EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
Dated as of January , 2001
By and Among
EMPIRE OF CAROLINA, INC., as Seller
and
APPLE SPORTS ACQUISITION, INC.,
▇▇▇▇▇▇ SPORTS ACQUISITION, INC., and
APPLE SHOES ACQUISITION, INC.,
as Buyers
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated this 18TH day of January, 2001,
by and between EMPIRE OF CAROLINA, Inc. a Florida corporation, with offices at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇▇▇ ("Seller"); and APPLE SPORTS
ACQUISITION, INC. ("Apple Acquisition"), ▇▇▇▇▇▇ SPORTS ACQUISITION, INC.
("▇▇▇▇▇▇ Acquisition"); and APPLE SHOES ACQUISITION, INC. ("Golf Acquisition")
each a New York corporation, with offices at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇. Apple Acquisition and ▇▇▇▇▇▇ Acquisition and Golf Acquisition are
herein sometimes collectively referred to as "Buyer".
RECITALS
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A. On November 17, 2000, Seller and Empire Industries, Inc.
filed a voluntary petition pursuant to Chapter 11 of 11 U.S.C.ss.101 et seq.
(the "Bankruptcy Code") with the United States Bankruptcy Court for the Southern
District of Florida ("Bankruptcy Court"), which case bears the case numbers
00-35179 and 00-35180 - BKC- PGH (collectively, the "Cases").
B. Seller represents and warrants that it is the beneficial
and record owner of all of the issued and outstanding shares of capital stock of
each of the following New York corporations: (1) Apple Sports, Inc. ("Apple
Sports") , ▇▇▇▇▇▇ Sports, Inc. ("▇▇▇▇▇▇ Sports") and Apple Golf Shoes,
Inc.("Apple Golf") (Apple Sports, ▇▇▇▇▇▇ Sports and Apple Golf are herein
collectively referred to as the "Acquired Companies", and each as an "Acquired
Company").
C. Seller is the licensee under certain Trademark Licensing
Agreement between Pacific Cycle, LLC and Seller for the use of the Mongoose (R)
trademark (the"Mongoose License") pursuant to which ▇▇▇▇▇▇ Sports, Inc. sells
and distributes snowboards, skateboards and related products bearing the
Mongoose(R) trademark.
D. Apple Sports Inc. and Apple Golf Shoes, Inc. are parties to
a Trademark License Agreement between ▇▇▇▇▇▇ Sporting Goods Co. and Apple Sports
Inc. and Apple Golf Shoes, Inc pursuant to which each of the foregoing entities
are entitled to, inter alia, manufacture and distribute golf shoes and
accessories bearing the ▇▇▇▇▇▇(R)trademark. (the"▇▇▇▇▇▇ License") (the "Mongoose
License" and the "▇▇▇▇▇▇ License" are hereinafter referred to as the
"Licenses").
E. Seller wishes to sell to Buyer, and Buyer wishes to
purchase from Seller, in a contemporaneous single transaction pursuant to
Sections 363(b) and (f) of the Bankruptcy Code, all of the issued and
outstanding shares of capital stock of the Acquired Companies as well as
Seller's interests in the Licenses as follows: (i) Seller shall convey to Apple
Acquisition to all of the issued and outstanding shares of Apple Sports: (ii)
Seller shall convey to ▇▇▇▇▇▇ Acquisition all of the issued and outstanding
shares of ▇▇▇▇▇▇ Sports; (iii) Seller shall convey to Apple Golf Acquisition all
of the issued and outstanding shares of capital stock of Apple Golf; (iv) Seller
shall obtain, in writing, all necessary consents from ▇▇▇▇▇▇ Sporting Goods Co.
to the assignment of the ▇▇▇▇▇▇ License to the corporations constituting Buyer
as they may request prior to Closing and (v) Seller shall, pursuant to Section
365 of the Bankruptcy Code, assign to the corporations constituting Buyer as
they may request prior to Closing, all of Seller's rights and interests under
the Mongoose License, all as hereinafter more particularly set forth.
F. Congress Financial Corporation (Central) ("Congress"),
Finova Capital Corporation ("Finova") and LaSalle National Bank ("LaSalle")
("Congress", "Finova" and "LaSalle" are collectively referred to hereinafter as
the "Banks") hold security interests in the Assets to be acquired hereunder as
well as continuing unconditional guaranties made by Apple Sports, Inc., Apple
Shoes, Inc. and ▇▇▇▇▇▇ Sports, Inc. with respect to the obligations of Seller to
the Banks. The Banks also hold a guaranty from Empire Industries, Inc., with
respect to the obligations of the Acquired Companies to the Banks.
G. In accordance with the Interim Order (as hereinafter
defined) dated January 3, 2001, the Bankruptcy Court scheduled a hearing to
consider the motion of Seller to sell all of the outstanding stock of ▇▇▇▇▇▇
Sports Inc., Apple Sports, Inc. and Apple Golf Shoes, Inc. to Buyer free and
clear of all liens, claims and encumbrances, to assume and assign certain
executory contracts, establish bidding and sales procedures and approve a
break-up fee in favor of Buyer all on the terms set forth in the Interim Order.
H. At the election of Buyer, subsequent to the Closing
(hereinafter referred to), the Buyer is contemplating the following merger
transactions pursuant to the provisions of a separate agreement(s), (i) Apple
Sports, Inc. may be merged into Apple Acquisition, Inc.; (ii) ▇▇▇▇▇▇ Sports,
Inc. may be merged into ▇▇▇▇▇▇ Acquisition, Inc. and (iii) Apple Golf Shoes,
Inc. may be merged into Apple Shoes Acquisitions, Inc.
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual representations, warranties, covenants and agreements herein set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
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DEFINITIONS
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1.1 Definitions:
For all purposes of this Agreement, except as otherwise
expressly provided, all accounting terms shall have the meanings assigned under
generally accepted accounting principles,
(iii) all references in this Agreement to designated
"Articles," "Sections," "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of the body of
this Agreement,
(iv) all references in this Agreement to "Exhibits"
are to the Exhibits attached to this Agreement,
(v) pronouns of either gender or neuter shall
include, as appropriate, the other pronoun forms, and
(vi) unless the context requires otherwise, the words
"herein," "hereof" and "hereunder," and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section, Subsection
or other subdivision.
As used in this Agreement and Exhibits, the following
additional definitions shall apply: "Agreement" means this Stock Purchase
Agreement by and between Buyer and Seller, as the same may be amended or
supplemented in a writing signed by duly authorized representatives of both
parties, together with the Exhibits hereto.
"Apple Golf Stock" means all of the issued and outstanding
shares of capital stock of Apple golf Shoes, Inc.
"Apple Sports Stock" means all of the issued and outstanding
shares of capital stock of Apple Sports, Inc.
"Assets" means the Stock and Licenses.
"Bank Debt" shall mean all of the indebtedness of the Acquired
Companies to the Banks evidenced by that certain Amended, Restated and
Consolidated Loan and Security Agreement, dated March 24, 1999 by and among the
Acquired Companies and the Banks together with all other loan documents executed
by the Acquired Companies in connection with such indebtedness, together with
all liens and security interests security such indebtedness, except that Bank
Debt shall expressly exclude the Guaranteed Indebtedness.
"Bank Liens" means all liens and encumbrances securing the
Bank Debt.
"Banks" shall mean the collective reference to LaSalle
National Bank, Congress Financial Corporation (Central) and Finovia Capital
Corporation.
"Break up Fee" shall mean the "Break up Fee" referred to in
the Order.
"Closing" means the consummation of the purchase and sale
transaction contemplated by this Agreement and shall be deemed to have occurred
effective as of 12:01 a.m. on the Closing Date.
"Closing Date" means the day on which the Closing actually
occurs.
"▇▇▇▇▇▇ Sports Stock" means all of the issued and outstanding
shares of capital stock of ▇▇▇▇▇▇ Sports, Inc.
"Empire Continuing Unconditional Guaranty" means the
Continuing Unconditional Guaranty dated March 24, 1999 executed by Empire
Industries, Inc. in favor of the Bank Group which guarantees the Bank Debt.
"Final Sale Order" shall mean that final order to be entered
in the Chapter 11 case of Seller authorizing Seller to sell the Assets to Buyer
pursuant to the provisions of Sections 365 and 363(b) and (f) of the Bankruptcy
Code complying with the provisions of clause (ii) of Section 7.1 hereof.
Financing Loan" shall mean a loan in the principal amount of
not less $10,000,000 made to Buyers by an institutional lender (the "Financing
Banks")on terms satisfactory to Buyer in its sole discretion, for the purpose of
providing purchase money financing of the Purchase of the Assets pursuant to
this Agreement and working capital.
"Guaranteed Indebtedness" means the indebtedness of Empire
Industries, Inc. to the Bank Group guarantied by the Acquired Companies whether
pursuant to that certain Continuing Unconditional Guaranty, dated March 9, 1999,
executed by each of the Acquired Companies, or otherwise, together with all
liens securing any such guaranty.
"Interim Order" shall mean the Order Establishing Bidding
Procedures, Approving Break-up Fee and Fixing Date for Final Hearing on Debtor's
Motion to Sell All Outstanding Stock of the Apple Subsidiaries and Assume and
Assign Executory Contract, as well as the related Notice of Sale, each dated
January 3, 2001, issued by the Bankruptcy Court in the Chapter 11 case of Seller
authorizing the sale of the Assets to Buyer in accordance with the provisions of
the Agreement, subject to higher offers, if any, at a sale to be held on January
17, 2001.
"Licenses" shall mean the Licenses referred to in the preamble
to this Agreement. "Loan Value" shall mean the line balance as of the Closing
Date with respect to the Bank Debt, plus the principal amount of all open
Letters of Credit issued by the Banks for the benefit of the Acquired Companies,
as defined the Order (computed consistently with prior practice).
"Purchase Price" has the meaning set forth in Section 3.1.
"Stock" means all of the issued and outstanding shares of
capital stock of all of the Acquired Companies.
ARTICLE II
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SALE AND PURCHASE
-----------------
2.1 Sale of Stock and Licenses: Subject to the terms and
provisions of this Agreement, in a single contemporaneous transaction, Seller
shall, at the Closing, (A) sell, assign, transfer and convey the Stock to Buyer,
and Buyer shall then purchase and acquire the Stock from Seller, as follows: (i)
Apple Acquisition shall acquire the Apple Sports Stock; (ii) ▇▇▇▇▇▇ Acquisition
shall acquire the ▇▇▇▇▇▇ Sports Stock (iii) Apple Golf Acquisition shall acquire
the Apple Golf Stock, (B)Seller shall obtain, in writing, all necessary consents
from ▇▇▇▇▇▇ Sporting Goods Co. to the assignment of the ▇▇▇▇▇▇ License to the
corporations constituting Buyer at Closing and (C) Seller shall assign to the
Buyer, all of Sellers rights, as licensee under the Mongoose License pursuant to
the provisions of Sections 363 (b) and (f) of the Bankruptcy Code and the Stock
and the rights of Seller under the Licenses (collectively, the "Assets") shall
on the Closing be free and clear of any liens, charges, taxes, encumbrances,
equities, claims, pledges, security interests and options of whatever nature,
other than liens securing the Bank Debt.
ARTICLE III
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PURCHASE PRICE
--------------
3.1 Purchase Price: The purchase price for the Assets (the
"Purchase Price") shall be equal to the sum of (A) the Loan Value as of the
Closing Date plus and (B) $2,000,000. The Purchase Price shall be paid by Buyer
as follows: (i) $150,000 (including any accrued interest thereon, the
"Deposit"), which shall be placed in escrow with Seller's counsel, as
"Escrowee," at such time as Buyers shall have received a commitment (the
"Commitment") acceptable to Buyers in their sole discretion for bank financing
of the transactions contemplated hereby and working capital (the "Bank
Financing") in amount not lower than $10,000,000 and (ii) the balance of the
Purchase Price shall be paid at Closing via wire transfer in immediately
available funds to the account designated in writing by Seller to the Buyer;
provided, however, that if the Banks shall be providing the financing for the
transactions contemplated hereby, the balance of the Purchase Price shall be
paid at closing as follows: (i) the portion of the Purchase price equal to the
Loan Value shall be paid by Buyer, consummating the transaction without release
of the Bank Debt and (ii) the payment of $2,000,000 less any Deposit at Closing
via wire transfer in immediately available funds to the account designated in
writing by Seller to Buyer. The Escrowee shall hold the Deposit in escrow until
Closing or earlier termination of this Agreement. At Closing, the Deposit shall
be delivered to Seller and if this Agreement shall be terminated prior to
Closing, the Escrowee shall remit the Deposit in accordance with Section 8.2
hereof.
3.2 Allocation of Purchase Price: The Purchase Price shall be
allocated by Buyer and Seller among the Assets in accordance with the following
percentages: (i) 60% for the Apple Sports Stock; (ii) 20 % for the ▇▇▇▇▇▇ Sports
Stock (iii) 5% for the Apple Golf Stock and (iv) 15% for the Mongoose License.
Such allocation shall be conclusive and binding for all purposes, and the
parties shall file all income or other tax returns in a manner consistent with
such allocation.
3.3 Tax Election: The parties hereto agree that upon the
written request of Buyer, they will each make the election permitted by Section
338 (h)(10) of the Internal Revenue Code of 1986, as amended, in connection with
the transactions contemplated by this Agreement and to take all necessary
actions to implement such election.
ARTICLE IV
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CLOSING
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4.1 Closing Date: The Closing under this Agreement (the
"Closing) shall be at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, at 10:00 a.m. one Business
day after the Final Sale Order is entered in the docket of the Bankruptcy Court.
Buyer shall have the right to terminate this Agreement by written notice to
Seller given at any time after January 19, 2001 if the Closing shall not have
theretofore been consummated.
At the Closing, Seller shall execute and deliver or cause to
be executed and delivered to Buyers, at Seller's cost and expense, the
following:
The Original Stock Certificates evidencing all of the issued
and outstanding shares of the capital stock of the Acquired Companies, with
appropriate stock powers duly executed and notarized and, in the reasonable
opinion of Buyer's counsel, in proper form for transfer (or, if such Original
Stock Certificates can not be located, lost stock affidavits in form and
substance reasonably acceptable to Buyer;
such bills of sale, assignments, (in recordable form) and
other instruments of transfer as shall be necessary or required in the
reasonable opinion of Buyers Counsel, to sell, assign and transfer to Buyer all
Seller's rights, and interests in and to the Licenses;
A Certified Copy of the Final Sale Order complying with the
provisions of subdivision (ii) of Section 7.1 hereof;
The written consent of the Licensor under each of the ▇▇▇▇▇▇
License and the Mongoose License to the consummation of the assignment thereof
contemplated by this Agreement, in form reasonably satisfactory to Buyer's
counsel;
A satisfaction and release of liens with respect to the
Guaranteed Debt;
A release of the Unconditional Guaranty Agreement evidencing
the Guaranteed Debt;
A good standing certificate and certified articles of
incorporation issued by the Secretary of State of the State of Incorporation for
Seller;
An incumbency certificate for Seller;
A corporate resolution certified by an authorized officer of
Seller; authorizing the consummation of the transactions described in this
Agreement; and
The Empire Continuing Unconditional Guaranty shall be
released.
such other termination statements, instruments of transfer,
agreements, certificates and other documents as Buyer shall reasonably request.
4.2 Buyer Closing Documents: At the Closing, the Buyer shall
execute and deliver to Seller:
(i) the payment of the remaining portion of the Purchase Price
via wire transfer as provided in Section 3.1(ii) hereof;
(ii) A good standing certificate and certified articles of
incorporation issued by the Secretary of State of the State of incorporation for
each corporation comprising the Buyer;
(iii) An incumbency certificate for each corporation
comprising the Buyer;
(iv) A corporate resolution certified by an authorized officer
of each corporation comprising the Buyer authorizing the consummation of the
transaction described in this Agreement;
(v) Such other stock delivery receipts, certificates and other
documents as Seller shall reasonably request.
4.3 Proceedings: All proceedings taken and all documents
executed and delivered by the parties on the Closing Date shall be deemed to
have been taken and executed simultaneously, and no proceeding shall be deemed
taken nor any document executed or delivered until all have been taken, executed
and delivered, it being expressly agreed that this transaction is an all or none
transaction involving the purchase by Buyer of all of the Assets, if any of the
Assets are to be purchased.
4.4 Cure Costs. Buyer shall be responsible for payment, in the
ordinary course of its business, for the license fees, if any, due with respect
to the Mongoose and ▇▇▇▇▇▇ Licenses for the fourth quarter of the calendar year
2000.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer, with the
understanding that Buyer is relying on these representations and warranties in
entering into this Agreement, as follows:
5.1 Organization and Good Standing: Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. All of the authorized capital stock of each of the Acquired
Companies, which consists solely of common stock, is owned beneficially and of
record by Seller. There is outstanding no security or instrument convertible
into or exchangeable for capital stock of any Acquired Companies.
5.2 Authority Relative to Agreements, etc.: The Seller has the
requisite power and authority to execute, deliver and perform its obligations
under this Agreement. The execution, delivery and performance by Seller of this
Agreement and each such agreement, document, certificate or instrument, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action and (i) do not require the consent, waiver,
approval, license or authorization of any person, entity, or public authority
(provided however, that no representation or warranty is given with respect to
the right of Seller to assign the Mongoose License or any consent required with
respect to such assignment), (ii) do not violate, with or without the giving of
notice and/or the passage of time, any material law, rule, or regulation, and
(iii) will not conflict (in any material respect) with or result in a material
breach or termination of any provision of, or constitute a material default or
give rise to a right of termination or acceleration under, or pursuant to any
corporate charter, by-law, mortgage, deed of trust, indenture, written or oral,
or agreement, written or oral, or instrument, or any Order, law, rule,
regulation or any other restriction of any kind or character, to which Seller is
a party or by which Seller, or any of the Acquired Companies or any of its
assets may be bound, or result in the creation of any lien, charge or
encumbrance upon the Stock (provided however, that no representation or warranty
is given with respect to the right of Seller to assign the Mongoose License or
any consent required with respect thereto).
5.3 Effect of Agreement: This Agreement has been duly executed
and delivered by Seller and constitutes, and each other agreement, document,
certificate or instrument contemplated by this Agreement when executed and
delivered hereunder shall constitute, a legal, valid and binding obligation of
Seller, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, amortization or similar laws affecting the enforcement of
creditors' rights generally, and by general equity principles (whether
enforcement is sought in proceedings in equity or at law).
5.4 Title: Subject to the proviso set forth at the end of
Section 2.1 hereof, the Acquired Companies have good, valid and marketable title
to the their respective assets, free and clear of all mortgages, liens, pledges,
security interests, charges, claims, restrictions and other encumbrances and
defects of title of any nature whatsoever except for the Bank Debt (if the
provision in Section 3.1 shall be applicable); however all of the agreements of
the Acquired Companies, as well as all of the liens and encumbrances evidencing
or securing the Guaranteed Debt shall be released prior to Closing.
5.5 No Outstanding Decrees: There are no Orders of any
federal, state, county, municipal, foreign or other government or of any court,
department, commission, board, bureau, agency or other instrumentality thereof
outstanding against, or relating or applicable to Seller or to any of the
Acquired Companies or the Assets, other than the Cases (in the case of Seller)
and the Final Sale Order.
5.6 Litigation and Claims: There is no action, suit, legal or
administrative proceeding, arbitration, investigation or other proceeding or
claim pending or, to the knowledge of Seller, threatened against, or affecting
Seller or Seller's assets that, if adversely determined, might reasonably be
expected to have a material adverse effect on the Stock, or Seller's ability to
perform this Agreement or any aspect of the transactions contemplated by this
Agreement.
5.7 Taxes: To Seller's knowledge, there are no unpaid federal,
state or local Taxes and there are no known or proposed deficiency assessments
in respect of any federal, state, county, municipal or other tax that might
affect any Acquired Company.
5.8 No Brokers or Finders: Neither Seller nor any of its
directors, officers, employees or agents have retained, employed or used any
broker or finder in connection with the transactions provided for herein or the
negotiation thereof.
5.9 AS IS, WHERE IS, WITH ALL FAULTS: EXCEPT AS EXPRESSLY SET
FORTH IN THIS AGREEMENT, THE FINAL SALE ORDER OR ANY DOCUMENTS OR CERTIFICATES
EXECUTED BY SELLER IN CONNECTION WITH THE CLOSING HEREUNDER (COLLECTIVELY, THE
"TRANSACTION DOCUMENTS"), SELLER HEREBY SPECIFICALLY DISCLAIMS ANY EXPRESS OR
IMPLIED WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE, OF, AS TO, OR CONCERNING (I) THE NATURE AND CONDITION OF ANY OF THE
ASSETS, OR ANY OF THE ASSETS OR BUSINESS OF THE ACQUIRED COMPANIES AND THE
SUITABILITY THEREOF FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY ELECT TO
CONDUCT THEREON, AND (II) THE COMPLIANCE OF THE ASSETS, OR ANY OF THE BUSINESS
OR ASSETS OF THE ACQUIRED COMPANIES OR THEIR RESPECTIVE OPERATION WITH ANY LAWS
OR ANY ENVIRONMENTAL LAWS. BUYER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH IN THE
TRANSACTION DOCUMENTS, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE
ASSETS, THE BUSINESS OF THE ACQUIRED COMPANIES AND THE ASSETS OF THE ACQUIRED
COMPANIES AND HAVING FULLY INSPECTED THE ASSETS, THE BUSINESS OF THE ACQUIRED
COMPANIES AND THE ASSETS OF THE ACQUIRED COMPANIES, IS THOROUGHLY FAMILIAR WITH
THE CONDITION OF THE ASSETS, THE BUSINESS OF THE ACQUIRED COMPANIES AND THE
ASSETS OF THE ACQUIRED COMPANIES AND HEREBY ACCEPTS THE STOCK, THE LICENSES, AND
THE ACQUIRED COMPANIES IN THEIR "AS IS, WHERE IS, WITH ALL FAULTS CONDITION."
EXCEPT AS SET FORTH IN THE TRANSACTION DOCUMENTS, BUYER EXPRESSLY ACKNOWLEDGES
THAT SELLER HAS NOT MADE AND DOES NOT HEREBY MAKE ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW OR OTHERWISE,
WHATSOEVER WITH RESPECT TO ANY OF THE ASSETS, THE BUSINESS OF THE ACQUIRED
COMPANIES OR THE ASSETS OF THE ACQUIRED COMPANIES, INCLUDING WITHOUT LIMITATION
ANY REPRESENTATION OR WARRANTY REGARDING CONDITION, HABITABILITY, SUITABILITY,
QUALITY OF CONSTRUCTION, WORKMANSHIP, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR
PURPOSE. ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
6.1 Organization and Good Standing: Each corporation
constituting Buyer is a corporation, duly organized, validly existing and in
good standing under the laws of the State of New York.
6.2 Authority Relative to Agreement, etc.: Buyer has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each agreement, document or instrument
required to be delivered hereby. The execution, delivery and the performance by
Buyer of this Agreement have been authorized by all necessary action and (I) do
not require the consent, waiver, approval, license or authorization of any
person, entity, or public authority, (ii) do not violate, with or without the
giving of notice and/or the passage of time, any provision of law, and (iii)
will not conflict with or result in a breach or termination of any provision of,
or constitute a default or give rise to a right of termination or acceleration
under, any corporate charter, by-law, mortgage, deed of trust, indenture or
other agreement or instrument or any order, judgment, decree, statute,
regulation or any other restriction of any kind or character, to which Buyer is
a party or by which any of its assets or properties may be bound, or result in
the creation of any lien, charge or encumbrance upon any of the properties or
assets of Buyer.
6.3 No Brokers or Finders: Neither Buyer nor any of their
respective, directors, officers, employees or agents have retained, employed or
used any broker or finder in connection with the transactions provided for
herein or the negotiation thereof.
ARTICLE VII
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CONDITIONS OF CLOSING
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7.1 The obligation of Buyer to consummate the transactions contemplated
hereby are subject, at the option of Buyer, to the following conditions:
(1) All representations and warranties of Seller contained in
this Agreement shall be accurate when made, in all material respects, and, in
addition, shall be accurate, in all material respects, as of the Closing as if
made and given on and as of the Closing Date, and the Seller shall not have
theretofore defaulted in the performance of any of its obligations hereunder.
(2) The Bankruptcy Court shall have delivered the Final Sale
Order reasonably satisfactory to Buyer, which shall inter alia (1) approve all
of the terms and provisions of this Agreement (2) provide that the sale of the
Stock and transfer of the Mongoose License shall be free and clear of any and
all liens, clauses and encumbrances pursuant to Section 363(b) and (f) of the
Bankruptcy Code; (3) provide that, except as may be expressly provided for in
the proviso at the end of Section 2.1 hereof, all obligations of the Acquired
Companies, as well as all liens on any of their respective assets relating to or
securing the Bank Debt shall be released upon payment of the balance of the
Purchase Price.; (4) provide that the Mongoose License has been assigned to
Buyer pursuant to Section 365(b) of the Bankruptcy Code, that any necessary
approvals of the Licensor(s) have been obtained, and that any and all defaults
under the Mongoose License has been cured through and including the Closing Date
and (5) that the Buyer is a "good faith" purchaser entitled to the protections
of Section 363(m) of the Bankruptcy Code; (6) that Seller has complied with all
applicable provisions of the Bankruptcy Code and all of the local rules of this
Bankruptcy Court, and (or) that all creditors and that all parties in interest
and all parties that have an interest in the Assets have been notified of the
sale and had an opportunity to file objection thereto.
(3) The Financing Bank shall have closed on the disbursement
of the Financing Loan.
(4) Upon payment of the balance of the Purchase Price at
Closing the Acquired Companies shall have been fully released from any and all
obligations relating to the Guaranteed Indebtedness and all liens or security
interests encumbering the Stock or any Assets thereto for securing the
Guaranteed Indebtedness shall have been released, and the Empire Continuing
Unconditional Guaranty shall be released.
(5) La Salle Bank, as administrative agent for the Banks,
shall have certified the Loan Balance to the Buyer as of the Closing Date.
(6) Since the date of this Agreement, no event shall have
occurred which can be reasonably expected to result in any materially adverse
change in the business, properties, operations, prospects or assets, or in the
condition, financial or otherwise of the Acquired Companies.
(7) The Seller shall have delivered the other Closing
Documents referred to in Section 4.1 hereof.
ARTICLE VIII
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COVENANTS AND AGREEMENTS OF SELLER
----------------------------------
8.1 The Seller covenants and agrees that prior to Closing:
During the period prior to the Closing, Seller shall give to
Buyer, its counsel, accountants and other representatives (a) access during
normal business hours to all of the properties, books, records, contracts and
documents of Acquired Companies for the purpose of such inspection,
investigation and testing as Buyer deems appropriate (and Seller shall furnish
or cause to be furnished to Buyer and its representatives all information with
respect to the business and affairs of Acquired Companies as Buyer may request);
(b) access to employees, agents and representatives for the purposes of such
meetings and communications as Buyer reasonably desires; and (c) with the prior
consent of Seller in each instance (which consent shall not be unreasonably
withheld), access to vendors, customers, manufacturers of its machinery and
equipment, and others having business dealings with the Acquired Companies.
Buyer shall indemnify and hold Seller, each of the Acquired Companies, and their
respective shareholders, directors, officers and agents (collectively, the
"Seller Group") harmless from and against any and all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including, without
limitation, attorneys' fees and disbursements), suffered or incurred by the
Seller Group and arising out of or in connection with (i) Buyer or its
representatives entry upon the property or business of the Acquired Companies,
(ii) any investigations or other activities conducted thereon by Buyer or
Buyer's representatives, (iii) any liens or other encumbrances filed or recorded
against any asset of Seller or the Acquired Companies as a consequence of the
investigations or any and all other activities undertaken by Buyer or Buyer's
representatives, and/or (iv) any and all other activities undertaken by Buyer or
Buyer's representatives with respect to the business or assets of the Acquired
Companies. The foregoing indemnification by Buyer shall survive the Closing for
all purposes.
Seller will conduct the business of the Acquired Companies
only in the ordinary course as theretofore conducted and use commercially
reasonable efforts to maintain and preserve the business operations of the
Acquired Companies and to conduct their affairs as heretofore conducted so as to
preserve the accuracy of the representations and warranties.
Seller will use all commercially reasonable efforts to obtain
satisfaction if the conditions of closing set forth in Article VII hereof.
Seller will not permit the Loan Balance by the Acquired
Companies to increase beyond the Loan Balance in existence on the date hereof.
8.2 Break up Fee and Deposit. If Buyer shall have theretofore
made payment of the Deposit to Escrowee, and if for any reason the Assets are
sold to an entity other than Buyer, the Seller (in addition to Escrowee's
returning the Deposit to Buyer) shall immediately make payment of the Break up
Fee to Buyer, as a liquidated amount in reimbursement of Buyer's expenses. Upon
any termination of this Agreement prior to Closing, the Deposit shall be
remitted to Buyer, unless Agreement shall be terminated by reason of the failure
of Buyer to consummate the sale of the Assets where all of the conditions
precedent to such obligation of Buyer shall have been satisfied, in which
circumstances Seller may retain the Deposit as liquidated damages hereunder.
ARTICLE IX
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SURVIVAL OF REPRESENTATIONS AND FURTHER ASSURANCES
--------------------------------------------------
9.1 General Survival:
----------------
Notwithstanding any investigation or audit conducted before or
after the Closing Date, each party shall be entitled to rely upon the
representations and warranties in this Agreement to the extent hereinafter set
forth. Each of the parties hereto agree that the representations and warranties
of the other contained herein shall survive for the period of time represented
by three months following the expiration of applicable statute of limitations to
claims asserted by a party concerning such matters.
9.2 Further Assurances:
------------------
If, at any time after the Closing, Buyer shall consider or be
advised that any further assignments, conveyances, certificates, filings,
instruments or documents or any other things are necessary or desirable to vest,
perfect or confirm in Buyer title to the Assets, or to consummate any of the
transactions contemplated by this Agreement, Seller shall, upon request and at
Buyer's expense, promptly execute and deliver all such proper deeds,
assignments, certificates, filings, instruments and documents and do all things
reasonably necessary and proper to vest, perfect or confirm title in Buyer and
to otherwise carry out the purposes of this Agreement.
ARTICLE X
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TERMINATION
-----------
10.1. Right of Termination Without Breach: Subject to the
provisions of Section 10.3, if applicable, this Agreement may be terminated
without further liability of any party at any time prior to the Closing, except
the return of the Deposit to Buyer:
1. by mutual written agreement of Buyer and Seller; or
2. by Buyer, if the Final Sale Order has not entered in
the docket of the Bankruptcy Court on or before
January 19, 2001; or
3. by Buyer, if all conditions to Buyer's obligations
listed in Article VII have not been satisfied on or
prior to January 19, 2001, or
4. by Buyer or Seller, if the Final Sale Order provides
for a competing bidder to purchase the Assets and
such bidder acquires the Assets pursuant to such
Final Sale Order; or
5. by Seller, if the conditions listed in Article VII
shall have been satisfied and Buyer fails to
consummate the Closing under this Agreement on or
prior to January 19, 2001.
10.2 Termination for Breach:
i. Termination by Buyer. If there has been a material
violation or breach by Seller of any of the agreements, representations or
warranties contained in this Agreement which has not been waived in writing by
Buyer, then Buyer may deliver written notice to Seller at any time prior to the
Closing that such violation, breach, failure or wrongful termination attempt is
continuing and may terminate this Agreement. In the event Buyer terminates this
Agreement, then, in addition to any other liability of Seller to Buyer with
respect to such termination, the Deposit shall be returned to Buyer.
ii. Termination by Seller: If there has been a material
violation or breach by Buyer of any of the agreements, representations or
warranties contained in this Agreement which has not been waived in writing by
Seller, then provided Seller shall not then be in default in the performance of
any of its obligations hereunder, Seller may deliver written notice to Buyer at
any time prior to the Closing that such violation, breach, failure or wrongful
termination attempt is continuing and may terminate this Agreement. Upon
termination of this Agreement by Seller as set forth above, the Deposit shall be
nonrefundable and shall be retained by Seller as liquidated damages to
compensate Seller for the damages caused by Buyer for Buyer's breach of this
Agreement.
10.3 Break-Up Fee: In consideration of Buyer's entry into this
Agreement, and in recognition of the benefits which it provides Seller in
seeking to sell the business for the highest and best offer, Seller agrees (as
Buyer's sole and exclusive remedy under this Agreement other than return of the
Deposit) to pay Buyer the Break-Up Fee if the Final Sale Order provides for
another bidder to purchase all or substantially all of the stock or assets of
the Acquired Companies, which Break-Up Fee shall be paid to Buyer when and as
provided for in the Final Sale Order, if and only if, the closing of the sale of
the stock or assets (or a sale of substantially all of the stock or assets of
the Acquired Companies) to such other bidder in a transaction that is approved
by the Bankruptcy Court (such event, the "Other Sale Event"). In the event the
Closing under this Agreement fails to occur for any reason other than an Other
Sale Event, then, no Break-Up Fee whatsoever shall payable to Buyer by Seller.
This Article 10 and Company's obligation to pay the Break-Up Fee shall survive
the termination of this Agreement. Payment of the Break-Up Fee shall be
considered a superiority administrative expense senior to all other
administrative expense claims under Sections 503(b) and 507(a)(1) of the
Bankruptcy Code.
ARTICLE XI
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MISCELLANEOUS
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11.1 Waivers and Amendments:
----------------------
This Agreement may be amended, modified or supplemented only
by a written instrument executed by the parties hereto. The provisions of this
Agreement may be waived only by an instrument in writing executed by the party
granting the waiver. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach.
No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
11.2 Fees and Expenses: Except as otherwise expressly provided
in this Agreement, Buyer shall be responsible for all its fees and expenses
incurred in connection with this transaction, and Seller shall be responsible
for all its fees and expenses incurred in connection with this transaction.
11.3 Notices: All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given or made: if by hand,
immediately upon delivery; if by telex, telecopier or similar electronic device,
two (2) hours after sending, provided it is sent on a business day between 9:00
a.m. and 4:00 p.m., but if not, then immediately upon the beginning of the first
business day after being sent; if by Federal Express, Express Mail or any other
overnight delivery service, on the first business day after dispatch; and if
mailed by certified mail, return receipt requested, two (2) business days after
delivery or the return of the notice to sender marked "unclaimed". All notices,
requests, and demands are to be given or made to the parties at the following
addresses (or to such other address as either party may designate by notice in
accordance with the provisions of this paragraph):
If to Buyer: Apple Sports Acquisition, Inc.
▇▇▇▇▇▇ Sports Acquisition Inc.
Apple Shoes Acquisition Inc.
c/o Apple Sports Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ Brog Leinwand ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Esq
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: Empire of Carolina, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PA
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
11.4 Entire Agreement: The Letter Agreement and this Agreement
and the schedules and exhibits hereto and the documents and instruments executed
and delivered in connection herewith set forth the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, letters of intent,
understandings or arrangements between the parties hereto with respect to the
subject matter hereof. The Letter Agreement dated as of December 28, 2000 from
Buyer to Seller is hereby terminated and is null and voice for all purposes.
11.5 Binding Effect; Benefits: This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto, or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
11.6 Non-Assignability: This Agreement and any rights and
obligations pursuant hereto shall not be assignable by any party hereto without
the prior written consent of the other party, except that the rights of Buyer
hereunder shall inure to the benefit of the survivor corporation, as the case
may be, with respect to the merger agreements referred to in recital "I" at the
beginning of this Agreement.
11.7 Applicable Law; Venue; Jurisdiction: This Agreement and
the legal relations between the parties hereto shall be governed by and
construed in accordance with the laws of the State of New York, applicable to
contracts made and to be enforced in such state. Seller and Buyer each hereby
consent to the personal jurisdiction of the courts of the State of New York and
the federal courts situated therein over any judicial proceeding under or that
may otherwise arise out of this Agreement and agree not to contest venue for any
such proceeding commenced in the courts of the State of New York in New York
County or in the United States District Court for the Southern County District
of New York.
11.8 No Benefit to Others: The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto, and their successors and assigns, and they shall not be
construed as conferring any rights on any other persons.
11.9 Section and Other Headings: The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. 11.10 Counterparts:
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
11.11 Joint and Several Liability of Buyer: Each of the
corporations comprising "Buyer" shall be jointly and severally liable for all
liabilities and obligations of Buyer under this Agreement for all purposes. The
act of omission of any corporation comprising "Buyer" with respect to this
Agreement shall legally bind each of the other corporations comprising "Buyer"
for all purposes without the joinder of the other corporations.
11.12 Time is of Essence: Time if of the essence in the
performance of this Agreement. This section may be waived only in a writing
expressly referring hereto.
11.13 Conflict: To the extent a conflict exists between the
Final Sale Order and this Agreement, the terms and provisions of the Final Sale
Order shall control for all purposes.
11.14 Interim Agreements. In connection this Stock Purchase
Agreement, Seller and Buyer hereby confirm the following understandings and
agreements relating to the Acquired Companies providing, on an interim basis,
certain services for Seller "Post- Closing" as follows:
(A) Rose ▇▇▇ ▇▇▇▇▇▇▇ an employee of the Acquired Companies
will continue to provide reasonable (not more than 3 hrs per day) clerical
assistance to the Seller until not later than January 27, 2001.
(B) File cabinets belonging to Seller that are currently
stored in the warehouse of the Acquired Companies may be continued to be stored
in such warehouse, at the sole risk of Seller, until not later than 120 days
from the date hereof; provided that if not removed at or prior to end of 120
days, same may be placed in an independent warehouse under Seller's name with
Buyer paying the first 30 days of the warehousing fee.
(C) Office space in premises leased by the Acquired Companies
heretofore used by Seller for such purposes, may continue to be used by the
Accounts Receivable temp employed by and at the sole expense of Seller, until
not later than February 28, 2001. Thereafter, at the sole cost of Seller, such
use shall terminate and all paperwork not theretofore removed by Seller will be
placed in one back office for storage, at Seller's risk. Although Buyer would
appreciate removal of all such paperwork as soon as possible, it will permit
storage in the back office to continue until not later than 120 days after the
date hereof.
(D) The EDI system benefiting Seller which is run by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, may remain on premises of the Acquired Companies until not later
than February 28, 2001.
(E) Buyer will, at no out of pocket cost to Seller or any
Acquired Companies, permit the Buying Department of the Acquired Companies to
render reasonable assistance with landed product to Seller's Florida offices
until not later than 30 days after the date hereof; provided no out of pocket
cost to the Acquired Companies shall be incurred as a result thereof.
(F) ▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇") will continue after Closing as an
employee of the Acquired Companies. In order to assist Seller during the
transition, Buyer will permit ▇▇▇ to render assistance to Seller (not more than
4 hours per day) at Seller's request for a period not to exceed 90 days from the
date hereof. The services being provided by ▇▇▇ will be without charge to Seller
for the first 30 days after the date hereof , and at the rate of $100/hr. during
the next 60 days, which shall be payable to Seller to the Acquired Companies on
demand.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
EMPIRE OF CAROLINA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Acting Executive Officer
APPLE SPORTS ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇▇ SPORTS ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
APPLE SHOES ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
