ASSET PURCHASE AGREEMENT

EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement” ) is made and entered into as of this 29th day of May, 2009, by and among Butler America LLC, a Delaware limited liability company (the “Buyer” ), Butler International, Inc., a Maryland corporation (the “ Parent ”), and the other Sellers set forth on the signature page hereto (each, a “ Seller ” and together with Parent, the “ Sellers ”).  Sellers and Buyer are sometimes collectively referred to herein as the “Parties” .

RECITALS

A.           Sellers are engaged in the business of providing engineering, installation and maintenance and technology service outsourcing for its clients (the “Business” ).

B.           Sellers wish to sell to Buyer, pursuant to Section 363 of Chapter 11 of Title 11 of the United States Code (as amended, the “Bankruptcy Code” ),   substantially all of the assets (but excluding the Excluded Assets (as described below)) used in connection with and arising out of the operation of the Business at the price and on the other terms and conditions specified in detail below and Buyer wishes to so purchase and acquire such assets from Sellers.

C.           As contemplated by this Agreement, the Sellers shall file voluntary petitions for relief under Chapter 11 of Title 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “ Bankruptcy Court ”), and each such Seller will request that the Sellers’ respective Chapter 11 cases be jointly administered for procedural purposes under a single case number (the “ Bankruptcy Case ”).

D.           The Sellers believe, following consultation with their financial advisors and consideration of available alternatives, that, in light of the current circumstances, a sale of their assets is necessary to preserve and maximize value and is in the best interest of the Sellers, their respective estates and creditors.

E.           The transactions contemplated by this Agreement (the “ Transactions ”) will be subject to the approval of the Bankruptcy Court and will be consummated only pursuant to an Approval Order (as defined below) to be entered in the Bankruptcy Case and the applicable provisions of the Bankruptcy Code.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1.            Transfer of Assets .

 

1.1            Purchase and Sale of Assets .  At the Closing, as hereinafter defined, in consideration of the covenants, representations and obligations of Buyer hereunder, and subject to the conditions hereinafter set forth, each Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from each Seller, such Seller’s right, title and interest in, to and under all of the property, assets and rights owned by Sellers used in or useful to the Business (other than Excluded Assets), of every kind, character and description, whether tangible, intangible, personal or mixed and wheresoever located, whether carried on the books of Sellers or not carried on the books of Sellers, due to expense, full depreciation or otherwise (collectively, the “Purchased Assets” ), free and clear of all liabilities, obligations, claims, charges, easements, encumbrances, mortgages, covenants, security interests, liens, options, pledges, rights of others, or restrictions (whether on voting, sale, transfer, disposition or otherwise), whether imposed by agreement, understanding, law, equity or otherwise (each, a “ Lien ”), including, without limitation, the following:

1.1.1    Contracts .  Subject to Buyer’s designation rights set forth in Section 1.3 hereof, (i) the real property leases described in Section 1.1.1-(i) of the Disclosure Letter (collectively, the “Real Property Leases” ; the property leased pursuant to such Real Property Leases, the “Leased Real Property” ), (ii) the equipment, personal property and intangible property leases, rental agreements, licenses, Contracts, agreements and similar arrangements described in Section 1.1.1-(ii) of the Disclosure Letter (collectively, the “Other Leases” ), (iii) the customer contracts set forth in Section 1.1.1-(iii) of the Disclosure Letter (the “ Customer Contracts ” and any information identifying such customers, whether in Section 1.1.1-(iii) of the Disclosure Letter or any other Section of the Disclosure Letter, Schedule or Exhibit hereto, the “ Customer Information ”) and (iv)  those other Contracts, leases, orders, purchase orders, licenses, contracts, agreements and similar arrangements described in Section 1.1.1-(iv) of the Disclosure Letter (collectively, the “Other Contracts” and together with the Other Leases and the Customer Contracts, the “Other Leases and Contracts” ).

1.1.2    Personal Property .  All of those items of equipment and tangible assets and other tangible personal property now or hereafter owned by any Seller and used in connection with the Business (collectively, the “Personal Property” ); a schedule of which Personal Property used in the Business, the historical cost of which exceeds one hundred thousand dollars ($100,000) individually, is set forth in Section 1.1.2 of the Disclosure Letter .  The Personal Property, however, shall expressly exclude any equipment or other tangible property held by any Seller pursuant to a lease, rental agreement, contract, license or similar arrangement (a “Contract” ) in the event that Buyer does not assume the underlying Contract relating to such personal property at the Closing.

1.1.3    Intangible Property .  All intangible personal property owned or held by any Seller and used in connection with the Business, together with all books, records and like items pertaining to the Business, including, without limitation, the names listed in Section 1.1.3 of the Disclosure Letter , the goodwill associated with the Business or the Purchased Assets, copyrights, patents, processes, trademarks, trade names, domain names, service marks, catalogues, customer lists and other customer data bases, correspondence with present or prospective customers and suppliers, advertising materials, software programs, telephone exchange numbers, and other similar intangible assets in each case used in connection with the Business (collectively, the “Intangible Property” ); provided that, to the extent such Intangible Property cannot be transferred to Buyer, Sellers shall be deemed to have granted to Buyer an exclusive, royalty-free right and license to use such Intangible Property from and after the Closing Date, to the fullest extent permitted by applicable law.  As used in this Agreement, Intangible Property shall in all events exclude (i) any materials containing privileged communications or information about employees, disclosure of which would violate an employee’s reasonable expectation of privacy and any other materials which are subject to attorney-client or any other privilege, and (ii) any software or other item of intangible property held by any Seller pursuant to a license or other Contract where Buyer does not assume the underlying Contract relating to such intangible personal property at the Closing.

 

1.1.4    Receivables .  All instruments, receivables, accounts receivable and unbilled costs and fees attributable to the Business or the Purchased Assets and, subject to Section 1.2, all causes of action relating or pertaining to the foregoing (collectively, the “Receivables” ), except for the Receivables described in Section 1.1.4 of the Disclosure Letter .

1.1.5    Certain Insurance Policies .  The insurance policies relating to the Purchased Assets or the operation of the Business set forth in Section 1.1.5 of the Disclosure Letter (the “ Assumed Insurance ”), which Section shall be updated by Seller and Buyer no later than five (5) business days prior to the Bid Deadline (as defined in the Bidding Procedures Order), except any recoveries or refunds thereunder with respect to actions or occurrences prior to the Closing Date.

1.1.6    Certain Deposits .  All of Sellers' right, title and interest in and to all claims, deposits (including any cash deposits made on account of any Real Property Lease or other Contract that are an Assumed Contract (“ Purchased Deposits ”), and any restricted cash, cash collateral and letters of credit Sellers are required to maintain in connection with Sellers’ workers compensation insurance programs that represent Assumed Insurance (collectively, “ Restricted Cash ”), other than the restricted cash, cash collateral and letters of credit of Sellers specifically identified in Section 1.1.6 of the Disclosure Letter ), prepayments and similar items arising primarily out of, or relating to, the Business or the Purchased Assets.

1.1.7    Permits .  To the extent transferable pursuant to applicable law, all of Sellers' right, title and interest in and to all approvals, authorizations, consents, licenses, permits or certificates of a Governmental Authority (“ Permits ”) of Sellers held in connection with the ownership, lease or operation of the Purchased Assets or the conduct of the Business.

1.1.8    Books and Records .  All of Sellers' right, title and interest in and to all books, records, and other documents (whether on paper, computer diskette, tape or other storage media) associated with the Purchased Assets or the operation of the Business, including, but not limited to, property records, production records, purchase and sales records, credit data, marketing, advertising and promotional materials, personnel and payroll records of employees, accounting records, financial reports, Tax Returns, fixed asset lists, customer lists, customer records and information, supplier lists, parts lists, manuals, technical and repair data, correspondence, files and any similar items (collectively, “ Books and Records ”).

1.1.9    Cause of Action .  All of Sellers' right, title and interest in and to all rights, claims and causes of action against Sellers’ customers or which relate to the Intellectual Property (“ Assumed Claims ”).

 

1.1.10    Stationery .  All of Sellers' right, title and interest in and to all stationery, forms, labels, shipping materials, brochures, art work, photographs, advertising materials and any similar items used in the Business.

1.1.11    Non-Debtor Subsidiaries .  All of (i) the Sellers’ ownership rights and equity interests (collectively, the “ Transferred Securities ”) in Butler Technical Services India Private Limited and such other Non-Debtor Subsidiaries, if any, as shall be mutually agreed upon among Buyer and the Sellers prior to the Closing and set forth in Section 1.1.11 of the Disclosure Letter , which Section shall be updated by Seller and Buyer no later than five (5) business days prior to the Bid Deadline (as defined in the Bidding Procedures Order) and (ii) to the extent in the possession of the Sellers, organizational documents, record books, copies of Tax and financial records and such other files, books and records of the Sellers relating to the Non-Debtor Subsidiaries.  “ Non-Debtor Subsidiaries ” shall mean all of Parent’s direct and indirect subsidiaries that are not Sellers.

1.1.12    Certain Benefit Plans .  The Benefit Plans and Benefit Arrangements of Sellers set forth in Section 1.1.12 of the Disclosure Letter ,   which Section shall be updated by Seller and Buyer no later than five (5) business days prior to the Bid Deadline (as defined in the Bidding Procedures Order).

1.2           Excluded Assets .  Notwithstanding anything to the contrary in this Agreement, the Purchased Assets shall be limited to the items identified or described in Section 1.1 above and shall in any event exclude all of the following (collectively, the “Excluded Assets” ): (i) those items expressly excluded pursuant to the provisions of Section 1.1 above; (ii) all cash or cash equivalents (other than Purchased Deposits and Restricted Cash); (iii) Sellers’ rights under this Agreement and all cash and non-cash consideration payable or deliverable to the Sellers by Buyer pursuant to the terms and provisions hereof; (iv)  claims and causes of action of Sellers, other than Assumed Claims; (v) any real property lease, other lease, or other Contract to which any Seller is a party which is listed or described in Section 1.2.1 of the Disclosure Letter and any Contract that does not become an Assumed Contract pursuant to Buyer’s designation rights set forth in Section 1.3 hereof (including, without limitation, any Contract with respect to which fails to become an Assumed Contract as a result of the fact that any consent requirement in favor of the counter-party thereto may not be overridden pursuant to Section 365 of the Bankruptcy Code) (collectively, “Excluded Contracts” ), (vi)  all securities, whether capital stock or debt, of any Seller or any other entity, other than the Transferred Securities; (vii) all rights and claims in or to any refunds or credits of or with respect to any Taxes, assessments or similar charges paid by or on behalf of any Seller, in each case to the extent applicable to any period prior to the Closing; (viii) Tax records, minute books, stock transfer books and corporate seals of any Seller that Sellers are required by law to retain; provided that, Sellers shall provide Buyer with reasonable access to, and, at Buyer’s sole cost and expense, copies of, any Excluded Asset described in this subclause (viii); (ix) all suits, rights, claims, choses in action and causes of action of any Seller against any third party, including claims against any current or former officers, directors, employees, members, principals, agents, and representatives of such Seller, other than Assumed Claims; (x) subject to applicable law, all preference or avoidance claims and actions of the Seller arising under Chapter 5 of the Bankruptcy Code; (xi) all instruments, receivables, accounts receivable and unbilled costs and fees outstanding or owing between or among Sellers (or any entities comprising Sellers) and all causes of action relating or pertaining to the foregoing, (xii) any assets excluded pursuant to the Approval Order, (xiii) all assets related to or used in the business of Chief Executive Magazine and Butler Publishing Inc.; (xiv) refunds and recoveries under any such insurance policies relating to the Purchased Assets or the operation of the Business; (xv) the real property option related to the real estate located in Montvale, New Jersey, more fully described in Section 1.2(xv) of the Disclosure Letter ; and (xvi) those additional assets, if any, listed in Section 1.2 (xvi) of the Disclosure Letter .  As used herein, “ Taxes ” means any taxes, charges, fees or other assessments imposed by any Governmental Authority, including all Federal, state, local, foreign and other income, gross receipts, franchise, capital stock, withholding, payroll, social security, unemployment, disability, real property, personal property, sales, use, ad valorem, excise, transfer, profits, license, customs, estimated, severance, stamp, occupation, value added and corporation and any other taxes, including any interest, penalties or additions on or to the foregoing.

 

1.3           Executory Contract Designation .

1.3.1   No later than five (5) business days following the filing of the Approval Order with the Bankruptcy Court and Sellers have prepared the monetary amounts that must be paid and nonmonetary obligations that otherwise must be satisfied, including pursuant to Section 365(b)(1)(A) and (B) of the Bankruptcy Code, in order for Buyer to assume Sellers’ Executory Contracts pursuant to this Agreement (“ Undisputed Cure Costs ”), Sellers shall deliver to Buyer a true, correct and complete list of all Executory Contracts related to the Purchased Assets or otherwise used in connection with the Business (the “ Executory Contract List ”).  The Executory Contract List shall include Sellers’ Undisputed Cure Costs and such other commercial information related to the Executory Contracts listed thereon as shall be reasonably requested by Buyer.  As used herein, the term “ Executory Contract ” shall mean any Contract that is “executory” and any Other Leases and Real Property Leases that are “unexpired” as such terms are used in section 365 of the Bankruptcy Code.

1.3.2   To the extent a counterparty to an Executory Contract objects or otherwise challenges the Undisputed Cure Costs determined by Sellers and asserts a different monetary amount that must be paid and/or nonmonetary obligations that otherwise must be satisfied, including pursuant to Section 365(b)(1)(A) and (B) of the Bankruptcy Code, in order for Buyer to assume such Executory Contracts pursuant to this Agreement, the difference between the Undisputed Cure Costs determined by Sellers and such amounts and/or nonmonetary obligations determined by such counterparty shall be referred to as the “ Disputed Cure Costs ”.

 

 

1.3.3   On or prior to the Designation Deadline, Buyer may designate in writing any Executory Contract as a Contract to be assumed by it pursuant to this Agreement (collectively, the “ Assumed Contracts ”).  Buyer shall be obligated to pay at Closing any Undisputed Cure Costs associated with the assumption of such Assumed Contract and shall be obligated to escrow or otherwise secure payment of any Disputed Cure Costs.  The Disputed Cure Costs shall only be paid by Buyer pursuant to Order of the Bankruptcy Court or mutual agreement between Buyer and the counterparty to the applicable Assumed Contract.  Notwithstanding anything contained herein to the contrary, Buyer shall only assume, and shall only be responsible for, Contracts designated by it as Assumed Contracts pursuant to this Section 1.3.  As used herein, the “ Designation Deadline ” shall mean the date that is five (5) business days following the date upon which the rights of the parties to the Executory Contracts to object or otherwise challenge Seller’s Undisputed Cure Costs expire pursuant to the Bidding Procedures Order and “ Order ” shall mean any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental Authority.

1.3.4   Sellers shall use commercially reasonable efforts to cooperate with Buyer in its efforts to reduce the Disputed Cure Costs and negotiate rent reductions with respect to Other Leases and Real Property Leases that are Executory Contracts.  Such efforts shall include, without limitation, providing Buyer with access to relevant business records, personnel, equipment, and Buyer's other reasonable requests in order to allow Buyer to assist with evaluating the Disputed Cure Costs, in each case, at Buyer’s sole cost and expense.  In furtherance of the foregoing, Sellers shall make, all payments arising or accruing following the filing of the Bankruptcy Case under Executory Contracts to be assumed hereunder (provided that, if not previously paid, Sellers shall make all such payments due and payable under such Executory Contracts promptly following the Designation Deadline), pursuant to Bankruptcy Code Sections 365, 503 or otherwise.

1.4           Assignment of Contracts and Rights .  To the maximum extent permitted by the Bankruptcy Code, the Purchased Assets shall be assumed by and assigned to Buyer pursuant to Section 365 of the Bankruptcy Code as of the Closing Date or such other date as specified in an Order of the Bankruptcy Court.  Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any asset or any right thereunder if an attempted assignment without the consent of a third party would constitute a breach or in any way adversely affect the rights of Buyer or Sellers thereunder.  If such consent is not obtained or such assignment is not attainable pursuant to Section 105, 363 or 365 of the Bankruptcy Code, other than as a result of the failure to pay Disputed Cure Costs or Undisputed Cure Costs that are not Assumed Liabilities, then such Purchased Assets shall not be transferred hereunder and the Closing shall proceed with respect to the remaining Purchased Assets and Sellers, at Buyer’s sole cost and expense, shall use their commercially reasonable efforts, and Buyer shall cooperate with Sellers, to obtain any such consent and to resolve the impracticalities of assignment after the Closing.  To the extent that the consents referred to in this Section 1.4 have not been obtained by Sellers prior to the Closing, it being understood and agreed that any such consents shall be limited to consents associated with Permits constituting Purchased Assets, until the impracticalities of assignment referred to in this Section 1.4 hereof are resolved, Sellers shall use their commercially reasonable efforts to (i) provide Buyer the benefits of any Purchased Asset referred to in this Section 1.4, (ii) cooperate in any reasonable and lawful arrangement designed to provide such benefits to Buyer, and (iii) enforce, for the account and benefit, and at the cost, of Buyer, any and all rights of Sellers arising from the Purchased Assets referred to in this Section 1.4 against such issuer thereof and all other parties thereto (including the right to elect to terminate any Contract in accordance with the terms thereof on the advice of Buyer).  To the extent that Buyer is provided the benefits pursuant to this Section 1.4 of any Purchased Asset, Buyer shall perform, on behalf of Sellers, for the benefit of the issuer thereof and/or all other parties thereto, the obligations of Sellers thereunder or in connection therewith, but only to the extent that such action by Buyer would not result in any material default thereunder or in connection therewith.  Nothing contained in this Section 1.4 shall constitute a waiver of, or impair, Buyer's rights under Section 4.2.6.

 

1.5           Instruments of Transfer; Assumption of Liabilities .  The sale, assignment, transfer, conveyance and delivery of the Purchased Assets to Buyer shall be made by assignments, bill of sale, stock powers and other instruments of assignment, transfer and conveyance provided for in Section 3 below and such other instruments as may reasonably be requested by Buyer to transfer, convey, assign and deliver the Purchased Assets to Buyer.  The assumption of the Assumed Liabilities by Buyer shall be made by an Undertaking provided for in Section 3 below and such other instruments as may reasonably be requested by Buyer to assume the Assumed Liabilities.

2.            Consideration .

2.1           Purchase Price .

2.1.1   The consideration to be paid by Buyer to Sellers for the Purchased Assets (the " Purchase Price ") shall be equal to (a) $26,875,000 in cash (except for amounts attributable to Sellers' outstanding letters of credit, to the extent replaced or assumed by Buyer), which amount is equal to the sum of (i) the estimated revolver loan balance, (ii) the estimated debtor-in-possession loan balance and (iii) estimated letters of credit balance, in each case, payable to General Electric Capital Corporation (“ GECC ”) by Sellers (such sum, the “ Estimated Loan Balance ”), as set forth in line 26 (column H) of the Debtor-in-Possession budget prepared by the Sellers (the “ DIP Budget ”) and attached hereto as Exhibit “A” and incorporated herein by reference, (b) plus the amount, if any, by which the sum of (i) the actual revolver loan balance, (ii) the actual debtor-in-possession loan balance and (iii) the actual letters of credit balance, in each case, as certified by Sellers (such sum, the “ Actual Loan Balance ”) exceeds the Estimated Loan Balance, or minus the amount, if any, by which the Estimated Loan Balance exceeds the Actual Loan Balance, (c) plus an amount equal to twenty-five percent (25%) of the difference, if any, between (i) $16,370,000 (the sum of the estimated aggregate amount of total disbursements made by Sellers, as set forth in line 99 (column H) of the DIP Budget and $750,000) and (ii) the actual aggregate amount of total disbursements made by Sellers (the “ Actual Aggregate Disbursement Amount ”); provided that , notwithstanding the foregoing and subject to the Purchase Price Cap Exceptions (as defined below), the Purchase Price shall not exceed an amount equal to the Estimated Loan Balance plus $750,000 (the “ Purchase Price Cap ”); provided further that , the Purchase Price Cap shall not apply to, and the Purchase Price shall be increased (without duplication) pursuant to subsection (b) of this Section 2.1.1 for, (x) the amount equal to the difference, if any, between (i) $8,900,000, the estimated aggregate amount of total collections received by Sellers, as set forth in line 163 (column H) of the DIP Budget and (ii) the actual aggregate amount of total collections received by Sellers (the “ Actual Aggregate Collections Amount ”), and (y) the amount equal to the difference, if any, between the actual total disbursement amounts with respect to the disbursement items set forth in lines 66 (Total payroll, taxes and related expenses), 69 (Sub-contractors) and 70 (Expense Reports) of the DIP Budget (the “ Actual Billable Employee Disbursement Amounts ”) and the corresponding estimated amounts set forth in the DIP Budget, but only to the extent such amounts are solely attributable to billable employees and sub-contractors of the Business (together, the exceptions to the Purchase Price Cap described in the preceding subsections (x) and (y), the “ Purchase Price Exceptions ”).  No later than three (3) business days prior to the Closing Date, Sellers shall cause to be prepared and delivered to Buyer a certificate signed by the Chief Executive Officer of Parent setting forth its calculation of the Purchase Price and, if used in the calculation of the Purchase Price pursuant to this Section 2.1.1, the accuracy of the Actual Loan Balance, the Actual Aggregate Disbursement Amount, the Actual Aggregate Collections Amount and the Actual Billable Employee Disbursement Amounts, in each case, used to calculate the Purchase Price.  Such certificate shall also certify that with respect to any increase in the Purchase Price in excess of the Purchase Price Cap relating to Actual Billable Employee Disbursement Amounts in excess of the corresponding estimated amounts, that all such amounts relate solely to disbursements attributable to billable employees and sub-contractors of the Business.

 

2.1.2   The Purchase Price shall be paid as follows:

(a)      Following the date hereof, but not later than one business day following such date, Buyer shall deposit into an escrow account with Deutsche Bank Trust Company Americas, as escrow agent (the “Escrow Holder” ) an amount equal to $250,000 (the “Initial Deposit” ), and thereafter, but not later than one Business Day prior to the Bid Deadline, Buyer shall deposit into an escrow account with the Escrow Agent, an amount equal to $750,000 (the “ Second Deposit ”, and together with the Initial Deposit, the “ Cash Deposit ”), both such deposits to be made in immediately available, good funds (funds delivered in this manner are referred to herein as “Good Funds” ), pursuant to joint escrow instructions to be delivered to the Escrow Holder on or before the date hereof.  In turn, the Escrow Holder, shall immediately deposit the Cash Deposit upon receipt thereof, into an interest-bearing account, which shall be held and released pursuant to the terms of an Escrow Agreement among Buyer, Parent and the Escrow Holder, in a form to be agreed by the Parties and the Escrow Holder (the “ Escrow Agreement ”).  The Cash Deposit shall become nonrefundable if this Agreement is terminated by Sellers pursuant to Section 4.3.6 or 4.3.13 hereof (a “Buyer Default Termination” ).  At the Closing, the Cash Deposit (and any interest accrued thereon) shall be credited and applied toward payment of the Purchase Price.  If the Cash Deposit becomes nonrefundable by reason of a Buyer Default Termination, Escrow Holder shall immediately disburse the Cash Deposit and all interest accrued thereon to Sellers to be retained by Sellers for their own account.  If, on the other hand, this Agreement is terminated for any reason other than a Buyer Default Termination, the Escrow Holder shall disburse to Buyer the Cash Deposit (together with all interest accrued thereon) in accordance with the terms of the Escrow Agreement, but less Buyer’s one-half share of the Escrow Holder’s escrow fees and charges.

(b)      On the Closing Date, Buyer shall (A) cause the Escrow Holder to deliver the Cash Deposit (together with all accrued interest thereon) to Sellers in accordance with the terms of the Escrow Agreement, and (B) pay and deliver, in Good Funds, the balance of the Purchase Price to Sellers.

 

 

2.2           Assumed Liabilities .  Buyer shall, effective as of the Closing Date, be assigned Sellers’ interest under the Assumed Contracts (specifically excluding the Excluded Contracts) to be assigned by Sellers under this Agreement and shall assume all then existing liabilities and obligations of Sellers (i) accruing under the Assumed Contracts after the Closing, (ii) arising in connection with the use and operation of the Leased Real Property (but only with respect to such property for which the Real Property Lease is an Assumed Contract) from and after the Closing Date; (iii) any and all accrued liabilities of Sellers to or with respect to the Transferred Employees for unpaid vacation pay as of the Closing Date; (iv)  for workers compensation and similar claims related to Transferred Employees for events occurring after the Closing, and (v) as may be set forth or described in Section 2.2-(v) of the Disclosure Letter (collectively, the “ Assumed Liabilities ”).  Other than the Assumed Liabilities, Buyer is not assuming and shall not be liable for any liabilities or obligations of Sellers.

2.3           Excluded Liabilities .  Except for the Assumed Liabilities specifically assumed by Buyer as set forth in Section 2.2, Buyer is not assuming and shall not be liable for any other liabilities or obligations of the Sellers or their respective Affiliates of whatever nature, including without limitation any liabilities for Taxes (except as otherwise provided in Section 3.5), whether presently in existence or arising hereafter, known or unknown, disputed or undisputed, contingent or non-contingent, liquidated or unliquidated or otherwise (collectively, the “ Excluded Liabilities ”).  As used herein, the term “ Affiliate ” shall have the meaning ascribed to such term in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.

2.4           Purchase Price Allocation .  Within a reasonable period of time after the Closing, Buyer shall prepare and deliver to Sellers for their review and consideration a schedule (the “Allocation Schedule” ) allocating the Purchase Price and the Assumed Liabilities among the various assets comprising the Purchased Assets in accordance with Treasury Regulation 1.1060-1 (or any comparable provisions of state or local Tax law) or any successor provision.  If Sellers disagree with or raise objections to the Allocation Schedule, Buyer and Sellers will negotiate in good faith to resolve such objections.  If the Parties are able to agree upon the allocation of the Purchase Price, Buyer and Sellers shall report and file all Tax Returns (including any amended Tax Returns and claims for refund) consistent with such mutually agreed Purchase Price allocation, and shall take no position contrary thereto or inconsistent therewith (including in any audits or examinations by any taxing authority or any other proceedings).  Buyer and Sellers shall file or cause to be filed any and all forms (including U.S. Internal Revenue Service Form 8594), statements and schedules with respect to such allocation, including any required amendments to such forms.  If, on the other hand, the Parties are unable mutually to agree upon the manner in which the Purchase Price and the Assumed Liabilities should be allocated within fifteen (15) days after receipt by Sellers of the Allocation Schedule, then any disputed matters shall be finally and conclusively determined in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended (the “ Code ”) by the New York office of Amper, Politziner & Mattia, or such other accounting firm of national reputation as shall be mutually acceptable to Buyer and Sellers (the “ Independent Accountants ”).  Promptly, but not later than fifteen (15) days after its acceptance of appointment hereunder, the Independent Accountant shall determine only those matters in dispute and shall render a written report as to the disputed matters and the resulting allocation, and such report of the Independent Accountant shall be final, conclusive and binding upon Buyer and Sellers.  The fees and disbursements of the Independent Accountants shall be borne solely by Buyer.  Notwithstanding any other provisions of this Agreement, the provisions of this Section 2.4 shall survive the Closing.  As used herein, “ Tax Returns ” means, collectively, all returns, reports and similar statements (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to any Governmental Authority relating to Taxes.

 

3.            Closing Transactions .

3.1           Closing .  The Closing of the transactions provided for herein (the “Closing” ) shall take place at the offices of Moses & Singer LLP, 405 Lexington Avenue, 12 ^th Floor, New York, New York  10174, or at such other place as Buyer and Parent mutually agree, at 10:00 A.M. local time, on the Closing Date.

3.2           Closing Date .  Subject to the satisfaction of the last of the conditions set forth in Sections 4.1 and 4.2 below (or the waiver thereof by the Party entitled to waive that condition), the Closing shall be held upon the earlier to occur (such date of the Closing determined pursuant to this Section 3.2, the “ Closing Date ”) of (i) the second (2 ^nd ) business day after entry of the Approval Order and (ii) July 10, 2009 (as may be extended by mutual agreement, the “Outside Date” ).  Alternatively, the Parties may mutually agree to an extended Closing Date.  Until this Agreement is either terminated or the Parties have agreed upon an extended Closing Date, the Parties shall diligently continue to work to satisfy all conditions to Closing and the transaction contemplated herein shall close as soon as such conditions are satisfied or waived.  As used herein, a “ Final Order ” shall mean an Order of the Bankruptcy Court (or any non-interlocutory portion thereof) the operation of which has not been modified or amended without the consent of Buyer, reversed or stayed, as to which order no appeal or motion, application, petition or writ seeking reversal, reconsideration, reargument, rehearing, certiorari, amendment, modification, a stay or similar relief is pending, and the time to file any such appeal or motion, application, petition or writ has expired.

3.3           Sellers’ Deliveries to Buyer at Closing .  On the Closing Date, Sellers shall make the following deliveries to Buyer:

3.3.1   A General Assignment and Assumption Agreement substantially in the form attached as Exhibit “B” hereto, duly executed by Sellers pursuant to which each Seller shall assign to Buyer its interest, if any, in the Assumed Contracts and other assets described therein (the “General Assignment” ).

3.3.2   A bill of sale, duly executed by each Seller substantially in the form attached hereto as Exhibit “C,” pursuant to which each Seller shall transfer its right, title and interest in and to the Personal Property and the Receivables to Buyer (the “Bill of Sale” ).

3.3.3   An assignment of intangible property, duly executed by each Seller, substantially in the form of the assignment attached as Exhibit “D” hereto, pursuant to which each Seller shall assign to Buyer its right, title and interest, if any, in and to the Intangible Property (the “Assignment of Intangible Property” ).

 

 

3.3.4   An assignment of domain names, duly executed by each Seller, substantially in the form of the assignment attached as Exhibit “E” hereto, pursuant to which each Seller shall assign to Buyer its right, title and, if any, in and to all domain names used in connection with the Business or the Purchased Assets (the “ Domain Name Assignment ”).

3.3.5   The compliance certificate described in Section 4.2.1, duly executed by Parent.

3.3.6   Duly executed counterparts of the consents referred to in Section 4.2.6.

3.3.7   Affidavits of non-foreign status for each Seller transferring U.S. property that comply with Section 1445 of the Code and the Treasury regulations promulgated thereunder.

3.3.8   Certificates representing the Transferred Securities, duly endorsed or accompanied by stock powers duly executed in blank or duly executed instruments of transfer, and any other documents, in form and substance satisfactory to Buyer, that are necessary to transfer good and valid title to such capital stock or other equity interest of the Non-Debtor Subsidiaries.

3.3.9   Any such other documents or other things reasonably contemplated by this Agreement to be delivered by Sellers to Buyer at the Closing.

3.4           Buyer’s Deliveries to Sellers at Closing .  On the Closing Date, Buyer shall make or cause the following deliveries to Seller:

3.4.1   That portion of the Purchase Price to be delivered by Buyer directly to Sellers at the Closing under Section 2.1 (and Buyer shall cause Escrow Holder to deliver the Cash Deposit to Sellers as contemplated in Section 2.1.2(b) hereof).

3.4.2   An undertaking, duly executed by Buyer substantially in the form attached hereto as Exhibit “F,” pursuant to which Buyer shall assume and agree to perform, pay, or discharge, when due, the Assumed Liabilities, effective as of the Closing (the “Undertaking” ).

3.4.3   A counterpart of the General Assignment, duly executed by Buyer.

3.4.4   A counterpart of the Assignment of Intangible Property, duly executed by Buyer.

3.4.5   The compliance certificate described in Section 4.1.1, duly executed by Buyer.

3.4.6   Any such other documents, funds or other things reasonably contemplated by this Agreement to be delivered by Buyer to Seller at the Closing.

 

 

3.5           Sales, Use and Other Taxes .  Any sales, purchases, transfer, stamp, documentary stamp, use or similar Taxes under the laws of the states in which any portion of the Purchased Assets are located, or any subdivision of any such state, which may be payable by reason of the sale of the Purchased Assets or the assumption of the Assumed Liabilities under this Agreement or the transactions contemplated herein shall be borne solely by Buyer; provided that Buyer shall not be responsible for any such Taxes pursuant to this Section 3.5 in the aggregate in excess of $100,000.

3.6           Possession .  Except as otherwise provided herein, right to possession of the Purchased Assets shall transfer to Buyer on the Closing Date.

4.            Conditions Precedent to Closing .

4.1           Conditions to Sellers’ Obligations .  Sellers’ obligation to make the deliveries required of Sellers at the Closing Date and otherwise consummate the Transactions contemplated herein shall be subject to the satisfaction or waiver by Sellers of each of the following conditions:

4.1.1   The representations and warranties of Buyer made in this Agreement shall be true and correct in all material respects as of the date hereof and on and as of the Closing Date, as though made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time (which need only be true and correct as of such date or time), and Buyer shall have in all material respects performed or tendered performance of or complied with, each and every covenant, obligation and condition on Buyer’s part to be performed which, by its terms, is required by this Agreement to be performed or complied with at or before the Closing, and Buyer shall have delivered to Parent a certificate dated the Closing Date and signed by a senior officer of Buyer in the officer’s capacity as such confirming the foregoing.

4.1.2   Buyer shall have executed and delivered to Seller the General Assignment and Assignment of Intangible Property.

4.1.3   Buyer shall have delivered, or shall be prepared to deliver (or cause to be delivered) to Sellers at the Closing, the Purchase Price.

4.1.4   Buyer shall have delivered to Sellers appropriate evidence of all necessary limited liability company action by Buyer in connection with the transactions contemplated hereby, including, without limitation:  (i) certified copies of resolutions duly adopted by Buyer’s Board of Managers approving the transactions contemplated by this Agreement and authorizing the execution, delivery, and performance by Buyer of this Agreement; and (ii) a certificate as to the incumbency of officers of Buyer executing this Agreement and any instrument or other document delivered in connection with the transactions contemplated by this Agreement.

4.1.5   No action, suit or other proceedings shall be pending before any Governmental Authority seeking or threatening to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain substantial damages in respect thereof, or involving a claim that consummation thereof would result in the violation of any law, decree or regulation of any Governmental Authority having appropriate jurisdiction.

 

4.1.6   The Bankruptcy Court shall have entered the Approval Order and the Approval Order shall not have been stayed as of the Closing Date.

4.2           Conditions to Buyer’s Obligations .  Buyer’s obligation to make the deliveries required of Buyer at the Closing, and to otherwise close the Transaction contemplated herein, shall be subject to the satisfaction or waiver by Buyer of each of the following conditions:

4.2.1   The representations and warranties of Sellers made in this Agreement that are qualified by materiality or Material Adverse Effect, shall be true and correct as of the date hereof and on and as of the Closing Date, as though made on and as of the Closing Date, and the representations and warranties of Sellers that are not so qualified shall be true and correct in all material respects as of the date hereof and on and as of the Closing Date, as though made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time (which need only be true and correct as of such date or time), and Sellers shall have in all material respects performed or tendered performance of or complied with, each and every covenant, obligation and condition on each Seller’s part to be performed which, by its terms, is required by this Agreement to be performed or complied with at or before the Closing, and Parent shall have delivered to Buyer a certificate dated the Closing Date and signed by a senior officer of Parent in the officer’s capacity as such confirming the foregoing.

4.2.2   Sellers shall have executed and be prepared to deliver to Buyer the Assignment of Leases and Contracts, the Bill of Sale and the Assignment of Intangible Property.

4.2.3   Sellers shall have delivered, or shall be prepared to deliver to Buyer at the Closing, all other documents required of Sellers to be delivered at the Closing.

4.2.4   No action, suit or other proceedings shall be pending before any Governmental Authority seeking or threatening to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain substantial damages in respect thereof, or involving a claim that consummation thereof would result in the violation of any law, decree or regulation of any Governmental Authority having appropriate jurisdiction.

4.2.5   The Order, substantially in the form attached hereto as Exhibit “G” (the “ Approval Order ”), approving, among other things, the sale of the Purchased Assets to Buyer and assumption by Buyer of the Assumed Liabilities, shall have been entered by the Bankruptcy Court and shall not have been modified or amended without the consent of Buyer, reversed or stayed as of the Closing Date.

4.2.6   Sellers shall have obtained those consents related solely to Permits set forth in Section 4.2.6 of the Disclosure Letter .

4.3           Termination .  This Agreement may be terminated at any time prior to the Closing:

4.3.1   by mutual written consent of Buyer and the Sellers at any time prior to the Closing;

 

4.3.2   by Buyer or Sellers, if the Closing shall not have occurred by the close of business on the Outside Date; provided , however , that if the Closing shall not have occurred on or before the Outside Date due to a material breach of any representations, warranties, covenants or agreements contained in this Agreement by Buyer or a Seller, then the breaching party may not terminate this Agreement pursuant to this Section 4.3.2;

4.3.3   by Buyer, if any material condition to the obligations of Buyer set forth in Section 4.2 shall have become incapable of fulfillment other than as a result of a breach by Buyer of any covenant or agreement contained in this Agreement, and such condition is not waived by Buyer;

4.3.4   by Sellers, if any material condition to the obligations of the Sellers set forth in Section 4.1 shall have become incapable of fulfillment other than as a result of a breach by the Sellers of any covenant or agreement contained in this Agreement, and such condition is not waived by the Sellers;

4.3.5   by Buyer, upon a material breach of any representation, warranty, covenant or agreement on the part of Sellers set forth in this Agreement, such that the conditions set forth in Section 4.2 would not be capable of being satisfied; provided , however , that Sellers shall have ten (10) business days after receipt of written notice of such default from Buyer to cure such breach and further provided that Buyer shall not have the right to terminate this Agreement solely as a result of acceptance by Sellers of a higher and better bid in accordance with the Bidding Procedures;

4.3.6   by Sellers, upon a material breach of any representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement, such that the conditions set forth in Section 4.1 would not be capable of being satisfied; provided, however, that Buyer shall have ten (10) business days after receipt of written notice of such default from Parent to cure such breach;

4.3.7   by Buyer, if the Approval Order with respect to the Transactions has been entered and (i) Buyer has provided the Sellers with written notice that it is prepared to consummate the Transactions and (ii) the Closing Date does not occur within four (4) business days of the Buyer providing the Sellers with such notice;

4.3.8   by Buyer, upon written notice prior to the Bid Deadline (as defined in the Bidding Procedures Order), if Buyer has not obtained financing commitments from General Electric Capital Corporation or one of its Affiliates or another financial institution on terms reasonably satisfactory to Buyer for sufficient funds available, together with $5,000,000 in cash to be provided by Buyer, to pay the Purchase Price and all other payments required to be paid by Buyer pursuant to Agreement, and any expenses incurred by Buyer in connection with the Transactions (the “ Financing ”) (for the avoidance of doubt, in the event Buyer terminates this Agreement pursuant to this Section 4.3.8, the Initial Deposit and the Second Deposit, if deposited with the Escrow Holder (together with all interest accrued thereon), shall be disbursed to Buyer in accordance with Section 2.1.2 hereof);

 

4.3.9   by Buyer, if the Order, substantially in the form attached hereto as Exhibit “H” (the “ Bidding Procedures Order ”) shall not have been entered by the Bankruptcy Court on or before June 9, 2009;

4.3.10 by Buyer, if the Approval Order shall not have been entered by the Bankruptcy Court on or before July 1, 2009;

4.3.11 by Buyer if the Bidding Procedures Order shall not have become a Final Order on or before ten (10) days after entry thereof;

4.3.12 by Buyer, if the Approval Order shall have been modified or amended without the consent of Buyer, reversed or stayed as of the Closing Date;

4.3.13 by Sellers, if the Second Deposit is not made by Buyer as required by Section 2.1.2(a) hereof; and

4.3.14 automatically, upon consummation of a sale or other disposition of any or all of the Purchased Assets to a third party other than Buyer.

4.4           Effect of Termination .  In the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of its duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to Buyer or the Sellers; provided , however , that the provisions of Section 2.1.2(a) and Section 13 hereof shall survive any such termination and shall be enforceable hereunder; provided further , however , that nothing in this Section 4.4 shall be deemed to release any party from liability for any breach of its obligations under this Agreement.

5.            Representations and Warranties .

5.1           Representations and Warranties of Sellers .  In addition to the representations and warranties contained elsewhere in this Agreement, each Seller hereby jointly and severally represents and warrants to Buyer that:

5.1.1   Organization and Good Standing .  Each Seller is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and, subject to the limitations imposed on such Seller as a result of having filed a petition for relief under the Bankruptcy Code, has the requisite power and authority to own, lease and operate its properties and to carry on its business as now conducted.

 

5.1.2        Authorization of Agreement .  Subject to entry of the Approval Order and such other authorization as is required by the Bankruptcy Court, each Seller has the requisite power and authority to execute and deliver this Agreement and each other agreement, document or instrument contemplated hereby or thereby to which it is a party and to perform its respective obligations hereunder and thereunder.  The execution and delivery of this Agreement and each other agreement, document or instrument contemplated hereby or thereby to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite action, corporate or otherwise, on the part of each Seller.  This Agreement and each other agreement, document or instrument contemplated hereby or thereby to which it is a party has been duly and validly executed and delivered by each Seller and (assuming the due authorization, execution and delivery by the other parties hereto, the entry of the Approval Order and receipt of such other authorization as is required by the Bankruptcy Court) this Agreement and each other agreement, document or instrument contemplated hereby or thereby to which it is a party constitutes legal, valid and binding obligations of each Seller enforceable against such Seller in accordance with its respective terms, subject to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

5.1.3         Conflicts; Consents of Third Parties .

(a)           The execution and delivery by each Seller of this Agreement and each other agreement, document or instrument contemplated hereby or thereby to which it is a party, the consummation of the Transactions contemplated hereby and thereby, or compliance by such Seller with any of the provisions hereof do not conflict with, or result in any violation of or default or breach (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under any provision of (i) the certificate of incorporation and by-laws or comparable organizational documents of such Seller; (ii) subject to entry of the Approval Order, any Contract, Real Property Lease or Permit to which such Seller is a party or by which any of the properties or assets of such Seller are bound; (iii) subject to entry of the Approval Order, any Order of any government or any agency, bureau, board, commission, court, department, official, political subdivision, quasi-governmental, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign (each, a “ Governmental Authority ”), applicable to such Seller or any of the properties or assets of such Seller as of the date hereof; or (iv) subject to entry of the Approval Order, any applicable law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, breaches, terminations or cancellations that would not reasonably be expected to constitute, individually or in the aggregate, a Material Adverse Effect.  No Seller is a party to, or subject to or bound by, any judgment, injunction or decree of any Governmental Authority or agreement which may restrict or interfere with the performance by such Seller of this Agreement or Buyer’s ability to operate the Business as currently operated.  As used herein, a “ Material Adverse Effect ” means the occurrence of a material adverse effect on the ability of the Sellers, taken as a whole, to perform their obligations under this Agreement.

(b)           Set forth in Section 5.1.3 of the Disclosure Letter is a list of consents related to Permits that may be required on the part of the Sellers in connection with the execution and delivery of this Agreement or any other agreement, document or instrument contemplated hereby or thereby to which it is a party, the compliance by the Sellers with any of the provisions hereof or thereof, the consummation of the transactions contemplated hereby or thereby, the assignment or conveyance of the Purchased Assets, or the taking by the Sellers of any other action contemplated hereby or thereby

 

 

5.1.4         Title to Purchased Assets .  One of the Sellers has good and valid title to or leasehold interest in the Purchased Assets in each case free and clear of Liens, except (i) mechanics’, carriers’, workmen’s, landlord’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business, (ii) other imperfections of title or encumbrances, if any, that, individually and in the aggregate, do not materially impair, and would not reasonably be expected to materially impair, the use of the Purchased Assets in the conduct of the Business as conducted by Sellers, (iii) Liens for Taxes and assessments that are not yet due and payable (for which adequate reserves have been made in the Financial Statements in accordance with generally accepted accounting principles in the United States “ GAAP ”); (iv) Debtor in Possession Financing, if any, and (v) financing pursuant to that certain Supplier Agreement dated April 29, 2009 between Butler Service Group, Inc. and Citibank, N.A. (the Liens described in clauses (i) through (v) above are referred to collectively as “ Permitted Liens ”).  Assuming receipt of the Approval Order, upon Closing, Buyer will be vested with good and valid title to or leasehold interest in the Purchased Assets free and clear of all Liens, including Permitted Liens, to the fullest extent permissible under Sections 363 and 365 of the Bankruptcy Code.

5.1.5         Tax Matter .  None of the Sellers is a foreign person within the meaning of Section 1445(f)(3) of the Code.

5.1.6         Intellectual Property .

(a)           Except as set forth in