ASSET PURCHASE AGREEMENT
BY AND AMONG
JARDEN CORPORATION,
AND
DIAMOND BRANDS INC.,
DIAMOND BRANDS OPERATING CORP.,
DIAMOND BRANDS KANSAS, INC.
AND
FORSTER, INC.
NOVEMBER 27, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION...................................................................1
1.1 Definitions.....................................................................................1
1.2 Rules of Construction..........................................................................12
ARTICLE II PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES..................................................12
2.1 Purchase and Sale of Assets....................................................................12
2.2 Assignment and Assumption of Certain Liabilities...............................................15
2.3 Excluded Assets................................................................................15
2.4 No Other Liabilities Assumed...................................................................16
2.5 Assumption of Certain Contractual Obligations; Excluded Contracts..............................18
2.6 Deemed Consents; Cures.........................................................................19
ARTICLE III BASIC TRANSACTION....................................................................................19
3.1 Purchase Price.................................................................................19
3.2 Payment of the Deposit and Purchase Price......................................................19
3.3 Allocation of Purchase Price...................................................................20
ARTICLE IV CLOSING; CONDITIONS TO CLOSING........................................................................20
4.1 Closing........................................................................................20
4.2 The Debtors' Conditions........................................................................21
4.3 Buyer's Conditions.............................................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE DEBTORS..........................................................26
5.1 Organization; Authorization....................................................................26
5.2 No Conflict; Consents..........................................................................26
5.3 Consents and Approvals of Governmental Authorities.............................................26
5.4 Contracts......................................................................................27
5.5 Financial Statements...........................................................................27
5.6 Equipment......................................................................................27
5.7 Inventory......................................................................................27
5.8 Intellectual Property..........................................................................27
5.9 Compliance with Laws...........................................................................29
5.10 Books and Records..............................................................................29
5.11 Permits........................................................................................29
5.12 Environmental Matters..........................................................................29
5.13 Employees; Benefit Plans.......................................................................30
5.14 Absence of Certain Changes.....................................................................31
5.15 Liabilities....................................................................................31
5.16 Insurance......................................................................................31
5.17 Taxes..........................................................................................32
5.18 Accounts Receivable............................................................................32
5.19 Brokers; Agents................................................................................32
5.20 Warranty Obligations...........................................................................32
5.21 Real Property..................................................................................32
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5.22 Litigation.....................................................................................33
5.23 Trade Relations................................................................................33
5.24 Subsidiaries...................................................................................33
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................33
6.1 Organization...................................................................................33
6.2 Authorization..................................................................................33
6.3 No Conflict or Violation.......................................................................34
6.4 Consents and Approvals.........................................................................34
6.5 Brokers........................................................................................34
ARTICLE VII ACTIONS PRIOR TO AND ON THE CLOSING..................................................................34
7.1 Conduct of the Business prior to the Closing...................................................34
7.2 Inspection.....................................................................................36
7.3 Consents and Commercially Reasonable Efforts...................................................37
7.4 Employee Benefit Plans.........................................................................38
7.5 Employees......................................................................................39
7.6 Debtors' Cooperation in Hiring of Employees....................................................39
7.7 WARN Act.......................................................................................39
7.8 Bankruptcy Actions.............................................................................40
7.9 Excluded Real Property.........................................................................40
ARTICLE VIII ACTIONS AFTER THE CLOSING...........................................................................40
8.1 Employee Benefit Plans.........................................................................40
8.2 Cooperation of the Buyer and the Debtors.......................................................41
8.3 Further Assurances; Certain Consents...........................................................41
8.4 Name Changes...................................................................................42
8.5 Accounts Receivable/Collections................................................................42
8.6 Access to Information..........................................................................42
8.7 Transition Services............................................................................43
ARTICLE IX TERMINATION...........................................................................................43
9.1 Termination and Abandonment....................................................................43
9.2 Notice of Termination..........................................................................43
9.3 Effect of Termination..........................................................................43
9.4 No Survival of Representations and Warranties..................................................44
ARTICLE X GENERAL PROVISIONS.....................................................................................44
10.1 Amendment and Modification.....................................................................44
10.2 Assignments....................................................................................44
10.3 Business Day...................................................................................44
10.4 Captions.......................................................................................44
10.5 Counterpart Facsimile Execution................................................................44
10.6 Counterparts...................................................................................45
10.7 Entire Agreement...............................................................................45
10.8 Schedules and Exhibits.........................................................................45
10.9 Expenses Incurred by the Parties...............................................................45
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10.10 Failure or Delay...............................................................................45
10.11 Governing Law..................................................................................45
10.12 Legal Fees.....................................................................................45
10.13 Notices Between the Parties....................................................................45
10.14 Publicity Regarding This Agreement.............................................................46
10.15 Remedies Are Exclusive.........................................................................47
10.16 Severability...................................................................................47
10.17 Specific Performance and Injunctive Relief.....................................................47
10.18 Submission to Jurisdiction.....................................................................47
10.19 Successors and Assigns.........................................................................48
10.20 Third-Party Beneficiary........................................................................48
10.21 Effective Control..............................................................................48
10.22 Liability of Buyer's Affiliates................................................................48
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LIST OF SCHEDULES AND EXHIBITS
Schedule 2.1.1.5 - Assumed Contracts
Schedule 2.1.1.6 - Bank Accounts
Schedule 2.1.1.7 - Assumed Owned Real Property
Schedule 2.1.1.22 - Assumed Plans
Schedule 2.2.1(vi) - Assumed Obligations
Schedule 2.3.5 - Excluded Assets
Schedule 3.3 - Allocation Schedule
Schedule 5.3 - No Conflict or Violation
Schedule 5.4 - Contracts
Schedule 5.5 - Financial Statements
Schedule 5.6 - Equipment
Schedule 5.8 - Intellectual Property
Schedule 5.9 - Compliance with Laws
Schedule 5.11 - Permits
Schedule 5.12 - Environmental Matters
Schedule 5.13 - Employee Benefit Plans
Schedule 5.14 - Absence of Certain Changes
Schedule 5.15 - Liabilities
Schedule 5.16 - Insurance
Schedule 5.17 - Taxes
Schedule 5.20 - Warranty Obligations
Schedule 5.21 - Real Property
Schedule 5.22 - Litigation
Schedule 5.23 - Trade Relations
Schedule 5.24 - Subsidiaries
Schedule 7.1.1 - Conduct of Business
Schedule 7.5.1 - Employees
EXHIBITS
Exhibit A - Plan of Reorganization
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of
this 27th day of November, 2002, by and among Jarden Corporation, a Delaware
corporation (the "BUYER"), Diamond Brands, Incorporated, a Minnesota corporation
("DBI"), Diamond Brands Operating Corp., a Delaware corporation and wholly-owned
subsidiary of DBI ("DBOC"), Diamond Brands Kansas, Inc., a Kansas corporation
("DBKI"), and Forster, Inc., a Maine corporation and wholly-owned subsidiary of
DBOC ("FORSTER"). DBI, DBOC, DBKI and Forster are sometimes referred to herein
individually as a "DEBTOR" and collectively as the "DEBTORS." Capitalized terms
used but not otherwise defined herein shall have the meanings accorded to them
in Section 1.1 hereof.
RECITALS
A. The Debtors are engaged in the business of designing, manufacturing,
marketing and selling plastic cutlery, matches, toothpicks and other wooden and
plastic consumer items (the "ACQUIRED PRODUCT LINES").
B. On May 22, 2001, the Debtors filed in the United States Bankruptcy
Court for the District of Delaware (the "BANKRUPTCY COURT") for bankruptcy
protection pursuant to chapter 11 of the United States Bankruptcy Code, 11
U.S.C. ss.101 et seq. (the "BANKRUPTCY CODE"), which chapter 11 case is being
administered under case number 01-1825 (the "REORGANIZATION CASES").
C. The Debtors continue to produce the Acquired Product Lines as
debtors-in-possession.
D. The Buyer wishes to cause the Asset Buyer(s) to purchase from the
Debtors, and the Debtors wish to sell to the Asset Buyer(s), certain assets of
the Debtors upon the terms set forth herein.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein
contained and other good and valuable consideration (the receipt, adequacy and
sufficiency of which are hereby acknowledged by the Parties by their execution
hereof), the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.1 DEFINITIONS. For purposes of this Agreement, the following
capitalized terms have the following meanings:
"ACCOUNTS RECEIVABLE" means all accounts receivable (including
all intercompany accounts receivable), notes receivable, trade accounts,
security deposits and other debts due or accruing to the Debtors.
"ACQUIRED ASSETS" has the meaning set forth in Section 2.1.1
hereof.
"ACQUIRED PRODUCT LINES" has the meaning set forth in Recital A.
"ADDITIONAL CONSIDERATION" means, at the Buyer's election, (i)
$6,000,000 in cash payable by wire transfer of immediately available funds or
(ii) shares of the Buyer's Common Stock with an aggregate Fair Market Value of
$6,000,000 as of the date of delivery, which shares shall be freely tradeable,
registered and qualified for listing prior to their issuance.
"ADMINISTRATIVE CLAIM" has the meaning set forth in the Plan of
Reorganization.
"AFFILIATE" means any Person which, directly or indirectly, is
in control of, is controlled by or is under common control with the party for
whom an affiliate is being determined.
"AFFILIATED GROUP" means any affiliated group within the meaning
of Code ss.1504(a) and any similar provision of local, state, or foreign law.
"AGREEMENT" means this Asset Purchase Agreement, including all
Exhibits and Schedules hereto, as the same may be amended from time to time in
accordance with its terms.
"ALTERNATIVE TRANSACTIONS ORDER" has the meaning set forth in
the Plan of Reorganization.
"ASSET BUYER" means one or more Affiliates of the Buyer (which
shall be formed by the Buyer prior to the Closing if not already in existence)
whom the Buyer designates to consummate the Closing.
"ASSUMED CONTRACTS" means, collectively, all Contractual
Obligations to which any Debtor is a party or by which any Debtor is bound which
relate to the Acquired Assets and which are listed on Schedule 2.1.1.5 attached
hereto, which Schedule 2.1.1.5 may be amended from time to time by the Buyer in
accordance with Section 2.5.
"ASSUMED FACILITIES" means the premises at which the Debtors
produce or distribute the Acquired Product Lines identified in the real property
leases which are Assumed Contracts. .
"ASSUMED OBLIGATIONS" has the meaning set forth in Section 2.2.1
hereof.
"ASSUMED OWNED REAL PROPERTY" means the Owned Real Property
identified in Schedule 2.1.1.7 attached hereto.
"ASSUMED PLANS" has the meaning set forth in Section 2.1.1.22.
"AUDITED FINANCIALS" has the meaning set forth in Section 5.5.
"BANKRUPTCY CODE" has the meaning set forth in Recital B.
"BANKRUPTCY COURT" has the meaning set forth in Recital B.
"BENEFIT PLAN" has the meaning set forth in Section 5.13.
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"BOOKS AND RECORDS" means (i) all records and lists of the
Debtors, (ii) all records and lists pertaining to the Acquired Product Lines
(including, without limitation, merchandise and post-season analysis reports,
marketing analysis reports and creative material) or customers, suppliers or
personnel of the Debtors (including, without limitation, customer lists, mailing
lists, e-mail address lists, recipient lists, sales records, correspondence with
customers, customer files and account histories, supply lists and records of
purchases from and correspondence with suppliers), (iii) all product, business
and marketing plans of the Debtors and (iv) all other books, ledgers, files,
reports, plans, drawings and operating records of every kind maintained by the
Debtors related to or used in connection with the Acquired Product Lines.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to close under
the laws of the United States of America.
"BUYER" has the meaning set forth in the opening paragraph of
this Agreement.
"BUYER'S COMMON STOCK" means the common stock, par value $.01
per share, of the Buyer.
"BUYER'S REPRESENTATIONS" means all representations and
warranties of the Buyer contained in Article VI.
"CASH PURCHASE PRICE" has the meaning as set forth in Section
3.1 hereof.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.).
"CLAIM" has the meaning set forth in ss.101(5) of the
Bankruptcy Code.
"CLOSING DATE" has the meaning set forth in Section 4.1.
"CLOSING" has the meaning set forth in Section 4.1.
"CODE" means the United States Internal Revenue Code of 1986,
as amended.
"COMMERCIALLY REASONABLE EFFORTS" means efforts which are
commercially reasonable under the circumstances taking into account all relevant
facts, but such term does not include the provision of any material
consideration to any Third Party or the suffering of any material economic
detriment to a Party's ongoing operations for the taking of any action
(including the procurement of any consent, authorization or approval) required
under this Agreement except for: (i) the costs of gathering or supplying any
data or other information or making any filings; (ii) fees and expenses of
counsel and consultants; and (iii) customary fees and charges of Governmental
Authorities and Third Parties.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement entered into between the Buyer and one of the Debtors.
3
"CONFIRMATION DATE" means the date on which the Confirmation
Order is entered by the Clerk of the Bankruptcy Court in the docket for the
Reorganization Cases, unless otherwise ordered by the Bankruptcy Court or such
other court of competent jurisdiction exercising jurisdiction over the matters
set forth in the Confirmation Order.
"CONFIRMATION ORDER" means the order of the Bankruptcy Court
confirming the Plan of Reorganization pursuant to ss.1129 of the Bankruptcy
Code.
"CONTRACTUAL OBLIGATION" means any binding contract,
obligation, agreement, commitment or undertaking, whether oral or written,
including, without limitation, any equipment leases and Facility Leases.
"CONTROVERSY" means any action, suit, proceeding, hearing,
arbitration, investigation, inquiry, complaint, charge, judgment, order, decree,
injunction, ruling, counterclaim, cross-claim, demand, cause of action, writ or
assessment.
"COPYRIGHTS" means copyrights, including all renewals and
extensions thereof, copyright registrations and applications for registration
thereof, and non-registered copyrights.
"CREDITORS' COMMITTEE" has the meaning set forth in the Plan
of Reorganization.
"CURE AMOUNT" means the distribution of cash, or such other
property as may be agreed upon by the Parties or ordered by the Bankruptcy
Court, with respect to the assumption of an Assumed Contract, pursuant to
Section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid monetary
obligations, without interest, or such other amount as may be agreed upon by the
Parties, under such Assumed Contract, to the extent such obligations are
enforceable under the Bankruptcy Code and applicable bankruptcy law.
"CURRENT BALANCE SHEET" has the meaning set forth in Section
5.5.
"DBI" has the meaning set forth in the opening paragraph to
this Agreement.
"DBI PLAN" has the meaning set forth in the Plan of
Reorganization.
"DBKI" has the meaning set forth in the opening paragraph of
this Agreement.
"DBOC" has the meaning set forth in the opening paragraph to
this Agreement.
"DEBTOR" and "DEBTORS" has the meaning set forth in the
opening paragraph to this Agreement.
"DEBTORS' KNOWLEDGE" means the actual knowledge, after
reasonable investigation, of any executive officer or facility manager of the
Debtors.
"DEBTORS' REPRESENTATIONS" means those representations and
warranties of the Debtors in Article V hereof.
4
"DEPOSIT" means the $1,000,000 in earnest money deposited by
the Buyer pursuant to the Earnest Money Deposit Agreement.
"DIP ADMINISTRATIVE AGENT" means Wells Fargo Bank, National
Association with respect to that certain DIP Loan Agreement.
"DIP LENDERS" means the syndicate of banks and other financial
institutions which are parties to the DIP Loan Agreement.
"DIP LOAN AGREEMENT" means the credit agreement dated June 1,
2001, providing up to $92,250,000, and entered into by the Debtors, the DIP
Lenders and the DIP Administrative Agent, which credit agreement was approved by
order of the Bankruptcy Court entered on July 13, 2001.
"EARNEST MONEY DEPOSIT AGREEMENT" means that certain deposit
letter from the Buyer addressed and delivered to the Debtors in accordance with
the Scheduling Order.
"EMPLOYEE BENEFIT PLAN" means any: (i) non-qualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan; (ii) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan; (iii) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan); (iv) Employee Welfare Benefit Plan, material
fringe benefit plan, severance or change of control benefit or other executive
compensation or benefit; (v) equity-based plan or arrangement, including any
stock option plan, stock purchase plan, stock appreciation rights or phantom
stock plan; (vi) bonus plan or arrangement or incentive award plan or
arrangement; (vii) consulting agreement or employment agreement; or (viii)
vacation policy.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA ss.3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA ss.3(1).
"ENVIRONMENT" has the meaning set forth in CERCLA.
"ENVIRONMENTAL LAWS" means 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, in each case concerning public
health and safety, worker health and safety, 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 Substances (including
without limitation CERCLA and analogous state laws), each as amended or in
effect prior to, on or after the Closing.
"EQUIPMENT" means all machinery, equipment, vehicles,
furniture, furnishings, fixtures, operating equipment, supplies and tools,
computer hardware and all parts, spares and accessories thereof and ascensions
thereto.
5
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA AFFILIATE" means any trade or business (irrespective of
whether incorporated) which is a member of a group of which any of the Debtors
is a member and thereafter treated as a single employer under ss.414(b), (c),
(m) or (o) of the Code or applicable Treasury Regulations.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.3
hereof.
"EXCLUDED CONTRACTS" has the meaning set forth in Section
2.3.3 hereof.
"EXCLUDED ENVIRONMENTAL LIABILITIES" means any Liability or
investigatory, corrective, removal or remedial obligation, whenever arising or
occurring, arising under Environmental Laws with respect to the Debtors, the
Acquired Assets, the Owned Real Property, the Leased Facilities, or any
properties or facilities currently or formerly owned, operated or occupied by
the Debtors (including without limitation any arising from the on-site or
off-site Release, threatened Release, treatment, storage, disposal, or
arrangement for disposal of Hazardous Substances) whether or not constituting a
breach of any representation or warranty herein and whether or not set forth on
any disclosure schedule hereto, except where the facts or circumstances
underlying any such Liability or obligation were solely caused by the operation
of the Acquired Assets after the Closing Date.
"EXCLUDED REAL PROPERTY" has the meaning set forth on Schedule
2.3.5 (Excluded Assets).
"EXHIBITS" means the exhibits hereto.
"FACILITY LEASES" means all leases, subleases, licenses,
concessions and other agreements (written or oral), pursuant to which any Debtor
holds a leasehold or subleasehold estate in, or is granted the right to use or
occupy, any land, buildings, structures, improvements, fixtures or other
interest in real property which is used or intended to be used in, or otherwise
related to, the Acquired Product Lines.'
"FAIR MARKET VALUE" of each share of the Buyer's Common Stock
means, as of the date of issuance, the average of the closing prices of the
sales of the Buyer's Common Stock on all securities exchanges on which the
Buyer's Common Stock may at the time be listed, or, if there have been no sales
on any such exchange on any day, the average of the highest bid and lowest asked
prices on all such exchanges at the end of such day, or, if on any day the
Buyer's Common Stock is not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if
on any day the Buyer's Common Stock is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period consisting of the twenty (20) consecutive Business Days
immediately preceding the fifth Business Day preceding the date of issuance.
"FINAL ORDER" means any order which has been entered by the
Bankruptcy Court or any other court of competent jurisdiction that has not been
reversed or stayed, is no longer
6
subject to appeal, certiorari proceeding or other proceeding for review,
reargument, or rehearing, and as to which no appeal, certiorari proceeding, or
other proceeding for review, reargument, or rehearing has been requested or is
then pending and the time to file any such appeal, certiorari proceeding or
other proceeding for review, reargument, or rehearing has expired or as to which
any right to appeal, petition for certiorari, reargue, or seek rehearing shall
have been waived in writing in form and substance satisfactory to the Debtors
and the Buyer.
"FORSTER" has the meaning set forth in the opening paragraph
of this Agreement.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"GOVERNMENTAL AUTHORITY" means any government of any nation,
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and includes the Bankruptcy Court.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"HAZARDOUS SUBSTANCES" means any pollutants, contaminants or
chemicals, and any industrial, toxic or otherwise hazardous materials,
substances or wastes with respect to which liability or standards of conduct are
imposed under any Environmental Laws, including, without limitation, petroleum
and petroleum-related substances, and asbestos.
"INDEBTEDNESS" with respect to any Person means any obligation
of such Person for borrowed money, and in any event shall include (i) any
Liability incurred for all or any part of the purchase price of property or
other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the Ordinary Course
of Business, (ii) the face amount of all letters of credit issued for the
account of such Person, (iii) Liabilities (whether or not such Person has
assumed or become liable for the payment of such obligation) secured by Liens,
(iv) all guarantees and similar Liabilities of such Person, (v) all accrued
interest, fees and charges in respect of any Indebtedness and (vi) all
prepayment premiums and penalties, and any other fees, expenses, indemnities and
other amounts payable as a result of the prepayment or discharge of any
Indebtedness.
"INTELLECTUAL PROPERTY" means all of the following as they
exist in any jurisdictions throughout the world, in each case, to the extent
owned by, licensed to, or otherwise used or held for use by any of the Debtors:
(i) patents, pending patent applications, industrial
rights and the inventions, designs and improvements described and claimed
therein, patentable inventions, and other patent rights (including any
divisionals, continuations, continuations-in-part, renewals, substitutions or
reissues thereof, whether or not patents are issued on any such applications and
whether or not any such applications are amended, modified, withdrawn or
refilled);
(ii) Trademarks;
7
(iii) Copyrights;
(iv) Trade Secrets;
(v) all web sites and web pages and related rights and
items; and
(vi) Software.
"INVENTORY" means all inventory held by any Debtor for sale in
the Ordinary Course of Business and all raw materials, work-in-process,
semi-finished or finished products and similar items with respect to such
inventory, in each case wherever the same may be located.
"IP LICENSE(S)" means all permits, licenses, sublicenses and
other agreements or permissions under which any Debtor is a licensee or
otherwise authorized to use or practice, or under which any Debtor is a licensor
of, any Intellectual Property.
"LAW" means any law, rule, regulation, order, decree or other
requirement having the force of law and, where applicable, any interpretation
thereof by any authority having jurisdiction with respect thereto or charged
with the administration thereof.
"LEASED FACILITIES" means the real property leased or
subleased by the Debtors pursuant to the Facility Leases.
"LETTER OF CREDIT" has the meaning set forth in the Plan of
Reorganization, provided that the Letter of Credit shall be issued by Bank of
America.
"LIABILITY" means any obligation or liability (in each case,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due and regardless of when asserted), including,
without limitation, any obligation or liability for Taxes.
"LICENSED IP" means Intellectual Property that is the subject
of an IP License.
"LIEN" means an indenture, as defined in ss.101(28) of the
Bankruptcy Code; a judicial lien, as defined in ss.101(36) of the Bankruptcy
Code; a lien, as defined in ss.101(37) of the Bankruptcy Code; a security
interest, as defined in ss.101(51) of the Bankruptcy Code; a statutory lien, as
defined in ss.101(53) of the Bankruptcy Code; and any other any mortgage, deed
of trust, security agreement, pledge, hypothecation, assignment, deposit
arrangement, lien (statutory or otherwise), security interest, financing
statement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
any event, change, condition or matter that individually or in the aggregate
results in or would reasonably be expected to result in a material adverse
effect or change in the results of operations or condition (financial or
otherwise) of the Debtors, the Acquired Product Lines or the Acquired Assets.
"MATERIAL CUSTOMERS" has the meaning set forth in Section
5.23.
8
"MATERIAL SUPPLIERS" has the meaning set forth in Section
5.23.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in ss.3(37) and ss.4001(a)(3)(A) of ERISA.
"NOTICE" means any summons, citation, directive, order, claim,
litigation, proceeding, judgment, letter or other communication, written or
oral, actual or threatened, from a Governmental Authority including any lien
imposed pursuant to any Environmental Law on property owned, leased, occupied or
used by the Debtors or any predecessor or former Affiliates thereof .
"OPTIONS" means options, warrants, rights of first refusal,
purchase rights, sale rights, subscription rights, puts, calls, conversion
rights, exchange rights or similar Contractual Obligations.
"ORDER" means any decree, order, injunction, rule, judgment,
consent of or by any court or governmental authority.
"ORDINARY COURSE OF BUSINESS" means the production and
distribution of the Acquired Product Lines by the Debtors in the usual and
ordinary course consistent with past practice and custom.
"OWNED REAL PROPERTY" means all land and all buildings,
structures, fixtures and other improvements located thereon, and all easements,
rights of way, servitudes, tenements, hereditaments, appurtenances, privileges
and other rights with respect thereto owned by the Debtors.
"PARTY" means a Person named as entering into this Agreement.
"PERMIT" means all approvals, authorizations, consents,
licenses, franchises, orders, registrations, certificates, variances, permits
and similar rights, in each case obtained from or issued by any Governmental
Authority.
"PERMITTED LIENS" means (i) statutory liens for current
property Taxes and assessments not yet due and payable, including, without
limitation, liens for ad valorem Taxes and statutory liens not yet due and
payable arising other than by reason of any default on the part of the Debtors,
and (ii) easements, covenants, conditions, restrictions and other similar
matters of record on real property, leasehold estates or personalty that do not
in any material respect detract from the value of the property subject thereto
thereof and do not individually or in the aggregate in any material respect
interfere with the present use of the property subject thereto with respect to
the Acquired Product Lines.
"PERSON" means any natural person, corporation, limited
partnership, general partnership, joint venture, association, company, trust,
joint stock company, bank, trust company, land trust, vehicle trust, business
trust, real estate investment trust, estate, limited liability company, limited
liability partnership, limited liability limited partnership or other
organization irrespective of whether it is a legal entity, and any Governmental
Authority.
9
"PLAN OF REORGANIZATION" means the Plan of Reorganization
Sponsored by Jarden Corporation in substantially the form attached hereto as
Exhibit A.
"PROCEEDING" has the meaning set forth in Section 2.4.10
hereof.
"PURCHASE PRICE" has the meaning set forth in Section 3.1
hereof.
"REGULATION" means any law, statute, regulation, ruling, rule
or Order of, administered or enforced by or on behalf of, any court or
governmental authority.
"REHIRED EMPLOYEES" has the meaning set forth in Section 7.5.2
hereof.
"RELEASE" has the meaning set forth in CERCLA.
"REORGANIZATION CASES" has the meaning set forth in Recital B.
"RESPONSIBLE OFFICER" means: (i) in the case of a corporation,
a president, a chief executive officer, a chief financial officer, a vice
president or a treasurer of such corporation; (ii) in the case of a partnership,
a general partner therein; or (iii) in the case of a limited liability company,
a manager or managing member of such entity.
"RULE" or "RULES" means the Federal Rules of Bankruptcy
Procedure.
"SCHEDULES" means the schedules attached hereto.
"SCHEDULING ORDER" means the Bankruptcy Court's Scheduling
Order Establishing (I) Procedures with Respect to Filing of Amended Proposed
Plans of Reorganization and (II) Hearing Date to Consider Proposed Plans of
Reorganization dated as of October 30, 2002.
"SOFTWARE" means computer software programs and software
systems, including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, and all related material
documentation and information, whether in source code, object code or human
readable form.
"SOLICITATION DATE" means the date on which the Debtors
distribute the Plan of Reorganization to its creditors for the solicitation of
such creditors' approval of the Plan of Reorganization.
"STOCK" means shares of capital stock (including common and
preferred stock) or other equity interests (regardless of how designated) of or
in a corporation or comparable entity (including a partnership, joint venture or
limited liability company), whether voting or nonvoting, or general or limited.
"STOCK EQUIVALENTS" means all securities convertible into or
exercisable or exchangeable for Stock and all Options to purchase or subscribe
for Stock, whether or not presently convertible, exercisable or exchangeable.
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"SUBSIDIARIES" means, with respect to any Person, any
corporation a majority of the total voting power of shares of stock of which is
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or any partnership,
limited liability company, association or other business entity a majority of
the partnership or other similar ownership interest of which is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes of this
definition, a Person is deemed to have a majority ownership interest in a
partnership, limited liability company, association or other business entity if
such Person is allocated a majority of the gains or losses of such partnership,
limited liability company, association or other business entity or is or
controls the managing director or general partner of such partnership, limited
liability company, association or other business entity.
"SURVEYS" has the meaning set forth in Section 4.3.10.
"TAX" and, with correlative meaning, "TAXES" mean with respect
to any Person (i) all federal, state, local, county, foreign and other taxes,
assessments or other government charges, including, without limitation, any
income, alternative or add-on minimum tax, estimated gross income, gross
receipts, sales, use, ad valorem, value added, transfer, capital stock
franchise, profits, license, registration, recording, documentary, intangibles,
conveyancing, gains, withholding, payroll, employment, social security (or
similar), unemployment, disability, excise, severance, stamp, occupation,
premium, property (real and personal), environmental or windfall profit tax,
custom duty or other tax, governmental fee or other like assessment, charge, or
tax of any kind whatsoever, together with any interest, penalty, addition to tax
or additional amount imposed by any Governmental Authority responsible for the
imposition of any such tax (domestic or foreign) whether such Tax is disputed or
not, or (ii) liability for the payment of any amounts of the type described in
clause (a) above relating to any other Person as a result of being party to any
agreement to indemnify such other Person, being a successor or transferee of
such other Person, or being a member of the same Affiliated Group or any
consolidated, combined, unitary or other group with such other Person.
"TAX RETURN" means any report, return, declaration, report,
claim for refund or information return or statement relating to Taxes, including
any schedule or attachment thereto.
"THIRD PARTY" means any Person other than Debtors, the Buyer
or any of their respective Affiliates.
"TITLE COMMITMENTS" has the meaning set forth in Section
4.3.9.
"TITLE INSURER" has the meaning set forth in Section 4.3.9.
"TITLE POLICIES" has the meaning set forth in Section 4.3.9.
"TRADEMARKS" means trademarks, service marks, trade dress,
trade names, brand names, domain names, designs, logos or corporate names and
all translations, adaptations, derivations and combinations of the foregoing
including, in each case, the goodwill associated therewith, whether registered
or unregistered, and all registrations and applications for
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registration thereof, which shall include, without limitation, "Diamond Brands"
and "Forster" or any derivation thereof.
"TRADE SECRETS" means trade secrets, confidential business
information and other proprietary information including, without limitation,
designs, research and development information, technical information,
specifications, operating and maintenance manuals, methods, engineering
drawings, know-how, data, mask works, discoveries, inventions, industrial
designs and other proprietary rights (whether or not patentable or subject to
copyright, mask work, or trade secret protection).
"TRANSITION PERIOD" has the meaning set forth in Section 8.6
hereof.
"TREASURY REGULATION" means those regulations promulgated by
the United States Department of the Treasury pursuant to the authority of the
Code or any other revenue law of the United States of America.
"UNASSUMED LIABILITIES" has the meaning set forth in Section
2.4 hereof.
"WARN ACT" means the Worker Adjustment and Retraining
Notification Act, as amended, and any similar foreign, state or local law,
regulation or ordinance.
1.2 RULES OF CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise: (i) references to the plural include the singular and vice
versa; (ii) references to any Person include such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement; (iii) references to one gender include all genders; (iv)
"including" is not limiting; (v) "or" has the inclusive meaning represented by
the phrase "and/or"; (vi) the words "hereof," "herein," "hereby," "hereunder"
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement; (vii) section, clause, Exhibit
and Schedule references are to this Agreement unless otherwise specified; (viii)
reference to any agreement (including this Agreement), document or instrument
means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof and, if
applicable, the terms hereof; and (ix) general or specific references to any Law
mean such Law as amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises regarding this Agreement, this
Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement.
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
2.1 PURCHASE AND SALE OF ASSETS.
2.1.1 Subject to the terms and conditions set forth in this Agreement,
at the Closing, the Debtors shall sell, contribute, convey, assign, transfer and
deliver to the Asset Buyer (or, if there is more than one Asset Buyer, then to
such Asset Buyer designated by the Buyer), free and clear of all Liens (other
than Permitted Liens), and the Asset Buyer(s) shall purchase,
12
acquire and take assignment and delivery of, for the consideration set forth in
Section 3.1, all properties, assets, rights, titles and interests of every kind
and nature, owned or leased by the Debtors (including indirect and other forms
of beneficial ownership) as of the Closing Date, which are used in, useful for
or otherwise associated with the Acquired Product Lines, whether tangible or
intangible, real or personal and wherever located and by whomever possessed,
including, without limitation, all of the following assets but excluding
Excluded Assets pursuant to Section 2.3 (all of the assets to be sold, assigned,
transferred and delivered to the Buyer hereunder referred to herein collectively
as the "ACQUIRED ASSETS"):
2.1.1.1 all marketable securities and other short-term investments,
deposits and advances, prepaid and other current assets relating to the Acquired
Product Lines, including, without limitation, all cash (including, without
limitation, checking account balances, certificates of deposit and other time
deposits and petty cash);
2.1.1.2 all Accounts Receivables (whether current or noncurrent)
and all causes of action specifically pertaining to the collection of all
Accounts Receivable;
2.1.1.3 all promotional allowances and vendor rebates and similar
items;
2.1.1.4 all Intellectual Property, along with all income,
royalties, damages and payments due or payable to the Debtors as of the Closing
or thereafter, including, without limitation, damages and payments for past,
present or future infringements or misappropriations thereof, the right to sue
and recover for past infringements or misappropriations thereof and any and all
corresponding rights that, now or hereafter, may be secured throughout the world
and all copies and tangible embodiments of any such Intellectual Property in the
Debtors' possession or control;
2.1.1.5 all of the Debtors' rights under the Assumed Contracts;
2.1.1.6 all bank accounts, safety deposit boxes, lock boxes and the
like and a list of the foregoing shall be set forth on Schedule 2.1.1.6 attached
hereto;
2.1.1.7 all Assumed Owned Real Property;
2.1.1.8 all Assumed Facilities and all plants, buildings and other
improvements located on such property, and all easements, licenses, rights of
way, Permits and all appurtenances to the real property leases which are Assumed
Contracts including, without limitation, all appurtenant rights in and to public
streets, whether or not vacated;
2.1.1.9 all leasehold improvements and all Equipment owned by the
Debtors with respect to the Acquired Product Lines, wherever located, including,
without limitation, all such items which are located in any building, warehouse,
office or other space leased, owned or occupied by the Debtors;
2.1.1.10 all Inventories, replacement and spare parts, packaging
materials, operating supplies, and fuels, owned by the Debtors with respect to
the Acquired Product Lines, wherever located;
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2.1.1.11 all office supplies, production supplies, spare parts,
other miscellaneous supplies, and other tangible property of any kind relating
to the Acquired Product Lines, wherever located, including, without limitation,
all property of any kind located in any building, office or other space leased,
owned or occupied by the Debtors or in any warehouse where any of the Debtors'
properties and assets may be situated;
2.1.1.12 except as set forth in Section 2.3.1, all claims,
deposits, prepayments, warranties, guarantees, refunds, causes of action, rights
of recovery, rights of set-off and rights of recoupment of every kind and nature
(whether or not known or unknown or contingent or non-contingent), other than
those relating exclusively to Excluded Assets;
2.1.1.13 the right to receive and retain mail, Accounts Receivable
payments and other communications relating to the Acquired Product Lines;
2.1.1.14 the right to bill and receive payment for products shipped
or delivered and services performed but unbilled or unpaid as of the Closing;
2.1.1.15 all Books and Records (excluding the originals of the
minute books, stock books and all Tax Returns of any Debtor);
2.1.1.16 all advertising, marketing and promotional materials and
all other printed or written materials;
2.1.1.17 all Permits and the rights to all data and records held by
the Governmental Authorities issuing or otherwise authorizing such Permits;
2.1.1.18 all goodwill as a going concern and all other intangible
properties;
2.1.1.19 all telephone numbers used by the Debtors with respect to
the Acquired Product Lines;
2.1.1.20 all rights to indemnification relating to the Acquired
Assets or the Acquired Product Lines existing prior to the Closing Date;
2.1.1.21 all rights under insurance policies to the extent related
to or payable in connection with any of the Acquired Assets, the Assumed
Obligations, Assumed Facilities, or the Assumed Owned Real Property existing
prior to the Closing Date;
2.1.1.22 the Employee Benefit Plans set forth on Schedule 2.1.1.22
(the "ASSUMED PLANS"); and
2.1.1.23 all security deposits relating to Assumed Contracts.
2.1.2 At the Closing, all of the Acquired Assets shall be sold,
assigned, transferred, conveyed and delivered to the applicable Asset Buyer free
and clear of all Liens (other than Permitted Liens) in accordance with the terms
of the Plan of Reorganization and the Confirmation Order and sections 363(f) and
365 of the Bankruptcy Code.
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2.2 ASSIGNMENT AND ASSUMPTION OF CERTAIN LIABILITIES.
2.2.1 Subject to the terms and conditions set forth in this Agreement,
at the Closing, the Asset Buyer(s) shall assume from the Debtors and thereafter
be responsible for the payment and/or performance of, in accordance with their
terms, only the following liabilities and obligations of the Debtors
(collectively, the "Assumed Obligations"): (i) obligations under the Assumed
Contracts first arising after the Closing, (ii) the "Pay to Stay Bonus" and
"Performance Bonus" payments under the Debtors' Key Employee Retention Program
in an amount not to exceed $1,200,000, (iii) obligations associated with the
Assumed Plans, (iv) obligations with respect to any unused vacation or sick
leave earned and accrued (to the extent not paid) by the Rehired Employees as of
the Closing Date; (v) obligations with respect to Rehired Employees' wages and
salary earned and accrued (to the extent not paid) as of the Closing Date and
(vi) the Liabilities set forth on Schedule 2.2.1(vi) attached hereto; provided,
that this Section 2.2.1 shall not limit any claims or defenses the Buyer or any
Asset Buyer may have in respect of the Assumed Obligations against any Person
other than the Debtors. The Debtors hereby acknowledge and agree that neither
the Buyer nor any Asset Buyer is assuming from the Debtors, or is in any way
responsible for, any of the Unassumed Liabilities.
2.2.2 The transactions contemplated by this Agreement shall in no way
expand the rights or remedies of any Third Party against the Buyer, any Asset
Buyer or the Debtors as compared to the rights and remedies which such Third
Party would have had against the Debtors absent the Reorganization Cases, had
the Buyer or the Asset Buyer(s) not assumed such Assumed Obligations.
2.3 EXCLUDED ASSETS. Notwithstanding anything to the contrary in this
Agreement, the following assets of the Debtors shall be retained by the Debtors
and are not being sold or assigned to the Buyer hereunder (collectively, the
"EXCLUDED ASSETS"):
2.3.1 any and all rights of the Debtors under this Agreement (including
all cash and non-cash consideration payable or deliverable to Debtors) and
avoidance claims or causes of action arising under the Bankruptcy Code or
applicable state law, including, without limitation, all rights and avoidance
claims of Debtors arising under chapter 5 of the Bankruptcy Code;
2.3.2 all Owned Real Property other than the Assumed Owned Real
Property;
2.3.3 all Leased Facilities other than the Assumed Facilities;
2.3.4 all Contractual Obligations to which any Debtor is a party or by
which any Debtor is bound which are not Assumed Contracts (collectively, the
"EXCLUDED CONTRACTS");
2.3.5 all of the assets set forth on Schedule 2.3.5 attached hereto;
provided that the Buyer may amend Schedule 2.3.5 at any time on or before one
(1) day prior to the Closing Date in order to exclude from the definition of
Acquired Asset any Licensed IP the Debtors use of which is not in compliance
with the terms and conditions of any applicable IP License;
2.3.6 income Tax Returns and related materials;
15
2.3.7 all Tax refunds, rebates, credits and similar items relating to
any period, or portion of any period, on or prior to the Closing Date; and
2.3.8 the equity securities of any Debtor.
2.4 NO OTHER LIABILITIES ASSUMED. Each Debtor acknowledges and agrees
that pursuant to the terms and provisions of this Agreement, neither the Buyer
nor any Asset Buyer shall assume, and shall not be deemed to have assumed, any
Claim against, or any debt or other Liability of, any Debtor or any of the
Debtors' respective Affiliates whatsoever (other than the Assumed Obligations),
including, without limitation, the following (collectively, the "UNASSUMED
LIABILITIES"):
2.4.1 except as specifically assumed under Section 2.2, any Liability
of, or Claim against, any of the Debtors or any predecessor(s) or Affiliates of
any of the Debtors that arose prior to, during or in connection with the
Reorganization Cases;
2.4.2 any Liability of, or Claim against, any of the Debtors or any
predecessor(s) or Affiliate(s) of the Debtors that relate to any of the Excluded
Assets (including any amounts relating to the rejection of Excluded Contracts);
2.4.3 any Cure Amounts with respect to the Assumed Contracts in excess
of in the amount of such Cure Amounts set forth on Schedule 2.1.1.5 as of the
Solicitation Date;
2.4.4 Excluded Environmental Liabilities (whether or not constituting a
"Liability of any Debtor or any of the Debtors' Affiliates" for the purposes of
the preamble to this Section 2.4));
2.4.5 any Liability of, or Claim against, any of the Debtors or any
predecessor(s) or Affiliate(s) of any of the Debtors or for which the Debtors or
any predecessor(s) or Affiliate(s) of the Debtors could be liable relating to
Taxes (including with respect to the Acquired Assets or otherwise) including,
without limitation, any Taxes that will arise as a result of the sale of the
Acquired Assets or the assumption of the Assumed Obligations pursuant to this
Agreement and any deferred Taxes of any nature;
2.4.6 except as specifically assumed under Section 2.2, any Liability
of, or Claim against, any of the Debtors for any legal, accounting, investment
banking, brokerage or similar fees or expenses incurred by any Debtor in
connection with, resulting from or attributable to the transactions contemplated
by this Agreement or otherwise;
2.4.7 except as specifically assumed under Section 2.2, all
Indebtedness of any Debtor or any predecessor(s) or Affiliate(s) of any Debtor;
2.4.8 all outstanding Stock and Stock Equivalents of the Debtors and
any Liabilities and/or Claims in any way related thereto;
2.4.9 except as specifically assumed under Section 2.2, any Liability
of, or Claim against, any of the Debtors or any predecessor(s) or Affiliate(s)
of the Debtors resulting from, caused by or arising out of, or which relate to,
directly or indirectly, the production and
16
distribution of the Acquired Product Lines or ownership or lease of any
properties or assets or any properties or assets (including, without limitation,
the Acquired Assets) previously used by the Debtors, or other actions,
omissions, including, without limitation, any amounts due or which may become
due or owing under the Assumed Contracts with respect to the period prior to
Closing (other than any Cure Amounts for which the Buyer may be responsible in
accordance with Section 2.6), whether known or unknown on the date hereof;
2.4.10 any Liability of, or Claim against, any of the Debtors or any
predecessor(s) or Affiliate(s) of the Debtors resulting from, caused by or
arising out of, or which relate to, directly or indirectly, the production or
distribution of the Acquired Product Lines anywhere or ownership or lease of any
properties or assets or any properties or assets previously used by the Debtors
at any time, or other actions, omissions or events occurring prior to the
Closing and which (i) constitute, may constitute or are alleged to constitute a
tort, breach of contract or violation of any law, rule, regulation, treaty or
other similar authority or (ii) relate to any and all Claims, disputes, demands,
actions, liabilities, damages, suits in equity or at law, administrative,
regulatory or quasi-judicial proceedings, accounts, costs, expenses, setoffs,
contributions, attorneys' fees and/or causes of action of whatever kind or
character ("PROCEEDING") against the Debtors or any predecessor(s) or
Affiliate(s) of the Debtors, whether past, present, future, known or unknown,
liquidated or unliquidated, accrued or unaccrued, pending or threatened;
2.4.11 except as specifically assumed under Section 2.2, any Liability
of, or Claim against, the Debtors arising out of any Proceeding commenced after
the Closing and arising out of, or relating to, any occurrence or event
happening prior to the Closing;
2.4.12 except as specifically assumed under Section 2.2, any Liability
of, or Claim against, any of the Debtors (whether known or unknown) with respect
to the employees or former employees, or both, of any Debtor arising from the
production or distribution of the Acquired Product Lines prior to the Closing,
including, without limitation, payroll, vacation, sick leave, worker's
compensation, unemployment benefits, pension benefits, employee stock option or
profit sharing plans, health care plans or benefits, or any other employee plans
or benefits or other compensation of any kind to any employee, and obligations
of any kind including, without limitation, any Liability pursuant to the WARN
Act for any action or inaction prior to the Closing;
2.4.13 except with respect to the Assumed Plans, any Liability of, or
Claim against, any of the Debtors arising under any Employee Benefit Plan or any
other employee benefit plan, program or arrangement at any time maintained,
sponsored or contributed to by any Debtor or any ERISA Affiliate, or with
respect to which any of the Debtors or any ERISA Affiliate has any liability;
2.4.14 any Liability of, or Claim against, any of the Debtors on,
arising out of or relating to services and/or products of any of the Debtors to
the extent provided, manufactured, developed and/or sold prior to the Closing;
17
2.4.15 any Liability of, or Claim against, any of the Debtors under any
Assumed Contract which arises after the Closing but which arises out of or
relates to any breach that occurred prior to the Closing;
2.4.16 any Liability of, or Claim against, any of the Debtors under any
Excluded Contract;
2.4.17 except as specifically assumed under Section 2.2, any Liability
of, or Claim against, any of the Debtors under any employment, severance,
retention or termination agreement with any employee, consultant or contractor
of Debtors;
2.4.18 any Liability of, or Claim against, any of the Debtors arising
out of or relating to any grievance by any Debtor's employees, whether or not
the affected employees are Rehired Employees;
2.4.19 any Liability of, or Claim against, any of the Debtors to any
shareholder or Affiliate of any Debtor;
2.4.20 any Liability of, or Claim against, any of the Debtors to
indemnify, reimburse or advance amounts to any officer, director, employee or
agent of any Debtor;
2.4.21 any Liability of, or Claim against, any of the Debtors to
distribute to any Debtor's shareholders or otherwise apply all or any part of
the consideration received hereunder;
2.4.22 any Liability of, or Claim against, any of the Debtors arising
out of or resulting from any Debtor's noncompliance with any Law;
2.4.23 any Liability of, or Claim against, any of the Debtors based
upon any of the Debtors' acts or omissions occurring after the Closing; and
2.4.24 any Liability of, or Claim against, any of the Debtors under
this Agreement or any other document executed in connection herewith.
The Parties acknowledge and agree that disclosure of any Liability on any
Schedule to this Agreement shall not create an Assumed Obligation or other
Liability of or Claim against the Buyer or any Asset Buyer, except where such
disclosed obligation has been expressly assumed by an Asset Buyer as an Assumed
Obligation in accordance with the provisions of Section 2.2 hereof.
2.5 ASSUMPTION OF CERTAIN CONTRACTUAL OBLIGATIONS; EXCLUDED CONTRACTS.
2.5.1 At the Closing, the applicable Debtors shall assume and such
Debtors shall assign to the applicable Asset Buyer(s) the Assumed Contracts. The
Assumed Contracts shall be identified on Schedule 2.1.1.5 by the date of the
Assumed Contract, the other party or parties to the Assumed Contract and the
address of such party or parties, and all such information shall be included on
an exhibit attached to a motion for the authority to assume and assign the
Assumed Contracts which motion shall be filed by the Debtors at the direction of
the Buyer. Such exhibit shall also set forth the amounts necessary to cure
defaults under each of such Assumed Contracts
18
as determined by the Debtors based on the Debtors' Books and Records. Until the
Solicitation Date, the Buyer, in its sole discretion, by delivery of written
notice to the Debtors, shall have the right to (i) add any Contractual
Obligation to Schedule 2.1.1.5 and/or (ii) exclude any Contractual Obligation
listed on Schedule 2.1.1.5, and the Buyer shall not acquire any rights or assume
any Liabilities with respect to any such excluded Contractual Obligation. The
Plan of Reorganization shall reflect that the applicable Asset Buyer's promise
to perform from and after the Closing under the Assumed Contracts shall be the
only adequate assurance of future performance necessary to satisfy the
requirements of Section 365 of the Bankruptcy Code in respect of the assignment
to the applicable Asset Buyer of such Assumed Contracts.
2.6 DEEMED CONSENTS; CURES. For all purposes of this Agreement
(including all representations and warranties of the Debtors contained herein),
the Debtors shall be deemed to have obtained all required consents in respect of
the assignment of any Assumed Contract or Assumed Lease if, and to the extent
that, pursuant to the Plan of Reorganization or other Bankruptcy Court order,
the Debtors are authorized to assume and assign Assumed Contracts to the Asset
Buyer(s) pursuant to section 365 of the Bankruptcy Code and any applicable Cure
Amount has been satisfied. If there exists on the Closing Date any default
related to an Assumed Contract which relates to the Acquired Product Lines, the
Buyer shall be responsible for Cure Amounts only to the extent such Cure Amounts
are set forth on Schedule 2.1.1.5 as of the Solicitation Date as a condition to
the assumption and assignment of such Assumed Contract. At the Closing, the
Buyer shall provide funds to the Debtors (by wire transfer of immediately
available funds) in an amount sufficient to pay all such Cure Amounts not to
exceed the aggregate amount of the Cure Amounts set forth on Schedule 2.1.1.5 as
of the Solicitation Date for such Assumed Contracts. Immediately upon receipt by
the Debtors of such funds, the Debtors shall pay all Cure Amounts for such
Assumed Contracts.
ARTICLE III
BASIC TRANSACTION
3.1 PURCHASE PRICE. The aggregate consideration (the "PURCHASE PRICE")
to be paid for the Acquired Assets shall be an amount equal to the sum of (i)
cash in the amount of (a) $12,950,000 plus (b) the balance, as of the Closing,
of the principal amount due under the DIP Loan Agreement, taking into account
all payments made in respect of such principal amount by the Debtors through the
Closing (collectively the "CASH PURCHASE PRICE") plus (ii) the Additional
Consideration (which amount, if requested in writing by the Debtors at least ten
(10) Business Days prior to the Closing, shall be secured by a Letter of Credit
to be delivered by the Buyer at the Closing). Allowed Administrative Claims (as
defined in the Plan of Reorganization) shall be treated in accordance with the
terms of the Plan of Reorganization.
3.2 PAYMENT OF THE DEPOSIT AND PURCHASE PRICE.
3.2.1 The Buyer will deposit the Deposit with the Debtors in accordance
with the terms of the Earnest Money Deposit Agreement. The Parties hereby agree
that it is impossible to determine accurately the amount of damages that the
Debtors would suffer if the transactions contemplated hereby were not
consummated as a result of a breach of this Agreement by the Buyer. As a result,
notwithstanding anything herein to the contrary, if (i) the Buyer materially
breaches its obligations under this Agreement (which breach has not been cured
19
within ten (10) Business Days following receipt by the Buyer from the Debtors of
written notice of such breach); and (ii) the Debtors terminate this Agreement in
accordance with Section 9.1.4, the Buyer shall be obligated to pay liquidated
damages in the amount of the Deposit in accordance with the terms of the Earnest
Money Deposit Agreement, and the receipt by the Debtors of the Deposit shall be
the Debtors' sole and exclusive remedy as liquidated damages. Accordingly, if
liquidated damages are payable hereunder in accordance with the foregoing, the
Deposit (together with all interest accrued thereon) shall be released to the
Debtors in accordance with the terms of the Earnest Money Deposit Agreement. If
this Agreement is terminated for any reason other than under the foregoing
circumstances, the Debtors shall upon such termination return to the Buyer the
Deposit together with all interest accrued thereon in accordance with the terms
of the Earnest Money Deposit Agreement, and neither the Buyer nor the Asset
Buyer(s) shall have any further obligation of any kind to any of the Debtors.
Upon the consummation of the Closing hereunder, the Deposit (together with all
interest accrued thereon) shall be applied by the Debtors against the Cash
Purchase Price as set forth in Section 3.2.2 below.
3.2.2 At the Closing, the Buyer shall cause the Asset Buyer(s) to pay
by wire transfer of immediately available funds an amount in cash equal to the
Cash Purchase Price less the amount of the Deposit (together with all interest
accrued thereon). Such payment shall be made to the Debtors to such account as
designated by the Debtors in writing to the Buyer, in accordance with the terms
of the Plan of Reorganization, no later than two (2) Business Days prior to the
Closing Date. No later than six (6) months following the Closing Date, the Buyer
shall deliver the Additional Consideration to such Person(s) as designated by
the Debtors in writing to the Buyer no later than January 22, 2003; provided
that if no such designation is made on or prior to January 22, 2003, the
Additional Consideration shall be delivered to the Debtors. If requested in
writing by the Debtors no later than ten (10) Business Days prior to the
Closing, the Buyer shall deliver to the Debtors a Letter of Credit in an amount
equal to the Additional Consideration.
3.3 Allocation of Purchase Price. The Buyer and the Debtors shall allocate
the Purchase Price (plus the Assumed Obligations) among the Acquired Assets as
set forth on Schedule 3.3 attached hereto (which schedule shall be agreed to by
the Parties no later than thirty (30) Business Days after to the Closing), and
such Schedule shall be used by the parties in preparing (i) Form 8594, Asset
Acquisition Statement, for the Buyer and the Debtors and (ii) all Tax Returns.
The Buyer and the Debtors shall each file Form 8594 prepared in accordance with
this Section 3.3 with its federal income Tax Return for its tax period which
includes the Closing Date. All allocations made pursuant to this Section 3.3
shall be binding upon the parties and upon each of their successors and assigns,
and the Parties shall report the transactions contemplated by this Agreement in
accordance with such allocations.
ARTICLE IV
CLOSING; CONDITIONS TO CLOSING.
4.1 CLOSING. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "CLOSING") will take place at 10:00 a.m.
Chicago time on February 7, 2003, or, at the Buyer's sole election, as soon as
practicable following the Confirmation Date, or at such other date, time
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or place which the Parties may mutually agree (the "CLOSING DATE"). The Closing
shall occur at the offices of Kirkland & Ellis, 200 East Randolph Drive,
Chicago, Illinois.
4.2 THE DEBTORS' CONDITIONS. All of the obligations of the Debtors
hereunder are subject to the satisfaction of every one of the following
conditions precedent unless, and only to the extent, waived in writing by DBOC
(on behalf of the Debtors):
4.2.1 this Agreement, any documents related hereto and the transactions
contemplated hereby (including the Plan of Reorganization) have been approved
and authorized to the extent required by the Bankruptcy Code pursuant to an
order of the Bankruptcy Court in form and substance reasonably satisfactory to
DBOC (on behalf of the Debtors), which order has been entered for at least ten
days, has not been modified, reversed or amended in any manner materially
adverse to the Debtors and has not been stayed pending a timely commenced
appeal, and no order staying the consummation of the transactions contemplated
by this Agreement has been entered in connection with any timely commenced
appeal or certiorari;
4.2.2 the Confirmation Order has been signed by the Bankruptcy Court
and duly entered on the docket for the Reorganization Cases by the Clerk of the
Bankruptcy Court in form and substance reasonably acceptable to DBOC (on behalf
of the Debtors), has been entered for at least ten days and has not been
modified, reversed or amended in any manner materially adverse to the Debtors,
and there is no stay in effect with respect to the Confirmation Order and no
pleading has been filed seeking such a stay or appeal of the Confirmation Order;
4.2.3 the Buyer's Representations are true and correct in all material
respects on and as of the Closing Date with the same force and effect as if made
at and as of the Closing Date (without giving effect to any disclosures made by
the Buyer after the date hereof) (provided, however, that if any portion of any
representation or warranty is already qualified by materiality, for purposes of
determining whether this Section 4.2.3 has been satisfied with respect of such
portion of such representation or warranty, such portion of such representation
or warranty as so qualified must be true and correct in all respects);
4.2.4 the covenants, agreements and undertakings of the Buyer herein
have been complied with in all material respects;
4.2.5 the waiting period under the Hart-Scott-Rodino Act, if
applicable, has expired or been terminated;
4.2.6 no Controversy is pending or overtly threatened by or before any
arbitrator or Governmental Authority which is reasonably likely to enjoin,
restrain or prohibit, or result in material damages in respect of, or which is
related to or arises out of, this Agreement or the consummation of the
transactions contemplated hereby; and
4.2.7 at the Closing, the Buyer and the Asset Buyer(s) have tendered to
DBOC (acting on behalf of the Debtors) the following documents, executed in a
manner and otherwise in form and substance reasonably satisfactory to DBOC
(acting on behalf of the Debtors):
4.2.7.1 a duly executed assumption agreement or other appropriate
instruments (including, without limitation, appropriate Intellectual Property
assignments in
21
recordable form to the extent necessary to assign such Intellectual Property
rights) assigning the Assumed Obligations to the applicable Asset Buyer;
4.2.7.2 a copy of resolutions duly adopted by the board of
directors of the Buyer authorizing the execution and delivery of this Agreement
and by the board of directors of the Buyer and the Asset Buyer(s) authorizing
the execution and delivery of any other agreement to which it is a party in
connection herewith and the consummation of the transactions herein and therein
contemplated to be consummated by the Buyer or the Asset Buyer(s), as
applicable, duly certified, as of the applicable Closing Date, by a duly
authorized agent or officer of the Buyer or the Asset Buyer(s), as applicable;
and
4.2.7.3 a certificate, dated as of the Closing Date, of a
Responsible Officer of the Buyer to the effect that the Buyer's Representations
are true and correct in all material respects on and as of the Closing Date, as
though made on and as of the Closing Date (without giving effect to any
disclosures made by the Buyer after the date hereof) (provided, however, that if
any portion of any representation or warranty is already qualified by
materiality, for purposes of determining whether this Section 4.2.7.3 has been
satisfied with respect of such portion of such representation or warranty, such
portion of such representation or warranty as so qualified must be true and
correct in all respects) and that the Buyer has complied in all material
respects with its covenants hereunder.
4.3 BUYER'S CONDITIONS. All of the obligations of the Buyer hereunder are
subject to the satisfaction of every one of the following conditions precedent
as of the Closing unless, and only to the extent, waived in writing by the
Buyer:
4.3.1 this Agreement, any documents related hereto and the transactions
contemplated hereby have been approved and authorized to the extent required by
the Bankruptcy Code pursuant to an Order or Orders of the Bankruptcy Court in
form and substance reasonably satisfactory to the Buyer, which Order has not
been modified, reversed or amended in any manner adverse to the Buyer and has
become a Final Order, and no Order staying the consummation of the transactions
contemplated by this Agreement has been entered in connection with any timely
commenced appeal or certiorari;
4.3.2 the Confirmation Order has been signed by the Bankruptcy Court
and duly entered on the docket for the Reorganization Cases by the Clerk of the
Bankruptcy Court in form and substance reasonably satisfactory to the Buyer and
has not been modified, reversed or amended in any manner, there is no stay in
effect with respect to the Confirmation Order, no pleading has been filed
seeking such a stay or appeal of the Confirmation Order and the Confirmation
Order is a Final Order; without limiting the generality of the foregoing, the
Confirmation Order must provide, among other things, in form and substance
reasonably satisfactory to the Buyer, that: (i) the Acquired Assets shall have
been sold, contributed, conveyed, assigned, transferred and delivered to the
Asset Buyer(s) free and clear of all Liens (other than Permitted Liens); (ii)
the transactions contemplated by this Agreement are approved and effected
pursuant to the Plan of Reorganization; (iii) the Bankruptcy Court retains
exclusive jurisdiction to interpret and enforce the provisions of (1) this
Agreement and any related agreements to which the Buyer and the Debtors (as the
case may be) are a party and (2) the Confirmation Order in all respects; (iv)
neither the Buyer nor the Asset Buyer(s) shall be liable
22
for any of the Unassumed Liabilities; (v) the Bankruptcy Court approves and
authorizes the assumption and assignment of the Assumed Contracts set forth on
Schedule 2.1.1.5 as of the Closing and (vi) the provisions of the Confirmation
Order are nonseverable and mutually dependent;
4.3.3 all Claims against the Debtors are treated and discharged
pursuant to the Plan of Reorganization and the Confirmation Order (other than
the Assumed Obligations expressly assumed by the Asset Buyer(s) hereunder);
4.3.4 the Debtors' Representations are true and correct in all material
respects on and as of the Closing Date with the same force and effect, as if
made at and as of the Closing Date (without giving effect to any disclosures
made by the Debtors after the date hereof) (provided, however, that if any
portion of any representation or warranty is already qualified by materiality,
for purposes of determining whether this Section 4.3.4 has been satisfied with
respect of such portion of such representation or warranty, such portion of such
representation or warranty as so qualified must be true and correct in all
respects);
4.3.5 the covenants, agreements and undertakings of the Debtors herein
have been complied with in all material respects;
4.3.6 no Material Adverse Change has occurred since the date hereof,
and the Debtors have delivered to the Buyer a certificate, dated as of the
Closing Date and signed in its name by a Responsible Officer of each Debtor,
confirming the foregoing;
4.3.7 the waiting period under the Hart-Scott-Rodino Act, if
applicable, has expired or been terminated;
4.3.8 no Controversy is pending or threatened by or before any
arbitrator or Governmental Authority which is reasonably likely to enjoin,
restrain or prohibit, or result in material damages in respect of, or which is
related to or arises out of, this Agreement or the consummation of the
transactions contemplated hereby, or which could reasonably be expected to
result in a Material Adverse Change;
4.3.9 the Debtors have obtained, in preparation for the Closing, at
their own cost and expense, and have delivered to the Buyer no later than ten
(10) days prior to the Closing, a commitment for an ALTA Owners Policy of Title
Insurance 1992 Form, for each parcel of Assumed Owned Real Property and each
material Assumed Facility identified by the Buyer (the "TITLE COMMITMENTS"),
issued by the corporate office of Chicago Title Insurance Company located in
Chicago, Illinois (the "TITLE INSURER"), in such amount as the Buyer determines
to be the fair market value (including all improvements thereon), insuring the
Buyer's or the applicable Asset Buyer's interest, as applicable, in such parcel
as of the Closing, subject only to the Permitted Liens. The Debtors shall
deliver at the time of delivery of the Title Commitments, copies of all
documents of record referred to therein. The Debtors will provide the Buyer with
title insurance policies ("TITLE POLICIES") on or before the applicable closing
date, from the Title Insurer based upon the Title Commitments. The Debtors will
deliver to the Title Insurer all affidavits, GAP undertakings and other title
clearance documents necessary to issue the Title Policies and endorsements
thereto. Each such Title Policy will be dated as of the Closing Date
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and (i) insure fee simple title to the Assumed Owned Real Property or legal,
valid, binding and enforceable leasehold interest in each Assumed Facility (as
the case may be) and all recorded easements benefiting such parcels, subject
only to Permitted Liens, with gap coverage from the Debtors through the date of
recording (ii) contain an "extended coverage endorsement" insuring over the
general exceptions contained customarily in such policies, (iii) contain an ALTA
Zoning Endorsement 3.1, with parking (or equivalent), (iv) contain an
endorsement insuring that the parcel described in such Title Policy is the
parcel shown on the survey delivered with respect to such parcel and a survey
accuracy endorsement, (v) contain an endorsement insuring that each street
adjacent to such parcel is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from such parcel,
(vi) if the real estate covered by such policy consists of more than one record
parcel, contain a "contiguity" endorsement insuring that all of the record
parcels are contiguous to one another, (vii) contain a tax number endorsement
and (viii) contain such other endorsements as the Buyer and the Buyer's lender
may reasonably request;
4.3.10 the Debtors have procured, at their own cost and expense, in
preparation for the Closing, and shall have delivered to the Buyer no later than
ten (10) days prior to the Closing Date, current surveys of each of the Assumed
Owned Real Property and each material Assumed Facility ("SURVEYS"), prepared by
a licensed surveyor, satisfactory to the Buyer, and conforming to 1999 ALTA/ACSM
Minimum Detail Requirements for Urban Land Title Surveys, including Table A
Items Nos. 1, 2, 3, 4, 6, 7(a), (b)(1) and (c), 8, 9, 10, 11(b)(2), 13, 14, 15
and 16, and such standards as the Title Insurer may require as a condition to
the removal of any survey exceptions from the Title Policy, and certified to the
Buyer, the Buyer's lenders and the Title Insurer, within twenty-three days of
the applicable closing date, in a form satisfactory to such parties. The Surveys
shall not disclose any encroachments from or onto any of THE Assumed Owned Real
Property or Assumed Facility or any portion thereof or any other such survey
defect which has not been cured or insured over to the Buyer's reasonable
satisfaction prior to the Closing Date;
4.3.11 subject to Section 2.6 hereof, the Debtors shall have obtained
and delivered to the Buyer all material Third Party consents that are required
in order to prevent a breach of or default under, a termination or modification
of, or acceleration of the terms of, any Assumed Contract, in each case on terms
satisfactory to the Buyer;
4.3.12 in the event that the DBI Plan is not confirmed simultaneously
with the Plan of Reorganization, the Bankruptcy Court shall have entered no
later than the Confirmation Date the Alternative Transactions Order, in form and
substance reasonably acceptable to the Buyer and reasonably acceptable to DBI
and the Creditors' Committee; and
4.3.13 at the Closing, the applicable Debtor has tendered to the Buyer
or the Asset Buyer(s), as applicable, the following documents, executed in a
manner and otherwise in form and substance reasonably satisfactory to the Buyer:
4.3.13.1 a duly executed bill or bills of sale and assignment or
other appropriate instruments (including, without limitation, appropriate
Intellectual Property assignments in recordable form to the extent necessary to
assign such Intellectual Property rights), transferring title to and interest in
the Acquired Assets to the Asset Buyer(s);
24
4.3.13.2 a copy of resolutions duly adopted by the board of
directors of the Debtors authorizing the execution and delivery of this
Agreement and any other agreement executed and delivered by the Debtors in
connection herewith and the consummation of the transactions herein and therein
contemplated to be consummated by the Debtors, duly certified, as of the Closing
Date, by the secretary or any assistant secretary of each Debtor;
4.3.13.3 a certificate, dated as of the Closing Date, of a
Responsible Officer of each Debtor to the effect that the Debtors'
Representations are true and correct in all material respects on and as of the
Closing Date, as though made on and as of the Closing Date (without giving
effect to any disclosures made by the Debtors after the date hereof) (provided,
however, that if any portion of any representation or warranty is already
qualified by materiality, for purposes of determining whether this Section
4.3.14.3 has been satisfied with respect of such portion of such representation
or warranty, such portion of such representation or warranty as so qualified
must be true and correct in all respects) and that such Debtor has complied in
all material respects with its covenants hereunder;
4.3.13.4 a certificate of the Secretary and another officer of
each Debtor that contains their certification of the names and signatures of the
officers of such Debtor who have been authorized to execute and deliver this
Agreement and any other agreement executed and delivered on behalf of such
Debtor in connection herewith;
4.3.13.5 physical possession of all of the Acquired Assets
capable of passing by delivery with the intent that title in such Acquired
Assets shall pass by and upon delivery;
4.3.13.6 an affidavit from each Debtor stating such Debtor's
taxpayer identification number and that such Debtor is not a foreign person
pursuant to section 1445(b)(2) of the Code;
4.3.13.7 special warranty or limited warranty deeds (as may be
applicable) with respect to each Assumed Owned Real Property, in form and
substance reasonably satisfactory to Buyer, subject only to the Permitted Liens;
4.3.13.8 certificates of title and title transfer documents to
all titled motor vehicles;
4.3.13.9 an assignment and assumption agreement with respect to
Permits and warranties in form and substance reasonably acceptable to the Buyer,
whereby the Debtors shall assign to the Buyer all of their respective rights in
and to any Permits and warranties relating to the Acquired Assets or the
Acquired Product Lines, to the extent such Permits and warranties are
assignable;
4.3.13.10 all Books and Records (excluding the originals of the
minute books, stock books and all Tax Returns of any Debtor); and
4.3.13.11 such other instruments as shall be reasonably
requested or required by the Buyer to vest in the Asset Buyer(s) title in and to
the Acquired Assets in accordance with the provisions hereof;
25
4.3.14 all proceedings in connection with the transactions contemplated
by this Agreement, and all documents and instruments incident thereto, are
reasonably satisfactory in form and substance to the Buyer, and the Buyer has
received all such documents and instruments, or copies thereof, certified if
requested, as may be reasonably requested;
4.3.15 all consents, licenses, permits, approvals and authorizations of
any Third Party necessary for consummation of the transactions contemplated
hereby have been obtained or made and copies thereof delivered to the Buyer
(other than those consents, licenses, permits, approvals and authorizations
which have been provided for in the Confirmation Order); and
4.3.16 the process and proceedings relating to the Reorganization Cases
from the date of the filing of the Plan of Reorganization to the date of the
confirmation of the Plan of Reorganization are reasonably satisfactory to the
Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE DEBTORS
The Debtors hereby jointly and severally represent and warrant to the
Buyer that, with respect to the Acquired Product Lines, the statements contained
in this Article V are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article V.
5.1 ORGANIZATION; AUTHORIZATION. Each Debtor is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation as designated in the first paragraph of this Agreement and,
subject to entry of the Confirmation Order, has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Subject to entry of the Confirmation Order, the
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action of each Debtor. This Agreement has been duly
and validly executed by each Debtor and, subject to the entry of the
Confirmation Order, constitutes a legal, valid and binding obligation of each
Debtor, enforceable against it in accordance with its terms.
5.2 NO CONFLICT; CONSENTS. Subject to the entry of the Confirmation Order,
neither the execution and delivery of this Agreement nor the consummation of any
or all of the transactions contemplated hereby will (i) violate the certificate
of incorporation or by-laws (or other governing instrument) of any Debtor; (ii)
violate, be in conflict with or constitute an enforceable default under, or
require the consent of any third party to, any Assumed Contract; or (iii) to the
Debtors' knowledge, violate any Laws or Orders applicable to the Acquired
Product Lines.
5.3 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Other than the
approval of the Bankruptcy Court and consent under the Hart-Scott-Rodino Act, no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority is required in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
26
5.4 CONTRACTS. Schedule 5.4 sets forth a list of all Contractual
Obligations of the Debtors and, to the Debtors' knowledge, sets forth all Cure
Amounts as of the date of this Agreement. Each Contractual Obligation is valid,
binding and enforceable in accordance with its material terms, and is in full
force and effect. Except as set forth on Schedule 5.4 and except for defaults of
the type referred to in Section 365(b)(2) of the Bankruptcy Code, there are no
material defaults or events that, with notice or lapse of time or both, would
constitute a material default) by any Debtor or, to the Debtor's knowledge, any
other party under any of the Contractual Obligations.
5.5 FINANCIAL STATEMENTS. The Debtors have delivered to the Buyer the
audited consolidated balance sheet, income statement and statement of cash flows
of Debtors for the fiscal year ended December 31, 2001, (the "AUDITED
Financials") attached as Schedule 5.5 hereto and the interim unaudited balance
sheet, income statement and statement of cash flows of Debtors for the fiscal
period ended as of the last day of the most recent full month preceding the date
of this Agreement attached as Schedule 5.5 hereto (collectively, the "CURRENT
BALANCE SHEET"). The Audited Financials fairly and accurately reflect, in all
material respects, the financial position of Debtors on a consolidated basis as
of the dates thereof, and have been prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in the
notes thereto. The Current Balance Sheet fairly and accurately reflects, in all
material respects, the financial position of Debtors as of the date thereof, and
has been prepared in accordance with GAAP consistently applied during the
periods involved, subject to the absence of footnotes and year-end adjustments
(which would not be material).
5.6 EQUIPMENT. Set forth on Schedule 5.6 is a complete and correct list of
all Equipment as of the last day of the most recent full month preceding the
date of this Agreement. Such Equipment is sufficient to produce or distribute
the Acquired Product Lines as these were produced or distributed prior to May
22, 2001, and is in good operating condition and repair, subject to normal wear
and tear.
5.7 INVENTORY. With respect to the Acquired Product Lines, the amount of
Inventory on hand (i) has been manufactured and/or purchased in the Ordinary
Course of Business; and (ii) is not obsolete and is of a quality usable and
saleable in the Ordinary Course of Business, other than with respect to reserves
reflected in the financial statements described in Section 5.5 above that are
maintained by Debtors for obsolete or "slow moving" inventory.
5.8 INTELLECTUAL PROPERTY.
5.8.1 Schedule 5.8 sets forth the following items owned or licensed by
the Debtors or otherwise used or held for use by the Debtors with respect to the
Acquired Product Lines: (i) all U.S. and foreign issued patents and utility
patents, and all pending patent applications relating to any inventions, and all
reissues, divisions, continuations, continuations-in-part, extensions,
reexaminations or interferences of them; (ii) all U.S. and foreign registered
trademarks, registered service marks, trademark and service mark applications,
unregistered trademarks and service marks, trade names and logos; (iii) all U.S.
and foreign registered copyrights and copyright applications and all renewals
and extensions; (iv) a general identification of all logos and domain name
addresses; and (v) material Software (other than
27
commercially available off-the-shelf software purchased or licensed for less
than a total cost of $1,000 in the aggregate).
5.8.2 Schedule 5.8 sets forth all IP Licenses granted by or to any
Debtor and all other agreements to which any Debtor is a party, which create
rights in such Debtor or in any Third Party regarding any Intellectual Property
specifically or other intellectual property generally. The IP Licenses are
binding against such Debtor and in full force and effect. The continued use by
the Buyer (or the Asset Buyer(s) as applicable) of any IP License or Licensed IP
is not restricted by any IP License.
5.8.3 Except as set forth on Schedule 5.8, the Debtors are the owners,
free and clear of all liens, claims and encumbrances (except Permitted Liens and
liens under the DIP Loan Agreement which will be terminated as of the Closing),
of all right, title and interest in or have a valid and enforceable license to
use, all Intellectual Property necessary for the production and distribution of
the Acquired Product Lines, as presently conducted or as presently proposed to
be conducted, and the Debtors have the absolute right to use and assign those
rights without seeking the approval or consent of any Third Party and without
payments to any Third Party. All registrations and applications for the
Intellectual Property are in full force and effect. There are no existing or, to
Debtors' knowledge, threatened claims or proceedings by any Person and there is
no basis for any claim or proceeding relating to the use by the Debtors of the
Intellectual Property or challenging its ownership of the same. Except as set
forth on Schedule 5.8, to the Debtors' knowledge, no Third Party has infringed,
misappropriated, or otherwise conflicted with any of the Debtors' Intellectual
Property and to the Debtors' knowledge, there are no facts that indicate a
likelihood of any of the foregoing.
5.8.4 To the Debtors' knowledge, no Debtor has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of third parties, and, except as set forth on
Schedule 5.8, no Debtor has received any charge, complaint, claim, or notice
alleging any such interference, infringement, misappropriation or violation and
there is no basis for any such claim.
5.8.5 The Debtors have taken Commercially Reasonable Efforts to
maintain the confidentiality of their Trade Secrets.
5.8.6 Each present or past employee, officer, consultant or any other
person who developed any part of the Intellectual Property has vested in a
Debtor any and all right, title and interest in and to all such Intellectual
Property.
5.8.7 All Software owned or licensed by the Debtors for use in
connection with the Acquired Product Lines, or necessary for the production or
distribution of the Acquired Product Lines as such production or distribution is
currently conducted or anticipated to be conducted is set forth in Schedule 5.8.
5.8.8 The execution of this Agreement will not result in the loss or
impairment of the rights of the Buyer or the Asset Buyer(s) to own or use any of
the Intellectual Property.
5.8.9 The Debtors' products relating to the Acquired Product Lines have
been marked as required by the applicable patent statute and the Debtors have
given the public notice
28
of its Copyrights and notice of its Trademarks as required by the applicable
Trademark and Copyright statutes.
5.9 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.9, (i) the
production and distribution of the Acquired Product Lines have been conducted in
all material respects in accordance with all applicable Laws (including all
Environmental Laws) of all Governmental Authorities having jurisdiction over
Debtors and applicable to the Acquired Assets and (ii) no Debtor has received
any notification of any asserted present or past failure by any Debtor to comply
with any such Laws during the past three (3) years which apply to the Acquired
Product Lines or the Acquired Assets.
5.10 BOOKS AND RECORDS. All of the Books and Records of the Debtors have
been made available to the Buyer. The Books and Records are complete and correct
in all material respects.
5.11 PERMITS. Set forth on Schedule 5.11 is a complete list of all of the
Debtors' Permits relating to the Acquired Assets and the Acquired Product Lines.
Except as set forth on Schedule 5.11, such Permits (i) are valid and effective,
(ii) represent all Permits required by any Governmental Authority with
jurisdiction over the Acquired Product Lines or the Acquired Assets to own and
operate the Acquired Assets in connection with the Acquired Product Lines in the
same manner as operated prior to the date hereof and (iii) may be transferred or
reissued to the Buyer or the Asset Buyer, as applicable, without the approval of
any Third Party.
5.12 ENVIRONMENTAL MATTERS.
5.12.1 Except as set forth on Schedule 5.12, the Debtors and the
Acquired Assets are and have been in material compliance with all applicable
Environmental Laws. The Debtors have obtained all Permits and approvals required
under applicable Environmental Laws for the ownership and operation of the
Acquired Assets, all such Permits and approvals are in effect, the Debtors have
not received written Notice of any action to revoke or modify any of such
Permits or approvals, and the ownership and operation of the Acquired Assets is
and has been in material compliance with all terms and conditions thereof. No
Debtor has received written Notice of any pending or threatened claim or
investigation by any Governmental Authority or any other Person concerning
potential liability of any of the Debtors under Environmental Laws in connection
with the ownership or operation of the Acquired Assets. There has not been a
Release to the Environment of any Hazardous Substance at, upon, in, from or
under (i) any of the Assumed Owned Real Property, Assumed Facilities or other
properties upon which any of the Debtor's assets are or were located at any time
during the Debtors' ownership thereof or (ii) at any location to or from which a
Debtor has transported or arranged for the transportation of Hazardous
Substances from an Assumed Facility or the Assumed Owned Real Property. None of
the Assumed Facilities nor the Assumed Owned Real Property is currently, and, to
the Debtors' knowledge, none of the Assumed Facilities nor the Assumed Owned
Real Property has been, used as a treatment, storage or disposal facility for
Hazardous Waste, as such term is defined in the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. ss. 6901 et. Seq.; and, to the Debtors'
knowledge, no Hazardous Substances are present on any Assumed Facility or the
Assumed Owned Real Property, except in compliance with all applicable
Environmental Laws and as are used in the operation of the Acquired Assets.
29
5.12.2 The Debtors have delivered to the Buyer all correspondence, test
results, records, notices, disclosures and reports in any of the Debtor's
possession or control with respect to the Debtors, the Assumed Owned Real
Property or any Assumed Facility, including all material correspondence with any
Governmental Authority concerning any and all past and/or present health, safety
and/or environmental issues or concerns.
5.12.3 Except as set forth on Schedule 5.12, no Debtor has received
Notice, or otherwise obtained knowledge, of the existence of any circumstances
or conditions that have a reasonable likelihood of resulting in any damages for
which it could be liable arising pursuant to any Environmental Law.
5.13 EMPLOYEES; BENEFIT PLANS.
5.13.1 Set forth on Schedule 5.13 is the following: (i) a listing of
the names, titles and dates of hire of all of the employees of the Debtors who
are not governed by any collective bargaining agreement, (ii) a list of
collective bargaining agreements entered into by the Debtors and (iii) a list of
all "employee benefit plans" (within the meaning of Section 3(3) of ERISA),
whether or not subject to ERISA, in which current or former employees of the
Business participate (collectively, the "BENEFIT PLANS"). The annual salaries
and bonuses of such employees of the Debtors and a copy of such collective
bargaining arrangements and employee benefit plans have been made available to
the Buyer on or prior to the date hereof.
5.13.2 Except as set forth on Schedule 5.13, none of the Benefit Plans
is, and no Debtor has ever maintained or had an obligation to contribute to, or
incurred any other obligation with respect to (i) a plan subject to Title IV of
ERISA or Section 412 of the Code or Title I, Subtitle B, Part 3 of ERISA, (ii) a
Multiemployer Plan or (iii) a funded welfare benefit plan, as defined in Section
419 of the Code. None of the Debtors has any agreement or commitment to create
any additional Benefit Plan, or to modify or change any existing Benefit Plan.
5.13.3 The Debtors have performed and complied with all of their
obligations under and with respect to the Benefit Plans in all material respects
and each of the Benefit Plans has, at all times, in form, operation and
administration complied in all material respects with its terms, and, where
applicable, the requirements of the Code, ERISA and all other applicable Laws.
Each Benefit Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the Internal Revenue Services
to be so qualified, nothing has occurred which could reasonably be expected to
adversely affect such qualified status, and, to the extent required by
applicable law, each such Benefit Plan was timely amended and filed with the
Internal Revenue Service with respect to the legislation referred to as GUST.
5.13.4 There are no unpaid contributions due prior to the date hereof
with respect to any Benefit Plan that are required to have been made under its
terms and provisions, any related insurance contract or any applicable Law.
There are no trusts or similar funding vehicles, reserve assets, surpluses or
prepaid premiums with respect to any Benefit Plan that is a welfare plan.
5.13.5 No Debtor nor any ERISA Affiliate thereof has incurred any
liability or taken any action, and the Debtors have no knowledge of any action
or event, that could cause
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any Debtor or any ERISA Affiliate thereof to incur any liability (i) under
Section 412 of the Code or Title IV or ERISA with respect to any
"single-employer plan," as defined in Section 4001(a)(15) of ERISA, or (ii) on
account of a partial or complete withdrawal, as defined in Section 4203 and 4205
of ERISA, respectively, with respect to any Multiemployer Plan or on account of
unpaid contributions to any Multiemployer Plan.
5.13.6 There are no Controversies pending, or to the Debtors'
knowledge, threatened that involve any employees employed in connection with the
Business. Each Debtor has complied, and is in substantial compliance, in all
material respects with all Laws relating to the employment of labor, including,
without limitation, any provision thereof relating any provision thereof
relating to wages, hours, collective bargaining, employee health, immigration,
layoffs, safety and welfare, and the payment of social security and similar
taxes. There are presently no unfair labor practice complaints or other material
labor controversies pending against any Debtor, union representation questions
involving persons employed by the Debtors, or, to the Debtors' knowledge,
current activities or proceedings of any labor union (or representative thereof)
to organize any unorganized employees of any Debtor or any strikes, slowdowns,
work stoppages, lockouts, or threats thereof, by or with respect to any
employees of any Debtor.
5.14 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 5.14,
since the date of the Current Balance Sheet: (i) there has been no Material
Adverse Change; (ii) there has been no damage, destruction or loss to any
material asset or property, tangible or intangible, of the Debtors, ordinary
wear and tear excepted; (iii) other than in connection with the proposed sale of
the Acquired Assets and the Acquired Product Lines, the Business has been
conducted only in the Ordinary Course of Business; (iv) no Debtor has increased
the compensation of any officer or granted any general salary or benefits
increase to their employees other than in the Ordinary Course of Business; (v)
the post-Petition liabilities have been paid in the Ordinary Course of Business;
and (vi) there has been no material change by the Debtors, in relation to the
Acquired Product Lines or in accounting principles, practices or methods.
5.15 LIABILITIES. None of the Debtors has any Liabilities other than (i)
Liabilities as set forth in the Current Balance Sheet or referred to in the
footnotes to the Audited Financials, (ii) Liabilities set forth in Schedule 5.15
and (iii) Liabilities incurred after the date of the Current Balance Sheet in
the Ordinary Course of Business.
5.16 INSURANCE. Schedule 5.16 contains an accurate summary description of
all policies of property, fire and casualty, product liability, workers
compensation and other forms of insurance owned by or held by any Debtor in
connection with the Acquired Assets or the Acquired Product Lines, together with
a list of all outstanding claims against any insurer relating to the Acquired
Assets or the Acquired Product Lines. Except as set forth on Schedule 5.16, no
Debtor has received (a) any notice of cancellation or non-renewal of any policy
described in such Schedule 5.16 or refusal of coverage thereunder, (b) any
notice that any issuer of such policy has filed for protection under applicable
insolvency laws or is otherwise in the process of liquidating or has been
liquidated, or (c) any other indication that such policies are no longer in full
force or effect or that the issuer of any such policy is no longer willing or
able to perform its obligations thereunder.
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5.17 TAXES. Except as set forth on Schedule 5.17, all Tax returns, reports
and forms of the Debtors due prior to the date hereof with respect to the
Acquired Assets or the Acquired Product Lines have been timely filed and
properly reflect the tax liability of the Debtors with respect to the applicable
periods, and no extension of time with respect to any date on which any Tax
return, report or form was or is to be filed with respect to the Debtors is in
force. All Taxes and withholding amounts due and payable (or required to be
withheld) prior to the date hereof have been paid (or withheld). Except as set
forth on Schedule 5.17, no ongoing audit, litigation or similar proceeding
concerning any Tax returns of any Debtor has been proposed, threatened, or is in
progress nor does there exist any waiver or agreement for the extension of time
for the assessment of any Taxes against any Debtor. Except as set forth on
Schedule 5.17, there are no Liens on any of the assets of the Debtors that arose
in connection with any failure (or alleged failure) to pay any Tax and there are
no claims for Taxes, and to Debtors' knowledge, no basis for which any such
claims might be made, that might result in any such Liens. Except as set forth
on Schedule 5.17, no claim has ever been made by a taxing authority in a
jurisdiction where the Debtors do not currently file Tax returns that any Debtor
is or may be subject to taxation by such jurisdiction. None of the Acquired
Assets is a "tax exempt use property" within the meaning of Section 168(h) of
the Code. None of the Acquired Assets is subject to a lease made pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954.
5.18 ACCOUNTS RECEIVABLE. The Accounts Receivable constitute bona fide,
valid and collectible claims arising in the Ordinary Course of Business in a
manner consistent with the Debtors' normal credit practices and are subject to
no set-offs or counterclaims, subject only to reasonable reserves for bad debts
calculated in a manner consistent with the Debtors' past practice.
5.19 BROKERS; AGENTS. Except with respect to Jefferies & Company, Inc., the
Debtors have not dealt with any agent, finder, broker or other representative in
any manner which could result in the Buyer or the Asset Buyer(s) being liable
for any fee or commission in the nature of a finder's fee or originator's fee in
connection with the subject matter of this Agreement.
5.20 WARRANTY OBLIGATIONS. Schedule 5.20 contains a true and complete
description of the Debtors' experience over the past three years with respect to
product warranty obligations, pricing and other accommodations with respect to
the Acquired Product Lines. To the best of Debtors' knowledge, as of November 1,
2002, sufficient reserves were maintained on the books of the Debtors to cover
the Debtors' product warranty obligations. Over the past three years, the
Debtors have had no product recall obligations.
5.21 REAL PROPERTY. Attached hereto as Schedule 5.21 is a description of
all Assumed Owned Real Property and the Assumed Facilities. True and complete
copies of all owners policies of title insurance obtained for the benefit of any
of the Debtors have been delivered to the Buyer. The Debtors own good and
marketable fee title to the Assumed Owned Real Property. At the Closing, such
title shall be free and clear of all Liens other than Permitted Liens. Except as
set forth in Schedule 5.21, the Assumed Owned Real Property and the Assumed
Facilities constitute all of the real property used by any of the Debtors in
connection with the Acquired Assets or the Acquired Product Lines. Each parcel
included in the Assumed Owned Real Property constitutes a separate tax lot.
There is no pending or, to the Debtors'
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knowledge, threatened condemnation (or sale in lieu thereof) affecting the
Assumed Owned Real Property.
5.22 LITIGATION. Except as set forth on Schedule 5.22 or claims made in
connection with the Reorganization Cases, there are no actions, claims, charges,
complaints, material grievances, causes of action, proceedings, suits or
investigations pending or, to the Debtors' knowledge, threatened, against the
Debtors or any of their respective assets, properties or rights, before (or that
could come before) any Governmental Authority or arbitrator that would result in
a Material Adverse Change. Except in connection with the Reorganization Cases,
none of Debtors is subject to any Order entered in any lawsuit or proceeding.
5.23 TRADE RELATIONS. On or prior to the date hereof, the Debtors have
delivered to the Buyer a list of each of the Debtors' ten largest customers (the
"MATERIAL CUSTOMERS") and ten largest suppliers (the "MATERIAL SUPPLIERS"), as
determined by the dollar amount of sales to such customers and purchases from
such suppliers for the year ending December 31, 2001. Except as set forth on
Schedule 5.23, there exists no actual or, to the Debtors' knowledge, threatened,
cancellation of, or (except for the tightening of credit terms as a result of
Reorganization Cases) any material adverse modification to or change in, the
business relationship of the Debtors with any Material Customer or Material
Supplier.
5.24 SUBSIDIARIES. Schedule 5.24 sets forth the name and jurisdiction of
incorporation of each Subsidiary of the Debtors, the number of shares of each
class of each of the Debtors' Subsidiary's Stock (both authorized, issued and
outstanding), the names of the holders of each such issued share of Stock and
the number of shares held by each such holder, the number of shares of each such
Subsidiary's Stock held in treasury and each Subsidiary's directors and
officers. There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any Stock of any Subsidiary.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER.
The Buyer represents and warrants to the Debtors that the statements
contained in this Article VI are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article VI.
6.1 ORGANIZATION. The Buyer is, and, as of the Closing each Asset Buyer
will be, a duly organized and validly existing corporation in good standing
under the laws of the jurisdiction of its organization, and the Buyer has, and
as of the Closing each Asset Buyer will have, the power and authority to own,
lease and operate its assets and properties and to conduct its business as now
being conducted (or in the case of each Asset Buyer, conducted as of the
Closing).
6.2 AUTHORIZATION. There is no provision in the Buyer's, and as of the
Closing, there will not be in any Asset Buyer's, organizational documents which
prohibits or limits the Buyer's or any Asset Buyer's respective ability to
consummate the transactions contemplated to be consummated by the Buyer and the
Asset Buyer(s) hereunder. The Buyer has, and each Asset
33
Buyer will have, the full right, power and authority to enter into this
Agreement and to consummate or cause to be consummated all of the transactions
and to fulfill all of the obligations contemplated to be consummated or
fulfilled by the Buyer and each Asset Buyer hereunder. The execution and
delivery of this Agreement by the Buyer and the due consummation by the Buyer of
the transactions contemplated to be consummated by the Buyer and each Asset
Buyer hereby have been, and with respect to each Asset Buyer will be, duly
authorized by all necessary action of the general partners, board of directors
or members or managers, as applicable, of the Buyer or such Asset Buyer,
respectively. This Agreement constitutes a legal, valid and binding agreement of
the Buyer enforceable against the Buyer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
6.3 NO CONFLICT OR VIOLATION. Except as may be required by the
Hart-Scott-Rodino Act, neither the execution and delivery of this Agreement by
the Buyer, nor the consummation by the Buyer or any Asset Buyer of the
transactions contemplated to be consummated by the Buyer and such Asset Buyer
hereby nor compliance by the Buyer and each Asset Buyer with any of the
provisions hereof will result in: (i) a violation of or a conflict with any
provision of the organizational documents of the Buyer or any Asset Buyer, as
applicable; or (ii) a violation of any Law, or order, judgment, writ,
injunction, decree or award, or an event which, with the giving of notice, lapse
of time or both, would result in any such violation.
6.4 CONSENTS AND APPROVALS. No consent, approval or authorization of any
Person, nor any declaration, filing or registration with any Governmental
Authority or other Person, is required to be made or obtained by the Buyer in
connection with the execution, delivery and performance by the Buyer of the
transactions contemplated to be consummated by the Buyer hereunder, except as
may be required by the Hart-Scott-Rodino Act.
6.5 BROKERS. No agent, broker or other Person acting pursuant to express or
implied authority of the Buyer is entitled to a commission or finder's fee in
connection with the transactions contemplated by this Agreement or, pursuant to
express or implied authority of the Buyer, will be entitled to make any claim
(including the assertion of a Lien) against the Debtors for a commission or
finder's fee.
ARTICLE VII
ACTIONS PRIOR TO AND ON THE CLOSING
7.1 CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING. Except as otherwise
expressly contemplated by this Agreement or with the prior written consent of
the Buyer, from the date hereof until the Closing, each of the Debtors shall,
with respect to the Acquired Product Lines and the Acquired Assets (i) produce
and distribute the Acquired Product Lines in the Ordinary Course of Business
(including with respect to the payment of accounts payable to the fullest extent
permissible under the Bankruptcy Code), (ii) use Commercially Reasonable Efforts
to preserve intact the Acquired Product Lines, to keep available the services of
present employees with respect thereto and to maintain appropriate levels of
Inventory and (iii) not take any action inconsistent with this Agreement or
with the consummation of the Closing. Without limiting the generality of the
foregoing, except as otherwise expressly contemplated by this Agreement or
34
with the prior written consent of the Buyer, from the date hereof until the
Closing, each Debtor shall:
7.1.1 not sell, assign, transfer, convey, pledge, mortgage, lease,
license or otherwise dispose of or encumber their respective assets, or any
interests therein, other than in the Ordinary Course of Business and consistent
with past practice or as set forth on Schedule 7.1.1;
7.1.2 not make any material change in its methods of management,
marketing, accounting or operating (or practices relating to payments);
7.1.3 provide to the Buyer, (i) all financial information which the
Debtors are required to provide to the DIP Lenders under the DIP Loan Agreement
and (ii) on a weekly basis, any other management reports and financial
information prepared by or for the Debtors in the Ordinary Course of Business;
7.1.4 not take any action which is inconsistent with its obligations
under this Agreement;
7.1.5 maintain the Acquired Assets in good operating condition and
repair, subject to ordinary wear and tear;
7.1.6 continue all of its existing policies of insurance (or comparable
insurance) in full force and effect and at least at such levels as are in effect
on the date hereof, up to and including the Closing (and not cancel any such
insurance or take, or fail to take, any action that would enable the insurers
under such policies to avoid liability for claims arising out of occurrences
prior to the Closing);
7.1.7 not enter into any transaction or make or enter into any
Contractual Obligation or amend any such obligation which is not in the Ordinary
Course of Business;
7.1.8 not grant any increase in the compensation payable or to become
payable to any employee (including, without limitation, retention or stay bonus
arrangements), except such increases as are required by contract and not
contribute or make any commitment to, or representation that it shall,
contribute any amounts to any Employee Benefit Plan of the Debtors, or otherwise
alter any such Employee Benefit Plan of the Debtors or the funding thereof
except as required by law or by the terms of any such plan as in effect on the
date of this Agreement;
7.1.9 maintain the Books and Records in the usual, regular and ordinary
manner and consistent with past practice;
7.1.10 maintain compliance with all Laws, rules and Regulations of all
federal, state, local or foreign governmental or regulatory bodies that relate
to the Acquired Product Lines and the Acquired Assets;
7.1.11 not implement any employee layoffs that could implicate the WARN
Act;
35
7.1.12 apply or continue prosecution of applications already submitted
for any Permits required under Environmental Laws for the continued operation of
the Acquired Assets (as they are currently being operated) up to and after the
Closing;
7.1.13 not incur any Liability, whether absolute, fixed or contingent,
except in the Ordinary Course of Business;
7.1.14 not sell, transfer, license or otherwise dispose of, or agree to
sell, transfer, license or otherwise dispose of, or permit to lapse any of the
Intellectual Property;
7.1.15 not dividend, distribute or otherwise pay out any cash or cash
equivalents except (i) for the payment of the Debtors' trade payables in the
Ordinary Course of Business, (ii) to pay for professional fees and expenses
incurred by the Debtors (to the extent that the payment of such professional
fees and expenses is permitted by the Bankruptcy Court) and (iii) to pay
interest due under the DIP Loan Agreement;
7.1.16 not incur any Indebtedness including, without limitation,
drawing down any amounts under the DIP Loan Agreement; and
7.1.17 not terminate, discontinue, close or dispose of any plant,
Leased Facility or business operation relating to the Acquired Product Lines.
The Debtors shall not (i) take or agree or commit to take any action
that would make any of the Debtors' Representations inaccurate in any material
respect at, or as of any time prior to, the Closing or (ii) omit or agree to
omit to take any action necessary to prevent any such representation or warranty
from being inaccurate in any material respect at any such time.
7.2 INSPECTION.
7.2.1 The Debtors agree that, prior to the Closing, the Buyer, the
Buyer's lenders, and their respective representatives shall, upon reasonable
notice and so long as such access does not unreasonably interfere with the
business operations of the Debtors, have reasonable access during normal
business hours to all Leased Facilities and Owned Real Property and shall be
entitled to make such reasonable investigation of the properties, businesses and
operations of the Debtors (including, without limitation, any "Phase I" or
"Phase II" environmental investigations) and such examination of the Books and
Records and financial condition of the Debtors as it reasonably requests and to
make extracts and copies to the extent necessary of such Books and Records;
provided that the Buyer shall be bound by and shall comply with the terms of the
Confidentiality Agreement with respect to the Buyer's ability to use or disclose
any such information; and provided further that no investigation pursuant to
this Section 7.2 shall affect any representations or warranties made herein or
the conditions to the obligations of the respective parties to consummate the
transactions contemplated by this Agreement.
7.2.2 The Debtors agree that, prior to the Closing, the Buyer and the
Buyer's lenders shall, upon reasonable notice and so long as such access does
not unreasonably interfere with the business operations of the Debtors, through
its authorized officers, employees, agents and representatives, have reasonable
access during normal business hours to all facilities of the
36
Debtors for the purposes of permitting the Buyer's lenders (or a Third Party
service provider selected by the Buyer's lenders) to conduct a physical
inventory of the Inventory. The cost of any such physical inventory shall be the
responsibility of the Buyer or the Buyer's lenders.
7.2.3 The Debtors shall deliver to the Buyer copies of the Debtors'
interim monthly and year-to-date consolidated financial statements as soon as
reasonably practicable (and in any event within 15 days) following the end of
each monthly accounting period during the period between the date of this
Agreement and the Closing. These financial statements shall include income
statements, balance sheets, profit and loss and other analyses and comparisons
to the Debtors' budget for the Acquired Product Lines, as well as an explanation
of the assumptions and the accounting policies and practices used in preparation
thereof and such other matters as the Buyer may reasonably request and, if any,
interim statements and operating reports filed with the United States Trustee or
the Bankruptcy Court.
7.3 CONSENTS AND COMMERCIALLY REASONABLE EFFORTS.
7.3.1 AUTHORIZATIONS. Upon the approval of this Agreement by the
Bankruptcy Court, the Parties will commence to take all Commercially Reasonable
Efforts required to obtain all authorizations, consents, approvals, orders and
agreements of, and to give all notices and make all filings with, Governmental
Authorities and any other Person necessary to authorize, approve or permit their
respective obligations pursuant to this Agreement and the consummation of the
transactions contemplated hereby. Subject to the terms and conditions herein
provided, each of the Parties covenants and agrees to cooperate fully with each
other and use its Commercially Reasonable Efforts to take, or cause to be taken,
all actions or do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
transactions contemplated hereby. The Parties will cooperate with one another:
(i) in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material Contractual
Obligations in connection with the consummation of the transactions contemplated
by this Agreement; and (ii) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers. Subject to applicable Laws relating to the exchange of
information, the Parties shall have the right to review in advance, and to the
extent practicable each will consult with the other on, all information related
to the Parties and their respective subsidiaries that appears in any filing made
with, or written materials submitted to, any Third Party or Governmental
Authority in connection with the transactions contemplated by this Agreement.
7.3.2 HART-SCOTT-RODINO ACT. Upon the approval of this Agreement by the
Bankruptcy Court or earlier if directed by the Buyer, the Parties, if
applicable, will promptly prepare and file with the Federal Trade Commission and
the Antitrust Division of the United States Department of Justice Notification
and Report Forms and documentary material which comply with the provisions of
the Hart-Scott-Rodino Act and the rules thereunder and will use Commercially
Reasonable Efforts to promptly file any additional information requested as soon
as practicable after receipt of the request. The Buyer will pay all filing and
other fees in connection with such filings.
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7.3.3 PLAN OF REORGANIZATION. The Debtors will not amend the Plan of
Reorganization except in accordance with the terms of the Plan of
Reorganization. The Debtors will use Commercially Reasonable Efforts to have the
Plan of Reorganization confirmed by the Bankruptcy Court as soon as possible.
7.3.4 REGULATORY APPROVALS. No Party will take any action which will
have the effect of delaying, impairing or impeding the receipt of any required
regulatory approvals.
7.3.5 NOTICES OF CERTAIN EVENTS. Each Party will notify the other Party
of: (i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this
Agreement; (iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving or
otherwise affecting such Party or any of its Affiliates which relate to the
consummation of the transactions contemplated by this Agreement; and (iv) any
change that is reasonably likely to result in a Material Adverse Change or is
likely to delay or impede the ability of any Party to consummate the
transactions contemplated by this Agreement or to fulfill its obligations set
forth herein.
7.3.6 FORBEARANCE AGREEMENT. The Debtors will use their best efforts to
obtain an Order by the Bankruptcy Court that prohibits the DIP Lenders from
exercising any of their rights under the Forbearance Agreement dated as of
August ___, 2002 by and between the DIP Lenders and the Debtors which could
materially adversely effect the Debtors or interfere with the Debtors' use and
enjoyment of the Acquired Assets.
7.4 EMPLOYEE BENEFIT PLANS. The Debtors agree that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Buyer, from the date of this Agreement through the Closing, none of the Debtors
shall:
7.4.1 increase the compensation payable to or to become payable to any
director or executive officer of the Debtors or any ERISA Affiliate, except for
increases in salary or wages payable or to become payable upon promotion to an
office having greater operational responsibilities and otherwise in the Ordinary
Course of Business;
7.4.2 grant any severance or termination pay (other than pursuant to
the severance policies of the Debtors or any ERISA Affiliate or any Contractual
Obligation binding on the Debtors or any ERISA Affiliate, in each case as in
effect on the date of this Agreement and disclosed in the schedules to this
Agreement) to, or enter into any employment or severance agreement with, any
director, officer of the Debtors or any ERISA Affiliate, either individually or
as part of a class of similarly situated Persons;
7.4.3 establish, adopt or enter into any Employee Benefit Plan; or
7.4.4 except as required by Law or the terms of the applicable Employee
Benefit Plan, amend or take any other actions, including acceleration of vesting
and waiver of performance criteria, with respect to any Employee Benefit Plan.
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7.5 EMPLOYEES.
7.5.1 Immediately prior to the Closing, the employment of the employees
employed in connection with the Acquired Product Lines shall be terminated by
the Debtors, and all employees set forth on Schedule 7.5.1 shall have the right
to apply for employment with the Buyer and/or the Asset Buyer(s). The Debtors
acknowledge that the Buyer and/or the Asset Buyer(s) intend to make offers of
employment to certain employees employed in connection with the Acquired Product
Lines, on terms and conditions of employment that may be different from those
provided by the Debtors, and that it is uncertain how many employees of the
Debtors will accept employment with the Buyer and/or the Asset Buyer(s). The
number of offers of employment made by the Buyer and/or the Asset Buyer(s), and
the terms and conditions of such offers, shall be determined by the Buyer in its
sole discretion and in accordance with applicable law. Except to the extent
specifically assumed under Section 2.2 hereof, the Debtors shall be responsible
for any and all wages, bonuses, commissions, employee benefits, retention or
stay bonus arrangements, and other compensation (including all obligations under
any Employee Benefit Plans) due to the employees employed in connection with the
Acquired Product Lines arising out of their employment with the Debtors prior to
and as of the Closing.
7.5.2 Nothing contained in this Agreement shall confer upon any
employee of the Debtors hired by the Buyer and/or any Asset Buyer (the "REHIRED
EMPLOYEES") any right with respect to continuance of employment by the Buyer,
nor shall anything herein interfere with the right of the Buyer and/or the Asset
Buyer(s) to terminate the employment of any Rehired Employees at any time, with
or without notice, or restrict the Buyer and/or the Asset Buyer(s), in the
exercise of their business judgment in modifying any of the terms or conditions
of employment of the Rehired Employees after the Closing.
7.6 DEBTORS' COOPERATION IN HIRING OF EMPLOYEES. The Debtors shall
cooperate with the Buyer and shall, permit the Buyer a reasonable period prior
to the Closing Date (i) to meet with employees of the Debtors (including
managers and supervisors) who are employed in connection with the Acquired
Product Lines at such times as the Buyer shall reasonably request, (ii) to speak
with such employees' managers and supervisors (in each case with appropriate
authorizations and releases from such employees) who are being considered for
employment by the Buyer and/or the Asset Buyer(s), (iii) to distribute to such
employees of the Debtors such forms and other documents relating to potential
employment by the Buyer and/or the Asset Buyer(s) after the Closing as the Buyer
may reasonably request, and (iv) to the extent permitted by applicable law, to
permit the Buyer's counsel, upon request, to review personnel files and other
relevant employment information regarding employees of the Debtors.
7.7 WARN ACT. In respect of notices and payments relating to events
occurring on or prior to the Closing, the Debtors shall be jointly and severally
responsible for and assume all liability for any and all notices, payments,
fines or assessments due to any government authority, pursuant to any applicable
federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of employees by the Debtors as of
or before the Closing, including but not limited to the WARN Act. Likewise, in
respect of notices and payments relating to events occurring after the Closing,
the Asset Buyer(s) shall be responsible and assume all liability for any and all
notices, payments, fines or assessments due to any
39
Governmental Authority, pursuant to any applicable Law, including but not
limited to the WARN Act, with respect to the employment, discharge or layoff of
Rehired Employees.
7.8 BANKRUPTCY ACTIONS. The Debtors will provide the Buyer with a
reasonable opportunity to review and comment upon all motions, applications and
supporting papers prepared by the Debtors relating to this Agreement (including
forms of Orders and notices to interested parties) prior to the filing thereof
in the Reorganization Cases. All motions, applications and supporting papers
prepared by the Debtors and relating to the approval of this Agreement
(including forms of Orders and notices to interested parties) to be filed on
behalf of the Debtors after the date hereof must be acceptable in form and
substance to Buyer, in its reasonable discretion.
7.9 EXCLUDED REAL PROPERTY. The Debtors agree that the covenants contained
in Section 7.1 hereof shall apply to the Excluded Real Property. The Debtors
further agree that the Buyer shall have the right to cause the Debtors to
dispose of the Excluded Real Property prior to the Closing and to control all
aspects of such disposition including, without limitation, (i) the hiring of
real estate brokers, (ii) the negotiation of price and other terms of sale for
any parcel of the Excluded Real Property, and (iii) directing a donation of any
parcel of the Excluded Real Property. Any proceeds received by the Debtors in
connection with the disposition of any of the Excluded Real Property whether by
sale, condemnation or otherwise and whether received prior to or after the
Closing, shall be Acquired Assets for all purposes of this Agreement. At the
Buyer's direction, the Debtors will promptly execute any documents the Buyer
reasonably requests to effectuate the disposition of the Excluded Real Property,
including, without limitation, purchase and sale agreements, deeds, transfer
declarations and closing statements. In addition, the Debtors shall obtain all
necessary sale orders from the Bankruptcy Court to effectuate such dispositions
of the Excluded Real Property. If on or prior to the Closing the Excluded Real
Property is not disposed of pursuant to this Agreement, at the Debtors' request,
the Buyer will assume the Excluded Real Property at Closing.
ARTICLE VIII
ACTIONS AFTER THE CLOSING
8.1 EMPLOYEE BENEFIT PLANS.
8.1.1 To the extent responsible on the Closing Date, the Debtors shall
be responsible for all Employee Benefit Plans (other than the Assumed Plans) and
to the extent not specifically assumed under Section 2.2.1 hereof, all
obligations and liabilities thereunder. Except for the Assumed Plans or
obligations specifically assumed under Section 2.2.1 hereof, or as required by
operation of applicable Law, neither the Buyer nor any Asset Buyer shall assume
any Employee Benefit Plans or any obligation or liability thereunder, and the
Asset Buyer(s) shall provide benefits to those Rehired Employees as of or after
the Closing as the Buyer, in its sole discretion, shall determine. Except for
obligations arising, and relating solely to periods, after the Closing with
respect to the Assumed Plans or obligations specifically assumed under Section
2.2.1 hereof, the Debtors shall indemnify, defend and hold harmless the Buyer
and the Asset Buyer(s) from and against any and all Claims or Liabilities under
any Employee Benefit
40
Plans. With respect to all Claims by current and former employees of the Debtors
who are or were employed in connection with the Acquired Product Lines arising
prior to or as of the Closing under any Employee Benefit Plans, whether insured
or otherwise (including, but not limited to, life insurance, medical and
disability programs), the Debtors shall, at their own expense, honor or cause
their respective insurance carriers to honor such claims, whether made before or
after the Closing, in accordance with the terms and conditions of such Employee
Benefit Plans without regard to the employment by the Buyer or the Asset
Buyer(s) of any such employees after the Closing and without regard to the
assumption by the Buyer or the Asset Buyer(s) of the Assumed Plans.
8.1.2 As soon as reasonably possible after the Closing Date, the Buyer
shall cause each Rehired Employee to be given credit for his or her service with
the Debtors (only to the extent such service is taken into account under any
Debtor's vacation or sick leave policy, program or arrangement) for the purpose
of determining such Rehired Employee's vacation and sick leave (on a
going-forward basis) in any vacation or sick leave plan, program or arrangement
maintained for the Buyer's employees' benefit on or after the Closing Date;
provided, however, neither the Buyer nor the Asset Buyer(s) shall be obligated
to pay any cash amounts based on such credit. Notwithstanding the forgoing, the
Buyer and the Asset Buyer(s) shall be responsible only for accrued liabilities
and claims with respect to vacation and sick leave earned or accrued by Rehired
Employees on or prior to the Closing Date to the extent such Liability is
specifically assumed under Section 2.2.1 hereof.
8.2 COOPERATION OF THE BUYER AND THE DEBTORS. The Buyer and the Debtors
jointly covenant and agree that, from and after the Closing Date, the Buyer and
the Debtors will each use Commercially Reasonable Efforts to cooperate with each
other in connection with any action, suit, proceeding, investigation or audit of
the other relating to (a) the preparation of an audit of any Tax Return of any
Debtor or the Buyer for all periods prior to or including the Closing Date and
(b) any audit of the Buyer or any Asset Buyer and/or any audit of any Debtor
with respect to the sales, transfer and similar Taxes imposed by the laws of any
state or political subdivision thereof, relating to the transactions
contemplated by this Agreement. In furtherance hereof, the Buyer and the Debtors
further covenant and agree to promptly respond to all reasonable inquiries
related to such matters and to provide, to the extent reasonably possible,
substantiation of transactions and to make available and furnish appropriate
documents and personnel in connection therewith. All costs and expenses incurred
in connection with this Section 8.2 referred to herein shall be borne by the
party who is subject to such action.
8.3 FURTHER ASSURANCES; CERTAIN CONSENTS. From time to time after the
Closing and without further consideration, (i) the Debtors, upon the request of
the Buyer, shall execute and deliver such documents and instruments of
conveyance and transfer as the Buyer may reasonably request in order to
consummate more effectively the purchase and sale of the Acquired Assets as
contemplated hereby and to vest in the Asset Buyer title to the Acquired Assets
transferred hereunder, and (ii) the Buyer, upon the request of the Debtors,
shall execute and deliver (or shall cause to be executed and delivered) such
documents and instruments of contract or lease assumption as Debtors may
reasonably request in order to confirm the Asset Buyer(s)' liability for the
obligations specifically assumed hereunder or otherwise more fully consummate
the transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, if a consent of a Third Party which is required in order to
assign any Acquired
41
Asset (or Claim, right or benefit arising thereunder or resulting therefrom) is
not obtained prior to the Closing, or if an attempted assignment would be
ineffective or would adversely affect the ability of any Debtor to convey its
interest in question to the applicable Asset Buyer, the Debtors will cooperate
with the Buyer and use Commercially Reasonable Efforts in any lawful arrangement
to provide that the applicable Asset Buyer shall receive the interests of any
Debtor in the benefits of such Acquired Asset. If any consent or waiver is not
obtained before the Closing and the Closing is nevertheless consummated, each
Debtor agrees to continue to use Commercially Reasonable Efforts to obtain all
such consents as have not been obtained prior to such date.
8.4 NAME CHANGES. Promptly after the Closing, each Debtor shall and shall
cause each of its Subsidiaries to take all necessary action to change its name
to a name bearing no resemblance to the names set forth on the signature pages
to this Agreement and following the Closing each Debtor shall not and shall
cause its Subsidiaries not to use, directly or indirectly, the name "Diamond" or
"Forster" or any other name which is confusingly similar thereto.
8.5 ACCOUNTS RECEIVABLE/COLLECTIONS. After the Closing, the Debtors shall
permit the applicable Asset Buyer to collect, in the name of the Debtors, all
Accounts Receivable constituting part of the Acquired Assets and to endorse with
the name of any Debtor for deposit in the applicable Asset Buyer's account any
checks or drafts received in payment thereof. Debtors shall promptly deliver to
the applicable Asset Buyer any cash, checks or other property that they may
receive after the Closing in respect of any Accounts Receivable or other asset
constituting part of the Acquired Assets.
8.6 ACCESS TO INFORMATION. For a period of twenty-four (24) months after
the Closing Date (the "TRANSITION Period"), each Party and their representatives
shall have reasonable access to, and each shall have the right to photocopy, all
of the Books and Records relating to the Acquired Product Lines or the Acquired
Assets, including all employee records or other personnel and medical records
required by law, legal process or subpoena, in the possession of the other party
to the extent that such access may reasonably be required by such Party in
connection with the Assumed Obligations or the Unassumed Liabilities, or other
matters relating to or affected by the operation of the Acquired Product Lines
and the Acquired Assets. During the Transition Period, and only to the extent
that the Buyer's operation of the Acquired Assets is not interrupted in any
material respect, the Buyer agrees to provide the Debtors, during ordinary
business hours and upon reasonable notice and at any Debtor's request, with
reasonable access to employees of the Buyer and/or the Asset Buyer(s) for
purposes of winding down the estates of the Debtors. Such access shall be
afforded by the party in possession of such Books and Records upon receipt of
reasonable advance notice and during normal business hours; provided, however,
that (A) any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the operation of the business of any party or its
affiliates, (B) no party shall be required to take any action which would
constitute a waiver of the attorney-client privilege and (C) no party need
supply the other party with any information which such party is under a legal
obligation not to supply. The party exercising this right of access shall be
solely responsible for any costs or expenses incurred by it pursuant to this
Section 8.6. If the party in possession of such Books and Records shall desire
to dispose of any such Books and Records upon or prior to the expiration of such
period, such party shall, prior to such disposition, give the
42
other party a reasonable opportunity at such other party's expense, to segregate
and remove such Books and Records as such other party may select.
8.7 TRANSITION SERVICES. Following the Closing, the Debtors shall provide
to the Asset Buyer(s) and the Buyer various services, including without
limitation, operations support services (e.g., storage space for the Acquired
Assets) and other transition services pursuant to mutually acceptable terms and
conditions.
TERMINATION
9.1 TERMINATION AND ABANDONMENT. This Agreement may be terminated and
abandoned at any time prior to the Closing Date:
9.1.1 by mutual written consent of the Parties;
9.1.2 by the Buyer if the Closing has not occurred on or before
February 7, 2003; provided that if the Buyer is in breach of its obligations
under this Agreement, the Buyer may not terminate this Agreement under this
Section 9.1.2 if its breach is a primary cause of the delay of the Closing;
9.1.3 by the Buyer, so long as the Buyer is not then in breach of its
obligations hereunder, if there has been a material breach of a Debtor's
Representation as of the date of this Agreement or at the time of termination as
if made on the date of such termination, except to the extent it relates to a
particular date, or if there has been a material breach by the Debtors of their
obligations under this Agreement, and in either case which breach, if curable,
has not been cured within ten (10) Business Days following receipt by the
Debtors of written notice of such breach and is existing at the time of
termination of this Agreement;
9.1.4 by the Debtors, so long as none of the Debtors is then in breach
of its obligations hereunder, if there has been a material breach of a Buyer's
Representation as of the date of this Agreement or at the time of termination as
if made on the date of such termination, except to the extent it relates to a
particular date, or if there has been a material breach by the Buyer of its
obligations under this Agreement, and in either case which breach, if curable,
has not been cured within ten (10) Business Days following receipt by the Buyer
of written notice of such breach and is existing at the time of termination of
this Agreement; and
9.1.5 by the Buyer or the Debtors, if any event occurs which renders
satisfaction of one or more of its conditions to effect the Closing impossible;
provided that the Buyer or the Debtors, as the case may be, shall not be
entitled to terminate this Agreement pursuant to this Section 9.1.5 if the
impossibility results primarily from such party itself breaching any
representation, warranty or covenant contained in this Agreement.
9.2 NOTICE OF TERMINATION. In the event of the termination of this
Agreement by either the Buyer or the Debtors in accordance with Section 9.1, the
terminating Party shall give prompt written notice thereof to the
non-terminating Party.
9.3 EFFECT OF TERMINATION. Except as specifically provided in Section
3.2.1, in the event of the termination or abandonment of this Agreement in
accordance with the provisions of
43
Section 9.1, the Deposit will be returned to the Buyer in accordance with the
Earnest Money Deposit Agreement, and this Agreement thereafter shall become null
and void and cease to have any effect other than the provisions of Sections
5.19, 6.5, 10.9 and 10.22, which sections shall survive such termination.
9.4 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Debtors and the Buyer contained in this Agreement or in any
instrument delivered in connection herewith shall not survive the Closing.
ARTICLE X
GENERAL PROVISIONS
10.1 AMENDMENT AND MODIFICATION. No amendment, modification, supplement,
termination, consent or waiver of any provision of this Agreement, nor consent
to any departure therefrom, will in any event be effective unless the same is in
writing and is signed by Buyer and the Debtors. Any waiver of any provision of
this Agreement and any consent to any departure from the terms of any provision
of this Agreement is to be effective only in the specific instance and for the
specific purpose for which given.
10.2 ASSIGNMENTS. No Party may assign or transfer any of its rights or
obligations under this Agreement (whether voluntarily or involuntarily or by
operation of Law (including a merger or consolidation), judicial decree or
otherwise) to any other Person without the prior written consent of the other
Party. Notwithstanding the foregoing, the Buyer may assign its rights and
obligations under this Agreement to (i) any Affiliate of the Buyer and (ii) as
collateral for indebtedness for borrowed money, the Acquired Product Lines or
the Acquired Assets without the consent of the Debtors, but no such assignment
shall relieve the Buyer of any of its obligations hereunder.
10.3 BUSINESS DAY. If any day on which any payment is required to be made
hereunder, or on which any notice must be sent, or on which any time period
described herein commences or ends is not a Business Day, then such day will be
deemed for all purposes of this Agreement to fall on the next succeeding day
which is a Business Day.
10.4 CAPTIONS. Captions contained in this Agreement and the table of
contents preceding this Agreement have been inserted herein only as a matter of
convenience and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
10.5 COUNTERPART FACSIMILE EXECUTION. For purposes of this Agreement, a
document (or signature page thereto) signed and transmitted by facsimile machine
or telecopier is to be treated as an original document. The signature of any
Party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of any Party, any facsimile or telecopy document is to be re-executed in
original form by the Parties who executed the facsimile or telecopy document. No
Party may raise the use of a facsimile machine
44
or telecopier or the fact that any signature was transmitted through the use of
a facsimile or telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in compliance with this
Section.
10.6 COUNTERPARTS. This Agreement may be executed by the Parties on any
number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the Parties notwithstanding that all the
Parties are not signatories to the same counterpart.
10.7 ENTIRE AGREEMENT. This Agreement, together with the Plan of
Reorganization, constitutes the entire agreement among the Parties pertaining to
the subject matter hereof and supersede all prior agreements, letters of intent,
understandings, negotiations and discussions of the Parties, whether oral or
written. If there are any inconsistencies between the terms of this Agreement
and the terms of the Plan of Reorganization, the Parties and the Creditors'
Committee hereby agree to work in good faith to resolve any such
inconsistencies.
10.8 SCHEDULES AND EXHIBITS. All of the Schedules and Exhibits attached to
this Agreement are deemed incorporated herein by reference.
10.9 EXPENSES INCURRED BY THE PARTIES. Except as otherwise provided herein,
in the Plan of Reorganization or agreed to in writing by the Parties, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby are to be paid by the Party incurring such
costs and expenses.
10.10 FAILURE OR DELAY. No failure on the part of any Party to exercise,
and no delay in exercising, any right, power or privilege hereunder operates as
a waiver thereof; nor does any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege. No notice to or demand on any
Party in any case entitles such Party to any other or further notice or demand
in similar or other circumstances.
10.11 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (regardless of the laws that
might otherwise govern under applicable Delaware principles of conflicts of law)
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
10.12 LEGAL FEES. In the event any Party brings suit or institutes
arbitration proceedings to construe or enforce the terms hereof, or raises this
Agreement as a defense in a suit or arbitration proceeding brought by another
Party, the prevailing Party in such suit or arbitration proceeding shall be
entitled to recover its attorneys' fees and expenses. The Debtors agree to pay
directly all Taxes, fees and other charges, including all sales Taxes, transfer
Taxes and recording charges, incurred as a result of the consummation of the
transactions contemplated by this Agreement. The Debtors will seek a provision
in the Confirmation Order that exempts the transactions contemplated hereby from
Taxes pursuant to ss.1146(c) of the Bankruptcy Code.
10.13 NOTICES BETWEEN THE PARTIES. All notices, consents, requests, demands
and other communications hereunder are to be in writing, and are deemed to have
been duly given or made: (i) when delivered in person; (ii) three days after
deposited in the United States mail, first class postage prepaid; (iii) in the
case of telegraph or overnight courier services, one Business Day after delivery
to the telegraph company or overnight courier service with payment provided;
45
(iv) in the case of telecopy or fax, when sent, verification received; or (v) in
the case of electronic transmission such as e-mail, when sent; in each case
addressed as follows:
if to the Buyer:
Jarden Corporation
555 Theodore Fremd Avenue
Suite B-302
Rye, NY 10580-1455
Attn: Martin E. Franklin
Fax No. (914) 967-9405
e-mail: mfranklin@jardencorp.com
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
56th Floor
Chicago, Illinois 60601
Attention: Gary R. Silverman
Fax No: (312) 861-2200
e-mail: gsilverman@chicago.kirkland.com
if to the Debtors:
Diamond Brands, Inc.
1660 South Highway 100
Suite 122
Minneapolis, MN 55416
Attn: Naresh K. Nakra
Fax No. (952) 543-6211
e-mail: nnakra@diamondbrands.com
with a copy to:
Skadden Arps Slate Meagher & Flom
333 West Wacker Drive
Chicago, Illinois 60606
Attn: Timothy R. Pohl
Fax No. (312) 404-0411
e-mail: tpohl@skadden.com
or to such other address as any Party may designate by notice to the other Party
in accordance with the terms of this Section.
10.14 PUBLICITY REGARDING THIS AGREEMENT. Any publicity release,
advertisement, filing, public statement or announcement made by or at the
request of any Party regarding this Agreement or any of the transactions
contemplated hereby is to be first reviewed by and must be
46
satisfactory to the other Party. Notwithstanding the preceding sentence, if a
Party is required by applicable Law to make any publicity release, filing,
public statement or announcement, the issuing Party may make the same without
the approval of the other Party but the issuing Party must use Commercially
Reasonable Efforts to consult with the other Party before making any such
release, public statement or announcement.
10.15 REMEDIES ARE EXCLUSIVE. Except in the case of fraud or willful
misconduct, the remedies provided herein are the sole remedies of the Parties
and are exclusive of any remedies or rights that might be available to any Party
at law, in equity or otherwise.
10.16 SEVERABILITY. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction is, as to such jurisdiction,
ineffective to the extent of any such prohibition, unenforceability or
nonauthorization without invalidating the remaining provisions hereof, or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction, unless the ineffectiveness of such provision would result in
such a material change as to cause completion of the transactions contemplated
hereby to be unreasonable. Upon a determination that any provision of this
Agreement is prohibited, unenforceable or not authorized, the Parties agree to
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible, in a mutually acceptable manner,
in order that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
10.17 SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF. Each Party recognizes
that, if it fails to perform, observe or discharge any of its obligations under
this Agreement, no remedy at law will provide adequate relief to the other
Party. Therefore, each Party is hereby authorized to demand specific performance
of this Agreement, and is entitled to temporary and permanent injunctive relief,
in a court of competent jurisdiction at any time when the other Party fails to
comply with any of the provisions of this Agreement applicable to it. To the
extent permitted by Law, each Party hereby irrevocably waives any defense that
it might have based on the adequacy of a remedy at law which might be asserted
as a bar to such remedy of specific performance or injunctive relief.
10.18 SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO MUST BE BROUGHT IN THE
BANKRUPTCY COURT AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF SUCH COURT. THE PARTIES IRREVOCABLY WAIVE
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. EACH PARTY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF SUCH COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO EACH OF THE OTHER PARTIES AT ITS ADDRESS PROVIDED
HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
47
10.19 SUCCESSORS AND ASSIGNS. All provisions of this Agreement are binding
upon, inure to the benefit of and are enforceable by or against the Parties and
their respective heirs, executors, administrators or other legal representatives
and permitted successors and assigns.
10.20 THIRD-PARTY BENEFICIARY. This Agreement is solely for the benefit of
the Parties and their respective successors and permitted assigns, and no other
Person has any right, benefit, priority or interest under or because of the
existence of this Agreement except as specifically set forth herein.
10.21 EFFECTIVE CONTROL. If the transactions contemplated under this
Agreement (as may be amended, supplemented or otherwise modified from time to
time) are consummated and the Plan of Reorganization (as may be amended,
supplemented or otherwise modified from time to time) is confirmed in accordance
with the terms and conditions hereunder and thereunder, the Parties hereby agree
that the date on which the Buyer and the Asset Buyer(s) will be deemed to have
acquired effective control (i.e., the risks and rewards of ownership) of the
Acquired Product Lines shall be January 1, 2003.
10.22 LIABILITY OF BUYER'S AFFILIATES. No past, present or future director,
officer, employee, member, shareholder, incorporator, partner or Affiliate of
the Buyer or any Affiliate thereof will have any Liability for any obligations
of the Buyer under this Agreement or for any Claim based on, in respect of or by
reason of such obligations or their creation.
{The remainder of this page has been left intentionally blank.
The next page is the only signature page.}
48
IN WITNESS WHEREOF, the Parties hereto have caused this Asset Purchase
Agreement to be executed and delivered on the date first above written.
BUYER:
JARDEN CORPORATION
By: /s/ Desiree DeStefano
-----------------------------
Desiree DeStefano
Vice President
DEBTORS:
DIAMOND BRANDS INC.
By: /s/ Naresh Nakra
-----------------------------
Naresh Nakra
Chief Executive Officer
DIAMOND BRANDS OPERATING CORP.
By: /s/ Naresh Nakra
-----------------------------
Naresh Nakra
Chief Executive Officer
DIAMOND BRANDS KANSAS, INC.
By: /s/ Naresh Nakra
-----------------------------
Naresh Nakra
Chief Executive Officer
FORSTER, INC.
By: /s/ Naresh Nakra
-----------------------------
Naresh Nakra
Chief Executive Officer