IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division
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:
:
In re: :
:
NX NETWORKS, INC. : Case No. 01-14223-RGM
: Chapter 11
Debtor-in-Possession :
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ORDER PURSUANT TO 11 U.S.C. SECTIONS 105 AND 363
APPROVING ASSET PURCHASE AGREEMENT BETWEEN
THE DEBTOR AND NSGDATA.COM INC.
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Upon consideration of the Motion for an Order Authorizing the Sale of
Assets (the "Motion") dated January 31, 2002 filed by NX Networks, Inc. (the
"Seller" or "Debtor"), by counsel, seeking, among other things, the entry of
an order pursuant to Bankruptcy Code sections 105(a) and 363(b), (f) and (m),
and Rules 2002, 6004 and 9014 of the Federal Rules of Bankruptcy Procedure
authorizing the sale of certain assets of the Debtor (the "Subject Assets")
which shall have the same meaning as the "Assets" as set forth in the Asset
Purchase Agreement (exclusive, however, of the SMTC Inventory and the
Agreement and any rights or other interests of Seller or Debtor under the
Agreement, as those terms are defined in the Stipulation and Agreement As To
The Exclusion of Certain Assets From The Debtor's Proposed Sale of Assets
Pursuant To 11 U.S.C. 365 and 11 U.S.C. 363 between the Debtor and SMTC
Manufacturing Corporation of North Carolina) to nsgdata.com Inc. or its
designee (the "Buyer"), pursuant to the terms and conditions of the Asset
Purchase Agreement free and clear of all claims, liens, encumbrances and
interests; and due notice of the Motion and relief sought herein and upon the
record of the hearing held on March 5, 2002 (the "Sale Hearing"), and based on
the pleadings, testimony of witnesses, if any, and arguments of counsel, and
good and sufficient cause appearing therefor;
IT IS HEREBY FOUND AND DETERMINED THAT:
A. This Court has jurisdiction to hear and determine the Motion
pursuant to 28 U.S.C. Sections 157(b)(2)(A), (N) and (O). The statutory
predicates for the relief sought herein are sections 105 and 363 of the United
States Code, 11 U.S.C. Sections 101 et seq. as amended (the "Bankruptcy Code")
and Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") 2002, 6004
and 9014.
B. Proper, timely and adequate notice of the Motion and the Sale
Hearing has been provided in accordance with section 102(1) of the Bankruptcy
Code and Bankruptcy Rules 2002, 6004, 6006, and 9006, and no other or further
notice of the Motion, the Sale Hearing or the entry of this Order is required.
C. The sale of the Subject Assets reflects the Debtor's sound business
judgment.
D. Approval of the Asset Purchase Agreement and consummation of the
sale of the Subject Assets at this time are in the best interests of the
Debtor, its creditors and estate. The Debtor has demonstrated good and
sufficient business justification for the sale of the Subject Assets pursuant
to section 363(b) of the Bankruptcy Code outside of a plan of reorganization,
in that, among other things:
a. In the absence of a prompt sale of the Subject Assets, their
value will rapidly decline;
b. A sale to the Buyer of the Subject Assets at this time will
result in the highest possible sale price for the Subject Assets; and
c. Unless a sale to the Buyer is concluded expeditiously as
provided for under the Asset Purchase Agreement, (i) the value of the Subject
Assets will decline and (ii) the Debtor, its estate and its creditors will
realize less value for the Subject Assets.
E. The Asset Purchase Agreement represents the highest and best offer
for the Subject Assets, the Purchase Price is fair and reasonable and
constitutes reasonably equivalent value under the Bankruptcy Code and
applicable state law.
F. The Asset Purchase Agreement was negotiated, proposed and entered
into by the parties without collusion, in good faith, and from arm's length
bargaining positions. The Buyer is a good faith purchaser under section
363(m) of the Bankruptcy Code and, as such, is entitled to the protections
afforded thereby.
G. The transfer of the Subject Assets pursuant to the Asset Purchase
Agreement (a) are or will be legal, valid and effective transfers of property
of the Debtor's estate to the Buyer, and (b) vest or will vest the Buyer with
all right, title and interest of the Debtor in and to the Subject Assets free
and clear of all liens, claims, encumbrances and interests pursuant to section
363(f) of the Bankruptcy Code, as and to the extent provided in the Asset
Purchase Agreement.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion be, and hereby is, granted in all respects.
2. All objections to the Motion or the relief requested therein that
have not been withdrawn, waived, or settled, are overruled on their merits.
3. The terms and conditions of the Asset Purchase Agreement are hereby
approved in all respects pursuant to section 363(b) of the Bankruptcy Code and
the Debtor and the Buyer are directed and authorized to immediately take such
actions as are necessary to consummate, implement, and otherwise exercise any
and all rights and remedies under, the Asset Purchase Agreement. The purchase
price is as follows:
a. $677,000 cash at closing;
b. a promissory note in the amount of $300,000 payable within
30 days of closing and a note in the amount of $150,000 payable in 60
days and a note in the amount of $150,000 payable within 90 days, all
secured by the accounts receivable, intellectual property and the
DEC/Cabletron Lawsuit;
c. 60% of the accounts receivable as collected;
d. 70% of the proceeds of the DEC/Cabletron Lawsuit; and
e. Purchaser will pay all post-petition accounts payable.
4. The Debtor is hereby authorized and empowered to fully perform
under, consummate, and implement the Asset Purchase Agreement, together with
such additional instruments and documents that may be reasonably necessary or
desirable to implement the Asset Purchase Agreement, and to take all further
actions as may reasonably be requested by the Buyer for the purpose of
assigning, transferring, granting, conveying and conferring to the Buyer, or
reducing to Buyer's possession, any or all of the Subject Assets, or as may be
necessary or appropriate to the performance of the obligations contemplated by
the Asset Purchase Agreement.
5. Pursuant to sections 105(a) and 363(f) of the Bankruptcy Code, the
Subject Assets shall be transferred to the Buyer and upon the Closing under
the Asset Purchase Agreement shall be free and clear of all mortgages,
security interests, pledges, liens, claims, interests, judgments, demands,
encumbrances, restrictions or charges of any kind or nature, fixed or
contingent (collectively, the "Liens"), whether arising prior to or subsequent
to the commencement of the Debtor's Chapter 11 case, and whether imposed by or
asserted based on agreement, understanding, law, equity or otherwise, with all
such Liens to attach to the sale proceeds in the order of their priority, with
the same validity, force and effect which they now have as against the Subject
Assets.
6. All persons and entities holding Liens of any kind and nature with
respect to the Subject Assets are hereby barred from asserting such Liens of
any kind or nature against the Buyer, its successors or assigns, or the
Subject Assets.
7. Except to the extent otherwise expressly provided in the Asset
Purchase Agreement, (a) Buyer shall not be liable for any claims (including,
but not limited to any and all "claims" as defined in Section 101(5) of the
Bankruptcy Code and any and all rights and claims under any bulk transfer
statutes and similar laws) against the Debtor or its estate, and (b) Buyer
is not assuming nor shall it in any way whatsoever be liable or responsible,
as successor or otherwise, for any other liabilities, debts or obligations of
the Debtor.
8. As to the Asset Purchase Agreement and Subject Assets transferred
thereby, this Sale Order (a) is and shall be effective as a determination
that, on the Closing, all liens existing as to the Subject Assets prior to the
Closing have been unconditionally released, discharged and terminated, and (b)
is and shall be binding upon and govern the acts of all creditors of the
estate.
9. This Court shall retain jurisdiction (i) to enforce and implement
the terms and provisions of the Asset Purchase Agreement, all amendments
thereto, any waivers and consents thereunder, and of each of the agreements
executed in connection therewith, (ii) to compel delivery of the Subject
Assets to the Buyer, (iii) to compel delivery of the Purchase Price, (iv) to
compel specific performance of the Debtor's and the Buyer's obligations under
the Asset Purchase Agreement, (v) to resolve any disputes arising under or
related to the Asset Purchase Agreement, (vi) to interpret, implement and
enforce the provisions of this Sale Order, and (vii) determine any disputes
relating to or concerning the receipt, use, application or retention of the
proceeds from the sale of the Subject Assets.
10. Nothing contained in any plan of reorganization or liquidation
confirmed in this case or the order of confirmation confirming such plan shall
conflict with or derogate from the provisions of the Asset Purchase Agreement
or this Sale Order.
11. The Buyer is a purchaser in good faith of the Subject Assets and is
entitled to all of the protections afforded by section 363(m) of the
Bankruptcy Code.
12. The terms and provisions of the Asset Purchase Agreement, together
with the terms and provisions of this Sale Order, shall be binding in all
respects upon, and shall inure to the benefit of, the Debtor, its estate and
creditors, the Buyer, and their affiliates, successors and assigns, and any
affected third parties including but not limited to all non-debtor parties
asserting a claim against or interest in the Debtor's estate or any of the
Subject Assets to be sold to the Buyer pursuant to the Asset Purchase
Agreement, notwithstanding any subsequent appointment of any trustee for the
Debtor under any chapter of the Bankruptcy Code, as to which trustee such
terms and provisions likewise shall be binding in all respects.
13. The Asset Purchase Agreement and any related agreements, documents
or other instruments may be modified, amended or supplemented by the parties
thereto in accordance with the terms thereof without further order of the
Court, provided that any such modification, amendment or supplement is not
material.
14. The failure specifically to include any particular provision of the
Asset Purchase Agreement in this Sale Order shall not diminish or impair the
efficacy of such provision, it being the intent of the Court that the Asset
Purchase Agreement be authorized and approved in its entirety.
15. The provision of Federal Rule of Bankruptcy Procedure 6004(g)
staying the effectiveness of this Sale Order for ten (10) days is hereby
waived, and this Order shall be effective immediately upon entry thereof.
16. The Debtor is hereby authorized and directed to pay all property or
similar taxes owed in connection with the Subject Assets and arising prior to
the Closing the non-payment of which would result in the creation of a lien on
the Subject Assets, including but not limited to any and all such pre-petition
taxes and all penalties and interest.
17. The Debtor is hereby authorized and directed to take all actions
reasonable and necessary to effectuate the terms of the Asset Purchase
Agreement, the transactions contemplated thereunder and the provisions of this
Sale Order, all without the necessity of any further order of this Court.
18. The Subject Assets do not include any license agreements, or
related assets including, without limitation, any licenses or related assets
of Texas Instruments, Incorporated and/or Telogy Networks, Inc. to which the
Debtor is a party, unless previously agreed to by the licensor.
/s/ Robert G. Mayer
Dated: March 6, 2002 --------------------------------------
Robert G. Mayer
Judge, United States Bankruptcy Court
for the Eastern District of Virginia
NOTICE OF JUDGMENT OR ORDER
Entered on Docket 3/6/02
PREPARED BY:
By: /s/ Steven J. Tave
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Steven J. Tave, VA Bar No. 45917
Michael J. Lichtenstein
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W., Suite 300
Washington, D.C. 20007
(202) 424-7500
Copies to:
Michael J. Lichtenstein, Esquire
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W., Suite 300
Washington, D.C. 20007
Thomas P. Gorman, Esquire
Tyler, Bartl, Burke & Gorman, P.L.C.
206 N. Washington St., Suite 200
Alexandria, VA 22314
Frank J. Bove, Esquire
Office of the U.S. Trustee
115 S. Union Street, Suite P210
Alexandria, VA 22314