the Seller
to the Borrower pursuant to promissory notes of the Seller held by the
Borrower.
"Subordinated Note" means, collectively, the Promissory Note of The
CenterCore Group, Inc. dated January 20, 1998, in the original principal
amount of $(fill in the blank), and the Promissory Note of The CenterCore
Group, Inc. executed December 17, 1997, in the original principal amount of
$(fill in the blank), and all amendments, modifications, supplements, or
additions to such notes.
"Transaction Documents" means the Credit Documents and the Operative
Documents.
1.2 Terms that are defined in other provisions of this Agreement have
the meanings given to them in those provisions.
1.3 Terms defined in the Subordinated Note and not otherwise defined in
this Agreement have the same meaning in this Agreement.
2. Assignment and Assumption
In consideration of the mutual covenants and agreements in, and subject
to the terms and conditions of, this Agreement:
(a) subject to Buyer complying with the conditions in Section 3.2,
Seller irrevocably sells, transfers, assigns, grants, and conveys the
Assigned Rights (subject to the Set-Off) to Buyer with effect on and after
the Closing Date;
(b) subject to Seller complying with the conditions in Section 3.1,
Buyer acquires the Assigned Rights (subject to the Set-Off), and assumes and
agrees to perform and comply with the Assumed Obligations, with effect on and
after the Closing Date; and
(c) notwithstanding the foregoing, Buyer assumes no obligations other
than the Assumed Obligations.
This Agreement is intended to, and upon execution hereof and satisfaction of
the conditions precedent set forth in Section 3 shall, effect a true sale of
the Assigned Rights.
3. Conditions Precedent
3.1 Buyer's obligations to pay the Purchase Price to Seller, to acquire
the Assigned Rights, and to assume the Assumed Obligations shall be subject
to the conditions that (a) Seller's representations and warranties in this
Agreement shall have been true and correct in all material respects on the
Agreement Date and the Closing Date, (b) Seller shall have complied in all
material respects with all covenants required by this Agreement to be
complied with by it on or before the Closing Date, (c) Buyer shall have
received duly executed copies of this Agreement, the Subordinated Note duly
endorsed to the Buyer, and (d) all required consents have been obtained.
<PAGE> 5
3.2 Seller's obligation to sell, transfer, assign, grant, and convey
the Assigned Rights to Buyer on the Closing Date shall be subject to the
conditions that (a) Buyer's representations and warranties in this Agreement
shall have been true and correct in all material respects on the Agreement
Date and the Closing Date, (b) Buyer shall have complied in all material
respects with all covenants required by this Agreement to be complied with by
it on or before the Closing Date, (c) Seller shall have received duly
executed copies of this Agreement, (d) all required consents have been
obtained, and (e) Seller shall have received payment of the Purchase Price
from Buyer.
4. Seller's Representations and Warranties
4.1 Seller represents and warrants to Buyer that:
(a) Seller has full power and authority to execute, deliver, and
perform its obligations under, the Transaction Documents to which it is or
will become a party.
(b) Seller's execution, delivery, and performance of the
Transaction Documents to which it is or will become a party has not resulted,
and, will not result, in a breach of any provision of (i) any statute, law,
writ, order, rule, or regulation of any Governmental Authority applicable to
Seller, (ii) any judgment, injunction, decree or determination applicable to
Seller, or (iii) any contract, indenture, mortgage, loan agreement, note,
lease or other instrument by which Seller may be bound or to which any of the
assets of Seller are subject, in each case as in effect as of the Agreement
Date and the Closing Date.
(c) (i) The Transaction Documents to which Seller is or will
become a party (A) have been (or will be) duly and validly executed and
delivered by Seller and (B) are (or will be) the legal, valid, and binding
obligations of Seller, enforceable by Seller or against Seller (as
applicable) in accordance with their terms, except that such enforceability
against Seller may be limited by bankruptcy, insolvency, or other similar
laws of general applicability affecting the enforcement of creditors' rights
generally and by the court's discretion in relation to equitable remedies;
and
(ii) No notice to, registration with, consent or approval of,
or any other action by, any relevant Governmental Authority or other Entity
(other than Borrower) is or will be required for Seller to execute, deliver,
and perform its obligations under, the Transaction Documents to which Seller
is or will become a party.
(d) Seller is the sole legal and beneficial owner of, and has good
title to, the Assigned Rights, free and clear of any Encumbrance, and the
Assigned Rights are not subject to any prior sale, transfer, assignment, or
participation by Seller or any agreement to assign, convey, transfer, or
participate, in whole or in part.
(e) No proceedings are (i) pending against Seller or (ii) to the
best of Seller's knowledge (without duty of inquiry), threatened against
Seller before any relevant Governmental Authority that, in the aggregate,
will materially and adversely affect (A) the Assigned Rights or (B) any
action taken or to be taken by Seller under this Agreement.
<PAGE> 6
(f) The outstanding principal, interest, fees and other amounts of
the Loan and the Assigned Rights as of the Closing Date are approximately
$(fill in the blank).
(g) There is no funding liability or obligation of any kind
(whether fixed, contingent, conditional, or otherwise) in respect of the
Assigned Rights that Seller or Buyer is or shall be required to pay or
otherwise perform that Seller has not paid or otherwise performed in full,
and Buyer shall have no funding liability or obligation of any kind under or
in connection with the Assigned Rights.
(h) Seller has performed, and has complied with, in all material
respects, all obligations required to be performed or complied with by it
under the Credit Documents, and is not in breach in any material respect of
any provisions of the Credit Documents.
(i) No broker, finder, or other Entity acting under Seller's
authority is entitled to any broker's commission or other fee in connection
with the transactions contemplated by this Agreement for which Buyer could be
responsible. If a broker, finder, or other Entity acting under Seller's
authority was involved in this transaction, Seller represents and warrants
that such broker, finder, or other Entity was and is the representative of
Seller, not of Buyer; that such broker, finder, or other Entity had no
authority to make any statements on behalf of Buyer- that Seller had the
opportunity to review all documentation independently of such broker, finder,
or other Entity; that Seller has no recourse against Buyer for any
misstatements that may have been made by such broker, finder, or other
Entity; and that Seller is solely responsible for any fees due to such
broker, finder, or other Entity arising out of this transaction.
(j) Seller originally made the Loan.
(k) Seller has not effected or received the benefit of any setoff
against the Borrower on account of the Assigned Rights, except the Set-Off.
(l) Seller has not received any written notice that (i) any
payment or other transfer made to or for the account of Seller from or on
account of Borrower under the Assigned Rights is or may be void or voidable
as an actual or constructive fraudulent transfer or as a preferential
transfer, or (ii) the Assigned Rights, or any portion of them, are void,
voidable, unenforceable or subject to any Impairment.
(m) Seller acknowledges that the consideration paid under this
Agreement for the purchase of the Assigned Rights and the assumption of the
Assigned Obligations may differ both in kind and amount from any
Distributions.
<PAGE> 7
(n) Seller (i) has adequate information concerning Borrower's
business and financial condition to make an informed decision regarding the
sale of the Assigned Rights and the retention of the Retained Obligations,
and (ii) has independently and without reliance upon Buyer, and based on such
information as Seller has deemed appropriate, made its own analysis and
decision to enter into this Agreement, except that Seller has relied upon
Buyer's express representations, warranties, covenants, and indemnities in
this Agreement. Seller acknowledges that Buyer has not given Seller any
investment advice, credit information, or opinion on whether the sale of the
Assigned Rights or the retention of the Retained Obligations is prudent.
(o) Seller acknowledges that (i) Buyer currently may have, and
later may come into possession of, information on the Assigned Rights,
Borrower, or Borrower's Affiliates that is not known to Seller and that may
be material to a decision to sell the Assigned Rights ("Seller Excluded
Information"), (ii) Seller has determined to sell the Assigned Rights
notwithstanding its lack of knowledge of the Seller Excluded Information, and
(ill) Buyer shall have no liability to Seller, and Seller waives and releases
any claims that it might have against Buyer or any Buyer Indemnitee, whether
under applicable securities laws or otherwise, with respect to the
nondisclosure of the Seller Excluded Information; provided, however, that the
Seller Excluded Information shall not and does not affect the truth or
accuracy of Buyer's representations or warranties in this Agreement.
(p) Without characterizing the Assigned Rights as a "security"
within the meaning of applicable securities laws, Seller has not made any
offers to sell, or solicitations of offers to buy, any portion of the
Assigned Rights in violation of any applicable securities laws.
(q) If Buyer has requested them, Seller has provided to Buyer true
and complete copies of the Credit Documents.
(r) Seller has received no payments or other transfers from or on
account of Borrower in respect of the Assigned Rights or otherwise on or
after the 366th day preceding the Agreement Date, except the Set-Off.
4.2 Except as expressly stated in this Agreement, Seller makes no
representations or warranties, express or implied.
4.3 Seller acknowledges that (a) its sale of the Assigned Rights to
Buyer is irrevocable; (b) Seller shall have no recourse to the Assigned
Rights; and (c) Seller shall have no recourse to Buyer, except for (i)
Buyer's breaches of its representations, warranties, or covenants, and (ii)
Buyer's indemnities, expressly stated in this Agreement.
5. Buyer's Representations and Warranties
5.1 Buyer represents and warrants to Seller that:
(a) Buyer (i) is duly organized and validly existing under the
laws of its jurisdiction of organization or incorporation, (ii) is in good
standing under such laws and (iii) has full power and authority to execute,
deliver, and perform its obligations under, the Transaction Documents to
which it is or will become a party.
<PAGE> 8
(b) Buyer's execution, delivery, and performance of the
Transaction Documents to which it is or will become a party has not resulted,
and will not result, in a breach of any provision of (i) Buyer's
organizational documents, (ii) any statute, law, writ, order, rule, or
regulation of any Governmental Authority applicable to Buyer, (iii) any
judgment, injunction, decree or determination applicable to Buyer, or (iv)
any contract, indenture, mortgage, loan agreement, note, lease, or other
instrument by which Buyer may be bound or to which any of the assets of Buyer
are subject, in each case as in effect as of the Agreement Date and the
Closing Date.
(c) (i) The Transaction Documents to which Buyer is or will
become a party (A) have been (or will be) duly and validly authorized,
executed, and delivered by Buyer, and (B) are (or will be) the legal, valid,
and binding obligations of Buyer, enforceable against Buyer in accordance
with their terms, except that such enforceability may be limited by
bankruptcy, insolvency, or other similar laws of general applicability
affecting the enforcement of creditors' rights generally and by the court's
discretion in relation to equitable remedies; and
(ii) except as provided in the Credit Documents, no notice
to, registration with, consent or approval of, or any other action by, any
relevant Governmental Authority or other Entity is or will be required for
Buyer to execute, deliver, and perform its obligations under, the Transaction
Documents to which Buyer is or will become a party.
(d) Without characterizing the Assigned Rights as a "security"
within the meaning of applicable securities laws, Buyer is not purchasing the
Assigned Rights with a view towards the sale or distribution thereof in
violation of the Securities Act; provided, however, that Buyer may resell the
Assigned Rights if such resale is in accordance with the Securities Act and
in compliance with Section 10 hereof.
(e) Buyer acknowledges that the consideration paid under this
Agreement for the purchase of the Assigned Rights and the assumption of the
Assumed Obligations may differ both in kind and amount from any
Distributions.
(f) Buyer (i) is a sophisticated Entity with respect to the
purchase of the Assigned Rights and the assumption of the Assumed
Obligations, (ii) is able to bear the economic risk associated with the
purchase of the Assigned Rights and the assumption of the Assumed
Obligations, (iii) has adequate information concerning Borrower's business
and financial condition to make an informed decision regarding the purchase
of the Assigned Rights and the assumption of the Assumed Obligations, (iv)
has such knowledge and experience, and has made investments of a similar
nature, so as to be aware of the risks and uncertainties inherent in
purchases of rights and assumptions of liabilities of the type contemplated
in this Agreement, and (v) has independently and without reliance upon
Seller, and based on such information as Buyer has deemed appropriate, made
its own analysis and decision to enter into this Agreement, except that Buyer
has relied upon Seller's express representations, warranties, covenants, and
indemnities in this Agreement. Buyer acknowledges that Seller has not given
Buyer any investment advice, credit information, or opinion on whether the
purchase of the Assigned Rights or the assumption of the Assumed Obligations
is prudent.
<PAGE> 9
(g) Except as otherwise provided in this Agreement, Buyer has not
relied, and will not rely, on Seller to furnish or make available any
documents or other information regarding the credit, affairs, financial
condition, or business of Borrower, or any other matter concerning Borrower.
(h) Buyer acknowledges that (i) Seller currently may have, and
later may come into possession of, information on the Assigned Rights,
Borrower, or Borrower's Affiliates that is not known to Buyer and that may be
material to a decision to acquire the Assigned Rights ("Buyer Excluded
Information"), (ii) Buyer has determined to purchase the Assigned Rights and
assume the Assumed Obligations notwithstanding its lack of knowledge of the
Buyer Excluded Information, and (iii) Seller shall have no liability to
Buyer, and Buyer waives and releases any claims that it might have against
Seller or any Seller Indemnitee, whether under applicable securities laws or
otherwise, with respect to the nondisclosure of the Buyer Excluded
Information; provided, however, that the Buyer Excluded Information shall not
and does not affect the truth or accuracy of Seller's representations or
warranties in this Agreement.
(i) No broker, finder, or other Entity acting under Buyer's
authority is entitled to any broker's commission or other fee in connection
with the transactions contemplated by this Agreement for which Seller could
be responsible. If a broker, finder, or other Entity acting under Buyer's
authority was involved in this transaction, Buyer represents and warrants
that such broker, finder, or other Entity was and is the representative of
Buyer, not of Seller; that such broker, finder, or other Entity had no
authority to-make any statements on behalf of Seller; that Buyer had the
opportunity to review all documentation independently of such broker, finder,
or other Entity; that Buyer has no recourse against Seller for any
misstatements that may have been made by such broker, finder, or other
Entity; and that Buyer is solely responsible for any fees due to such broker,
finder, or other Entity arising out of this transaction.
(j) There are no fees, compensation, or commissions payable by
Seller to or for the benefit of any Entity engaged or retained by, through or
on behalf of Buyer with respect to the transfer of the Assigned Rights.
(k) Buyer acknowledges that (i) if it has requested them, it has
received from Seller copies of the Credit Documents, and (ii) it is assuming
all risk with respect to the accuracy or sufficiency of such documents and
information.
(l) Buyer is an "accredited investor" within the meaning of
Section 2(15) of the Securities Act.
(m) Buyer has not breached any term or condition of any
confidentiality agreement executed by Buyer in connection with this
transaction.
(n) No proceedings are pending or, to the best of Buyer's
knowledge, threatened against or affecting Buyer before any Governmental
Authority that, in the aggregate, will materially and adversely affect any
action taken or to be taken by Buyer under this Agreement.
5.2 Except as expressly stated in this Agreement, Buyer makes no
representations or warranties, express or implied.
<PAGE> 10
5.3 Buyer acknowledges that (a) Seller's sale of the Assigned Rights to
Buyer, and Buyer's assumption of the Assumed Obligations, are irrevocable,
and (b) Buyer shall have no recourse to Seller except for (i) Seller's
breaches of its representations, warranties, or covenants, and (ii) Seller's
indemnities, expressly stated in this Agreement.
6. Indemnification
6.1 Seller shall indemnify, defend, and hold Buyer and its officers,
directors, agents, partners, members, controlling Entities, and employees
(collectively, "Buyer Indemnitees") harmless from and against any liability,
claim, cost, loss, judgment, damage, or expense (including reasonable
attorneys' fees and expenses) that Buyer Indemnitees incur or suffer as a
result of, or arising out of, (a) Seller's breach of any of Seller's
representations, warranties, covenants, or agreements in this Agreement, or
(b) any obligation of Buyer to disgorge, in whole or in part, or otherwise
reimburse Borrower, Agent or any other Entity for, any payments, property
(including Collateral), setoffs, or recoupments received, applied, or
effected by or for the account of Seller, under or in connection with the
Assigned Rights or otherwise from, against, or on account of Borrower;
provided that, the foregoing notwithstanding, (i) Seller shall have no
obligation to Buyer Indemnitees under this Section 6.1 with respect to a
decrease in the value of any claim Buyer may have against Borrower in
connection with the Assigned Rights so long as Buyer is not required to
affirmatively pay any amount to any third party in connection with such
decrease, provided, however, that the Buyer Indemnitees shall be entitled to
indemnification hereunder for all defense costs and expenses (including, but
not limited to, reasonable attorneys' fees and expenses) incurred in
connection therewith, and (ii) the amount of Seller's liability pursuant to
Section 6.1(a) shall not exceed the Purchase Price, and the amount of
Seller's liability under Section 6.1(b) shall not exceed the amount of the
Set-Off.
6.2 Buyer shall indemnify, defend, and hold Seller harmless from and
against any liability, claim, cost, loss, judgment, damage, or expense
(including reasonable attorneys' fees and expenses) that Seller incurs or
suffers as a result of or arising out of (a) Buyer's breach of any of Buyer's
representations, warranties, covenants, or agreements in this Agreement, (b)
Buyer's actions after the Closing Date with respect to the Assigned Rights,
or (c) Seller acting or refraining to act, pursuant to any direction of (i)
Buyer, or (ii) the Majority Holders (as defined in Section 11); provided,
however, that Buyer's share of the indemnity under clause (b)(ii) shall be
limited to a fraction, the numerator of which is (A) the outstanding
principal amount of the Assigned Rights or (B) if Seller has consented to
transfers of the Assigned Rights (or a portion thereof) pursuant to Section
10.1, the then outstanding principal amount of the claims beneficially held
by Buyer in respect of which the action involved is taken by Seller, and the
denominator of which is the then aggregate outstanding principal amount of
all claims in respect of which the action involved is taken by Seller.
<PAGE> 11
6.3 If a third party commences any action or makes any demand against
either Party for which such Party ("Indemnified Party") is entitled to
indemnification under this Agreement, such Indemnified Party will promptly
notify the other Party ("Indemnifying Party") in writing of such action or
demand. The Indemnifying Party may, at its own expense and without limiting
its obligation to indemnify the Indemnified Party, participate in the defense
of such action with counsel reasonably satisfactory to the Indemnified Party,
or the Indemnifying Party may, at its own expense and without limiting its
obligation to indemnify the Indemnified Party, assume the defense of such
action with counsel reasonably acceptable to the Indemnified Party. In any
event, the Party that has assumed the defense of such action shall provide
the other Party with copies of all notices, pleadings, and other papers filed
or served in such action; provided, however, that if the Indemnified Party
assumes the defense of the action and fails to provide prompt notice to the
Indemnifying Party, such failure shall not limit in any way the Indemnifying
Party's obligation to indemnify the Indemnified Party except to the extent
that such failure materially prejudices the Indemnifying Party's ability to
defend the action. No settlement or adjustment shall be made without the
Indemnified Party's prior written consent, which consent (a) will not be
unreasonably withheld if the settlement or adjustment involves only the
payment of money damages by the Indemnifying Party and (b) may be withheld
for any reason if the settlement or adjustment involves performance or
admission by the Indemnified Party.
6.4 Each indemnity in this Agreement is a continuing obligation,
separate and independent from the other obligations of the parties and
survives termination of this Agreement, and it is not necessary for a Party
to incur expense or make payment before enforcing a right of indemnity
conferred by this Agreement.
7. Costs and Expenses
The Parties agree to bear their own respective legal and other costs and
expenses for preparing, negotiating, executing, and implementing this
Agreement and any related documents and consummating the transactions
contemplated under this Agreement.
8. Distributions; Payments
8.1 (a) If any time after the Closing Date, Seller receives a payment
from Borrower in respect of unpaid interest or fees payable to Seller under
the Credit Documents, Seller shall (A) accept and hold such payment for the
account and sole benefit of Buyer, (B) have no equitable or beneficial
interest in such payment, and (C) deliver such payment (free of any
withholding, setoff, recoupment, or deduction of any kind) promptly (but in
no event later than two Business Days after the date on which Seller receives
it) to Buyer in the same form received and, when necessary or appropriate,
with Seller's endorsement (without recourse, representation, or warranty),
except to the extent prohibited under any applicable law, rule, or order. If
Seller fails to make such delivery of such payment to Buyer within two
Business Days after receiving it, under Section 8.3 the delivery of such
payment by Seller shall be deemed to have been due on the date Seller
received it.
<PAGE> 12
(b) If at any time after the Closing Date, Seller receives a
Distribution, Seller shall (a) accept and hold the Distribution for the
account and sole benefit of Buyer, (b) have no equitable or beneficial
interest in the Distribution, and (c) deliver the Distribution (free of any
withholding, setoff, recoupment, or deduction of any kind) promptly (but in
no event later than two Business Days after the date on which Seller receives
it) to Buyer in the same form received and, when necessary or appropriate,
with Seller's endorsement (without recourse, representation, or warranty),
except to the extent prohibited under any applicable law, rule, or order. If
Seller fails to make such delivery of a Distribution to Buyer within two
Business Days after receiving it, under Section 8.3 the delivery of such
Distribution by Seller shall be deemed to have been due on the date Seller
received it.
(c) If the Distributions include securities, Seller shall, to the
extent permissible by law, endorse (without recourse) or cause to be
registered in Buyer's name, or such name as Buyer may direct (at Buyer's sole
expense) in writing and deliver such securities to Buyer or to such Entity as
Buyer may direct as soon as practicable. Pending such transfer, Seller shall
hold the same as agent for Buyer and Seller shall have no legal, equitable,
or beneficial interest in any such Distribution. Buyer is entitled to
receive any Distributions to be remitted by Seller under this Agreement
without the withholding of any tax. If Seller receives any Distributions
which it is required to remit to Buyer, Buyer will furnish to Seller such
forms, certifications, statements, and other documents as Seller may
reasonably request in writing to evidence Buyer's exemption from the
withholding of any tax imposed by the United States of America or any other
jurisdiction, whether domestic or foreign, or to enable Seller to comply with
any applicable laws or regulations relating thereto, and Seller may refrain
from remitting such Distributions until such forms, certifications,
statements, and other documents have been so furnished.
(d) If any Distributions received by Seller and transferred to
Buyer pursuant to Section 8.1(b) have been made to Seller wrongfully or in
error, and are required to be returned or disgorged by Seller, Buyer shall
promptly return such payments or distributions to Seller together with all
related interest and charges payable by Seller.
8.2 All payments made by Buyer to Seller or by Seller to Buyer under
this Agreement shall be made in the lawful currency of the United States by
wire transfer of immediately available funds to Seller or Buyer, as
applicable.
8.3 With respect to the payment of any funds or other property under
this Agreement (including the delivery of Distributions under Section 8.1),
whether from Seller to Buyer or from Buyer to Seller, the Party failing to
make full payment of any amount when due shall, upon demand by the other
Party, pay such defaulted amount together with interest on it (for each day
from (and including) the date when due to (but excluding) the date when
actually paid) at a rate equal to the Federal Funds Rate plus one percent.
<PAGE> 13
9. Notices
9.1 All communications between the Parties or notices or other
information sent under this Agreement shall be in writing, hand-delivered, or
sent by ordinary mail or overnight courier, telex, or telecopier, addressed
to the relevant Party at its address below or at such other address as such
Party may request in writing. All such communications and notices shall be
effective upon receipt.
If to Seller, to: If to Buyer, to:
(Fill in blank) Mr. Brad Nielson
BOCCC, Inc.
1301 West 400 North
Orem, Utah 84057
9.2 After the Closing Date, if Seller receives any notices,
correspondence, or other documents in respect of the Assigned Rights or any
Credit Document, it shall promptly forward them to Buyer.
10. Further Transfers
10.1 Buyer may not sell, assign, grant a participation in, or otherwise
transfer (a) the Assigned Rights, this Agreement, its rights under this
Agreement, or any interest in the Assigned Rights, (b) any rights acquired by
Buyer under that certain Assignment Agreement between Buyer and Core
Technologies, Inc. of even date herewith relating to the purchase by Buyer of
certain debt of Borrower held by Core Technologies, Inc., or (c) any rights
acquired by Buyer under that certain Assignment Agreement of even date
herewith between Buyer and JGFS, Inc. relating to the purchase by Buyer of
certain debt of Borrower held by JGFS, Inc., unless, in each case, Seller
otherwise consents in writing (which consent Seller shall not unreasonably
withhold or delay).
10.2 Seller may not assign its rights, or delegate its obligations,
under this Agreement unless Buyer otherwise consents in writing (which
consent Buyer shall not unreasonably withhold or delay).
11. Voting
On and after the Closing Date, (a) Buyer shall have sole authority to
exercise all voting and other rights and remedies under the Assigned Rights,
and (b) if for any reason Seller is entitled to exercise any such rights
(including the right to vote) after the Closing Date, Seller (i) shall not
take any action with respect to the Assigned Rights other than in accordance
with the prior written instructions of Buyer, and (ii) shall take (or refrain
from taking) any action with respect to the Assigned Rights in accordance
with the prior written instructions of Buyer except (A) as prohibited under
applicable law, rule, order or contract, or (B) if following such
instructions might (in Seller's reasonable determination) expose Seller to
any obligation, liability, or expense that in Seller's reasonable judgment is
material and for which Seller has not been provided adequate indemnity;
provided, however, that if the vote or other action involved is not divisible
or may not be cast or taken separately in respect of the Assigned Rights (or
<PAGE> 14
the relevant portion thereof) and any other claim against the Borrower or any
other person (whether or not included in the Assigned Rights), then Seller
shall take or refrain from taking such action in accordance with instructions
received by Seller and believed by Seller in good faith to have been given by
the then current holders (including, as the case may be, Seller) of more than
50% of the aggregate principal amount of the claims then outstanding in
respect of which such action is to be taken by Seller (the "Majority
Holders"). For purposes of determining the Majority Holders pursuant to the
preceding sentence, Seller shall only be required to obtain instructions
relating to any action to be taken in respect of the Assigned Rights from (x)
the Buyer or (y) if Seller has consented to transfers of the Assigned Rights
(or a portion thereof) pursuant to Section 10.1, the then current holders of
the aggregate principal amount of the claims outstanding in respect of which
such action is to be taken by Seller.
12. Exercise of Rights
12.1 No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Parties and no waiver of any
provision of this Agreement, nor consent to any departure by either Party
from it, shall be effective unless it is in writing and signed by the
affected Party, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
12.2 No failure on the part of a Party to exercise, and no delay in
exercising, any right under this Agreement shall operate as a waiver hereof
by such Party, nor shall any single or partial exercise of any right under
this Agreement preclude any other or further exercise thereof or the exercise
of any other right. The rights and remedies of each Party provided herein
(a) are cumulative and are in addition to, and are not exclusive of, any
rights or remedies provided by law (except as otherwise expressly set forth
in this Agreement) and (b) are not conditional or contingent on any attempt
by such Party to exercise any of its rights under any other related document
against the other Party or any other Entity.
13. Survival; Successors and Assigns
13.1 All representations, warranties, covenants, indemnities, and other
provisions made by the Parties shall be considered to have been relied upon
by the Parties, shall be true and correct as of the Closing Date, and shall
survive the execution, delivery, and performance of this Agreement and the
other Operative Documents.
13.2 This Agreement, including the representations, warranties,
covenants, and indemnities in it, shall inure to the benefit of, be binding
upon, and be enforceable by and against the Parties and their respective
successors and permitted assigns.
14. Further Assurances
Each Party agrees (a) to execute and deliver, or to cause to be executed
and delivered, all such instruments, and (b) to take all such actions as the
other Party may reasonably request, to effectuate the intent and purposes,
and to carry out the terms, of this Agreement, including the procurement of
any third-party consents.
<PAGE> 15
15. Disclosure
15.1 Each Party agrees that, without the prior consent of the other
Party, it shall not disclose the contents of this Agreement (including the
Purchase Price) to any Entity, except that any Party may make any such
disclosure (a) as required to implement or enforce this Agreement, (b) if
required to do so by any law, court, or regulation, (c) to any Governmental
Authority or self-regulatory Entity having or asserting jurisdiction,
including, but not limited to, the Securities and Exchange Commission
pursuant to reporting obligations applicable to such Party, (d) if its
attorneys advise it that it has a legal obligation to do so or that failure
to do so may resort in it incurring a liability to any other Entity, or (e)
to its professional advisors and auditors.
15.2 Buyer may disclose the contents of this Agreement (but not the
Purchase Price) to any proposed transferee, assignee, participant, or other
Entity proposing to enter into contractual relations with Buyer in respect of
the Assigned Rights or any part of them.
15.3 Buyer agrees to comply with the requirements, if any, of the
Credit Documents regarding confidentiality.
16. Parties' Other Relationships
16.1 Each Party and any of its Affiliates may engage in any kind of
lawful business or relationship with Borrower or its Affiliates without
liability to the other Party, or any obligation to disclose such business or
relationship to the other Party; provided, however, that in connection with
any such business or relationship of Seller, Seller shall not claim that, or
take any position contrary to the position that, (i) the obligation of
Borrower under the Subordinated Note, as assigned to Buyer pursuant to this
Agreement, is not a valid, binding or enforceable obligation of Borrower, or
(ii) the Assigned Rights have not been validly transferred to Buyer.
16.2 Buyer shall not (a) disclose to Borrower's other creditors any
information concerning Seller's business or relationships with Borrower
obtained by Buyer by reason of its purchase of the Subordinated Note or by
reason of Buyer's status as an Affiliate of Mity-Lite, Inc., nor (b) take any
action which (i) involuntarily initiates an insolvency proceeding under any
state or federal law against Borrower or Seller, or (ii) voluntarily
initiates or authorizes a creditor representative to initiate legal action,
e.g. a lawsuit, motion or other similar proceeding, against Seller relating
to Seller's relationship to Borrower prior to the Closing Date, provided that
in no event shall the foregoing prohibit Buyer from initiating legal action
against Seller to enforce the provisions of this Agreement. The provisions
of clause (a) of this Section 16.2 shall not apply to information generally
available to the public or available from sources other than Borrower,
Seller, or an affiliate of Mity-Lite, Inc., information disclosed pursuant to
a request or an order of a court of competent jurisdiction or a Governmental
Authority, or to information required to be disclosed by Mity-Lite, Inc. or
its Affiliates pursuant to reporting obligations to the Securities and
Exchange Commission.
<PAGE> 16
17. Entire Agreement
This Agreement constitutes the entire agreement of the Parties about its
subject matter, and supersedes all previous and contemporaneous negotiations,
promises, covenants, agreements, understandings, and representations on that
subject, all of which have become merged and finally integrated into this
Agreement.
18. Counterparts; Telecopies
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the
same instrument. Transmission by fax of an executed counterpart of this
Agreement shall be deemed to constitute due and sufficient delivery of such
counterpart. Each Party shall deliver to the other an original counterpart
of this Agreement (and, upon the request of either Party, any other document)
promptly after delivery of the fax; provided, however, that the failure by
either Party to so deliver an original counterpart shall not affect the
sufficiency of a fax of such counterpart (and the fact that such fax
constitutes the due and sufficient delivery of such counterpart), as provided
in the second sentence of this paragraph.
19. Relationship Between Purchaser and Seller
The relationship between Seller and Buyer shall be that of seller and
buyer. Neither is a trustee or agent for the other, nor does either have
fiduciary obligations to the other. This Agreement shall not be construed to
create a partnership or joint venture between the Parties.
20. Severability
The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its legality,
validity, or enforceability under the law of any other jurisdiction nor the
legality, validity, or enforceability of any other provision.
21. Governing Law
THIS AGREEMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT, AND ANY CLAIM OR CONTROVERSY DIRECTLY OR INDIRECTLY BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, SHALL IN ALL RESPECTS
BE GOVERNED BY, AND INTERPRETED, CONSTRUED, AND DETERMINED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE).
<PAGE> 17
22. Waiver of Trial by Jury
THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION, OR IN ANY LEGAL PROCEEDING, DIRECTLY OR
INDIRECTLY BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER
THEORY). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY
OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
23. Jurisdiction
23.1 The Parties irrevocably and unconditionally submit to and accept
the exclusive jurisdiction of any United States federal court sitting in the
State of Utah, New Jersey or Delaware, for any action, suit or proceeding
arising out of or based upon this Agreement or any matter relating to it, and
waives any objection it may have to the laying of venue in any such court or
that such court is an inconvenient forum or does not have personal
jurisdiction over it.
23.2 The Parties irrevocably agree that, should either Party institute
any legal action or proceeding in any jurisdiction (whether for an
injunction, specific performance, damages or otherwise) in relation to this
Agreement, no immunity (to the extent that it may at any time exist, whether
on the grounds of sovereignty or otherwise) from such action or proceeding
shall by claimed by it or on its behalf, any such immunity being hereby
irrevocably waived, and each Party irrevocably agrees that it and its assets
are, and shall be, subject to such legal action or proceeding in respect of
its obligations under this Agreement.
24. Interpretation
24.1 The terms defined in Section 1 have the meanings therein specified
for this Agreement. Capitalized terms used in this Agreement but not
otherwise defined herein shall have the meaning ascribed to such terms in the
Subordinated Note.
24.2 This Agreement includes any other documents attached as exhibits
to the Agreement.
24.3 Terms used in the singular or the plural include the plural and
the singular, respectively; "includes" and "including" are not limiting; and
"or" is not exclusive.
24.4 Any reference to a Party includes the Party's successors and
permitted assigns.
<PAGE> 18
24.5 Unless otherwise indicated, any reference to:
(a) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be, such other
agreement or document as the same may have been, or may at any time before
the Closing Date be, in effect as modified, amended, or supplemented as of
the Closing Date; and
(b) a statute, law, order, rule, or regulation shall be construed
as a reference to such statute, law, order, rule, or regulation as it may
have been, or may at any time before the Closing Date be, in effect as
modified, amended, or supplemented as of the Closing Date.
24.6 Section and captions are included solely for convenience of
reference and are not intended to affect the interpretation of any provisions
of this Agreement.
24.7 This Agreement shall be deemed to have been jointly drafted, and
no provision of it shall be interpreted or construed for or against any Party
because such Party purportedly prepared or requested such provision, any
other provision, or the Agreement as a whole.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement by
their duly authorized officers as of the date first set forth above.
SELLER
Name:
BOCCC, INC.
By: Gregory L. Wilson
Title: President
The Borrower hereby consents to the transfer of the Assigned Rights pursuant
to this Agreement.
The CenterCore Group, Inc.
By:
Name:
Title:
FOR IMMEDIATE RELEASE: Tuesday, April 6, 1999
CONTACT: Gregory L. Wilson
Chairman and President
Bradley "T" Nielson
Chief Financial Officer
Mity-Lite, Inc.
801-224-0589
MITY-LITE, INC. TO ACQUIRE CENTERCORE
OREM, UTAH - Mity-Lite, Inc. (Nasdaq: MITY), designer, manufacturer, and
marketer of a variety of institutional furniture, today announced that the
Company has entered into an agreement to acquire CenterCore Group, Inc., a
privately-owned designer, manufacturer and marketer of office furniture,
based in Plainfield, New Jersey. Terms of the transaction were not disclosed
but involve the purchase of assets for cash. After acquiring the assets,
Mity-Lite will move the operations from New Jersey to Marked Tree, Arkansas,
where their affiliate, DO Group, has an underutilized manufacturing facility.
Closing of the transaction, which is subject to board approval and certain
other conditions set forth in the agreement, is expected within the next two
weeks.
CenterCore specializes in call center, 911 and group workstation
environments. The Company's target markets include commercial and government
call centers and several original equipment manufacturing (OEM) agreements.
For the twelve months ended December 31, 1998, CenterCore generated sales of
approximately $23.7 million. The new company, called C Core, Inc., will be a
wholly owned subsidiary of Mity-Lite.
"This acquisition follows our goal of enhancing the Company's growth
through acquiring niche products," said Gregory L. Wilson, chairman and
president of Mity-Lite. "We are confident this is a sound strategic step for
Mity-Lite, considering the ongoing consolidation occurring in the office
furniture industry and the benefits available to us from consolidation.
CenterCore's focus is on call center systems. Our DO Group affiliate makes
call center seating. This creates a natural marriage of these two entities.
The addition of CenterCore's resources will significantly strengthen our
competitive position in this call center market."
<PAGE> 2
"CenterCore represents an excellent opportunity for us to leverage the
manufacturing capacity and expand the seating sales of our partially owned
affiliate, DO Group, Inc.," remarked Bradley T Nielson, chief financial
officer of Mity-Lite. "Once the transition to Marked Tree is done, which
should take approximately three to four months, we expect the business to
make a positive contribution to our growth in both revenues and earnings."
Founded in 1987, Mity-Lite, Inc. designs and manufactures institutional
furniture, and markets these products in niche markets. The Company's
operations consist of multipurpose room furniture, geriatric seating and,
through an affiliate, speciality office seating and office systems. The
Company's products are marketed under the Mity-Lite, Broda, Domore, DO3,
Corel and JG tradenames. Headquartered in Utah, Mity-Lite serves national
and international customers directly and through distributors.
This release includes forward-looking statements relating to the
proposed acquisition of CenterCore Group, Inc., the projected growth rate in
C Core's sales in future years, and the opportunity to expand the call center
market. These forward-looking statements may not be realized and are subject
to uncertainties including CenterCore and Mity-Lite's ability to satisfy pre-
closing conditions and consummate the propose acquisition, and Mity-Lite's
ability to integrate C Core's assets effectively, realize expected sales
growth in C Core and DO Group's operations, maintain or increase gross profit
margins, and expand the call center market. No assurance is given that any
of these forward looking statements will be realized.
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