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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
WESTPOINT ▇▇▇▇▇▇▇ INC.
CMI INDUSTRIES, INC.
DATED
JANUARY 5, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE OF ASSETS......................................................................................1
Section 1.1 The Purchase...........................................................................1
Section 1.2 Excluded Assets........................................................................3
Section 1.3 Assumed Liabilities....................................................................4
Section 1.4 Excluded Liabilities...................................................................4
ARTICLE II AMOUNT AND PAYMENT OF PURCHASE PRICE...................................................................6
Section 2.1 Amount of Purchase Price...............................................................6
Section 2.2 Payment of Purchase Price; Establishment of an Escrow..................................6
Section 2.3 Adjustment to Purchase Price...........................................................7
Section 2.4 Prorations.............................................................................8
Section 2.5 Transfer Expenses......................................................................9
Section 2.6 Allocation of Purchase Price...........................................................9
ARTICLE III CLOSING...............................................................................................9
Section 3.1 Date of Closing........................................................................9
Section 3.2 All Proceedings........................................................................9
Section 3.3 Certain Consents......................................................................10
Section 3.4 Further Assurances....................................................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................10
Section 4.1 Due Organization; Good Standing; Qualification........................................10
Section 4.2 Due Authority; Due Execution and Delivery; Binding Effect.............................11
Section 4.3 No Conflicts; Consents................................................................11
Section 4.4 Financial Statements..................................................................11
Section 4.5 Litigation; Compliance with Laws......................................................12
Section 4.6 Permits...............................................................................12
Section 4.7 Taxes.................................................................................12
Section 4.8 Contracts.............................................................................13
Section 4.9 Absence of Adverse Consequences.......................................................14
Section 4.10 Employee Benefit Plans and Employee Relations.........................................14
Section 4.11 [Omitted].............................................................................16
Section 4.12 [Omitted].............................................................................16
Section 4.13 Intangible Property; Intellectual Property............................................16
Section 4.14 Title to Purchased Assets.............................................................17
Section 4.15 Inventory.............................................................................18
Section 4.16 Absence of Changes....................................................................18
Section 4.17 Environmental Matters.................................................................19
Section 4.18 Substantial Customers and Suppliers...................................................21
Section 4.19 Accounts Receivable...................................................................21
Section 4.20 Insurance.............................................................................21
Section 4.21 No Guarantees.........................................................................22
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Section 4.22 Books and Records.....................................................................22
Section 4.23 Brokers...............................................................................22
Section 4.24 Full Disclosure.......................................................................22
Section 4.25 Definition of "knowledge".............................................................22
Section 4.26 Definition of "material" and "Material Adverse Effect"................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER................................................................23
Section 5.1 Due Organization; Good Standing.......................................................23
Section 5.2 Due Authority; Due Execution and Delivery; Binding Effect.............................23
Section 5.3 No Conflicts; Consents................................................................23
Section 5.4 Litigation............................................................................24
Section 5.5 Brokers...............................................................................24
Section 5.6 Full Disclosure.......................................................................24
ARTICLE VI FURTHER AGREEMENTS OF THE PARTIES.....................................................................24
Section 6.1 Preservation of Records...............................................................24
Section 6.2 Employee and Employee Benefit Matters.................................................25
Section 6.3 Noncompetition........................................................................25
Section 6.4 Remittances by Seller and Buyer.......................................................26
Section 6.5 Cooperation...........................................................................26
Section 6.6 Facility Lease........................................................................26
Section 6.7 Systems Support.......................................................................26
Section 6.8 Replacement of Existing Letters of Credit. Contemporaneously herewith,
Seller and Buyer are entering into a letter agreement
regarding certain letters of credit...................................................26
ARTICLE VII DOCUMENTS TO BE DELIVERED AT THE CLOSING.............................................................27
Section 7.1 Documents to Be Delivered by Seller...................................................27
Section 7.2 Documents to Be Delivered by Buyer....................................................27
ARTICLE VIII INDEMNIFICATION AND RELATED MATTERS.................................................................28
Section 8.1 Indemnification by Seller.............................................................28
Section 8.2 Indemnification by Buyer..............................................................29
Section 8.3 Procedures for Indemnification........................................................29
Section 8.4 Third Party Claims....................................................................30
Section 8.5 Application of Damages Against Escrow.................................................31
Section 8.6 Time Limitations......................................................................32
Section 8.7 Limitations as to Amount..............................................................32
Section 8.8 Exclusions from Limitations...........................................................33
Section 8.9 Treatment of Payment..................................................................33
Section 8.10 Insurance Proceeds....................................................................33
Section 8.11 Subrogation...........................................................................33
Section 8.12 Exclusive Remedy......................................................................33
ARTICLE IX MISCELLANEOUS.........................................................................................33
Section 9.1 Entire Agreement......................................................................33
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Section 9.2 Governing Law.........................................................................33
Section 9.3 Dispute Resolution....................................................................33
Section 9.4 Schedules, Tables of Contents and Headings............................................34
Section 9.5 Notices...............................................................................35
Section 9.6 Severability..........................................................................35
Section 9.7 Waiver................................................................................35
Section 9.8 Binding Effect; Assignment............................................................36
Section 9.9 Parties in Interest; No Third-Party Beneficiaries.....................................36
Section 9.10 Counterparts..........................................................................36
Section 9.11 Headings, Gender, and "Person"........................................................36
Section 9.12 Time of Essence.......................................................................36
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SCHEDULES
Schedule 1.1(a) -- Fixed Assets
Schedule 1.1(d) -- Assumed Contracts
Schedule 1.2(b) -- Excluded Assets
Schedule 1.3 -- Categories of Expense Accruals
Schedule 1.4 -- Permitted Encumbrances
Schedule 2.3 -- CMI Accounting Procedures
Schedule 2.3(g) -- Finished Insert Cost
Schedule 3.3 -- Certain Customer Consents
Schedule 4.3 -- Seller Necessary Consents
Schedule 4.4 -- Financial Statements
Schedule 4.5 -- Pending Actions and Proceedings
Schedule 4.6 -- Necessary Permits
Schedule 4.8 -- Contracts
Schedule 4.9 -- Adverse Consequences
Schedule 4.10 -- Benefit Plans
Schedule 4.10(m) -- Labor Matters
Schedule 4.13 -- Intellectual Property
Schedule 4.14 -- Necessary Assets
Schedule 4.15 -- Liens on Inventory
Schedule 4.16 -- Absence of Changes
Schedule 4.18(a) -- Substantial Customers
Schedule 4.18(b) -- Substantial Suppliers
Schedule 4.18(c) -- Changes in Customers and Suppliers
Schedule 4.20 -- Insurance
Schedule 4.22 -- Boxes and Records
Schedule 5.3 -- Buyer Necessary Consents
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DEFINED TERMS
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Accountants.........................................8
Accounts Receivable.................................2
Acquired Working Capital............................6
Actions or Proceedings.............................12
Adjustment Amount...................................7
Agreement...........................................1
Assumed Contracts...................................2
Assumed Liabilities.................................4
Audited Acquired Working Capital Schedule...........7
Audited Statements.................................11
Benefit Plans......................................14
Business............................................1
Business Employee..................................14
Buyer...............................................1
Buyer's Indemnitees................................28
CERCLA.............................................20
Closing.............................................9
Closing Date........................................9
COBRA..............................................15
Code................................................9
Damages............................................29
Divisional Change in Control Agreements.............4
Effective Time......................................9
Employee Benefit Cap................................4
Environmental Costs and Liabilities................20
Environmental Law..................................20
Environmental Permit...............................21
ERISA..............................................14
ERISA Affiliate....................................15
Escrow..............................................6
Escrow Agent........................................6
Escrow Agreement....................................6
Excluded Assets.....................................3
Excluded Liabilities................................4
Facility............................................1
Facility Lease.....................................26
Financial Statements...............................11
Finished Insert.....................................8
Fixed Assets........................................1
GAAP................................................7
Governmental or Regulatory Authority................2
Hazardous Material.................................21
Hired Employees....................................25
Indemnification Claim..............................29
Indemnitee.........................................29
Indemnitor.........................................29
Intellectual Property...............................2
Inventory...........................................2
knowledge..........................................22
Laws...............................................11
Leased Employees...................................25
Liens...............................................6
Management Prepared Statements.....................11
Material Adverse Effect............................23
Material Warranty Claims and Charge-backs...........5
Multiemployer Plan.................................15
Negotiation Period.................................30
Non-Competition Period.............................25
Parties.............................................1
Party...............................................1
Pension Plan.......................................16
Permits.............................................2
Permitted Liens.....................................6
person.............................................36
Proprietary Rights.................................16
Proration Items.....................................8
Purchase Price......................................6
Purchased Assets....................................1
Raw Inserts.........................................7
RCRA...............................................21
Release............................................21
Required COBRA Coverage.............................5
Seller..............................................1
Seller's Accountants................................7
Seller's Indemnitees...............................29
Seller's Maximum Amount............................32
Seller's Proprietary Rights........................16
Seller's Threshold Amount..........................32
Services Agreement.................................26
Springs Inventory...................................7
Tax................................................13
Tax Return.........................................13
Technology..........................................2
Third Party Claim..................................29
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT"), is made and entered
into as of this 5th day of January, 2001, by and between CMI Industries, Inc., a
Delaware corporation ("SELLER"), and WestPoint ▇▇▇▇▇▇▇ Inc., a Delaware
corporation ("BUYER"). Seller and Buyer are sometimes collectively referred to
as the "PARTIES" and individually as a "PARTY."
BACKGROUND INFORMATION
A. through its Chatham Consumer Products Division, is engaged in
the procurement, manufacture and marketing of woven and non-woven blankets,
throws and similar products for sale to the retail, institutional and health
care markets (the "BUSINESS"), in a facility owned by Seller, located in Elkin,
North Carolina (the "FACILITY").
B. Subject to the limitations and exclusions contained in the
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and assign and Buyer desires to purchase and assume substantially all of
the assets and business operations and certain of the obligations of the
Business and to enter into a lease, which terms shall include a purchase option,
for the use of the Facility.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties, covenants and agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, for themselves, their
successors and assigns, agree as follows:
ARTICLE I
PURCHASE OF ASSETS
SECTION 1.1 THE PURCHASE. Subject to Section 1.2. hereof, upon
the terms and subject to the conditions of this Agreement, on the Closing Date,
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase, acquire and accept from Seller, all right, title and interest of
Seller in and to the following assets and properties of Seller (all such assets
being referred to herein as the "PURCHASED ASSETS") in each case free and clear
of all liens, pledges, mortgages, security interests, claims and encumbrances of
any kind or nature other than Permitted Liens:
(a) All of the furnishings, furniture, vehicles, tools,
machinery, equipment and other tangible personal property (other than Inventory)
to the extent owned, used or held for use by Seller in connection with the
Business, including without limitation all such fixed assets listed on Schedule
1.1(a) (collectively, the "FIXED ASSETS");
(b) All quantities of inventory, including raw materials,
work-in-process, finished goods, products under research and development,
packaging materials and other accessories relating thereto, stores and supplies
to the extent owned, used or held for use by Seller in connection with the
Business and which are (i) held at, or are in transit from or to, the locations
at which the Business is
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conducted, including but not limited to the Facility or the Seller's leased
distribution facility, (ii) located at customers' premises on consignment or
(iii) otherwise held at, or in transit from or to, the premises of any other
third party (collectively, the "INVENTORY");
(c) All patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
▇▇▇▇ rights, service names and service name rights, brand names, inventions,
copyrights and copyright rights, and all pending applications for and
registrations thereof to the extent used, held for use or licensed by Seller in
connection with the Business, including Seller's goodwill therein (collectively,
the "INTELLECTUAL PROPERTY"), and all research, development and commercially
practiced processes, trade secrets, know-how, inventions, product
specifications, techniques, designs, drawings, computer software, computer
programs, procedures, models, manuals, formulae, systems and other
manufacturing, engineering and other technical information, whether owned by
Seller or licensed from third parties by Seller to the extent used in connection
with the Business (the "TECHNOLOGY"), and all notebooks, records, reports,
materials, information and data relating to the Technology;
(d) All contracts, agreements, leases, unfilled purchase
and sales orders or commitments listed in Schedule 1.1(d) together with all
contracts, leases, warranties, commitments, agreements, arrangements, guaranties
of payment or performance pertaining to the Purchased Assets or relating to the
Business and not required to be disclosed pursuant to Section 4.8, and all
purchase and sales orders entered into after the date of Schedule 1.1(d) in the
ordinary course of business consistent with past practice and to the extent
related to the Business (the "ASSUMED CONTRACTS");
(e) All trade accounts receivable and all notes, bonds
and other evidences of indebtedness and rights to receive payment arising out of
sales by Seller exclusively related to the Business, and any security agreements
related thereto, including any rights of or any other Actions or Proceedings
which have been commenced in connection therewith (the "ACCOUNTS RECEIVABLE");
(f) All catalogs, sales promotion literature and
advertising material of Seller to the extent relating to the Business;
(g) All earned rebates and all security deposits
deposited by or on behalf of Seller as lessee or subleasee under any leases of
Fixed Assets, Assumed Contracts or other agreements in connection with the
Business;
(h) All files and documents (including credit
information) relating to customers and vendors, and other business and financial
books, records, files and documents to the extent used or held for use by Seller
in connection with the Business or otherwise relating to the Purchased Assets;
(i) To the extent permitted under applicable law or
regulation, all franchises, licenses, authorizations, permits, certificates of
authority, approvals, registrations, and similar consents granted or issued by
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States, any foreign country or any domestic
or foreign state, county, city or other political subdivision (a "GOVERNMENTAL
OR REGULATORY Authority") that are identified on Schedule 4.6 (collectively, the
"PERMITS");
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(j) All prepaid charges and prepaid assets, expenses,
sums and fees to the extent relating to the Business;
(k) All rights, privileges, claims, causes of action,
options and other intangible personal property of Seller to the extent relating
to the Business or the Purchased Assets; and
(l) All other assets and properties of Seller to the
extent used or held for use in connection with the Business.
SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anything to the
contrary contained in Section 1.1. hereof, the Seller and the Buyer expressly
understand and agree that the Seller shall not sell, assign, transfer or convey
to the Buyer and the Buyer shall not purchase, acquire or accept from Seller and
the Purchased Assets shall not include any asset not identified in Section 1.1,
including, but not limited to, the following assets, rights and properties
(collectively, the "EXCLUDED ASSETS"):
(a) Cash and cash equivalents (e.g., commercial paper and
bank accounts), negotiable instruments (e.g., certificates of deposits, treasury
bills, treasury notes and marketable securities) and letters of credit issued as
security for purchase orders and commitments;
(b) Any assets, properties, or rights of Seller (i)
identified on Schedule 1.2; (ii) for the avoidance of doubt, any assets,
properties or rights at the Seller's facilities in New York, New York; Stuart,
Virginia; Clarksville, Georgia; Greensboro, North Carolina; Clinton, South
Carolina; Columbia, South Carolina and Geneva, Alabama; and (iii) to the
Facility, which will be leased to Buyer, or any other real property and
improvements located at Elkin, North Carolina or elsewhere;
(c) The assets of any Benefit Plan maintained by Seller
for the benefit of the employees of the Business or to which Seller has made any
contribution;
(d) Seller's corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders or members, tax returns and records, books of account and ledgers,
and such other records having to do with Seller's organization or stock
capitalization;
(e) Any rights which accrue or will accrue to Seller
under this Agreement;
(f) Any rights of any of Seller's insurance policies,
premiums, or proceeds from insurance coverages relating to the Business;
(g) Any rights to any of Seller's claims for any federal,
state, local or foreign tax refund;
(h) The stock of Chatham Real Property, Inc. and the
membership interests in Chatham, LLC, or any of their respective assets;
(i) Assets disposed of in the ordinary course of
business;
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(j) Those receivables not reflected on the Financial
Statements that have been written off because the debtors are in bankruptcy; and
(k) The IBM AS400 owned by Interface Fabrics Group, Inc.
or other assets previously sold to Interface or Borgstena.
SECTION 1.3 ASSUMED LIABILITIES. Subject to Section 1.4, as of
the Effective Time, Buyer shall assume, pay, perform and discharge when due only
the following liabilities and obligations of Seller:
(a) all liabilities and obligations arising or to be
performed by Buyer after the Closing Date to the extent related to the Business
or the Purchased Assets, including without limitation liabilities and
obligations arising under any Assumed Contract; provided, however, Buyer shall
not assume any liability under any Assumed Contract for any breach thereof or
default thereunder by Seller on or prior to the Closing Date (except to the
extent reflected on the Audited Acquired Working Capital Schedule);
(b) To the extent reflected on the Audited Acquired
Working Capital Schedule, the trade payables of the Business, the categories of
expense accruals related to the Business identified on Schedule 1.3 to the
extent they are not otherwise included in trade payables referred to above, and,
with respect to such accruals that are employee-related, only to the extent they
pertain to the Hired Employees; provided, however, the aggregate amount of
claims of Hired Employees assumed by Buyer hereunder related to benefits
incurred or earned prior to the Closing Date shall not exceed $500,000 (the
"EMPLOYEE BENEFIT CAP");
(c) The Divisional Change in Control Agreement dated as
of October 31, 2000 between Seller and ▇▇▇▇ ▇▇▇▇▇▇▇, and the Divisional Change
in Control Agreement dated as of October 31, 2000 between Seller and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ (collectively, the "DIVISIONAL CHANGE IN CONTROL AGREEMENTS"); and
(d) Warranty claims, reserves for returns and
charge-backs that are either listed on Schedule 1.3 or are not Excluded
Liabilities described in Section 1.4(f) (the liabilities referred to in this
Section 1.3 collectively referred to herein as the "ASSUMED LIABILITIES").
SECTION 1.4 EXCLUDED LIABILITIES. The Parties expressly
understand and agree that, except for the Assumed Liabilities, Buyer does not
assume or agree to pay, perform or discharge when due any liabilities or
obligations of Seller, whether accrued, absolute, contingent or otherwise,
including, without limitation, the following liabilities hereunder, all of which
shall be specifically excluded from the transactions contemplated by this
Agreement (the "EXCLUDED LIABILITIES"):
(a) All liabilities with respect to any and all Excluded
Assets;
(b) Except as set forth in Section 2.5, any and all taxes
levied by or arising under any federal, state, local or foreign taxing authority
upon Seller or with respect to Seller's ownership or use of the Purchased Assets
or conduct of the Business on or prior to the Closing Date, whether asserted
before or after the Closing Date;
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(c) All liabilities with respect to annual employee bonus
and/or vacation payments by Seller to its employees incurred or arising during,
or otherwise attributable to, any period prior to the Closing, except as assumed
by Buyer as provided in Section 1.3 or to the extent included in the calculation
of the Audited Acquired Working Capital Schedule;
(d) All liabilities of Seller with respect to any
indebtedness to its shareholders, or except as assumed by Buyer as provided in
Section 1.3, its or their affiliates;
(e) Except as assumed by Buyer as provided in Section 1.3
and except as otherwise provided in this Section 1.4, all liabilities and
obligations of Seller or any predecessor of Seller resulting from, caused by or
arising out of the conduct of the Business by Seller or Seller's ownership,
operation or lease of any properties or assets included in the Purchased Assets,
or which arise out of contracts or dealings with customers, suppliers, sales
representatives, distributors, insurers, employees, agents, personal property
lessors, lessees, licensors, licensees, consignors or consignees, with respect
to any period on or prior to the Closing Date, whether arising before or after
the Closing Date, including, without limitation, any such liabilities or
obligations that constitute, may constitute or are alleged to constitute a
violation of or a liability or obligation under any Environmental Law by Seller,
such as, among other things, any liability or obligation to contribute to the
cost of investigation or remediation under CERCLA, RCRA and any state or local
analogues thereof;
(f) Warranty claims and charge-backs that (i) are based
solely on defective products shipped by Seller or breach of contract relating to
products shipped by Seller, and (ii) are not listed on Schedule 1.3, but only to
the extent that the excess of (A) the aggregate net amount of such warranty
claims and charge-backs (taking into account the salvage value of returned
products), over (B) the unutilized amount of all reserves on the Audited Closing
Date Working Capital Schedule for returns, charge-backs, warranty claims and bad
debt, is greater than $75,000 ("MATERIAL WARRANTY CLAIMS AND CHARGE-BACKS"). To
establish that a warranty claim or charge-back is based solely on a defective
product or breach of contract by Seller, the product must be returned by the
customer;
(g) All product liability, strict liability or negligence
claims with respect to products sold to customers by Seller on or prior to the
Closing;
(h) All worker's compensation expenses and claims for any
accident or injury occurring, arising or attributable to any period prior to the
Closing (whether discovered before or after such time);
(i) All claims, liabilities and obligations under all of
Seller's Benefit Plans, including, without limitation, medical, dental, life
insurance, disability, accident and sickness claims and other welfare plan
expenses and claims (including retiree medical and dental claims), incurred by
any of Seller's employees and their eligible dependents relating to any
accident, injury, illness, sickness or disease occurring, arising or
attributable to any period prior to the Closing;
(j) Any liability for continuation coverage required
under Section 4980B of the Code or Part 6 of Title I of ERISA ("REQUIRED COBRA
COVERAGE") with respect to any employees
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or former employees of Seller or their dependents, other than any Required COBRA
Coverage arising under a group health plan of Buyer with respect to the Business
Employees who become employed by Buyer on or after the Closing Date or their
dependents;
(k) All obligations of Seller to pay severance or similar
benefits to any employees as a result of the transactions contemplated by this
Agreement, except as assumed by Buyer as provided in Section 1.3(c);
(l) All liability and obligations resulting from or
arising out of claims made in suits, actions, investigations, or other legal,
governmental or administrative proceedings pending at the Closing;
(m) All liability and obligations for sums due or
payments, and other obligations arising, under any contract, lease or other
agreement which is to be transferred to Buyer hereunder and is not duly and
effectively transferred to Buyer, unless Buyer receives the benefit of such
contract, lease or other agreement pursuant to Section 3.3; and
(n) The Excluded Liabilities shall mean and include all
claims, actions, litigations and proceedings relating to any or all of the
foregoing and all costs and expenses in connection therewith.
For purposes of this Agreement, "LIENS" shall mean any liens, pledges,
mortgages, security interests, claims, leases, charges, options, rights of first
refusal, unsatisfied preemptive rights, transfer restrictions under any
agreement or any other encumbrances, restrictions or limitations whatsoever, and
"PERMITTED LIENS" shall mean any Liens listed on Schedule 1.4.
ARTICLE II
AMOUNT AND PAYMENT OF PURCHASE PRICE
SECTION 2.1 AMOUNT OF PURCHASE PRICE. The purchase price to be
paid to Seller for the sale, transfer and conveyance of the Purchased Assets and
for the covenant not to compete contained in Section 6.3 (the "PURCHASE PRICE"),
in addition to the assumption of the Assumed Liabilities, shall be an amount
equal to $8,362,500, as adjusted in accordance with Section 2.3. As agreed upon
by the Parties, the Purchase Price, reflects an estimate of the working capital
of the Business being acquired by Buyer as of the Closing Date equal to
$8,500,000 (the "ACQUIRED WORKING CAPITAL").
SECTION 2.2 PAYMENT OF PURCHASE PRICE; ESTABLISHMENT OF AN
ESCROW. At the Closing the following shall occur with respect to the Purchase
Price:
(a) Buyer shall pay to Seller, by wire transfer of
immediately available funds, the amount of $7,962,500, representing the Purchase
Price less the amount of the Escrow.
(b) Buyer shall deposit the sum of $400,000 in cash into
an escrow (the "ESCROW") established with SunTrust Bank as the escrow agent
("ESCROW AGENT") and pursuant to the terms of an escrow agreement (the "ESCROW
AGREEMENT"), which amount shall be paid to Seller as part of the Purchase Price
or delivered to Buyer (i) as the exclusive remedy for satisfaction of
post-Closing indemnification claims pursuant to Section 8.1 (except as set forth
therein), and (ii) as
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the exclusive remedy for satisfaction of the cost of insert replacements
pursuant to Section 2.3(g). Any interest earned on the Escrow shall be added
back to the Escrow.
SECTION 2.3 ADJUSTMENT TO PURCHASE PRICE.
(a) Within 60 days following the Closing Date, Seller
shall deliver to Buyer a schedule of the Acquired Working Capital as of the
Closing Date for the Business audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the independent
public accountants to Seller ("SELLER'S ACCOUNTANTS") (the "AUDITED ACQUIRED
WORKING CAPITAL SCHEDULE"), which shall equal the sum of (i) inventory (net of
reserves); (ii) accounts receivable (net of reserves); and (iii) prepaid
expenses and other current assets, less the sum of (iv) trade payables and (v)
accrued expenses set forth on Schedule 1.3. For purposes of the computation of
the Acquired Working Capital, inventory, accounts receivable and prepaid
expenses and other current assets shall include only those items and amounts
included in the Purchased Assets pursuant to Section 1.1 and trade payables and
accrued expenses shall include only those items and amounts included in the
Assumed Liabilities pursuant to Section 1.3. The procedures to be used by Seller
for the preparation of the Audited Acquired Working Capital Schedule shall be in
accordance with generally accepted accounting principles ("GAAP") applied
consistently with the Management Prepared Statements and following the
procedures set forth in Schedule 2.3.
(b) All finished goods inventory held for sale by Seller
at Closing under Seller's programs with Springs Industries (the "SPRINGS
INVENTORY") shall be valued based on the assumption that Buyer shall be entitled
to sell Springs Inventory under the Springs Industries programs in the ordinary
course and shall not be subject to any form of discount due to the termination
of the Springs Industries programs and the requirement to liquidate Springs
Inventory as a consequence of the transactions contemplated by this Agreement.
The computation of Acquired Working Capital shall not include Seller's raw
material inventory of "inserts" which would be inserted into finished goods
packaging as part of the Springs Industries programs (the "RAW Inserts").
Provided, however, Buyer is under a good faith obligation to utilize Raw Inserts
and to the extent Buyer does utilize Raw Inserts between the Closing Date and
the date the Audited Acquired Working Capital Schedule is presented to Buyer by
Seller's Accountants, then such utilized Raw Inserts shall be included in
Inventory, at cost, in the Audited Acquired Working Capital Schedule.
(c) The Purchase Price will be increased by the amount,
if any, by which the Acquired Working Capital shown on the Audited Acquired
Working Capital Schedule is greater than the $8,500,000; and the Purchase Price
will be decreased by the amount, if any, by which the Acquired Working Capital
shown on the Audited Acquired Working Capital Schedule is less than $8,500,000
(the amount of the increase or decrease, as the case may be, being the
"ADJUSTMENT AMOUNT").
(d) If Buyer objects to the computations delivered by
Seller pursuant to paragraph (a) of this Section 2.3, Buyer shall deliver to
Seller a detailed statement describing such objections within 30 days after
receiving such computations. If Buyer timely objects to the computation
delivered by Seller pursuant to paragraph (a) of this Section 2.3, Buyer and
Seller will use reasonable efforts to resolve any such objections themselves. If
the Parties are unable to reach a final
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determination within 120 days after the Closing Date, the Parties will mutually
select a nationally recognized accounting firm (the "ACCOUNTANTS"), which
neither Buyer or Seller has had a business relationship with during the two (2)
years prior to the Closing Date, to resolve any remaining objections. The
Accountants shall deliver to each of Buyer and Seller its determinations within
15 days after receiving the joint instructions from Buyer and Seller. The
determinations of the Accountants shall be in accordance with GAAP and the
procedures and requirements set forth in Schedule 2.3, and shall be set forth in
writing and shall be conclusive and binding upon the Parties. The expenses of
the Accountants shall be borne by Buyer and Seller in inverse proportion to the
value of issues resolved in a Party's favor over the total value of issues
submitted to the Accountants.
(e) Pursuant to paragraph (c) above, if the Adjustment
Amount is an increase to the Purchase Price, Buyer shall pay to Seller an amount
in cash equal to the Adjustment Amount by delivery of cash payable by wire
transfer or delivery of other immediately available funds. Pursuant to paragraph
(c) above, if the Adjustment Amount is a decrease to the Purchase Price, Seller
shall pay to Buyer an amount in cash equal to the Adjustment Amount by delivery
of cash payable by wire transfer or delivery of other immediately available
funds. Any such payment hereunder shall be made no later than five (5) business
days after (i) the 30th day after the computation of Audited Acquired Working
Capital Schedule has been given by Seller to Buyer, if Buyer has not objected to
the computation of the same within such 30-day period; (ii) Buyer and Seller
have resolved any objection raised by Buyer; or (iii) the date the determination
of the Accountants described in paragraph (c) above is given to Buyer and
Seller.
(f) If any Raw Inserts are utilized by Buyer after the
date of the Audited Acquired Working Capital Schedule, then the cost of such Raw
Inserts shall be credited as an adjustment to the Purchase Price and Buyer shall
pay to Seller the amount of such credit by delivery of cash payable by wire
transfer or delivery of other immediately available funds as soon as
administratively feasible.
(g) As previously contemplated by Section 2.3(b), the
Audited Acquired Working Capital Schedule shall include the Springs Inventory.
If, after the Closing Date, Buyer is required to replace an insert in respect of
a unit of Springs Inventory (each a "FINISHED INSERT"), Seller shall reimburse
Buyer for the cost of the original insert card with such cost being set forth on
Schedule 2.3(g). The Buyer's right to costs for Finished Insert replacements
under this Section 2.3(g) shall be exclusively paid out of the Escrow, and to
the extent the Escrow has been exhausted or distributed, Seller shall have no
obligation to Buyer in respect to the replacement cost of Finished Inserts. For
the avoidance of doubt, Seller shall not through the Escrow or otherwise be
responsible to Buyer for any other costs not shown on Schedule 2.3(g) associated
with Finished Insert replacements, including labor.
SECTION 2.4 PRORATIONS.
(a) To the extent not taken into account in the Purchased
Assets or the Assumed Liabilities or the Audited Acquired Working Capital
Schedule, at the Closing (or promptly after the Closing to the extent the
necessary calculations cannot be made at the Closing), the Personal Property
Taxes (meaning ad valorem taxes imposed upon the Purchased Assets and relating
to the Business) including, without limitation, accruals or prepayments thereof
(collectively called the "PRORATION ITEMS"), shall be prorated as of the Closing
Date, and Buyer shall pay, when due, such
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Proration Items. The Proration Items shall initially be determined based on the
previous year's taxes and shall later be adjusted to reflect the current year's
taxes when the tax bills are finally rendered and shall be prorated on a
calendar year basis.
(b) Each of the Parties shall make any necessary payments
under this Section 2.4 to the other immediately upon receipt of an invoice and
supporting documentation and such other corroborating information as may be
reasonable under the circumstances with respect to such payment amount. The
Parties shall fully cooperate to avoid, to the extent legally possible, the
payment of duplicate Personal Property Taxes, and each Party shall furnish, at
the request of the other, proof of payment of any Personal Property Taxes or
other documentation which is a prerequisite to avoiding payment of a duplicate
tax.
SECTION 2.5 TRANSFER EXPENSES. Buyer shall pay any and all sales
and use, transfer or documentary taxes levied on the transfer of the Purchased
Assets. All inventory included in the Purchased Assets shall be claimed as
exempt from sales tax by Buyer. Buyer shall timely report and remit any such
taxes to the appropriate revenue authorities on or before the Closing Date and
shall promptly remit any increases in such taxes determined to be due after the
Closing Date.
SECTION 2.6 ALLOCATION OF PURCHASE PRICE. The consideration paid
for the Purchased Assets and covenant not to compete set forth in Section 6.3
(which shall equal the Purchase Price) and the assumption of the Assumed
Liabilities that are taken into account in determining the amount realized for
tax purposes shall be allocated as promptly as possible following the final
determination of the Audited Acquired Working Capital Schedule among the
Purchased Assets. Such allocation will comply with the requirements of Section
1060 of Internal Revenue Code of 1986, as amended (the "CODE"). Purchaser and
Seller each agree to file IRS Form 8594, and all required federal, state, local
and foreign tax returns in a manner consistent with such allocation and
Purchaser and Seller each agree to provide the other promptly with any
information required to complete such allocation.
ARTICLE III
CLOSING
SECTION 3.1 DATE OF CLOSING. The closing of the sale and purchase
of the Purchased Assets provided for in Article I hereof (the "CLOSING") shall
take place at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, on January 5, 2001 (or at such other date
and place as the Parties may agree upon in writing). The date on which the
Closing is held is referred to in this Agreement as the "CLOSING DATE." Subject
to the consummation of the Closing on the Closing Date, the sale, assignment,
transfer, and conveyance to Buyer of the Purchased Assets and the assumption by
Buyer of the Assumed Liabilities will be effective as of 12:01 a.m., Eastern
Standard Time, on the Closing Date (the "EFFECTIVE TIME"). At the Closing, the
Parties shall execute and deliver the documents referred to in Article VII.
SECTION 3.2 ALL PROCEEDINGS. All proceedings to be taken and all
documents to be executed and delivered by all Parties at the Closing shall be
deemed to have been taken and executed simultaneously and no proceedings shall
be deemed taken or documents executed or delivered until all have been taken,
executed and delivered.
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SECTION 3.3 CERTAIN CONSENTS. To the extent that Seller's rights
under any agreement, Assumed Contract, commitment, lease, Permit, or other
Purchased Asset to be assigned to Buyer hereunder may not be assigned without
the consent of another person which has not been obtained prior to the Closing
Date, and which is material to the ownership, use or disposition by Buyer of a
Purchased Asset, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof or be
unlawful, and Seller shall use its reasonable good faith efforts to obtain any
such required consent(s) as promptly as possible. Buyer shall be responsible for
the costs of obtaining consents for the agreements identified on Schedule 3.3,
and Seller shall be responsible for the costs of obtaining other consents. If
any necessary consent not identified on Schedule 3.3 shall not be obtained or if
any attempted assignment thereof would be ineffective or would impair Buyer's
rights under the Purchased Assets in question so that Buyer would not in effect
acquire the benefit of all such rights, Seller, to the maximum extent permitted
by law and the specific Purchased Asset, shall act after the Closing as Buyer's
agent in order to obtain for Buyer the benefits thereunder, and Seller shall be
responsible for its out-of-pocket costs with respect to such action.
Furthermore, Seller shall cooperate, to the maximum extent permitted by law and
the specific Purchased Assets, with Buyer in any other reasonable arrangement
designed to provide benefits to Buyer in respect of any necessary consent not
identified on Schedule 3.3, including any sublease or subcontract or similar
arrangement.
SECTION 3.4 FURTHER ASSURANCES. Seller from time to time after
the Closing Date, at Buyer's request, will execute, acknowledge, and deliver to
Buyer such other instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents, certifications, and
further assurances as Buyer may reasonably require in order to vest more
effectively in Buyer, or to put Buyer more fully in possession of, any of the
Purchased Assets, or to better enable Buyer to complete, perform, or discharge
any of the Assumed Liabilities. Each of the Parties hereto will cooperate with
the other and execute and deliver to the other Party such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other Party as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
SECTION 4.1 DUE ORGANIZATION; GOOD STANDING; QUALIFICATION.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Seller has full corporate power and
authority (i) to enter into and to perform this Agreement and any other
agreement, document or instrument to be delivered by Seller pursuant to this
Agreement, (ii) to consummate the transactions contemplated hereby and thereby,
(iii) to carry on the Business as now conducted and (iv) to own, lease, use and
operate the Purchased Assets. Seller is qualified to do business and is in good
standing in each jurisdiction in which the conduct of the Business by it
requires qualification, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect.
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SECTION 4.2 DUE AUTHORITY; DUE EXECUTION AND DELIVERY; BINDING
EFFECT. The execution, delivery and performance by Seller of this Agreement and
the other agreements, documents or instruments to be delivered pursuant to this
Agreement, and the consummation by Seller of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
by Seller. Each of this Agreement and any other agreement, document and
instrument to be delivered pursuant to this Agreement by Seller has been duly
executed and delivered by Seller and constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar Laws from time to time in effect affecting the enforcement of creditors'
rights generally.
SECTION 4.3 NO CONFLICTS; CONSENTS. Subject to obtaining the
consents and approvals described in Schedule 4.3, the execution, delivery and
performance of this Agreement or the other agreements, documents or instruments
to be delivered pursuant to this Agreement by Seller, or the consummation of the
transactions contemplated hereby or thereby, will not (i) conflict with, or
result in a violation or breach of any of the terms, conditions or provisions
of, Seller's Certificate of Incorporation or by-laws, each as currently in
effect, (ii) conflict with, or result in a breach, violation or termination of,
or constitute (with or without notice or lapse of time or both) a default under,
any material contract, lease, agreement, commitment or other instrument, or any
order, judgment or decree, to which Seller is a party or by which Seller, the
Purchased Assets, or the Business may be bound, (iii) conflict with or
constitute a violation, in any material respect, of any law, regulation, rule,
ordinance or any other applicable requirement of any Governmental or Regulatory
Authority (collectively, "LAWS") applicable to Seller, the Purchased Assets, or
the Business, or (iv) result in the creation of any Lien upon the Purchased
Assets (except in favor of Buyer). Except as set forth on Schedule 4.3, no
consent, approval or authorization of, or designation, declaration or filing
with, any Governmental or Regulatory Authority, any lender or lessor or any
other person or entity is required in connection with the execution, delivery
and performance by Seller of this Agreement or the other agreements, documents
or instruments to be delivered pursuant to this Agreement, or the consummation
of the transactions contemplated hereby or thereby.
SECTION 4.4 FINANCIAL STATEMENTS. Attached as Schedule 4.4 are
complete and correct copies of the audited balance sheets and related statements
of income and cash flows of Seller as, at and for the fiscal years ended January
2, 1999 and January 1, 2000 and for the periods then ended (the "AUDITED
STATEMENTS") and the balance sheet and statement of income as, at and for the
three quarters ended September 30, 2000 and for the period then ended of the
Seller and the Business, in each case prepared by management of Seller (the
"MANAGEMENT PREPARED STATEMENTS"). The Audited Statements and the Management
Prepared Statements are collectively referred to herein as the "FINANCIAL
STATEMENTS." The Audited Statements have been prepared in accordance with GAAP
consistently applied, and present fairly in all material respects the financial
position, assets, liabilities, revenues and expenses and results of operation of
Seller, as at the dates and for the periods indicated. The Management Prepared
Statements (i) have been prepared in accordance with Schedule 2.3 and GAAP
(except as otherwise disclosed in Schedule 2.3), (ii) do not contain footnotes
(that, if presented, would not differ materially from those included in the
Audited Statements) and are subject to normal year-end adjustments, and (iii)
present fairly in all material
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respects the financial position, assets, liabilities, revenues and expenses, and
results of operations of the Business as at the date and for the periods
indicated.
SECTION 4.5 LITIGATION; COMPLIANCE WITH LAWS.
(a) There are no actions, suits, hearings, proceedings,
arbitrations, mediations or Governmental or Regulatory Authority investigations
or audits (collectively, "ACTIONS OR PROCEEDINGS") pending or, to Seller's
knowledge, threatened, that question the validity of or seek to enjoin the
execution, delivery or performance by Seller of this Agreement and the other
agreements, documents or instruments to be delivered by Seller pursuant to this
Agreement, or the consummation of the transactions contemplated hereby or
thereby, or any action taken or to be taken by Seller in connection herewith or
therewith.
(b) Except as set forth on Schedule 4.5, and except as
relates to the Benefit Plans and employee relations, which are governed by the
representations and warranties set forth in Section 4.10, there is no Action or
Proceeding pending or, to Seller's knowledge, threatened, or any order,
injunction or decree outstanding against Seller relating to any of the Purchased
Assets or the Business. Except as set forth on Schedule 4.5, Seller is not in
violation of any applicable Law, except to the extent a violation reasonably
would not be expected to have a Material Adverse Effect. To Seller's knowledge,
there are no facts or circumstances that could reasonably be expected to give
rise to any material Action or Proceeding that would be required to be disclosed
hereunder.
SECTION 4.6 PERMITS. Seller possesses all Permits necessary or
required to conduct the Business as now conducted, all of which are listed on
Schedule 4.6, except for those Permits with respect to the which the failure to
obtain does not have, and could not reasonably be expected to have, a Material
Adverse Effect. The Permits are valid, binding and in full force and effect,
Seller has received no written notice of any violations having been recorded in
respect of any Permit, and no Action or Proceeding is pending, or to Seller's
knowledge, threatened, to revoke or limit any Permit. The representations and
warranties contained in this Section 4.6 do not include or relate or pertain to
environmental matters.
SECTION 4.7 TAXES.
(a) All Tax Returns required to be filed with respect to
the Business have been properly prepared in all material respects and duly and
timely filed with the appropriate taxing authorities in all jurisdictions in
which such Tax Returns are required to be filed, taking into account any
extensions of the filing deadlines which have been validly granted; and all such
Tax Returns are true, complete and correct in all material respects. Seller has
duly and timely paid all Taxes that are due, or claimed or asserted by any
taxing authority to be due, from or with respect to it for periods covered by
such Tax Returns with respect to the Business, except such Taxes contested in
good faith by Seller. There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to the Business. No claim has been made by a taxing authority in a
jurisdiction where Seller does not file Tax Returns that it is or may be subject
to taxation by that jurisdiction in connection with the Business or the
ownership or use of the Purchased Assets.
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(b) With respect to the employees of the Business, Seller
has duly and timely withheld from employee salaries, wages and other
compensation, and has paid over to the appropriate taxing authorities, all
amounts required to be withheld and paid over for all periods under all
applicable Laws.
(c) There are no Liens with respect to Taxes upon any of
the Purchased Assets of Seller, other than Liens that arise by operation of Law
for Taxes that are not yet payable.
(d) Seller is not a foreign person within the meaning of
Section 1441 of the Code.
(e) For purposes of this Agreement, the term "TAX" means
all taxes, charges, fees, levies, imposts, duties, and other assessments,
including, without limitation, any income, alternative minimum or add-on tax,
estimated, gross income, gross receipts, sales, use, transfer, gains,
transactions, intangibles, ad valorem, value-added, franchise, registration,
title, license, capital, paid-up capital, profits, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, recording, personal
property, Federal highway use, commercial rent, environmental, windfall profit
tax, custom, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, penalties, or
additions to tax, and any interest or penalties imposed by any Federal, state,
local or foreign taxing authority with respect to the filing, obligation to file
or failure to file any tax return and the term "TAX RETURN" means any return,
declaration, report, claim for refund, information return, statement, or other
similar document relating to taxes, including any schedule or attachment
thereto, and including any amendment thereof.
SECTION 4.8 CONTRACTS.
(a) Schedule 4.8 contains a true and complete list of:
(i) all commitments and agreements for the purchase of any materials or supplies
that involve an expenditure by Seller in respect of the Business of more than
$100,000 for any one contract or from any one person (other than for the
purchase or sale of Inventory in the ordinary course of business consistent with
past practice); (ii) all leases, subleases and other rental agreements for any
of facilities under which Seller is either the lessor or lessee; (iii) all other
orders, leases, contracts, commitments, agreements, arrangements and instruments
to which Seller is a party that involve amounts of more than $50,000 and by
which the Purchased Assets may be bound; (iv) all contracts with the United
States Federal government or any other Governmental or Regulatory Authority to
which Seller is a party in respect of the Business; (v) all contracts,
arrangements and agreements containing any provision or covenant prohibiting or
limiting the ability of Seller to engage in the Business or compete with any
person or entity engaged in the Business or prohibiting or limiting the ability
of any other person or entity to compete with Seller in respect of the Business;
(vi) all partnership, joint venture, shareholders or other similar contracts,
agreements or arrangements relating to the Business or the Purchased Assets and
to which Seller is a party; (vii) all contracts, agreements and arrangements
with distributors, dealers, manufacturer's representatives, sales agencies or
franchisees of the Business or related to the Purchased Assets; (viii) all
contracts, agreements and arrangements relating to the future disposition or
acquisition of any Purchased Assets, other than dispositions or acquisitions of
Inventory in the ordinary course of business consistent with past practice; (ix)
all cooperative contracts, agreements or arrangements with retail stores to
which Seller is a party related to the Business; (x) all material
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contracts, agreements and arrangements to sell goods or merchandise for reduced
prices to which Seller is a party related to the Business; and (x) all contracts
and agreements between Seller and any employee of the Business.
(b) True and complete copies of the orders, leases,
commitments, contracts, agreements, arrangements and instruments referred to on
Schedule 4.8, each as amended to date, have been delivered or made available to
Buyer, and assuming no defaults by the other party thereto, each of them is in
full force and effect and constitute a legal, valid and binding agreement,
enforceable in accordance with its terms, of Seller and to Seller's knowledge
the other party thereto, except as enforceability may be limited by applicable
equitable principles by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Laws from time to time in effect affecting
the enforcement of creditors' rights generally.
(c) Seller has not received written notice of any default
by any party under any order, lease, commitment, contract, agreement,
arrangement or instrument referred to in Section 4.8 (a) that has not been
cured, (ii) neither Seller nor, to Seller's knowledge, any other party to any of
the foregoing is now in violation or breach of, or in default in complying with,
any material provision thereof, (iii) Seller has not received written notice of
any plan or intention of any other party thereto to exercise any right to cancel
or terminate any of the foregoing, and (iv) to Seller's knowledge, no such
cancellation or termination has been threatened.
SECTION 4.9 ABSENCE OF ADVERSE CONSEQUENCES. Except as set forth
on Schedule 4.9, the execution, delivery and performance by Seller of this
Agreement and the other agreements, documents or instruments to be delivered
hereunder by Seller, and the consummation of the transactions contemplated
hereby and thereby, will not (i) result in or give to any person or entity any
right of termination, cancellation, acceleration or modification in or with
respect to, or (ii) result in or give to any person additional rights or
entitlement to increased, additional, accelerated or guaranteed payments under,
any order, lease, contract, commitment, agreement, arrangement or instrument
referred to in Section 4.8.
SECTION 4.10 EMPLOYEE BENEFIT PLANS AND EMPLOYEE RELATIONS.
Schedule 4.10 lists each pension, retirement, disability, medical, dental or
other health insurance plan, life insurance or other death benefit plan, profit
sharing, deferred compensation, stock option, bonus or other incentive plan,
vacation benefit plan, severance plan, payroll practice or other employee
benefit plan or arrangement, including any employee plan (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or any other written or unwritten program, arrangement, agreement or
understanding covering any Business Employee to which Seller is a party or bound
or by which Seller otherwise may have any liability to any Business Employee
(all such plans or arrangements being hereinafter referred to collectively as
the "BENEFIT PLANS"). For purposes of the preceding sentence, the term "BUSINESS
EMPLOYEE" includes all current or former employees who are or were employed or
otherwise entitled to compensation from Seller primarily in connection with the
Business.
(b) Seller has delivered or made available to Buyer true,
correct and complete copies of the following documents relating to the Benefit
Plans: (i) all plan documents, amendments, trust instruments and other material
agreements adopted or entered into in connection with each of
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the Benefit Plans; (ii) all insurance and annuity contracts related to any
Benefit Plans; (iii) all administrative notices and forms used for the Benefit
Plans, including the notices and election forms used to notify employees and
their dependents of their continuation coverage rights under Seller's group
health plans; and (iv) the most recently available Form 5500 annual reports,
certified financial statements, actuarial reports, summary plan descriptions and
favorable determination letters for the Benefit Plans.
(c) All of the Benefit Plans comply in all material
respects and have been administered in material compliance with (i) the
provisions of ERISA; (ii) all provisions of the Code applicable to secure the
intended tax consequences; (iii) all applicable state and federal securities
Laws; (iv) all collective bargaining agreements, and (v) to Seller's knowledge,
all other applicable Laws; except to the extent that the failure to maintain and
administer such Benefit Plans does not have, or could not reasonably be expected
to have, a Material Adverse Effect. Seller has not received any written notice
from any governmental agency or instrumentality questioning or challenging such
compliance. There is no Action or Proceeding pending or, to Seller's knowledge,
threatened with respect to the Benefit Plans, or any order, injunction or decree
outstanding against Seller with respect to the Benefit Plans, that have had or
could reasonably be expected to have a Material Adverse Effect.
(d) Seller has complied in all material respects with the
continuation coverage requirements of Section 1001 of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601 through
608 ("COBRA").
(e) No Benefit Plan is subject to Title IV of ERISA, and
neither Seller nor any ERISA Affiliate has incurred any liability under Title IV
of ERISA arising in connection with the termination of any plan covered or
previously covered by Title IV of ERISA that could become, after the Closing
Date, an obligation of Buyer or any of its affiliates. For purposes of this
Section 4.10, "ERISA AFFILIATE" means any person or entity that is required to
be aggregated with Seller under Section 414(b), (c), (m) and/or (o) at any time
prior to the Closing.
(f) The Purchased Assets are not, and to Seller's
knowledge there exist no facts which could reasonably be expected to cause them
to become, subject to any obligation or liability regarding the Benefit Plans.
(g) Neither Seller nor its ERISA Affiliates currently are
parties to any multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA (a "MULTIEMPLOYER PLAN"). Neither Seller nor any ERISA Affiliate (i)
currently have any liability to make any withdrawal liability payment to any
Multiemployer Plan; (ii) will incur any such liability for which Buyer or its
affiliates may become liable; (iii) are delinquent in making any contributions
required to be paid to any Multiemployer Plan; or (iv) are involved in any
pending dispute with any Multiemployer Plan.
(h) Except as set forth on Schedule 4.10, none of the
Benefit Plans provides welfare benefits, including, without limitation, death or
medical benefits (whether or not insured) with respect to Business Employees
beyond their retirement or other termination of service (other than coverage
required by COBRA or any similar state law).
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(i) Buyer shall not, as a result of the Closing and
consummation of the transactions contemplated by this Agreement, become subject
to any liability relating to any Multiemployer Plan.
(j) All contributions required to have been made by
Seller to any "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA (a "PENSION PLAN"), without regard to any waivers granted under Section
412 of the Code, have been timely made. Each Pension Plan is intended to be
qualified under Section 401 of the Code and its related trust exempt from
federal income taxation under Section 501 of the Code, and Seller has not been
notified to the contrary by the Internal Revenue Service.
(k) With respect to the Business, Seller is in compliance
in all material respects with all applicable requirements of the Immigration and
Nationality Act of 1952, as amended by the Immigration Reform and Control Act of
1986, and the regulations promulgated thereunder.
(l) Seller is not a party to any collective bargaining or
other labor agreement relating to the Business.
(m) With respect to the Business, except as set forth on
Schedule 4.10(m), Seller (i) has been and is in compliance in all material
respects with all Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; and (ii) is not liable for any
arrears of wages or penalties for failure to comply with any of the foregoing.
With respect to the Business, Seller has not engaged in any unfair labor
practice or discriminated on the basis of race, color, religion, sex, national
origin, age or handicap in its employment conditions or practices. Except as set
forth in Schedule 4.10(m), with respect to the Business there are no (i) unfair
labor practice charges or complaints or racial, color, religious, sex, national
origin, age or handicap discrimination charges or complaints pending or, to
Seller's knowledge, threatened against Seller before any federal, state or local
court, board, department, commission or agency, nor, to Seller's knowledge, does
any reasonable basis therefor exist; or (ii) recent, existing or, to Seller's
knowledge, threatened labor strikes, disputes, grievances, controversies or
other labor troubles, nor, to Seller's knowledge, does any reasonable basis
therefor exist.
SECTION 4.11. [OMITTED].
SECTION 4.12. [OMITTED].
SECTION 4.13. INTANGIBLE PROPERTY; INTELLECTUAL PROPERTY. Except
as set forth on Schedule 4.13, Seller owns, or possesses adequate licenses or
other rights to use, all computer software, software programs, Intellectual
Property, Technology, drawings, designs, customer lists, or other proprietary
information or rights ("PROPRIETARY RIGHTS") used or held for use by Seller in
connection with the Business ("SELLER'S PROPRIETARY Rights"). To Seller's
knowledge, Seller's Proprietary Rights do not conflict with or infringe in any
respect, and, except as set forth on Schedule 4.13, there has been no written
assertion that any of Seller's Proprietary Rights conflict with or infringe, any
Proprietary Right of any third party. To Seller's knowledge, no person or entity
is infringing or threatening to infringe on any of Seller's Proprietary Rights.
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(b) Schedule 4.13 sets forth all of the Intellectual
Property used by Seller in the conduct of the Business. With respect to the
Intellectual Property disclosed in Schedule 4.13, (i) Seller has the right to
use such Intellectual Property on either an exclusive or nonexclusive basis, as
designated on such Schedule 4.13, (ii) all registrations with and applications
to Governmental or Regulatory Authorities in respect of such Intellectual
Property are valid and in full force and effect and are not subject to the
payment of any taxes or maintenance fees or the taking of any other actions by
Seller to maintain their validity or effectiveness, (iii) there are no
restrictions on the direct or indirect transfer of any order, lease, contract,
commitment, agreement, arrangement or instrument or any interest therein, held
by Seller in respect of such Intellectual Property, (iv) Seller has taken
commercially reasonable security measures to protect the secrecy,
confidentiality and value of its trade secrets and (v) Seller is not, nor has it
received any notice that it is, in default (or with the giving of notice or
lapse of time or both, would be in default) under any order, lease, contract,
commitment, agreement, arrangement or instrument relating to the use of such
Intellectual Property.
(c) To Seller's knowledge, all equipment, systems,
software, data and databases included in the Purchased Assets have been adapted
to accommodate to the century change at the Year 2000 or similar date change,
and to Seller's knowledge as of the Closing Date no such date change has
resulted in nor to Seller's knowledge will result in a Material Adverse Effect.
SECTION 4.14. TITLE TO PURCHASED ASSETS.
(a) Seller owns outright and has good title to the
Purchased Assets, free and clear of any Liens, except for (i) Liens to be
released at Closing; (ii) leased or immaterial assets and properties; (iii)
assets and properties disposed of or subject to purchase or sales orders in the
ordinary course of business, consistent with past practice; (iv) Permitted
Liens, and Liens securing taxes, assessments, governmental charges or levies, or
the claims of materialmen, carriers, landlords and like persons or entities,
which are not yet due and payable; and (v) minor Liens of a character which do
not materially detract from Seller's operation of the Business. Except for the
warranties of title set forth in this Section 4.14, the Fixed Assets are being
sold by Seller and purchased by Buyer on an "AS IS-WHERE IS" basis, and Seller
hereby expressly disclaims all oral, written, statutory or nonstatutory
warranties or representations whatsoever (including, without limitation, any
express or implied representations or warranties of merchantability, fitness for
a particular purpose, habitability, operability, condition, utility or
otherwise) with respect to the Purchased Assets.
(b) Except as set forth on Schedule 4.14 and except for
the Excluded Assets, the Purchased Assets constitute all the assets used in or
necessary and sufficient for the operation of the Business in the manner
heretofore conducted, except where the failure to so include such asset, either
individually or in the aggregate, would not have a Material Adverse Effect.
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SECTION 4.15 INVENTORY. All Inventory, whether reflected on the
Financial Statements or subsequently acquired, has been acquired by Seller only
in bona fide transactions entered into in the ordinary course of business.
Except as described in Schedule 4.15, Seller has valid legal title to its
Inventory free and clear of any consignments, liens, claims, charges, and
encumbrances. Purchase commitments made for raw materials and parts are not in
excess of normal requirements.
SECTION 4.16 ABSENCE OF CHANGES. Since October 1, 2000, except as
set forth on Schedule 4.16, Seller has operated the Business and the Purchased
Assets in the ordinary course and has not with respect to the Business or the
Purchased Assets:
(a) entered into any transaction except in the ordinary
course of business consistent with past practice, provided, that no such
transaction entered into by Seller in the ordinary course of business (with the
exception of purchases of raw materials and payments thereon, sales of goods and
invoicing and receipts thereon), exceeds $100,000;
(b) purchased, sold or transferred, or entered into any
agreement for the purchase, sale or transfer of, any assets that are material to
the Business, except in the ordinary course of business consistent with past
practice, provided, that no such purchase, sale or transfer (with the exception
of purchases of raw materials and payments thereon, sales of goods and invoicing
and receipts thereon, and borrowings and payments by Seller under its bank
credit facilities in existence on October 1, 2000) exceeds $100,000,
individually;
(c) granted or agreed to grant any increase in the salary
or compensation of any Business Employee or agent of Seller, or made or entered
into any bonus payment, loan or similar arrangement with any Business Employees
or agents of Seller, other than the Divisional Change in Control Agreements and
annual or other periodic compensation increases in the ordinary course of
business consistent with past practice and other than reasonable and customary
travel advances;
(d) except for the Divisional Change in Control
Agreements, (i) established or modified (x) targets, goals, pools or similar
provisions in respect of any fiscal year under any Benefit Plan or any
employment-related contract, agreement or other compensation arrangement with or
for employees or (y) salary ranges, increase guidelines or similar provisions in
respect of any Benefit Plan or any employment-related contract, agreement or
other compensation arrangement or other compensation arrangement with or for
employees; or (ii) adopted, entered into or become bound by any Benefit Plan,
employment-related contract or agreement or collective bargaining agreement, or
amendment, modification or termination (partial or complete) of any Benefit
Plan, employment-related contract or agreement or collective bargaining
agreement, except to the extent required by applicable Law and other annual
updates and modifications that became effective on January 1, 2000, in the
ordinary course of business consistent with past practices relating to January 1
updates and modifications;
(e) made any change in the accounting methods or
practices, depreciation or amortization policies or rates, method of calculating
any bad debt, contingency or other reserve, or any other accounting, financial
reporting, or tax practice or policy adopted by Seller;
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(f) materially changed any of its business policies,
including, without limitation, advertising, marketing, pricing, purchasing,
personnel, sales, returns, budget or product acquisition policies;
(g) suffered or incurred any damage, destruction or loss
(whether or not covered by insurance), with respect to the Purchased Assets or
otherwise, in an amount exceeding $100,000, individually or in the aggregate;
(h) entered into, amended, modified, terminated
(partially or completely) or granted a waiver under or given any consent with
respect to (i) any order, lease, contract, commitment, agreement, arrangement or
instrument which is required (or had it been in effect on the date hereof would
have been required) to be disclosed in Schedule 4.8 pursuant to Section 4.8 or
(ii) any Permit disclosed in Schedule 4.6;
(i) made capital expenditures or commitments for
additions to property, plant or equipment used or held for use by Seller
constituting capital assets in excess of the capital expenditures set forth in
Seller's current capital expenditures plan in an aggregate amount exceeding
$100,000, individually or in the aggregate;
(j) except for the Divisional Change in Control
Agreements, entered into any transaction with any officer, director or other
affiliate of Seller or any affiliate of any such officer, director or affiliate
(i) outside the ordinary course of business consistent with past practice or
(ii) other than on an arm's-length basis;
(k) entered into a contract, agreement or arrangement to
do or engage in any of the foregoing; or
(l) operated the Business other than in the ordinary
course of business consistent with past practice.
SECTION 4.17 ENVIRONMENTAL MATTERS.(a) Except as set forth in
Schedule 4.17 hereto, and except as may be reflected in any of the environmental
reports referred to on such Schedule, true, correct and complete copies of which
have been made available to the Buyer, with respect to the Facility and the
Business, Seller:
(i) Is in compliance with all Environmental
aws, except to the extent a failure to comply would not reasonably be expected
to result in a Material Adverse Effect.
(ii) Has obtained and maintains all Environmental
Permits, except to the extent a failure to do so would not reasonably be
expected to result in a Material Adverse Effect. Schedule 4.17 contains a
complete list of each such Environmental Permit. Except as described in Schedule
4.17, Seller is in compliance with each such Environmental Permit, except to the
extent a failure to comply would not reasonably be expected to result in a
Material Adverse Effect.
(iii) Has not entered into or received nor is
Seller in default in any material respect under any consent decree, compliance
order, or administrative order issued by any agency, or
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any judgment, order, writ, injunction or decree of any federal, state, or
municipal court or other governmental authority relating to Environmental Laws.
(b) Except as set forth in Schedule 4.17 hereto, and except as may
be reflected in any of the environmental reports referred to on such Schedule,
with respect to the Facility and the Business:
(i) There are no actions, suits, claims, arbitration
proceedings, or complaints pending or to the Seller's knowledge threatened by
any governmental authority, municipality, community, citizen, or other entity,
against Seller relating to Environmental Laws. Seller has not been notified in
writing that Seller is potentially liable under CERCLA and to Seller's knowledge
no such liability exists.
(ii) During the period the Facility has been owned by
Seller and its affiliates and, to the knowledge of Seller, prior thereto, there
has been no storage, treatment or Release of Hazardous Materials at or from the
premises of the Facility which either was in violation of the Environmental Laws
or results in Environmental Costs and Liabilities, except in either case to the
extent the same would not reasonably be expected to result in a Material Adverse
Effect.
(iii) Seller's removal of any and all Hazardous Materials
from the Facility and other facilities from which Seller has conducted the
Business and offsite disposition thereof have to the extent applicable been in
accordance with Environmental Laws and Environmental Permits, except to the
extent a failure to comply would not reasonably be expected to result in a
Material Adverse Effect. To the extent Seller has contracted with third parties
for the transportation or disposal of Hazardous Materials, to Seller's knowledge
such third parties have been duly authorized to the extent applicable under
applicable Environmental Laws to transport such waste.
(iv) There is not now, nor, to the Seller's knowledge, has
there been, on, in or under the premises of the Facility (A) any underground
storage tanks, (B) above ground storage tanks, dikes or impoundments containing
Hazardous Materials, (C) any asbestos-containing materials which are as of the
date hereof friable, or (D) any polychlorinated biphenyls.
(c) For purposes of the foregoing Section 4.17:
"ENVIRONMENTAL COSTS AND LIABILITIES" shall mean any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including reasonable fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and the reasonable costs of
investigation and feasibility studies, remedial or removal actions and cleanup
activities) arising from or under any Environmental Law or any order or
agreement now in effect with any Governmental or Regulatory Authority.
"ENVIRONMENTAL LAW" means any applicable federal, state, local or
foreign Law (including common law) or other requirement relating to the
environment, natural resources, or public and employee health and safety and
includes, but is not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601, et seq. ("CERCLA"), the
Hazardous Materials Transportation Act, 49 ▇.▇.▇.▇▇. 1801, et seq., the Resource
Conservation and Recovery
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Act, 42 ▇.▇.▇.▇▇. 6901, et seq. ("RCRA"), the Clean Water Act, 33 ▇.▇.▇.▇▇.
1251, et seq., the Clean Air Act, 42 U.S.C. ss.ss.7401, et seq., the Toxic
Substances Control Act, 15 ▇.▇.▇.▇▇. 2601, et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 ▇.▇.▇.▇▇. 136, et seq., the Oil Pollution Act
of 1990, 33 ▇.▇.▇.▇▇. 2701, et seq., the Federal Safe Drinking Water Act, 42
U.S.C.ss.ss.300F, et seq., and the Occupational Safety and Health Act, 29
▇.▇.▇.▇▇. 651, et seq., as such Laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state or local
statutes, all as in effect on the date hereof.
"ENVIRONMENTAL PERMIT" means any permit, approval, authorization,
license, variance, registration or permission required under any applicable
Environmental Law.
"HAZARDOUS MATERIAL" means any substance, material or waste that is
regulated by any governmental entity as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous substance," "restricted
hazardous waste," "contaminant," "toxic waste," "toxic substance" or words of
similar import, including, without limitation, petroleum, petroleum products
(including crude oil and any fraction thereof), asbestos, asbestos-containing
materials, urea formaldehyde and polychlorinated biphenyl.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the indoor or outdoor environment or into or
out of any property.
SECTION 4.18 SUBSTANTIAL CUSTOMERS AND SUPPLIERS. Schedule 4.18(a)
lists the 20 top customers of Seller with respect to the Business, on the basis
of revenues for goods sold or services provided for fiscal year 1999. Schedule
4.18(b) lists the suppliers of Seller with respect to the Business for which
cost of goods or services purchased from any such supplier for fiscal year 1999
exceeded $100,000. Except as disclosed in Schedule 4.18(c) none of the customers
or suppliers of Seller listed on Schedules 4.18(a) or (b) has refused, or to
Seller's knowledge communicated or threatened that it will or may refuse, to
purchase or supply goods or services, as the case may be, in any material
respect, or has communicated that it will or may substantially reduce the amount
of goods or services that it is willing to purchase from, or sell to, the
Business. Except as disclosed in Schedule 4.18(d), to the knowledge of Seller,
no such customer or supplier listed on Schedule 4.18(a) or (b) is threatened
with bankruptcy or insolvency. Notwithstanding anything to the contrary
contained in this Agreement, Seller makes no representations or warranties
whatsoever regarding the willingness or obligation of Springs Industries to
continue as a customer or licensor of the Business.
SECTION 4.19 ACCOUNTS RECEIVABLE. All Accounts Receivable shown on
the Financial Statements are valid and represent amounts properly invoiced by
Seller. The reserves for doubtful or uncollectible Accounts Receivable reflected
on the Financial Statements were established in accordance with GAAP with
respect to the Audited Statements and as required to be consistent with Schedule
2.3 and GAAP (except as otherwise are disclosed on Schedule 2.3) with respect to
the Management Prepared Statements.
SECTION 4.20 INSURANCE. Schedule 4.20 contains a true and complete
list of all liability, property, workers' compensation and other insurance
policies currently in effect that insure the Purchased Assets and indicating
thereon whether each such policy is a "claims made" or an
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"occurrence" policy and a brief description of the interests insured thereby.
Each such insurance policy is valid and binding and in full force and effect, no
premiums due thereunder have not been paid and Seller has not received any
notice of cancellation or termination in respect of any such policy or is in
default thereunder. Such insurance policies are, in light of the nature of the
Business and the Purchased Assets, in amounts and coverages that are reasonable
and customary for persons or entities engaged in such business and having such
assets and properties. Neither the Seller nor, to Seller's knowledge, the person
or entity to whom such policy has been issued has received notice that any
insurer under any policy referred to in this Section is denying liability with
respect to a claim thereunder or defending under a reservation of rights clause.
SECTION 4.21 NO GUARANTEES. None of the Assumed Liabilities is
guaranteed by or subject to a similar contingent obligation of any other person
or entity.
SECTION 4.22 BOOKS AND RECORDS. Except as set forth on Schedule
4.22, none of the books and records of Seller included in the Purchased Assets
are recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means of
access thereto and therefrom) are not under the exclusive ownership and direct
control of one or more employees of Seller.
SECTION 4.23 BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Seller
directly with Buyer without the intervention of any person or entity on behalf
of Seller in such manner as to give rise to any valid claim by any person or
entity against Buyer for a finder's fee, brokerage commission or similar
payment.
SECTION 4.24 FULL DISCLOSURE.
(a) All copies of documents and agreements delivered to
Buyer by or on behalf of Seller in connection with this Agreement and the
transactions contemplated hereby are true and accurate copies of such documents
and agreements.
(b) No representation or warranty contained in this
Agreement, and no statement contained in any Schedule or in any certificate,
list or other writing furnished by Seller or Seller's representatives to Buyer
pursuant to any provision of this Agreement (including without limitation the
Financial Statements), contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.25 DEFINITION OF "KNOWLEDGE". The phrases "to the
knowledge of Seller," "Seller has not received notice," "to Seller's knowledge,"
"Seller has not been notified," "Seller is not aware" and any other similar
phrases as used in this Article IV refer to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Information shall be deemed to be known to
Seller if that information is actually or reasonably should have been known by
any such persons in each case after due inquiry by such person.
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SECTION 4.26 DEFINITION OF "MATERIAL" AND "MATERIAL ADVERSE
EFFECT". The phrases "material," "material fact," "material respect" and any
other similar phrases used in this Article IV refer to such matters which have a
material effect on the Purchased Assets, the Business or the operations,
financial condition or performance of the Business taken as a whole. For
purposes of this Agreement, a violation or other matter will be deemed to have a
"MATERIAL ADVERSE EFFECT" if such violation or other matter would have a
material adverse effect on the Purchased Assets, the Business or the operations,
financial condition or performance of the Business taken as a whole.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:]
SECTION 5.1 DUE ORGANIZATION; GOOD STANDING. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has full corporate power and authority to enter
into and to perform this Agreement and any other agreement, document or
instrument to be delivered by Buyer pursuant to this Agreement and to consummate
the transactions contemplated hereby and thereby.
SECTION 5.2 DUE AUTHORITY; DUE EXECUTION AND DELIVERY; BINDING
EFFECT. The execution, delivery and performance by Buyer of this Agreement and
the other agreements, documents and instruments to be delivered pursuant to this
Agreement, and the consummation by Buyer of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action by
Buyer. Each of this Agreement and any other agreement, document and instrument
to be delivered pursuant to this Agreement by Buyer has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar Laws from time to time in effect affecting the enforcement of creditors'
rights generally.
SECTION 5.3 NO CONFLICTS; CONSENTS. The execution, delivery and
performance by Buyer of this Agreement or the other agreements, documents or
instruments to be delivered pursuant to this Agreement by Buyer, or the
consummation of the transactions contemplated hereby or thereby, will not (i)
conflict with or result in a violation or breach of any of the terms, conditions
or provisions of the Certificate of Incorporation or by-laws of Buyer, each as
currently in effect, (ii) conflict with, or result in a breach, violation or
termination of, or constitute (with or without notice or lapse of time or both)
a default under, any material contract, lease, agreement, commitment or other
instrument, or any order, judgment or decree, to which Buyer is a party or by
which it or its properties are bound or (iii) conflict with or constitute a
violation, in any material respect, of any Law applicable to Buyer. Except as
set forth on Schedule 5.3, no consent, approval or authorization of, or
designation, declaration or filing with, any Governmental or Regulatory
Authority, any lender or lessor or any other person or entity is required on the
part of Buyer in connection with the execution, delivery and performance by
Buyer of this Agreement and the other agreements, documents or instruments to be
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delivered pursuant to this Agreement, or the consummation of the transactions
contemplated hereby or thereby.
SECTION 5.4 LITIGATION. There are no Actions or Proceedings
pending or, to the best of Buyer's knowledge, threatened, that question the
validity of or seek to enjoin the execution, delivery or performance by Buyer of
this Agreement and the other agreements, documents or instruments to be
delivered by Buyer pursuant to this Agreement, or the consummation of the
transactions contemplated hereby or thereby, or any action taken or to be taken
by Buyer in connection herewith or therewith.
SECTION 5.5 BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Buyer directly
with Seller without the intervention of any person or entity on behalf of Buyer
in such manner as to give rise to any valid claim by any person or entity
against Seller for a finder's fee, brokerage commission or similar payment.
SECTION 5.6 FULL DISCLOSURE.
(a) All copies of documents and agreements delivered to
Seller by or on behalf of Buyer in connection with this Agreement and the
transactions contemplated hereby are true and accurate copies of such documents
and agreements.
(b) No representation or warranty contained in this
Agreement, and no statement contained in any Schedule or in any certificate,
list or other writing furnished by Buyer or Buyer's representatives to Seller
pursuant to any provision of this Agreement, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.
ARTICLE VI
FURTHER AGREEMENTS OF THE PARTIES
SECTION 6.1 PRESERVATION OF RECORDS. Each of Buyer and Seller
agree that it shall preserve and keep the records of Seller acquired pursuant to
this Agreement or retained by Seller, as the case may be, for a period of five
(5) years from the Closing Date, or for any longer period as may be required by
any government agency or ongoing audit, administrative proceeding or litigation,
and shall make such records and personnel available to the other as may be
reasonably required by the other in connection with, among other things, the
filing of any tax return or report by, or any insurance claim by, or any Action
or Proceeding (including tax audits) against Buyer or Seller. If a Party wishes
to destroy such records after that time, it shall first give 90 days' prior
written notice to the other Party and the other Party shall have the right, at
its option and expense, upon prior written notice given within that 90-day
period, to take possession of the records within 180 days after the date of such
notice. Seller may assign its obligation to preserve and keep records hereunder
to another person or entity upon the prior written consent of Buyer, provided,
that Seller shall cause such assignee to agree in writing to honor Seller's
obligations to retain, keep and make available such records in accordance with
the terms of this Section 6.1.
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SECTION 6.2 EMPLOYEE AND EMPLOYEE BENEFIT MATTERS.
(a) Buyer will employ as of the Effective Time ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and assume their respective Divisional Change in
Control Agreements. In addition, pursuant to the terms and conditions of the
Human Resources Agreement, as of the Effective Time, Buyer shall offer
employment to certain employees of the Business. All employees of the Business
accepting Buyer's offer of employment, including ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇, are hereinafter referred to individually and collectively as the "HIRED
EMPLOYEES."
SECTION 6.3 NONCOMPETITION.
(a) Seller will, for a period of five (5) years from the
Closing Date (the "NON-COMPETITION PERIOD"), refrain from, either alone or in
conjunction with any other person or entity, or directly or indirectly through
its present or future affiliates:
(i) employing, engaging or seeking to employ or
engage (it being understood that general newspaper advertisements or
other general circulation materials not specifically targeted at Hired
Employees will not be deemed to be solicitations hereunder) any person
who within the prior two (2) years preceding the Closing Date had been
an employee of Buyer or any of its affiliates, or a Hired Employee,
unless such employee (A) resigns voluntarily (without any solicitation
from Seller or any of its affiliates) or (B) is terminated by Buyer or
any of its affiliates after the Closing Date;
(ii) causing or attempting to cause (A) any
client, customer or supplier of the Business to terminate or materially
reduce its business with Buyer or any of its affiliates in respect of
the Business or (B) any officer, employee or consultant of Buyer or any
of its affiliates to resign or sever a relationship with Buyer or any
of its affiliates;
(iii) disclosing (unless compelled by an Action or
Proceeding of a Governmental or Regulatory Authority) or using any
confidential or secret information relating to the Business or the
Purchased Assets; or
(iv) participating or engaging in (other than
through the ownership of 5% or less of any class of securities
registered under the Securities Exchange Act of 1934, as amended), or
otherwise lending financial assistance to any person or entity
participating or engaged in, the Business.
(b) The Parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in Section
6.3(a). It is the intention of the Parties that the provisions of Section 6.3(a)
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of Section 6.3(a) shall not render unenforceable, or impair, the
remainder of the provisions of Section 6.3(a). Accordingly, if any provision of
Section 6.3(a) shall be determined to be invalid or unenforceable, such
invalidity or unenforceability shall be deemed to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
determination is made and not with respect to any other provision or
jurisdiction.
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(c) The Parties hereto acknowledge and agree that any
remedy at Law for any breach of the provisions of Section 6.3(a) would be
inadequate, and Seller hereby consents to the granting by any court of an
injunction or other equitable relief, without the necessity of actual monetary
loss being proved, in order that the breach or threatened breach of such
provisions may be effectively restrained.
SECTION 6.4 REMITTANCES BY SELLER AND BUYER.
(a) If Seller shall receive on or after the Closing Date
any sums with respect to the Purchased Assets, including, without limitation,
any sums under an Assumed Contract that are attributable to any period of time
subsequent to the Effective Time, Seller shall promptly cause the same to be
remitted to Buyer in the same form received by Seller and, if required, endorsed
over to Buyer.
(b) If Buyer shall receive, on or after the Closing Date,
any sums with respect to the Excluded Assets that in any such case are
attributable to any period of time prior to the Effective Time, then Buyer shall
promptly cause the same to be remitted to Seller in the same form received by
Buyer and, if required, endorsed over to the Seller.
(c) Any such sums so received by Seller or Buyer shall be
held in trust by Seller for Buyer, or by Buyer for
Seller, respectively, to be remitted to or endorsed over as provided in this
Section 6.4.
SECTION 6.5 COOPERATION. Seller and Buyer shall cooperate with
each other in all reasonable respects in connection with the defense of any
claim included within any Assumed Liability or Excluded Liability, as the case
may be, including making available records relating to such claim and
furnishing, management employees of the Party as may be reasonably necessary for
the preparation of the defense of any such claim or for testimony as a witness
in any proceeding relating to such claim; provided, however, that the foregoing
right to cooperation shall not be exercisable by one Party in such a manner as
to interfere unreasonably with the normal operations and business of the other
Party and subject to reimbursement for all reasonable expenses associated
therewith that are pre-approved by the Party.
SECTION 6.6 FACILITY LEASE. At the Closing, Seller shall lease to
Buyer the Facility (as more particularly described in Exhibit A to the Facility
Lease) pursuant to the terms of a lease agreement (the "FACILITY LEASE"),
together with associated rights of ingress, egress and parking.
SECTION 6.7 SYSTEMS SUPPORT. At the Closing, Seller and Buyer
shall enter into an agreement (the "SERVICES AGREEMENT") pursuant to which
Seller shall provide support services to Buyer for the operation of the Business
consistent with such systems support provided to the Business when conducted by
Seller.
SECTION 6.8 REPLACEMENT OF EXISTING LETTERS OF CREDIT.
Contemporaneously herewith, Seller and Buyer are entering into a letter
agreement regarding certain letters of credit.
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ARTICLE VII
DOCUMENTS TO BE DELIVERED AT THE CLOSING
SECTION 7.1 DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing,
Seller shall deliver, or cause to be delivered, to Buyer the following:
(a) Such bills of sale, assignments, and certificates of title,
dated the Closing Date, necessary to transfer to Buyer the Purchased Assets;
(b) the Escrow Agreement executed by Seller;
(c) copies of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement and any
agreements, documents or instruments to be delivered pursuant to this Agreement
by Seller, and a certificate of Seller's Secretary, dated the Closing Date, that
such resolutions were duly adopted and are in full force and effect as
certified;
(d) the Facility Lease executed by Seller;
(e) the Services Agreement executed by Seller;
(f) the opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, Seller's
counsel;
(g) a certificate of the Secretary of Seller certifying as to the
incumbency and signatures of the officers of Seller who have executed documents
delivered at the Closing on behalf of Seller;
(h) a certificate of good standing, dated within 10 days before
the Closing Date, from the Secretary of State of the State of Delaware,
establishing that Seller is in existence and is in good standing to transact
business in such state;
(i) foreign qualification certificates, dated within 10 days
before the Closing Date, of the Secretaries of State of the states in which
Seller, with respect to the Business, is qualified to do business, to the effect
that Seller is qualified to do business and is in good standing as a foreign
corporation in each of such states;
(j) all authorizations, consents, approvals, permits and licenses
required of Seller pursuant to the terms of this Agreement;
(k) executed trademark assignments,
dated the Closing Date, in form and substance satisfactory to the Parties;
(l) consent to the transfer of the Services Agreement by and
between Seller and Interface Fabrics Group, Inc.;
(m) the Human Resources Agreement executed by Seller; and
(n) such other documents as Buyer may reasonably request.
SECTION 7.2 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing,
Buyer shall deliver to Seller the following:
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(a) an executed instrument of assumption, dated the Closing Date,
pursuant to which Buyer shall assume all of the Assumed Contracts and all of the
Assumed Liabilities;
(b) the Escrow Agreement executed by Buyer;
(c) a copy of the resolutions of the board of directors of Buyer
authorizing the execution, delivery and performance of this Agreement and any
agreements, documents or instruments to be delivered pursuant to this Agreement
by Buyer, and a certificate of Buyer's Secretary or Assistant Secretary, dated
the Closing Date, that such resolutions were duly adopted and are in full force
and effect as certified;
(d) the Facility Lease executed by Buyer;
(e) the Services Agreement executed by Buyer;
(f) an agreement with Springs Industries reasonably satisfactory
to Seller;
(g) Letter Agreement regarding replacement letters of credit to be
issued in favor of those vendors and suppliers of the Business which require
such letters of credit as a condition to doing business with the Seller in
respect of the Business.
(h) the opinion of ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Buyer's counsel;
(i) a certificate of the Secretary or Assistant Secretary of Buyer
certifying as to the incumbency and signatures of the officers of Buyer who have
executed documents delivered at the Closing on behalf of Buyer;
(j) a certificate of good standing, dated within 10 days of the
Closing Date, from the Secretary of State of the State of Delaware, establishing
that Buyer is in existence, has paid all franchise taxes that are due and
payable and otherwise is in good standing to transact business in such state;
(k) the Human Resources Agreement executed by Buyer; and
(l) such other documents as Seller may reasonably request.
ARTICLE VIII
INDEMNIFICATION AND RELATED MATTERS
SECTION 8.1 INDEMNIFICATION BY SELLER. Except as set forth in
Sections 8.6(a) and (b), the representations and warranties made by Seller in
this Agreement shall survive the Closing for one (1) year after the Closing
Date. Subject to the terms and conditions of this Article VIII, Seller shall
indemnify, defend and hold harmless Buyer, its affiliates and each of their
respective directors, officers, employees, agents, shareholders, partners or
other representatives (collectively, "BUYER'S INDEMNITEES") from and against any
and all losses, claims, obligations, assessments, penalties, liabilities, costs,
damages, expenses (including without limitation interest, court costs,
reasonable fees and expenses of attorneys, accountants and other experts or
other expenses of litigation on other
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Actions or Proceedings or of any claim, default or assessment actually
incurred), fines, fees and deficiencies (collectively, "DAMAGES"), asserted
against or incurred by Buyer by reason of or resulting from:
(a) a breach by Seller of any representation or warranty
of Seller contained herein;
(b) any Excluded Liability;
(c) a breach by Seller of, or failure by Seller to
fulfill or perform, any covenant or agreement of Seller contained herein; or
(d) any violation of, or failure to comply with the
fraudulent conveyance or preferential transfer laws of the United States
(including any bulk sales laws) or any state in connection with the transactions
contemplated herein.
SECTION 8.2 INDEMNIFICATION BY BUYER. The representations and
warranties made by Buyer in this Agreement shall survive the Closing for one (1)
year after the Closing Date; provided, however, any breach of a representation,
warranty, covenant or agreement with respect to Assumed Liabilities shall
survive the Closing for two (2) years after the Closing Date. Subject to the
terms and conditions of this Article VIII, Buyer shall indemnify, defend and
hold harmless Seller, its affiliates and each of their respective directors,
officers, employees, agents, shareholders, partners or other representatives
(collectively, "SELLER'S INDEMNITEES") from and against any and all Damages
asserted against or incurred by Seller by reason of or resulting from;
(a) a breach by Buyer of any representation or warranty
of Buyer contained herein;
(b) the failure of Buyer to pay, perform and discharge
when due any of the Assumed Liabilities;
(c) a breach by Buyer of, or failure by Buyer to fulfill
or perform, any covenant or agreement of Buyer hereunder; or
(d) any claims by third parties against Seller relating
solely to the performance by Buyer under the Assumed Contracts from and after
the Closing.
SECTION 8.3 PROCEDURES FOR INDEMNIFICATION. As used herein, the
term "INDEMNITOR" means the Party against whom indemnification hereunder is
sought, and the term "INDEMNITEE" means the Party seeking indemnification
hereunder.
(a) A claim for indemnification hereunder ("INDEMNIFICATION
CLAIM") shall be made by the Indemnitee by delivery of a written declaration to
the Indemnitor requesting indemnification and providing reasonable detail with
respect to the basis on which indemnification is sought and the amount of
asserted Damages and, in the case of the assertion of a claim by any person or
entity who is not a Party to this Agreement (a "THIRD PARTY CLAIM") containing
(by attachment or otherwise) such other information as the Indemnitee shall have
concerning such Third Party Claim.
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(b) If the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 8.4 shall be observed by the
Indemnitee and the Indemnitor.
(c) If the Indemnification Claim involves a matter other
than a Third Party Claim, the Indemnitor shall have thirty (30) business days to
object to such Indemnification Claim by delivery of a written notice of such
objection to the Indemnitee specifying in reasonable detail the basis for such
objection. Failure to timely so object shall constitute a final and binding
acceptance of the Indemnification Claim by the Indemnitor and the
Indemnification Claim shall be paid in accordance with Section 8.3(d). If an
objection is timely interposed by the Indemnitor, then the Indemnitee and the
Indemnitor shall negotiate in good faith for a period of thirty (30) business
days from the date (such period is hereinafter referred to as the "NEGOTIATION
PERIOD") the Indemnitee receives such objection prior to commencing any
arbitration under Section 9.3.
(d) Upon determination of the amount of an
Indemnification Claim (including any Third Party Claim) that is binding on both
the Indemnitor and the Indemnitee, the Indemnitor shall pay the amount of such
Indemnification Claim by check within ten (10) business days of the date such
amount is determined; provided, that if the Indemnitor is Seller, the Indemnitee
shall give notice of such Indemnification Claim under the Escrow Agreement and
the Indemnification Claim shall be satisfied, to the extent funds remain in the
Escrow, first from the Escrow and any remaining amount of such Indemnification
Claim shall be paid by the Indemnitor as provided in this Section 9.3(d).
SECTION 8.4 THIRD PARTY CLAIMS. The respective obligations and
liabilities of any Party obligated to provide indemnification in respect of a
Third Party Claim shall be subject to the following terms and conditions:
(a) Promptly after receipt of written notice of the
assertion of any Third Party Claim evidenced by service of process or other
legal pleading, the Indemnitee shall give the Indemnitor written notice thereof
together with a copy of such claim, process or other legal pleading, and the
Indemnitor shall have the right to undertake the defense thereof by
representatives of its own choosing and at its own expense. The failure of the
Indemnitee to notify promptly the Indemnitor of the Third Party Claim shall not
relieve the Indemnitor for any liability that it may have with respect to such
claim except to the extent the Indemnitor demonstrates that the defense of such
claim is prejudiced by such failure. The Indemnitee may participate in the
defense (subject to the Indemnitor's right to control) with counsel of its own
choice, the fees and expenses of which counsel shall be paid by the Indemnitee
unless (i) the Indemnitor has agreed to pay such fees and expenses, (ii) the
Indemnitor has failed to assume the defense of such action as specified in
Section 8.4(b) or (iii) the named parties to any such action (including any
impleaded parties) include both the Indemnitor and the Indemnitee and the
Indemnitee has been advised by counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the Indemnitor, such that the same counsel cannot in good faith
represent both the Indemnitor and the Indemnitee (in which case, if the
Indemnitee informs the Indemnitor in writing that it elects to employ separate
counsel at the expense of the Indemnitor, the Indemnitor shall not have the
right to assume the defense of such action on behalf of the Indemnitee, it being
understood, however, that the Indemnitor shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
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be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnitee, which firm shall be designated in
writing by the Indemnitee).
(b) If the Indemnitor has not, by the 30th day after
receipt of notice of any such claim (or the date 10 days prior to such earlier
date after receipt of such notice by which an answer or other pleading must be
served in order to prevent judgment by default in favor of the person asserting
such claim), elected to defend against such claim, the Indemnitee will (upon
further notice to the Indemnitor) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the Indemnitor and at the Indemnitor's expense (unless the Indemnitor is
determined to have no indemnity liability hereunder in connection with such
claim), it being understood, however, that the Indemnitor shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the Indemnitee (and one
separate firm of local counsel, as necessary), which firm shall be designated by
the Indemnitee.
(c) No settlement of a Third Party Claim as to which
notice has been given to Indemnitor by Indemnitee pursuant to Section 8.4(a)
shall be made without the prior written consent by or on behalf of the
Indemnitor, which consent shall not be unreasonably withheld or delayed. Consent
shall be presumed in the case of settlements of $10,000 or less where the
Indemnitor has not responded with thirty (30) business days of notice of a
proposed settlement. If the Indemnitor assumes the defense of a Third Party
Claim, no compromise or settlement thereof may be effected by the Indemnitor
without the Indemnitee's consent (which will not be unreasonably withheld or
delayed ) unless (i) there is no finding or admission of any violation of law or
any violation of the rights of any person, (ii) the sole relief provided is
monetary damages and (iii) the compromise or settlement includes, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
Indemnitee of a release, in form and substance reasonably satisfactory to the
Indemnitee, from all liability in respect of such Third Party Claim.
(d) The Indemnitee and the Indemnitor will each cooperate
with all requests of the other with respect to any
matter involving indemnification under this Section 8.4.
SECTION 8.5 APPLICATION OF DAMAGES AGAINST ESCROW. To the extent
Buyer is finally determined to be entitled to Damages hereunder, except as
otherwise contemplated by Section 8.7, Buyer may only seek recourse from the
Escrow by means of Buyer and Seller reducing the Escrow by the amount of Damages
and directing the Escrow Agent to release the amount of such Damages to Buyer,
in accordance with the Escrow Agreement, and Buyer will have no further claim
against Seller to the extent the amount of the Escrow is less than the Damages
otherwise subject to indemnification hereunder. If there are any unresolved
Indemnification Claims of Buyer at the expiration date of the Escrow Agreement,
Buyer and Seller will direct the Escrow agent to retain, and not pay, the Escrow
to the extent, and in the amount, of Buyer's unresolved Indemnification Claims
for Damages hereunder for which notice has been provided under Section 8.3(a) or
Section 8.4(a). Upon the resolution of such claims, Buyer and Seller will direct
the Escrow Agent to pay the remaining Escrow Deposit in accordance with the
resolution of the claims.
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SECTION 8.6 TIME LIMITATIONS. The indemnification rights of the
Parties hereto for Damages resulting from each of the occurrences or conditions
specified below shall be subject to the condition that the Indemnitor shall have
received an Indemnification Claim for the Damages for which indemnification is
sought within the corresponding time period set forth below:
(a) Indemnification Claims resulting from a breach of
representations and warranties or for breaches of covenants that are related to
tax matters, ERISA and Seller's Benefit Plans shall be brought prior to the
fifth (5th) business day after the expiration of the applicable statute of
limitations therefor;
(b) Indemnification Claims resulting from a breach of
representations and warranties set forth in Section 4.17 shall be brought prior
to the third anniversary of the Closing Date; and
(c) All other Indemnification Claims of the Parties
hereunder not specifically identified in paragraphs (a) and (b) above shall be
brought prior to the first anniversary of the Closing Date.
SECTION 8.7 LIMITATIONS AS TO AMOUNT. In accordance with Section
1.4(f), with respect to warranty claims and charge-backs, Seller shall be
obligated to indemnify Buyer only when and only to the extent such warranty
claims and charge-backs become Material Warranty Claims and Charge-backs (as
defined in Section 1.4(f)). Seller shall be obligated to indemnify Buyer only
when and to the extent the aggregate of all Damages suffered or incurred by
Buyer (excluding Material Warranty Claims and Charge-backs) as to which a right
of indemnification is provided under this Article VIII exceeds One Hundred Fifty
Thousand Dollars ($150,000) (the "SELLER'S THRESHOLD AMOUNT"). After the
aggregate of all Damages suffered or incurred by Buyer (excluding Material
Warranty Claims and Charge-backs) exceeds the Seller's Threshold Amount, subject
to the other limitations set forth herein, Seller shall be obligated to
indemnify Buyer for all such Damages in excess of the Seller's Threshold Amount.
In no event shall the aggregate liability of Seller to Buyer Indemnitees under
this Article VIII or otherwise with respect to the transactions contemplated
hereby, whether based upon contract, statutory or regulatory law, tort or
otherwise, including without limitation, for Material Warranty Claims and
Charge-backs, exceed the amount held from time to time in the Escrow and
available for payment of indemnity claims (the "SELLER'S MAXIMUM AMOUNT"),
except for the environmental matters set forth in Section 4.17, tax matters set
forth in Section 4.7, and ERISA and Seller's Benefit Plans set forth in Section
4.10. The liability of Seller for indemnity claims based on a breach of the
representations and warranties contained in Sections 4.7 and 4.10 shall be
unlimited. The aggregate liability of Seller to Buyer Indemnitees under this
Article VIII or otherwise with respect to the transactions contemplated hereby,
whether based on contract, statutory or regulatory law, tort or otherwise, for
Environmental Costs and Liabilities shall be limited to (a) the amount held in
the Escrow from time to time and available for payment of indemnity claims, and
(b) to the extent the Escrow has been exhausted, the excess of $375,000 over the
aggregate costs to the Seller after the date hereof for cleanup and other
remediation work with respect to the Facility. With respect to the matters which
are not subject to the Seller's Maximum Amount, Buyer must first obtain recourse
from the Escrow, and may make a claim for payment from Seller only to the extent
the funds in Escrow have been fully paid out or distributed.
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SECTION 8.8 EXCLUSIONS FROM LIMITATIONS. The limitations that are
set forth in Sections 8.6 and 8.7 shall not apply in the case of fraud.
SECTION 8.9 TREATMENT OF PAYMENT. Buyer and Seller agree to treat
any indemnity payment made pursuant to this Article VIII as an adjustment to the
Purchase Price for federal, state, local and foreign income tax purposes.
SECTION 8.10 INSURANCE PROCEEDS. To the extent the Indemnitee has
received proceeds of insurance with respect to a matter for which it is to be
indemnified hereunder, the indemnification obligation of the Indemnitor shall be
reduced to the extent of the net insurance proceeds received by the Indemnitee,
unless the insurance company is subrogated to the rights of the Indemnitee.
SECTION 8.11 SUBROGATION. Upon payment in full of any
Indemnification Claim, the Indemnitor shall be subrogated to the extent of such
payment to the rights of the Indemnitee against any person or entity with
respect to the subject matter of such Indemnification Claim.
SECTION 8.12 EXCLUSIVE REMEDY. After the Closing, to the extent
permitted by Law, the indemnities set forth in this Article VIII shall be the
exclusive remedies of Buyer and Seller for any misrepresentation, breach of
warranty or failure to fulfill or perform any covenant or agreement contained in
this Agreement, or any other matter relating to the transactions contemplated by
this Agreement, whether based upon breach of contract, statutory or regulatory
law, tort or otherwise, and the Parties shall not be entitled to a recision of
this Agreement or to any further indemnification rights or claims of any nature
whatsoever in respect thereof, all of which the Parties hereto hereby waive to
the full extent permitted by Law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 ENTIRE AGREEMENT. This Agreement (with its Schedules
and Exhibits) contains, and is intended as, a complete statement of all of the
terms of the arrangements between the Parties with respect to the matters
provided for herein, supersedes any previous agreements and understandings
between the Parties with respect to those matters, and cannot be changed or
terminated orally.
SECTION 9.2 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the substantive laws (but not the rules
governing conflicts of law) of the State of North Carolina.
SECTION 9.3 DISPUTE RESOLUTION.
(a) Other than as provided for in Section 2.3, any
dispute, controversy or claim arising out of or relating to this Agreement or
any contract or agreement entered into pursuant hereto or the performance by the
Parties of its or their terms shall be settled by binding arbitration held in
Atlanta, Georgia in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, except as specifically
otherwise provided in this Section 9.3. The
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interpretation and enforceability of this Section 9.3 shall be governed
exclusively by the Federal Arbitration Act, 9 U.S.C. ss. 1-16.
(b) If the matter in controversy (exclusive of attorney
fees and expenses) shall appear, as at the time of the demand for arbitration,
to exceed $100,000, then the panel to be appointed shall consist of three
neutral arbitrators; otherwise, one neutral arbitrator.
(c) The arbitrator(s) shall allow such discovery as the
arbitrator(s) determine appropriate under the circumstances and shall resolve
the dispute as expeditiously as practicable, and if reasonably practicable,
within one hundred twenty (120) days after the selection of the arbitrator(s).
The arbitrator(s) shall give the Parties written notice of the decision, with
the reasons therefor set out, and shall have thirty (30) days thereafter to
reconsider and modify such decision if any Party so requests within ten (10)
days after the decision. Thereafter, the decision of the arbitrator(s) shall be
final, binding, and nonappealable with respect to all persons, including
(without limitation) persons who have failed or refused to participate in the
arbitration process.
(d) The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or preliminary
relief, and to allocate responsibility for the costs of the arbitration and to
award recovery of attorneys' fees and expenses in such manner as is determined
to be appropriate by the arbitrator(s); provided that the arbitrator(s) shall be
bound by and shall limit their awards based upon the limitations of liability
contained in this Agreement. A Party may, however, seek an emergency temporary
restraining order, if appropriate under governing law, in any court having
jurisdiction over the subject matter and the parties. Following the ruling on
the request for temporary restraining order, the matter shall proceed in
arbitration as set forth herein.
(e) Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having in personam and subject matter jurisdiction.
(f) All proceedings under this Section 9.3, and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all Parties.
(g) The fact that the dispute resolution procedures
specified in this Section 9.3 shall have been or may be invoked shall not excuse
any Party from performing its obligations under this Agreement and during the
pendency of any such procedure all Parties shall continue to perform their
respective obligations in good faith, subject to any rights to terminate this
Agreement that may be available to any Party.
(h) All applicable statutes of limitation shall be tolled
with respect to the subject matter of the dispute while the procedures specified
in this Section 9.3 are pending. The Parties will take such action, if any,
required to effectuate such tolling.
SECTION 9.4 SCHEDULES, TABLES OF CONTENTS AND HEADINGS. Any
matter disclosed on any Schedule to this Agreement shall be deemed to have been
disclosed in all other Schedules to this Agreement. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
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SECTION 9.5 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after its deposit in the mail, by registered mail,
return receipt requested, to the Parties at the following addresses (or to such
other address as a Party may have specified by notice given to the other Parties
pursuant to this provision):
If to Seller:
CMI Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
WestPoint ▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Post ▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall also constitute notice):
WestPoint ▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Post ▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.6 SEVERABILITY. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never compromised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 9.7 WAIVER. Buyer may waive compliance by Seller, and
Seller may waive compliance by Buyer, with any of the provisions of this
Agreement. No waiver of any provision
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shall be construed as a waiver of any other provision. Any waiver must be in
writing. No waiver by either Party of any default or breach by the other Party
of any representation, warranty, covenant or condition contained in this
Agreement, any exhibit or any document, instrument or certificate contemplated
hereby shall be deemed to be a waiver of any subsequent default or breach by
such Party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of either
Party in exercising any right, power or remedy under this Agreement or at law or
in equity shall operate as a waiver hereof or thereof or otherwise prejudice any
of such Party's rights, powers and remedies. All remedies, whether at law or in
equity, shall be cumulative and the election of any one or more shall not
constitute a waiver of the right to pursue other available remedies.
SECTION 9.8 BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective
successors and permitted assigns. No assignment of this Agreement or of any
rights or obligations hereunder may be made by any Party (by operation of law or
otherwise) without the prior written consent of the other Party which shall not
be unreasonably withheld; provided, however, (i) no such assignment shall
relieve the assigning Party of any of its obligations or liabilities under this
Agreement and (ii) the assignee shall expressly agree, in writing, to assume all
obligations and liabilities of the assigning Party under this Agreement.
SECTION 9.9 PARTIES IN INTEREST; NO THIRD-PARTY BENEFICIARIES.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the Parties hereto. Except as otherwise provided herein or therein,
neither this Agreement nor any other agreement, document or instrument to be
delivered pursuant to this Agreement shall be deemed to confer upon any person
not a Party hereto any rights or remedies hereunder or thereunder.
SECTION 9.10 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each binding upon the Party signing the same, and all of
such counterparts, when taken together, shall constitute one agreement.
SECTION 9.11 HEADINGS, GENDER, AND "PERSON". All section headings
contained in this Agreement are for convenience of reference only, do not form a
part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, limited liability company,
partnership, trust, governmental authority or body, association, unincorporated
organization or any other entity.
SECTION 9.12 TIME OF ESSENCE. Time is of the essence in this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the Parties hereto as of the date first above written.
BUYER
WestPoint ▇▇▇▇▇▇▇, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
SELLER
CMI Industries, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
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