ASSET PURCHASE AGREEMENT
By and Among
XXXX GROUP, INC.,
X.X. XXXXXXXXXX & CO., INC.,
and
BLUE RIDGE ACQUISITION COMPANY, LLC
August 31, 1998
Table of Contents
Page
ARTICLE 1 PURCHASE AND SALE OF ASSETS 1
1.1 Purchased Assets; Excluded Assets 1
1.2 Assumed Liabilities; 3
1.3 Purchase Price for the Assets 4
1.4 Transfer Taxes; Recording Fees 7
1.5 Closing 7
1.6 Risk of Loss 8
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE
SELLER AND PARENT8
2.1 Corporate Matters 8
2.2 Validity of Agreement and Conflict with Other
Instruments 8
2.3 Approvals, Licenses and Authorizations 9
2.4 Title to and Condition of Properties 9
2.5 Purchased Proprietary Rights 9
2.6 Contracts and Commitments 9
2.7 No Litigation 10
2.8 No Adverse Changes or Events 11
2.9 Suppliers 12
2.10 Customers 12
2.11 Certain Business Relationships with Affiliates 12
2.12 Environmental Matters 12
2.13 Financial Statements; No Undisclosed Liabilities 13
2.14 Purchased Real Property 14
2.15 Equipment; Vehicles; Personal Property 14
2.16 Inventory 14
2.17 Accounts Receivable 15
2.18 Disclaimer of Implied Warranties 15
2.19 Insurance 15
2.20 Employee Benefit Plans and Employment Agreements 15
2.21 Employment and Labor Matters 16
2.22 Immigration 16
2.23 Taxes 16
2.24 No Defaults or Violations 17
2.25 Finder's Fees 17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BUYER 17
3.1 Organizational Matters 17
3.2 Validity of Agreement and Conflict with Other
Instruments. 17
3.3 Approvals and Authorizations 18
3.4 Litigation. 18
3.5 Finder's Fees 18
ARTICLE 4 ADDITIONAL AGREEMENTS 18
4.1 Implementing Agreements 18
4.2 Consents and Approvals 18
4.3 Employee Matters 18
4.4 Continuation of Employee Benefits. 19
4.5 Use of Names. 20
4.6 Access to Information and Facilities 20
4.7 Due Diligence 20
4.8 Preservation of Businesses 20
4.9 Exclusivity 20
4.10 Accounts 20
4.11 Monthly Financial Statements 21
4.12 Inquiry of Xxxxxxx 00
ARTICLE 5 BUYER'S CONDITIONS 21
5.1 Representations, Warranties and Covenants 21
5.2 No Material Adverse Change. 21
5.3 No Litigation 21
5.4 Real Estate 22
5.5 Xxxx Purchase Price 22
5.6 Consents and Approvals 22
5.7 Updated Schedules 22
5.8 Closing Actions 22
ARTICLE 6 SELLER'S CONDITIONS 23
6.1 Representations, Warranties and Covenants 23
6.2 No Litigation 23
6.3 Consents and Approvals 23
6.4 Closing Actions 23
ARTICLE 7 INDEMNIFICATION 24
7.1 Indemnification by Seller 24
7.2 Indemnification by Buyer. 24
7.3 Indemnification Procedures. 25
7.4 Settlement. 25
7.5 Limitations on Liability 26
7.6 Effect on Purchase Price of Indemnity Payments 26
ARTICLE 8 NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS 26
ARTICLE 9 TERMINATION 27
9.1 Events of Termination 27
9.2 Liability Upon Termination27
9.3 Notice of Termination 27
ARTICLE 10 DEFINITIONS OF CERTAIN TERMS 28
10.1 "Accounts Receivable" 28
10.2 "Affiliate" 28
10.3 "Agreement" 29
10.4 "Assumed Liabilities" 29
10.5 "Businesses" 29
10.6 "Business Day" 29
10.7 "Businesses'Financial Statements" 29
10.8 "Buyer" 29
10.9 "CERCLA" 29
10.10 "Code" 29
10.11 "Confidential Information" 29
10.12 "Contracts" 29
10.13 "Debt Obligations" 29
10.14 "Easements" 29
10.15 "Environmental Laws" 30
10.16 "Environmental Permit" 30
10.17 "Equipment" 30
10.18 "ERISA" 30
10.19 "Excluded Assets" 30
10.20 "GAAP" 30
10.21 "Governmental Entity" 30
10.22 "Hazardous Substance" 30
10.23 "Inventories" 31
10.24 "Law" 31
10.25 "Lien" 31
10.26 "Loss"or "Losses" 31
10.27 "Material Adverse Change" 31
10.28 "Material Adverse Effect" 31
10.29 "Order" 31
10.30 "Ordinary Course of Business" 31
10.31 "Permits" 32
10.32 "Permitted Liens" 32
10.33 "Person" 32
10.34 "Proprietary Information" 32
10.35 "Proprietary Rights" 32
10.36 "Proceeding" 32
10.37 "Seller" 32
10.38 "Taxes" 32
10.39 "Tax Return" 33
10.40 "Title Insurer" 33
10.41 "Knowledge" 33
ARTICLE 11 MISCELLANEOUS 33
11.1 Public Announcements 33
11.2 Other Action 33
11.3 Expenses 33
11.4 Notices 34
11.5 Successors 35
11.6 Entire Agreement 35
11.7 Governing Law 36
11.8 Waiver 36
11.9 Severability 36
11.10 No Third Party Beneficiaries 36
11.11 Counterparts 36
11.12 Interpretation 36
List of Schedules
Schedule Subject Matter
1.1(a)(i) Equipment
1.1(a)(ii) Inventories
1.1(a)(iii) Accounts Receivable
1.1(a)(iv) Purchased Real Property
1.1(a)(v) Easements
1.1(a)(vi) Purchased Proprietary Rights
1.1(a)(vii) Vehicles
1.1(a)(x) Personal Property Leases
1.1(a)(xi) Contracts
1.1(a)(xii) Permits
1.1(b) Excluded Assets
1.2(a) Certain Assumed Liabilities
1.3(a) Xxxx Purchase Price
1.3(b)(iv) Determination of Net Inventory
1.3(d) Allocation of Purchase Price
2.1 Seller Foreign Jurisdiction
2.2(b) Conflicts
2.3 Seller Consents
2.5 Purchased Proprietary Rights
2.6 Contracts
2.7 Litigation
2.8 Adverse Changes or Events
2.9 Suppliers
2.10 Customers
2.11 Relationships with Affiliates
2.12 Environmental Matters
2.13(a) Businesses' Financial Statements
2.14 Purchased Real Property Matters
2.16 "As Is" Inventory
2.19(a) Insurance
2.19(b) Insurance Claims
2.20 Benefit Plans
2.21 Employment and Labor Matters
2.22 Immigration
2.24 Defaults and Violations
3.3 Buyer Consents
4.4(c) Former Employees
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and
entered into this 31st day of August, 1998 by and among XXXX GROUP, INC., a
Delaware corporation (the "Seller"), X.X. XXXXXXXXXX & CO., INC., a Delaware
corporation and the sole stockholder of Seller ("Parent"), and BLUE RIDGE
ACQUISITION COMPANY, LLC, a Delaware limited liability company (the "Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of, among other
things, manufacturing carpet through its Blue Ridge Carpet Xxxxx Division
located in Ellijay, Georgia and dyeing carpet through its Courier Dyeing and
Printing Division located in Ellijay, Georgia (collectively, the "Businesses");
and
WHEREAS, the Seller and Parent desire to transfer to the Buyer
the Businesses and the properties and assets related to or used for operating
the Businesses, and the Buyer desires to acquire such Businesses, properties and
assets, and assume certain liabilities related thereto all upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements contained herein and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows (all capitalized terms not otherwise defined in
this Agreement shall have the meanings given to them in Article 10):
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchased Assets; Excluded Assets
(a) Purchased Assets. Subject to the terms and conditions of this
Agreement and in consideration of the obligations of the Buyer as provided
herein, and except as otherwise provided in Section 1.2, at the Closing, the
Seller shall sell, assign, transfer, deliver and convey to the Buyer, free and
clear of any Liens except Permitted Liens, and the Buyer shall purchase, acquire
and take assignment and delivery from the Seller, the Seller's right, title and
interest in, to and under the Businesses and certain assets, properties and
rights that are related to or used for the Businesses (the "Purchased Assets"),
including the following:
(i) the Equipment set forth in Schedule 1.1(a)(i);
(ii) the Inventories set forth in Schedule 1.1(a)(ii);
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(iii) the Accounts Receivable set forth in Schedule 1.1(a)(iii);
(iv) the parcels of land set forth in Schedule 1.1(a)(iv),
together with all privileges and easements appurtenant thereto and all
buildings, plants, facilities, installations, fixtures and other structures
and improvements situated or located thereon or attached thereto
(collectively, the "Purchased Real Property");
(v) the Easements set forth in Schedule 1.1(a)(v);
(vi) the Purchased Proprietary Rights set forth in Schedule 1.1(a)(vi)
(the "Purchased Proprietary Rights");
(vii) the Vehicles set forth in Schedule 1.1(a)(vii);
(viii) all prepaid expenses, deposits made by the Seller, and deposits
made by customers relating to the Businesses;
(ix) any goodwill associated with the Businesses;
(x) the equipment leases and other leases set forth in Schedule
1.1(a)(x) (collectively, the "Personal Property Leases");
(xi) the Contracts set forth in Schedule 1.1(a)(xi),including, but not
limited to, all customer purchase orders;
(xii) the Permits set forth in Schedule 1.1(a)(xii)
(xiii) copies of all financial books and records necessary for the
operations of Businesses and the Purchased Assets;
(xiv) all rights under warranties relating to the Equipment;
(xv) copies of all employee records;
(xvi) all customer lists;
(xvii) all Benefit Plans set forth in Schedule 1.1(a)(xvii); and
(xviii) all other assets used in the Businesses.
Items (x) and (xi) are referred to herein collectively as the "Purchased
Contracts."
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(b) Excluded Assets. Notwithstanding anything in Section 1.1(a)
to the contrary, the Purchased Assets shall not include those assets of the
Seller listed or described in Schedule 1.1(b) to this Agreement (collectively,
the "Excluded Assets").
1.2 Assumed Liabilities; Retained Liabilities.
(a) Assumed Liabilities. At the Closing, the Seller shall assign all
of its respective right, title and interest in and to, and the Buyer shall
assume and agree to pay, perform, fulfill and discharge in a timely manner:
(i) all liabilities and obligations of Seller under all Purchased
Contracts or service commitments relating to the Businesses except as
specifically set forth in Section 1.2(b) or elsewhere in this Agreement;
(ii) all payroll, accrued vacation obligations, and other liabilities
(except for payroll, accrued vacation obligations and other liabilities to
Xxxxxx X. Xxxxx, Xx.) incurred with respect to employee benefits with respect to
Continuing Employees for any periods prior to the Closing Date which are accrued
on the Businesses' Financial Statements or incurred in the Ordinary Course of
Business since the date of the last balance sheet included in the Businesses'
Financial Statements;
(iii) Except as otherwise provided in this Agreement, all liabilities
and obligations in connection with Environmental Laws;
(iv) all warranty obligations for products sold and services performed
by the Businesses prior to the Closing Date;
(v) certain non-interest bearing current liabilities of the
Businesses listed in Schedule 1.2(a) including trade accounts payable (excluding
an amount equal to the sum of all checks issued by Seller for the payment of
trade accounts payable but not presented for payment at the effective time of
the Closing ("Checks in Transit") and operating expenses which are accrued on
the Businesses' Financial Statements or incurred in the Ordinary Course of
Business since the date of the last balance sheet included in the Businesses'
Financial Statement;
(vi) up to $150,000 of health insurance claims liability existing
on the Closing Date which are accrued on the Businesses' Financial Statements or
incurred in the Ordinary Course of Business since the date of the last balance
sheet included in the Businesses' Financial Statement or which represent
incurred but not reported claims (the "Assumed Health Insurance Liability"); and
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(vii) up to $115,000 of the unfunded liability of the Seller at the
Closing Date under its Unfunded Deferred Compensation Plan (Top Hat Plan) (the
"Assumed Retirement Plan Liability").
The obligations being assumed by the Buyer are collectively referred to herein
as the "Assumed Liabilities". The assumption of the Assumed Liabilities will be
evidenced by the Buyer's execution and delivery of the assumption contemplated
by Section 6.4(c).
(b) Liabilities Not Assumed by the Buyer. Except for the Assumed
Liabilities, the Buyer shall not assume or otherwise be liable in respect of, or
be deemed to have assumed or otherwise be liable in respect of, any Debt, claim,
obligation or other liability of the Seller (collectively, "Retained
Liabilities"). The Retained Liabilities shall include, but are not limited to,
the following:
(i) all obligations or liabilities under the Retention Bonus Letters
dated December 11, 1997 and December 19, 1997 sent to X.X. Xxxxx, Xxxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxxx Xxxxxxx and Xxxxxx Xxxxx, III;
(ii) all obligations of the Seller to Xxxxxx X. Xxxxx, Xx.;
(iii) all interest bearing Debt of the Seller and all accrued interest
or prepayment fees thereon;
(iv) any incentive compensation liability of the Seller payable as a
result of this transaction;
(v) all health insurance liability in excess of the Assumed Health
Insurance Liability;
(vi) all retirement plan liability in excess of the Assumed Retirement
Plan Liability;
(vii) any liability relating to worker's compensation claims associated
with events occurring on or prior to the Closing Date; and
(viii) any liability relating to Checks in Transit; and
(ix) any liability relating to the Excluded Assets.
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1.3 Purchase Price for the Assets.
(a) Base Purchase Price. At the Closing, in consideration of the sale
and transfer to the Buyer of the Purchased Assets, the Buyer shall pay to the
Seller an amount equal to $18,000,000 plus all amounts expended by the Seller
prior to the Closing Date to acquire, transport and install the small pressure
xxxx described in Schedule 1.3(a) (the "Xxxx Purchase Price")(the "Base Purchase
Price"). The Base Purchase Price shall be subject to adjustment prior to Closing
as provided in Section 1.3(b) and after Closing as provided in Section 1.3(d) .
The Base Purchase Price shall be paid to Seller as follows:
(i) $17,500,000 plus (A) the Xxxx Purchase Price and (B) any
Preclosing Price Adjustment (to the extent the calculation described in Section
1.3(c) results in an increase to the Base Purchase Price) and less any
Preclosing Price Adjustment (to the extent the calculation described in Section
1.3(c) results in a decrease to the Base Purchase Price) by wire transfer of
immediately available funds to an account or accounts designated by Seller; and
(ii) $500,000 by wire transfer of immediately available funds to
Chase Bank of Texas, national association (the "Escrow Agent") to be held
pursuant to the terms and conditions of the escrow agreement attached hereto as
Exhibit A (the "Escrow Agreement").
(b) Preclosing Adjustments. The Base Purchase Price will be increased or
decreased dollar for dollar to the extent Seller's Working Capital is greater
than or less than, respectively, the average working capital employed in the
Businesses for the twelve (12) months ended July 31, 1998 of $7,090,000 (the
"Working Capital Peg") based upon a Preliminary Closing Date Balance Sheet (the
"Preliminary Closing Date Balance Sheet") and a Preliminary Working Capital
Schedule (the "Preliminary Working Capital Schedule") provided for herein. For
the purposes of this Section, the following terms have the following meanings:
(i) "Current Assets" means all Net Accounts Receivable, Net
Inventory and prepaid expenses.
(ii) "Current Liabilities" means, without duplication, all
Assumed Liabilities which would be considered under GAAP to be current
liabilities.
(iii) "Net Accounts Receivable" shall mean all Accounts Receivable,
excluding any amounts recorded therein related to cash deposits for unfilled
purchase orders from customers for shipments not made as of the end of each
month for the period being used to calculate such receivables ("Customer
Deposits"), acquired by Buyer on the Closing Date less a reserve of $101,000
(the "Reserve").
(iv) "Net Inventory" shall mean all Inventory acquired by the Buyer
on the Closing Date (but excluding all Inventory described on Schedule 2.16
except to the extent such Inventory is included in inventory reserves
established in accordance with GAAP) valued according to GAAP less a reasonable
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inventory reserve established in accordance with GAAP applied in a manner
consistent with Seller's past practice. The manner and method for determining
Net Inventory shall be as described in Schedule 1.3(b)(iv).
(v) "Working Capital" means the excess of Current Assets over
Current Liabilities as shown in the Purchase Price Adjustment Schedule.
(c) Calculations. The calculations of Working Capital are to be made in a
manner consistent with Seller's preparation of the Financial Statements of the
Businesses for the year ended December 31, 1997 (including classifications of
assets and liabilities) and consistent with the provisions of Section 1.3(b).
Prior to the Closing Date, the Buyer shall deliver to Seller a Preliminary
Closing Date Balance Sheet and a schedule based upon the Preliminary Closing
Date Balance Sheet showing the Current Assets, the Current Liabilities and the
Working Capital (the "Preliminary Working Capital Schedule") which Buyer and
Seller shall agree upon prior to the Closing. When the Preliminary Working
Capital Schedule is agreed upon, the Base Purchase Price shall be (i) increased
dollar for dollar to the extent Working Capital shown on the Preliminary Working
Capital Schedule is greater than the sum of Working Capital Peg and Customer
Deposits and (ii) decreased dollar for dollar to the extent Working Capital
shown on the Preliminary Working Capital Schedule is less than the sum of
Working Capital Peg and Customer Deposits (the "Preclosing Price Adjustment").
(d) Post Closing Adjustments. The Base Purchase Price will be (i) increased
dollar for dollar to the extent Seller's Working Capital as finally determined
after the Closing pursuant to Section 1.3(e) is greater than the sum of the
Working Capital Peg and Customer Deposits and (ii) decreased dollar for dollar
to the extent Seller's Working Capital as finally determined after the Closing
pursuant to Section 1.3(e) is less than the sum of the Working Capital Peg and
Customer Deposits. The Base Purchase Price as adjusted by Section 1.3(b) and
this Section 1.3(d) is hereinafter referred to as the "Purchase Price."
(e) Post Closing Calculations.Within 60 days after the Closing Date, Buyer
shall deliver to Seller a draft closing date balance sheet (the "Draft Closing
Date Balance Sheet") and a schedule based upon the Draft Closing Date Balance
Sheet showing the Current Assets, the Current Liabilities and the Working
Capital (the "Draft Working Capital Schedule"). Within 15 days after Buyer
delivers the Draft Closing Date Balance Sheet and the Working Capital Schedule
to Seller, Seller must state, in writing by notice to Buyer within such 15 day
period, whether Seller agrees or disagrees with the Draft Closing Date Balance
Sheet or Working Capital Schedule (in whole or in part). The failure of Seller
to so state within such 15 day period will result in the Seller's deemed
acceptance of the Draft Closing Date Balance Sheet and Working Capital Schedule.
If the parties are in agreement as to the Draft Closing Date Balance Sheet and
Working Capital Schedule (either as a result of Seller's notice being delivered
within the 15 day period or Seller being deemed in agreement for failure to
deliver its notice within such 15 period) then the Draft Closing Date Balance
Sheet shall become the Closing Date Balance Sheet and the adjustment to the Base
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Purchase Price under Section 1.3(d) will be calculated using the Working Capital
Schedule and taking into account the Preclosing Price Adjustment and the party
owing the other will pay that amount, plus interest calculated at a rate of 8%
per annum accrued on the amount owed from the Closing Date to the date of
payment. If Seller timely delivers its notice of disagreement, then Seller and
Buyer will have 15 days to resolve their differences. If they resolve their
differences, the adjustment to the Base Purchase Price and payment will be made
as set forth above. If they are unable to resolve their differences within such
15 day period, the matter will be submitted within 15 days to a mutually agreed
upon independent accountant with the Atlanta office of KPMG Peat Marwick LLP
(the "Accountant") for arbitration with the adjustment to the Base Purchase
Price under Section 1.3(d) being calculated in accordance with the Accountant's
decision, which shall be final and binding on all parties. Seller and Buyer will
cooperate with each other in order to facilitate and complete the procedures as
described in this paragraph. All fees and expenses of the Accountant shall be
paid by the Buyer and the Seller in such amounts as the Accountant shall
determine based upon his determination as to the merits of each such party's
arguments with respect to the differences resolved by him.
(f) Allocation of Purchase Price. The Purchase Price shall be allocated
among the Purchased Assets by the Buyer and the Seller in the manner set forth
in Schedule 1.3(d) with such Schedule to be revised based upon the Closing Date
Balance Sheet. The Seller and Buyer agree that:
(i) such allocation of the Purchase Price will be in accordance with
Section 1060 of the Code and the regulations thereunder; and
(ii) the Buyer and the Seller will treat and report in filings under
the Code and the transactions contemplated by this Agreement in a manner
consistent with Schedule 1.3(f).
1.4 Transfer Taxes; Recording Fees .
(a) Transfer Taxes. The Buyer shall pay, and indemnify the Seller against,
and protect, save and hold the Seller harmless from, any loss, liability,
obligation or claim for any and all sales, use, transfer, stamp, vehicle,
service, or other similar taxes (other than income or similar taxes relating to
the sale of the Purchased Assets) and any interest, penalties, additions to tax
and fines thereon or related thereto imposed as a result of the consummation of
the transactions contemplated by this Agreement.
(b) Recording Fees. The Buyer shall pay any and all recording, filing or
other fees relating to the conveyance or transfer of the Purchased Assets from
the Seller to the Buyer.
1.5 Closing . Subject to the conditions set forth in this Agreement, the
consummation of the purchase, sale and assignment of the Purchased Assets, and
assumption of the Assumed Liabilities, pursuant to this Agreement (the
"Closing") shall take place at 10:00 a.m. on August 31, 1998, or at such other
7
time, date and place as the parties hereto shall mutually agree upon in writing,
but not later than September 30, 1998 (the "Closing Date"). The effective date
and time of the Closing shall be 12:01 a.m. on August 31, 1998.
1.6 Risk of Loss . Risk of loss or damage to the Purchased Assets by fire
or other casualty occurring prior to the Closing shall remain with the Seller,
and risk of loss or damage to the Purchased Assets by fire or other casualty
occurring after the Closing shall be borne by the Buyer.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PARENT
The Seller and Parent, jointly and severally, represent and
warrant to the Buyer as follows:
2.1 Corporate Matters . The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority (i) to enter into this Agreement, (ii)
to perform its obligations under this Agreement, (iii) to own, lease and operate
its properties and (iv) to carry on the Businesses as they are now owned,
leased, operated and carried on. The Seller is qualified to do business in those
foreign jurisdictions set forth in Schedule 2.1 which jurisdictions are, to
Seller's Knowledge, the only jurisdictions where the failure to be so qualified
could result in a Material Adverse Effect.
2.2 Validity of Agreement and Conflict with Other Instruments .
(a) Validity of Agreement. This Agreement constitutes a legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms, except that the enforceability of Seller's obligations are
subject to (i) applicable bankruptcy, insolvency, or other similar laws relating
to or affecting the enforcement of creditors' rights generally and (ii) general
principles of equity.
(b) Conflict with Other Instruments. Except as set forth in Schedule
2.2(b), neither (i) the execution and delivery of this Agreement, nor (ii) the
consummation or performance of the transactions contemplated hereby will
directly or indirectly, with or without notice or lapse of time or both:
(i) conflict with or violate the Certificate of Incorporation or Bylaws
of the Seller;
(ii) conflict with, result in a violation or breach of any provision of,
or give any Person the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel, terminate or
modify, any Purchased Contract;
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(iii) result in the creation or imposition of any material Lien, other
than Permitted Liens and Liens created by the Buyer, on any of the Purchased
Assets or permit the acceleration of the maturity of any indebtedness of Seller
or any indebtedness secured by any Purchased Asset; or
(iv) violate any Law in effect on the date of this Agreement applicable
to the Seller, the Businesses or any of the Purchased Assets.
2.3 Approvals, Licenses and Authorizations. Except as set forth in Schedule
2.3 ("Seller Consents"), no consent, authorization or approval of, filing or
registration with, or notification to, any Person not a party to this Agreement,
or any Governmental Entity, is required in connection with Seller's execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
2.4 Title to and Condition of Properties . The Seller has good and
marketable title to and is the lawful owner of the Purchased Real Property, free
and clear of any Liens, other than Permitted Liens. The Seller has the right to
sell, convey, transfer and deliver all Purchased Assets to the Buyer. Except as
set forth in Schedule 2.4, all of the tangible Purchased Assets (other than
Inventory), whether real or personal, owned or leased, are fit for the purpose
for which they were procured or manufactured. and have been maintained in
accordance with past practices and in good operating condition and repair, with
the exception of normal wear and tear.
2.5 Purchased Proprietary Rights . Schedule 1.1(a)(vi) sets forth a true
and accurate list of all Proprietary Rights owned by the Seller that are related
to or necessary to the Businesses as presently conducted or which are related to
other Purchased Assets (the "Purchased Proprietary Rights"). Except as otherwise
described in Schedule 2.5: (a) Seller owns or possesses adequate, perpetual and
irrevocable rights in and to all of the Purchased Proprietary Rights and is not
obligated to pay any royalty, license fee or other payment to any Person in
order to use them; and (b) none of the Purchased Proprietary Rights is the
subject of any (i) pending or, to the Seller's Knowledge, threatened litigation,
or (ii) claim of infringement or misappropriation and, to Seller's Knowledge,
there is no basis for making any such claim.
2.6 Contracts and Commitments .
(a) Schedule 2.6 sets forth a true and accurate list of the following
Contracts and commitments relating to the Businesses:
(i) any Contract requiring the expenditure or series of related
expenditures of funds in excess of $10,000, other than purchase orders entered
into in the Ordinary Course of Business for goods necessary for the Seller to
complete then existing contracts or purchase orders;
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(ii) any loan or advance to, or investment in, any Person or any
agreement, contract, commitment or understanding relating to the making of any
such loan, advance or investment;
(iii) any Debt Obligations;
(iv) any management service, employment, consulting, leased employee or
other similar type of Contract or arrangement;
(v) any license, royalty or similar agreement;
(vi) any collective bargaining agreement;
(vii) any Contract or arrangement pursuant to which Seller grants
or is granted any license or other rights to use any of the assets or any rights
of joint use with respect to any of the assets, other than any Personal Property
Lease;
(viii) any Contract not made in the Ordinary Course of Business that is
to be performed in whole or in part on or after the date of this Agreement; and
(ix) any Contract not specified above that is material to the
Businesses.
The Seller has delivered to the Buyer true and accurate copies of each document
set forth on Schedule 2.6 as amended or modified and each of the Contracts
included in the Purchased Contracts as amended or modified.
(b) To Seller's Knowledge, each of the Purchased Contracts is valid and
enforceable by the Seller in accordance with its terms. The Seller has performed
all of, and is not in default with respect to, its material obligations under
any of the Purchased Contracts and to the Seller's Knowledge, other parties
thereto have performed all of, and are not in default with respect to, their
material obligations thereunder. The Seller has not given nor received any
notice of termination or cancellation of any Purchased Contracts. Schedule 2.6
also sets forth a listing of all Purchased Contracts requiring the consent of
any party for them to be transferred to Buyer.
2.7 No Litigation . Except as disclosed in Schedule 2.7, Seller (i) has not
received any notice that an injunction, judgment, Order, decree, ruling or
charge has been entered against it and (ii) has not received any notice that it
is a party to or, to the Seller's Knowledge, is not threatened to be made a
party to, any action, suit, proceeding, hearing or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator.
2.8 No Adverse Changes or Events .
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(a) Except as disclosed in Schedule 2.8, since June 30, 1998 (or with
respect to any matter relating to taxes, December 31, 1997) the Businesses have
been operated in the Ordinary Course of Business, and there has not been:
(i) to Seller's Knowledge any Material Adverse Change in the condition
or results of operations of the Businesses except for such changes that in the
aggregate have not had a Material Adverse Effect;
(ii) any physical damage or physical destruction incurred or suffered
by the Businesses or the Purchased Assets in excess of $10,000;
(iii) any sale, transfer or other disposition of any properties or
assets, real, personal or mixed, tangible or intangible, used in, held for use
in, or related to the Businesses having a value of $10,000 or more, other than
sales in the Ordinary Course of Business; or
(iv) any change in the Seller's method or principle of accounting.
(b) Except as disclosed in Schedule 2.8, since June 30, 1998 (or with
respect to any matter relating to taxes, December 31, 1997) the Seller, with
respect to the Businesses and the Purchased Assets, has not:
(i) taken any action, or entered into or authorized any Contract or
other transaction or any amendment or modification to any Contract or other
transaction, other than in the Ordinary Course of Business;
(ii) waived, released or canceled any claims against third parties or
debts owing to it or any rights, which have value in the aggregate, in excess of
$10,000;
(iii) made any loan, advance or capital contribution to, or investment
in, any other Person other than cash advances to officers, directors and
employees for reimbursable expenses which are in the Ordinary Course of
Business, and do not individually exceed $10,000;
(iv) made any Tax election or settled or compromised any federal, state
or local Tax liability, or waived or extended the statute of limitations in
respect of any such Taxes;
(v) increased, or promised increases in compensation to employees
other than regularly scheduled increases made in a manner consistent with past
practices; or
(vi) altered or amended any Benefit Plan.
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2.9 Suppliers . Except as set forth in Schedule 2.9, no supplier of
materials or services to the Businesses in an amount in excess of $250,000 per
year has during the last twelve (12) months decreased materially, or, to the
Seller's Knowledge, threatened to decrease materially or limit materially,
except upon the Businesses' request, its provision of services or supplies. The
Seller does not have any knowledge of any termination, cancellation, or
limitation of, or any material modification or change in, during the last twelve
(12) months, the business relationships of the Businesses with any suppliers of
materials or services in any amount in excess of $250,000 per year. The
Businesses' relationships and pricing terms with its yarn suppliers have not
changed in any material respects from those in effect during 1997.
2.10 Customers . Except as set forth in Schedule 2.10, to Seller's
Knowledge there has not been any change in the business relationships or
prospects of the Businesses with any customer to whom the Company had aggregate
sales during 1997 or during the 7-month period ending July 31, 1998 in excess of
$500,000.
2.11 Certain Business Relationships with Affiliates . Except as set forth
in Schedule 2.11, the Businesses have not been involved in any business
arrangement or relationship involving sales of products or supplies within the
last twelve (12) months with any Affiliate of the Businesses or of the Seller.
2.12 Environmental Matters .
(a) The sole representations of the Seller with respect to environmental
matters are set forth in this Section 2.12. To the extent representations in
other sections of this Agreement also could be interpreted to apply to
environmental matters, including, but not limited to, matters related to,
arising under or concerning Environmental Laws, such representations shall be
construed to exclude all environmental matters and to apply to matters other
than environmental matters. The exclusive remedy which may be asserted by Buyer
with respect to any environmental matter or matters related to, arising under or
concerning Environmental Laws, shall be a contract action to recover Buyer's
actual economic damages pursuant to the indemnification provisions of Article 7
of this Agreement if Buyer proves a breach of any of the representations
contained in this Section 2.12. Without limiting the foregoing, no action in
tort or strict liability or for contribution or cost recovery may be maintained
by Buyer against Seller, related to the Purchased Assets, the Businesses, or any
Real Property in connection therewith including any action pursuant to any
Environmental Laws, and BUYER HEREBY IRREVOCABLY WAIVES THE RIGHT TO BRING, AND
AGREES NOT TO BRING, ANY SUCH ACTION AGAINST SELLER.
(b) Except as set forth on Schedule 2.12 to Seller's Knowledge:
(i) The Businesses and the Purchased Assets are in material
compliance with all applicable Environmental Laws that could give rise to any
material Liens and no condition or event has occurred which, with or without
12
notice or the passage of time or both, is reasonably likely to give rise to any
material Liens under any applicable Environmental Laws in connection with the
Purchased Assets or the Businesses;
(ii) The Seller has obtained and is in compliance in all
material respects with all Environmental Permits required for the ownership of
the Purchased Assets and the conduct and operation of the Businesses;
(iii) No material quantity of any Hazardous Substance has been
intentionally or unintentionally released into the environment (including
releases to air, soil, surface water, and groundwater) at, on or near the
Purchased Real Property except releases in compliance with Environmental Laws,
nor has the Purchased Real Property been used at any time by any person or
entity as a landfill or a disposal site for any Hazardous Substance or for
garbage, waste, or refuse of any kind, which release or use would be reasonably
likely to give rise to any Liens or Proceedings under any Environmental Laws;
(iv) The Seller is not subject to any existing, pending, or
threatened Proceedings involving any alleged violations of, or potential
liability arising under,any Environmental Laws in connection with the Businesses
or the Purchased Assets;
(v) All underground storage tanks and connected pipes, valves,
and/or associated appurtenances("USTs")located on or under the Purchased Real
Property are properly registered with the State of Georgia and are in material
compliance with current Georgia and federal law as well as with future law which
is proposed to take effect on December 22, 1998 (40 CFR Section 280.21); and
(vi) The Purchased Real Property is not listed on the United
States Environmental Protection Agency's National Priorities List of Hazardous
Wastes Sites nor any other list, log, schedule, inventory, or record of
hazardous materials or hazardous waste sites maintained by any federal,state,
county, or municipal governmental agency.
2.13 Financial Statements; No Undisclosed Liabilities .
(a) Attached hereto as Schedule 2.13(a) are true and accurate copies
of the Businesses' Financial Statements which were prepared and delivered to the
Buyer prior to the date of this Agreement. The Businesses' Financial Statements
(i) present fairly, in all material respects, the financial position, assets and
liabilities of the Businesses as of the dates thereof and the revenues,
expenses, results of operations and cash flows of the Businesses for the periods
covered thereby in each case in conformity with GAAP applied consistently during
such periods in accordance with past accounting practices of Seller and (ii)
make adequate disclosure of, and provision for, all material obligations and
liabilities of the Businesses as of the dates thereof. Except as set forth in or
reflected on the balance sheets or Schedule 2.13(a) included in the Businesses'
Financial Statements, there are no liabilities, debts, claims or obligations,
whether accrued, absolute,contingent or otherwise, including "off-balance sheet"
liabilities, whether due or to become due.
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(b) The Businesses' Financial Statements (i) have been prepared from
the books and records of the Businesses, and (ii) do not reflect any
transactions that are not bona fide transactions.
2.14 Purchased Real Property . Schedule 1.1(a)(iv) sets forth true and
accurate legal descriptions of all of the parcels of land owned by the Seller
and related to or necessary for the Businesses and a description of any and all
buildings, plants, facilities, installations, fixtures and structures situated
or located thereon. Schedule 1.1(a)(v) sets forth true and accurate legal
descriptions of all material Easements (together with Real Property, "Purchased
Real Property"). Except as disclosed on Schedule 2.14, there are no leases of
Real Property to which the Seller is a party and which provide for the lease to
or by the Seller of any Real Property related to or necessary for the Businesses
(the "Real Property Leases"). The Seller has delivered to the Buyer the most
recent title insurance policies and surveys, if any, for the Real Property and
true and accurate copies of material Easements as amended or modified. Except as
disclosed on Schedule 2.14, the Seller has not received notice of, and to the
Seller's knowledge, there exists no, dispute, claim, event of default or event
which constitutes or would constitute, with or without notice or lapse of time
or both, a default by the Seller under any material Easement or any Real
Property Lease.
2.15 Equipment; Vehicles; Personal Property . Schedule 1.1(a)(i) sets forth
a true and accurate list of all of the Equipment. Schedule 1.1(a)(vii) sets
forth a true and accurate list of all of the Vehicles. Schedule 1.1(a)(x) sets
forth a true and accurate list of all material leases to or by the Seller of
personal property that relates to other Purchased Assets or are related to or
necessary for the Businesses. Except as set forth in Schedule 2.15, all of the
Equipment and all of the personal property leased by the Seller under the
Personal Property Leases is presently utilized by the Seller in the Businesses
in the Ordinary Course of Business.
2.16 Inventory . Schedule 1.1(a)(ii) sets forth a true and accurate
description of the nature, amount and location of the Inventory as of the date
of this Agreement. Except for inventory listed on Schedule 2.16, which will be
sold "as is," each item of the Inventory is of merchantable quality and is
usable or salable in the Ordinary Course of Business, and none of such items is
obsolete or is held by the Seller on assignment or consignment.
2.17 Accounts Receivable . Schedule 1.1(a)(iii) set forth a true and
accurate list of all Accounts Receivable as of the date of this Agreement. Each
Account Receivable represents a sale made in the Ordinary Course of Business and
which arose pursuant to an enforceable order for a bona fide sale of goods or
for services performed and is collectable in accordance with their terms subject
to the Reserve.
2.18 Disclaimer of Implied Warranties . EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, THE SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESSED OR
IMPLIED, AS TO (A) THE MAINTENANCE, REPAIR, CONDITION, DESIGN, WORKMANSHIP,
SUITABILITY, UTILITY OR MARKETABILITY OF ANY OF THE PURCHASED ASSETS OR ANY
PORTION THEREOF OR OTHER PROPERTY THEREON OR THE ABSENCE OF ANY DEFECTS THEREIN,
14
WHETHER LATENT OR PATENT, OR (B) ANY MATERIALS OR INFORMATION THAT MAY HAVE BEEN
MADE OR THAT WILL BE MADE AVAILABLE OR COMMUNICATED TO BUYER OR ITS AGENTS,
CONSULTANTS OR REPRESENTATIVES IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, OR ANY DISCUSSION OR PRESENTATION RELATING
THERETO, INCLUDING ANY EXPRESSED OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. IT IS THE EXPRESS AGREEMENT OF THE BUYER AND
THE SELLER THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE BUYER WILL
OBTAIN RIGHTS IN THE PURCHASED ASSETS IN THEIR PRESENT CONDITION AND STATE OF
REPAIR, "AS IS" AND "WHERE IS" AND "WITH ALL FAULTS".
2.19 Insurance .
(a) Schedule 2.19(a) sets forth a true and accurate list of all
material policies of fire and casualty, liability, worker's compensation, title
and other forms of insurance held by the Seller and applicable to any Purchased
Asset or the Businesses. All such insurance is currently in full force and
effect.
(b) Schedule 2.19(b) sets forth a true and accurate list of
all material claims which (i) have been made by the Seller since December 31,
1996 under any insurance policy held by the Seller with respect to the Purchased
Assets or the operations of the Businesses, (ii) are still pending or (iii) were
for more than $10,000 as to any one event or loss. Except as set forth on
Schedule 2.19(b) there are no pending or, to Seller's Knowledge, threatened
claims under such insurance policy.
2.20 Employee Benefit Plans and Employment Agreements . Schedule 2.20
contains an accurate list of (a) all "employee welfare benefit plans" or
"employee pension benefit plans" as those terms are respectively defined in
sections 3(1) and 3(2) of ERISA, (b) all retirement or deferred compensation
plans, incentive compensation plans, stock plans, unemployment compensation
plans, vacation pay, severance pay, bonus or benefit arrangements, insurance or
hospitalization programs or any other fringe benefit arrangements, whether
pursuant to any Contract, arrangement, custom or informal understanding, which
do not constitute "employee benefit plans" as defined in section 3(3) of ERISA
and (c) all employment agreements, covering any employee of the Businesses
(collectively, the "Benefit Plans"). True and accurate copies or descriptions of
the Benefit Plans have been supplied to the Buyer. Seller does not now and has
never maintained a defined benefit pension plan. All Benefit Plans comply and
have been administered in form and in operation in all material respects with
all requirements of Law, and to Seller's Knowledge no event has occurred which
will or could cause any such Benefit Plan to fail to comply with such
requirements and no notice has been issued by any Governmental Entity
questioning or challenging such compliance. Each Benefit Plan that is qualified
under the provisions of Section 401(a) of the Code has obtained a determination
letter signifying its qualified status and copies of those determination letters
have been provided to Buyer. Seller does not participate in and has never
15
participated in a multiemployer pension plan, as defined in ERISA ss. 3(37)(A)
except for such participation which would not result in any liability to the
Buyer. The consummation of the transaction contemplated by this Agreement shall
not result in the payment, vesting or acceleration of any benefit which would
result in any liability to the Buyer. Other than claims for benefits to
participants or beneficiaries in accordance with the terms of the Benefit Plans,
there are no claims pending or, to the knowledge of Seller, threatened by any
participant in any Benefit Plan which would result in any liability to the
Buyer.
2.21 Employment and Labor Matters . Schedule 2.21 sets forth a true and
accurate list of all salaried employees of the Seller who are employed by the
Seller, as of the date hereof, in connection with the Businesses and their
annual compensation for the current fiscal year. There is neither pending nor,
to the Seller's knowledge, threatened, any labor dispute, strike, work stoppage
or organizational effort in connection with the Businesses or any charge or
complaint of an unfair labor practice or similar charge against the Seller in
connection with the Businesses. The Seller has not signed any currently
effective collective bargaining or union agreement in connection with the
Businesses.
2.22 Immigration . To Seller's Knowledge the Businesses' hiring procedures
have fully complied with all applicable immigration laws, regulations, and other
requirements of government authorities having jurisdiction over the Businesses.
Except as disclosed in Schedule 2.22, the Businesses have received no inquiries
from Immigration and Natural Services ("INS") concerning their employees and are
not a party to, or to the Seller's Knowledge, threatened to become a party to,
any INS proceeding or action.
2.23 Taxes . Seller has filed or will file all (a) Tax Returns prior to the
due dates thereof and (b) all other material filings in respect of Taxes for all
periods through and including the Closing Date as required by applicable Law.
All Taxes shown as due on all such Tax Returns and other filings have been paid
or will be paid prior to the due dates thereof. Each such Tax Return and filing
is true and accurate and the Seller does not and will not have any additional
liability for Taxes with respect to any Tax Return or other filing heretofore
filed or which was required by Law to be filed, other than as reflected as
liabilities on the Financial Statements. There are no Tax Liens upon any of the
Purchased Assets.
2.24 No Defaults or Violations . Except as set forth on Schedule 2.24, to
the Seller's Knowledge:
(a) the Businesses and the Purchased Assets are in material
compliance with, and no violation exists under, all Laws applicable to the
Businesses and the Purchased Assets; and
(b) no notice from any Governmental Entity has been received by
the Seller with respect to the Businesses (i) claiming any material violation
of any Law,including any building, zoning or other ordinance or(ii)requiring any
work, construction or expenditure, or asserting any Tax, assessment or penalty.
16
2.25 Finder's Fees . Except for Wheat First Union, Inc., the Seller has not
employed or retained any investment banker, broker, agent, finder or other
party, or incurred any obligation for brokerage fees, finder's fees or
commissions, with respect to the sale by the Seller of any of the Purchased
Assets or with respect to the transactions contemplated by this Agreement, or
otherwise dealt with anyone purporting to act in the capacity of a finder or
broker with respect thereto whereby any party hereto may be obligated to pay
such a fee or commission. The fees and expenses of Wheat First Union, Inc. shall
be borne by Seller.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
3.1 Organizational Matters . The Buyer is a limited liability company,
validly existing and in good standing under the laws of the State of Delaware
with full requisite power and authority to enter into this Agreement and to
perform its obligations under this Agreement.
3.2 Validity of Agreement and Conflict with Other Instruments. This
Agreement and all transactions contemplated hereby have been duly authorized and
approved by all necessary action on the part of the Buyer. No further action is
necessary on the part of the Buyer to execute and deliver this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Buyer and is a legal, valid and binding obligation
of the Buyer, enforceable against it in accordance with its terms, except that
the enforceability of this Agreement is subjected to applicable bankruptcy,
insolvency or similar laws relating to or affecting the enforcement of
creditors' rights generally and to general principles of equity. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby by the Buyer will not, directly or indirectly, violate any
provision of, or constitute a default under, any Contract to which the Buyer is
a party or by which it is bound, or conflict with its organizational documents
other than violations, defaults or conflicts that would not have a Material
Adverse Effect on the ability of the Buyer to consummate the transactions
provided for in this Agreement.
3.3 Approvals and Authorizations . Except as set forth on Schedule 3.3
("Buyer Consents") no consent, authorization or approval of, filing or
registration with, or notification to, any Person not a party to this Agreement,
or any Governmental Entity, is required in connection with Buyer's execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
3.4 Litigation. There is no pending or, to Buyer's Knowledge, threatened
Proceeding by and against Buyer that challenges, or that seeks to prevent, delay
or make illegal this Agreement or any of the transactions contemplated herein.
3.5 Finder's Fees . The Buyer has not employed or retained any investment
banker, broker, agent, finder or other party, or incurred any obligation for
17
brokerage fees, finder's fees or commissions, with respect to the sale of the
Purchased Assets or with respect to the transactions contemplated by this
Agreement, or otherwise dealt with anyone purporting to act in the capacity of a
finder or broker with respect thereto whereby any party hereto may be obligated
to pay such a fee or a commission.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1 Implementing Agreements . Subject to the terms and conditions hereof,
the Seller and the Buyer shall take all actions required of them to fulfil
their respective obligations under the terms of this Agreement and shall use all
commercially reasonable efforts to facilitate the consummation of the
transactions contemplated hereby. Except as otherwise expressly permitted
hereby, the Seller and the Buyer agree that they will not take any action that
would have the effect of preventing or impairing the performance of their
respective obligations under this Agreement.
4.2 Consents and Approvals .The Seller and the Buyer shall use commercially
reasonable efforts to obtain the consents and approvals set forth on Schedule
2.3 and Schedule 3.3, respectively.
4.3 Employee Matters . All employees of the Businesses except for Xxxxxx X.
Xxxxx, Xx. (the "Continuing Employees") shall, commencing on the Closing Date,
become employees of the Buyer; and thereupon, the Buyer shall have full
responsibility for all matters affecting such Continuing Employees, including,
without limitation, the institution of new benefit plans and severance
practices. With respect to periods prior to the Closing Date, the Seller shall
pay all obligations relating to the employees except for such liabilities as are
specifically included in Assumed Liabilities. Notwithstanding anything herein to
the contrary, Buyer shall not be obligated to retain any Continuing Employee for
any specified period of time after the Closing.
4.4 Continuation of Employee Benefits.
(a) For a period of one year from and after the Closing Date, Buyer
shall provide the Continuing Employees pension, health and other fringe benefits
that in the aggregate are substantially equivalent to and no less favorable than
those provided to such Continuing Employees under the Benefit Plans immediately
prior to the Closing Date, subject to the eligibility rules of such Benefit
Plans.
(b) To the extent that service is relevant for purposes of eligibility
or vesting under any employee benefit plan, program or arrangement established
or maintained by Buyer for the benefit of the Continuing Employees heretofore or
in the future, such plan, program or arrangement shall credit such Continuing
Employees for service with the Seller on or prior to the Closing Date and, to
the extent recognized by the Benefit Plans of Seller, its predecessors. Any such
plan, program or arrangement shall waive any preexisting condition limitations
18
with respect to Continuing Employees who are on the Closing Date fully
participating in Seller's health insurance plans and shall honor any deductible
and out-of-pocket expenses incurred by the Continuing Employees and their
beneficiaries under plans, programs or arrangements of the Seller.
(c) Effective as of the Closing Date, and except as provided below,
Buyer shall assume and become the successor sponsor of all Plans and the
obligations thereunder with respect to any Continuing Employee or any former
employee listed on Schedule 4.4(c). In connection therewith, (i) as soon as
practicable after the Closing Date, Seller and Buyer shall use their best
efforts to cause to be transferred to the trust that implements and forms a part
of Buyer's qualified 401(k) plan, in accordance with the provisions of the JBP
Co., Inc. 401(k) Savings Plan ("Seller's 401(k) Plan") and Buyer's qualified
401(k) plan and in accordance with the provisions of ERISA, the Code and all
applicable law, the assets of Seller's 401(k) Plan attributable to any former or
Continuing Employee (the "assumed trust") and Buyer shall assume and become the
successor grantor of the assumed trust, and (ii) Buyer shall assume and the
Seller shall be relieved of all liabilities and obligations with respect to the
Plans and the assumed trust, including without limitation all obligations to
make contributions required to be made to the Plans and the assumed trust.
Seller shall take all corporate action necessary, including amending the Plans
or the trust, to effect such transfer and assumption. Buyer represents, warrants
and covenants that Buyer's qualified 401(k) plan is and as of the date of the
asset transfer referred to in this paragraph will satisfy the requirements of
section 401(a) of the Code. Buyer shall promptly give such notices as are
necessary to advise all third parties providing benefits under any of the Plans
of Buyer's intent to continue all such Plans in the name and at the expense of
Buyer. Notwithstanding the foregoing, as of the Closing Date Seller shall make
any contributions to Seller's 401(k) Plan required by law or promised by the
Seller prior to the Closing Date.
4.5 Use of Names . All uses of the names set forth in Schedule 1.1(a)(vi)
to this Agreement, or any derivations thereof, are being transferred to the
Buyer hereunder as part of the Purchased Assets. The Seller agrees that it will
not take any action that could reasonably be expected to have a Material Adverse
Effect on the Buyer's right to the such names or cause confusion with respect to
the Buyer's use of the such names.
4.6 Access to Information and Facilities . After the Closing, the Buyer and
Seller shall make available to each other, as reasonably requested by such other
party, all information, records or documents relating to the Businesses for all
periods prior to the Closing and shall preserve all such information, records
and documents until the later of five (5) years after the Closing or the
expiration of any statute of limitations or extensions thereof applicable to the
Seller. Prior to destroying any records related to the Businesses after the
Closing Date, each party shall notify the other of its intent to destroy such
records.
4.7 Due Diligence . The Seller agrees to give Buyer and Buyer's lender
representatives full access during normal business hours to the Businesses'
facilities, records, personnel, customers and suppliers for the purpose of
conducting its due diligence investigation provided that no contact will be
permitted with the Businesses' personnel, customers or supplier without the
19
prior consent of the Seller in writing. Buyer agrees to coordinate its due
diligence and work with the Seller so as to minimize any disruption to the
Businesses' operations.
4.8 Preservation of Businesses . Prior to the Closing, the Seller will
cause the Businesses to be operated in a manner consistent with past practice
and use commercially reasonable efforts to preserve the present business
organization and work force of the Businesses and the relationships with
lessors, licensors, suppliers and customers.
4.9 Exclusivity . The Seller and Parent will not (i) solicit, initiate,
continue, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting securities of
the Seller, or any substantial portion of the assets of the Businesses, or (ii)
participate in any discussions or negotiations regarding, furnish any
Confidential Information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. The Seller and Parent will notify the Buyer immediately if
any Person makes any written proposal or offer with respect to any of the
foregoing.
4.10 Accounts . With respect to all Accounts Receivable acquired by Buyer
from Seller, Buyer agrees to use reasonably prudent collection practices in
order to attempt to collect all such Accounts Receivable existing as of the
Closing Date within 120 days thereafter. All payments on Seller's Accounts
Receivable existing as of the Closing Date will be applied: (i) as directed by
the customer; or (ii) if no such direction is made, to the oldest invoice first.
If Buyer has not collected an Account Receivable (after exhaustion of the
Reserve) included in Working Capital within 120 days after the Closing Date,
Buyer may, within the next 30 days, reassign such uncollected Account Receivable
back to Seller, together with the contractual obligation giving rise to such
Account Receivable and all rights of Buyer in and to such contractual
obligation. Upon any such reassignment, Seller will pay to Buyer, in cash, the
amount of such uncollected Account Receivable (but only to the extent such
uncollected Account Receivable was included in Working Capital) within 5 days
after such reassignment. If Buyer receives any payment on such reassigned
Account Receivable after Seller has paid to Buyer the amount of such Account
Receivable in accordance with the preceding sentence, Buyer will promptly remit
to Seller any such payment.
4.11 Monthly Financial Statements . Prior to the Closing, the Seller shall
deliver interim monthly financial statements for months ending subsequent to the
date of this Agreement within fifteen days of the end of each such month.
4.12 Inquiry of Xxxxxxx . Prior to the Closing, Seller and Xxxxxxx X. Xxxxx
will inquiry of Xxxxx Xxxxxxx as to her knowledge of the matters addressed by
Sections 2.7, 2.8, 2.9 and 2.10 as they relate to the Courier Dyeing and
Printing Division.
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ARTICLE 5
BUYER'S CONDITIONS
The obligation of the Buyer to purchase the Purchased Assets or to assume
the Assumed Liabilities as contemplated hereby and to consummate the
transactions contemplated hereby is, subject to the satisfaction on or before
the Closing Date of the conditions set forth below, any of which may be waived
by the Buyer in writing.
5.1 Representations, Warranties and Covenants . The representations and
warranties of the Seller contained in this Agreement shall be true and correct
in all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
such date. All of the agreements and covenants of the Seller to be performed or
complied with by the Seller on or before the Closing Date pursuant to this
Agreement shall have been performed or complied with in all material respects.
5.2 No Material Adverse Change. No Material Adverse Change shall have
occurred with respect to the Seller or the Businesses and no event shall have
occurred which might cause a loss to the Businesses in excess of $250,000.
5.3 No Litigation . No Proceeding shall have been instituted or threatened
which (a) might have a Material Adverse Effect on the Purchased Assets or the
Business or (b) could enjoin, restrain or prohibit, or have a Material Adverse
Effect on any provision of this Agreement or the consummation of the
transactions contemplated hereby. No court order shall have been entered in any
Proceeding, and no Law shall have been enacted or is existing as of the date
hereof and no action shall have been taken by any Governmental Entity which
enjoins, restrains or prohibits this Agreement or the consummation of the
transactions contemplated hereby.
5.4 Real Estate . Seller shall deliver good and marketable title to the
Purchased Real Property, free and clear of any Liens other than Permitted Liens.
5.5 Xxxx Purchase Price . Seller shall have delivered a detailed
schedule showing the calculation of the Xxxx Purchase Price and the Buyer shall
be satisfied with such schedules.
5.6 Consents and Approvals . The consents and approvals set forth on
Schedule 2.3 shall have been received by the Seller and delivered to the Buyer.
5.7 Updated Schedules . The Buyer shall have received and be satisfied
with new Schedules 1.1(a)(i),(ii) and (iii) which shall be updated to the
Closing Date.
5.8 Closing Actions . The Seller shall deliver or cause to be delivered
to the Buyer each of the following, duly executed by the Seller (where
appropriate):
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(a) bills of sale conveying to the Buyer the Purchased Assets and other
instruments of transfer as may be reasonably required by the Buyer;
(b) a special warranty deed or deeds conveying the Purchased Real Property
to the Buyer;
(c) originals of all of the following: (i) the Personal Property Leases;
(ii) all other Purchased Contracts; and (iii) any consents required for the
Purchased Contracts;
(d) title insurance policies for each parcel of Real Property issued by
Title Insurer, dated the Closing Date, each of which such policies (i) shall be
in the full amount of the portion of the Purchase Price that the Seller and the
Buyer mutually allocate to each such parcel in accordance with Section 1.3(c),
and (ii) shall be in the form of American Land Title Association Owner's Policy,
1970 Form B, subject only to the standard exclusions from coverage contained in
such policy and the applicable Permitted Liens;
(e) certificates of title for all Vehicles, duly endorsed for transfer to
the Buyer and keys for all Vehicles;
(f) certificates of the secretaries of the Seller and the Parent, dated as
of the Closing Date, certifying the resolutions of the boards of directors of
the Seller and Parent approving and authorizing the execution and delivery of
this Agreement and the consummation by the Seller and Parent of the transactions
contemplated hereby, together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of the Seller and Parent;
(g) non-competition agreements duly executed by Seller and Parent in the
form of Exhibit D attached hereto;
(h) a certificate executed by the Seller and Parent indicating that all
conditions to Seller's obligations have been satisfied or waived and that all
representations of the Seller and Parent contained herein are true and correct
at the Closing Date;
(i) the Escrow Agreement; and
(j) any and all other documents and instruments reasonably required to
satisfy the obligations under the transactions contemplated herein.
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ARTICLE 6
SELLER'S CONDITIONS
The obligation of the Seller to transfer the Purchased Assets as
contemplated hereby is subject to the satisfaction on or before the Closing Date
of the conditions set forth below, any of which may be waived by the Seller in
writing.
6.1 Representations, Warranties and Covenants . The representations and
warranties of the Buyer contained in this Agreement shall be true and correct in
all material respect on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
such date. All of the agreements and covenants of the Buyer to be performed or
complied with by it on or before the Closing Date pursuant to this Agreement
shall have been performed or complied with in all material respects.
6.2 No Litigation . No Proceeding shall have been instituted or threatened
which would enjoin, restrain or prohibit, or have a Material Adverse Effect on
this Agreement or the consummation of the transactions contemplated hereby. No
court order shall have been entered in any Proceeding, and no law shall have
been enacted or is existing as of the date hereof and no action shall have been
taken by any Governmental Entity which enjoins, restrains or prohibits this
Agreement or the consummation of the transactions contemplated hereby.
6.3 Consents and Approvals . The consents and approvals set forth in
Schedule 3.3 shall have been received by the Buyer.
6.4 Closing Actions . The Buyer shall have delivered to the Seller each of
the following:
(a) wire transfer of same day funds in the amount determined under
Section 1.3(a)(i);
(b) wire transfer of same day funds totaling $500,000 to the Escrow
Agent;
(c) an instrument of assumption in form and substance reasonably
satisfactory to the Seller; and
(d) the Escrow Agreement;
(e) a certificate executed by the Buyer indicating that all conditions
to Buyer's obligations have been satisfied or waived and that all
representations of the Buyer contained herein are true and correct at the
Closing Date; and
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(f) a certificate of the secretary of the Buyer, dated as of the
Closing Date, certifying the resolutions of the board of managers of the Buyer
approving and authorizing this Agreement and the consummation by the Buyer of
the transactions contemplated hereby, together with an incumbency and signature
certificate regarding the officer(s) signing on behalf of the Buyer.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Seller and Parent. The Seller and Parent agree to
indemnify the Buyer, its officers, directors, employees, agents and
representatives (collectively, the "Buyer Indemnified Parties") against, and
agree to hold each of the Buyer Indemnified Parties harmless from, the amount of
any and all Losses incurred or suffered by them relating to or arising out of or
in connection with any of the following:
(i) any breach in any inaccuracy in any representation or warranty
made by the Seller in this Agreement or any covenant of Seller contained in this
Agreement;
(ii) any Retained Liability.
7.2 Indemnification by Buyer. The Buyer agrees to indemnify the Seller, its
officers, directors, employees, agents and representatives (collectively, the
"Seller Indemnified Parties") against, and agrees to hold each of them harmless
from, any and all Losses incurred or suffered by them relating to or arising out
of or in connection with any of the following:
(i) any breach of any representation or warranty made by the Buyer
in this Agreement or any covenant of Buyer contained in this Agreement;
(ii) any Assumed Liabilities.
7.3 Indemnification Procedures. A party which believes it is entitled to
indemnification hereunder (an "Indemnified Party") shall promptly (but in any
event within 30 days after any claim is asserted against the Indemnified Party)
give written notice to the party believed to be responsible for indemnification
hereunder (the "Indemnifying Party") of any claim or the commencement of any
Proceeding by any Person (a "Claim"), in respect of which indemnity may be
sought hereunder; provided that the delay in giving, or the failure to give,
such written notice shall not limit the Indemnifying Party's obligation to
provide indemnification hereunder except to the extent that the Indemnifying
Party is materially damaged by such delay or failure. The Indemnified Party
shall notify the Indemnifying Party with reasonable particularity of the basis
for the Claim and the Indemnified Party shall give the Indemnifying Party such
other information with respect thereto as the Indemnifying Party may reasonably
request. Upon receipt of the notice of such Claim, the Indemnifying Party may by
giving notice to the Indemnified Party and at the Indemnifying Party's own
expense: (i) participate in the defense of such Claim at any time during the
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course of such Claim; or (ii) assume the defense thereof; provided, however,
that the Indemnifying Party shall thereafter consult with the Indemnified Party
upon the Indemnified Party's reasonable request from time to time with respect
to such Claim. If the Indemnifying Party assumes such defense, the Indemnified
Party shall have the right (but not the duty) to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party; provided, further, that if there are legal
or equitable defenses available to an Indemnified Party which are not available
to or ascertainable by the Indemnifying Party with respect to such Claim, the
Indemnified Party shall have the right to participate in the defense and employ
counsel at the reasonable expense of the Indemnifying Party for such purpose
(provided that the Indemnifying Party shall not be required to reimburse the
expenses and costs of more than one law firm for such purpose). Whether or not
the Indemnifying Party chooses to defend any such Claim, all of the parties
hereto shall cooperate in the defense thereof. After notice from the
Indemnifying Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable (except as provided in the second
preceding sentence) to such Indemnified Party for any legal or other expense in
connection with such defense incurred by the Indemnified Party after such date.
The parties hereto agree that any such defense shall be conducted expeditiously
and that the Indemnified Party shall be advised of all significant developments.
7.4 Settlement. Any settlement or compromise made or caused to be made by
the Indemnified Person or the Indemnifying Person, as the case may be, of any
Claim of the kind referred to in Section 7 shall also be binding upon the
Indemnifying Person or the Indemnified Person, as the case may be, in the same
manner as if a final judgment or decree had been entered by a court of competent
jurisdiction in the amount of such settlement or compromise; provided, however,
that no obligation, restriction or Loss shall be imposed on the Indemnified
Person as a result of such settlement without its prior written consent. If the
Indemnifying Party assumes the defense of any Claim as described in Section 7
and so long as the Indemnifying Party is defending such Claim in good faith, the
Indemnifying Party shall have the right to settle such Claim and the Indemnified
Party will not settle such Claim; provided, however, that no obligation,
restriction or Loss shall be imposed on the Indemnified Person as a result of
such settlement without its prior written consent; and provided further that the
Indemnified Party shall have no right to settle any Claim the defense of which
it has assumed if the Indemnified Party is participating in the defense as a
result of there being legal or equitable defenses available to an Indemnified
Party which are not available to or ascertainable by the Indemnifying Party with
respect to such Claim. The Indemnified Person will give the Indemnifying Person
at least thirty (30) days' notice of any proposed settlement or compromise of
any claim, suit, action or proceeding it is defending, during which time the
Indemnifying Person may reject such proposed settlement or compromise; provided,
however, that from and after such rejection, the Indemnifying Person shall be
obligated to assume the defense of and full and complete liability and
responsibility for such claim, suit, action or proceeding and any and all Losses
in connection therewith in excess of the amount of unindemnifiable Losses which
the Indemnified Person would have been obligated to pay under the proposed
settlement or compromise.
7.5 Limitations on Liability . Except for claims of indemnification
resulting from a breach of the representations contained in Sections 2.25, or
25
under Sections 7.1(ii) or Section 7.2(ii), and notwithstanding the foregoing, a
claim by any of the parties pursuant to this Article 7 against the others shall
not be asserted unless and until the aggregate and cumulative totals of all such
claims by the Buyer Indemnified Parties or Seller Indemnified Parties, as the
case may be, shall have exceeded One Hundred Thousand Dollars ($100,000) (the
"Deductible"), whereupon the Indemnified Person shall be entitled to
indemnification for all Losses to the extent such Losses exceed the Deductible;
provided, however, the total liability of the Indemnifying Party shall not
exceed Ten Million Dollars ($10,000,000) in the aggregate.
7.6 Effect on Purchase Price of Indemnity Payments . Any amounts payable
under Section 7.1 or Section 7.2 shall be treated by the Buyer and the Seller as
an adjustment to the Purchase Price of the Purchased Assets.
ARTICLE 8
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
The several representations and warranties of the parties to this Agreement
shall survive the Closing Date and shall remain in full force and effect until
April 30, 2000 (the period during which the representations and warranties shall
survive being referred to herein with respect to such representations and
warranties as the "Survival Period"); provided, however, that the tax
representations and warranties contained in Section 2.23 shall remain in full
force and effect until the expiration of the last applicable statute of
limitations for the particular representation and warranty that has been
breached and that the environmental representations and warranties contained in
Section 2.12 and all representations and warranties of the Seller in Section 2.4
relating to title to the properties and assets of the Businesses, shall remain
in full force and effect for a period of five (5) years. No indemnification with
respect to any representation or warranty herein shall be made after the
Survival Period, except as to claims for indemnification under Section 7 which
have been made in writing during the Survival Period.
ARTICLE 9
TERMINATION
9.1 Events of Termination . The obligation to close the transactions
contemplated by this Agreement may be terminated by:
(a) mutual agreement of the Buyer and the Seller;
(b) the Buyer, if a material default shall be made by the Seller
in the observance or in the due and timely performance by the Seller of any
agreements and covenants of the Seller herein contained, or if there shall have
been a material breach by the Seller of any of the warranties and
representations of the Seller herein contained, and such default or breach has
not been cured, or has not been waived in writing by the Buyer within twenty
(20) days of written notice thereof;
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(c) the Seller, if a material default shall be made by the Buyer
in the observance or in the due and timely performance by the Buyer of any
agreements and covenants of the Buyer herein contained, or if there shall have
been a material breach by the Buyer of any of the warranties and representations
of the Buyer herein contained, and such default or breach has not been cured or
has not been waived in writing by the Seller within twenty (20) days of written
notice thereof; or
(d) the Buyer or the Seller, provided the terminating party has not
materially breached any of its agreements, covenants, representations or
warranties, if the Closing shall not have occurred on or before September 30,
1998.
9.2 Liability Upon Termination . If the obligation to close the transactions
contemplated by this Agreement is terminated pursuant to any provision of this
Article 9 then this Agreement shall forthwith become void and there shall not be
any liability or obligation with respect to the terminated provisions of this
Agreement on the part of the Seller or the Buyer, except and to the extent such
termination results from the willful breach by a party of any of its
representations, warranties or agreements.
9.3 Notice of Termination . The parties hereto may exercise their respective
rights of termination under this Article 9 only by delivering written notice to
that effect (setting forth the reasons therefor) to the other party, provided,
however, that such notice must be received on or before the Closing Date. 1.5
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ARTICLE 10
DEFINITIONS OF CERTAIN TERMS
The terms listed below are defined in the respective referenced sections of
this Agreement:
Term Section Reference
Affected Employees Section 2.21
Benefit Plans Section 2.20
Buyer Consents Section 3.3
Buyer Indemnified Parties Section 7.1
Claim Section 7.3
Closing Section 1.5
Deductible Section 7.5
Easements Section 1.1(a)(v)
Excluded Assets Section 1.1(b)
Indemnified Party Section 7.3
Indemnifying Party Section 7.3
Purchased Real Property Section 1.1(a)(iv)
Personal Property Leases Section 1.1(a)(x)
Purchase Price Section 1.3
Purchased Assets Section 1.1(a)
Purchased Contracts Section 1.1(a)
Purchased Proprietary Rights Section 2.5
Purchased Real Property Section 2.14
Retained Liabilities Section 1.2(b)
Seller Consents Section 2.3
Seller Indemnified Parties Section 7.2
Survival Period Article 8
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the meanings assigned to them herein, unless the context
otherwise indicates, both for purposes of this Agreement and the Disclosure
Schedule:
10.1 "Accounts Receivable" shall mean all accounts receivable, trade
receivables, notes receivable and other receivables, which in any case are
payable as a result of goods sold or services provided by Seller in connection
with the Businesses.
10.2 "Affiliate" shall mean, with respect to any Person, an individual or
entity that, directly or indirectly, controls, is controlled by or is under
common control with such Person.
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10.3 "Agreement" shall mean this Asset Purchase Agreement between the Seller
and the Buyer, as amended from time to time by such parties.
10.4 "Assumed Liabilities" shall have the meaning given such term in Section
1.2(a) hereof.
10.5 "Businesses" shall have the meaning given such term in the First
Recital hereof.
10.6 "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in Chattanooga, Tennessee are authorized by
law to close.
10.7 "Businesses' Financial Statements" shall mean the unaudited year end
financial statements of the Businesses for the years ended December 31, 1997 and
December 31, 1996 and for the year to date period ended July 31, 1998.
10.8 "Buyer" shall have the meaning specified in the preamble.
10.9 "CERCLA" shall mean the United States Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., as
amended.
10.10 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or similar provisions of legislation replacing such law from time
to time.
10.11 "Confidential Information" means all Proprietary Rights and Proprietary
Information included within the Purchased Assets that are not and have not
become ascertainable or obtainable from public or published information.
10.12 "Contracts" shall mean all contracts, agreements, purchase orders and
contracts, customer contracts, understandings, indentures, notes, bonds, loan
agreements, instruments, leases, mortgages, franchises, licenses, commitments or
binding arrangements, whether express or implied, oral or written, to which,
with respect to the Businesses, the Seller is a party or bound, or to which the
Purchased Assets are subject.
10.13 "Debt Obligations" or "Debt" shall each mean any contract, agreement,
mortgage, credit or loan agreement, lease indenture, note or other instrument
relating to the borrowing of money or any guarantee or other contingent
liability in respect of any indebtedness or obligation of any Person, other than
the endorsement of negotiable instruments for deposit or collection in the
Ordinary Course of Business.
10.14 "Easements" shall mean all easements, rights-of-way and similar
interests of Seller related to or necessary for the Businesses.
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10.15 "Environmental Laws" shall mean any Laws that require or relate to the
environment in effect in the jurisdiction in which the Business are being
conducted or where any of the Purchased Assets are located, including without
limitation, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, the
Toxic Substances Control Act of 1976, as amended, the Federal Water Pollution
Control Act Amendments of 1972, the Clean Water Act of 1977, as amended, any
so-called "Superfund" or "Superlien" Law (including those already referenced in
this definition), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the Hazardous Transportation Act, as
amended, and any other Law having a similar subject matter. "Environmental Laws"
does not include the Occupational Safety and Health Act or any other federal,
state or local law, statute, ordinance, regulation or Order governing worker
safety or workplace conditions.
10.16 "Environmental Permit" shall mean any Permit required by or given or
granted pursuant to any applicable Environmental Law.
10.17 "Equipment" shall mean all machinery, transportation equipment, parts,
equipment, furnishings and fixtures and other items of personal property of
every kind and description that are related to or necessary for the Businesses
as operated by the Seller (other than the Vehicles and Inventory).
10.18 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
10.19 "Excluded Assets" shall have the meaning given such term in Section
1.2(b) hereof.
10.20 "GAAP" shall mean U.S. generally accepted accounting principles at the
time in effect.
10.21 "Governmental Entity" shall mean any: (a) nation, state, county, city,
town, village, district, or other jurisdiction of any nature; (b) federal,
state, local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
10.22 "Hazardous Substance" shall mean any material, chemical, substance,
waste or matter which (i) is petroleum or a petroleum product, (ii) constitutes
a hazardous substance, hazardous waste, toxic substance or pollutant as such
terms are defined by or pursuant to any Environmental Law or (iii) is regulated
or controlled as a Hazardous Substance, toxic substance, pollutant or other
regulated or controlled material, chemical, substance, waste or matter pursuant
to any Environmental Law.
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10.23 "Inventories" and "Inventory" shall each mean all inventories of
finished goods, tooling inventory, work in progress, supplies and raw materials
that are related to or necessary for the Businesses, wherever situated.
10.24 "Law" shall mean any applicable federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principal of common law, regulation, statute or
treaty.
10.25 "Lien" shall mean any mortgage, deed of trust, lien, pledge, claim,
charge, security interest, restriction, lease or sublease or other encumbrance,
option, defect or other rights of any third Person of any nature whatsoever.
10.26 "Loss" or "Losses" shall mean any and all liabilities, losses, costs,
claims, damages (including consequential damages but excluding punitive and
exemplary damages), penalties and expenses (including reasonable attorneys' fees
and expenses and reasonable costs of investigation and litigation). In the event
any of the foregoing are indemnifiable hereunder, the terms "Loss" and "Losses"
shall include any and all reasonable attorneys' fees and expenses and reasonable
costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity.
10.27 "Material Adverse Change" shall mean a change or circumstance
involving a prospective change in the business, operations, assets, liabilities,
results of operations, cash flows, condition (financial or otherwise) or
prospects of the Businesses or the Purchased Assets that is material and
adverse.
10.28 "Material Adverse Effect" shall mean a single event, occurrence or
fact that, together with all other events, occurrences and facts, has, or might
reasonably be expected to have, a material adverse effect on the business,
operations, assets, liabilities, results of operations, cash flows, condition
(financial or otherwise) or prospects of the Businesses or of the Purchased
Assets. For purposes of the foregoing, any aggregate loss to the Businesses
equal to or greater than $100,000 shall be deemed to have a Material Adverse
Effect.
10.29 "Order" shall mean any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Entity or by any arbitrator.
10.30 "Ordinary Course of Business" shall mean an action taken by a Person
that is consistent with the past practices of such Person and is taken in the
ordinary course of the normal operations of such Person.
10.31 "Permits" shall mean permits, tariffs, authorizations, licenses,
certificates, variances, interim permits, approvals, franchises and rights under
any Law or otherwise required by any Governmental Entity and any applications
for the foregoing.
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10.32 "Permitted Liens" shall mean (a) Liens for current taxes and
assessments not yet due or payable or that are being contested in good faith in
the Ordinary Course of Business or (b) Liens securing the claims of materialmen,
carriers, landlords and like persons, all of which are not yet due and payable.
10.33 "Person" shall mean a corporation, an association, a partnership, a
limited liability company, an organization, a business, an individual or a
Governmental Entity.
10.34 "Proprietary Information" shall mean collectively (a) Proprietary
Rights and (b) any and all other information and material proprietary to a
Person, owned, possessed or used by such Person, whether or not such information
is embodied in writing or other physical form, and which is not generally known
to the public, that (i) relates to financial information regarding such Person
or such Person's business, including, but not limited to, (A) business plans and
(B) sales, financing, pricing and marketing procedures or methods of such Person
or such business or (ii) relates to specific business matters concerning such
Person or such business, including such Person or such Person's business, the
identity of or other information regarding sales personnel and customers of such
Person or such business.
10.35 "Proprietary Rights" means trademarks, tradenames, service marks,
patents, copyrights, trade secrets, know-how and similar rights, and all
registrations, applications, licenses and rights with respect to any of the
foregoing; provided, however, that the name and trademarks "Xxxx" whether alone
or in conjunction with another name(s), word(s) or term(s) is not included
within the definition of "Proprietary Rights".
10.36 "Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Entity or arbitrator.
10.37 "Seller" shall have the meaning specified in the preamble.
10.38 "Taxes" shall mean all federal, state, local, foreign and other taxes,
charges, fees, duties, levies, imposts, customs or other assessments, including
all net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, profit share, license, lease, service, service use, value
added, withholding, payroll, employment, unemployment, excise, estimated,
severance, stamp, occupation, premium, real and personal property (tangible and
intangible), windfall profits, or other taxes, fees, assessments, customs,
duties, levies, imposts, or charges of any kind whatsoever, together with any
interest, penalties, additions to tax, fines or other additional amounts imposed
thereon or related thereto, and the term "Tax" means any one of the foregoing
Taxes.
10.39 "Tax Return" shall mean any report, return or other information
required to be supplied to a Governmental Entity in connection with any Taxes.
32
10.40 "Title Insurer" shall mean Xxxxxxx Title Guaranty Company.
10.41 "Knowledge" shall mean, with respect to a particular fact or other
matter, actual knowledge and awareness of such fact or other matter after due
and reasonable inquiry (including, but not limited to, inquiry of the Company's
general counsel. As used in this Agreement, the phrases "Seller's Knowledge,"
"Knowledge of Seller" and similar phrases shall mean only the Knowledge of Xxxx
X. Xxxxxxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xx., Xxxxxx X. Xxxxx, III,
Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx, X.X. Xxxxx, Xxxxx Xxxxxxxxxxxx,
Xxxxx Xxxxxx, Xxxxxxx Xxxxx Xxxx and Xxxxx Xxxxx.
ARTICLE 11
MISCELLANEOUS
11.1 Public Announcements . Subject to applicable securities law or stock
exchange requirements, neither the Buyer nor the Seller shall, without the prior
approval of the other party hereto which shall not be unreasonably withheld,
issue, or permit any of their respective partners, directors, officers,
employees, agents or Affiliates to issue, any press release or other public
announcement with respect to this Agreement or the transactions contemplated
hereby provided, that nothing in this Section 11.1 shall prevent such parties
from discussing such transactions with those Persons whose approval, agreement
or opinion, as the case may be, is required for consummation of such
transactions.
11.2 Other Action . Each of the parties shall use commercially reasonable
efforts to cause the fulfillment at the earliest practicable date but, in any
event, prior to the Closing Date of all of the conditions to their respective
obligations to consummate the transactions under this Agreement.
11.3 Expenses . Except as otherwise set forth herein, and whether or not the
transactions contemplated by this Agreement shall be consummated, each party
agrees to pay, without right of reimbursement from any other party, the costs
incurred by such party incident to the preparation and execution of this
Agreement and performance of its obligations hereunder, including without
limitation the fees and disbursements of legal counsel, accountants and
consultants employed by such party in connection with the transactions
contemplated by this Agreement. The Buyer shall pay all costs relating to the
transfer of title to the Purchased Assets, including all sales, use, stamp,
transfer, service, recording, real estate and like taxes or fees, if any,
imposed by any Government Entity in connection with the transfer and assignment
of the Purchased Assets.
11.4 Notices . All notices, requests, consents, directions and other
instruments and communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered in person, by courier, by an internationally recognized overnight
delivery service with proof of delivery or by prepaid registered or certified
United States first-class mail, return receipt requested, addressed to the
respective party at the address set forth below, or if sent by facsimile
33
transmission or other similar form of communication (with receipt confirmed) to
the respective party at the facsimile number set forth below:
If to the Seller, to:
Xxxx Group, Inc.
Suite 5400
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Copies to:
X.X. Xxxxxxxxxx & Xx., Xxx.
Xxxxx 0000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to Xxxxxxxxxx, to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
If to the Buyer, to:
River Associates, LLC
Xxxxx 0000, Xxx Xxxxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx, Xxx Xxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
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Copies to:
Xxxxxx & Xxxxxx
Suite 1000, Volunteer Building
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
or to such other address or facsimile number and to the attention of such other
Person(s) as either party may designate by written notice. Any notice mailed
shall be deemed to have been given and received on the third Business Day
following the day of mailing.
11.5 Successors . This Agreement shall inure to the benefit of and be
binding upon the Buyer and the Seller and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by either of the parties hereto without
the prior written consent of the other party hereto except that Buyer shall be
allowed to collaterally assign its rights under this Agreement to SouthTrust
Bank, National Association.
11.6 Entire Agreement . This Agreement and the exhibits and schedules
hereto constitute the entire agreement and understanding between the parties
relating to the subject matter hereof and supersede all prior representations,
endorsements, premises, agreements, memoranda, communications, negotiations,
discussions, understandings and arrangements, whether oral, written or inferred,
between the parties relating to the subject matter hereof and thereof. This
Agreement may not be modified, amended, rescinded, canceled, altered or
supplemented, in whole or in part, except upon the execution and delivery of a
written instrument executed by a duly authorized representative of each of the
parties hereto.
11.7 Governing Law .This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Georgia without giving
effect to choice of law principles.
11.8 Waiver . The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
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11.9 Severability . Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.10 No Third Party Beneficiaries . Any agreement contained, expressed or
implied in this Agreement shall be only for the benefit of the parties hereto
and their respective legal representatives, successors and permitted assigns,
and such agreements shall not inure to the benefit of the obligees of any
indebtedness of any party hereto, it being the intention of the parties hereto
that no Person shall be deemed a third party beneficiary of this Agreement.
11.11 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.
11.12 Interpretation . The headings preceding the text of Articles and
Sections included in this Agreement and the headings to schedules attached to
this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
herein shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Reference to any
Person includes such Person's successors and assigns to the extent such
successors and assigns are permitted by the terms of any applicable agreement,
and reference to a Person in a particular capacity excludes such Person in any
other capacity or individually. Reference to any agreement (including this
Agreement), document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof. Reference to any Law means
such Law as amended, modified, codified, replaced or re-enacted, in whole or in
part, and in effect on the date hereof, including rules, regulations,
enforcement procedures and any interpretations promulgated thereunder. The use
of the terms "hereunder", "hereof", "hereto" and words of similar import shall
refer to this Agreement as a whole and not to any particular Article, Section or
clause of or Exhibit or Schedule to this Agreement. Any lawsuit arising out of
this Agreement shall be brought in a court of competent jurisdiction in Xxxxxx
County, Texas. Each party hereby waives any objection it may have to the
jurisdiction of such court.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
SELLER:
XXXX GROUP, INC.
By:_______________________________________
Name:_____________________________________
Title:______________________________________
BUYER:
BLUE RIDGE ACQUISITION COMPANY, LLC
By:_______________________________________
Name:_____________________________________
Title:______________________________________
PARENT:
X.X. XXXXXXXXXX & CO., INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
