ASSET PURCHASE AGREEMENT
among
BELL MICROPRODUCTS - FUTURE TECH, INC.,
FUTURE TECH INTERNATIONAL, INC.,
and
CERTAIN OTHER PARTIES
May 14, 1999
TABLE OF CONTENTS
Page
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INDEX OF SCHEDULES
RECITALS.............................................................1
ARTICLE I BANKRUPTCY COURT APPROVAL.....................................2
1.1 Bankruptcy Court Approval as Express Condition..............2
1.2 Covenant to Seek Approvals..................................3
1.3 Effectiveness Upon Execution................................3
1.4 Name Change.................................................3
ARTICLE II SALE AND PURCHASE OF ASSETS...................................3
2.1 Purchase and Sale of Future Tech Assets.....................3
2.2 Delivery....................................................5
2.3 Acquired Assets Free and Clear of Any and All Liabilities...6
2.4 No Other Assets Acquired....................................6
ARTICLE III PURCHASE PRICE................................................6
3.1 Payment of the Purchase Price...............................6
3.2 Non-interference with Collection of Accounts Receivable
of Future Tech.............................................10
3.3 Equity Value Calculations..................................10
3.4 Allocation of Consideration................................12
3.5 Prorations.................................................12
ARTICLE IV CLOSING......................................................13
4.1 Closing Date; Closing Deliveries...........................13
ARTICLE V ADDITIONAL AGREEMENTS........................................13
5.1 Access and Inspection, Etc. ...............................13
5.2 Confidential Treatment of Information......................13
5.3 Public Announcements.......................................14
5.4 Covenant Against Competition...............................14
5.5 Further Assurances.........................................15
5.6 Notice of Developments.....................................16
ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF
FUTURE TECH AND LEONARD KELLER................................16
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6.1 Organization of Future Tech................................16
6.2 Authority..................................................17
6.3 Financial Statements.......................................17
6.5 Absence of Undisclosed Liabilities.........................20
6.6 Legal and Other Compliance.................................20
6.7 Taxes......................................................20
6.8 Restrictions on Business Activities........................21
6.9 Title to Properties; Absence of Liens; Condition of
Acquired Assets............................................21
6.10 Intellectual Property......................................22
6.11 Agreements, Contracts and Commitments......................24
6.12 Powers of Attorney.........................................26
6.13 Litigation.................................................26
6.14 Insurance..................................................27
6.15 Environmental, Health, and Safety Matters..................27
6.16 Employment Matters; Employee Benefits......................28
6.17 Consents...................................................30
6.18 Books and Records..........................................30
6.19 Year 2000 Compliance.......................................30
6.20 Product Warranties; Defects; Liabilities...................30
6.21 Product Warranty...........................................30
6.22 Product Liability..........................................31
6.23 Inventory..................................................31
6.24 Accounts Receivable........................................31
6.25 Bankruptcy Matters.........................................31
6.26 Representations Complete...................................32
6.27 Foreign Corrupt Practices Act..............................32
6.28 Florida Taxes. ............................................32
6.29 Export/Import Control Regulations..........................32
6.30 Absence of Currency Controls...............................32
6.31 Executory Contracts, Unexpired Leases......................32
ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS
OF BUYER.....................................................33
7.1 Organization...............................................33
7.2 Execution; Authorization and Approval......................33
7.3 Execution; No Inconsistent Agreements; Etc.................33
7.4 Full Disclosure............................................33
7.5 Approvals..................................................33
7.6 Bankruptcy Disclosure......................................34
7.7 Employment of Future Tech Employees........................34
7.8 WARN Act Compliance........................................34
7.9 Guaranty of Buyer's Performance by Bell....................34
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ARTICLE VIII CONDUCT OF BUSINESS OF FUTURE TECH
PENDING CLOSING.............................................35
8.1 Conduct of Business........................................35
8.2 No Material Changes........................................36
8.3 Compensation...............................................36
8.4 Bankruptcy Filings and Compliance..........................37
ARTICLE IX CONDITIONS TO OBLIGATIONS OF ALL PARTIES.....................37
9.1 Bankruptcy Court Approval..................................37
9.2 Other Governmental Consents................................37
ARTICLE X CONDITIONS TO OBLIGATIONS OF BUYER...........................37
10.1 Conditions.................................................37
ARTICLE XI CONDITIONS TO OBLIGATIONS OF FUTURE TECH.....................40
11.1 Conditions.................................................40
ARTICLE XII INDEMNITY....................................................40
12.1 Buyer Indemnification......................................40
12.2 Future Tech Indemnification................................41
ARTICLE XIII TERMINATION..................................................42
13.1 Termination................................................42
13.2 Manner and Effect of Termination...........................42
13.3 Liquidated Damages.........................................43
ARTICLE XIV COMPETING BID PROCEDURES.....................................43
14.1 Approval of Bidding Procedures.............................43
ARTICLE XV NOTICE; BREAK-UP FEE.........................................43
15.1 Notice.....................................................43
15.2 Breakup Fee................................................43
ARTICLE XVI MISCELLANEOUS................................................44
16.1 Notices....................................................44
16.2 Survival...................................................45
16.3 Counterparts; Interpretation...............................45
16.4 Governing Law..............................................45
16.5 Successors and Assigns; Assignment.........................46
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16.6 Partial Invalidity and Severability........................46
16.7 Waiver.....................................................46
16.8 Headings...................................................46
16.9 Expenses...................................................46
16.10 Finder's Fees..............................................46
16.11 Gender.....................................................47
16.12 Currency...................................................47
16.13 Acceptance by Fax..........................................47
16.14 Number of Days.............................................47
16.15 Attorneys' Fees............................................47
16.16 Further Representations....................................47
16.17 Accounting Terms...........................................47
16.18 NO JURY TRIAL..............................................47
16.19 Sole Remedy................................................48
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Exhibit A Plan
Exhibit B Form of Legal Opinion from Kozyak Tropin & Throckmorton, P.A.
Exhibit C Form of Legal Opinion from WSGR
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INDEX OF SCHEDULES
Schedule 2.1(a) Inventory
Schedule 2.1(b) Accounts Receivable
Schedule 2.1(c)(i) Rights Under Contracts (including current customer
contract information)
Schedule 2.1(c)(ii) Executory Contracts and Unexpired Leases
Schedule 2.1(d) Equipment; Tangible Assets
Schedule 2.1(f) Intellectual Property
- List of Seller Intellectual Property
- List of All Licenses, etc.
Schedule 2.1(g) Prepaid Expenses and Other Assets
Schedule 2.1(h) Assumed Real Property Lease
Schedule 2.1(j) Telephone Numbers
Schedule 2.4 Excluded Assets
Schedule 3.1(c)(i) Assumed Liabilities: Certain Persons
Schedule 3.1(c)(ii) Assumed Liabilities: Quantum/Maxtor
Schedule 3.4 Allocation of Consideration
Schedule 6.2 Conflicts
Schedule 6.3(d) Financial Statements
Schedule 6.4 Absence of Changes
Schedule 6.7 Taxes
Schedule 6.9(b) Acquired Assets - No Liabilities
Schedule 6.10(h) Confidentiality Agreements
Schedule 6.10(l) No Violation of Acquired Commercial Software Rights
Schedule 6.11 Agreements, Contracts, Commitments
Schedule 6.12 Powers of Attorney
Schedule 6.13 Litigation
Schedule 6.14 Insurance
Schedule 6.15 Environmental, Health, Safety Matters
Schedule 6.16(a) Employment and Labor Matters
Schedule 6.16(b) Employee Benefit Matters
Schedule 6.17 Consents
Schedule 14 Competing Bid Procedures
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into the
14th day of May, 1999, by and among Bell Microproducts-Future Tech, Inc., a
California corporation ("Buyer"), Future Tech International, Inc., a Florida
corporation ("Future Tech"), Leonard J. Keller, and, solely for purposes of
Section 7.9 hereof, Bell Microproducts Inc., a California corporation and sole
shareholder of Buyer ("Bell").
RECITALS
WHEREAS, Buyer wishes to purchase from Future Tech, and Future Tech
wishes to sell to Buyer, all the Acquired Assets (as defined herein);
WHEREAS, Buyer wishes to assume from Future Tech, and Future Tech
wishes to transfer to Buyer, all the Assumed Liabilities (as defined
herein) to the extent provided in the Agreement;
WHEREAS, shortly following the execution of this Agreement, it is
intended that Future Tech will file a voluntary petition for relief
under the provisions of Chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code"), initiating a Chapter 11 Case (the
"Case"), and that during the pendency of such Case, Future Tech will
remain in possession of its assets.
WHEREAS, pursuant to this Agreement and the Bankruptcy Code, it is
intended that Bell shall purchase the Acquired Assets free and clear of
any and all Liabilities (as defined herein) (other than the Assumed
Liabilities), and accept the Assumed Liabilities;
WHEREAS, Buyer's execution and delivery of this Agreement and the
purchase of the Acquired Assets pursuant to this Agreement shall be
deemed to be in good faith for the purposes of ss.363(m) of the
Bankruptcy Code.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants, promises, and
representations herein set forth and certain other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
BANKRUPTCY COURT APPROVAL
1.1 Bankruptcy Court Approval as Express Condition. Except as provided
in Section 1.3 of this Agreement, the effectiveness of this Agreement, and each
obligation arising hereunder, is expressly conditioned upon (i) Future Tech's
obtaining the approval of the United States Bankruptcy Court on or before May
28, 1999 to the competing bid procedures described in Article XIV of this
Agreement, the notice and breakup fee provisions described in Article XV of this
Agreement, the liquidated damages provision set forth in Section 13.3 of this
Agreement, the relief from the automatic stay under Section 362 of the
Bankruptcy Code for purposes of Section 13.2, and the indemnification provisions
set forth in Section 12.2 of this Agreement; and (ii) the entry of an order
confirming the Plan (as defined herein) by the United States Bankruptcy Court on
or before June 28, 1999, said order to become a final order ("Final Order") no
later than July 8, 1999:
(u) finding that the filing by Future Tech of the voluntary
petition for relief under the provisions of Chapter 11 of
Title 11 of the Bankruptcy Code initiating the Case was duly
authorized by all necessary corporate action;
(v) confirming the Plan;
(w) approving and authorizing this Agreement and the transactions
contemplated hereby, and finding that all of Future Tech's
creditors, equity security holders and parties in interest
were duly given notice of, and opportunity to be heard in
connection with, the Case pursuant to applicable provisions of
the Bankruptcy Code;
(x) authorizing the sale to Buyer of the Acquired Assets (as
defined below) free and clear of any and all Liabilities
pursuant to applicable provisions of the Bankruptcy Code
(except for Assumed Liabilities);
(y) determining that the Agreement is entered into in good faith
and that Bell and Buyer are acting in good faith as provided
in ss.363(m) of the Bankruptcy Code; and
(z) finding that the Agreement was an integral part of the
confirmed Plan pursuant to 11 U.S.C. ss.1129, thereby ordering
that all appropriate taxing entities shall not impose any tax
under any law imposing a stamp tax or similar tax based on the
issuance, transfer, or exchange of a security, or the making
or delivery of any instrument of transfer as contemplated by
the Plan or the Agreement pursuant to 11 U.S.C. ss.1146(c).
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For the purposes of this Agreement, the term "Final Order" means an
order entered on the docket by the Bankruptcy Court which is no longer subject
to appeal, certiorari proceedings or other proceedings for review or rehearing,
and as to which no appeal, certiorari proceedings or other proceedings for
review or rehearing are pending.
1.2 Covenant to Seek Approvals. Future Tech shall formally seek such
court approvals as expeditiously as practicable, obtain such court approvals
and, if the Bankruptcy Court proposes any changes to such approvals, obtain
Buyer's approval thereto. In the event that either (i) each such court approval
is not obtained by the respective dates set forth in Section 1.1 above, or such
later date as to which all parties may agree in writing, or, (ii) prior to the
Closing any representation made by Future Tech in the Case or any document filed
by Future Tech in the Case shall be shown to have contained any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements and information contained therein not misleading, this Agreement
shall be null and void and shall have no force or effect other than as otherwise
provided herein. Future Tech intends to file a bankruptcy plan in the Case
substantially in the form attached hereto as Exhibit A (the "Plan") within one
week after signing this Agreement.
1.3 Effectiveness Upon Execution. Notwithstanding Section 1.1, the
following provisions of this Agreement shall be effective upon the execution and
delivery of this Agreement by the parties: Article I, Section 5.1, Section 5.2,
Section 5.3, Section 5.6, Article VIII, Section 12.2, Section 13.1 (a) and (b),
Section 13.2, Section 13.3, Article XIV, Article XV and Article XVI.
1.4 Name Change. Future Tech agrees to change its corporate name to a
name that does not use the words "Future Tech" (individually or collectively)
effective upon the Closing.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 Purchase and Sale of Future Tech Assets. Subject to the terms and
conditions contained in this Agreement, at the Closing (as defined below),
Future Tech agrees to sell, transfer and deliver to Buyer, and Buyer agrees to
purchase from Future Tech for the Purchase Price (as defined below) (the "Asset
Transfer") all of Future Tech's right, title and interest in and to each of the
assets of Future Tech identified below (the "Acquired Assets"):
(a) Inventory. All of Future Tech's inventory as shall be
identified solely on Schedule 2.1(a) attached hereto, subject to changes between
the date of this Agreement and the Closing Date in accordance with the Business
Practices (as defined below); provided, however, that from the date of this
Agreement until the Closing, Buyer retains the right to
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reject any such inventory that Buyer, in its sole and absolute discretion
exercised in good faith, determines does not meet the requirements set forth for
inventory in Section 6.23 of this Agreement, without regard to any reserve for
inventory writedown. There will be a corresponding Purchase Price adjustment
made for the rejection of any inventory based upon the due diligence review
contemplated pursuant to Sections 10.1(j) and (n).
(b) Accounts Receivable. All of Future Tech's rights to
receive payments as shall be identified solely on Schedule 2.1(b) attached
hereto and shall be less than 90 days old at the Closing Date, and subject to
changes between the date of this Agreement and the Closing Date in accordance
with the Business Practices (the "Accounts Receivable"). The accounts receivable
set forth on Schedule 2.4 are specifically excluded from Accounts Receivable.
(c) Rights Under Contracts. All of Future Tech's rights under
(i) any equipment lease, contract, agreement, plan or arrangement as shall be
identified solely on Schedule 2.1(c)(i) attached hereto, subject to changes
between the date of this Agreement and the Closing Date in accordance with the
Business Practices, but excluding Future Tech's claims and rights under its
lawsuit and contract by and against Otomation Engineering, Tech Media Computer
Systems, Inc., and/or Tae Il Media Co. Ltd., and Future Tech's rights under its
director and officer omissions insurance policy pertaining to the Future Tech
Matters (as defined herein); and (ii) the executory contracts and unexpired
leases to be assumed by Future Tech and assigned to Buyer listed by name and
cure amount on Schedule 2.1(c)(ii) (it being expressly agreed that liability for
such cure amounts is not being assumed by Bell by virtue of such cure amounts
being listed on such schedule). It is the intent of the parties hereto that all
of the Acquired Assets and all of Future Tech's backlog, if any, arising out of
the operation of its business be transferred to Buyer. Accordingly, the parties
agree to use their reasonable best efforts to facilitate such transfer of
customers at the Closing. The names, addresses and phone and facsimile numbers
for each of Future Tech's current customers will be included on Schedule
2.1(c)(i).
(d) Equipment; Tangible Assets. The fixed assets, equipment,
and other tangible assets reasonably necessary for use in the business of Future
Tech as currently conducted and as currently proposed to be conducted by Buyer
which Buyer deems necessary for the conduct of the business of Future Tech after
the Closing Date, along with the prices that Buyer will pay therefor, as shall
be identified on Schedule 2.1(d) attached hereto, subject to changes between the
date of this Agreement and the Closing Date in accordance with the Business
Practices; provided, however, that from the date of this Agreement until the
Closing, Buyer retains the right to reject any such assets that Buyer, in its
sole and absolute discretion exercised in good faith, determines does not meet
the requirements for such items set forth in Sections 6.9(c) and (d) of this
Agreement, with a corresponding Purchase Price adjustment, based on its due
diligence review.
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(e) Books and Records. A copy, or if not required to be
retained in connection with the Future Tech Matters (as defined herein), the
originals of all books and records related to all Acquired Assets and Assumed
Liabilities, including, without limitation, all financial records, books,
ledgers, supplier lists, customer records (including customer histories),
marketing lists and databases (including all records, data and information
stored in the Oracle database applicable to the business of Future Tech (the
"Oracle Database")), marketing plans, management plans, distribution and
reseller methods, advertising materials, manuals, and other materials of Future
Tech.
(f) Intellectual Property. All of Future Tech's right, title
and interest in and to the Seller Intellectual Property (as defined herein),
including, without limitation: (i) the domain names "Future Tech" and
"MarkVision", (ii) the trademarks and logos that are listed on Schedule 2.1(f),
(iii) the website of the business, (iv) know-how, (v) all rights under
proprietary information agreements with respect to employees of Future Tech who
become employees of Buyer from and after the Closing, (vi) the names "Future
Tech" and "Future Tech International", and (vii) goodwill associated with the
Seller's Intellectual Property.
(g) Prepaid Expenses and Other Assets. The prepaid expenses
and other assets listed on Schedule 2.1(g) attached hereto, subject to changes
between the date of this Agreement and the Closing Date in accordance with the
Business Practices.
(h) Rights Under Lease. All of Future Tech's rights under the
real property lease agreement identified in Schedule 2.1(h) (the "Assumed Real
Property Lease").
(i) Other Assets. All of Future Tech's claims against any
parties relating exclusively or primarily to any Acquired Asset and/or any
Assumed Liability and any and all contract rights assigned to Buyer, including
without limitation, unliquidated rights under manufacturers' or vendors'
warranties or guarantees (but excluding any rights of Future Tech under this
Agreement), subject to review and confirmation two Business Days prior to the
Closing Date, and subject to changes between the date of this Agreement and the
Closing Date in accordance with the Business Practices, but excluding Future
Tech's claims and rights under its lawsuit and contract by and against Otomation
Engineering, Tech Media Computer Systems, Inc., and/or Tae Il Media Co. Ltd.,
and Future Tech's rights with respect to claims under its directors and officers
omission insurance policy pertaining to the Future Tech Matters (as defined
herein).
(j) Telephone Numbers. The telephone numbers used exclusively
or primarily in Future Tech's business identified on Schedule 2.1(j).
2.2 Delivery. To the extent delivery of any of the Acquired Assets
includes physical delivery, Future Tech shall be required to so deliver such
Acquired Assets at the
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Closing in place unless otherwise directed by Buyer, in which case Buyer will
bear the costs of moving such Acquired Assets to the chosen location.
2.3 Acquired Assets Free and Clear of Any and All Liabilities. The
Acquired Assets shall be transferred to Buyer free and clear of any and all
Liabilities, including any and all Liabilities to creditors or shareholders of
Future Tech or to any party-in-interest in the Case ("Liabilities") other than
the Assumed Liabilities (as defined herein). For purposes of this Agreement, the
term "Liabilities" is defined as (i) any and all liens, claims, encumbrances,
and interests as provided pursuant to Section 363(f) of the Bankruptcy Code, and
(ii) whether or not discharged in the Case for any reason whatsoever, any and
all other debts, liabilities, mortgages, claims, charges, liens, encumbrances,
options, commitments, security interests, and other obligations, whether accrued
or fixed, absolute or contingent, matured or determined or determinable,
including without limitation, those arising under (x) any federal, state, local
or foreign statute, law, ordinance, regulation, rule, code, order or other
requirement or rule of law (including under any environmental law) ("Law"), (y)
any claim, action, suit, arbitration, inquiry, hearing, proceeding,
investigation charge, complaint, or demand ("Adverse Legal Action") by or before
any United States federal, state, county, or local or any foreign governmental,
regulatory or administrative authority, agency, commission, instrumentality or
any court, tribunal, or judicial, quasi-judicial, or arbitral body
("Governmental Entity"), (z) any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental Entity
("Governmental Order").
2.4 No Other Assets Acquired. Other than the Acquired Assets set forth
in Section 2.1 above, it is agreed that Future Tech shall not transfer, and
Buyer shall not acquire, any of Future Tech's right, title, and/or interest in
or to any other assets of Future Tech, including, but not limited to the
MarkVision Receivable (as defined herein) (the "Excluded Assets"). Schedule 2.4
contains a non-exclusive list of such Excluded Assets. All such Excluded Assets
shall remain the property of Future Tech.
ARTICLE III
PURCHASE PRICE
3.1 Payment of the Purchase Price. As consideration for the Acquired
Assets and the transactions contemplated by this Agreement, Buyer agrees to pay
to Future Tech the Purchase Price, as described in Subsections 3.1(a), (b), (c)
and (d) below, and at the times and subject to the terms and conditions set
forth, below:
(a) Cash At Closing. On the Closing Date, Buyer shall pay to
Future Tech the sum of One Million Five Hundred Thousand ($1,500,000.00) Dollars
by wire transfer in immediately available funds, provided, however, that no
later than three (3) Business Days prior to the date first set for the hearing
on the confirmation of the Plan, Buyer will cause
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these funds to be held in the trust account of Broad and Cassel (unless the
parties otherwise agree) in compliance with applicable local bankruptcy rules.
This portion of the purchase price shall be immediately available without
hold-back for distribution to creditors of Future Tech pursuant to the
Bankruptcy Code and the Plan.
(b) Purchase Price Adjustment. (i) On the date set forth in
Section 3.3(c) (ii) or Section 3.3(c)(iv), as the case may be, Buyer shall pay
Future Tech a purchase price adjustment, to be determined in accordance with
this subsection (b) and Sections 3.3 and 3.5 of this Agreement ("Purchase Price
Adjustment") in the amount of One Million ($1,000,000.00) Dollars by wire
transfer in immediately available funds, provided, however, that in the event
the Closing Aggregate Equity Value (as defined herein) is less than ninety-five
percent (95%) of the Minimum Equity, the component of the Purchase Price
described in this Section 3.1(b) shall be reduced (but not below zero dollars)
by an amount equal to the difference between Minimum Equity and Closing
Aggregate Equity Value, and if Closing Aggregate Equity Value is greater than
one hundred five percent (105%) of Minimum Equity, then such component of the
Purchase Price provided for in this Section 3.1(b) shall be increased by an
amount equal to the difference between Closing Aggregate Equity Value and
Minimum Equity.
(ii) The entire amount paid to Future Tech as the
Purchase Price Adjustment shall upon receipt be immediately available without
hold-back for distribution to creditors of Future Tech pursuant to the
Bankruptcy Code and the Plan.
(c) Assumed Liabilities. On the Closing Date, Buyer shall
specifically assume and agree, pursuant to the Plan, to pay, perform and/or
discharge (i) those specific liabilities and obligations of Future Tech
identified solely on Schedule 3.1(c)(i), and Schedule 3.1(c)(ii) hereto, all
only in the amounts shown thereon, and (ii) unless excluded below, the
liabilities and obligations of Future Tech arising from events or occurrences
arising and occurring exclusively from and after the Closing Date (other than as
a result of acts or omissions of Future Tech or any of its affiliates after the
Closing Date) under the leases, contracts, agreements, plans, and/or
arrangements identified solely on Schedule 2.1(c)(ii) (but not the "cure
amounts" listed on such Schedule 2.1(c)(ii), except for the "cure amounts" that
are also listed on Schedule 3.1(c)(i) and Schedule 3.1(c)(ii)) (the liabilities
and obligations set forth in these subsections (i) and (ii), collectively, the
"Assumed Liabilities"), in the manner set forth below:
(i) Buyer shall, on the Closing Date, agree that it
will pay, without interest, each party listed on Schedule 3.1(c)(i), 90 days
after the Closing Date (or as soon thereafter as practicable), the amount
indicated opposite its name on such Schedule 3.1(c)(i), reduced by an amount
which equals such party's pro rata share of the Accounts Receivable specified in
Schedule 2.1(b) Buyer has not collected within 90 days after the Closing Date.
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(ii) Buyer shall, on the Closing Date, agree that it
will pay, without interest, each party listed on Schedule 3.1(c)(ii), one year
after the Closing Date (or as soon thereafter as practicable), the amount
indicated opposite its name on such Schedule 3.1(c)(ii), reduced by an amount
which equals such party's pro rata share of the Accounts Receivable specified in
Schedule 2.1(b) Buyer has not collected within 90 days after the Closing Date.
(iii) Any additional amounts collected from the 90th
day to 120th day after the Closing Date by Buyer in respect of any Accounts
Receivable, but without any affirmative obligation to collect such amounts,
shall be paid by Buyer to the parties listed on Schedule 3.1(c)(i) and Schedule
3.1(c)(ii), each such party's pro rata share of the additional collection of the
Accounts Receivable. On the 121st day after the Closing Date (or as soon
thereafter as practicable), Buyer shall return to Future Tech any accounts
receivable not collected, for collection and distribution by Future Tech to each
party, each such party's pro rata share of any such collection as provided in
the Plan.
(iv) For the purposes of calculating the potential
reduction provided in Sections 3.1(c)(i) and (ii), each such party's pro rata
share of the Accounts Receivable for purposes of those subsections shall be
equal to a fractional number, the numerator of which is the amount listed
opposite such creditor's name on Schedule 3.1(c)(i) or Schedule 3.1(c)(ii), as
the case may be, and the denominator of which is the total combined dollar
amount represented by all amounts listed on both schedules.
It is expressly understood and agreed by the parties, and the Final
Order will reflect, that neither Buyer nor Bell is hereby or otherwise assuming
or taking any responsibility whatsoever with respect to any obligation or
Liability of Future Tech not included within the definition of Assumed
Liabilities, including, without limitation, any obligation or Liability for, or
in respect of, (w) the account payable to Otomation Engineering, Tech Media
Computer Systems, Inc., and/or Tae Il Media Co. Ltd., (x) any Liability
resulting from, arising out of, relating to, in the nature of, or caused by any
breach of any contract, breach of warranty, tort, infringement, U.S. federal,
state, county or local, or foreign tax, or violation of Law, or any Future Tech
Matters (as defined herein), (y) any environmental Liability with respect to the
Assumed Leases or the premises leased thereunder, or (z) any Liabilities with
respect to any employee benefit plans maintained by Future Tech or to which
Future Tech contributes (the "Excluded Liabilities").
(d) Contingent Incentive Payment After Closing. (i)
Contingencies Triggering Incentive Payment. If (and only if) the following EBIT
(Earnings Before Interest and Taxes, as amended below) amounts are reached
within the first anniversary of the Closing Date, the indicated incentive
payment ("Contingent Incentive Payment") shall be payable to Future Tech at the
indicated times:
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EBIT ($mm) Incentive Payment ($mm)
Not less than $2.50 but not more than $2.99 $1.00
Not less than $3.00 but not more than $3.49 $2.50
Not less than $3.50 but not more than $3.99 $3.50
Not less than $4.00 and above $4.50
Payable:
(x) Fifty (50%) percent fifteen (15) months
after the Closing; and,
(y) Fifty (50%) percent twenty-one (21)
months after the Closing.
(ii) Calculation of EBIT. For purposes of this
Section 3.1(d), the term "EBIT" is defined as income from operations from all
sales before interest and income taxes, subject, however, to the following
deductions:
(A) the amount paid out as interest by Buyer
to banks or Buyer's other sources of financing for advances to Future Tech,
reduced by any amounts paid by Future Tech to Buyer. There shall be no deduction
to EBIT in respect of interest incurred by Buyer to pay the amounts specified in
Section 3.1(a) and (b), and interest paid, if any, to parties specified on
Section 3.1(c)(i) and Section 3.1(c)(ii);
(B) a management fee of $200,000.00;
(C) direct costs with respect to any
products transferred by and between Future Tech and Buyer, whether or not such
transfers shall be treated as a sale, which shall mean in the case of products
transferred by Future Tech to Buyer, costs incurred in order to make the
transfer F.O.B. Future Tech; and in the case of products transferred to Future
Tech, costs incurred in order to make the transfer F.O.B. Bell; and
(D) other direct costs incurred by Buyer,
including but not limited to legal fees, accounting and auditing fees, insurance
premiums and other administrative expenses directly attributable to the
operations of Future Tech.
(iii) Reasonable Commercially Diligent Efforts. Buyer
shall exercise its reasonable commercially diligent efforts, consistent with the
ordinary conduct of its business, to endeavor to achieve the Contingent
Incentive Payment.
(iv) Accounting. As promptly as possible following
the first anniversary of the Closing Date, Buyer will cause an accounting to be
performed and the Operating Earnings to be calculated in accordance with this
Section 3.1(d). In the event of any dispute
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over the calculation of the Contingent Incentive Payment, such dispute shall be
resolved in accordance with the procedures set forth in Section 3.3(c) of this
Agreement.
(v) Indemnity Set-Off. In the event Buyer makes a
claim for indemnification pursuant to Section 12.2 of this Agreement, any
amounts payable by Buyer pursuant to this Section 3.1(d) may be withheld pending
resolution of such claim.
(vi) Rights Non-Transferable. Future Tech's rights to
any payments under this Section 3.1(d) shall not be transferable by assignment
or otherwise except as otherwise provided in the Plan.
3.2 Non-interference with Collection of Accounts Receivable of Future
Tech. In the event Buyer receives a request for quotations from, or proposes to
sell to, or otherwise transact business with, any customers or former customers
of Future Tech in respect of whom Buyer has returned Accounts Receivable to
Future Tech or which has incurred any Liability to Future Tech, Buyer agrees to
consult with Future Tech in order to ascertain how to proceed; however, Future
Tech agrees and acknowledges that the decision to transact business with any
such party rests solely within Buyer's discretion.
3.3 Equity Value Calculations.
(a) Minimum Aggregate Equity Value. The Purchase Price is
based on the assumption that the Aggregate Equity Value of the Acquired Assets
is not less than one hundred ($100.00) dollars ("Minimum Equity"). For purposes
of this Section 3.3, the term "Aggregate Equity Value" means the difference
between: (i) the book value of the Acquired Assets, determined in accordance
with Generally Accepted Accounting Principles (GAAP) as of the Closing Date, and
(ii) the Assumed Liabilities; provided, that: (a) fixed assets are to be valued
at the lower of (x) market value and (y) book value, (b) the account payable of
$16,380,852 payable to Otomation Engineering, Tech Media Computer Systems, Inc.
and/or Tae Il Media Co. Ltd., at issue in the Tae Il Case shall not be counted
as a liability in computing Equity Value; and (c) the net accounts receivable
from the MarkVision companies listed in Schedule 2.4 and affiliated entities,
net of any payables due to such companies (the "MarkVision Receivable"), shall
not be counted as an asset for purposes of computing Equity Value. The amount of
the MarkVision Receivable was $14,192,614 as of April 21, 1999, and shall not
increase (except for accrual of interest and collection charges incurred by
Future Tech) between such date and the Closing Date.
(b) Final Aggregate Equity Value at Closing. (i) Future Tech
shall calculate the Aggregate Equity Value as of May 5, 1999 on the basis of
Future Tech's unaudited financial statements prepared by Future Tech in
accordance with GAAP and consistent with Future Tech's accounting practices and
policies and dated as of such date (the "Preliminary Aggregate Equity Value").
Future Tech shall deliver the Preliminary Aggregate
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Equity Value computation and the financial statements on which it was based to
Buyer no less than seven (7) days prior to Closing.
(ii) In order to facilitate the Closing, the parties
shall assume that Aggregate Equity Value as of the close of business on the
Closing Date (the "Closing Aggregate Equity Value") shall be equal to the
Preliminary Aggregate Equity Value.
(iii) If the Preliminary Aggregate Equity Value is
less than ninety-five percent (95%) of Minimum Equity, then notwithstanding
anything to the contrary contained in this Agreement, Buyer shall have no
obligation to consummate the transactions contemplated by this Agreement at the
Closing and the Agreement may be terminated in accordance with Section
13.1(b)(vi).
(iv) As soon as practicable, but in any event within
three (3) Business Days after the Closing Date, Future Tech, with any reasonably
required assistance of any Buyer personnel, will prepare and deliver to Buyer a
draft Aggregate Equity Value calculation dated as of the close of business on
the Closing Date in accordance with GAAP and consistent with Future Tech's
accounting practices and policies (the "Draft Closing Aggregate Equity Value
Computation").
(c) Accounting Dispute Resolution. (i) Upon receipt of the
Draft Closing Aggregate Equity Value Computation, Buyer shall have a period of
seven (7) Business Days after receipt thereof to review the same.
(ii) In the event Buyer does not dispute the accuracy
or presentation of any information or determination contained in the Draft
Closing Aggregate Equity Value Computation, Buyer shall prior to the close of
such seven (7) Business Day period, pay over to Buyer the Purchase Price
Adjustment set forth in Section 3.1(b) in the manner and in the amount as
therein set forth.
(iii) In the event Buyer does dispute the accuracy or
presentation of any information or determination contained in the Draft Closing
Aggregate Equity Value Computation (a "Dispute"), Buyer shall provide written
notice thereof to Future Tech ("Objection Notice") by the end of the seven (7)
Business Day period referred to in (i) above. The Objection Notice shall
describe in detail the basis for the objection.
(iv) Future Tech and Buyer will use reasonable
efforts to resolve the Dispute by themselves. If they are unable to do so within
two (2) Business Days after receipt by Future Tech of the Objection Notice,
Future Tech and Buyer shall cause their certified public accountants to select
an independent certified public accountant, which accountant shall be an
independent "Big Five" accounting firm, within three (3) Business Days
thereafter. The Independent Accountants shall have thirty (30) calendar days in
which to
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determine the Closing Aggregate Equity Value and Buyer shall pay over to Future
Tech the Purchase Price Adjustment set forth in Section 3.1(b) in the manner and
in the amount as therein set forth within two (2) Business Days thereafter.
(v) Absent manifest error, such determination shall
be final and binding upon the parties. The United States Bankruptcy Court shall
retain jurisdiction to enter an order confirming the determination of Closing
Aggregate Equity Value. In connection with such Dispute resolution and related
reviews or audits: (i) each party shall pay the fees and expenses of its
accountants; and (ii) the fees and expenses of the Independent Accountants shall
be paid by the Party whose accounting did not more closely reflect the Closing
Aggregate Equity Value.
3.4 Allocation of Consideration. Buyer and Future Tech will allocate
the Purchase Price among the Acquired Assets (the "Allocation") in accordance
with Schedule 3.4 to be attached to this Agreement at or prior to the Closing in
a form mutually agreeable to them. No party will take a position on any federal
or state tax return, before any governmental agency charged with the collection
of any income tax, or in any judicial proceeding that is, in any way,
inconsistent with the Allocation or prior to the final adjustment of the
Purchase Price pursuant to Section 3.3 of this Agreement. To the extent required
by Section 1060 of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder, the Allocation will be revised for any
adjustment of the Purchase Price pursuant to such Section 3.3.
3.5 Prorations. (a) The following shall be adjusted between Future Tech
and Buyer and shall be prorated or paid, as applicable, as of the close of
business on the date prior to the Closing Date, on the basis of a 365-day year
or the time period pertaining to the particular item, as applicable:
(i) Payments or revenues arising from any contracts
or agreements;
(ii) Rents and other charges payable under the
Assumed Real Property Lease;
(iii) Charges for any utilities servicing the
Acquired Assets or real property subject to the Assumed Real Property Lease; and
(iv) All other items customarily subject to
adjustment between sellers and buyers in transactions of the nature contemplated
by this Agreement, including without limitation, 1999 Florida tangible
commercial personal property taxes.
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(b) The adjustments of the items listed in this section shall
be accomplished by increasing or decreasing, as the case may be, the initial
amount of the Purchase Price Adjustment.
ARTICLE IV
CLOSING
4.1 Closing Date; Closing Deliveries. The parties to this Agreement
shall consummate the Asset Transfer and the other transactions contemplated by
this Agreement at a closing (the "Closing") to be held no later than July 9,
1999; provided, in no event shall the Closing occur prior to the satisfaction of
the conditions precedent set forth in Articles IX, X, and XI hereof. The date of
Closing is referred to herein as the "Closing Date." The Closing shall take
place at the offices of counsel for Buyer, or at such other place as may be
mutually agreed upon by Buyer and Future Tech. At the Closing, (i) Future Tech
shall deliver to Buyer such general warranty deeds, bills of sale, assignments
and other instruments of transfer and conveyance as, in the reasonable opinion
of counsel for Buyer shall be effective to vest in Buyer title to the Acquired
Assets; and (ii) Buyer shall pay the portion of the Purchase Price due at
Closing to Future Tech.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access and Inspection, Etc. Future Tech shall allow Buyer and its
authorized representatives reasonable access during normal business hours from
and after the date hereof and through the Closing Date to all of the properties,
books, contracts, commitments and records of Future Tech for the purpose of
making such investigations as Buyer may reasonably request in connection with
the transactions contemplated hereby, and shall furnish Buyer such information
concerning its affairs as Buyer may reasonably request.
5.2 Confidential Treatment of Information. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence this Agreement (including the Schedules and Exhibits hereto), all
matters relating thereto and all confidential data and information
(collectively, "Confidential Information") obtained with respect to the other
parties or their business, except such Confidential Information which is
published or is a matter of public record, or as compelled by legal process or
required during argument before the Bankruptcy Court in the Case. In the event
this Agreement is terminated pursuant to Article XIII hereof, each party shall
promptly return to the other any documents evidencing or containing Confidential
Information obtained from them in connection with this Agreement, and shall not
retain any copies thereof. The parties acknowledge this Agreement will be filed
with the bankruptcy court and served on all creditors and parties in interest.
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5.3 Public Announcements. The parties will consult with each other
before issuing any press releases or otherwise making any public statement with
respect to this Agreement or any of the transactions contemplated hereby and no
party will issue any such press release or make any such public statement
without the prior written consent of the other party, which consent shall not be
unreasonably withheld, or unless such party is obligated to do so by law,
regulation or court order.
5.4 Covenant Against Competition.
(a) Neither Future Tech nor Leonard Keller shall, for a period
of three (3) years following the Closing Date, for its/his own account or
jointly with another, directly or indirectly, for or on behalf of any
individual, partnership, corporation or other legal entity, as principal, agent
or otherwise:
(i) Own, control, manage, be employed by, consult
with, or otherwise participate in, a business involved within the Trade Area (as
defined herein) in the wholesale distribution of products, or any other activity
which competes with the business conducted by Future Tech, at any time during
the two (2) years preceding the Closing, excluding the trading of publicly
traded securities in a regulated securities market;
(ii) Solicit or induce, or in any manner attempt to
solicit, any person employed by Buyer or Bell to leave such employment, whether
or not such employment is pursuant to a written contract and whether or not such
employment is at will, or hire any person who has been employed by Buyer or Bell
at any time during the six (6) month period preceding such hiring; and
(iii) Use or disclose any trade secrets or
confidential information concerning the business of Future Tech as currently
conducted or any segment thereof. Trade secrets and confidential information
concerning such business shall include, but not be limited to: (i) lists of
names and addresses of customers and suppliers of Future Tech; and (ii) software
and computer programs, market research and data bases, sources of leads and
methods of obtaining new business, and methods of purchasing, marketing,
selling, performing and pricing products and services employed by Future Tech in
the business or any segment thereof.
(iv) Each of Future Tech and Leonard Keller
recognizes the importance of the covenant not to compete contained in this
subsection and acknowledges that the restrictions imposed herein are: (i)
reasonable as to scope, time and area; (ii) necessary for the protection of
Buyer's and Bell's legitimate business interests, including without limitation,
trade secrets, goodwill, and its relationship with customers and suppliers;
(iii) not unduly restrictive of its/his rights; and (iv) supported by adequate
consideration.
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Each of Future Tech and Leonard Keller acknowledges and agrees that the
covenants not to compete contained in this section are essential elements of
this Agreement and that but for these covenants, Buyer would not have agreed to
purchase the Acquired Assets or enter into this Agreement. Such covenants shall
be construed as agreements independent of any other provision of this Agreement.
(v) Each of Future Tech and Leonard Keller agree that
if it/he were to commit a breach or threaten to commit a breach of any of the
noncompete provisions of this section, Buyer shall have the right and remedy, in
addition to any others that may be available, at law or in equity, to have the
provisions of this section specifically enforced by any court having equity
jurisdiction, through injunctive or other relief (without any bond or security
being required to be posted), it being acknowledged that any such breach or
threatened breach will cause irreparable injury to Buyer, the amount of which
will be difficult to determine, and that money damages will not provide an
adequate remedy to Buyer.
(vi) To the extent that any waiver of the covenants
contained in subsection (a) (iii) is required in order for Future Tech, as
debtor in possession, to wind down and liquidate pursuant to the Plan, Buyer
will not withhold its consent to a request for such waiver made pursuant to
Section 16.1(g), provided that such waiver is as narrowly tailored as to time
and scope as reasonably necessary. Future Tech may sell to a liquidator any
inventory not purchased by Buyer pursuant to Section 2.1(a) of this Agreement.
(vii) If any covenant contained in this section, or
any part thereof, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenants, which shall be given full
effect, without regard to the invalid portions, and any court having
jurisdiction shall have the power to reduce the duration, scope and/or area of
such covenant so that the said covenants shall be enforceable to the fullest
extent which the court deems reasonable. If Future Tech or Leonard Keller breach
the covenants set forth in this section, the running of the noncompete period
described herein (but not its/his obligation) shall be tolled for so long as
such breach continues.
(b) For purposes of this Agreement, the term "Trade Area"
shall mean Miami-Dade and Broward Counties (Florida), and Latin America, more
specifically defined as South America, Central America, Mexico and the Caribbean
island nations excluding Cuba.
5.5 Further Assurances. The parties shall deliver any and all other
instruments or documents reasonably required to be delivered pursuant to, or
necessary or proper in order to give effect to, the provisions of this
Agreement, including without limitation, all instruments of transfer as may be
necessary or desirable to transfer ownership of the Acquired Assets and to
consummate the transactions contemplated by this Agreement. Future Tech may
retain originals or copies of any documents, books and records it deems, in its
sole discretion, may be needed to meet future obligations of the corporation or
its employees,
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officers, directors and shareholders: (i) in connection with the Plea Agreement
with the United States Department of Justice; (ii) any aspect of the
investigation by the Department of Justice relating to the conduct of any
employee of Future Tech; (iii) the examination by the Internal Revenue Service
of the income tax returns of Future Tech; and (iv) the prosecution and defense
by and of Future Tech of the Otomation Engineering, Tech Media Computer Systems,
Inc., and/or Tae Il Media Co. Ltd. case and the Acosta case (the matters
described in (i)-(iv), collectively, the "Future Tech Matters"). Additionally,
each party shall have complete access to the former employees of Future Tech,
and the right to copy any original Future Tech documents, books and records in
the possession of the other party for six (6) years following the Closing Date.
5.6 Notice of Developments. From the date of this Agreement, until the
Closing or the earlier termination hereof, Future Tech shall promptly notify
Buyer in writing of (i) all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of any
representation or warranty or covenant of Future Tech in this Agreement, or
which could have the effect of making any representation or warranty of Future
Tech in this Agreement untrue or incorrect in any respect and (ii) all other
material developments affecting the Acquired Assets, the Assumed Liabilities,
Liabilities, business, financial condition, operations, results of operations,
customer or supplier relations, projections or prospects of Future Tech or its
business as currently conducted and as proposed to be conducted by Buyer after
the Closing.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
FUTURE TECH AND LEONARD KELLER
Future Tech and Leonard Keller each hereby jointly and severally
represent and warrant and covenant to Buyer and Bell, subject to the specific
exceptions disclosed in the Disclosure Schedule (each referencing the
appropriate section numbers of this Article VI as to which an exception exists)
delivered by Future Tech and Leonard Keller to Bell and Buyer, and except as
specifically prohibited or mandated by the Bankruptcy Code and dated as of the
date hereof, as follows:
6.1 Organization of Future Tech. Future Tech is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. It has the corporate power and authority to own,
lease, and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased, or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a material adverse effect on Future
Tech or its business. Future Tech has
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made available to Buyer a true and correct copy of the constituent documents
(articles or certificate of incorporation and bylaws) of Future Tech, each as
amended to date, and each such instrument is in full force and effect.
6.2 Authority. Except as disclosed in Schedule 6.2, Future Tech has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. Except as disclosed in Schedule
6.2, the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action. The commencement of the Case (as well as the making of all
statements and filing of all information therein) has been duly authorized by
all necessary corporate action. This Agreement has been duly executed and
delivered by Future Tech and constitutes a valid and binding obligation of
Future Tech enforceable against Future Tech in accordance with its terms subject
to Bankruptcy Court approval once the Case is filed. This Agreement has been
duly executed and delivered by Leonard Keller and constitutes a valid and
binding obligation of Leonard Keller enforceable against him in accordance with
its terms. The execution and delivery of this Agreement by Future Tech does not,
and, as of the Closing Date, the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any breach or violation
of, or default under (with or without notice or lapse of time, or both), or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any benefit under or require any notice under any agreement to which
Future Tech is a party or by which it or any of the Acquired Assets are subject
(any such event, a "Conflict") (i) any provision of the constituent documents of
Future Tech or (ii) any mortgage, indenture, lease, contract or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Future Tech or any of
its properties or assets. No consent, waiver, approval, order, or authorization
of, or registration, declaration or filing with, any Governmental Entity or any
third party (so as not to trigger any Conflict), is required by or with respect
to Future Tech in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby and thereby,
including any other assignment or instrument of transfer to be delivered by
Future Tech except for (x) such filing as is required under the
Hart-Scott-Rodino AntiTrust Improvements Act of 1976, as amended (the "HSR Act")
and (y) Bankruptcy Court approval as described in Section 1.1 hereof.
6.3 Financial Statements. (a) Future Tech has delivered to Buyer and
its accountants: (i) the audited balance sheet and audited statement of income
and cash flow of Future Tech for the fiscal year ended December 31, 1996, and
(ii) the unaudited balance sheets and unaudited statements of income and cash
flow of Future Tech for the fiscal years ended as of December 31, 1997, December
31, 1998, and the three-month period ended March 31, 1999. The balance sheet of
Future Tech as of March 31, 1999 is referred to as the "1999 Future Tech Balance
Sheet" and all such financial statements are hereinafter referred to as the
"Financial Statements."
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(b) The Financial Statements (including the notes thereto) (i)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, (ii) present fairly the financial
condition and results of operations of Future Tech as of such dates, (iii) are
correct and complete and are consistent with the books and records of Future
Tech. The books and records of Future Tech are correct and complete, do not
contain any material inaccuracies or discrepancies, reflect all items required
therein to be reflected by GAAP, and have been maintained in accordance with
good business and accounting practices.
(c) Future Tech has no Liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other which (i) has not
been reflected in the 1999 Future Tech Balance Sheet, or (ii) has not arisen in
the ordinary course of business since March 31, 1999 consistent in nature and
amount with past practices and is not listed in the schedules to this Agreement,
except for legal fees which have accrued subsequent to March 31, 1999.
(d) A true and correct copy of the Financial Statements is
attached as Schedule 6.3(d).
(e) From the date of this Agreement until the commencement of
the Case, Future Tech will furnish Buyer with unaudited interim financial
statements for each month subsequent to March 31, 1999, as soon as practicable,
but in any event within thirty (30) days after the close of any such month and
from the commencement of the Case until the Closing Date, a Debtor in Possession
Report and thereafter, monthly operating reports as and at the same time
submitted to the Bankruptcy Court subject to Buyer's agreement that the
information contained therein is sufficient.
6.4 Absence of Changes. Except as set forth in Schedule 6.4, since the
date of the 1999 Future Tech Balance Sheet (or such other date specifically set
forth herein), Future Tech has conducted its business only in accordance with
the Business Practices and, except to the extent the following has occurred in
accordance with the Business Practices:
(a) There has not been any material adverse change in the
business, financial condition, operations, or results of operations of Future
Tech or its business;
(b) Future Tech has not sold, leased, licensed, or disposed of
any of its assets relating to Future Tech or its business (whether by way of
merger, purchase, or otherwise);
(c) Future Tech has not accelerated, terminated, modified or
canceled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) which relates to the Acquired
Assets;
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(d) Future Tech has not delayed or postponed the payment of
material accounts payable and other liabilities relating to the Acquired Assets
beyond their due date, except with respect to accounts or liabilities that are
subject to dispute in good faith;
(e) Future Tech has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) relating to
any Acquired Asset involving payments of more than $10,000 in the aggregate;
(f) To Future Tech's and Leonard Keller's knowledge, Future
Tech has no reason to believe that any vendors, licensors, licensees,
distributors, or customers related to any Acquired Asset intends to discontinue
with the Buyer a business relationship any such vendor, licensor, licensee,
distributor, or customer currently has with Future Tech;
(g) No Acquired Asset has been materially damaged, destroyed,
or lost (whether or not covered by insurance), and no material customer (a
customer accounting for 5% or more of the revenues of Future Tech in the last
twelve month-period) of Future Tech has been lost;
(h) Future Tech has not entered into any employment contract
or collective bargaining agreement, or modified the terms of any existing
employment contract or collective bargaining agreement, relating to the Acquired
Assets;
(i) Future Tech has not changed employment or compensation
terms for any employee specified on Schedule 6.16(a) other than in the normal
course of business;
(j) To Future Tech's and Leonard Keller's knowledge, Future
Tech has not taken any action involving the Acquired Assets, or failed to act
with respect to the Acquired Assets, in a manner which would have a material
adverse effect on the Acquired Assets and the business associated therewith;
(k) Future Tech has not entered into any capital commitments
in relation to any of the Acquired Assets or the business associated therewith;
(l) Future Tech has not accelerated the collection or
conversion of accounts receivable or notes receivable relating to the Acquired
Assets by offering any incentive for such acceleration, including but not
limited to prepayment discounts, allowances, or enhancements;
(m) Future Tech has not revalued any of the Acquired Assets;
(n) Future Tech has not effected any change in its accounting
methods or policies (including any change in depreciation or amortization
policies or rates);
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(o) Future Tech has not received notice of any claim or
potential claim of ownership of the Acquired Assets by any person, and to the
best of its knowledge, no Basis (as defined herein) exists for any such claim of
ownership;
(p) Future Tech has not received notice of any claim or
potential claim, and to the best of its knowledge, no Basis (as defined herein)
exists for any claim or potential claim that Future Tech has infringed the
intellectual property rights of any person or entity; and
(q) Future Tech has not negotiated with respect to or
otherwise committed or agreed to do any of the foregoing (other than
negotiations with CHS, which negotiations and letters of intent have been
terminated by mutual agreement and without prejudice to Future Tech prior to
negotiations with Buyer and its representatives regarding the transactions
contemplated by this Agreement).
For purposes of this Agreement, the term "Business Practices" shall mean
business, corporate, financial and accounting practices, acts and actions taken
in compliance with all Laws applicable to Future Tech, its business and the
Acquired Assets, such practices, acts and actions to have been taken in good
faith, in full compliance with any Governmental Order, without giving rise to
any Liability or Adverse Legal Action by any Governmental Entity (or any Basis
for either).
6.5 Absence of Undisclosed Liabilities. There is no Liability and, to
the best knowledge of Future Tech and Leonard Keller, no threatened Adverse
Legal Action by or before any Governmental Entity or third-party, nor is there
any past or present fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, that forms
or reasonably could form the basis therefor ("Basis") and which could thereby
give rise to any Liability with respect to any Acquired Asset.
6.6 Legal and Other Compliance. Future Tech is in full compliance with
all applicable Laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of all applicable
Governmental Entities, the violation of which would have a material adverse
effect on the Acquired Assets or the business of Future Tech associated with the
Acquired Assets or on the ability of Future Tech to consummate the transactions
contemplated by this Agreement or Buyer's ability to conduct the business of
Future Tech as currently conducted.
6.7 Taxes. Except as otherwise set forth on Schedule 6.7, to the extent
a failure to do so would adversely affect Buyer, any Acquired Asset, or Buyer's
use of any Acquired Asset, Future Tech has (i) timely filed within the time
period for filing or any extension granted with respect thereto all tax returns
which it is required to file relating to or pertaining to any and all taxes
attributable or levied upon any Acquired Asset and (ii) paid any and all
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taxes it is required to pay in connection with the periods to which such tax
returns relate. There are (and immediately following the Closing there will be)
no liens on any Acquired Asset relating to or pertaining to taxes, except with
respect to taxes not yet due and payable. No Basis exists or will exist for the
assertion of any claim which, if adversely determined, would result in a lien on
any Acquired Asset or otherwise adversely affect Buyer, any Acquired Asset, or
Buyer's use of any Acquired Asset.
Future Tech is not a party to any tax sharing, indemnification, or
allocation agreement, nor does it owe any amounts under any such agreement,
other than this Agreement. Future Tech's tax basis in its assets for purposes of
determining its future amortization, depreciation, and tax deductions is
accurately reflected on its tax books and records. Future Tech is not, and has
not been at any time, a "United States Real Property Holding Corporation" within
the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as
amended.
6.8 Restrictions on Business Activities. There is no agreement
(noncompetition, field of use, or otherwise), Adverse Legal Action by or before
any Governmental Entity or any Governmental Order which has or reasonably could
be expected to have the effect of prohibiting or impairing any business practice
utilizing any Acquired Asset. Future Tech has entered into agreements which
restrict its sale, license, or distribution of its products, services, and
technology to customers located solely within the Trade Area.
6.9 Title to Properties; Absence of Liens; Condition of Acquired
Assets. (a) Future Tech does not own any real property. Future Tech has
delivered to the Buyer a true and correct copy of the Assumed Real Property
Lease, none of which has been modified in any respect since delivery to Buyer.
The Assumed Real Property Lease is in full force and effect, is valid and
effective in accordance with its terms, and there is not, under such lease, any
material existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default or a Basis
therefor). To the best knowledge of Future Tech, neither the business operations
conducted on such real property, nor such real property, including improvements
thereon, violate any applicable law, building code, zoning requirement, or
classification, or pollution control ordinance or statute relating to the
particular property or such operations, and such non-violation is not dependent,
in any instance, on so-called non-conforming use exceptions. To the best
knowledge of Future Tech, all approvals of Governmental Entities (including
licenses and permits) required in connection with its operations on such real
property have been obtained. Future Tech is lawfully in possession of all real
properties of which it is a lessee.
(b) Future Tech has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, each Acquired
Asset being transferred to the Buyer, free and clear of any Liabilities, except
as reflected in the 1999 Future Tech Balance Sheet or Schedule 6.9(b).
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(c) Each item of fixed assets, equipment and other tangible
assets is in good operating condition and free from defects, except for ordinary
wear and tear, and repair and is reasonably fit and usable for the purposes for
which it is presently being used.
(d) The Acquired Assets comprise all of the assets,
properties, and rights of every type and description, real, personal, tangible,
and intangible necessary for and/or used by Future Tech in the business as
currently conducted and as currently proposed to be conducted by Buyer.
(e) Future Tech is in custody and control of all the Acquired
Assets being sold and transferred to the Buyer pursuant to this Agreement or any
assignments or other instruments of transfer delivered or to be delivered to
Buyer pursuant hereto or thereto.
(f) There is no backlog arising out of Future Tech's operation
of its business.
(g) Future Tech has no outstanding written customer orders,
purchase orders or any other customer commitments from current customers as of
the date of this Agreement and there will not be any in effect on the Closing
Date.
(h) Future Tech has no oral arrangements of any kind with its
current customers.
6.10 Intellectual Property.
(a) Schedule 2.1(f) lists all the intellectual property owned
by, or filed in the name of, Future Tech and included in the Acquired Assets
(the "Seller Intellectual Property") and lists any proceedings or actions before
any court, tribunal (including the United States Patent and Trademark Office
(the "PTO") or equivalent authority anywhere in the world) related to any of the
Seller Intellectual Property.
(b) Future Tech is the exclusive owner of all trademarks,
service marks, and trade names used in connection with the operation or conduct
of its business and Future Tech is the exclusive owner of, and has good title
to, all copyrighted works that are Future Tech's products or other works of
authorship which Future Tech otherwise purports to own and are included in the
Acquired Assets.
(c) Schedule 2.1(f) sets forth a complete list of all
licenses, sublicenses, and other agreements pursuant to which any person is
authorized to use the Seller Intellectual Property or any of Future Tech's trade
secrets material to the Acquired Assets, and includes the identity of all
parties thereto, a description of the nature and subject matter thereof, the
applicable royalty, and the term thereof. The execution and delivery of this
Agreement by
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Future Tech, and the consummation of the transactions contemplated hereby, will
not cause any such license, sublicense, or agreement to terminate, nor entitle
any other party to any such license, sublicense, or agreement to terminate or
modify such license, sublicense, or agreement.
(d) The intellectual property of Future Tech listed in
Schedule 2.1(f) constitutes all of the Seller Intellectual Property used in or
necessary to the conduct of the business as currently conducted by Future Tech,
or as reasonably contemplated to be conducted, including, without limitation,
the design, development, distribution, marketing, manufacture, use, import,
license and sale of the products, technology and services of the business
(including products, technology or services currently under development). No
person who has licensed intellectual property to Future Tech has ownership
rights or license rights to improvements made by Future Tech in such
intellectual property which has been licensed to Future Tech.
(e) The contracts, licenses and agreements listed in Schedule
2.1(f) constitute all contracts, licenses and agreements to which Future Tech is
a party with respect to any intellectual property included in the Acquired
Assets.
(f) The operation of Future Tech as currently conducted or as
reasonably contemplated to be conducted (including but not limited to the
design, development, distribution, marketing, use, import, manufacture, license
and sale of the products, technology or services (including products, technology
or services currently under development) of Future Tech) has not, does not and
will not infringe or misappropriate the intellectual property of any person,
violate the rights of any person (including rights to privacy or publicity), or
constitute unfair competition or trade practices under the laws of any
jurisdiction. Future Tech has not received notice nor have any claims been
asserted or threatened against Future Tech or any of its customers, from any
person claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development) of
Future Tech infringes or misappropriates the intellectual property of any person
or that Future Tech has engaged in unfair competition or trade practices under
the laws of any jurisdiction (nor to the best knowledge of Future Tech is there
any Basis therefor).
(g) All necessary registration, maintenance and renewal fees
in connection with Seller Intellectual Property have been paid and all necessary
documents and certificates in connection with Seller Intellectual Property have
been filed with the relevant patent, copyright, trademark or other authorities
in the United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Seller Intellectual Property.
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(h) Future Tech has protected its rights in confidential
information and trade secrets by having certain executive/management employees
execute confidentiality agreements (true and correct copies of which are
attached under Schedule 6.10(h)).
(i) Future Tech does not have any currently pending claim
against any person for infringing or misappropriating the Seller Intellectual
Property.
(j) No Seller Intellectual Property or product, technology or
service of Future Tech is subject to any proceeding or outstanding decree,
order, judgment, agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by Future Tech or may affect the validity, use or
enforceability of the Seller Intellectual Property.
(k) No (i) product, technology, service or publication of
Future Tech or (ii) material published or distributed by Future Tech in
connection with its business is obscene, defamatory, or constitutes false
advertising or otherwise violates any law or regulation in any jurisdiction in
which it is published or distributed by Future Tech.
(l) Except as provided on Schedule 6.10(l) to the extent any
Acquired Assets include Commercial Software Rights (the "Acquired Commercial
Software Rights"), Future Tech has not breached or violated the terms of its
license, sublicense, or other agreement relating to any Acquired Commercial
Software Rights, and Future Tech has a valid right to use such Acquired
Commercial Software Rights under such licenses and agreements. Future Tech is
not nor will be as a result of the execution and delivery of this Agreement or
the performance of its obligations hereunder, in violation of any license,
sublicense, or agreement relating to the Acquired Commercial Software Rights. No
claims with respect to the Acquired Commercial Software Rights have been
asserted or, to the best of Future Tech's knowledge, are threatened by any
person against Future Tech in connection with any Acquired Commercial Software
Right. To the best of Future Tech's knowledge, there is no material unauthorized
use, infringement, or misappropriation of any Acquired Commercial Software Right
by Future Tech or any employee or former employee. To the best of Future Tech's
knowledge, no Acquired Commercial Software Right is subject to any outstanding
order, judgment, decree, stipulation, or agreement restricting in any matter the
use thereof by Future Tech.
6.11 Agreements, Contracts and Commitments. Except as contemplated by
this Agreement or as set forth on Schedule 6.11, Future Tech does not currently
have, is not a party to, nor is bound by with respect to any Acquired Asset or
key employee:
(a) any collective bargaining agreements;
(b) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations;
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(c) any stock option, stock purchase, stock appreciation,
bonus, deferred compensation, pension, severance, profit sharing or retirement
plans, or any other employee benefit plans or arrangements;
(d) any agreement, contract, or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise;
(e) any employment or consulting agreement with an employee or
individual consultant or salesperson or consulting or sales agreement;
(f) any agreement (or group of related agreements) for the
lease of personal property to or from any person or entity having a value
individually in excess of $10,000;
(g) any agreement of indemnification or guaranty;
(h) any purchase order or contract for the purchase of
materials in excess of $5,000 except in the ordinary course of business;
(i) any agreement entered otherwise than in the ordinary
course of business;
(j) any agreement that is likely to result in a loss on
completion of performance;
(k) any agreement (or group of related agreements) containing
any covenant limiting the freedom of Future Tech to engage in any line of
business or to compete with any person or entity that could reasonably be
expected to impair or encumber the Acquired Assets;
(l) any agreement (or group of related agreements) relating to
capital expenditures and involving future payments in excess of $15,000;
(m) any agreement (or group of related agreements) under which
payment has already been received by Future Tech (whether in whole or in part)
but which requires the performance of services after the Closing Date;
(n) any fidelity or surety bond or completion bond;
(o) any agreement pursuant to which Future Tech has advanced
or loaned any amount to any director, officer, employee, or consultant other
than business travel advances in the ordinary course of business (other than as
in (g));
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(p) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money by Future Tech or extension of credit to it, involving obligations in
excess of $5,000 or under which Future Tech has imposed any lien on any of the
Acquired Assets;
(q) any purchase order or contract for the purchase of
materials (excluding capital expenditures) involving $15,000 or more except in
the ordinary course of business;
(r) any agreement concerning confidentiality;
(s) any construction contracts;
(t) any distribution, joint marketing, development, or
partnership or joint venture agreement;
(u) any agreement pursuant to which Future Tech has granted,
or may grant in the future, to any party a source-code license or option or
other right to use or acquire source-code; or
(v) any other agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) that involves
payment of $10,000 or more.
Future Tech has delivered to the Buyer a correct and complete copy of
each written agreement listed in Schedule 6.11. Future Tech has not breached,
violated, or defaulted under, or received notice that it has breached, violated,
or defaulted under, any of the terms of or conditions of any agreement,
contract, or commitment and each such agreement, contract and commitment is in
full force and effect and, except as otherwise disclosed in Schedule 6.11, is
not subject to any default thereunder of which Future Tech has knowledge by any
party obligated to Future Tech pursuant thereto.
6.12 Powers of Attorney. Except as provided on Schedule 6.12 there are
no outstanding powers of attorney executed on behalf of Future Tech in respect
of any Acquired Asset.
6.13 Litigation. Except as provided on Schedule 6.13 there is no
action, suit, proceeding, claim, arbitration, or investigation pending before
any court or administrative agency against Future Tech or any of its officers or
directors in their capacity as such that may result in any adverse change in
Future Tech's business or to the Acquired Assets or that questions the validity
of this Agreement or of any action taken or to be taken pursuant to or in
connection with this Agreement. To the best of Future Tech's and Leonard
Keller's knowledge, no such action, proceeding, claim, arbitration, or
investigation has been threatened, and neither of them is aware of any Basis for
any such action, suit, proceeding,
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claim, arbitration, or investigation. There are no judgments, orders, decrees,
citations, fines, or penalties heretofore assessed against Future Tech affecting
its business or the Acquired Assets under any federal, state or local law. No
governmental entity has at any time challenged or questioned the legal right of
Future Tech to manufacture, offer, or sell any product related to the Acquired
Assets in the present manner or style thereof.
6.14 Insurance. Schedule 6.14 lists all material insurance policies
covering the Acquired Assets. There is no claim by Future Tech pending under any
of such policies or bonds as to which coverage has been questioned, denied, or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid, and Future Tech is otherwise
in compliance with the terms of such policies and bonds.
6.15 Environmental, Health, and Safety Matters. Future Tech has
complied and is in compliance with all Environmental, Health, and Safety
Requirements.
(a) Without limiting the generality of the foregoing, Future
Tech has obtained and complied with, and is in compliance with, all permits,
licenses and other authorizations that are required pursuant to Environmental,
Health, and Safety Requirements (as defined below) for the occupation of its
facilities and the operation of its business; a list of all such permits,
licenses and other authorizations is set forth on the attached Schedule 6.15.
(b) Future Tech has not received any written or oral notice,
report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any Liabilities or potential
Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to it
or its facilities arising under Environmental, Health, and Safety Requirements.
(c) None of the following exists at any property or facility
owned or operated by Future Tech: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(d) Future Tech has not treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or owned or
operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to Liabilities, including any Liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
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amended ("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any
other Environmental, Health, and Safety Requirements.
(e) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(f) Future Tech has not either expressly or by operation of
law, assumed or undertaken any Liability, including without limitation any
obligation for corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(g) No facts, events or conditions relating to the past or
present facilities, properties or operations of Future Tech will prevent, hinder
or limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective obligations
pursuant to Environmental, Health, and Safety Requirements, or give rise to any
other Liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental, Health, and Safety Requirements, including
without limitation any relating to onsite or offsite releases or threatened
releases of hazardous materials, substances or wastes, personal injury, property
damage or natural resources damage.
(h) "Environmental, Health, and Safety Requirements" shall
mean for purposes of this Section 6.15 all federal, state, local and foreign
statutes, regulations, ordinances and other provisions having the force or
effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
6.16 Employment Matters; Employee Benefits.
(a) Employment and Labor Matters. Schedule 6.16(a) sets forth
the name, position, employment date, 1999 compensation (base and bonus) of, and
Future Tech's severance and indemnity obligations to, each employee of Future
Tech who is expected to earn U.S. $50,000 or more. Future Tech is not a party to
any collective bargaining agreement
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(whether industry wide or on a company level) or agreement of any kind with any
union or labor organization. There has not been any attempt by any union or
other labor organization to organize the employees of Future Tech at any time in
the past five (5) years.
(b) Employee Benefit Matters. Except as disclosed in Schedule
6.16(b), Future Tech does not as of the date hereof provide, nor is it obligated
to provide, directly or indirectly, any benefits for employees other than
salaries, sales commissions and bonuses, including, but not limited to, any
pension, profit sharing, stock option, retirement, bonus, hospitalization,
insurance, severance, vacation or other employee benefits (including any housing
or social fund contributions) under any law, regulation, practice, agreement or
understanding. Each employee benefit plan maintained by or on behalf of Future
Tech or any other party (including any terminated pension plans) which covers or
covered any employees or former employees of Future Tech ("Employee Benefit
Plan") is listed in Schedule 6.16(b). Future Tech has delivered to Buyer true
and complete copies of all such plans and any related documents. With respect to
each such plan: (i) no litigation, administrative or other proceeding or claim
is pending, or to Future Tech's knowledge threatened, involving such plan; and
(ii) such plan has been administered in compliance in all material respects with
all applicable plan documents, agreements, laws and regulations. Future Tech has
timely made payment in full of all contributions to all of the Employee Benefit
Plans which Future Tech was obligated to make prior to the date hereof; and
there are no contributions declared or payable by Future Tech to any Employee
Benefit Plan which, as of the date hereof, has not been paid in full.
(c) No Liability. Buyer shall be under no duty whatsoever to
hire any employee or group of employees of Future Tech. Effective as of the
Closing Date, Buyer may offer to hire such persons as are necessary and
qualified to operate its business. All terms, including benefits, of each offer
to such person shall be determined by Buyer in its sole discretion. Nothing
herein shall constitute either (i) an agreement to assume or be bound by any
previous or existing agreement between Future Tech and any of Future Tech's
employees or (ii) a guaranty that any employee of Future Tech, to whom an offer
of employment of Buyer is made shall be entitled to remain in the employment of
Buyer for a specified period of time. An employee of the Business to whom an
offer of employment is made by Buyer and who accepts such offer shall become an
employee of Buyer on the day such person reports to work for Buyer. Such person
who is unable to report to work for Buyer on the Closing Date due to illness,
injury or other reason shall not become an employee of Buyer until such person
reports to work for Buyer. Future Tech shall remain solely responsible for all
salaries, wages, benefits, severance arrangements and all other terms of
employment for (a) each person who may become an employee of Buyer accruing
prior to the date such person becomes an employee of Buyer and (b) each employee
of Future Tech who does not become an employee of Buyer accruing at any time.
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6.17 Consents. Schedule 6.17 sets forth a true, correct, and complete
list of the identities of any person or entity (including a governmental entity)
whose consent or approval is required or may be compelled pursuant to Section
365 of the Bankruptcy Code, and the matter, agreement, or contract to which such
consent relates, in connection with the transfer, assignment or conveyance by
Future Tech of any Acquired Asset.
6.18 Books and Records. The books and records of Future Tech related to
the businesses associated with the Acquired Assets (i) have been fully and
accurately maintained in accordance with applicable laws and with generally
accepted practices and standards in the jurisdiction(s) in which Future Tech
operates and (ii) are in Future Tech's possession or under its control. The
Acquired Assets include all equipment, material, and rights necessary to
maintain such records, and the Buyer will not be dependant upon any other
equipment, materials or rights or the services of any person to enable it
conveniently to continue to maintain the same.
6.19 Year 2000 Compliance. Future Tech represents and warrants that it
has made its best efforts to ensure that all Acquired Assets are designed to be
used prior to, during, and after the calendar year 2000 A.D. and that the
scheduled completion date of efforts to certify that the Acquired Assets will
operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than a century is December
1, 1999. Future Tech further represents and warrants that its best efforts are
designed to ensure Year 2000 compatibility, including, but not limited to, date
data century recognition, calculations which accommodate same century and
multi-century formulas and date values, and date data interface values that
reflect the century; and includes Year 2000 capabilities.
6.20 Product Warranties; Defects; Liabilities. Each product
manufactured, sold, licensed, leased, or delivered by Future Tech has been in
conformity with all applicable contractual commitments and all express and
implied warranties. Future Tech has no Liability (and to the best of its
knowledge, there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against Future Tech
giving rise to any Liability) for replacement or repair thereof or other damages
in connection therewith. No product manufactured, sold, licensed, leased, or
delivered by Future Tech is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale, license,
or lease or beyond that implied or imposed by applicable law.
6.21 Product Warranty. Each product manufactured, sold, leased, or
delivered by Future Tech has been in conformity with all applicable contractual
commitments and all express and implied warranties, and Future Tech has no
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
any of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve for product
warranty
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claims set forth on the 1999 Future Tech Balance Sheet. No product manufactured,
sold, leased, or delivered by Future Tech is subject to any guaranty, warranty,
or other indemnity beyond the applicable standard terms and conditions of sale
or lease.
6.22 Product Liability. Future Tech has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by Future Tech.
6.23 Inventory. The inventory portion of the Acquired Assets consists
of raw materials and supplies, manufactured and purchased parts, goods in
process, and finished goods all of which is merchantable and fit for the purpose
for which it was procured or manufactured, all of which is of the type sold by
Future Tech in the usual, regular and ordinary course of its business during the
12-month period ending as of the date of this Agreement, and all of which is
reflected on the 1999 Future Tech Balance Sheet at the lower of cost or market
value, and none of which is Slow-Moving ("Slow-Moving" inventory is inventory
over 90 days old as of the Closing Date), obsolete, damaged, or defective,
subject only to the reserve for inventory writedown to net realizable value set
forth in the 1999 Future Tech Balance Sheet. RMA inventory (as that term is
customarily used in the industry) will be purchased by Buyer in "as is"
condition and valued at fair market value.
6.24 Accounts Receivable. Future Tech has delivered to Buyer a complete
and accurate aging of all Accounts Receivable as set forth in Schedule 2.1(b)
excluding the accounts receivable as set forth in Schedule 2.4 of Future Tech as
of April 27, 1999. No Account Receivable reflected on Schedule 2.1(b) and in the
1999 Future Tech Balance Sheet and no Account Receivable arising after the date
of the 1999 Future Tech Balance Sheet and reflected on the books of the Company
and the Closing Date Balance Sheet (excluding the accounts receivable as set
forth in Schedule 2.4) is uncollectible or subject to counterclaim or offset,
except to the extent reserved against thereon, and all Accounts Receivable will
be collected within 120 days of their respective creation. All Accounts
Receivable have been generated and recorded in the ordinary course of business
and consistent with the Business Practices and reflect a bona fide obligation
for the payment of goods or services provided by the Company.
6.25 Bankruptcy Matters. (a) All filings, pleadings, statements and
other actions made or to be made in connection with the Case by or on behalf of
Future Tech have been duly and validly authorized by all required corporate
actions and have been timely filed in the Case; and (b) all information
contained in any document filed by or on behalf of Future Tech except to the
extent information is received from third parties in the Case will be true and
correct as of the date so filed to the best of Future Tech's knowledge, the date
of this Agreement and the Closing.
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6.26 Representations Complete. None of the representations or
warranties made by Future Tech or Leonard Keller (as modified by any Schedules),
nor any statement made in any schedule, exhibit or certificate furnished by
Future Tech or Leonard Keller pursuant to this Agreement contains or will
contain at the Closing Date, any untrue statement of a material fact, or omits
or will omit at the Closing Date to state any material fact necessary in order
to make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading.
6.27 Foreign Corrupt Practices Act. In conformity with the United
States Foreign Corrupt Practices Act, Future Tech and its employees and agents
have not directly or indirectly made any offer, payment, promise to pay, or
authorized payment, or offered a gift, promised to give, or authorized the
giving of anything of value for the purpose of influencing an act or decision of
an official of any foreign government or the United States Government (including
a decision not to act) or inducing such a person to use his influence to affect
any such governmental act or decision in order to assist in obtaining, retaining
or directing any business.
6.28 Florida Taxes. Future Tech shall comply with the requirements of
Section 212.10 and Chapter 220 of the Florida Statutes and the regulations
promulgated thereunder by the Florida Department of Revenue in order to insulate
Buyer from transferee liability for unpaid taxes owed by Future Tech to the
State of Florida pursuant to Chapters 212 and 220, respectively, of the Florida
Statutes.
6.29 Export/Import Control Regulations. Future Tech has complied with
all applicable export and/or import laws and restrictions and regulations of the
Department of Commerce or other United States or foreign agency or authority, as
the case may be, and has not knowingly imported, exported, or allowed the
re-import or re-export of, anything in violation of any such restrictions, or
without all required licenses and authorizations.
6.30 Absence of Currency Controls. As of the date of this Agreement,
there are no currency control laws applicable to the business conducted by
Future Tech in the Trade Area.
6.31 Executory Contracts, Unexpired Leases. Schedule 2.1(c)(ii) is a
true and complete list of all of Future Tech's executory contracts and unexpired
leases (constituting Acquired Assets to be assumed by Future Tech and assigned
to Buyer pursuant to the Agreement and the Plan) and each such contract is an
executory contract as so defined.
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ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
To induce Future Tech to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer represents and warrants to and
covenants with Future Tech as follows:
7.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. Buyer
has the corporate authority and power to own or lease its properties and to
carry on its business as and in the places where such business is now conducted,
and Buyer is duly licensed and qualified in all jurisdictions where the
character of the property owned by it or the nature of the business transacted
by it makes such license or qualification necessary, except where such failure
would not result in a material adverse effect on Buyer taken as a whole.
7.2 Execution; Authorization and Approval. The execution and delivery
of this Agreement and the performance of the transactions contemplated hereby
have been duly and validly authorized and approved by Buyer and this Agreement
is a valid and binding agreement of Buyer, enforceable against Buyer in
accordance with its terms, except as such enforcement may be limited by
bankruptcy or similar laws affecting the enforcement of creditors' rights
generally, and the availability of equitable remedies.
7.3 Execution; No Inconsistent Agreements; Etc. The execution and
delivery of this Agreement by Buyer does not, and the consummation of the
transactions contemplated hereby will not, constitute: (i) a breach or violation
of the charter or by-laws of Buyer; (ii) a default under any of the terms,
conditions or provisions of (or an act or omission that would give rise to any
right of termination, cancellation or acceleration under) any material note,
bond, mortgage, lease, indenture, agreement or obligation to which Buyer may be
bound; or (iii) a violation of any law, order, regulation, judgment, License or
decree applicable to Buyer.
7.4 Full Disclosure. No representation or warranty of Buyer contained
in this Agreement, and none of the statements or information concerning Buyer
contained in this Agreement, or the Schedules, contains or will contain any
untrue statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
7.5 Approvals. The approval of the shareholders of Buyer is not
required for the consummation of the transactions contemplated hereby.
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7.6 Bankruptcy Disclosure. Buyer will timely provide all financial and
other information reasonably required by Future Tech to meet the "adequate
disclosure" requirements of 11 U.S.C. ss.1125. Future Tech acknowledges that
Buyer has provided all such information to Future Tech. If additional
information concerning the Buyer shall be required by the Bankruptcy Court or
reasonably requested by the U.S. Trustee, Buyer will provide such information
within three (3) Business Days of receipt of such request by Buyer.
7.7 Employment of Future Tech Employees. After Closing, Buyer will hire
such employees of Future Tech as in its best judgment will enable Buyer to
exploit the assets purchased pursuant to this Agreement. Subject to a due
diligence review of the employees of Future Tech and unless cause is present,
Buyer shall first offer to the employees of Future Tech, employment with Buyer
which is similar in conduct, skill, aptitude and seniority as those employees
had with Future Tech. All hiring by Buyer, however, shall be subject to the
sound business judgment of Buyer, exercised with due regard to the objective of
Future Tech that as many of its employees as possible obtain employment with
Buyer which employment is similar to the employment they had with Future Tech.
7.8 WARN Act Compliance. Future Tech hereby represents, warrants and
covenants to Buyer that (i) for the 90-day period prior to the closing date it
will permanently layoff, or will have permanently laid off, no more than thirty
(30) employees, other than in connection with the transactions contemplated by
this Agreement; (ii) it will not take any action to trigger Liability under the
Worker Adjustment and Retraining Notification ("WARN") Act, 29 U.S.C.
ss.ss.2101-09, for Buyer; and (iii) it will indemnify and hold Buyer harmless
from any and all claims, demands, deficiencies, penalties, assessments,
executions, judgments or recoveries due to any actual or alleged violation of
the WARN Act caused by Future Tech's actions or failures to act. This
indemnification shall be separate from Future Tech's indemnification obligations
under Section 12.2 of this Agreement.
7.9 Guaranty of Buyer's Performance by Bell. The representations,
warranties, obligations and promises of performance, including promises to make
purchase price payments hereunder, of Buyer contained in this Agreement, to the
extent that performance or compliance is required of Buyer and, if there is any
dispute regarding such performance or compliance, after Buyer's defenses have
been adjudicated or waived (pursuant to the waiver provisions hereof), shall be
performed and complied with, in all material respects by Bell, as though made
directly by Bell, upon Buyer's failure of performance, upon notice by Future
Tech if such nonperformance is not promptly cured. This guaranty of performance
shall survive the closing and shall remain in full force and effect until the
obligations of Buyer shall have terminated pursuant to the terms of this
Agreement.
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ARTICLE VIII
CONDUCT OF BUSINESS OF FUTURE TECH PENDING CLOSING
Each of Future Tech and Leonard Keller covenants and agrees that,
except as otherwise prohibited or mandated by the Bankruptcy Code, between the
date hereof and the Closing Date:
8.1 Conduct of Business. The business of Future Tech shall be conducted
in compliance with the Business Practices. Without limiting the generality of
the foregoing, Future Tech:
(a) Shall not enter into any contract, agreement or other
arrangement which would constitute a material contract, except for contracts to
sell or supply goods or services to customers in accordance with the Business
Practices at prices and on terms substantially consistent with such Business
Practices;
(b) Except for sales of personal property in the ordinary
course of its business, shall not sell, assign, transfer, mortgage, convey,
encumber or otherwise dispose of, or cause the sale, assignment, transfer,
mortgage, conveyance, encumbrance or other disposition of, any of its assets or
properties or any interest therein;
(c) Shall not acquire any material assets, except expenditures
made in the ordinary course of business as reasonably necessary to enable it to
conduct its normal business operations and to maintain its normal inventory of
goods and materials, at prices and on terms substantially consistent with
current market conditions and prior operating practices;
(d) Shall maintain in full force and effect all insurance
policies;
(e) Shall maintain its books, records and accounts in the
usual, regular and ordinary course of business on a basis consistent with prior
practices and in accordance with GAAP;
(f) Shall use its best efforts to preserve its business
organization, to keep available the services of its employees, to preserve the
goodwill of its suppliers, customers and others having business relations with
Future Tech, and to retain the services of key employees and agents of Future
Tech on terms satisfactory to Buyer and shall pay, all compensation, bonus,
seniority bonus, commissions, vacation, severance, retirement, pension and other
benefits, including maintenance and funding of indemnity obligations
(collectively "Employment Benefits") due to, or accrued for the benefit of, its
employees through Closing.
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(g) Shall keep in full force and effect, and not cause a
default of any of its obligations under, each of its contracts and commitments
except as they may terminate in accordance with their terms or in accordance
with the terms of this Agreement;
(h) Shall duly comply in all material respects with all laws,
regulations and Licenses applicable to it and to the conduct of its business;
(i) Shall not create, incur or assume any material Liability
or indebtedness, except in the ordinary course of business consistent with past
practices;
(j) Shall not make or commit to make any capital expenditures
in excess of U.S. $50,000 in the aggregate;
(k) Shall not apply any of its assets to the direct or
indirect payment, discharge, satisfaction or reduction of any amount payable
directly or indirectly to or for the benefit of any shareholder or any Related
Party (as that term is defined in GAAP) except as an employee in the ordinary
course of business;
(l) Shall maintain the Oracle Database and not erase,
disclose, duplicate, or remove it, or permit third-parties to use or do any of
the same.
8.2 No Material Changes. Future Tech shall not materially alter its
organization, capitalization, or financial structure, practices or operations,
provided, however, that Future Tech's filing of a voluntary bankruptcy petition
in the Case shall not be deemed a material adverse change. Without limiting the
generality of the foregoing:
(a) No change shall be made in the articles of incorporation
or by-laws except as contemplated in the Plan;
(b) No change shall be made in the authorized or issued
capital stock;
(c) Future Tech shall not issue, or grant any right or option
to purchase or otherwise acquire, any of its capital stock or other securities;
(d) No dividend or other distribution or payment shall be
declared or made with respect to any of capital stock; and
(e) No change shall be made affecting banking arrangements
except as required in the Case as by the U.S. Trustee Operating Guidelines.
8.3 Compensation. No increase shall be made in the compensation or
employee benefits payable or to become payable to any director, officer,
employee or agent, and no
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bonus or profit-share payment or other arrangement (whether current or deferred)
shall be made to or with any such director, officer, employee or agent, except
in the ordinary course of business and consistent with prior practices.
8.4 Bankruptcy Filings and Compliance. (a) All filings, pleadings,
statements and other actions to be made in connection with the Case by or on
behalf of Future Tech will have been duly and validly authorized by all required
corporate actions when made; (b) all information contained in any document filed
by or on behalf of Future Tech, except to the extent it is received from third
parties will be true and correct as of the date so filed to the best of Future
Tech's knowledge; and (c) Future Tech will at all times be in full compliance
with all applicable provisions of (i) the Bankruptcy Code, (ii) the Federal
Rules of Bankruptcy Procedure, (iii) the Rules and/or Guidelines promulgated by
the U.S. Trustee, and (iv) all applicable local bankruptcy court rules.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligation of Future Tech and Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing, of each of the following conditions, any or all of which may be waived
in whole or in part by either Buyer or Future Tech:
9.1 Bankruptcy Court Approval. The United States Bankruptcy Court shall
have entered a Final Order as provided in Section 1.1(a) of this Agreement in
form and substance approved by Buyer.
9.2 Other Governmental Consents. All consents and approvals required by
governmental regulatory authorities for the consummation of the transactions
contemplated by this Agreement shall have been obtained, including, without
limitation, the expiration of any notice and waiting period under the HSR Act.
All of such consents and approvals shall have been obtained without the
imposition of any adverse terms or conditions.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF BUYER.
10.1 Conditions. All obligations of Buyer to consummate the
transactions contemplated by this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the
Closing, any or all of which may be waived in whole or in part by Buyer:
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(a) Representations and Warranties. The representations and
warranties contained in this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of Future Tech in
connection with the transactions contemplated by this Agreement shall be true,
correct and complete in all material respects (except for representations and
warranties which are by their terms qualified by materiality, which shall be
true, correct and complete in all respects) as of the date when made and shall
be deemed to be made again at and as of the Closing Date and shall be true,
correct and complete at and as of such time in all material respects (except for
representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects).
(b) Compliance with Agreements and Conditions. Future Tech
shall have performed and complied, in all material respects, with all agreements
and conditions required by this Agreement to be performed prior to or on the
Closing Date.
(c) Absence of Material Adverse Changes. Except for the filing
of the Case, no material adverse change in the business, assets, financial
condition, or prospects of Future Tech shall have occurred, no substantial part
of the assets of Future Tech not substantially covered by insurance shall have
been destroyed due to fire or other casualty, and no event shall have occurred
which has had or may reasonably be expected to have a material adverse effect on
the business, assets, financial condition or prospects of Future Tech (such
changes and effects, collectively, "Material Adverse Changes/Effects").
(d) Legal Opinions. Buyer shall have received one or more
legal opinions, substantially in the form of Exhibit B, from (i) Stearns,
Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., counsel to Future Tech;
(ii) Winston & Strawn, counsel to Future Tech; and/or (iii) Kozyak Tropin &
Throckmorton, P.A., counsel to Future Tech.
(e) Consents under Unexpired Leases, Executory Contracts and
Other Material Contracts. Buyer shall have received written consents or
approvals (collectively "Consents"), in form and substance reasonably acceptable
to Buyer's counsel, from all parties whose consent is required under any
executory contracts or unexpired leases and/or other material contracts to be
assigned to Buyer hereunder, for the transactions contemplated hereby, that such
Consents shall not amend or limit the terms of any lease or contract in any
material respect (except as otherwise provided in Sections 3.1(c)(i) and
(c)(ii)) or alternatively, that the Bankruptcy Court shall have entered an order
or orders authorizing the assumption of and assignment to Buyer of the lease or
contract on the Closing Date.
(f) Employment, Consulting and Non-Compete Agreements. At
Closing Louis Leonardo and Juan M. Ortiz shall enter into employment agreements
with Buyer containing terms that are mutually acceptable. All such persons shall
be covered by Buyer's directors= and officers= liability insurance, for acts or
omissions occurring after Closing, to the
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same extent as other officers of Buyer. Leonard Keller shall enter into a
consulting agreement with Buyer containing terms that are mutually acceptable.
(g) Board Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors of Buyer.
(h) Facility Lessor Approval. The Airport Key Corporation
shall have consented in writing to the assignment of the lease for Future Tech's
offices located at 7630 N.W. 25th Street, Miami, Florida 33122 and the terms of
such lease shall be no less favorable to Buyer than currently enjoyed by Future
Tech.
(i) Equity Value. The Equity Value, as defined above, is not
less than one hundred ($100.00) dollars.
(j) Bank Approval. Bell shall have received the consent of its
banks to the guaranty of Buyer's obligations hereunder pursuant to Section 7.9
of this Agreement.
(k) No Proceeding or Litigation. No Adverse Legal Action shall
have been commenced or threatened by or before any Governmental Entity against
either Future Tech, Leonard Keller or Buyer, seeking to restrain or materially
and adversely alter the transactions contemplated hereby which Buyer believes,
on the basis of the advice of its counsel rendered in good faith in its sole and
absolute discretion, (i) is likely to prevent the consummation of the
transactions contemplated hereby, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (iii)
affect adversely the right of Buyer to own the Acquired Assets, or to operate
the former business of Future Tech, or (iv) otherwise render inadvisable, in the
sole and absolute discretion of Buyer, the consummation of the transactions
contemplated by this Agreement.
(l) Resolutions of Future Tech. Buyer shall have received a
true and complete copy, certified by an officer of Future Tech, of the
resolutions duly and validly adopted by the Board of Directors of Future Tech
evidencing its authorization of the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, including the
commencement of the Case.
(m) Good Standing. Buyer shall have received good standing
certificates for Future Tech from the Secretary of State of the State of Florida
and any other jurisdiction in which the operation of Future Tech's business
requires Future Tech to qualify to do business as a foreign corporation, in each
case dated as of a date not earlier than five business days prior to the Closing
Date.
(n) Satisfactory Completion of Due Diligence. Buyer shall have
completed all its business, legal, accounting, financial, and environmental due
diligence with respect to
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Future Tech, which due diligence shall include but is not limited to a valuation
of the Acquired Assets and inventory, the Assumed Liabilities and the
transactions contemplated by this Agreement and shall, in its sole and absolute
judgment, formed in good faith, be satisfied with the results thereof.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF FUTURE TECH
11.1 Conditions. All of the obligations of Future Tech to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
and satisfaction of each and every of the following conditions on or prior to
the Closing, any or all of which may be waived in whole or in part, by Future
Tech:
(a) Representations and Warranties. The representations and
warranties contained in this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of Buyer in
connection with the transactions contemplated by this Agreement shall be true
and correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true, correct
and complete in all respects) when made and shall be deemed to be made again at
and as of the Closing Date and shall be true at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
(b) Compliance with Agreements and Conditions. Buyer shall
have performed and complied, in all material respects, with all agreements and
conditions required by this Agreement to be performed or complied with by Buyer
prior to or on the Closing Date.
(c) Legal Opinion. Future Tech shall have received a legal
opinion, substantially in the form of Exhibit C, from Wilson Sonsini Goodrich &
Rosati, P.C., counsel to Buyer.
ARTICLE XII
INDEMNITY
12.1 Buyer Indemnification. Buyer agrees to indemnify and hold harmless
Future Tech and its respective officers, directors, employees and Leonard J.
Keller ("Future Tech Indemnitees"), from and against any and all actions, suits,
claims, proceedings, costs, losses, damages, judgments, liabilities, fines,
penalties, amounts paid in settlement, and reasonable expenses (including,
without limitation, reasonable attorneys' fees and disbursements)
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("Damages") incurred by any Future Tech Indemnitee arising out of (i) any
material inaccuracy in or material breach, violation, or nonobservance of the
representations, warranties, covenants or agreements made by Buyer in this
Agreement; (ii) the failure of Buyer to discharge the Assumed Liabilities from
and after the Closing Date as provided in Section 3.1(c)(i) and (ii) hereof; or
(iii) the use and operation of the Acquired Assets by Buyer after Closing.
Notwithstanding the foregoing, it is expressly agreed by the parties, that (a)
no indemnity is to be made later than the date which is the later of (x) one
year from the date of Closing and (y) solely with respect to the payment of each
component of the Purchase Price under Section 3.1(a), (b) and (c), the date set
for payment thereof; (b) any amounts payable under Article III to Future Tech at
the time such indemnification is to be made may be offset by the amount of such
indemnification paid to Future Tech; (c) Future Tech shall promptly notify Buyer
of any third-party claims and allow Buyer to assume the defense of such claim
(without any prejudice as to whether indemnification is required); (d) the total
amount which may be paid as indemnification under (i) and (iii) above is
$1,000,000 (or if indemnification is sought with respect to nonpayment of the
Purchase Price, then the amount of such outstanding Purchase Price, taking into
account any permitted offsets or adjustments provided for in this Agreement);
(e) the total amount which may be paid as indemnification under (ii) above shall
not exceed the amount of the Assumed Liabilities less the amount paid on same to
the date of any such indemnification; (f) Future Tech shall not be entitled to
indemnification hereunder until Damages exceed $75,000, whereupon Future Tech
shall be responsible for the first $75,000 of such Damages; and (g) the amount
of any indemnification made to Future Tech will be reduced by any tax benefit
received or receivable by Future Tech arising from the matter for which
indemnification is being made. It is also expressly understood by the parties
that, in no case shall Buyer indemnify Mark B. Jimenez and/or anyone serving as
his agent or proxy or in any other way exercising or attempting to exercise
dominion or control over Future Tech or Jimenez's stock in Future Tech
(collectively, "Jimenez Entities") or the MarkVision companies and/or any of
their affiliated entities (collectively, "MarkVision Entities") in respect of
any matter whatsoever; and it is expressly agreed by the parties that Buyer
shall not indemnify any Future Tech Indemnitees with respect to any claim that
such Jimenez and/or MarkVision entities may bring against any Future Tech
Indemnitee.
12.2 Future Tech Indemnification. Future Tech agrees to indemnify and
hold harmless Buyer and its respective officers, directors, employees and
controlling persons, and each of them ("Buyer Indemnitees") from and against any
and all Damages incurred by any Buyer Indemnitee to the extent relating to or
arising out of (i) any material inaccuracy in or breach, violation or
nonobservance of the material representations, warranties, covenants or
agreements made herein by Future Tech and/or Leonard Keller, or (ii) any
actions, suits, claims, proceedings brought against any Buyer Indemnitee by any
Jimenez Entities or MarkVision Entities arising out of the negotiation,
execution, delivery and performance of this Agreement and the transactions
contemplated hereby. Notwithstanding the foregoing, it is expressly agreed by
the parties that (a) no indemnity is to be made with respect to
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Damages arising after the date which is 15 months after the Closing Date; (b)
the total amount which may be paid as indemnification hereunder shall be the
greater of $1,000,000 and the amount due, if any, to Future Tech pursuant to
Section 3.1(d); and (c) the amount of any indemnification made to Buyer will be
reduced by any tax benefit received or receivable by Buyer arising from the
matter for which indemnification is being made.
ARTICLE XIII
TERMINATION
13.1 Termination. This Agreement may be terminated at any time:
(a) By mutual consent of Buyer and Future Tech; or
(b) At the election of Buyer if between the date hereof and
the time scheduled for the Closing: (i) an event or condition occurs that has
resulted in or may be expected to result in a Material Adverse Change/Effect;
(ii) any material representation or warranty of Future Tech and/or Leonard
Keller contained in this Agreement (including the Schedules and Exhibits hereto)
shall not have been true and correct when made; (iii) Future Tech and/or Leonard
Keller shall not have complied with any material covenant or agreement to be
complied with by it/him contained in this Agreement (including if the approvals
required in Section 1.1 are not timely given); (iv) a Competing Bid (as defined
below) is approved by the Bankruptcy Court; (v) the Closing has not been
consummated by July 9, 1999; or (vi) Buyer shall have had no obligation to
consummate the transactions contemplated by this Agreement pursuant to Article X
of this Agreement; or
(c) At the election of Future Tech if between the date hereof
and the time scheduled for the Closing: (i) Buyer has materially breached or
failed to perform or comply with any of its representations, warranties,
covenants or obligations under this Agreement; or (ii) the Closing has not been
consummated by July 9, 1999.
13.2 Manner and Effect of Termination. Written notice of any
termination ("Termination Notice") pursuant to this Article XIII shall be given
by the party electing termination of this Agreement ("Terminating Party") to the
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of thirty (30) days (but no later than up
to July 9, 1999) after receipt of Termination Notice to cure the matters giving
rise to such termination to the reasonable satisfaction of the Terminating
Party. For purposes of this Article XIII, the automatic stay under ss.362 of the
Bankruptcy Code shall be deemed terminated as to Buyer in the event Buyer is the
Terminating Party.
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13.3 Liquidated Damages. Upon a breach of this Agreement by Buyer
(other than for failure to pay the Contingent Incentive Payment, if earned),
Buyer will pay to Future Tech, as liquidated damages, the out-of-pocket fees,
expenses and costs incurred by Future Tech (not to exceed $50,000), plus
$100,000.00. Upon a breach of this Agreement by Future Tech, Future Tech shall
pay to Buyer, as liquidated damages, the fees and expenses incurred by Buyer
(not to exceed $50,000), plus $100,000, which amount shall be allowed as an
administrative expense in the Case.
ARTICLE XIV
COMPETING BID PROCEDURES
14.1 Approval of Bidding Procedures. Pursuant to Section 1.1, Future
Tech will obtain Bankruptcy Court approval of the bidding procedures set forth
on Schedule 14.
ARTICLE XV
NOTICE; BREAK-UP FEE
15.1 Notice. In recognition of the time and expense expended by Buyer
with respect to the purchase of the Acquired Assets, Future Tech hereby
covenants and agrees that prior to the Closing Date or the termination of this
Agreement, it will notify Buyer of any and all inquiries which it receives
before and during the Case, regarding the purchase of some or all the Acquired
Assets. Future Tech shall not actively solicit any bid from a third party other
than Buyer for the sale or other disposition of the Acquired Assets until such
time as the Agreement is terminated pursuant to Section 13.1 of the Agreement;
provided, however, that Future Tech may respond to requests for information
and/or respond to proposals from such party consistent with its fiduciary
obligation as a debtor in possession under the Bankruptcy Code.
15.2 Breakup Fee. Future Tech further covenants and agrees, that if any
termination of this Agreement pursuant to Section 13.1(b)(iv) shall be followed
by a sale of substantially all the Acquired Assets to one or more purchasers,
Future Tech shall pay to Buyer a breakup fee equal to the Buyer's reasonable
costs and expenses not to exceed $500,000 which shall be allowed as an
administrative expense payable on termination.
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ARTICLE XVI
MISCELLANEOUS
16.1 Notices.
(a) All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon receipt if delivered in person or by facsimile transmission
(with confirmation of transmission), or upon the expiration of twenty-four (24)
hours after the date sent, if sent by Federal Express (or similar overnight
courier service) to the parties at the following addresses:
(1) If to Future Tech, and/or Leonard
Keller:
c/o Future Tech
7630 N.W. 25th Street
Miami, Florida 33122
With a copy (which shall not constitute notice) to:
Winston & Strawn
1400 L Street
Washington, DC 20005-3502
Attn: Barry J. Hart
Fax No.: (202) 371-5950
and
Kozyak Tropin & Throckmorton, P.A.
200 South Biscayne Boulevard
Miami, FL 33131-2335
Attn: Charles W. Throckmorton
Fax No: (305) 372-3508
(2) If to Buyer or Bell:
Bell Microproducts Inc.
1941 Ringwood Avenue
San Jose, California 95131-1721
Attn: W. Don Bell
Fax No: (408) 451-1694
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(3) With a copy (which shall not
constitute notice) to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 95060
Attention: Larry W. Sonsini, Esq. and
Thomas C. Klein, Esq.
Fax No: (650) 493-6811
(4) Notices may also be given in any
other manner permitted by law,
effective upon actual receipt.
Notices may be given on behalf of a
party by its counsel. Any party may
change the address to which notices,
requests, demands or other
communications to such party shall be
delivered or mailed by giving notice
thereof to the other parties hereto
in the manner provided herein.
16.2 Survival. (a) All of the representations and warranties contained
in Sections 6 and 7 of this Agreement, and all additional agreements which by
their terms contemplate performance subsequent to the Closing, shall survive the
Closing hereunder.
(b) Sections 5.2, 5.3, 5.5, 7.9, Article XII, and Article XVI
of this Agreement shall survive any termination of this Agreement.
16.3 Counterparts; Interpretation. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the parties with respect to the matters covered hereby. All Schedules
hereto shall be deemed a part of this Agreement. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular subsection or paragraph. References to
"including" means including without limiting the generality of any description
preceding such term.
16.4 Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Florida and the Bankruptcy Code, without regard to any conflict-of-law rule
or principle that would give effect to the laws of another jurisdiction. The
United States Bankruptcy Court shall retain jurisdiction to hear any dispute and
enter any order arising under this Agreement.
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16.5 Successors and Assigns; Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, legal representatives, and successors; provided,
however, that Buyer may assign this Agreement or any rights hereunder, in whole
or in part, to any wholly owned subsidiary so long as Buyer fully guarantees
performance of this Agreement by such subsidiary.
16.6 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
16.7 Waiver. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
16.8 Headings. The headings as to contents of particular paragraphs of
this Agreement are inserted for convenience only and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
16.9 Expenses. Except as otherwise expressly provided herein, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by Buyer or Future Tech as each
party incurs such expenses. The filing fee payable in connection with the HSR
Act filing will be paid 50% by Buyer and 50% by Future Tech.
16.10 Finder's Fees. Buyer represents to Future Tech that no broker,
agent, finder or other party has been retained by it in connection with the
transactions contemplated hereby and that no other fee or commission has been
agreed by Buyer to be paid for or on account of the transactions contemplated
hereby. Future Tech represents to Buyer that no broker, agent, finder or other
party has been retained by Future Tech in connection with the transactions
contemplated
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hereby and that no other fee or commission has been agreed by Future Tech to be
paid for or on account of the transactions contemplated hereby.
16.11 Gender. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
16.12 Currency. Unless otherwise expressly provided herein, all amounts
payable in cash hereunder shall be paid in U.S. Dollars. All foreign currency
amounts required to be converted to U.S. Dollars for purposes of this Agreement
shall be converted in accordance with GAAP.
16.13 Acceptance by Fax. This Agreement shall be accepted, effective
and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature
pages hereto.
16.14 Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the last day of any time period falls on a
day which is not a Business Day, then the last day shall be deemed to be the
next day which is a Business Day. As used herein, "Business Day" shall mean any
day on which commercial banks are not authorized or required to close in the
United States.
16.15 Attorneys' Fees. In the event of any litigation arising under the
terms of this Agreement, the prevailing party or parties shall be entitled to
recover its or their reasonable attorneys fees and court costs from the other
party or parties.
16.16 Further Representations. Each party to this Agreement
acknowledges that it has been represented by its own legal counsel in connection
with the transactions contemplated by this Agreement, with the opportunity to
seek advice as to its legal rights from such counsel. Each party further
represents that it is being independently advised as to the tax consequences of
the transactions contemplated by this Agreement and is not relying on any
representation or statements made by the other party as to such tax
consequences.
16.17 Accounting Terms. Except as otherwise expressly provided herein
or in the Schedules, all accounting terms used in this Agreement shall be
interpreted, and all financial statements, Schedules, certificates and reports
as to financial matters required to be delivered hereunder shall be prepared, in
accordance with GAAP consistently applied.
6.18 NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR
-47-
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY DOCUMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF
THIS AGREEMENT.
16.19 Sole Remedy. The indemnification provided by Article XII and
Section 7.8 is the sole remedy of the parties hereto or any other person or
entity claiming a remedy for any and all matters whatsoever arising under or
related to the transactions contemplated by this Agreement other than in respect
of (i) a termination pursuant to Section 13.1(b)(iv), in which case, Section
15.2 applies in addition to the indemnification provided in Article XII, or (ii)
a termination pursuant to Section 13.1(a), (b)(i)-(iii) or (v)-(vi), or (c), in
which case Section 13.3 applies in addition to the indemnifications provided in
Article XII and Section 7.8.
[remainder of page intentionally left blank]
-48-
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be duly executed by their duly authorized officers as of the
day and year first above written.
"BUYER": BELL MICROPRODUCTS-FUTURE TECH,
INC.
By: /s/ W. Don Bell
-----------------------------------------
Its: President
Name: W. Don Bell
By: /s/ W. Don Bell
-----------------------------------------
Its: CEO
Name: W. Don Bell
"FUTURE TECH": FUTURE TECH INTERNATIONAL, INC.
By: /s/ Louis Leonardo
-----------------------------------------
Its: President
Name: Louis Leonardo
"LEONARD J. KELLER": /s/ Leonard J. Keller
---------------------------------------------
LEONARD J. KELLER
Solely for purposes of Section 7.9:
"BELL": BELL MICROPRODUCTS INC.
By: /s/ W. Don Bell
-----------------------------------------
Its: President
Name: W. Don Bell
By: /s/ W. Don Bell
-----------------------------------------
Its: CEO
Name: W. Don Bell
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
-49-
AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT (the "Amendment") to that certain Asset Purchase
Agreement dated May 14, 1999 (the "Agreement") is entered into this first day of
June, 1999, by and among Bell Microproducts-Future Tech, Inc., a California
corporation ("Buyer"), Future Tech International, Inc., a Florida corporation
("Future Tech"), and Leonard J. Keller, and solely for the purposes of Section
7.9 of the Agreement, Bell Microproducts Inc., a California corporation and sole
shareholder of Buyer ("Bell").
1. Capitalized terms not defined in this Amendment shall have the
meanings defined in the Agreement.
2. Amendment to Section 1.1 - "Bankruptcy Court Approval as Express
Condition". The introductory paragraph contained in Section 1.1 of the Agreement
shall be deleted in its entirety and shall be replaced with, and read:
"1.1 Bankruptcy Court Approval as Express Condition. Except as
provided in Section 1.3 of this Agreement, the effectiveness of this Agreement,
and each obligation arising hereunder, is expressly conditioned upon (i) Future
Tech's obtaining the approval of the United States Bankruptcy Court on or before
June 1, 1999 to the competing bid procedures described in Article XIV of this
Agreement, the notice and breakup fee provisions described in Article XV of this
Agreement, the liquidated damages provision set forth in Section 13.3 of this
Agreement, the relief from the automatic stay under Section 362 of the
Bankruptcy Code for purposes of Section 13.2, and the indemnification provisions
set forth in Section 12.2 of this Agreement; and (ii) the entry of an order
confirming the Plan (as defined herein) by the United States Bankruptcy Court on
or before July 6, 1999, said order to become a final order ("Final Order") no
later than July 19, 1999:"
3. Amendment to Section 2.4 - "No Other Assets Acquired". Section 2.4
of the Agreement shall be deleted in its entirety and shall be replaced with,
and read:
"2.4 No Other Assets Acquired. Other than the Acquired Assets
set forth in Section 2.1 above, it is agreed that Future Tech shall not
transfer, and Buyer shall not acquire, any of Future Tech's right, title, and/or
interest in or to any other assets of Future Tech, including, but not limited to
(x) the MarkVision Receivable (as defined herein), (y) the Pembroke Pines house,
located at 590 S.W. 181 Way, Pembroke Pines, Florida (the "Pembroke Pines
House"), and (z) any and all fidelity bonds (the "Fidelity Bonds") as required
by the Bankruptcy Code (the "Excluded Assets"). Schedule 2.4 contains a
non-exclusive list of such Excluded Assets. All such Excluded Assets shall
remain the property of Future Tech."
4. Amendment to Section 3.1(c) - "Assumed Liabilities". Section 3.1(c)
of the Agreement shall be deleted in its entirety and shall be replaced with,
and read:
"(c) Assumed Liabilities. On the Closing Date, Buyer
shall specifically assume and agree, pursuant to the Plan, to pay, perform
and/or discharge (i) those specific liabilities and obligations of Future Tech
identified solely on Schedule 3.1(c)(i), and Schedule 3.1(c)(ii) hereto, all
only in the amounts shown thereon (but except as provided in Section 3.1(c)(v)
below), and (ii) unless excluded below, the liabilities and obligations of
Future Tech arising from events or occurrences arising and occurring exclusively
from and after the Closing Date (other than as a result of acts or omissions of
Future Tech or any of its affiliates after the Closing Date) under the leases,
contracts, agreements, plans, and/or arrangements identified solely on Schedule
2.1(c)(ii) (but not the "cure amounts" listed on such Schedule 2.1(c)(ii),
except for the "cure amounts" that are also listed on Schedule 3.1(c)(i) and
Schedule 3.1(c)(ii)) (the liabilities and obligations set forth in these
subsections (i) and (ii), collectively, the "Assumed Liabilities"), in the
manner set forth below:
(i) Buyer shall, on the Closing Date, agree that it
will pay, without interest, each party listed on Schedule 3.1(c)(i), 90 days
after the Closing Date (or as soon thereafter as practicable), the amount
indicated opposite its name on such Schedule 3.1(c)(i), adjusted by (y) a
reduction in respect of the amount which equals such party's pro rata share of
the Accounts Receivable specified in Schedule 2.1(b) Buyer has not collected
within 90 days after the Closing Date and (z) an adjustment in respect of the
Reallocation (as defined in Section 3.1(c)(v)). Notwithstanding the foregoing,
to the extent that the claim of any party listed on Schedule 3.1(c)(i) is the
subject of an objection to claim in the Case which has not been resolved by the
payment date above, the entire amount of such party's scheduled claim shall be
paid into the Trust Account (as defined herein).
(ii) Buyer shall, on the Closing Date, agree that it
will pay, without interest, each party listed on Schedule 3.1(c)(ii), one year
after the Closing Date (or as soon thereafter as practicable), the amount
indicated opposite its name on such Schedule 3.1(c)(ii), adjusted by (y) a
reduction in respect of the amount which equals such party's pro rata share of
the Accounts Receivable specified in Schedule 2.1(b) Buyer has not collected
within 90 days after the Closing Date and (z) an adjustment in respect of the
Reallocation. Notwithstanding the foregoing, to the extent that the claim of any
party listed on Schedule 3.1(c)(ii) is the subject of an objection to claim in
the Case which has not been resolved by the payment date above, the entire
amount of such party's scheduled claim shall be paid into the Trust Account. If,
pursuant to the Plan, Future Tech shall have paid such amount to any party
listed on Schedule 3.1(c)(ii) prior to the date for payment specified in the
previous sentence, Buyer shall pay Future Tech that amount on the date it would
have been required to make that payment in accordance with the previous
sentence.
(iii) Any additional amounts collected from the 91st
day to 120th day after the Closing Date by Buyer in respect of any Accounts
Receivable, but without any affirmative obligation to collect such amounts,
shall be paid by Buyer to Future Tech for distribution as provided in the Plan.
On the 121st day after the Closing Date (or as soon thereafter as practicable),
Buyer shall
return to Future Tech any Accounts Receivable not collected, for collection and
distribution by Future Tech as provided in the Plan.
(iv) For the purposes of calculating the potential
reduction provided in Sections 3.1(c)(i) and (ii), each such party's pro rata
share of the Accounts Receivable for purposes of those subsections shall be
equal to a fractional number, the numerator of which is the amount listed
opposite such creditor's name on Schedule 3.1(c)(i) or Schedule 3.1(c)(ii), as
the case may be, and the denominator of which is the total combined dollar
amount represented by all amounts listed on both schedules.
(v) For the purposes of this Section 3.1(c), Future
Tech shall, in accordance with Section 4.4 of the Plan, reallocate (the
"Reallocation") the amount to be paid by Buyer in respect of the liabilities and
obligations set forth on Schedule 3.1(c)(i) and Schedule 3.1(c)(ii) among the
creditors named on each such respective schedule in accordance with the Plan so
long as the aggregate amount of such liabilities and obligations (not including
interest earned thereon from and after the petition date) does not exceed the
total dollar amount represented by all amounts listed on each respective
schedule.
(vi) For purposes of each of Section 3.1(c)(i) and
Section 3.1(c)(ii), Future Tech shall timely notify Buyer in writing in the
event any amount listed on Schedule 3.1(c)(i) or Schedule 3.1(c)(ii) is disputed
in the Case, specifying the name of such party and such disputed amount. Prior
to the date set forth for payment in each of Section 3.1(c)(i) and Section
3.1(c)(ii), Future Tech shall establish a separate interest-bearing trust
account satisfactory to Buyer (the "Trust Account") and, on each of the dates
set forth for payment by Buyer in the aforesaid sections, Buyer shall pay such
disputed amount into the Trust Account for the benefit of the party or parties
with respect to whom there is a dispute. To the extent that, after payment to
all parties listed on Schedules 3.1(c)(i) and (c)(ii), respectively, of the
aggregate amount of each allowed claim on such schedule (other than interest
arising from and after the petition date) is less than the total amount that
would have been required to be paid to all such parties on those respective
schedules, such excess, with earned accrued interest thereon, will be promptly
refunded to Buyer.
(vii) It is expressly understood and agreed by the
parties, and the Final Order will reflect, that neither Buyer nor Bell is hereby
or otherwise assuming or taking any responsibility whatsoever with respect to
any obligation or Liability of Future Tech not included within the definition of
Assumed Liabilities, including, without limitation, any obligation or Liability
for, or in respect of, (w) the account payable to Otomation Engineering, Tech
Media Computer Systems, Inc., and/or Tae Il Media Co. Ltd., (x) any Liability
resulting from, arising out of, relating to, in the nature of, or caused by any
breach of any contract, breach of warranty, tort, infringement, U.S. federal,
state, county or local, or foreign tax, or violation of Law, or any Future Tech
Matters (as defined herein), (y) any environmental Liability with respect to the
Assumed Leases or the premises leased thereunder, or (z) any Liabilities with
respect to any employee benefit plans maintained by Future Tech or to which
Future Tech contributes (the "Excluded Liabilities")."
5. Amendment to Section 3.2 - "Non-interference with Collection of
Accounts Receivable of Future Tech". Section 3.2 of the Agreement shall be
deleted in its entirety and shall be replaced with, and read:
"3.2 Non-interference with Collection of Accounts Receivable
of Future Tech.
(a) Consultations. In the event Buyer receives a
request for quotations from, or proposes to sell to, or otherwise transact
business with, any customers or former customers of Future Tech in respect of
whom Buyer has returned Accounts Receivable to Future Tech or which has incurred
any Liability to Future Tech, Buyer agrees to consult with Future Tech in order
to ascertain how to proceed; however, Future Tech agrees and acknowledges that
the decision to transact business ("New Business") with any such party rests
solely within Buyer's discretion.
(b) Notice. On each of the 30th, 60th, 90th and 120th
day following the Closing Date, Buyer shall provide Future Tech with written
notice specifying, to the extent Buyer engages in New Business with a customer
whose receivable is listed on Schedule 2.1(b) (an "Old Customer", and the
Account Receivable of such Old Customer, an "Old Receivable"), (i) whether any
Old Receivable of such Old Customer has not been paid in accordance with its
terms; (ii) the aggregate amount of sales comprising New Business made to such
Old Customer during the period covered by such notice; (iii) whether such Old
Customer has performed its New Business payment obligations in accordance with
the terms of its New Business obligations; and (iv) whether such Old Customer
has stated any reason for its failure to perform its Old Receivable payment
obligations as set forth on Schedule 2.1(b).
(c) Compromise of Old Receivables. All payments by an
Old Customer made in respect of its Old Receivables will be so applied by Buyer.
In connection with any transaction by Buyer of any New Business with an Old
Customer, Buyer may not compromise, waive or extinguish, directly or indirectly
(a "Compromise") any Old Receivable without the prior written consent of Future
Tech; provided, however, that Future Tech's prior written consent shall not be
required so long as no reduction for the related Old Receivable is made in
respect of the entities listed on Schedules 3.1(c)(i) and (ii). If Buyer returns
an Old Receivable to Future Tech in accordance with Section 3.1(c)(iii), and the
related Old Customer alleges a Compromise with respect thereto by Buyer, if
requested by Future Tech, each of Buyer and Future Tech shall cause its
attorneys to select an independent lawyer within three (3) Business Days
thereafter, which lawyer (employing such advisors as s/he deems necessary) shall
then have thirty (30) calendar days in which to determine, with the full
cooperation of the parties, whether the Compromise in fact occurred as a matter
of law. In the event of a determination that there was a Compromise, Buyer shall
reverse any receivable reduction made in respect of such Old Receivable and
remit it to Future Tech for distribution in accordance with the Plan. Absent
manifest error, such determination shall be final and binding upon the parties.
Each party shall pay the fees and expenses of its lawyer in the selection of the
independent lawyer. In the event it is determined that there was a Compromise,
the fees and expenses of the independent lawyer shall be paid by Buyer. In the
event it is determined that there was no Compromise, the fees and expenses of
the independent lawyer shall be paid by Future Tech."
6. Amendment to Section 4.1 - "Closing Date; Closing Deliveries".
Section 4.1 of the Agreement shall be deleted in its entirety and shall be
replaced with, and read:
"4.1 Closing Date; Closing Deliveries. The parties to this
Agreement shall consummate the Asset Transfer and the other transactions
contemplated by this Agreement at a closing (the "Closing") to be held no later
than July 19, 1999; provided, in no event shall the Closing occur prior to the
satisfaction of the conditions precedent set forth in Articles IX, X, and XI
hereof. The date of Closing is referred to herein as the "Closing Date." The
Closing shall take place at the offices of counsel for Buyer, or at such other
place as may be mutually agreed upon by Buyer and Future Tech. At the Closing,
(i) Future Tech shall deliver to Buyer such general warranty deeds, bills of
sale, assignments and other instruments of transfer and conveyance as, in the
reasonable opinion of counsel for Buyer shall be effective to vest in Buyer
title to the Acquired Assets; and (ii) Buyer shall pay the portion of the
Purchase Price due at Closing to Future Tech."
7. Amendment to Subsection (a) of Section 6.9 - "Title to Properties;
Absence of Liens; Condition of Acquired Assets". Subsection (a) of Section 6.9
of the Agreement shall be deleted in its entirety and shall be replaced with,
and read:
"(a) Except for the Pembroke Pines House, Future Tech
does not own any real property. Future Tech has delivered to the Buyer a true
and correct copy of the Assumed Real Property Lease, none of which has been
modified in any respect since delivery to Buyer. The Assumed Real Property Lease
is in full force and effect, is valid and effective in accordance with its
terms, and there is not, under such lease, any material existing default or
event of default (or event which with notice or lapse of time, or both, would
constitute a material default or a Basis therefor). To the best knowledge of
Future Tech, neither the business operations conducted on such real property,
nor such real property, including improvements thereon, violate any applicable
law, building code, zoning requirement, or classification, or pollution control
ordinance or statute relating to the particular property or such operations, and
such non-violation is not dependent, in any instance, on so-called
non-conforming use exceptions. To the best knowledge of Future Tech, all
approvals of Governmental Entities (including licenses and permits) required in
connection with its operations on such real property have been obtained. Future
Tech is lawfully in possession of all real properties of which it is a lessee."
8. Amendment to Subsection (n) of Section 6.11 - "Agreements,
Contracts and Commitments". Subsection (n) of Section 6.11 of the Agreement
shall be deleted in its entirety and shall be replaced with, and read:
"(n) Except for any Fidelity Bonds, any fidelity or
surety bond or completion bond;"
9. Amendment to Section 6.24 - "Accounts Receivable". Section
6.24 of the Agreement shall be deleted in its entirety and shall be replaced
with, and read:
"6.24 Accounts Receivable. Future Tech has delivered to Buyer
a complete and accurate aging of all Accounts Receivable as set forth in
Schedule 2.1(b) excluding the accounts receivable as set forth in Schedule 2.4
of Future Tech as of April 27, 1999. No Account Receivable reflected on Schedule
2.1(b) and in the 1999 Future Tech Balance Sheet and no Account Receivable
arising after the date of the 1999 Future Tech Balance Sheet and reflected on
the books of the Company and the Closing Date Balance Sheet (excluding the
accounts receivable as set forth in Schedule 2.4) is uncollectible or subject to
counterclaim or offset, except to the extent reserved against thereon, and all
Accounts Receivable will be collected within 120 days of their respective
creation, and if not, will be accepted by Future Tech upon return by Buyer. All
Accounts Receivable have been generated and recorded in the ordinary course of
business and consistent with the Business Practices and reflect a bona fide
obligation for the payment of goods or services provided by the Company."
10. Amendment to Subsection (d) of Section 10.1 - "Conditions".
Subsection (d) of Section 10.1 of the Agreement shall be deleted in its entirety
and shall be replaced with, and read:
"(d) Legal Opinions. Buyer shall have received a
legal opinion, substantially in the form of Exhibit B, from Kozyak Tropin &
Throckmorton, P.A., counsel to Future Tech."
11. Amendment to Subsection (b)(v) of Section 13.1 - "Termination".
Subsection (b)(v) of Section 13.1 of the Agreement shall be deleted in its
entirety and shall be replaced with, and read:
"(v) the Closing has not been consummated by July 19,
1999;"
12. Amendment to Subsection (c)(ii) of Section 13.1 - "Termination".
Subsection (c)(ii) of Section 13.1 of the Agreement shall be deleted in its
entirety and shall be replaced with, and read:
"(ii) the Closing has not been consummated by July
19, 1999;"
13. Amendment to Section 13.2 - "Manner and Effect of Termination".
Section 13.2 of the Agreement shall be deleted in its entirety and shall be
replaced with, and read:
"13.2 Manner and Effect of Termination. Written notice of any
termination ("Termination Notice") pursuant to this Article XIII shall be given
by the party electing termination of this Agreement ("Terminating Party") to the
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of thirty (30) days (but no later than up
to July 19, 1999) after receipt of Termination Notice to cure the matters giving
rise to such termination to the reasonable satisfaction of the Terminating
Party. For purposes of this Article XIII, the automatic stay under ss.362 of the
Bankruptcy Code shall be deemed terminated as to Buyer in the event Buyer is the
Terminating Party."
14. Amendment to Article XV - "Notice; Break-up Fee". Article XV of the
Agreement shall be deleted in its entirety and shall be replaced with, and read:
"15.1 Notice. In recognition of the time and expense expended
by Buyer with respect to the purchase of the Acquired Assets, Future Tech hereby
covenants and agrees that prior to the Closing Date or the termination of this
Agreement, it will notify Buyer of any and all inquiries which it receives
before and during the Case, regarding the purchase of some or all of the
Acquired Assets. Unless otherwise directed by the Bankruptcy Court, Future Tech
shall not actively solicit any bid from a third party other than Buyer for the
sale or other disposition of the Acquired Assets until such time as the
Agreement is terminated pursuant to Section 13.1 of the Agreement; provided,
however, that Future Tech may respond to requests for information and/or respond
to proposals from such party consistent with its fiduciary obligation as a
debtor in possession under the Bankruptcy Code.
15.2 Break-up Fee. Future Tech further covenants and agrees,
that if any termination of this Agreement pursuant to Section 13.1(b)(iv) shall
be followed by a sale of substantially all the Acquired Assets to one or more
purchasers, Future Tech shall pay to Buyer a break-up fee approved by the
Bankruptcy Court equal to the Buyer's reasonable costs and expenses not to
exceed $500,000 which shall be allowed as an administrative expense payable on
termination."
15. Amendment to Section 16.19 - "Sole Remedy". Section 16.19 of the
Agreement shall be deleted in its entirety and shall be replaced with, and read:
"16.19 Sole Remedy. The indemnification provided by Article
XII and Section 7.8 is the sole remedy of the parties hereto or any other person
or entity claiming a remedy for any and all matters whatsoever arising under or
related to the transactions contemplated by this Agreement other than in respect
of (i) a termination pursuant to Section 13.1(b)(iv), in which case, Section
15.2 applies in addition to the indemnification provided in Article XII, (ii) a
termination pursuant to Section 13.1(a), (b)(i)-(iii) or (v)-(vi), or (c), in
which case Section 13.3 applies in addition to the indemnifications provided in
Article XII and Section 7.8, or (iii) Section 3.2."
16. Amendment of Certain Schedules; Amendment to Definition of Plan.
(a) Each of Schedule 2.1(c)(i) (Rights Under
Contracts (including current customer contact information), Schedule 2.4
(Excluded Assets), Schedule 3.1(c)(i) (Assumed Liabilities: Certain Persons),
Schedule 3.1(c)(ii) (Assumed Liabilities: Quantum/Maxtor), and Schedule 14
(Bidding Procedures) to the Agreement shall be deleted in its entirety and shall
be replaced with the schedules attached hereto as Exhibits A-E, respectively.
Schedule 2.1(c) is amended by adding a new subschedule (G), and cover page
attached hereto as Exhibit F.
(b) Amendment Definition of "Plan" in Section 1.2 - "Covenant
to Seek Approvals". Unless the context otherwise requires, the definition of the
term "Plan" contained in Section 1.2 of the Agreement shall be amended to
include the Amended Chapter 11 Plan filed on June 1, 1999.
17. Miscellaneous. Except as specifically modified or amended hereby,
the Agreement shall remain in full force and effect. No provision of this
Amendment may be modified or amended, nor shall any terms be waived, except
expressly in a writing signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Amendment or caused
this Amendment to be duly executed by their duly authorized officers as of the
day and year first above written.
"BUYER": BELL MICROPRODUCTS-FUTURE TECH, INC.
By: /s/ W. Don Bell
--------------------------------------
Its: President
---------------------------------
Name: W. Don Bell
---------------------------------
By: /s/ W. Don Bell
--------------------------------------
Its: CEO
---------------------------------
Name: W. Don Bell
---------------------------------
"FUTURE TECH": FUTURE TECH INTERNATIONAL, INC.
By: /s/ Louis Leonardo
--------------------------------------
Its: President
---------------------------------
Name: Louis Leonardo
---------------------------------
"LEONARD J. KELLER": /s/ Leonard J. Keller
---------------------------------
LEONARD J. KELLER
Solely for purposes of Section 7.9 of the Agreement:
"BELL": BELL MICROPRODUCTS INC.
By: /s/ W. Don Bell
--------------------------------------
Its: President
---------------------------------
Name: W. Don Bell
---------------------------------
By: /s/ W. Don Bell
--------------------------------------
Its: CEO
---------------------------------
Name: W. Don Bell
---------------------------------
[SIGNATURE PAGE TO AMENDMENT TO ASSET PURCHASE AGREEMENT]