STOCK PURCHASE AGREEMENT
CHROMA TECHNOLOGIES, INC.
This Agreement is entered into on July 1, 2000, by and among The Xxxxx Group,
Inc., a Tennessee corporation ("Xxxxx"), and Xxxxx X. Xxxxxxxx ("Xxxxxxxx") and
Xxxxxx X. Xxxxx (Xxxxxxxx and Xxxxx collectively, the "Stockholders"). Xxxxx
and the Stockholders are sometimes each referred to separately herein as a
"Party" and are sometimes collectively referred to herein as the "Parties."
W I T N E S S E T H:
WHEREAS, Chroma Systems Partners ("Chroma") is a California general partnership
in the business of dyeing and finishing carpet;
WHEREAS, Stockholders own all of the outstanding capital stock of Chroma
Technologies, Inc., a California corporation (hereinafter "ChromaTech");
WHEREAS, ChromaTech is a party to that certain Partnership Agreement of Chroma
dated December 17, 1992 (the "Partnership Agreement") pursuant to which
ChromaTech has a Percentage Interest (as defined in said Partnership Agreement)
in Chroma of 33.3%; and
WHEREAS, subject to the terms and conditions of this Agreement, Stockholders
desire to sell, or cause to be sold, and Xxxxx desires to purchase, all of the
outstanding capital stock of ChromaTech;
NOW, THEREFORE, in consideration of the premises and the mutual promises and
conditions contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
Section 1. Definitions.
1.1 Defined Terms. The following capitalized terms used herein and in the
agreements and other documents collateral hereto which incorporate the terms
set forth below by reference shall have the meanings set forth opposite such
term below:
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Business Day" has the meaning set forth in Section 9.6.
"Chroma" has the meaning set forth in the recitals.
"Chroma Interest" means the entire ownership interest of ChromaTech in Chroma,
which as of the Closing shall not be less than 33.3% of all the ownership
interests in Chroma.
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"ChromaTech" has the meaning set forth in the recitals.
"Closing Amount" has the meaning set forth in Section 4.
"Closing" has the meaning set forth in Section 4.
"Closing Date" has the meaning set forth in Section 4.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Sales Payment" has the meaning set forth in the Fabrica Agreement.
"Contracts" has the meaning set forth in Section 5.14.
"Controlled Groups" has the meaning set forth in Code Section 1563.
"Deferred Losses" has the meaning set forth in Section 8.2(b)
"Eligible Losses" has the meaning set forth in Section 8.2(a).
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement, (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit or other retirement, bonus, or
incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section 3(1).
"Environmental, Health, and Safety Requirements" shall mean all federal, state,
local and foreign statutes, regulations, ordinances and similar provisions
having the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, and specifically including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S. C. P9601 et seq.) ("CERCLA"), the Hazardous Material Transportation Act
(49 U.S.C. P5101 et seq.), the Resource Conservation
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and Recovery Act (42 U.S. C. P6901 et seq. ), the Federal Water Pollution
Control Act (33 U. S. C. P1251 et seq. ), the Clean Air Act (42 U. S.C. P7401
et seq. ), the Toxic Substances Control Act (15 U.S. C. P2601 et seq.), the
Safe Drinking Water Act (42 U.S. C. P300f et seq.), as such laws and
regulations thereunder have been amended or supplemented, and each similar
federal, provincial, state, municipal or local statute, and each rule and
regulation promulgated under such federal, state, municipal and local laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means each entity which is treated as a single employer with
Seller for purposes of Code Section 414(b) or (c).
"Excess Eligible Losses" has the meaning set forth in Section 8.2(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fabrica" has the meaning set forth in Section 5.14.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statements" has the meaning set forth in Section 5.8.
"First Phase Limit" has the meaning set forth in Section 8.2(b).
"Xxxxx" has the meaning set forth in the preamble.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time, consistently applied.
"Xxxxxxxx" has the meaning set forth in the preface above.
"Hazardous Materials" shall mean and include each substance identified or
designated as a hazardous substance or hazardous material under CERCLA as well
as any other substance or material meeting any one or more of the following
criteria: (i) it is or contains a substance designated as a hazardous waste,
hazardous substance, hazardous material, pollutant, contaminant or toxic
substance under any Environmental, Health and Safety Requirements; (ii) it is
toxic, reactive, corrosive, infectious, radioactive or otherwise hazardous; or
(iii) it is or contains, without limiting the foregoing, petroleum hydrocarbons.
"Indemnified Party" has the meaning set forth in Section 8.6.
"Indemnifying Party" has the meaning set forth in Section 8.6.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with
all reissuances, continuations,
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continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means (a) in the case of Stockholders, actual knowledge without any
independent investigation, and (b) in the case of Xxxxx, actual knowledge of
any of the individuals listed on Schedule 1.1 who have made a reasonable
inquiry of their relevant subordinates.
"Losses" has the meaning set forth in Section 8.2.
"Material Adverse Effect" means the occurrence of any act or event, or the
existence of any circumstance or fact, the result of which would reasonably be
expected to have a material adverse effect on the business, financial
condition, operations, results of operations or prospects of ChromaTech or
Chroma.
"Most Recent Balance Sheet" means the balance sheet contained within the Most
Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section 5.8.
"Most Recent Fiscal Month End" has the meaning set forth in Section 5.8.
"Most Recent Fiscal Year End" has the meaning set forth in Section 5.8.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).
"Partnership Agreement" has the meaning set forth in the recitals.
"Party" and "Parties" each has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Person" means an individual, a partnership, a corporation, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchase Price Adjustment" means the amount obtained by subtracting (a) the
sum of (i) the amounts paid to Xxxxxxxx and Xxxxx pursuant to Section 2.3
hereof and (ii) $1,800,000 from (b) Total Pre-tax Profit allocable to the
Chroma Interest.
"Real Property" has the meaning set forth in Section 5.11(a).
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Sales Contingency" has the meaning set forth in the Fabrica Agreement.
"Section 338(h)(10) Election" has the meaning set forth in Section 7.5.
"Security Agreements" mean, collectively, that certain Pledge and Security
Agreement by and between Xxxxx and each Stockholder dated July 1, 2000.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) mechanic's, materialmen's, and similar
liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Shares" has the meaning set forth in Section 2.1.
"Significant Customer" has the meaning set forth in Section 5.21.
"Significant Supplier" has the meaning set forth in Section 5.21.
"Stockholder Losses" has the meaning set forth in Section 8.4.
"Stockholders" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" or "Taxes" has the meaning set forth in Section 5.19.
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"Tax Claim" has the meaning set forth in Section 8.7.
"Tax Returns" has the meaning set forth in Section 5.19.
"Third Party Claim" has the meaning set forth in Section 8.6.
"Total Pre-tax Profit" means the sum of the following amounts:
(a) for the period from July 1, 2000 through December 31, 2000, the sum of the
amount (whether a positive or negative amount) of the profit (loss) line item
on Chroma's unaudited monthly statement of income and expenses for each
calendar month during such period;
(b) for the period from January 1, 2001 through December 31, 2001, the amount
of the profit (loss) line item on Chroma's audited statement of income and
expenses for fiscal year 2001;
(c) for the period from January 1, 2002 through December 31, 2002, the amount
of the profit (loss) line item on Chroma's audited statement of income and
expenses for fiscal year 2002; and
(d) for the period from January 1, 2003 through June 30, 2003, the sum of the
amount (whether a positive or negative amount) of the profit (loss) line item
on Chroma's unaudited monthly statement of income and expenses for each
calendar month during such period.
1.2 Construction. As used herein or in any document which incorporates the
terms hereof:
(a) the plural form of the noun shall include the singular and the singular
shall include the plural, unless the context requires otherwise;
(b) each of the masculine, neuter and feminine forms of any pronoun shall
include all forms unless the context otherwise requires;
(c) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein);
(d) the words "herein", "hereof'" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof;
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(e) all references to Sections, Exhibits and Schedules shall be construed to
refer to Sections of, and Exhibits and Schedules to this Agreement; and
(f) words of inclusion shall not be construed as terms of limitation, so that
references to included matters shall be regarded as non-exclusive,
non-characterizing illustrations.
1.3 Headings. The table of contents and article and section headings contained
herein and in any document which incorporates the terms hereof are for
convenience only and shall not control or affect the meaning or construction of
any provisions of this Agreement or such document.
Section 2. Purchase of Shares.
2.1 Transfer of Shares. Subject to the terms and conditions hereof and in
reliance upon the representations and warranties herein contained, Stockholders
agree to sell or cause to be sold to Xxxxx all the shares of the capital stock
of ChromaTech which are issued and outstanding (the number of shares being
sold by Stockholders and their percentage ownership is set forth on Exhibit A),
and Xxxxx agrees to purchase such shares (all of the shares being sold
hereunder being hereinafter referred to as the "Shares") from Stockholders, for
the Purchase Price.
2.2 Purchase Price. On the terms and subject to the conditions set forth in
this Agreement, Xxxxx and the Stockholders agree that the total purchase price
for the Shares shall be comprised of the following (such price being
hereinafter referred to as the "Purchase Price").
(a) Closing Amount. In consideration of the transfer to Xxxxx of the Shares,
and subject to the terms and conditions set forth in this Agreement, Xxxxx
shall pay to the Stockholders at Closing Eleven Million Dollars ($11,000,000)
by wire transfer of immediately available funds to bank accounts designated by
Stockholders as set forth in Exhibit A (the "Closing Amount").
(b) Purchase Price Adjustment. If the Purchase Price Adjustment is a positive
amount, Xxxxx shall pay (i) 50% of such amount to Xxxxxxxx by wire transfer of
immediately available funds to the bank account specified by Xxxxxxxx and (ii)
50% of such amount to Xxxxx by wire transfer of immediately available funds to
the bank account specified by Xxxxx. If the Purchase Price Adjustment is a
negative amount, (i) Xxxxxxxx shall pay 50% of such amount to Xxxxx by wire
transfer of immediately available funds to the bank account specified by Xxxxx
and (ii) Xxxxx shall pay 50% of such amount to Xxxxx by wire transfer of
immediately available funds to the bank account specified by Xxxxx. The
Purchase Price Adjustment shall be paid to the appropriate Party or Parties
within five (5) business days of the receipt by the Stockholders of the last
payment to be made pursuant to Section 2.3.
2.3 Distributions. Xxxxx shall pay, or shall cause ChromaTech to pay, to each
Stockholder in respect of each of 36 calendar months during the period
commencing July 1, 2000 and ending June 30, 2003, 50% of the amount, if any,
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of all distributions received by ChromaTech from Chroma during such calendar
month (the "Monthly Distribution") less the sum of $25,000 (the "Net Monthly
Distribution"); provided that, in the event the Net Monthly Distribution is
less than zero for any calendar month (the "Shortfall Amount"), the Shortfall
Amount shall be added to the $25,000 amount referenced immediately above for
the next month.
2.4 Deferred Tax Liability. In the event Stockholders elect installment sales
treatment in respect of the Purchase Price Adjustment hereunder, Stockholders
shall notify Xxxxx of such election no later than December 31, 2000. The
Purchase Price shall be subject to upward adjustment for (and Xxxxx shall pay
to Stockholders promptly following notification from Stockholders of the amount
thereof, but in any event not later than five (5) Business Days prior to the
due date of the payment of such amount) an amount equal to (i) the interest
imposed under IRC Section 453A (if any) on Stockholders' deferred tax liability
relating to the sale of the Shares and (ii) any Taxes imposed with respect to
the receipt of any payments pursuant to this Section 2.4. In addition,
following a final determination that the installment sales method to the
Stockholders is not available with respect to any portion of the Purchase Price
received after the close of the taxable year in which the Closing Date occurs,
Xxxxx shall pay to the Stockholders or on their behalf any penalty and
interest owing in respect thereof within five (5) Business Days prior to the
due date of the payment of such amount.
Section 3. Instruments of Conveyance.
3.1 Transfer of Shares; Pledge of Shares. At the Closing, Stockholders shall
deliver to Xxxxx all stock certificates representing the Shares, duly endorsed
in blank. Whereupon, following notation of such transfer on the ChromaTech
stock xxxxxx, Xxxxx shall deliver such certificates back to Stockholders to be
held by Stockholders in connection with its pledge thereof as collateral under
the Security Agreement.
3.2 Further Assurances. Stockholders shall at the Closing Date, and from time
to time thereafter at Dixie's request and without further consideration,
execute and deliver to Xxxxx such instruments of transfer, conveyance and
assignment, in addition to those delivered pursuant to Section 3.1 hereof, as
Xxxxx shall reasonably request to transfer, convey and assign more effectively
the Shares to Xxxxx and effectuate the transactions contemplated by this
Agreement.
Section 4. Closing.
The delivery of the Shares, the payment of the Closing Amount in respect
thereof and the delivery of the other instruments, and certificates required
hereunder and relating thereto (the "Closing") shall take place at the offices
of White & Case, LLP, 000 Xxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000, or such other place agreed to by the parties hereto, on July 1,
2000 or at such other time as agreed to by the parties hereto (the "Closing
Date").
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Section 5. Representations and Warranties of Stockholders.
In order to induce Xxxxx to enter into this Agreement, the Stockholders
represent and warrant that as of the date hereof and as of the Closing Date,
the following representations and warranties are true, complete and accurate,
and all such representations and warranties shall be continuing and shall
survive the execution of this Agreement pursuant to Section 10.1 hereof:
5.1 Ownership of and Title to the Shares, etc. Each Stockholder represents and
warrants that he is the lawful owner of the Shares as set forth in Exhibit A
hereof opposite such Stockholder's name; that each Stockholder has good and
marketable title to the Shares opposite such Stockholder's name, free and clear
of all taxes, liens, Security Interests, restrictions on transfer, options,
warrants, purchase rights, contracts, commitments, charges, equities, claims
and demands whatsoever; that each Stockholder has the full legal right and
power to execute, deliver and perform this Agreement; that this Agreement
constitutes a legal, valid and binding obligation of such Stockholder according
to its terms; that each Stockholder has full legal right and power to sell,
transfer and deliver the Shares opposite such Stockholder's name in the manner
provided in this Agreement; that upon delivery of, and payment for, such Shares
pursuant to this Agreement, Xxxxx will acquire good and marketable title
thereto, free and clear of all liens, Security Interests, restrictions on
transfer, options, charges, equities and claims whatsoever; and that such
Shares are at the date hereof and will on the Closing Date be duly authorized,
validly issued and outstanding and fully-paid and non-assessable, with no
personal liability attaching to the ownership thereof.
5.2 Ownership of and Title to the Chroma Interest, etc. ChromaTech has good
and marketable title to the Chroma Interest, free and clear of all Security
Interests except those described in the Partnership Agreement. Schedule 5.2
sets forth a list of each of the partners of Chroma (the "Partners") and the
Percentage Interest (as defined in the Partnership Agreement) of each such
Partner. To the Knowledge of Stockholders, except as set forth in Schedule 5.2
hereof and except as set forth in the Partnership Agreement, no Partner of
Chroma has granted any Person any right or has entered into any agreement or
understanding (whether by option, warrant, call, commitment, conversion, plan
or otherwise), fixed or contingent, with respect to the acquisition, purchase,
sale, transfer, assignment, creation or issuance of any interest in Chroma.
5.3 Existence, Power and Good Standing.
(a) ChromaTech is a corporation validly existing and in good standing under
the laws of the State of California and is duly qualified as a foreign
corporation in good standing in each state in which such qualification is
required in order to conduct its business and has full corporate power and
authority to conduct the business in which it is engaged and to own and
use its properties, except where the failure to have such standing or to be so
qualified or to have such power and authority would not have a Material Adverse
Effect.
(b) To the Knowledge of Stockholders, Chroma is a general partnership duly
formed, validly existing, and in good standing under the laws of the State of
California, and has all requisite power and authority to own, operate, or lease
the properties owned, operated or
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leased by Chroma and to carry on its business as it has been and is currently
conducted as of the date hereof and as contemplated by the Partnership
Agreement. To the Knowledge of Stockholders, Chroma is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes
such licensing or qualification necessary or desirable, except where the
failure to be so licensed or qualified would not have a Material Adverse Effect
on the Partnership.
(c) ChromaTech has heretofore furnished to Xxxxx a complete and correct copy
of the Partnership Agreement, which has never been amended and which is in full
force and effect. To the Knowledge of Stockholders, Chroma is not in violation
of any of the provisions of the Partnership Agreement or California
partnership law, except where such violation would not, individually or in the
aggregate, have a Material Adverse Effect on the Partnership.
(d) Neither the execution, delivery, and performance of this Agreement nor
the consummation by ChromaTech of the transactions contemplated hereby (i)
conflicts with or violates the Partnership Agreement or any other agreement to
which ChromaTech is a party, or (ii) to the Knowledge of Stockholders, results
in the creation or imposition of any Encumbrance upon any property or asset of
Chroma.
5.4 Capitalization. ChromaTech's authorized capital stock consists solely of
10,000 shares Common Stock, no par value per share, all which are duly and
validly issued and outstanding, all of which are fully paid and non-assessable
as of the date hereof. The Shares constitute all of the issued and outstanding
capital stock of ChromaTech. There are no outstanding options, warrants,
contracts, preemptive rights, proxies, calls, commitments or demands of rights
of any character obligating the Stockholders to issue any shares of capital
stock of ChromaTech or options or rights with respect thereto, and there are
not existing or outstanding securities of any kind convertible into or
exchangeable for shares of capital stock of ChromaTech. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to ChromaTech. There are no
outstanding obligations of ChromaTech to repurchase, redeem or otherwise
acquire any outstanding capital stock of ChromaTech. No former stockholder of
ChromaTech or of any corporation heretofore merged with or into ChromaTech has
any claim or cause of action whatsoever against ChromaTech arising out of or in
any way connected with any occurrence or state of facts in existence prior to
the date hereof, and no such former stockholder shall come to have any claim or
cause of action whatsoever against ChromaTech, or any officer, director or
stockholder of ChromaTech or of any such corporation, by virtue of, or in any
way connected with, the transactions contemplated by this Agreement or
otherwise. By the execution of this Agreement, Stockholders hereby waive any
and all rights, options, calls, equities or other claims which Stockholders may
have against ChromaTech whatsoever prior to the Closing Date.
5.5 Books and Records. The books and records of ChromaTech and, to the
Knowledge of Stockholders, the books and records of Chroma and are complete and
correct in all material respects and Chroma has maintained and kept its books
and records current and such books and records accurately reflect and/or
support the historical results of operations and the financial condition of
Chroma as set forth in the Financial Statements.
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5.6 Subsidiaries. ChromaTech does not own directly or indirectly, any capital
stock or other equity security or interest in any other corporation or in any
partnership, joint venture, cooperative, or other association other than its
ownership interest in Chroma. Chroma does not own directly or indirectly, any
capital stock or other equity security or interest in any other corporation or
in any partnership, joint venture, cooperative, or other association.
5.7 Assets and Liabilities of ChromaTech. Except for the Chroma Interest,
ChromaTech has no assets or liabilities. Xxxxx acknowledges that all assets and
liabilities of ChromaTech other than the Chroma Interest were distributed to
the Fabrica Stockholders prior to the Closing.
5.8 Financial Statements. Attached hereto as Exhibit A are the following
financial statements of Chroma (collectively the "Financial Statements"): (i)
audited balance sheets and statements of income and partners' capital accounts,
as of and for the fiscal years ended December 29, 1996, December 28, 1997,
January 3, 1999, and January 2, 2000 (the "Most Recent Fiscal Year End") for
Chroma; and (ii) unaudited balance sheets and statements of income and
partners' capital accounts, (the "Most Recent Financial Statements") as of and
for each of the fiscal months between the Most Recent Fiscal Year End and the
most recent month ending at least twenty (20) days prior to the Closing Date
(the "Most Recent Fiscal Month End") and for the interim period between
January 2, 2000 and the Most Recent Month End for Chroma. The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby and
present fairly the financial condition of Chroma and capital accounts as of
such dates and the results of operations of Chroma for such periods; provided,
however, that the Most Recent Financial Statements are subject to normal
year-end adjustments (which will not be material individually or in the
aggregate) and lack footnotes and other presentation items.
5.9 Absence of Undisclosed Liabilities; No Material Adverse Change. Except as
and to the extent reflected and adequately reserved against in the Financial
Statements, to the Knowledge of Stockholders, Chroma had no material liability
or obligation whatsoever, whether accrued, absolute, contingent or otherwise.
For purpose of this Section 5.9, "material" shall be deemed to be liabilities
which exceed fifty thousand dollars ($50,000) or more, in the aggregate. Except
as described on Schedule 5.9, since the Most Recent Fiscal Year End, to the
Knowledge of Stockholders (i) Chroma has not incurred any liability or
obligation whatsoever, whether accrued, absolute, contingent or otherwise,
except for current liabilities and obligations incurred in the Ordinary Course
of Business of Chroma and (ii) there has not been any material adverse change
in the business, financial condition, operations, results of operations, or
future prospects of Chroma. Since the Most Recent Fiscal Year End, and except
as disclosed on Schedule 5.9, to the Knowledge of Stockholders, Chroma:
(a) has conducted its business in the Ordinary Course of Business and in a
reasonable business manner;
(b) has not disposed of, leased, transferred, assigned or acquired any
material properties or assets except as disclosed herein or in the Ordinary and
Course of Business;
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(c) has not borrowed money or incurred any indebtedness other than ordinary
accounts payable, accrued expenses, accrued liabilities and income taxes
payable incurred in the Ordinary Course of Business;
(d) has not incurred or guaranteed any liability, contingent or otherwise,
except in the Ordinary Course of Business;
(e) has not mortgaged, pledged or otherwise subjected to any Security
Interest, material lien or other encumbrance any of its properties or assets,
or sold any real property or personal property other than in the Ordinary
Course of Business;
(f) has not modified, terminated, canceled or permitted the lapse of any
material lease, agreement, contract, or insurance policy; or
(g) has not granted any wage increase or bonus, entered into any employment,
union or collective bargaining agreement, or made any cash payments or
distributions or transferred any other assets (other than those described on
Schedule 5.6 hereof) to or on behalf of any officer, employee or partner, other
than payment of customary salaries and expenses.
5.10 [Intentionally Omitted.]
5.11 Real Property.
(a) Schedule 5.11 lists and describes briefly all of the real property owned
by Chroma (the "Real Property"). With respect to the Real Property, to the
Knowledge of Stockholders:
(i) Chroma has legal, valid, good and marketable title to all of the Real
Property. No part of the Real Property is subject to any assignment, lease,
license, concession, sublease or other agreement granting to any Person any
right to the possession, use, occupancy or enjoyment of the Real Property.
(ii) The Real Property, and the improvements, buildings and structures
thereon (the "Improvements"), constitute all of the real property used by
Chroma in the conduct of its business, may continue to be used for the
operation of such business as currently operated, and comply with all federal,
state or local building, zoning, health, safety, platting, subdivision or other
statute, ordinance or regulation, or any applicable private restriction. None
of the Real Property or Improvements are subject to "permitted non-conforming
use," "permitted non-conforming structure," "prior non-conforming use" or
"prior non-conforming structure" classifications, and do not encroach on any
easement which may burden the land.
(iii) Other than amounts owed for normal maintenance consistent with past
practices, which amounts will be paid by Chroma in full when due, Chroma does
not owe any money to any architect, contractor, subcontractor or materialmen or
any Person entitled to claim any lien or other charge on any of the Real
Property or any of the Improvements for labor, services or materials performed,
rendered or supplied to or in connection with the Real Property or any of the
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Improvements, and there is no construction or other improvement work being done
at nor are there any construction or other improvement materials being
supplied to the Real Property or any of the Improvements.
(iv) Chroma has received no notice of any pending, threatened, or
contemplated condemnation, expropriation or like proceedings, or of any
administrative agency action, litigation, or other material proceeding of any
kind (nor is there any basis for any such action), affecting the Real Property,
or any part thereof, or of any assessments made or threatened with respect to
the Real Property or any part thereof, or of any sales or other disposition of
the Real Property, or any part thereof, in lieu of condemnation.
(v) To the Knowledge of Stockholders, Chroma has not received notice from any
insurance company or board of fire underwriters requesting the performance of
any work or alteration with respect to the Real Property or any of the
Improvements, or requiring an increase in the insurance rates applicable to the
Real Property or any of the Improvements outside of the ordinary course of
business, consistent with past practice.
(vi) Chroma does not own or hold, and is not obligated under or a party to,
any option, right of first refusal or other contractual right to purchase,
acquire, sell or dispose of the Real Property, or any portion thereof or
interest therein. There are no outstanding options or rights of first refusal
to purchase the Real Property, or any portion thereof or interest therein;
(vii) All of the Improvements are structurally sound. Chroma has received no
notice from any governmental authority that any of the Improvements are prior
nonconforming structures under either the applicable zoning regulations or the
applicable building codes;
(viii) The Real Property and the Improvements are serviced by all necessary
utilities, including water, sewage, gas, electricity and telephone, and
ChromaTech and the Stockholders are not aware of any inadequacies with respect
to such utilities for the operation of Chroma's business consistent with
Chroma's past practices; all water, rail, gas, electrical, steam, compressed
air, telecommunication, sanitary and storm sewage lines and systems and other
similar systems serving the Real Property and/or the Improvements are installed
and operating and are sufficient to enable the Real Property and all of the
Improvements to continue to be used and operated in the manner currently being
used and operated, and any so-called hookup fees or other associated charges
have been fully paid; each such utility or other service is provided by a
public or private utility or service company and enters the Real Property from
an adjacent public street or valid private easement owned by the supplier of
such utility or other service which is part of the Real Property; and except
for recorded and insurable easements in existence on the date hereof and part
of the Real Property, no Improvement or portion thereof is dependent for its
access, operation or any utility service (including, without
13
limitation, water supply and/or disposition of waste water) on any land,
building or other improvement not included in the Real Property.
(b) To the Knowledge of Stockholders, no real property is leased or subleased
by or to Chroma other than approximately 88,000 square feet of space in
Chroma's dyeing and finishing facility at 0000 X. Xxxxx Xxxxxx, Xxxxx Xxx,
Xxxxxxxxxx that Chroma leases to Monterey Carpets, Inc.
5.12 Tangible Assets. To the Knowledge of Stockholders, the buildings,
machinery, equipment, and other tangible assets that Chroma owns and leases are
free from material defects (patent and latent), have been maintained in
accordance with normal industry practice, and are fit for the purpose for which
such assets are being used, are in good operating condition and repair and are
adequate to conduct the business of Chroma as it is presently being conducted
(subject to normal wear and tear).
5.13 Leased Property. To the Knowledge of Stockholders, there are no material
leases, licenses, rental or other agreements by which Chroma is bound other
than a lease agreement pursuant to which Chroma leases approximately 88,000
square feet of space in Chroma's dyeing and finishing facility at 0000 X. Xxxxx
Xxxxxx, Xxxxx Xxx, Xxxxxxxxxx to Monterey Carpets, Inc.
5.14 Contracts. To the Knowledge of Stockholders, Schedule 5.14 contains a
complete and accurate list of all material contracts, agreements, instruments
or other commitments or understandings to which Chroma or its assets are
subject (the "Contracts"). To the Knowledge of Stockholders, each of the
Contracts is valid, in full force and effect and enforceable by Chroma. With
respect to the Partnership Agreement and with respect to the Dyeing and
Finishing Agreement dated as December 17, 1992 and entered into originally by
and between Fabrica International, a California corporation ("Fabrica") and
Monterey Carpets, Inc., a California corporation, ChromaTech or Fabrica, as
applicable, has duly complied in all respects with all provisions of the
agreements and is not in default in any respect as to either of them; no
condition or state of facts exists which, with notice or the passage of time,
or both, would constitute a default by ChromaTech or Fabrica, as applicable,
under these agreements; both agreements are in full force and effect and are
enforceable by ChromaTech and Fabrica, as applicable against the other parties
thereto in all respects. Neither the execution, delivery and performance of
this Agreement nor the consummation of the transactions contemplated hereunder,
will conflict with or cause any default in or breach of any provision of the
Partnership Agreement or said Dyeing and Finishing Agreement, and none of such
actions will grant to any party to any such agreements any cancellation or
termination rights, acceleration rights, buy-out rights or any similar right.
5.15 Litigation. Except as disclosed on Schedule 5.15, to the Knowledge of
Stockholders there is no claim, suit, action, governmental investigation or
litigation, or legal, administrative, arbitration or other proceeding, of any
kind pending, directly relating to or involving, or threatened against, Chroma
(whether as plaintiff or defendant), or its property or business, nor does
ChromaTech or Chroma knows of any ground for any such claim, suit, action,
14
investigation, litigation or proceeding. To the Knowledge of Stockholders,
Chroma is not subject to any order, writ or decree of any court or other
governmental authority.
5.16 Labor Relations. Except to the extent set forth in Schedule 5.16, to the
Knowledge of Stockholders:
(a) Chroma is in compliance in all material respects with all applicable laws
and collective bargaining agreements respecting employment, wages, hours, and
occupational safety and health, and is not engaged in any unfair labor practice
within the meaning of any applicable law;
(b) there is no unfair labor practice, charge or complaint or any other
matter against or involving Chroma pending or threatened before any labor
relations board or equivalent agency having jurisdiction or any court of law or
arbitration board;
(c) there is no labor strike, dispute, slowdown, or stoppage whether actual,
pending or threatened against Chroma;
(d) no certification or decertification question or organizational drive with
respect to a collective bargaining organization exists or has existed within
the past twelve months respecting employees of Chroma; and
(e) no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending against Chroma, or threatened; and
no Basis for any claim therefore exists;
(f) there are no charges, investigations, administrative proceedings or
formal complaints of discrimination (including but not limited to
discrimination based upon sex, age, marital status, race, national origin,
sexual preference, disability, handicap, veteran status, religious affiliation,
or upon any other prohibited Basis) pending or threatened before any federal,
state or local agency or court against Chroma. There have been no audits of the
employment practices of Chroma, and no Basis for any such charges,
investigations, administrative proceedings or formal complaints of
discrimination exists.
5.17 Insurance. To the Knowledge of Stockholders, Chroma owns insurance
policies relating to the conduct of its business or which name Chroma as an
insured and which pertain to its assets, operations, or employees having
coverages and deductibles which are customary in the industry.
5.18 Status of Properties; Violation of Laws; Licenses, etc. To the Knowledge
of Stockholders, neither the physical condition of the properties of Chroma nor
its business or prior or present activities of its business violate or have
violated any applicable laws (including rules, regulations, codes, ordinances,
plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) (including but not limited to any of the foregoing which prohibit
discrimination in employment
15
or involve the protection of the environment or the health and safety of
persons whether or not employees) the violation of which would have an adverse
effect upon the business, financial condition, operations, results of
operations, or fixture prospects of Chroma, and all required material licenses,
approvals, registrations and permits have been obtained and are now in full
force and effect.
5.19 Taxes and Tax Returns. Except as disclosed in Schedule 5.19, to the
Knowledge of Stockholders, Chroma and ChromaTech have filed all federal, state,
local and foreign income and all other tax returns required to be filed by
them (including, but not limited to, any gross receipts, franchise and excise,
sales and use and privilege license tax returns) ("Tax Returns") and each such
return is complete and accurate in all material respects; Chroma and ChromaTech
have paid all taxes of any nature whatsoever, with any related penalties,
interest, deficiencies, assessments, reassessments and liabilities (any of the
foregoing being referred to herein as a "Tax" or "Taxes"), due and payable on
or before the date hereof; there are no claims, assessments or reassessments or
material disputes (including those contested in good faith and for which
adequate reserves have been provided in the Financial Statements) pending
against Chroma or ChromaTech for any alleged deficiency in Tax, nor are there
any threatened Tax claims or assessments against Chroma or ChromaTech or facts
which exist or have existed which would constitute grounds for the assessment
of any taxes with respect to the periods which have not been audited by the
relevant taxing authorities; neither Chroma nor ChromaTech has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to an Tax assessment or deficiency; and Chroma qualifies (and has
since the date of its formation qualified) to be treated as a partnership for
federal income tax purposes.
5.20 Employee Benefit Plans.
(a) Neither ChromaTech nor any ERISA Affiliate of ChromaTech has ever
maintained any Employee Benefit Plan. Except as set forth in Schedule 5.20, to
the Knowledge of Stockholders, the only Employee Pension Benefit Plan which
Chroma or any ERISA Affiliate of Chroma has maintained in the last ten years or
to which it has in the last ten years had any obligation to contribute is the
Employees' 401(k) Salary Savings Plan of Chroma (the "401(k) Plan"). To the
Knowledge of Stockholders:
(i) Every Employee Benefit Plan that Chroma maintains or to which it
contributes or has an obligation to contribute (and each related trust complies
in form and in operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(ii) All required reports and descriptions (including Form 5500 Annual
Reports, summary annual reports, and summary plan descriptions) have been
timely filed and distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of COBRA have been met in all material respects
with respect to each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
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(iii) All contributions (including all employer contributions and employee
salary reduction contributions) have been timely paid to the 401(k) Plan and
all contributions and expenses for any period ending on or before the Closing
Date which are not yet due have been paid to the 401(k) Plan or accrued in
accordance with the past custom and practice of Chroma and in compliance with
ERISA. All premiums or other payments due for all periods ending on or before
the Closing Date have been paid or accrued with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan.
(iv) The 401(k) Plan has received a favorable determination letter from the
Internal Revenue Service that the form of such plan meets the requirements of a
"qualified plan," under Sections 401(a) and 401(k) and neither Chroma nor any
of the Stockholders is aware of any facts or circumstances that could
reasonably result in the revocation of such determination letter.
(v) The market value of assets under the 401(k) Plan equals or exceeds the
present value of all vested and nonvested liabilities thereunder.
(vi) The Stockholders have delivered to Xxxxx correct and complete copies of
the plan documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the three (3) most recent
Form 5500 Annual Reports, and all related trust agreements, insurance
contracts, and other funding agreements which implement each Employee Benefit
Plan.
(b) With respect to each Employee Benefit Plan that Chroma or any ERISA
Affiliate maintains or ever has maintained or to which any of them contributes,
ever has contributed, or ever has been required to contribute or has any
liability (this provisions of this Section 5.20(b) do not apply with respect to
any Employee Benefit Plan during any time that neither Chroma nor any ERISA
Affiliate of Chroma maintained, contributed to, was required to contribute to,
or had any liability with respect to such plan) to the Knowledge of
Stockholders: there have been no nonexempt Prohibited Transactions with respect
to any such Employee Benefit Plan that would result in a liability of Chroma.
(c) To the Knowledge of ChromaTech, neither Chroma nor any ERISA Affiliate of
Chroma contributes to, or has ever contributed to any Multiemployer Plan and
neither Chroma nor any ERISA Affiliate of Chroma has any material liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any withdrawal liability (as
defined in ERISA P4201), under any Multiemployer Plan.
(d) To the Knowledge of ChromaTech, there is no action, suit, grievance,
arbitration or other manner of litigation, or claim with respect to the assets
of any Employee Benefit Plan (other than routine claims for benefits made in
the ordinary course of Employee
17
Benefit Plan administration) pending or threatened or imminent against or with
respect to the Employee Benefit Plan, Chroma, any ERISA Affiliate of Chroma, or
any other Fiduciary (including any action, suit, grievance, arbitration or
other manner of litigation, or claim regarding conduct which allegedly
interferes with the attainment of rights under any Employee Benefit Plan) that
would individually or in the aggregate result in a liabilityof Chroma;
(e) ChromaTech has no Knowledge of any facts which would reasonably be
expected to give rise to any action, suit, grievance, arbitration or other
manner of litigation, or claim with respect to any Employee Benefit Plan other
than routine claims for benefits.
5.21 Change in Business. Except for the fact that Camelot Carpet Xxxxx has
given notice that it may withdraw from Chroma, the result of which may have a
material adverse effect on dollar value and profits, since January 2, 2000, to
the Knowledge of Stockholders there have been no changes in the business
operations of Chroma, including but not limited to, changes with respect to its
products, customers, employees, equipment needs, markets, suppliers, or
legislation to which the business of Chroma is subject, which would or might
have a Material Adverse Effect upon Chroma, its business, its assets or its
prospects.
5.22 Occupational Safety and Health. To the Knowledge of Stockholders, Chroma
is in compliance with all occupational safety and health rules and regulations
applicable to its business operations and/or real property.
5.23 Environmental, Health and Safety Status. Except as set forth in Schedule
5.23, to the Knowledge of the Stockholders, neither the Real Property nor the
operations of Chroma is in material violation of or subject to any liability or
obligation under Environmental, Health and Safety Requirements. In addition, to
the Knowledge of Stockholders
(a) there has been no release, threatened release, application, spill, leak,
discharge, disposal or emission of any Hazardous Material to the air, surface
water, groundwater or soil of the Real Property requiring corrective action and
which is a violation of, any of the Environmental, Health and Safety
Requirements;
(b) Chroma has duly complied in all respects with, and the Real Property is in
compliance with, the Environmental, Health and Safety Requirements;
(c) Chroma does not have any documents or information relating to or
disclosing any release, threatened release, application, spill, leak,
discharge, disposal or emission of any Hazardous Material to the air, surface
water, groundwater or soil of the Real Property; and
(d) Chroma has been issued or has timely applied for and is in compliance in
all material respects with all Permits, a list and copy of which is set forth
on Schedule 5.23.
(e) There is no complaint, order, directive, claim, citation, notice,
information request or investigation by any governmental authority or any other
person or entity with
18
respect to any release, threatened release, application, spill, leak,
discharge, disposal or emission of any Hazardous Material to the air, surface
water, groundwater or soil of the Real Property requiring corrective action and
which is a violation or alleged violation of any Environmental, Health and
Safety Requirement at the Real Property.
(f) Non-hazardous solid waste materials or Hazardous Materials have not been
disposed of or buried at the Real Property.
(g) There has been no storage, treatment, generation, transportation, release,
disposal, spill or discharge of any Hazardous Material by Chroma, or its
predecessors in interest, or by any other person or entity for which Chroma is
or may be held responsible, or which could give rise to any obligation or
liability under Environmental, Health and Safety Requirements.
(h) No underground storage tanks are located under the Real Property. No
Hazardous Materials are located on the Real Property (except for those used in
the Ordinary Course of Business and which are stored and used in compliance
with all Environmental, Health and Safety Requirements).
5.24 Significant Customers and Suppliers. Except as set forth in Schedule
5.24, the Stockholders have no Knowledge of any intention or indication by a
Significant Customer (as defined herein) or Significant Supplier (as defined
herein)to terminate its business relationship with Chroma or to limit or alter
its business relationship with Chroma in any material respect. As used herein,
"Significant Customer" means Monterey Carpets, Inc., a California corporation;
Fabrica International, a California corporation; and Camelot Carpet Xxxxx, a
California corporation. As used herein, "Significant Supplier" means any of the
ten (10) largest suppliers of Chroma, measured in terms of purchasing volume
in dollars for the year ended January 2, 2000, as listed on Schedule 5.24.
5.25 Intellectual Property.
To the Knowledge of the Stockholders:
(a) Except as set forth in Schedule 5.25, Chroma owns or has the right to use
in its business pursuant to an assignable written license, sublicense or
agreement the Intellectual Property which it uses in its business or purports
to own. Except as set forth in Schedule 5.25, each item of Intellectual
Property it uses in its business will be owned or available for use by Chroma
on identical terms and conditions immediately subsequent to the Closing
hereunder. Chroma has taken all necessary action to protect each of the patent
and registered trademarks it owns and or uses in its business. Except as set
forth in Schedule 5.25, no amendments, responses, fees or any other action
related to any Intellectual Property are due or will be due within sixty (60)
days after the Closing.
(b) With respect to Intellectual Property, Chroma has not interfered with,
infringed upon, or misappropriated, any Intellectual Property rights of third
parties, or has not ever received any charge, complaint, claim, demand, or
notice alleging any such interference,
19
infringement, misappropriation, or violation of any Intellectual Property
rights of a third party (including any claim that Chroma must license or
refrain from using any Intellectual Property rights of any third party) which
has not been resolved. No third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights owned by Chroma.
5.26 No Liquidating Events; Activities. To the Knowledge of the Stockholders,
no event has occurred and is continuing that would result in the liquidation of
Chroma (a "Liquidating Event") and no event which, with the giving of notice
or lapse of time or both, would become a Liquidating Event has occurred and is
continuing. To the Knowledge of the Stockholders, Chroma has not engaged in any
business or activity of any kind, other than the business and activities
expressly contemplated and permitted by the Partnership Agreement.
5.27 Preferred Return Period. The Preferred Return Period (as defined in the
Partnership Agreement) has expired.
5.28 Disclosure. Neither this Agreement nor, to the Knowledge of Stockholders,
any other document furnished to Xxxxx by the Stockholders in connection with
this Agreement and the transactions contemplated hereby contains any untrue
statement of material fact or omits the statement of a material fact required
to be stated in order to make the statements contained herein and therein not
misleading. There is no fact peculiar to Chroma of which the Stockholders have
Knowledge which materially and adversely affects or may in the future
materially and adversely affect, the business, assets or condition, financial
or otherwise, of Chroma, which is not disclosed herein or in the other
documents furnished to Xxxxx.
Section 6. Representations and Warranties by Xxxxx.
Xxxxx hereby represents, warrants, covenants and agrees to and with
Stockholders as follows:
6.1 Existence, Power and Good Standing. Xxxxx is a corporation validly
existing and in good standing under the laws of the State of Tennessee.
6.2 Authorization. This Agreement and its execution, delivery and performance
have been duly authorized by all necessary corporate action on the part of
Xxxxx and is within its corporate powers. This Agreement has been duly executed
and delivered by Xxxxx and constitutes the legal, valid and binding agreement
of Xxxxx, enforceable in accordance with its terms. All consents on the part of
Xxxxx necessary to consummate the transactions contemplated herein shall have
been obtained prior to or on the Closing Date and no consent or approval of, or
declaration, filing or registration with, any non-governmental third party or
any governmental authority is required to be obtained by Xxxxx in connection
with the execution of this Agreement or for the consummation of the
transactions contemplated hereby. Neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated hereunder, will conflict with or cause any default in or breach of
any provision of Dixie's Charter, By-laws or any contract, agreement or
commitment to which Xxxxx is a party or by which Xxxxx is bound, and none of
such actions will grant to any party to any such contract,
20
agreement or commitment any cancellation or termination rights, acceleration
rights, or any similar right.
6.3 Brokers' and Finders' Fees. Neither Xxxxx nor anyone acting on its behalf
has done anything to cause or incur any liability to any party for any brokers'
or finders' fees or the like in connection with this Agreement or any
transaction contemplated hereby.
6.4 Investment. Xxxxx is acquiring the Shares for investment and not with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act of 1933, as amended.
6.5 Accuracy of SEC Filings. To the Knowledge of Xxxxx, the filings made by
Xxxxx pursuant to the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, through the date hereof complied in all
material respects with all applicable requirements of said Acts and the General
Rules and regulations promulgated thereunder, respectively, and did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
6.6 Disclosure. The representations and warranties contained in this Section 6
do not contain any untrue statement of material fact or omit the statement of
a material fact required to be stated in order to make the statements contained
in Section 6 not misleading.
6.7 No Knowledge of Breach. Xxxxx has no actual Knowledge of any fact,
circumstance or occurrence unknown to Stockholders or ChromaTech that would
cause any of the representations or warranties of Stockholders set forth in
Section 5 to be inaccurate or false. Without limiting the preceding sentence,
to the extent that Xxxxx has actual Knowledge of any fact, circumstance or
occurrence which is unknown to Stockholders or ChromaTech that would cause any
of the representations or warranties of Stockholders set forth in Section 5 to
be inaccurate or false and does not disclose the same to the Stockholders prior
to the Closing, Xxxxx hereby waives its right to seek indemnification pursuant
to Section 10 in respect of such inaccuracy or falseness.
Section 7. Covenants.
7.1 Waiver of Claims. Stockholders hereby release ChromaTech and forever
discharge it upon the Closing from any and all actions, claims, judgments and
demands whatsoever that such Stockholders may have as a result of any reason or
cause whatsoever whether in law or equity, known or unknown, that have or may
have resulted from any ocurrence or event that took place prior to the Closing.
7.2 Taxes. Stockholders shall cause to be filed by Chroma any federal, state
and local income and other tax return (including, but not limited to, any gross
receipts, franchise and excise, sales and use, privilege license taxes) for
any period or partial period ending on or prior to the Closing Date not filed
as of the date hereof, and each such tax return shall be complete and accurate
in all material respects.
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7.3 Press Releases and Public Announcements. The Stockholders acknowledge that
since Xxxxx is a publicly traded company, and Stockholders covenant that they
shall not (and shall use reasonable best efforts without expending more than
nominal amounts to cause Chroma not to) issue any press release or make any
public statement relating to this transaction without the prior approval of
Xxxxx.
7.4 Reimbursement of Taxes. If (i) a Section 338(h)(10) Election made by
Stockholders and Xxxxx or (ii) an election made by the partners of Chroma at
the request of Xxxxx under Section 754 of the Code during the taxable year in
which the purchase of Chroma occurs causes the taxes payable by Stockholders to
exceed the taxes that would have been payable by them if no such election had
been made, then Xxxxx shall (a) promptly reimburse Stockholders for such taxes
plus (b) any Taxes imposed with respect to the receipt of any payments pursuant
to Section 7.4(a).
7.5 Section 338 Election.
(a) Stockholders and Xxxxx shall, at Dixie's election and at Dixie's sole
cost and expense, take all actions necessary and appropriate (including filing
such forms, returns, elections, schedules and other documents as may be
required), to effect and preserve a timely Section 338(h)(10) election with
respect to the Shares (including a related election under Section 338(g) of the
Code) in accordance with Section 338 of the Code (and, at Dixie's election,
any corresponding elections under state or local tax law) (collectively, a
"Section 338(h)(10) Election"), as soon as practicable after the Closing Date,
but not later than the date which is the latest date for making such Section
338(h)(10) Election, and from time to time thereafter, and, if Xxxxx so elects,
Stockholders and Xxxxx shall report the sale of the Shares pursuant to this
Agreement consistent with the Section 338(h)(10) Election and shall take no
position contrary thereto or inconsistent therewith in any return, any
discussion with or proceeding before any taxing authority, or otherwise.
(b) Stockholders and Xxxxx agree that Xxxxx shall perform or, cause to be
performed an initial valuation of assets and allocation of purchase price of
the Shares for purposes of Section 338 of the Code in accordance with section
1060 of the Code. The valuations and allocations determined pursuant to this
Section 7.5 shall be used for purposes of all relevant tax returns, reports and
filings. The Stockholders and Xxxxx shall jointly allocate the Purchase Price
in accordance with Section 1060 of the Code. The Stockholders and Xxxxx hereby
undertake and agree to file timely any information that may be required to be
filed pursuant to Treasury Regulations promulgated under Section 1060(b) of the
Code, and shall use the allocation determined pursuant to this Section 7.5 in
connection with the preparation of Internal Revenue Service Form 8594 as such
form relates to the transactions contemplated by this Agreement. Neither the
Stockholders nor Xxxxx shall file any tax return or other document or otherwise
take any position which is inconsistent with the allocation determined
pursuant to this Section 7.5 except as may be adjusted by subsequent agreement
following an audit by the Internal Revenue Service or by court decision.
22
7.6 Tax Basis Step Up Election. The Stockholders shall have agreed and will
use their reasonable best efforts (without expending more than nominal amounts)
to cause other partners of Chroma to file an election to step up the basis in
the Chroma assets under Section 754 of the Code for the taxable year which
includes the purchase of the Chroma Interest by Xxxxx.
Section 8. Indemnification.
8.1 Survival of Representations and Warranties. All representations and
warranties made in this Agreement or contained in any certificate or other
instrument delivered pursuant hereto shall survive the delivery of the Shares
(notwithstanding any investigation at any time made by or on behalf of Xxxxx or
Stockholders) for a period of eighteen (18) months from the Closing Date with
the exception of the representations and warranties set forth in Section 5.1
(concerning title to the shares), the survival of which shall not be subject to
the aforesaid limitation or any other limitation, and with the exception of
the representations and warranties contained in Section 5.23 (concerning
Environmental, Health and Safety Requirements) which representations and
warranties shall extend for three (3) years and the representations and
warranties contained in Section 5.19 (concerning Taxes and Tax Returns) which
representations and warranties shall extend for the duration of the statute of
limitations relating thereto. Any claim for indemnification shall be initiated
during the period of survival of the representation, warranty, covenant or
agreement to which it relates by the filing of a notice of claim. Expiration
of such eighteen (18) month period, three (3) year period or statutory period
of limitation (whichever is applicable) subsequent to the filing of any claim
hereunder and to which such period is applicable shall not terminate any such
claim.
8.2 Indemnification by Stockholders. Except to the extent waived by Xxxxx,
Stockholders agree severally and not jointly to defend, indemnify and hold
Xxxxx harmless from and against and with respect to any and all loss, damage,
liability, deficiency, cost, obligation, or expense, including reasonable
attorneys' fees and court costs resulting from or with respect to (i) a breach
of any representation or warranty of Stockholders contained in this Agreement
or any certificate or document delivered to Xxxxx by Stockholders pursuant to
this Agreement; and (ii) the failure of Stockholders to perform or comply with
any covenant, agreement or obligation required by this Agreement to be
performed or complied with by Stockholders (collectively, "Losses"). Each claim
for Losses (as distinguished from claims to defend) shall, if not paid when
due, bear interest at a rate equal to ten percent (10%) from the date the
Stockholders are required to pay such claim until the date such claim is
satisfied in full; provided, that any claim for indemnity made with respect to
this Section 10.2 must be made by Xxxxx by notice in accordance with Section
12.6 hereof within the applicable periods of time as set forth in Section 10.1.
Expiration of the applicable limitation period subsequent to the filing of any
claim hereunder and to which such period is applicable shall not terminate any
such claim.
Notwithstanding anything else to the contrary contained in this Section 8.2,
the obligations of the Stockholders shall be limited as follows:
(a) Stockholders shall not be required to indemnify Xxxxx (A) for any
individual Loss which is less than $5,000 and (B) until the aggregate amount of
all Losses hereunder (together with Losses incurred under the Fabrica
Agreement) exceeds $1,000,000 (after which point
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Stockholders shall be obligated to indemnify Xxxxx from and against further
Losses, subject to (A) immediately above, in excess of such amount) (all Losses
meeting both (A) and (B) being "Eligible Losses"); and
(b) The maximum aggregate liability of the Stockholders under this Section 8.2
shall be limited to $3,425,000 (apportioned among the Stockholders based on
the relevant percentages set forth in Schedule 8.2) less any Losses paid under
the Fabrica Agreement (the "First Phase Limit"); provided, however, that if the
aggregate amount of Eligible Claims that are timely made by Xxxxx exceeds
$3,425,000 (such excess amount, "Excess Eligible Losses") and if the Sales
Contingency (as defined in the Fabrica Agreement) is met, that portion of
Excess Eligible Losses up to an additional maximum amount of $8,575,000
(apportioned among the Stockholders based on the relevant percentages set forth
in Schedule 8.2) less any Losses under the Fabrica Agreement not applied to
the First Phase Limit shall be deferred (the "Deferred Losses"), without a
claim for interest during the deferral period, until the later to occur of (i)
the payment of the Contingent Sales Payment (as defined in the Fabrica
Agreement) (at which time the Deferred Losses shall be setoff against the
Contingent Sales Payment) and (ii) the final determination of such Excess
Eligible Loss which amount shall be paid in immediately available funds within
five (5) Business days thereafter;
provided, however, that the limitations contained in Sections 8.2(a) and
8.2(b) shall not apply to (1) any breach of the representations made in Section
5.1, the first sentence of Section 5.2, Section 5.7, or (2) any Losses in
respect of Section 8.2(ii) above.
8.3 Claims by Xxxxx.
(a) Notice of Claim. When Xxxxx determines in good faith that it has a claim
or potential claim for indemnification pursuant to this Section it shall
deliver notice thereof to Stockholders at the addresses specified in Section
10.6. Such notice shall set forth the section or sections under this Agreement
pursuant to which such claim or potential claim is made and the amount or
estimate of the claim (provided, however, that Stockholders shall not be
prejudiced by any inaccuracy of any such estimate) and shall state, in
reasonable detail, the basis for such claim or potential claim. Upon
resolution of the claim then the amount attributable to the claim shall be paid
to Xxxxx by Stockholders by wire transfer of immediately available funds
within five (5) Business Days thereafter, the Stockholders being severally
liable to Xxxxx for said amount. Nothing herein shall be deemed to prevent
Xxxxx from making a claim for indemnification hereunder for potential or
contingent claims or demands provided the notice sets forth the specific basis
for any such potential or contingent claim or demand to the extent then
feasible and Xxxxx has reasonable grounds to believe that such a claim or
demand may be made, provided that the Stockholders shall have no obligation to
pay any such potential or contingent claim and no interest shall commence
accruing thereon until such claim becomes an actual quantifiable claim.
Expiration of the applicable limitation period subsequent to the filing of any
claim hereunder and to which such period is applicable shall not terminate any
such claim.
24
(b) Claim Resolution. Stockholders shall have a period of twenty (20) days
after receipt of a notice of claim within which to notify Xxxxx of its
disagreement with all or a portion of said claim or, in the case of a potential
or contingent claim, the estimated amount of such claim. Notice to Xxxxx shall
be provided in accordance with Section 10.6 hereof. If Xxxxx has not received
notice of disagreement from Stockholders within the 20-day period, the amount
of the claim shall be compensable in full. If Xxxxx receives within the 20-day
period a notice of disagreement regarding only a portion of a claim, the
portion of the claim, to the extent such claim is actual as opposed to
potential or Most Recent Balance Sheet contingent, not subject to disagreement
shall be compensable in accordance with this Section. If Xxxxx and Stockholders
are unable to resolve such matter within thirty (30) days of Stockholders'
notice, then the dispute may be resolved by arbitration in accordance with
Section 10.5 or by agreement between the parties. The prevailing party to any
such arbitration shall be entitled to indemnification for its reasonable
attorneys' fees and filing fees to the extent awarded by the arbitrator or
arbitrators. To the extent Xxxxx timely delivers a notice of a potential or
contingent claim, Xxxxx shall deliver a subsequent notice to the Stockholders
in accordance with Section 10.6 on or following the date such claim becomes an
actual quantifiable claim. Each such subsequent notice shall, for purposes of
this Section 8.3(b), be treated the same as other notices delivered pursuant to
this Section 8.3(b), i.e., the Stockholders shall have the right to dispute
and arbitrate all or a portion of said claim.
8.4 Indemnification by Xxxxx. Xxxxx agrees to defend, indemnify and hold
Stockholders harmless from and against and with respect to any and all loss,
damage, liability, deficiency, cost, obligation, or expense, including
reasonable attorneys' fees and court costs resulting from or with respect to
(i) a breach of any representation or warranty of Xxxxx contained in this
Agreement or any certificate or document delivered to Stockholders by Xxxxx
pursuant to this Agreement; and (ii) the failure of Xxxxx to perform or comply
with any covenant, agreement or obligation required by this Agreement to be
performed or complied with by Xxxxx (collectively, "Stockholder Losses"). Each
claim for Stockholder Losses (as distinguished from claims to defend) shall, if
not paid when due, bear interest at a rate equal to ten percent (10%) from the
date Xxxxx is required to pay such claim until the date such claim is
satisfied in full; provided, that any claim for indemnity made with respect to
this Section 8.4 must be made by Stockholders by notice in accordance with
Section 10.6 hereof within the applicable periods of time as set forth in
Section 8.1. Expiration of the applicable limitation period subsequent to the
filing of any claim hereunder and to which such period is applicable shall not
terminate any such claim.
Notwithstanding anything else contained herein to the contrary, Xxxxx shall
not be required to indemnify Stockholders (A) for any individual Stockholder
Loss which is less than $5,000 (B) until the aggregate amount of all
Stockholder Losses hereunder (together with Stockholder Losses incurred under
the Fabrica Agreement) exceeds $1,000,000 (after which point Xxxxx shall be
obligated to indemnify Stockholders from and against further Stockholder Losses
in excess of such amount), and (C) to the extent the aggregate Stockholder
Losses
25
hereunder do not exceed $12,000,000; provided; however, provided, however, that
the limitations contained in the foregoing sentence shall not apply to any
Stockholder Losses in respect of Section 8.4(ii) above.
8.5 Claims by Stockholders.
(a) Notice of Claim. When any Stockholder determines in good faith that he or
it has a claim or potential claim for indemnification pursuant to this Section
he or it shall deliver notice thereof to Xxxxx at the address specified in
Section 10.6. Such notice shall set forth the section or sections under this
Agreement pursuant to which such claim or potential claim is made and the
amount or estimate of the claim and shall state, in reasonable detail, the
basis for such claim or potential claim. Upon resolution of the claim then the
amount attributable to the claim shall be paid to Stockholders by Xxxxx by wire
transfer of immediately available funds within five (5) Business Days
thereafter, Xxxxx being liable to Stockholders for said amount. Nothing herein
shall be deemed to prevent Stockholders from making a claim for indemnification
hereunder for potential or contingent claims or demands provided the notice
sets forth the specific basis for any such potential or contingent claim or
demand to the extent then feasible and Stockholders have reasonable grounds to
believe that such a claim or demand may be made, provided that Xxxxx shall have
no obligation to pay any such potential or contingent claim and no interest
shall commence accruing thereon until such claim becomes an actual quantifiable
claim. Expiration of the applicable limitation period subsequent to the filing
of any claim hereunder and to which such period is applicable shall not
terminate any such claim.
(b) Claim Resolution. Xxxxx shall have a period of twenty (20) days after
receipt of a notice of claim within which to notify Stockholders of its
disagreement with all or a portion of said claim or, in the case of a potential
or contingent claim, the estimated amount of such claim. Notice to Xxxxx shall
be provided in accordance with Section 10.6 hereof. If Stockholders have not
received notice of disagreement from Xxxxx within the 20-day period, the amount
of the claim shall be compensable in full. If Stockholders receive within the
20-day period a notice of disagreement regarding only a portion of a claim, the
portion of the claim, to the extent such claim is actual as opposed to
potential contingent, not subject to disagreement shall be compensable in
accordance with this Section. If Xxxxx and Stockholders are unable to resolve
such matter within thirty (30) days of Stockholders' notice, then the dispute
may be resolved by arbitration in accordance with Section 10.5 or by agreement
between the parties. The prevailing party to any such arbitration shall be
entitled to indemnification for its reasonable attorneys' fees and filing fees
to the extent awarded by the arbitrator or arbitrators. To the extent
Stockholders timely deliver a notice of a potential or contingent claim,
Stockholders shall deliver a subsequent notice to Xxxxx in accordance with
Section 10.6 on or following the date such claim becomes an actual quantifiable
claim. Each such subsequent notice shall, for purposes of this Section
8.5(b), be treated the same as other notices delivered pursuant to this
26
Section 8.5(b), i.e., Xxxxx shall have the right to dispute and arbitrate
all or a portion of said claim.
8.6 Third Party Claims Immediately following the receipt of notice by a Party
of a claim from a third party (a "Third Party Claim"), the party receiving the
notice of the Third Party Claim shall (i) notify the other party of its
existence setting forth with reasonable specificity the facts and circumstances
of which such party has received notice and (ii) if the Party giving such
notice is a Party that is entitled to indemnification hereunder in respect of
such Third Party Claim (an "Indemnified Party"), specifying the basis hereunder
upon which the Indemnified Party's claim for indemnification is asserted. The
Indemnified Party may, upon reasonable notice, tender the defense of a Third
Party Claim to the Party required to provide indemnification (an "Indemnifying
Party"). If (a) the defense of a Third Party Claim is so tendered and within
thirty (30) days thereafter such tender is accepted without qualification by
the Indemnifying Party or (b) within thirty (30) days after the date on which
written notice of a Third Party Claim has been given pursuant to this Section
8.6, the Indemnifying Party shall acknowledge in writing to the Indemnified
Party and without qualification its indemnification obligations as provided in
this Section 8; then, except as hereinafter provided, the Indemnified Party
shall not, and the Indemnifying Party shall, have the right to contest, defend,
litigate or settle such Third Party Claim. The Indemnified Party shall have
the right to be represented by counsel at its own expense in any such contest,
defense, litigation or settlement conducted by the Indemnifying Party provided
that the Indemnified Party shall be entitled to reimbursement therefor if the
Indemnifying Party shall lose its right to contest, defend, litigate and settle
the Third Party Claim as herein provided. The Indemnifying Party shall lose
its right to defend, contest, litigate and settle the Third Party Claim if it
shall fail to diligently contest the Third Party Claim. So long as the
Indemnifying Party has not lost its right and/or obligation to defend, contest,
litigate and settle as herein provided, the Indemnifying Party shall have the
exclusive right to contest, defend and litigate the Third Party Claim and shall
have the exclusive right, in its discretion exercised in good faith, and upon
the advice of counsel, to settle any such matter, either before or after the
initiation of litigation, at such time and upon such terms as it deems fair and
reasonable, provided that at least ten (10) days prior to any such settlement,
written notice of its intention to settle shall be given to the Indemnified
Party. All expenses (including without limitation reasonable attorneys' fees)
incurred by the Indemnifying Party in connection with the foregoing shall be
paid by the Indemnifying Party. Notwithstanding the foregoing, in connection
with any settlement negotiated by an Indemnifying Party, no Indemnified Party
shall be required by an Indemnifying Party to (x) enter into any settlement
that does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to the Indemnified Party of a release from all liability
in respect of such claim or litigation, (y) enter into any settlement that
attributes by its terms liability to the Indemnified Party or (z) consent to
the entry of any judgment that does not include as a term thereof a full
dismissal of the litigation or proceeding with prejudice. No failure by an
Indemnifying Party to acknowledge in writing its indemnification obligations
under this Section 8 shall relieve it of such obligations to the extent they
exist. If an Indemnified Party is entitled to indemnification against a Third
Party Claim, and the Indemnifying Party fails to accept a tender of, or assume,
the defense of a Third Party Claim pursuant to this Section 8.6, or if, in
accordance with the foregoing, the Indemnifying Party shall lose its right to
contest, defend, litigate and settle such a Third Party Claim, the Indemnified
Party shall have the right, without prejudice to its right of indemnification
hereunder, in its
27
discretion exercised in good faith and upon the advice of counsel, to contest,
defend and litigate such Third Party Claim, and may settle such Third Party
Claim, either before or after the initiation of litigation, at such time and
upon such terms as the Indemnified Party deems fair and reasonable, provided
that at least ten (10) days prior to any such settlement, written notice of its
intention to settle is given to the Indemnifying Party. If, pursuant to this
Section 10.6, the Indemnified Party so contests, defends, litigates or settles
a Third Party Claim, for which it is entitled to indemnification hereunder as
hereinabove provided, the Indemnified Party shall be reimbursed by the
Indemnifying Party for the reasonable attorneys' fees and other expenses of
defending, contesting, litigating and/or settling the Third Party Claim which
are incurred from time to time, forthwith following the presentation to the
Indemnifying Party of itemized bills for said attorneys' fees and other
expenses.
8.7 Certain Tax Matters. From and after the Closing, Xxxxx shall have the
exclusive obligation and authority to file or cause to be filed all Tax Returns
for all taxable years or other taxable periods of ChromaTech. Xxxxx shall
allow Stockholders to review and participate in the preparation of such Tax
Returns and the filing of any such Tax Returns that indicate a Basis for a
claim for a Tax, penalty and/or interest liabilities for which Stockholders are
obligated to indemnify Xxxxx under this Section 8 (a "Tax Claim") and any such
filing shall require the consent of the Stockholders which shall not be
unreasonably withheld. Likewise Stockholders shall have the right to
participate in any tax audit and/or proceeding which involves, in whole or in
part, a Tax Claim.
Section 9. Miscellaneous.
9.1 Binding Effect. This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that Xxxxx shall not assign this Agreement or its
obligations hereunder (except to a wholly owned entity whose performance is
guaranteed by Xxxxx) without the prior written consent of the Stockholders
9.2 Governing Law. This Agreement shall be deemed to be made in, and in any
and all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the State of California.
9.3 Survival of Representations. Subject to Section 8.1, all representations,
warranties, covenants and agreements (including indemnification) made by the
parties in this Agreement and pursuant to the terms hereof shall survive the
consummation of the transactions contemplated by this Agreement,
notwithstanding any investigation heretofore or hereafter made by any of them
or on behalf of any of them.
9.4 Expenses. Each party hereto shall pay the expenses incurred by it in
connection with the preparation and execution of this Agreement and in
connection with the transactions contemplated hereby; provided, however, that
Xxxxx, on the one hand, and Stockholders, on the other hand, shall share
equally in any and all filings fees required by the Xxxx-Xxxxx-Xxxxxx Act.
28
9.5 Arbitration. Any dispute between the parties concerning this Agreement
shall be submitted to binding arbitration before a single arbitrator in
accordance with the following provisions:
(a) If a dispute arises concerning this Agreement, the disputed shall be
resolved through binding and non-appealable arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association (the
"Rules"), except where the Rules conflict with the provisions of this Section
9.5, in which event the provisions of this Section 12.5 shall prevail. The
arbitration shall be before one (1) arbitrator selected by the parties, or if
the parties cannot agree upon a single arbitrator within thirty (30) days of a
party giving notice to the other of a proposed choice for an arbitrator, then
by a single arbitrator selected by the New York City office of the American
Arbitration Association, who shall be a person (i) who is admitted to practice
law in the State of New York, (ii) who is a partner in a law firm having at
least one hundred attorneys, and (iii) who is familiar with the terms of stock
purchase agreements entered into in the context of acquisitions. Any arbitrator
so appointed shall be neutral and subject to disqualification for the reasons
specified in Section 19 of the Rules.
(b) Each party shall pay the fees of his or its own attorneys, expenses of
witnesses and all other expenses connected with the preparation and
presentation of such party's case. The cost of the arbitration, including the
cost of the record or transcripts thereof, if any, administrative fees, and all
other fees involved, shall be shared equally, unless the arbitrators otherwise
direct.
(c) The parties agree to request that the arbitrator appointed pursuant to
the procedure agreed upon above shall, as soon as reasonably practicable after
his or her appointment, and after consultation with the parties, set an
arbitration date of no later than thirty (30) days after his or her
appointment. If that arbitrator is unable to conduct the arbitration during
such 30-day period then the parties shall select a new arbitrator in accordance
with Section 9.5(b).
(d) The arbitration shall be conducted pursuant to the Rules, as then in
effect. Without limitation of the arbitrator's general authority, the
arbitrator shall have the right to order reasonable discovery in accordance
with the California Rules of Civil Procedure. Conformity to the legal rules of
evidence shall not be required in the arbitration. At any oral hearing of
evidence in connection with the arbitration, each party thereto or its legal
counsel shall have the right to examine its witnesses and to cross-examine the
witnesses of any opposing party. No evidence of any witness shall be presented
in written form unless the opposing party shall have the opportunity to
cross-examine such witness, except as the parties to the dispute otherwise
agree in writing or except under extraordinary circumstances where the
interests of justice require a different procedure.
(e) The decision of the arbitrator shall be binding upon all parties and no
appeal may be taken therefrom; provided, however, that no decision by such
arbitrator shall include the award of punitive damages. The decision of the
arbitrator shall be enforced and honored by the parties hereto without the
necessity of confirmation by a court. The parties hereby waive, to the
29
extent permitted by law, any rights to appeal or to review of any such decision
by any court or tribunal.
(f) This arbitration shall be conducted in New York, New York. In the event a
party desires to obtain judicial confirmation of an arbitration award, the
parties consent to the exclusive jurisdiction of the appropriate state court in
New York, New York for the entry and enforcement of a judgment upon any
arbitration award rendered in connection with any state law, and of the United
States District Court for the Southern District of New York, for the entry and
enforcement of judgment upon any arbitration award rendered in connection with
any federal law, and the parties agree to both subject matter and in personam
jurisdiction for those purposes.
(g) Notwithstanding any provision of this Section, the requirement to
arbitrate disputes under this Section shall not apply to any application for
interim injunctive or other equitable relief from any court of competent
jurisdiction with respect to this Agreement or any matter it contemplates.
9.6 Notices, Demands and Communications. Any and all notices or demands
permitted or required to be made under this Agreement shall be in writing
signed by the Party giving such notice or demand, and shall be delivered
personally, or sent by (i) facsimile transmission, (ii) recognized overnight
delivery service or (iii) registered or certified mail to the other Party or
Parties at the address or addresses set forth below, or at such other address
or addresses as may be supplied in writing pursuant to the terms of this
section. The recipient of such notice shall be deemed to have received the
notice (i) on the date of delivery or the date of transmission if the notice
was personally delivered or sent by facsimile transmission on a Business Day
(or if not a Business Day then the next succeeding Business Day), (ii) on the
Business Day after dispatch if the notice was sent by recognized overnight
delivery service (and marked for delivery on the next Business Day) or (iii)
five (5) days after dispatch if sent by registered or certified mail. For
purposes of this Agreement, a "Business Day" is 8 A.M. to 5:30 P.M. Eastern
Time, on any day when the Federal Reserve Bank in Atlanta, Georgia and in San
Francisco California are both open for business. The rejection or inability to
deliver because of a change of address of which no notice has been given shall
not effect the validity of any notice or demand sent in accordance with the
provisions hereof. For purposes of this Agreement:
If to Xxxxxxxx:
Xxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxxx, XX 00000
If to the Xxxxx
Xxxxxx Xxxxx
0 Xxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
30
In each case with a copy to:
Xxxx X. Xxxx
White & Case LLP
000 Xxxx Xxxxx Xxxxxx, 00'x Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Dixie:
The Xxxxx Group, Inc.
0000 Xxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx X Xxxxxx
Facsimile: (000) 000-0000
In each case with a copy to:
Xxxxx X. Xxxxxxxxx, Xx., Esq.
Xxxx, Xxxxxxx & Xxxxxxxx, P.C.
0000 XxxXxxxx Xxxx Xxxx.
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
9.7 Schedules and Exhibits. The schedules and exhibits referenced in this
Agreement when delivered as set forth herein will become a part of this
Agreement by reference.
9.8 Headings. The section and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.9 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
9.10 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter. This Agreement may be modified or amended only by a written
instrument signed by each of the Parties hereto. The actions, course of dealing
or customs of the Parties hereto shall not operate to modify this Agreement
except in conformity with the preceding sentence.
9.11 Severability. If any provision of this Agreement or the application
thereof to any person, entity, or circumstance shall be invalid or
unenforceable to any extent, then such
31
provision or application shall be modified to the minimum extent necessary to
render it valid and enforceable, and the remainder of the Agreement and the
application of such provisions to the parties hereto and the transactions
contemplated hereby shall not be affected and shall be enforced to the greatest
extent permitted by law, unless such provision cannot be modified without
materially impairing the ability of the respective Parties to enjoy the benefit
of their respective bargain hereunder.
9.12 Interpretation. Should the provisions of this Agreement require judicial
interpretation, it is agreed that the judicial body interpreting or construing
the same shall not apply the assumption that the terms hereof shall be more
strictly construed against one party by reason of the rule of construction that
an instrument is to be construed more strictly against the party which itself
or through its agents prepared the same, it being agreed that the agents of
both parties have participated in the preparation hereof equally.
9.13 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any person or entity other than the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
above written.
THE XXXXX GROUP, INC.
By: /s/ Xxxx X. Xxxxxx
Title: /s/ V.P. & CFO
Attest: /s/ Xxxxxx X. Xxxxxxxx, Xx.
Title: /s/ Attorney
STOCKHOLDERS:
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
32
EXHIBIT A
Xxxxx X. Xxxxxxxx 5,000 shares no par value common stock
Xxxxxx X. Xxxxx 5,000 shares no par value common stock
33
