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EXHIBIT 2
ASSET PURCHASE AGREEMENT
by and among
ASSEMBLY & TEST WORLDWIDE, INC.,
DETROIT TOOL AND ENGINEERING COMPANY,
ASSEMBLY TECHNOLOGY & TEST, INC.,
ADVANCED ASSEMBLY AUTOMATION, INC.,
and
DT INDUSTRIES, INC.
------------------------------
Dated as of May 12, 2004
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ARTICLE I
DEFINITIONS.......................................................
1
Section 1.1
Definitions...................................................
1
Section 1.2 Additional
Definitions........................................ 9
Section 1.3
Headings......................................................
9
Section 1.4
Schedules.....................................................
9
Section 1.5 References to
Articles, Etc................................... 9
Section 1.6 References to
"Herein," Etc................................... 10
ARTICLE II PURCHASE AND SALE OF
THE ASSETS; PURCHASE
PRICE ................
10
Section 2.1 Purchase and Sale of
the Assets............................... 10
Section 2.2 Excluded
Assets............................................... 11
Section 2.3 Assumption of
Liabilities..................................... 12
Section 2.4 Excluded
Liabilities.......................................... 13
Section 2.5 Purchase
Price................................................ 13
Section 2.6 Purchase Price
Adjustments Based on Net Working Capital....... 14
Section 2.7 Allocation of the
Final Purchase Price........................ 17
Section 2.8 Contract Rejection and
Assumption............................. 17
Section 2.9 Cure of
Defaults.............................................. 18
ARTICLE III THE CLOSING
.................................................... 18
Section 3.1 Time and Place of
Closing..................................... 18
Section 3.2 Deliveries at
Closing......................................... 18
Section 3.3 Assignment of
Designated Contracts, Etc....................... 19
Section 3.4 Sales, Use and Other
Taxes.................................... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND PARENT ........ 20
Section 4.1
Organization..................................................
20
Section 4.2
Capitalization................................................
20
Section 4.3 Power and
Authority........................................... 20
Section 4.4 No
Violation..................................................
21
Section 4.5
Actions.......................................................
21
Section 4.6 Compliance with
Laws.......................................... 21
Section 4.7 Title to
Property............................................. 22
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Section 4.8
Approvals.....................................................
22
Section 4.9 Broker's or Finder's
Fees..................................... 22
Section 4.10 Real Property
.............................................. 22
Section 4.11 Designated Contracts
........................................ 22
Section 4.12 Intellectual Property
....................................... 23
Section 4.13 "AS IS" Transaction
......................................... 23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER................... 24
Section 5.1 Organization and Good
Standing................................ 24
Section 5.2 Power and
Authority........................................... 24
Section 5.3 No
Violation..................................................
24
Section 5.4
Approvals.....................................................
25
Section 5.5 Solvency; Availability
of Funds............................... 25
Section 5.6 Investment
Representation..................................... 25
Section 5.7 Affiliated and
Associated Persons............................. 25
Section 5.8 Broker's or Finder's
Fees..................................... 26
ARTICLE VI COVENANTS OF THE SELLERS
........................................ 26
Section 6.1 Conduct of
Business........................................... 26
Section 6.2 Acquisition
Proposals......................................... 26
Section 6.3 Access to the
Sellers......................................... 27
Section 6.4 WARN
Act......................................................
27
Section 6.5 Certificate of
Service........................................ 27
ARTICLE VII COVENANTS OF THE PURCHASER
..................................... 28
Section 7.1 No Interference with
Bankruptcy Cases......................... 28
Section 7.2 Adequate
Assurance............................................ 28
Section 7.3
Confidentiality...............................................
28
ARTICLE VIII AGREEMENTS OF PURCHASER AND
SELLERS
28
Section 8.1 Hart-Scott-Rodino
Cooperation................................. 28
Section 8.2
Employees.....................................................
29
Section 8.3 Restricted
Assets............................................. 29
Section 8.4 Bankruptcy Court
Orders....................................... 29
ARTICLE IX CONDITIONS PRECEDENT TO THE
PURCHASER'S OBLIGATIONS ............. 31
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Section 9.1 Representations and
Warranties................................ 31
Section 9.2
Performance...................................................
31
Section 9.3 Sale
Order....................................................
31
Section 9.4 Expiration of the HSR
Act Waiting Period...................... 32
Section 9.5 Conduct of
Business........................................... 32
Section 9.6 Material Adverse
Changes...................................... 32
Section 9.7 Compliance with
Laws.......................................... 32
ARTICLE X CONDITIONS PRECEDENT TO THE
SELLERS' OBLIGATIONS.................. 32
Section 10.1 Representations and
Warranties .............................. 33
Section 10.2 Performance
................................................. 33
Section 10.3 Sale Order
.................................................. 33
Section 10.4 Expiration of the HSR
Act Waiting Period .................... 33
ARTICLE XI COVENANTS AND AGREEMENTS
SUBSEQUENT TO THE CLOSING .............. 33
Section 11.1 Books and Records;
Access ................................... 33
Section 11.2 Further Assurances
.......................................... 33
ARTICLE XII TERMINATION
.................................................... 34
Section 12.1 Termination
................................................. 34
Section 12.2 Effect of Termination
....................................... 35
ARTICLE XIII MISCELLANEOUS
................................................. 36
Section 13.1 Public Announcements
........................................ 36
Section 13.2 Amendment; Waiver
........................................... 36
Section 13.3 No Survival of
Representations and Warranties ............... 36
Section 13.4 Fees and Expenses
........................................... 36
Section 13.5 Notices
..................................................... 36
Section 13.6 Assignment
.................................................. 37
Section 13.7 Governing Law;
Consent to Jurisdiction ...................... 38
Section 13.8 WAIVER OF JURY TRIAL
........................................ 39
Section 13.9 Entire Agreement
............................................ 39
Section 13.10 Severability
............................................... 39
Section 13.11 No Third Party
Beneficiaries ............................... 39
Section 13.12 Enforcement
................................................ 39
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Section 13.13 Counterparts
............................................... 39
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ASSET PURCHASE AGREEMENT
THIS ASSET
PURCHASE AGREEMENT, dated as of May 12, 2004, is made by and
among Detroit Tool and Engineering Company,
a Delaware corporation, Assembly
Technology & Test, Inc., a Delaware
corporation, Advanced Assembly Automation,
Inc., an Ohio corporation (collectively,
the "Sellers"), DT Industries, Inc., a
Delaware corporation ("Parent"), and
Assembly & Test Worldwide, Inc., a Delaware
corporation, as buyer ("Purchaser").
R E C I T A L S
A. Sellers
are wholly-owned subsidiaries of Parent that manufacture
special automation assembly and processing
equipment, precision tooling and
dies, welding systems, custom
non-synchronous and synchronous assembly systems,
rotary dial assembly systems, electrified
monorail material handling systems,
fuel injection, engine and transmission
test systems, and lean assembly systems
(the "Business");
B. The
Purchaser desires to purchase from Sellers and Parent, and
Sellers
and Parent desire to sell, convey, assign
and transfer to the Purchaser, the
Transferred Assets (hereinafter defined),
and in connection therewith, the
Purchaser desires to assume certain
specified obligations and liabilities of the
Sellers and Parent relating thereto, all in
the manner and subject to the terms
and conditions set forth herein and in
accordance with Sections 105, 363 and 365
of the Bankruptcy Code (collectively, the
"Transaction");
C. The
parties desire to consummate the Transaction as promptly as
practical after the entry of an order
approving the Transaction ("Sale Order")
in the voluntary cases (the "Bankruptcy
Cases") to be filed by Parent, the sole
stockholder of Sellers, and Sellers, under
Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for
the Southern District of Ohio Dayton Office
(the "Bankruptcy Court").
A G R E E M E N T
In
consideration of the premises, the mutual covenants herein
contained
and other good and valuable consideration
(the receipt and sufficiency of which
is hereby acknowledged), the parties
hereto, subject to the terms and conditions
contained herein, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section
1.1. Definitions. The following terms, as used in this
Agreement,
shall have the following meanings:
"Account"
shall have the meaning ascribed to such term in Section 9-102
of
the Uniform Commercial Code as in effect in
the State whose laws govern the
interpretation of this Agreement as of its
Effective Time.
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"Acquired
Stock" shall have the meaning ascribed to such term in Section
2.1(a).
"Acquired
Subsidiary" shall have the meaning ascribed to such term in
Section 2.1(a).
"Acquisition Documents" shall mean, collectively, this Agreement,
the Bill
of Sale, the Assignment and Assumption
Agreement, the Escrow Agreement and all
agreements, instruments, certificates and
other documents executed and delivered
in connection herewith or contemplated
hereby.
"Added
Contracts" shall have the meaning ascribed to such term in
Section
2.8 hereof.
"Action"
shall mean any claim, dispute, demand, cause of action or
action
asserted in any arbitration, litigation,
adversary proceeding, mediation, suit,
investigation or other proceeding and any
appeal therefrom.
"Affiliate" shall mean, with respect to any Person, any Person
which,
directly or indirectly through one or more
intermediaries, controls, is
controlled by, or is under common control
with, such Person. As used in this
definition, the term "control" (including
the terms "controlled by" and "under
common control with") means the possession,
directly or indirectly, of the power
to (a) vote one-third (1/3) or more of the
voting power of the outstanding
voting securities of such Person, or (b)
otherwise direct the management
policies of such Person by contract or
otherwise.
"Agreement" shall mean this Asset Purchase Agreement and shall
include all
of the Schedules and Exhibits attached
hereto.
"Allocation" shall have the meaning ascribed to such term in
Section 2.7
hereof.
"Alternative Transaction" shall mean any transaction occurring
after the
Bidding Procedures Order is entered
involving the consummation of the sale of
all or a material portion of the Business
pursuant to Section 363(b) of the
Bankruptcy Code or a plan of reorganization
under Section 1123 of the Bankruptcy
Code to a purchaser or purchasers other
than the Purchaser and/or one or more of
its Affiliates at any time during the
pendency of the Bankruptcy Cases.
"Approval"
shall mean any approval, authorization, consent, license,
franchise, order or permit of or by, notice
to, or filing or registration with,
a Person.
"AS
Financial Statements" shall have the meaning ascribed to such term
in
Section 4.2 hereof.
"AS
Tangible Equity" shall have the meaning ascribed to such term
in
Section 2.6(d) hereof.
"AS Tangible Equity
Adjustment" shall have the meaning ascribed to such
term in Section 2.6(d) hereof.
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AS
Tangible Equity Shortfall" shall have the meaning ascribed to such
term
in Section 2.6(d) hereof.
"AS
Tangible Equity Target" shall have the meaning ascribed to such
term
in Section 2.6(d) hereof.
"Assets"
shall mean both the Transferred Assets and the Excluded Assets.
"Assignment and Assumption Agreement" shall mean the Assignment
and
Assumption Agreement, substantially in the
form attached hereto as Exhibit A.
"Assumed
Liabilities" shall have the meaning ascribed to such term in
Section 2.3 hereof.
"Bankruptcy Cases" shall have the meaning ascribed to such term in
the
recitals to this Agreement.
"Bankruptcy Code" shall have the meaning ascribed to such term in
the
recitals to this Agreement.
"Bankruptcy Court" shall have the meaning ascribed to such term in
the
recitals to this Agreement.
"Bidding
Procedures Hearing" shall have the meaning ascribed to such
term
in Section 8.4(b) hereof.
"Bidding
Procedures Order" shall have the meaning ascribed to such term
in
Section 8.4(b) hereof.
"Bill of
Sale" shall mean the bill of sale transferring to the Purchaser
the Transferred Assets, substantially in
the form attached hereto as Exhibit B.
"Books and
Records" shall have the meaning ascribed to such term in
Section 2.1(h) hereof.
"Break-Up
Fee" shall mean cash in an amount equal to $540,000.
"Business"
shall have the meaning ascribed to such term in the recitals to
this Agreement.
"Business
Day" shall mean a day that is not a Saturday, a Sunday or a day
on which banks in the State of Ohio or
Missouri are required or authorized to
close for regular banking business.
"Claim"
shall have the meaning ascribed to such term in Section 101(5)
of
the Bankruptcy Code so long as such Claim
arises out of or relates to the
Transferred Assets, the Business or any
Seller.
"Cash
Deposit" shall have the meaning ascribed to such term in
Section
2.5(b)(ii) hereof.
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"Closing"
shall mean the consummation of the transactions contemplated by
this Agreement.
"Closing
Date" shall mean the Business Day that is three (3) Business
Days
after the date of the Sale Order, subject
to the satisfaction or waiver of the
other conditions to Closing described in
Articles IX and X hereof, or such other
date as the Purchaser and Parent may
mutually agree upon.
"Closing
Date Net Working Capital" shall have the meaning ascribed to
such
term in Section 2.6(c) hereof.
"COBRA
Liabilities" shall have the meaning ascribed to such term in
Section 2.3(a)(viii) hereof.
"Commencement Date" shall
mean the date of the entry of the order for
relief in the Bankruptcy Case of a
Seller.
"Contract"
shall mean each instrument, contract, license and other
agreement, including real property leases,
operating leases, capital leases,
unexpired leases of personal property and
other leases, in each case primarily
relating to the Business, to which any
Seller is a party or by which any Seller
or any of the Transferred Assets is
bound.
"Cure
Costs" shall have the meaning ascribed to such term in Section
2.3(a)(iii) hereof.
"Deposit"
shall have the meaning ascribed to such term in Section 2.5(a)
hereof.
"Designated Contracts" shall have the meaning ascribed to such term
in
Section 2.8 hereof.
"Designated Contract List" shall have the meaning assigned to such
term in
Section 2.8 hereof.
"Drop Dead
Date" shall have the meaning ascribed to such term in Section
12.1(f) hereof.
"EarthShell Equipment" shall have the meaning ascribed to such term
in
Section 2.6(g) hereof.
"EarthShell Order" shall have the meaning ascribed to such term in
Section
2.6(g) hereof.
"EarthShell Profit" shall have the meaning ascribed to such term
in
Section 2.6(g) hereof.
"Effective
Time" shall mean 12:01 a.m. on the Closing Date.
"Eligible
Employee" shall mean any individual in the employment of any
Seller with respect to the Business both on
the Petition Date and at the
Effective Time.
"Equipment" shall mean each item of machinery, equipment and
fixture owned
by any Seller as of the date hereof, or any
subsequent replacements or additions
thereto, in each case which has been or is
now used by any Seller in connection
with the Business.
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"Equipment
Leases" shall mean any and all operating leases of equipment
where any Seller is the lessor.
"Escrow
Account" shall have the meaning set forth in the Escrow
Agreement.
"Escrow
Agent" means LaSalle Bank, N.A.
"Escrow
Agreement" shall mean the Escrow Agreement dated, as of the
date
hereof, entered into by and among the
Purchaser, the Sellers, the Parent and the
Escrow Agent.
"Escrow
Fees" shall have the meaning set forth in the Escrow Agreement.
"Escrow
Fund" shall have the meaning ascribed to such term in Section
2.5(b)(ii) hereof.
"Estimated
AS Tangible Equity Shortfall" shall have the meaning ascribed
to such term in Section 2.6(d).
"Estimated
Net Working Capital" shall have the meaning ascribed to such
term in Section 2.6(b) hereof.
"Estimated
Net Working Capital Excess" shall have the meaning ascribed to
such term in Section 2.6(a) hereof.
"Estimated
Net Working Capital Shortfall" shall have the meaning ascribed
to such term in Section 2.6(a) hereof.
"Estimated
Working Capital Adjustment" shall have the meaning ascribed to
such term in Section 2.6(a) hereof.
"Excluded
Assets" shall have the meaning ascribed to such term in Section
2.2 hereof.
"Excluded
Liabilities" shall have the meaning ascribed to such term in
Section 2.4 hereof.
"Final
Adjustment" shall have the meaning ascribed to such term in
Section
2.6(f) hereof.
"Final
Order" means an order (the finality of which may be waived by
Purchaser in writing) entered by a court of
competent jurisdiction as to which
the time for appellate review has expired
without any party having sought such
review or the determination of any such
review by the affirmance of such order.
"Final
Purchase Price" shall have the meaning ascribed to such term in
Section 2.5 hereof.
"GAAP"
shall mean generally accepted accounting principles in the
United
States.
"Governmental Authority" shall mean any foreign, federal, state,
local or
other governmental, administrative or
regulatory authority, body, agency, court,
tribunal or similar
9
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entity including any arbitrator or
arbitration panel, including, without
limitation, the Bankruptcy Court.
"HSR Act"
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"IBNR
Claims" shall have the meaning ascribed to such term in Section
2.3(a)(viii) hereof.
"Independent Auditor" shall have the meaning ascribed to such term
in
Section 2.6(e) hereof.
"Initial
Purchase Price" shall have the meaning ascribed to such term in
Section 2.5 hereof.
"Intellectual Property" shall mean all of the following that relate
to the
operation of the Business: (a) all
inventions (whether patentable or
unpatentable and whether or not reduced to
practice), all improvements thereto
and all United States and foreign patents
of any description, and applications
therefor, utility models and utility model
applications (whether owned or
licensed), including any continuations,
continuations-in-part, reissues,
registrations, additions or extensions
thereof; (b) United States (federal and
state) and foreign trademarks (and goodwill
associated therewith) and other
trade names, service marks, logos, labels,
trade dress, advertising and package
designs, and other trade rights, whether or
not registered and all applications
therefor; (c) United States and foreign
copyrights, whether or not registered
and all applications therefor (including
copyrights in computer software and
computer software documentation, source
code and systems documentation), and
websites; and (d) know-how, trade secrets,
business leads, research and results
thereof, technology, techniques, data,
methods, processes, instructions,
drawings and specifications, inventions,
discoveries, improvements, designs,
processes, formulae, recipes, shop rights
and license agreements and other
agreements of every kind and character
relating to the Business, and all claims
and causes of action relating to any of the
foregoing.
"Inventory" shall have the meaning ascribed to such term in Section
9-102
of the Uniform Commercial Code as in effect
in the State whose laws govern the
interpretation of this Agreement as of its
Effective Time.
"Knowledge" means with respect to Sellers, the actual knowledge,
without
independent investigation, of Steve
Perkins, Jack Casper, John Schott and John
Baysore.
"Law"
shall mean any law, statute, rule, regulation, ordinance,
standard,
requirement, administrative ruling, order
or process promulgated by any
Governmental Authority as in effect from
time to time (including, without
limitation, any zoning or land use law or
ordinance, building code, securities,
blue sky, civil rights or occupational
health and safety law or regulation and
any court, administrative agency or
arbitrator's order or process).
"Letter of
Credit" shall have the meaning ascribed to such term in Section
2.5(a) hereof.
"Liability" shall mean any debt, liability, commitment,
responsibility,
cost, expense and guaranty, warranty or
obligation of any kind, character or
nature whatsoever, whether based in
10
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common law or statute or arising under
written contract or otherwise, known or
unknown, primary or secondary, direct or
indirect, choate or inchoate, secured
or unsecured, tangible or intangible, real
or potential, fixed, absolute,
contingent or otherwise, and whether or not
accrued or due or to become due.
"Lien" shall have the meaning ascribed to such term in Section
101(37) of
the Bankruptcy Code, including, without
limitation, statutory lien, pledge,
mortgage, security interest, charge,
easement, right of way, covenant, claim,
restriction, right, option, conditional
sale or other title retention agreement,
or encumbrance of any kind or nature.
"Material
Adverse Change" shall mean any change or effect that is, or
reasonably likely would result in, a
material adverse change in the Transferred
Assets or the Business, in each case taken
as a whole and taking into account
the operations of the Sellers as distressed
companies, other than (i) changes or
effects resulting from the commencement or
pendency of the Bankruptcy Cases,
(ii) changes or effects resulting from the
entry into this Agreement or the
public announcement thereof, or (iii)
changes in general economic conditions,
financial markets or conditions generally
affecting the Business or related
industries.
"Net
Working Capital" shall have the meaning ascribed to such term
in
Section 2.6(b) hereof.
"Non-Disclosure Agreement" shall have the meaning ascribed to such
term in
Section 6.2 hereof.
"Objections Statement" shall have the meaning ascribed to such term
in
Section 2.6(e) hereof.
"Ohio
Court" shall have the meaning ascribed to such term in Section
13.7(c) hereof.
"Other
Personalty" shall mean all personal property (including parts,
furniture and furnishings), other than
Equipment, Intellectual Property and
Inventory, owned, held or leased by any
Seller, in each case in connection with
the operation of the Business.
"Parent"
shall have the meaning ascribed to such term in the recitals to
this Agreement.
"Permitted
Exceptions" means imperfections of title, restrictions or
encumbrances, if any, that (a) would not
involve material costs to correct or
remove, (b) do not materially impair the
use and operation of the applicable
Transferred Asset in the Business as
currently conducted or (c) are caused
solely by the Purchaser.
"Person"
shall mean any individual, general or limited partnership,
corporation, limited liability company,
association, business trust, joint
venture, Governmental Authority, business
entity or other entity of any kind or
nature.
"Petition
Date" shall mean the date the Bankruptcy Cases are filed with
the Bankruptcy Court by Parent and
Sellers.
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"Purchaser" shall have the meaning ascribed to such term in the
preamble
to this Agreement.
"Real Property"
shall have the meaning ascribed to such term in Section
4.10 hereof.
"Representative" shall mean, with respect to a Person, any
employee,
officer, director, stockholder, partner,
accountant, attorney, investment
banker, broker, finder, investor,
subcontractor, consultant or other authorized
agent or representative of such Person.
"Restricted Assets" shall have the meaning ascribed to such term
in
Section 3.3 hereof.
"Sale
Hearing" shall have the meaning ascribed to such term in
Section
8.4(c) hereof.
"Sale
Hearing Notice" shall have the meaning ascribed to such term in
Section 8.4(b) hereof.
"Sale
Order" shall have the meaning ascribed to such term in the
recitals
to this Agreement.
"Schedules" means the schedules annexed hereto and made a part
hereof.
"Sellers"
shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
limited
liability company, partnership,
association, or other business entity of which
(i) if a corporation, a majority of the
total voting power of shares of stock
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 (ii) if a limited
liability company, partnership,
association, or other business entity (other
than a corporation), a majority of
partnership or other similar ownership
interest thereof 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
and for this purpose, a Person or Persons
owns a majority ownership interest in
such a business entity (other than a
corporation) if such Person or Persons
shall be allocated a majority of such
business entity's gains or losses or shall
be or control any managing director or
general partner of such business entity
(other than a corporation). The term
"Subsidiary" shall include all Subsidiaries
of such Subsidiary.
"Target"
shall have the meaning ascribed to such term in Section 2.6(a)
hereof.
"Tax" or
"Taxes" means all taxes, assessments, charges, duties, fees,
levies, imposts or other governmental
charges, including, without limitation,
all federal, state, local, municipal,
county, foreign and other income,
franchise, profits, capital gains, capital
stock, capital structure, transfer,
gross receipt, sales, use, transfer,
service, occupation, ad valorem, property,
excise, severance, windfall profits,
premium, stamp, license, payroll,
employment, social security, unemployment,
disability, environmental, taxes
under Tax Code Section 59A, alternative,
minimum, add-on, value-added,
withholding and other taxes, assessments,
charges, imposts or other governmental
charges of any kind whatsoever (whether
payable directly or by withholding
12
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and whether or not requiring the filing of
a Tax Return), and all estimated
taxes, deficiency assessments, additions to
tax, additional amounts imposed by
any governmental authority (domestic or
foreign), penalties and interest.
"Tax Code" shall mean the
Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated
thereunder.
"Tax
Return" shall mean any return, report, declaration, claim for
refund,
estimate, election, or information
statement or return relating to any Tax,
including any schedule or attachment
thereto, and any amendment thereof.
"Transaction" shall have the meaning ascribed to such term in the
recitals
to this Agreement.
"Transfer"
shall mean any sale, transfer, conveyance, assignment, delivery
or other disposition, and "Transfer" or
"Transferred," used as a verb, shall
each have a correlative meaning.
"Transferred Assets" shall have the meaning ascribed to such term
in
Section 2.1 hereof.
"Treasury
Regulation" means a regulation promulgated by the Treasury
Department under the Tax Code, including a
temporary regulation and a proposed
regulation to the extent that, by reason of
their actual or proposed effective
date, would or could, as of the date of any
determination or opinion as to the
Tax consequences of any action or proposed
action or transaction, be applied to
the Transferred Assets.
"Working
Capital Adjustment" shall have the meaning ascribed to such
term
in Section 2.6(c) hereof.
Section
1.2. Additional Definitions. In addition to the foregoing
defined
terms, other capitalized terms appearing in
this Agreement shall have the
respective meanings ascribed to such terms
where they first appear in the text
of this Agreement.
Section
1.3. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not
constitute a part hereof or define,
limit or otherwise affect the meaning of
any of the terms or provisions hereof.
Section
1.4. Schedules. Unless the context otherwise requires, all
capitalized terms used in the Schedules
shall have the respective meanings
assigned in this Agreement. No reference to
or disclosure of any item or other
matter in the Schedules shall be construed
as an admission or indication that
such item or other matter is material or
that such item or other matter is
required to be referred to or disclosed in
the Schedules. No disclosure in the
Schedules relating to any possible breach
or violation of any agreement, law or
regulation shall be construed as an
admission or indication that any such breach
or violation exists or has actually
occurred. Any information, item or other
disclosure set forth in any Schedule shall
be deemed to have been set forth in
all other applicable Schedules if the
relevance of such disclosure to such other
Schedules is reasonably apparent from the
facts specified in such disclosure.
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<PAGE>
Section
1.5. References to Articles, Etc. All references herein to
Articles, Sections, Exhibits and Schedules
shall be to Articles and Sections of
and Exhibits and Schedules to this
Agreement.
Section
1.6. References to "Herein," Etc. As used in this Agreement,
the
words "herein," "hereof," "hereby" and
"hereunder" shall refer to this Agreement
as a whole, and not to any particular
section, provision or subdivision of this
Agreement.
ARTICLE II
PURCHASE AND SALE OF
THE ASSETS; PURCHASE PRICE
Section
2.1. Purchase and Sale of the Assets. Subject to the terms and
conditions of this Agreement, at and as of
the Effective Time, Sellers and
Parent shall Transfer to (or cause to be
Transferred to) Purchaser, and
Purchaser shall purchase and accept from
Sellers and Parent, all of the Sellers'
and Parent's right, title and interest in
and to all assets held for use or used
in connection with the operation of the
Business, free and clear of all Liens or
other interests (except Permitted
Exceptions), other than any Excluded Assets,
including the following (collectively, the
"Transferred Assets"):
(a) the outstanding capital stock (the "Acquired Stock") of DT
Assembly
& Test Europe GmbH, a company organized under the laws of
Germany
(the
"Acquired Subsidiary"), and it is agreed and understood that in
connection
with Purchaser's purchase of such Acquired Stock, by operation
of Law,
the Liabilities of the Acquired Subsidiary shall remain
Liabilities of the Acquired
Subsidiary after the Closing;
(b) the Equipment Leases;
(c) the Equipment and Other Personalty;
(d) the Intellectual Property;
(e) all Inventory related to the operation of the Business,
including,
without limitation, the EarthShell Equipment;
(f) all rights of the Sellers under the Designated Contracts;
(g) all prepaid expenses, security deposits and other credits
owed
to the
Sellers from third parties;
(h) originals or copies of all books, financial and other
records
and
information which has been reduced to written, recorded or
encoded
form, in
each case to the extent related to the Business (collectively,
the "Books
and Records");
(i) licenses and permits used in the operation of the Business,
to
the extent
transferable;
14
<PAGE>
(j) owned and leased Real Property;
(k) the assets of the Parent, including, without limitation,
software
licenses (including Encompix and Microsoft), computer and
related
hardware
(including servers, work stations, air conditioners, back-up
generators
and furniture), phone systems hardware and software (including
voicemail,
phone switch and hand sets), office, audio and video equipment,
used in
the operation of the Business;
(l) all Accounts of Sellers related to the operation of the
Business;
and
(m) all Claims and causes of action of Sellers against third
parties
to enforce
rights under any of the foregoing categories of Transferred
Assets.
Section
2.2. Excluded Assets. Notwithstanding anything to the contrary
contained herein, including in Section 2.1
above, the Sellers shall retain all
of their right, title and interest in and
to, and shall not Transfer to the
Purchaser, the following assets of the
Sellers or Parent as applicable
(collectively, the "Excluded Assets"):
(a) all cash, cash equivalents and marketable securities;
(b) all Contracts that are not Designated Contracts;
(c) all defenses, Claims, counter-Claims, rights of offset and
other
Actions
against any Person asserting or seeking to enforce any
Liability
against
the Sellers, to the extent such Liability is not assumed by the
Purchaser
pursuant to this Agreement;
(d) any rights of Sellers under this Agreement;
(e) any avoidance or similar Actions, including, but not limited
to,
Actions
under Sections 544, 545, 547, 548, 550 and 553 of the
Bankruptcy
Code;
(f) any Tax refunds or credits arising out of the operation of
the
Business
prior to the Closing Date;
(g) except to the extent a Designated Contract (as defined
herein),
any assets
of any employee benefit plan of any Seller and any rights under
any such
plan or any contract, agreement or arrangement between any
employee
or consultant and any Seller;
(h) any Books and Records related to the Sellers' employees that
are
not being
hired by Purchaser at or after the Effective Time, the Transfer
of which
would conflict with any confidentiality or privacy obligations
of
Sellers
under applicable law;
(i) the capital stock of Sellers or their Subsidiaries, other
than
the
Acquired Stock; and
(j) except to the extent a Transferred Asset, any assets,
properties
and rights
of any Seller or Parent not used in the operation of the
Business
as it is currently operated by Sellers.
15
<PAGE>
Section
2.3. Assumption of Liabilities.
(a) Subject to the terms and conditions of this Agreement, at and
as
of the
Effective Time, the Purchaser shall assume and agree to pay,
perform,
discharge and satisfy when due in accordance with their terms
the
following
Liabilities:
(i) all Liabilities to the extent arising out of, incurred in
connection with or relating in any way to the ownership of the
Transferred Assets on or following the Closing Date or the
operation
of the Business by the Purchaser on or following the Closing
Date;
(ii) Liabilities under any of the Designated Contracts
accruing, or arising out of or relating to performance by the
Purchaser thereunder, after the Effective Time;
(iii) all amounts which may be payable according to the Sale
Order or other order of the Bankruptcy Court entered pursuant
to
Sections 365(b) of the Bankruptcy Code to cure defaults in
connection with the assumption and assignment of the Designated
Contracts ("Cure Costs");
(iv) any Liabilities for unpaid salaries, severance benefits
and any other accrued but unpaid benefits (including, but not
limited to, accrued vacation) payable to Eligible Employees who
are
hired by the Purchaser at the Effective Time (other than
retention
bonuses and severance obligations relating to key employees
approved
by the Bankruptcy Court in the Bankruptcy Cases), or any other
accruals, in each case to the extent reflected in Closing Date
Net
Working Capital;
(v) any post-Petition Date accounts payable to the extent
reflected in Closing Date Net Working Capital;
(vi) Liabilities for Taxes to the extent reflected in the
Closing Date Net Working Capital as determined pursuant to
Section
2.6(c) below;
(vii) insured health care expenses incurred by Eligible
Employees who are hired by the Purchaser at or after the
Effective
Time that have been reported but not yet paid or for which
claims
have not been submitted as of the Closing Date ("IBNR Claims");
and
(viii) Liabilities incurred by the Purchaser arising under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
for
Eligible Employees who are not hired by the Purchaser at the
Effective Time if and only if applicable regulations under
COBRA
would obligate the Purchaser to satisfy such Liabilities
(notwithstanding that such Liabilities are otherwise Excluded
Liabilities hereunder), to the extent reflected in the Closing
Date
Net Working Capital ("COBRA Liabilities").
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<PAGE>
(The Liabilities described in the foregoing clauses (i), (ii),
(iii),
(iv), (v), (vi), (vii) and (viii) are collectively defined
herein
as the
"Assumed Liabilities".)
(b) From the date hereof through the Closing Date, Sellers shall
use
commercially reasonable efforts to obtain settlements or
stipulations (but
without
any obligation of Sellers to pay any material amount in respect
of
such
settlements) with any party that objects to the assumption and
assignment
of a Designated Contract or any related cure amount.
Section
2.4. Excluded Liabilities. Except for the Assumed Liabilities,
the
Purchaser shall not assume, and shall have
no liability or obligation for other
Claims against, or Liabilities of, the
Sellers or Parent (collectively, the
"Excluded Liabilities"). The Excluded
Liabilities include, but are not limited
to, (i) Liabilities for Taxes of the
Sellers or Parent, other than for Taxes set
forth in Section 2.3(a)(vi), (ii) that
certain lawsuit identified as Green
Packaging SDN BHD and Green Earth Packaging
Corp. vs. Detroit Tool & Engineering
Company, DT Industries, Inc., et al., Case
No. 01129608, Superior Court of the
State of California, Santa Barbara County,
Anacapa Division, and (iii)
Liabilities in connection with any matter
referred to in Schedule 4.5 or
Schedule 4.6.
Section
2.5. Purchase Price. The aggregate consideration for the
Transferred Assets shall consist of cash in
the amount of $18,000,000 (the
"Initial Purchase Price"), as may be
adjusted pursuant to Section 2.6 below (the
resulting adjusted aggregate consideration
being referred to herein as the
"Final Purchase Price"), payable as
follows:
(a) Deposit. Prior to the execution and delivery of this
Agreement
by the
parties hereto and following evidence reasonably satisfactory
to
the
Purchaser of receipt by Sellers of debtor-in-possession financing,
the
Purchaser
shall have deposited $900,000 in the form of a letter of credit
(the
"Letter of Credit") in the Escrow Account (the amount deposited
in
the Escrow
Account through the earlier of termination of this Agreement in
accordance
herewith and the Closing Date is referred to herein as the
"Deposit"). Upon termination of this Agreement for any reason other
than
by Sellers
pursuant to, and as permitted by, Section 12.1(c) below due to
a material
breach of a covenant or agreement by Purchaser, the Escrow
Agent
shall return the Deposit to the Purchaser in accordance with
the
terms of
the Escrow Agreement. If this Agreement is terminated by
Sellers
pursuant
to, and as permitted by, Section 12.1(c) below due to a
material
breach of
a covenant or agreement by Purchaser, the Escrow Agent shall
pay
the
Deposit to the Sellers in accordance with the terms of the
Escrow
Agreement.
The Purchaser, Parent and the Sellers shall, within three (3)
Business
Days following such termination, execute and deliver to the
Escrow
Agent joint written instructions directing the Escrow Agent to
deliver
the Deposit in accordance with the foregoing. Sellers' right to
receive
the Deposit under such circumstances shall be without prejudice
to
any rights
Sellers may have to be compensated in full for any damages
which they
may have suffered as a result of any breach of this Agreement
by the
Purchaser.
(b) Initial Purchase Price. At the Closing, the Purchaser shall
deliver to
Sellers by wire transfer of immediately available funds to that
account or
accounts designated in writing by Sellers:
17
<PAGE>
(i) cash in the amount of the Initial Purchase Price, as may
be adjusted pursuant to Section 2.6 below in the case of an
Estimated Net Working Capital Shortfall and/or Estimated AS
Tangible
Equity Shortfall, if any; minus
(ii) cash in the amount of $1,500,000 (the "Cash Deposit") to
secure the Sellers' and Parent's obligations for the Working
Capital
Adjustment and/or AS Equity Adjustment pursuant to Section 2.6
below
(the Cash Deposit, together with any investment earnings
thereon,
the "Escrow Fund"), $900,000 of which Cash Deposit shall be
deposited into the Escrow Account by the Purchaser in place of
the
Letter of Credit at the Closing by wire transfer of immediately
available funds (and the parties hereto shall, at the Closing,
instruct the Escrow Agent to return the Letter of Credit to the
Purchaser upon deposit of such funds), and $600,000 of which
Cash
Deposit shall be deposited into the Escrow Account by the
Purchaser
at the Closing by wire transfer of immediately available funds.
(c) Payment of Estimated Net Working Capital Excess. To the
extent
any
Estimated Net Working Capital Excess is not paid by the Purchaser
at
the
Closing, such amount shall be paid by the Purchaser by wire
transfer
of
immediately available funds within fifteen (15) Business Days
following
the
Closing Date.
(d) Escrow Fees. Purchaser shall pay directly to the Escrow
Agent
the Escrow
Fees as and when due under the Escrow Agreement.
Section
2.6. Purchase Price Adjustments Based on Net Working Capital.
(a) Adjustments for Estimated Net Working Capital
Shortfall/Excess.
The
Initial Purchase Price shall be (a) reduced dollar-for-dollar to
the
extent the
Estimated Net Working Capital (as defined below) is less than
the Target
(such shortfall, if any, being referred to herein as the
"Estimated
Net Working Capital Shortfall") or (b) increased
dollar-for-dollar to the extent the Estimated Net Working Capital
is
greater
than the Target (such excess, if any, being referred to herein
as
the
"Estimated Net Working Capital Excess"). The Estimated Net
Working
Capital
Excess or the Estimated Net Working Capital Shortfall shall be
the
"Estimated
Working Capital Adjustment." As used herein, the "Target" shall
be
$16,697,000, plus up to $256,000 in amounts owing to Pyxis to
the
extent any
amounts owed to Pyxis by Sellers have not been paid prior to
the
Closing Date, plus up to $150,000 in amounts owing to ITE to
the
extent any
amounts owed to ITE by Sellers have not been paid prior to the
Closing
Date.
(b) Closing Date Net Working Capital Estimate. At least three
(3)
days prior
to the Closing Date, the Sellers and Purchaser shall mutually
agree upon
a good faith reasonable estimate of the Closing Date Net
Working
Capital (the "Estimated Net Working Capital"). "Net Working
Capital"
means, consistent with the categories of current assets and
current
liabilities of the Sellers as set forth on Schedule 2.6 hereto,
an
amount
equal to (a) the sum of the current assets included among the
Transferred Assets, including trade receivables, costs and
estimated
earnings
in excess of amounts billed on uncompleted contracts, Inventory
and
prepaid expenses, determined on a consolidated basis (excluding
cash,
cash
equivalents and marketable securities), minus (b) trade
18
<PAGE>
payables,
customer advances, billings in excess of costs and estimated
earnings
on uncompleted contracts and any other accounts payable, Cure
Costs or
accrued expenses (including warranty reserves and rebates)
included
among the Assumed Liabilities. Net Working Capital shall also
include
COBRA Liabilities; provided that any accrual for COBRA
Liabilities
shall not
exceed $150,000 in the Closing Date Net Working Capital
calculation determined pursuant to Section 2.6(c) below. Net
Working
Capital
does not include: (w) any assets or Liabilities of the Acquired
Subsidiary, (x) any amounts payable for IBNR Claims or (y) the
value of
the
EarthShell Equipment and any costs or expenses incurred in
connection
with the
EarthShell Equipment prior to receipt of an EarthShell Order.
The
Net
Working Capital shall be determined in accordance with GAAP and,
to
the extent
consistent with GAAP, in a manner consistent with Sellers'
historical
accounting practices, and shall include only those accounts set
forth on
Schedule 2.6 hereto.
(c) Closing Balance Sheet. On a date no later than sixty (60)
days
following
the Closing Date, Purchaser will prepare a balance sheet of the
Business
of Sellers, as of the Closing Date, in accordance with GAAP
and,
to the
extent consistent with GAAP, in a manner consistent with the
accounting
practices used in connection with the preparation of the
Estimated
Net Working Capital, together with a calculation of the Net
Working
Capital as of the Closing Date (the "Closing Date Net Working
Capital").
Purchaser shall also include a written calculation of the
proposed
adjustment amount equal to (A) the Closing Date Net Working
Capital,
minus (B) the sum of the Target and the Estimated Working
Capital
Adjustment
(such amount, the "Working Capital Adjustment"), which may be a
positive
or a negative number. The Closing Date Net Working Capital
shall
consist of
the same components as the Estimated Net Working Capital.
(d) Adjustments for Acquired Subsidiary Tangible Stockholders'
Equity. On
a date no later than sixty (60) days following the Closing
Date,
Purchaser will prepare, in accordance with GAAP and, to the
extent
consistent
with GAAP, in a manner consistent with the historical
accounting
practices of the Acquired Subsidiary, a statement of tangible
stockholders' equity of the Acquired Subsidiary as of the Closing
Date
(the "AS
Tangible Equity"). For clarity, the AS Tangible Equity shall be
calculated
without regard to goodwill. The parties hereto agree that the
Initial
Purchase Price shall be reduced dollar-for-dollar to the extent
the AS
Tangible Equity is less than 1,353,000 Euros (the "AS Tangible
Equity
Target") (such shortfall, if any, being referred to herein as
the
"AS
Tangible Equity Shortfall" and said reduction shall be the "AS
Tangible
Equity Adjustment"). Notwithstanding the foregoing, if the AS
Tangible
Equity is at least 1,303,000 Euros, the AS Tangible Equity
Adjustment
shall be zero. At least three (3) days prior to the Closing
Date, the
Sellers and the Purchaser shall mutually agree upon a good
faith
reasonable
estimate of the AS Tangible Equity Shortfall, if any (the
"Estimated
AS Tangible Equity Shortfall").
(e) Disputes. After delivery of the Closing Date Net Working
Capital
and AS
Tangible Equity, the Sellers and their accountants shall be
permitted
reasonable access to review the Purchaser's books and records
and work
papers related to the preparation of the Closing Date Net
Working
Capital,
the Working Capital Adjustment, the AS Tangible
19
<PAGE>
Equity and
the AS Tangible Equity Adjustment. The Sellers and their
accountants may make inquiries of Purchaser and its respective
accountants
regarding
questions concerning or disagreements with the Closing Date Net
Working
Capital, the Working Capital Adjustment, the AS Tangible Equity
and the AS
Tangible Equity Adjustment arising in the course of their
review
thereof, and Purchaser shall use its reasonable best efforts to
cause any
such accountants to respond to such inquiries. If the Sellers
have any
objections to the Closing Date Net Working Capital, the Working
Capital
Adjustment, the AS Tangible Equity and the AS Tangible Equity
Adjustment, the Sellers shall deliver to Purchaser a statement
setting
forth
their objections thereto (an "Objections Statement"). If an
Objections
Statement is not delivered to Purchaser within 15 days after
delivery
of the Closing Date Net Working Capital, the Closing Date Net
Working
Capital, the Working Capital Adjustment, the AS Tangible Equity
and the AS
Tangible Equity Adjustment shall be final, binding and
non-appealable on the parties hereto. The Sellers and Purchaser
shall
negotiate
in good faith to resolve any such objections, but if they do
not
reach a
final resolution within 15 days after the delivery of the
Objections
Statement, the Sellers and Purchaser shall submit such dispute
to a
representative from the office of a nationally recognized
accounting
firm
chosen by the Sellers and Purchaser (the "Independent Auditor").
The
Sellers
and Purchaser shall use their commercially reasonable efforts
to
cause the
Independent Auditor to resolve all disagreements as soon as
practicable, but in any event, within twenty (20) days. The
resolution of
the
dispute by the Independent Auditor shall be final, binding and
non-appealable on the parties hereto. The costs and expenses of
the
Independent Auditor shall be paid equally by Purchaser and the
Sellers.
(f) Payment of Adjustments from Escrow Fund. If, based on the
Closing
Date Working Capital, the Working Capital Adjustment, the AS
Tangible
Equity and the AS Tangible Equity Adjustment as finally
determined
pursuant to Section 2.6(e) (the aggregate of the Working
Capital
Adjustment and the AS Tangible Equity Adjustment shall be
referred
to herein
as the "Final Adjustment") the Final Adjustment is a positive
number,
the Purchaser and the Sellers shall forthwith (but in any event
within
three (3) Business Days) instruct the Escrow Agent to release
the
Escrow
Fund, including any interest thereon, to the Sellers, and the
Purchaser
shall forthwith (but in any event within fifteen (15) Business
Days) pay
the amount of the Final Adjustment to the Sellers. If, based on
the
Closing Date Working Capital, the Work Capital Adjustment, the
AS
Tangible
Equity and the AS Tangible Equity Adjustment as finally
determined
pursuant to Section 2.6(e), the Final Adjustment is a negative
number,
the Sellers and the Purchaser shall forthwith (but in any event
within
three (3) Business Days) instruct the Escrow Agent to pay such
negative
amount to the Purchaser from the Escrow Fund, including any
interest
thereon, and to pay any amounts remaining in the Escrow Fund
after such
payment to the Sellers. By way of example, and solely for
purposes
of illustration, if the Working Capital Adjustment is equal to
$50,000
and the AS Tangible Equity Adjustment is equal to -$10,000, the
Final
Adjustment payable to Seller shall equal $40,000. Any payment
required
to be made pursuant to this paragraph shall be made by wire
transfer
of immediately available funds to an account designated in
writing by
the party that is to receive payment of such adjustment.
Sellers
and Purchaser agree that the party required to pay the Final
Adjustment
pursuant to this Section 2.6(f) shall be liable to the other
party for
any amount payable pursuant to this Section 2.6(f) in excess
20
<PAGE>
of the
Escrow Fund. To the extent required, the Purchase shall pay
such
excess
amount to Sellers within fifteen (15) Business Days of the
determination of the Final Adjustment.
(g) EarthShell Equipment. Purchaser intends to acquire as part
of
the
Transferred Assets the first eight (8) units (comprising two
(2)
systems)
currently on the Sellers' floor and related work-in-process
Inventory
and Equipment of Detroit Tool and Engineering Company ("DTE")
relating
to an equipment vendor sublicense agreement between DTE and
EarthShell
Corporation (the "EarthShell Equipment"). Purchaser hereby
agrees
that in the event a purchase order is received for the
EarthShell
Equipment
following the date hereof but prior to the Closing Date (an
"EarthShell Order"), Purchaser will assume such EarthShell Order if
it is
reasonably
determined by John Schott, or a successor agreed upon by
Purchaser
and Parent, that such EarthShell Order includes material terms
(including, without limitation, performance specifications, price
and
delivery
timetables) substantially similar to, or more favorable to DTE
than,
those included in the quotation provided by DTE to Meridian and
such
EarthShell
Order is not contingent upon the execution and delivery of a
license
agreement with EarthShell Corporation. With respect to such
assumed
EarthShell Order, Parent shall be entitled to the greater of
(i)
50% of the
profit earned on such EarthShell Equipment, and (ii) $1,000,000
(the
"EarthShell Profit"). Purchaser shall pay the EarthShell Profit
to
Parent
promptly upon acceptance of the EarthShell Equipment by the
customer
on the customer's floor pursuant to the terms of the EarthShell
Order with
respect to the EarthShell Equipment, and such payment shall be
deemed to
be in addition to the Final Purchase Price. For purposes of
this
Section
2.6(g), the EarthShell Profit shall equal the pro rata revenue
received
by Purchaser from the EarthShell Order related to the
EarthShell
Equipment
minus only those costs and expenses specifically and directly
incurred
by Purchaser with respect to the EarthShell Equipment after the
date such
EarthShell Order is received. Such costs and expenses shall be
incurred
by Purchaser consist
