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STOCK AND ASSET SALE AGREEMENT
by and among
WARNACO INC.,
WARNER'S (U.K.) LTD.,
WARNACO (HK) LTD.
and
LUEN THAI OVERSEAS LIMITED
Dated as of December 21, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..............................................................................2
Section 1.1 Definitions...................................................................2
Section 1.2 Interpretation................................................................6
ARTICLE II PURCHASE AND SALE OF STOCK AND ASSETS...................................................7
Section 2.1 Sale and Transfer of the Shares...............................................7
Section 2.2 Sale and Transfer of the Assets...............................................7
Section 2.3 Retained Assets...............................................................9
Section 2.4 Assumed Liabilities...........................................................9
Section 2.5 Retained Liabilities..........................................................9
Section 2.6 Purchase Price...............................................................10
Section 2.7 Good Faith Deposit...........................................................10
Section 2.8 Allocation of Cash Purchase Price for Tax Purposes...........................10
ARTICLE III THE CLOSING...........................................................................11
Section 3.1 The Closing..................................................................11
Section 3.2 Deliveries by the Sellers....................................................11
Section 3.3 Deliveries by the Purchaser..................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS..........................................13
Section 4.1 Organization.................................................................13
Section 4.2 Capitalization of Transferred Subs...........................................13
Section 4.3 Authority Relative to this Agreement.........................................13
Section 4.4 Consents and Approvals.......................................................14
Section 4.5 No Violations................................................................14
Section 4.6 Books and Records............................................................15
Section 4.7 Title to Property............................................................15
Section 4.8 Property Leases..............................................................15
Section 4.9 Brokers......................................................................15
Section 4.10 Ability to Conduct Business.................................................15
Section 4.11 No Other Representations or Warranties......................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.........................................16
Section 5.1 Organization.................................................................16
Section 5.2 Authority Relative to this Agreement.........................................16
Section 5.3 Consents and Approvals.......................................................17
Section 5.4 No Violations................................................................17
Section 5.5 Brokers......................................................................17
Section 5.6 Financing....................................................................17
ARTICLE VI COVENANTS..............................................................................17
Section 6.1 Interim Operations of the Business...........................................17
Section 6.2 Access; Confidentiality......................................................19
Section 6.3 Bankruptcy Actions...........................................................19
Section 6.4 Reasonable Best Efforts......................................................20
Section 6.5 Employee Matters.............................................................20
Section 6.6 No Implied Representations or Warranties; Due Diligence......................25
Section 6.7 Books and Records............................................................25
Section 6.8 Publicity....................................................................26
Section 6.9 Tax Matters..................................................................26
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Section 6.10 Disclosure Supplements......................................................26
Section 6.11 Bulk Sale...................................................................27
Section 6.12 Warnaco Trademarks, Logos and Names.........................................27
Section 6.13 Insurance...................................................................27
Section 6.14 Letters of Credit...........................................................27
Section 6.15 Cash Balances in Transferred Subs...........................................28
Section 6.16 Further Assurances..........................................................28
ARTICLE VII CONDITIONS PRECEDENT..................................................................28
Section 7.1 Conditions Precedent to Obligation of the Sellers and the Purchaser..........28
Section 7.2 Conditions Precedent to Obligation of the Sellers............................29
Section 7.3 Conditions Precedent to Obligation of the Purchaser..........................29
ARTICLE VIII TERMINATION..........................................................................30
Section 8.1 Termination..................................................................30
Section 8.2 Termination for Alternative Transaction......................................30
Section 8.3 Effect of Termination and Abandonment........................................30
Section 8.4 Extension; Waiver............................................................31
ARTICLE IX GENERAL PROVISIONS.....................................................................31
Section 9.1 Survival of Representations, Warranties and Agreements.......................31
Section 9.2 Notices......................................................................31
Section 9.3 Descriptive Headings.........................................................33
Section 9.4 Entire Agreement; Assignment.................................................33
Section 9.5 Governing Law; Jurisdiction..................................................33
Section 9.6 Expenses.....................................................................33
Section 9.7 Amendment and Modification...................................................33
Section 9.8 Counterparts.................................................................33
Section 9.9 Severability; Validity; Parties in Interest..................................33
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TABLE OF SCHEDULES
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Schedule A Transferred Subs
Schedule 2.2(a) Accounts Receivable
Schedule 2.2(b)(i) Customer Contracts
Schedule 2.2(b)(iii) Other Contracts
Schedule 2.2(d) Tangible Personal Property
Schedule 2.2(e) Intellectual Property
Schedule 2.2(g) Property Leases
Schedule 2.2(i) Prepaid Items or Deposits
Schedule 2.2(k) Other Acquired Assets
Schedule 2.6(a) GECC Assets
Schedule 2.6(b) Transferred Subs Bank Accounts
Schedule 4.4 Consents and Approvals
Schedule 6.5 Offered Employees
Schedule 7.1(b) Permits, Authorizations and Approvals
TABLE OF EXHIBITS
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Exhibit A Form of Letter of Credit
Exhibit B Form of ▇▇▇▇ of Sale
Exhibit C Form of Undertaking and Instrument of
Assumption
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Manufacturing Agreement
Exhibit F License Agreement
Exhibit G Form of Bidding Procedures Order
Exhibit H Acknowledgment and Waiver
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STOCK AND ASSET SALE AGREEMENT
STOCK AND ASSET SALE AGREEMENT, dated as of December 21, 2001 (the
"Agreement"), by and among Warnaco Inc., a Delaware corporation ("Warnaco
Inc."), Warner's (U.K.) Ltd., a corporation organized and existing under the
laws of the United Kingdom ("Warner's U.K.") and Warnaco (HK) Ltd., a
corporation organized and existing under the laws of Barbados ("Warnaco HK" or
the "Stock and Asset Seller") (together, Warnaco Inc., Warner's U.K. and Warnaco
HK are referred to as the "Sellers"), and Luen Thai Overseas Limited, a
corporation organized and existing under the laws of Bahamas (the "Purchaser").
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in Article I.
WHEREAS, The Warnaco Group, Inc. ("Warnaco"), the parent company of the
Sellers, along with certain of its Affiliates, sought relief under Chapter 11 of
title 11 of the United States Code, 11 U.S.C. 'SS''SS' 101-1330, as amended (the
"Bankruptcy Code"), in the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") (the "Bankruptcy Case");
WHEREAS, the Purchaser desires to purchase and acquire, and the Stock
and Asset Seller desires to sell and transfer, or cause to be sold and
transferred, to the Purchaser all of the equity interests directly or indirectly
owned by the Stock and Asset Seller (the "Shares") in the subsidiaries of the
Stock and Asset Seller set forth on Schedule A (each a "Transferred Sub" and
collectively, the "Transferred Subs") in the manner and subject to the terms and
conditions set forth herein and in accordance with Sections 105, 363 and 365 of
the Bankruptcy Code;
WHEREAS, the Purchaser desires to purchase and acquire, and the Sellers
desire to sell, convey, assign and transfer, or cause to be sold, conveyed,
assigned and transferred, to the Purchaser, the Acquired Assets (as hereinafter
defined) and the Purchaser is willing to assume, and the Sellers desire to
assign and delegate to the Purchaser, the Assumed Liabilities (as hereinafter
defined), all in the manner and subject to the terms and conditions set forth
herein and in accordance with Sections 105, 363 and 365 of the Bankruptcy Code
(together with the sale of the Shares, the "Acquisition"); and
WHEREAS, the Transferred Subs, the Acquired Assets and the Assumed
Liabilities constitute a business of designing, manufacturing and merchandising
women's intimate apparel and sleepwear and other apparel (the "Business").
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context clearly requires otherwise:
"Acquired Assets" has the meaning set forth in Section 2.2.
"Acquisition" has the meaning set forth in the Recitals.
"Adjustment Date" has the meaning set forth in Section 6.14(c).
"Affiliate" has the meaning set forth in Rule 12b-2 of the Securities
Exchange Act.
"Agreement" has the meaning set forth in the Preamble.
"Allocation" has the meaning set forth in Section 2.8.
"Ancillary Agreements" means collectively the Undertaking and
Instrument of Assumption, the ▇▇▇▇ of Sale, the Manufacturing Agreement, and the
License Agreement.
"Applicable Law" shall mean any law, regulation, rule, order, judgment,
decree, constitution, statute, code, ordinance, judicial or arbitral or
administrative or ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, consent orders and decrees, policies, guidelines
or any interpretations of any of the foregoing, including general principals of
civil law and equity, issued by any Governmental Entity having or exercising
jurisdiction or otherwise affecting, to which the Business, the Acquired Assets,
the Sellers, the Purchaser or any of the Transferred Subs is subject.
"Assumed Liabilities" has the meaning set forth in Section 2.4.
"Bankruptcy Case" has the meaning set forth in the Recitals.
"Bankruptcy Code" has the meaning set forth in the Recitals.
"Bankruptcy Court" has the meaning set forth in the Recitals.
"Bidding Procedures" has the meaning set forth in Section 6.3(a)(i).
"Bidding Procedures Order" has the meaning set forth in Section
6.3(a)(i).
"▇▇▇▇ of Sale" has the meaning set forth in Section 3.2(c).
"Business" has the meaning set forth in the Recitals.
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"Cash Purchase Price" has the meaning set forth in Section 2.6(a).
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"COBRA" means IRC Section 4980B and the rules and regulations
promulgated thereunder.
"Confidentiality Agreement" shall mean the letter agreement dated
October 5, 2001 between the Purchaser and Warnaco.
"Customer Contracts" has the meaning set forth in Section 2.2(b)(i).
"Employment Offer" has the meaning set forth in Section 6.5(a).
"Environmental Laws" means federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations promulgated thereunder.
"Final Order" shall mean an order or judgment of the Bankruptcy Court
or other court of competent jurisdiction, in form and substance reasonably
satisfactory to the Sellers and the Purchaser, approving this Agreement and the
Ancillary Agreements, and authorizing, pursuant to all applicable sections of
the Bankruptcy Code, all of the transactions and agreements contemplated hereby,
which order shall not have been stayed, vacated or otherwise rendered
ineffective.
"GJM LCs" has the meaning set forth in Section 6.14(a).
"Governmental Entity" means any federal, state, provincial, local,
county or municipal government, governmental, judicial, regulatory or
administrative agency, commission, board, tribunal, bureau or other authority or
instrumentality, domestic or foreign.
"HK Employee Acknowledgment" has the meaning set forth in Section
6.5(b).
"HK Offered Employees" has the meaning set forth in Section 6.5(b).
"HK Transferred Employee" has the meaning set forth in Section 6.5(b).
"HKSAR" has the meaning set forth in Section 6.5(b).
"Intellectual Property" has the meaning set forth in Section 2.2(e).
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"Inventory" has the meaning set forth in Section 2.2(c).
"IRC" means the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Letter of Credit" has the meaning set forth in Section 2.7.
"Manufacturing Agreement" has the meaning set forth in Section 3.2(h).
"Material Adverse Effect" means any change, event or occurrence in
respect of the operation of the Business, the Transferred Subs, the Acquired
Assets or the Assumed Liabilities that in the aggregate results in or has a
material adverse effect on the business, financial condition or operations of
the Business taken as a whole; provided, however, that, any change, event or
occurrence that (i) is generally applicable to (A) the industries or markets in
which the Business operates or (B) the United States or global economies or (ii)
relates to foreign currency exchange rate fluctuations, shall in each case be
excluded from the determination of Material Adverse Effect; and provided,
further, that any event, condition or matter resulting from the Bankruptcy Case,
the execution of this Agreement, the announcement of this Agreement, or the
consummation of the transactions contemplated by this Agreement shall also be
excluded from the determination of Material Adverse Effect (other than for
purposes of Section 4.5).
"Offered Employees" has the meaning set forth in Section 6.5(a).
"PBGC" means the Pension Benefit Guaranty Corporation or a successor
entity.
"Permitted Exceptions" means: (i) real property taxes not yet due and
payable; (ii) any public roads and road right-of-ways, public streets and all
easements, all whether by reservation, dedication or grant of record; (iii)
zoning and building ordinances, and rules and regulations of any governmental
unit now or hereafter in effect and (iv) easements, reservations, restrictions
and other matters of record affecting all or a part of the premises.
"Person" shall mean a natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity or organization.
"Plans" means each deferred compensation and incentive compensation,
stock purchase, stock option and other equity compensation plan, program,
agreement or arrangement; each severance or termination pay, medical, surgical,
hospitalization, life insurance and other material "welfare" plan, fund or
program (within the meaning of Section 3(1) of ERISA, whether or not subject to
ERISA); each profit-sharing, stock bonus or other "pension" plan, fund or
program (within the meaning of Section 3(2) of ERISA, whether or not subject to
ERISA); each material employment, termination, change of control or severance
agreement; and each other material employee benefit plan, fund, program,
agreement or arrangement, that is sponsored, maintained or contributed to or
required to be contributed to by any of the Sellers or the Purchaser, as the
case may be, or by any trade or business, whether or not incorporated (an
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"ERISA Affiliate"), that together with the Sellers or the Purchaser, as the case
may be, would be deemed a "single employer" within the meaning of section
4001(b) of ERISA, or to which any of the Sellers or the Purchaser or an ERISA
Affiliate of any such entity, as the case may be, is party, whether written or
oral, for the benefit of any employee or former employee of the Sellers or the
Purchaser, as the case may be.
"Property Leases" has the meaning set forth in Section 2.2(g).
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser LC" has the meaning set forth in Section 6.14(a).
"Purchaser Savings Plan" has the meaning set forth in Section
6.5(g)(i).
"Retained Assets" has the meaning set forth in Section 2.3.
"Sale Order" shall mean an order of the Bankruptcy Court approving the
Agreement and consummation of the Acquisition, under Sections 105, 363 and 365
of the Bankruptcy Code.
"Sellers" has the meaning set forth in the Preamble.
"Shares" has the meaning set forth in the Recitals.
"Stock and Asset Seller" has the meaning set forth in the Preamble.
"Tangible Personal Property" has the meaning set forth in Section
2.2(d).
"Tax" or "Taxes" shall mean any and all taxes, fees, levies, compulsory
pension contributions or other assessments, including, without limitation,
federal, state, local, or foreign income, corporate gross receipts, excise, real
or personal property, sales, withholding, social security, occupation, use,
service, value added, license, net worth, payroll, franchise, severance, stamp,
transfer, registration, premium, windfall, profits, environmental, customs
duties, capital stock, capital duty profits, unemployment, disability,
alternative or add-on minimum, estimated or any similar taxes imposed by any
Taxing Authority together with any interest, penalties or additions to tax and
additional amounts imposed with respect thereto, (including any fee or
assessment or other charge in the nature of or in lieu of any tax) in each case,
whether or not disputed and including any transferee or secondary liability in
respect of any tax (whether imposed by law, contractual agreement or otherwise)
and any liability in respect of any tax as a result of being a member of any
affiliated, consolidated, combined, unitary or similar group.
"Taxing Authority" shall mean any Governmental Entity responsible for
the imposition or collection of any Taxes.
"Tax Return" shall mean any return (including information and estimated
returns), report, statement, declaration or other document (including any
related or supporting
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information) filed or required to be filed with any United States federal,
state, local or foreign Governmental Entity in connection with any
determination, assessment or collection of any Tax or other administration of
any laws, regulations or administrative requirements relating to taxes,
including any amendments thereto.
"Termination Date" has the meaning set forth in Section 8.1(c).
"Third Party" shall mean any Person other than the Sellers, the
Purchaser or any of their respective Affiliates.
"Trademarks" shall mean registered and unregistered trademarks, service
marks, logos, trade names, corporate names and all registrations and
applications to register the same.
"Transfer Amount" has the meaning set forth in Section 6.5(f)(i).
"Transfer Taxes" has the meaning set forth in Section 6.9(a).
"Transferred Employees" has the meaning set forth in Section 6.5(a).
"Transferred Sub" has the meaning set forth in the Recitals.
"Transition Services Agreement" has the meaning set forth in Section
3.2(g).
"Undertaking and Instrument of Assumption" has the meaning set forth in
Section 3.2(d).
"WARN Act" means the Workers Adjustment and Retraining Notification Act
of 1988, as amended.
"Warnaco" has the meaning set forth in the Recitals.
"Warnaco Pension Employees" has the meaning set forth in Section
6.5(f)(i).
"Warnaco Pension Plan" has the meaning set forth in Section 6.5(f)(i).
"Warnaco HK" has the meaning set forth in the Preamble.
"Warnaco Inc." has the meaning set forth in the Preamble.
"Warner's U.K." has the meaning set forth in the Preamble.
Section 1.2 Interpretation.
(a) When a reference is made in this Agreement to a section,
article, paragraph, exhibit or schedule, such reference shall be to a section,
article, paragraph, exhibit or schedule of this Agreement unless clearly
indicated to the contrary.
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(b) Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement.
(d) The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of such term, and
words denoting any gender shall include all genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's predecessors, successors and
permitted assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-enactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(g) References to $ are to United States Dollars.
(h) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
ARTICLE II
PURCHASE AND SALE OF STOCK AND ASSETS
Section 2.1 Sale and Transfer of the Shares. On the terms and subject
to the conditions set forth in this Agreement and subject to approval of the
Bankruptcy Court pursuant to Sections 105, 363 and 365 of the Bankruptcy Code,
at the Closing, the Stock and Asset Seller shall sell, assign, transfer, convey
and deliver, or cause to be sold, assigned, transferred, conveyed and delivered,
to the Purchaser, and the Purchaser shall purchase and accept from the Stock and
Asset Seller, all right, title and interest of the Stock and Asset Seller in and
to the Shares.
Section 2.2 Sale and Transfer of the Assets. On the terms and subject
to the conditions set forth in this Agreement and subject to approval of the
Bankruptcy Court pursuant to Sections 105, 363 and 365 of the Bankruptcy Code,
at the Closing, the Sellers shall sell,
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assign, transfer, convey and deliver, or cause to be sold, assigned,
transferred, conveyed and delivered, to the Purchaser, and the Purchaser shall
purchase and accept from the Sellers, all right, title and interest of the
Sellers in and to all rights, properties and assets of the Sellers that are
listed or described below, wherever located, whether tangible or intangible, as
the same shall exist on the Closing Date (collectively, the "Acquired Assets"):
(a) all accounts receivable arising out of the operation of
the Business existing on the date hereof that are listed or described on
Schedule 2.2(a) or arising in the ordinary course under the Customer Contracts
after the date hereof;
(b) all rights and incidents of interest of the Sellers to:
(i) all agreements, contracts and arrangements
between the Sellers and a Third Party customer exclusively relating to
the Business that are listed or described on Schedule 2.2(b)(i) or that
exclusively relate to the Business and arise in the ordinary course
after the date hereof (the "Customer Contracts");
(ii) all agreements, contracts and arrangements
between the Sellers and the Transferred Employees regarding employment,
confidentiality, assignment of invention, non-competition, severance
and other employment-related matters; and
(iii) the agreements, contracts and arrangements that
are listed or described on Schedule 2.2(b)(iii);
(c) all inventory, supplies, finished goods, works in process,
goods-in-transit, packaging materials and other consumables of the Sellers
exclusively relating to the Business (the "Inventory"), including Inventory (i)
in transit from suppliers of the Business or (ii) held by suppliers of the
Business;
(d) all equipment, computers, furniture, furnishings,
fixtures, office supplies, vehicles and all other fixed assets currently leased
by, owned by, or on order to be delivered to, the Sellers that are used
exclusively in the operation of the Business that are listed or described on
Schedule 2.2(d) or that exclusively relate to the Business and are acquired in
the ordinary course after the date hereof (collectively, the "Tangible Personal
Property");
(e) all U.S. and other patents, patent applications, patent
licenses, Sellers' proprietary software together with applicable source codes,
software licenses and know-how licenses, Trademarks, copyright registrations and
applications, internet addresses and other internet related assets used
exclusively in the operation of the Business that are listed or described on
Schedule 2.2(e) (the "Intellectual Property");
(f) all rights as of the Closing under all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with all other Acquired Assets;
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(g) the real property leases used primarily in the operation
of the Business that are listed or described on Schedule 2.2(g) (the "Property
Leases");
(h) to the extent transferrable, all material licenses,
permits, authorizations and approvals issued to the Sellers by any Governmental
Entity exclusively relating to the operation of the Business;
(i) all prepaid items or deposits existing on the date hereof
that are listed or described on Schedule 2.2(i) or that relate exclusively to
the Business arising in the ordinary course after the date hereof;
(j) all books and records of the Sellers exclusively relating
to the operation of the Business; and
(k) all the rights, properties or assets that are listed or
described on Schedule 2.2(k).
Section 2.3 Retained Assets. The Acquired Assets shall include only
those assets identified in Section 2.2, it being the intention of the parties
that all other rights, properties and assets of the Sellers are to be retained
by the Sellers and not sold or assigned to the Purchaser (collectively, the
"Retained Assets").
Section 2.4 Assumed Liabilities. On the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Purchaser shall
assume from the Sellers and thereafter pay, perform or otherwise discharge in
accordance with their terms, and shall hold the Sellers harmless from, all of
the liabilities and obligations of the Sellers with respect to, arising out of
or relating to the following (collectively, the "Assumed Liabilities"):
(a) the ownership, possession or use of the Acquired Assets
and the operation of the Business (of any nature or kind, and whether based in
common law or statute or arising under written contract or otherwise, known or
unknown, fixed or contingent, accrued or unaccrued, liquidated or unliquidated,
real or potential) on and after the Closing Date, including, without limitation,
all of the obligations and liabilities (including all cure and reinstatement
costs or expenses) arising under the agreements, contracts and arrangements
included in the Acquired Assets; and
(b) Environmental Laws or Taxes relating to the real property
subject to the Property Leases to the extent of all claims therefor brought
arising on or after the Closing.
Section 2.5 Retained Liabilities. The Purchaser shall not assume or
agree to pay, perform or otherwise discharge any liabilities, obligations or
expenses other than the Assumed Liabilities.
Section 2.6 Purchase Price.
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(a) In consideration for the Acquired Assets and the Shares,
the Purchaser shall, in addition to its assumption of the Assumed Liabilities,
pay to the Sellers at the Closing $10,100,000 (the "Cash Purchase Price") in
cash by wire transfer of immediately available funds to an account or accounts
designated by the Sellers; provided, that the Cash Purchase Price will be
reduced by $42,000 if the Sellers can not deliver to the Purchaser the assets
subject to the GECC Master Lease Agreement set forth on Schedule 2.6(a).
(b) Upon the second business day after receipt of Schedule
2.6(b) (described below), the Purchaser will pay to the Sellers the amount of
the cash balances as of the close of business on the Closing Date in the bank
accounts of the Transferred Subs set forth on Schedule 2.6(b) in cash by wire
transfer of immediately available funds to an account or accounts designated by
the Sellers.
Section 2.7 Good Faith Deposit. Concurrently with the execution of this
Agreement, the Purchaser shall cause to be issued a letter of credit in favor of
the Sellers by the Hongkong and Shanghai Banking Corporation (the "Letter of
Credit") in the form attached as Exhibit A hereto for the sum of $505,000 which
will satisfy the requirements for and function as a Good Faith Deposit (as
described in Exhibit G hereto). In the event that (x) this Agreement is
terminated or abandoned as a direct result of a material breach hereof by the
Purchaser and (y) no event, circumstance or condition shall have occurred or
exist which would give the Purchaser the right not to close the transactions
contemplated by this Agreement, the Letter of Credit will be drawn by the
Sellers according to the terms of the Letter of Credit. In the event that this
Agreement is terminated or abandoned for any other reason or under any other
circumstance in which the conditions set forth in clause (x) or (y) of the
preceding sentence do not exist, the Letter of Credit will be terminated.
Section 2.8 Allocation of Cash Purchase Price for Tax Purposes. Within
ninety days following the Closing, the Sellers shall provide the Purchaser with
a proposed allocation of the consideration paid for the Shares and the Acquired
Assets pursuant to this Agreement (including the Assumed Liabilities) pursuant
to Section 1060 of the Code and applicable regulations. Within thirty days
following such provision, the Purchaser shall have the right to object to such
proposed allocation. Within thirty days following receipt of the Purchaser's
objections to the proposed allocation, the parties shall attempt to resolve in
good faith any differences regarding such proposed allocation. If the Purchaser
does not object to the Sellers' proposed allocation within such thirty day
period or if the parties agree on a final allocation within such thirty day
period (in either case, the "Allocation"), the Sellers and the Purchaser shall
(i) be bound by the Allocation for all Tax purposes; (ii) prepare and file all
Tax Returns in a manner consistent with the Allocation; and (iii) take no
position inconsistent with the Allocation in any Tax Return, any proceeding
before any Taxing Authority or otherwise. In the event that the Allocation is
disputed by any Taxing Authority, the party receiving notice of such dispute
shall promptly notify and consult with the other party and keep the other party
apprised of material developments concerning resolution of such dispute. In the
event that the parties cannot agree on the allocation of the consideration paid
for the Shares and the Acquired Assets pursuant
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to this Agreement, each of the parties may prepare and file its Tax Returns and
take any position it sees fit.
ARTICLE III
THE CLOSING
Section 3.1 The Closing. Upon the terms and subject to the conditions
of this Agreement, the consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00
a.m., New York time, on the first business day following the satisfaction and/or
waiver of all conditions to closing set forth in Article VII (other than
conditions which can be satisfied only by the delivery of certificates, opinions
or other documents at the Closing), unless another date and/or place is agreed
in writing by each of the parties hereto (the date of the Closing being herein
referred to as the "Closing Date").
Section 3.2 Deliveries by the Sellers. At the Closing, the Sellers
shall deliver or cause to be delivered to the Purchaser (unless previously
delivered), the following:
(a) stock certificates representing the Shares being purchased
at the Closing, duly endorsed or accompanied by other duly executed instruments
of transfer;
(b) the books, files and other records of (i) the Sellers
referred to in Section 2.2(j) and (ii) the Transferred Subs;
(c) a duly executed ▇▇▇▇ of sale (the "▇▇▇▇ of Sale"),
substantially in the form of Exhibit B attached hereto, transferring the
Acquired Assets to the Purchaser;
(d) the undertaking and instrument of assumption (the
"Undertaking and Instrument of Assumption ") substantially in the form of
Exhibit C attached hereto, evidencing the assignment and assumption by the
Purchaser of the Assumed Liabilities;
(e) duly executed assignments of the Intellectual Property
sufficient to transfer the Intellectual Property to the Purchaser;
(f) all other duly executed conveyance documents reasonably
necessary to transfer to the Purchaser the Acquired Assets, including assignment
and assumption agreements regarding the Property Leases;
(g) the transition services agreement to be entered into
between the Sellers and the Purchaser (the "Transition Services Agreement"),
substantially in the form of Exhibit D attached hereto, duly executed by the
Sellers;
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(h) the manufacturing agreement to be entered into between the
Sellers and the Purchaser (the "Manufacturing Agreement"), substantially in the
form of Exhibit E attached hereto, duly executed by the Sellers;
(i) the trademark license agreement to be entered into between
the Sellers and the Purchaser (the "License Agreement"), substantially in the
form of Exhibit F attached hereto, duly executed by the Sellers;
(j) the Officers' Certificate referred to in Section 7.3(c);
(k) a certified copy of each of the Bidding Procedures Order,
Sale Order, and the docket of the Bankruptcy Court evidencing the entry of the
Bidding Procedures Order and the Sale Order; and
(l) all other previously undelivered documents required to be
delivered by the Sellers to the Purchaser at or prior to the Closing Date in
connection with the Acquisition.
Section 3.3 Deliveries by the Purchaser. At the Closing, the Purchaser
shall deliver or cause to be delivered to the Sellers (unless previously
delivered), the following:
(a) the Cash Purchase Price (less the Good Faith Deposit) by
wire transfer in immediately available funds to an account or accounts
designated by the Sellers;
(b) the assignment and assumption agreements regarding the
Property Leases duly executed by the Purchaser;
(c) the Transition Services Agreement, duly executed by the
Purchaser;
(d) the Manufacturing Agreement, duly executed by the
Purchaser;
(e) the License Agreement, duly executed by the Purchaser;
(f) the Officer's Certificate referred to in Section 7.2(c);
and
(g) all other previously undelivered documents required to be
delivered by the Purchaser to the Sellers at or prior to the Closing Date in
connection with the Acquisition.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as disclosed in the written statement delivered by the Sellers
to the Purchaser at or prior to the execution of this Agreement (the "Seller
Disclosure Schedule"), the Sellers represent and warrant to the Purchaser as
follows
Section 4.1 Organization. Each of the Sellers and the Transferred Subs
is duly organized, validly existing and in good standing (or its equivalent)
under the laws of the jurisdiction of its incorporation or organization and has
the requisite power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the failure
to be so existing and in good standing or to have such power and authority would
not be reasonably likely to have a Material Adverse Effect. The jurisdiction of
incorporation or organization of each Transferred Sub is set forth on Schedule
A. Each of the Sellers and the Transferred Subs is duly qualified or licensed to
do business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified, licensed and in good standing would not be reasonably likely to have
a Material Adverse Effect. The Sellers have heretofore made available to the
Purchaser a complete and correct copy of the organizational documents of each
Seller and Transferred Sub, as in effect on the date hereof.
Section 4.2 Capitalization of Transferred Subs. The authorized and
outstanding equity interests of each Transferred Sub are as set forth on
Schedule A. All of the equity interests of each Transferred Sub are owned
beneficially and of record as set forth on Schedule A. There are no existing (i)
options, warrants, calls, subscriptions or other rights, convertible securities,
agreements or commitments of any character obligating a Transferred Sub to
issue, transfer or sell any equity interests in such Transferred Sub or
securities convertible into or exchangeable for such equity interests, (ii)
contractual obligations of a Transferred Sub to repurchase, redeem or otherwise
acquire any equity interests in such Transferred Sub or (iii) voting trusts or
similar agreements to which a Transferred Sub is a party with respect to the
voting of equity interests in such Transferred Sub. Other than as set forth on
Schedule A, none of the Transferred Subs holds any equity interest in any other
entity.
Section 4.3 Authority Relative to this Agreement. Subject to the entry
of the Sale Order, the Sellers have the corporate power and authority to enter
into this Agreement and each Ancillary Agreement and to carry out their
obligations hereunder and thereunder. The execution, delivery, and performance
of this Agreement and each Ancillary Agreement by the Sellers and the
consummation by the Sellers of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate action. This Agreement has
been duly and validly executed and delivered by the Sellers, and upon the entry
of the Sale Order (assuming this Agreement constitutes a valid and binding
obligation of the Purchaser), will constitute a valid and binding agreement of
the Sellers, enforceable against the Sellers in accordance with its terms,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws
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affecting creditors' rights generally from time to time in effect and to general
equitable principles. At the Closing, each Ancillary Agreement executed and
delivered by the Sellers will have been duly and validly executed and delivered
by the Sellers and upon the entry of the Sale Order (assuming each such
Ancillary Agreement constitutes a valid and binding obligation of the Purchaser
or its permitted designee), each such Ancillary Agreement will constitute a
valid and binding agreement of the Sellers, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from time to
time in effect and to general equitable principles.
Section 4.4 Consents and Approvals. Upon the entry of the Sale Order,
no consent, approval, or authorization of, or declaration, filing, or
registration with, any Governmental Entity will be required to be made or
obtained by the Sellers in connection with the execution, delivery, and
performance of this Agreement and the consummation of the Acquisition, except
for (a) consents, approvals, or authorizations of, or declarations or filings
with, the Bankruptcy Court, (b) consents, approvals, authorizations,
declarations, filings or registrations already obtained or made and (c)
consents, approvals, authorizations, declarations, filings or registrations,
which, if not obtained or made, would not be reasonably likely to have a
Material Adverse Effect. Except as set forth on Schedule 4.4, upon the entry of
the Sale Order, no consent, approval, waiver or authorization of any Person
(other than a Governmental Entity) will be required in connection with the
execution, delivery, and performance of this Agreement and the consummation of
the Acquisition, other than those already obtained and those, which, if not
obtained, could not be reasonably likely to have a Material Adverse Effect.
Section 4.5 No Violations. Assuming that the consents, approvals,
authorizations, declarations, filings and registrations referred to in Section
4.4 have been obtained or made and shall remain in full force and effect and the
conditions set forth in Article VII shall have been satisfied or waived, at the
Closing, neither the execution, delivery or performance of this Agreement and
the Ancillary Agreements by the Sellers, nor the consummation by the Sellers of
the transactions contemplated hereby, nor compliance by the Sellers with any of
the provisions hereof will (a) conflict with or result in any breach of any
provisions of the certificate of incorporation or bylaws or similar
organizational documents of each of the Sellers, (b) result in a violation or
breach of, or constitute (with or without due notice or lapse of time) a default
(or give rise to any right of termination, cancellation, vesting, payment,
exercise, acceleration, suspension or revocation) under any of the terms,
conditions or provisions of any contract, agreement or arrangement that is
included as an Acquired Asset or any material note, bond, mortgage, deed of
trust, security interest, indenture, license, contract, agreement, plan or other
instrument or obligation to which one of the Transferred Subs is a party or by
which the Sellers' properties or assets related to the Business may be bound or
affected or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Sellers, the Transferred Subs or the Acquired
Assets, except in the case of clause (b) or (c) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations that would not be reasonably likely to have a
Material Adverse Effect.
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Section 4.6 Books and Records. The books, records and accounts of the
Sellers maintained with respect to the Business accurately and fairly reflect,
in reasonable detail, the assets and liabilities of the Sellers and the
Transferred Subs with respect to the Business. The Sellers have not engaged in
any material transactions with respect to the Business, maintained any bank
account for the Business or used any material funds of the Sellers or any
Transferred Sub in the conduct of the Business, except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained
books and records of the Sellers.
Section 4.7 Title to Property. Upon the entry of the Sale Order, at the
Closing, the Sellers will have the power and right to sell, or assign, transfer
and deliver, as the case may be, to the Purchaser the Shares and the Acquired
Assets and on the Closing Date will sell, assign, transfer and deliver the
Shares and the Acquired Assets free and clear of all liens, claims, encumbrances
and security interests, other than Permitted Exceptions.
Section 4.8 Property Leases. Upon the entry of the Sale Order, the
Sellers will transfer and assign the Property Leases, set forth on Schedule
2.2(g)(ii), free and clear of all liens, claims, encumbrances and security
interests other than Permitted Exceptions. Schedule 2.2(g)(ii) identifies
instruments through which the Sellers derive their leasehold interest in the
Property Leases (including all amendments thereto). Complete and correct copies
of the Property Leases have been delivered to, or made available for inspection
by, the Purchaser, and none of the Property Leases have been modified in any
material respect except to the extent that such modifications are disclosed by
the copies delivered to or made available for inspection by the Purchaser.
Section 4.9 Brokers. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by the Sellers in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Sellers.
Section 4.10 Ability to Conduct Business. The (i) Acquired Assets and
(ii) tangible and intangible assets currently leased or owned by the Transferred
Subs, taken together, constitute substantially all of the tangible and
intangible assets that are required to conduct the Business as of the date
hereof (it being understood and agreed that nothing set forth in this Section
4.10 constitutes a representation or warranty that the Business can or will be
operated at the existing performance levels following the Closing Date) or are
otherwise used exclusively in the Business.
Section 4.11 No Other Representations or Warranties. EXCEPT AS
SPECIFICALLY AND EXPRESSLY SET FORTH IN THIS ARTICLE IV, (I) THE SELLERS MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO
THE ACQUIRED ASSETS, THE TRANSFERRED SUBS, THE ASSUMED LIABILITIES OR THE
BUSINESS, INCLUDING , WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO
VALUE, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR FOR ORDINARY
PURPOSES, OR ANY OTHER MATTER, (II) THE SELLERS MAKE NO, AND HEREBY DISCLAIM
ANY, OTHER REPRESENTATION OR WARRANTY REGARDING THE ACQUIRED ASSETS,
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THE TRANSFERRED SUBS, THE ASSUMED LIABILITIES OR THE BUSINESS AND (III) THE
ACQUIRED ASSETS, THE TRANSFERRED SUBS, THE ASSUMED LIABILITIES AND THE BUSINESS
BEING TRANSFERRED TO THE PURCHASER ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS AS
OF THE CLOSING, AND THE PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE SELLERS MAKE NO
REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN THE ACQUIRED ASSETS
OR ANY LIABILITIES OTHER THAN THE ASSUMED LIABILITIES OR ANY BUSINESS OTHER THAN
THE BUSINESS, AND NONE SHALL BE IMPLIED AT LAW OR IN EQUITY.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
Section 5.1 Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted. The Purchaser is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary.
Section 5.2 Authority Relative to this Agreement. The Purchaser has the
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to carry out its obligations hereunder and thereunder. The
execution, delivery, and performance of this Agreement and each of the Ancillary
Agreements by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action. This Agreement has been duly and validly executed
and delivered by the Purchaser. At the Closing, each of the Ancillary Agreements
will be duly and validly executed and delivered by the Purchaser. Assuming this
Agreement constitutes a valid and binding obligation of the Sellers, this
Agreement constitutes a valid and binding agreement of the Purchaser,
enforceable against the Purchaser in accordance with its terms, and upon the
Closing (assuming each of the Ancillary Agreements will constitute a valid and
binding obligation of the Sellers) each of the Ancillary Agreements will
constitute a valid and binding agreement of the Purchaser, enforceable against
the Purchaser in accordance with its respective terms, in each case subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and to general
equitable principles.
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Section 5.3 Consents and Approvals. No consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Entity is required to be made or obtained by the Purchaser in connection with
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby.
Section 5.4 No Violations. Neither the execution, delivery or
performance of this Agreement or the Ancillary Agreements by the Purchaser, nor
the consummation by the Purchaser of the transactions contemplated hereby, nor
compliance by the Purchaser with any of the provisions hereof, will (a) conflict
with or result in any breach of any provisions of the certificate of
incorporation or bylaws, or similar organizational documents, of the Purchaser,
(b) result in a violation or breach of, or constitute (with or without due
notice or lapse of time) a default (or give rise to any right of termination,
cancellation, acceleration, vesting, payment, exercise, suspension, or
revocation) under any of the terms, conditions or provisions of any note, bond,
mortgage, deed of trust, security interest, indenture, license, contract,
agreement, plan or other instrument or obligation to which the Purchaser is a
party or by which the Purchaser or the Purchaser's properties or assets may be
bound or affected or (c) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Purchaser or the Purchaser's properties or
assets, except in the case of clause (b) or (c) for violations, breaches,
defaults, terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations that would not individually or in the aggregate have
a material adverse effect on the Purchaser or materially impair its ability to
consummate the transactions contemplated hereby.
Section 5.5 Brokers. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by the Purchaser in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Purchaser.
Section 5.6 Financing. As of the date hereof, the Purchaser has
sufficient funds available to deliver the Cash Purchase Price to the Sellers and
consummate the transactions contemplated by this Agreement. On the Closing Date,
the Purchaser will have sufficient funds available to deliver the Cash Purchase
Price (less the Good Faith Deposit) to the Sellers and consummate the
transactions contemplated by this Agreement. Upon the consummation of the
Acquisition, (i) the Purchaser will not be insolvent, (ii) the Purchaser will
not be left with unreasonably small capital, (iii) the Purchaser will not have
incurred debts beyond its ability to pay such debts as they mature and (iv) the
capital of the Purchaser will not be impaired.
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Business. Subject to any
obligations as a debtor or debtor-in-possession under the Bankruptcy Code, or
order of the Bankruptcy Court or other court of competent jurisdiction, the
Sellers shall use their reasonable best efforts to ensure
17
that, and the Sellers covenant and agree that, after the date hereof and prior
to the Closing Date, except (i) as expressly provided in this Agreement, the
Bankruptcy Code, Applicable Law or any contract to which the Sellers are bound,
(ii) as disclosed in the Seller Disclosure Schedule, (iii) with the prior
written consent of the Purchaser, or (iv) as otherwise approved by the
Bankruptcy Court:
(a) the Business shall be conducted substantially in the same
manner as heretofore conducted and only in the ordinary course;
(b) no Transferred Sub shall: (i) amend its certificate of
incorporation or by-laws or similar organizational documents, (ii) issue, sell,
transfer, pledge, dispose of or encumber any shares of any class or series of
its capital stock, or securities convertible into or exchangeable for any shares
of any class or series of its capital stock, (iii) declare or pay any dividend
or other distribution payable in cash, stock or property with respect to any
shares of any class or series of its capital stock, (iv) split, combine or
reclassify any shares of any class or series of its capital stock, or (v)
redeem, purchase or otherwise acquire, directly or indirectly, any shares of any
class or series of its capital stock, or any instrument or security which
consists of or includes a right to acquire such shares;
(c) no Seller, with respect to the Business, nor any
Transferred Sub, shall: (i) incur or assume any long-term debt or (ii) assume or
guarantee the obligations of any other Person, except in the ordinary course of
business;
(d) no Seller, with respect to the Business, nor any
Transferred Sub, shall make any material change in the compensation payable, or
to become payable, to any Offered Employees or any employees of the Transferred
Subs (other than normal recurring increases in the ordinary course of business
or pursuant to plans, programs or agreements existing on the date hereof);
(e) no Seller nor any Transferred Sub shall adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(f) no Seller nor any Transferred Sub shall take, or agree to
or commit to take, any action that would result in any of the conditions to the
Closing set forth in Article VII not being satisfied in all material respects,
or that would materially impair the ability of the Purchaser or the Sellers to
consummate the Closing in accordance with the terms hereof or materially delay
such consummation;
(g) no Seller nor any Transferred Sub shall enter into any
agreement to do any of the foregoing;
(h) no Seller nor any Transferred Sub shall change in any
respect its accounting policies, methods or procedures (other than as required
to comply with new accounting standards);
18
(i) accounts payable shall be paid to creditors of the
Business on a basis consistent with current practices (not to exceed an average
of forty-five days); and
(j) no Seller nor any Transferred Sub shall factor the
receivables of the Business except in a manner consistent with past practices of
the Business.
Section 6.2 Access; Confidentiality.
(a) Subject to any Applicable Laws and the reasonable
requirements of the Sellers to protect competitively sensitive information, the
Sellers shall afford to the Purchaser and to the Purchaser's financial advisors,
legal counsel, accountants, consultants, financing sources and other authorized
representatives reasonable access during normal business hours throughout the
period prior to the Closing Date to the books, records, properties and personnel
of the Sellers relating to the Business and the Transferred Subs and, during
such period, shall furnish reasonably promptly to the Purchaser such information
as the Purchaser reasonably may request.
(b) Any information regarding the Business, the Transferred
Subs or the Acquired Assets heretofore or hereafter obtained from the Sellers by
the Purchaser or its representatives shall be subject to the terms of the
Confidentiality Agreement, and such information shall be held by the Purchaser
and its representatives in accordance with the terms of the Confidentiality
Agreement.
Section 6.3 Bankruptcy Actions. (a) The Sellers have previously filed
with the Bankruptcy Court a motion, together with supporting papers, notices and
a proposed order or orders (i) seeking the Bankruptcy Court's approval of
bidding procedures as set forth in Exhibit G hereto (the "Bidding Procedures")
to be employed with respect to the proposed Acquisition (the "Bidding Procedures
Order"), and (ii) seeking the Bankruptcy Court's approval of the Acquisition,
the Sellers' performance of its obligations as contemplated under this
Agreement, the assumption and assignment of the Acquired Assets and the Sellers'
retention of the Retained Assets and Retained Liabilities (the "Sale Order"). On
December 13, 2001, the Bankruptcy Court entered the Bidding Procedures Order.
(b) The Sellers shall use their reasonable best efforts to
obtain, subject to the provisions of the Bidding Procedures Order, entry of the
Sale Order.
(c) The Sellers shall use their reasonable best efforts to
provide the Purchaser with copies of all motions, applications, and supporting
papers prepared by the Sellers (including forms of orders and notice to
interested parties) relating to the transactions contemplated by this Agreement
prior to the filing thereof in the Bankruptcy Court if reasonably practicable.
Section 6.4 Reasonable Best Efforts.
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(a) Subject to the terms and conditions of this Agreement and
Applicable Law, the Sellers and the Purchaser shall use their reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement as soon as practicable. Without
limiting the foregoing, the parties shall take all necessary actions to (i)
obtain all consents, approvals, waivers, licenses, permits, authorizations,
registrations, qualifications or other permissions or actions by, and give all
necessary notices to, and make all filings with and applications and submissions
to, any Governmental Entity or other Person necessary in connection with the
consummation of the transactions contemplated by this Agreement as soon as
reasonably practicable; (ii) provide all such information concerning such party
as may be necessary or reasonably requested in connection with any of the
foregoing; (iii) avoid the entry of, or have vacated or terminated, any
injunction, decree, order, or judgment that would restrain, prevent, or delay
the consummation of the transactions contemplated hereby, including but not
limited to defending through litigation on the merits any claim asserted in any
court by any Person; and (iv) take any and all reasonable steps necessary to
avoid or eliminate every impediment under any antitrust, competition, or trade
regulation law that is asserted by any Governmental Entity with respect to the
transactions contemplated hereby so as to enable the consummation of such
transactions to occur as expeditiously as possible.
(b) The Sellers and the Purchaser shall keep each other
reasonably informed as to the status of matters relating to the completion of
the transactions contemplated hereby, including promptly furnishing the other
with copies of notices or other communications received by either of the Sellers
or the Purchaser or by any of their Affiliates, from any Third Party and/or any
Governmental Entity with respect to the transactions contemplated by this
Agreement.
(c) Notwithstanding the foregoing or any other covenant herein
contained, nothing in this Agreement shall be deemed to require the Purchaser to
take or agree to take any other action or agree to any limitation that could
reasonably be expected to have a material adverse effect on the Purchaser and
its subsidiaries, taken as a whole, after giving effect to the Acquisition.
(d) The obligations of each of the Sellers and the Purchaser
pursuant to this Section 6.4 shall be subject to any orders entered or approvals
or authorizations granted by the Bankruptcy Court and the Bankruptcy Code.
Section 6.5 Employee Matters.
(a) No later than ten business days prior to the Closing Date,
the Purchaser shall make an offer of employment (the "Employment Offer") to each
employee of the Sellers whose name is set forth on Schedule 6.5 (the "Offered
Employees") on terms and conditions (including, but not limited to salary or
wages and incentive opportunities) that are in the aggregate no less favorable
than those provided by the Sellers on the date hereof. Each Employment Offer
shall provide that the Offered Employee may only accept the offer of employment
on or prior to the Closing Date and that such offer of employment shall take
effect
20
on the Closing Date. Offered Employees who accept employment with the Purchaser
are referred to herein as ("Transferred Employees"). The Purchaser agrees that
it will not, for a period of one year following the Closing Date, employ any
Offered Employee who does not accept the Purchaser's offer of employment.
Notwithstanding the generality of the foregoing, the Purchaser hereby agrees
that, with respect to Offered Employees and Transferred Employees, in either
case employed by Warner's U.K., it shall comply in all respects with the
Transfer of Undertakings (Protection of Employment) Regulations 1981.
(b) Notwithstanding the generality of the foregoing Section
6.5(a), the Purchaser agrees that the Employment Offer made by the Purchaser
pursuant to Section 6.5(a) to the Offered Employees who are employed as of the
date hereof by Warnaco HK and whose employment contracts are governed by the
laws of the Hong Kong Special Administrative Region ("HKSAR") (the "HK Offered
Employees") shall be deemed to be offers to re-engage the HK Offered Employees
under new contracts of employment within the meaning of Section 31J of the
Employment Ordinance, Cap. 57 of the laws of the HKSAR. The Purchaser agrees
that the terms and conditions of employment set forth in the Employment Offer
made to the HK Offered Employees shall remain effective for a period of not less
than three months following the Closing Date. With respect to HK Offered
Employees, the Purchaser shall stipulate in the applicable Employment Offer that
it shall be a condition of employment by the Purchaser that each HK Offered
Employee who wishes to accept the Purchaser's offer of employment will,
concurrent with the signing of the employment contracts with Purchaser, deliver
to the Purchaser a signed acknowledgment in the form of Exhibit H (an "HK
Employee Acknowledgment"). Within ten business days following the Closing Date,
Purchaser shall deliver to Warnaco HK all signed originals of the HK Employee
Acknowledgments that it has received. The Purchaser shall indemnify and hold
harmless the Sellers and each of their respective Affiliates, directors,
officers, employees and agents from and against all losses arising from claims
made by any Transferred Employee currently employed by Warnaco HK (an "HK
Transferred Employee") against Warnaco HK for constructive discharge on the
basis that the terms of employment offered to such HK Transferred Employee by
the Purchaser are not sufficient to prevent such HK Transferred Employee from
being able to claim severance payment from Warnaco HK due to termination of such
HK Transferred Employee's employment with Warnaco HK.
(c) The Purchaser shall as of the Closing Date assume and
thereafter pay, perform or otherwise discharge, and the Purchaser shall
indemnify and hold harmless the Sellers against, any liabilities or obligations
relating to severance or long service entitlements due to, and be liable for any
severance, long service and related termination costs (including but not limited
to any notice or severance or long service pay mandated by applicable law and
accrued but unpaid vacation benefits) of, any Transferred Employee who is
terminated following the Closing Date.
(d) The Sellers shall remain liable for all liabilities and
obligations relating to severance payments calculated up to the Closing Date due
to the Offered Employees (i) whose employment with the Sellers is terminated on
the Closing Date and (ii) who do not accept the Employment Offers on or prior to
the Closing Date. Notwithstanding the foregoing,
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the Purchaser shall be responsible for all liabilities and obligations relating
to severance payments due to the HK Transferred Employees.
(e) Effective as of the Closing Date, the Offered Employees
and employees of the Transferred Subs shall cease participation in all Seller
Plans and the Sellers and their Affiliates shall cease making contributions to
Seller Plans with respect to such employees. Effective as of the Closing Date,
the Transferred Employees and employees of the Transferred Subs shall commence
participation in all Purchaser Plans and the Purchaser shall, or shall cause its
Affiliates to, make contributions as required under such Plans with respect to
the Transferred Employees and employees of the Transferred Subs. The Purchaser
shall recognize and give credit for all service by each Transferred Employee and
employee of the Transferred Subs, in each case, with the Sellers and the
Transferred Subs or any predecessor or Affiliate of the Sellers and the
Transferred Subs, as the case may be, for purposes of eligibility, vesting and
benefit accrual under the Purchaser Plans and any policies of Purchaser or any
of its Affiliates relating to severance, vacation pay, sick leave, short-term
disability and personal or family leave, except to the extent such credit would
result in the duplication of benefits. Purchaser shall use its best efforts, and
shall use its best efforts to cause the Purchaser Plans to, waive all
pre-existing condition limitations and waiting periods with respect to such
employees to the extent such limitations and waiting periods have been satisfied
under analogous Sellers Plans. The Purchaser shall credit the Transferred
Employees and the employees of the Transferred Subs with any amounts paid prior
to the Closing Date under any Seller Plan with respect to the satisfaction of
any applicable deductible amounts and co-payment minimums under any analogous
Purchaser Plan.
(f) (i) As soon as practicable after the Closing Date, and in
any event effective as of the Closing Date, the Purchaser shall, or shall cause
an Affiliate to, establish a defined benefit pension plan and trust intended to
qualify under IRC Sections 401(a) and 501(a) ("Purchaser Pension Plan"). Upon
receipt by Warnaco Inc. of written evidence of the adoption of Purchaser Pension
Plan and related trust and either (A) the receipt by Warnaco Inc. of a copy of a
favorable determination letter issued by the IRS with respect to Purchaser
Pension Plan or (B) an opinion, reasonably satisfactory to Warnaco Inc.'s
counsel, of the Purchaser's counsel to the effect that the terms of the
Purchaser Pension Plan and its related trust qualify under IRC Sections 401(a)
and 501(a), Warnaco Inc. shall direct the trustee of the Employee Retirement
Plan of Warnaco Inc. (the "Warnaco Pension Plan") to transfer from the trust
under the Warnaco Pension Plan, in accordance with IRC Section 414(l), to the
trust under the Purchaser Pension Plan, an amount in cash or other assets as
agreed upon by the Purchaser and Warnaco Inc. (or any combination thereof as
agreed upon by the Purchaser and Warnaco) equal to the Accrued Liability
(defined below), which shall be equal to the present value of all accrued
benefits, including all ancillary benefits, under the Warnaco Pension Plan as of
the Closing Date, in respect of Transferred Employees who are participants in
the Warnaco Pension as of the Closing Date (the "Warnaco Pension Employees"),
plus the amount of the pro rata share of actual investment earnings or losses
allocable to the Warnaco Pension Employees attributable to the period from the
Closing Date to the date of transfer, less the amount of any benefit payments
22
made to Warnaco Pension Employees from the Closing Date to the date of transfer
and reasonable administrative costs and expenses during such period (the
"Transfer Amount").
For purposes of this Section 6.5(f), "Accrued Liability" shall mean,
with respect to the Warnaco Pension Plan, the present value of the accrued
benefit of each Warnaco Pension Employee in the Warnaco Pension Plan, determined
on a termination basis using the interest factors specified by the PBGC as in
effect as of the Closing Date for an immediate or deferred annuity as
appropriate for each such person and using the other methods and factors
specified in the PBGC's regulations for the valuation of accrued benefits upon a
plan termination including, but limited to, the expected retirement age and
expense load assumptions and the 1983 Annuity Mortality Table. The Accrued
Liability shall be determined by an enrolled actuary designated by Warnaco Inc.
and Warnaco Inc. shall provide any actuary designated by the Purchaser with such
information as is reasonably necessary to review the calculations of the Accrued
Liability in all material respects. If the Purchaser's actuary disagrees with
the calculations performed by Warnaco Inc.'s actuary, a third actuary chosen by
the Warnaco Inc.'s actuary and the Purchaser's actuary, whose expenses shall be
shared equally by the Purchaser and Warnaco Inc., shall be retained and its
determination of the Transfer Amount shall be binding on the parties.
(ii) In accordance with the provisions of this Section 6.5(f),
effective as of the date of the transfer of assets described in subparagraph (i)
above, the Purchaser shall cause the Purchaser Pension Plan to accept all
liabilities for benefits under the Warnaco Pension Plan, whether or not vested,
that would have been paid or payable (but for the transfer of assets and
liabilities pursuant to this Section 6.5(f)) to or with respect to the Warnaco
Pension Employees, including but not limited to all liabilities for "Section
411(d)(6) protected benefits" (as defined under IRC Section 411(d)(6)) that have
accrued under the Warnaco Pension Plan as of the Closing Date. Except as may
otherwise be permitted by applicable law, the Purchaser shall not, and shall not
permit any Affiliate to, amend the Purchaser Pension Plan, or permit the
Purchaser Pension Plan to be amended so as to eliminate any benefit, whether or
not vested, with respect to which liabilities are transferred pursuant to the
provisions of this subsection (ii), including but limited to any such benefit
that is a Section 411(d)(6) protected benefit or to decrease the accrued benefit
as of the Closing Date of any Warnaco Pension Employee.
(iii) The Purchaser and Warnaco Inc. shall provide each other with such
records and information as may be necessary or appropriate to carry out their
obligations under this Section 6.5(f) or for the purposes of administration of
the Purchaser Pension Plan, and they shall cooperate in the filing of all
documents required by the transfer of assets and liabilities described herein.
(iv) Warnaco Inc. will provide the Purchaser with copies of such
personnel and other records of Warnaco Inc. pertaining to the Warnaco Pension
Employees and such records of any agent or representative of Warnaco Inc.
pertaining to the Warnaco Pension Employees and such records of any agent or
representative of Warnaco Inc., in each case pertaining to the Warnaco Pension
Plan and as the Purchaser may reasonably request in order to administer and
manage the accounts and assets transferred to the Purchaser Pension Plan. Upon
such transfer,
23
the Purchaser Pension Plan shall assume all liabilities and obligations
whatsoever with respect to all amounts transferred from the Warnaco Pension Plan
to the Purchaser Pension Plan in respect of the Warnaco Pension Employees and
each of Warnaco Inc. and its affiliates and the Warnaco Pension Plan shall be
relieved of all such liabilities and obligations.
(g) (i) The Purchaser's existing defined contribution plan, or
the defined contribution plan of an Affiliate of the Purchaser (the "Purchaser
Savings Plan") either (A) currently provides for the receipt from Transferred
Employees of "eligible rollover distributions" (as defined under IRC Section
402) or (B) shall be amended as soon as practicable following the Closing Date
to provide for the receipt from the Transferred Employees of eligible rollover
distributions. As soon as practicable following the Closing Date, (x) the
Purchaser shall provide Warnaco Inc. with such documents and other information
as Warnaco Inc. shall reasonably request to assure itself that the Purchaser
Savings Plan provides for the receipt of eligible rollover distributions and (y)
Warnaco Inc. shall provide the Purchaser with such documents and other
information as the Purchaser shall reasonably request to assure itself that the
accounts of the Transferred Employees under the Warnaco Group Inc. Employee
Savings Plan (the "Warnaco Savings Plan"), if distributed to such Transferred
Employees, would be eligible rollover distributions. Each Transferred Employee
who is a participant in the Warnaco Savings Plan shall be given the opportunity
to receive a distribution of his or her account balance and shall be given the
opportunity to elect to "roll over" such account balance to the Purchaser
Savings Plan, subject to and in accordance with the provisions of such Plans and
applicable law.
(ii) Warnaco Inc. will provide the Purchaser with copies of such
personnel and other records of Warnaco Inc. pertaining to the Transferred
Employees and such records of any agent or representative of Warnaco Inc.
pertaining to the Transferred Employees and such records of any agent or
representative of Warnaco Inc., in each case pertaining to the Warnaco Savings
Plan and as the Purchaser may reasonably request in order to administer and
manage the accounts and assets transferred to the Purchaser Savings Plan. Upon
such transfer, the Purchaser Savings Plan shall assume all liabilities and
obligations whatsoever with respect to all amounts transferred from the Warnaco
Savings Plan to the Purchaser Savings Plan in respect of the Transferred
Employees and each of Warnaco Inc. and its Affiliates and the Warnaco Savings
Plan shall be relieved of all such liabilities and obligations. The Purchaser
and Warnaco Inc. shall cooperate in the filing of documents required by the
transfer of assets and liabilities described therein.
(h) The Purchaser shall indemnify and hold the Sellers and
each of their respective subsidiaries and Affiliates, directors, officers,
employees and agents harmless from and against any and all claims, losses,
damages, expenses, obligations and liabilities (including, but not limited to,
costs of collection, attorneys' fees and other costs of defense) which the
Sellers or their subsidiaries or Affiliates, directors, officers, employees and
agents may incur in connection with any suit or claim or violation brought
against the Sellers or their subsidiaries or Affiliates under any national,
multi-national, state or local law, common law, statute, rule or regulation,
including, but not limited to, the WARN Act or COBRA, which relates to actions
taken or omissions by the Purchaser or any of its Affiliates on or after the
Closing Date with
24
regard to the employment, discharge or layoff of any Offered Employees or the
employees of the Transferred Subs.
Section 6.6 No Implied Representations or Warranties; Due Diligence.
(a) The Purchaser hereby acknowledges and agrees that the
Sellers are not making any representation or warranty whatsoever, express or
implied, except those representations and warranties of the Sellers explicitly
set forth in this Agreement or in any certificate contemplated hereby and
delivered by the Sellers in connection herewith.
Without limiting the generality of the foregoing, and
notwithstanding any otherwise express representations and warranties made by the
Sellers in Article IV hereof, the Sellers make no representation or warranty to
the Purchaser with respect to:
(i) any projections, estimates or budgets heretofore
delivered to or made available to the Purchaser of future revenues,
expenses or expenditures or future results of operations; or
(ii) except as expressly covered by a representation
or warranty contained in Article IV hereof, any other information or
documents (financial or otherwise) made available to the Purchaser or
its counsel, accountants or advisers with respect to the Business.
(b) The Purchaser acknowledges that: (i) it has had the
opportunity to visit with the Sellers and the Transferred Subs and meet with
their respective officers and other representatives to discuss the Business and
the assets, liabilities, financial condition, cash flow and operations of the
Business and the Transferred Subs; and (ii) all materials and information
requested by the Purchaser to date have been provided to the Purchaser's
reasonable satisfaction.
Section 6.7 Books and Records. For a period of seven (7) years after
the Closing Date (or such longer period as may be required by any Governmental
Entity or legal proceeding):
(a) the Purchaser shall not dispose of or destroy any of the
business records and files of the Business transferred to it hereunder; and
(b) the Purchaser shall allow the Sellers and any of their
directors, officers, employees, counsel, representatives, accountants and
auditors access to the Transferred Employees and employees of the Transferred
Subs and other employees of the Purchaser or its subsidiaries engaged in the
operation of the Business and all business records and files of the Sellers, the
Transferred Subs or the Business that are transferred to it in connection
herewith, which are reasonably required by the Sellers for purposes related to
the Bankruptcy Case, tax matters and other reasonable business purposes, during
regular business hours and upon reasonable notice, and the Sellers shall have
the right to make copies of any such records and files.
25
Section 6.8 Publicity. The initial press release with respect to the
execution of this Agreement shall be a press release of the Sellers reasonably
acceptable to, and approved prior to dissemination thereof by, the Purchaser.
Thereafter, until the Closing, or the date the Acquisition is terminated or
abandoned pursuant to Article VIII, neither the Sellers nor the Purchaser, nor
any of their respective Affiliates, shall issue or cause the publication of any
press release or other public announcement with respect to this Agreement or the
Acquisition without prior consultation with the other party, except as may be
required by law, by an order of the Bankruptcy Court, or by any listing
agreement with a national securities exchange or trading market.
Section 6.9 Tax Matters.
(a) Transfer Taxes. The Sellers and the Purchaser will use
reasonable efforts and cooperate in good faith to exempt the sale, conveyance,
assignments, transfers and deliveries to be made to the Purchaser hereunder from
any sales, use, transfer, documentary, registration, recording and other similar
Taxes (collectively, "Transfer Taxes") payable in connection with such sale,
conveyance, assignments, transfers and deliveries, to the extent provided by
Section 1146(c) of the Bankruptcy Code. In the event that any Transfer Taxes are
assessed or are required to be paid to secure the admissibility for any legal
purpose of an instrument with respect to such sale, conveyance, assignments,
transfers or deliveries, such Transfer Taxes shall be paid by the Purchaser.
(b) Assistance and Cooperation. The Purchaser and the Sellers
shall furnish, or cause their Affiliates to furnish, to each other, upon
request, as promptly as practicable, such information and assistance relating to
the Transferred Subs, the Acquired Assets or the Business (including, without
limitation, access to books and records) as is reasonably necessary for the
filing of all Tax Returns, and making of any election related to Taxes, the
preparation for any audit by any Taxing Authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax Return. The
Purchaser and the Sellers shall cooperate, and cause their Affiliates to
cooperate, with each other in the conduct of any audit or other proceeding
related to Taxes and each shall execute and deliver such powers of attorney and
other documents as are necessary to carry out the intent of this Section 6.9(b).
The Purchaser and the Sellers shall provide, or cause their Affiliates to
provide, timely notice to each other in writing of any pending or threatened Tax
audits, assessments or litigation with respect to the Transferred Subs, the
Acquired Assets or the Business for any taxable period for which the other party
may have liability under this Agreement. The Purchaser and the Sellers shall
furnish, or cause their respective Affiliates to furnish, to each other copies
of all correspondence received from any Taxing Authority in connection with any
Tax audit or information request with respect to any taxable period for which
the other or its Affiliates may have liability under this Agreement.
Section 6.10 Disclosure Supplements. The Sellers may from time to time
prior to or on the Closing Date by notice in accordance with this Agreement
supplement or amend the Seller Disclosure Schedule, including one or more
supplements or amendments to correct any matter that would otherwise constitute
a breach of any representation, warranty or covenant
26
contained herein. Notwithstanding any other provision hereof to the contrary,
the Seller Disclosure Schedule and the representations and warranties made, the
Seller Disclosure Schedule shall be deemed for all purposes to include and
reflect such supplements and amendments as of the date hereof and at all times
thereafter, including the Closing Date.
Section 6.11 Bulk Sale. Each of the parties to this Agreement hereby
waives compliance with any bulk sales or bulk transfer laws that are applicable
in respect of the transactions contemplated by this Agreement.
Section 6.12 Warnaco Trademarks, Logos and Names. It is expressly
agreed that (a) the Purchaser and its Affiliates are not purchasing, acquiring
or otherwise obtaining, and will not be entitled to retain following the Closing
Date, (i) any right, title or interest in any Trademarks, logos or names
employing the name "Warnaco" or any part or variation of such name or anything
confusingly similar thereto, including but not limited to the corporate logo of
Warnaco, and (ii) any right, title or interest in any Trademarks, logos or names
used by Warnaco not transferred pursuant to this Agreement, and (b) neither the
Purchaser nor its Affiliates shall make any use of such rights from and after
the Closing. Every board displaying the Warnaco name or the Warnaco corporate
logo shall be removed from the offices, sites and factories transferred to the
Purchaser by virtue of the Acquisition within one month from the Closing Date.
Section 6.13 Insurance. To the extent a Transferred Sub is insured via
the Sellers' group insurance coverage, the Purchaser shall ensure that the new
insurance coverage of such Transferred Sub as at the Closing Date provides
adequate coverage for any insured risk originating prior to the Closing Date,
but for which a claim is made after the Closing Date.
Section 6.14 Letters of Credit.
(a) Prior to the Closing Date, the Purchaser shall cause to be
issued a letter of credit in favor of the Sellers (the "Purchaser LC") in a form
satisfactory to the Sellers and in an amount equal to the aggregate amount of
the outstanding letters of credit which the Sellers or their Affiliates have
issued on behalf of the Business for the purpose of sourcing raw materials for
the Business from Third Party vendors (the "GJM LCs").
(b) Following the consummation of the Acquisition, as amounts
are drawn on the GJM LCs by Third Party vendors for raw materials purchased for
the Business or a successor entity, the Purchaser shall immediately reimburse
the Sellers therefor as well as for any fees or expenses incurred by the Sellers
relating thereto. In the event that the Purchaser fails to reimburse the Sellers
pursuant to this paragraph (b), then the Sellers shall have a right to draw such
amounts under the Purchaser LC.
(c) On the 20th business day following the consummation of the
Acquisition and on every 20th business day following such date (each such date
being an "Adjustment Date"), the amount outstanding under the Purchaser LC shall
be decreased by an amount equal to the amount the Sellers have been reimbursed
since, in the case of the first
27
Adjustment Date, the Closing Date, and in the case of each subsequent Adjustment
Date, the preceding Adjustment Date, until such time as the GJM LCs have either
been (x) terminated or (y) fully drawn by Third Party vendors (but only if in
such instance the Sellers have been fully reimbursed).
Section 6.15 Cash Balances in Transferred Subs. Pursuant to Section
2.6(b), as soon as practicable after the Closing, the Sellers shall provide to
the Purchaser a schedule of the cash balances in the bank accounts of the
Transferred Subs set forth on Schedule 2.6(b).
Section 6.16 Further Assurances. Each party shall cooperate with the
other parties, and execute and deliver, or use its commercially reasonable
efforts to cause to be executed and delivered, all such other instruments,
including instruments of conveyance, assignment and transfer, and to make all
filings with and to obtain all consents, approvals or authorizations of any
Governmental Entity or other regulatory authority or any other Person under any
permit, agreement, indenture or other instrument, and take all such other
actions as such party may reasonably be requested to take by another party
hereto from time to time, consistent with the terms of this Agreement, in order
to effectuate the provisions and purposes of this Agreement and the transactions
contemplated hereby. The obligations of each of the Purchaser and the Sellers
pursuant to this Article VI shall be subject to any orders entered or approvals
or authorizations granted by the Bankruptcy Court and the Bankruptcy Code.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions Precedent to Obligation of the Sellers and the
Purchaser. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) the Bankruptcy Court shall have entered the Bidding
Procedures Order and the Sale Order, each of which shall have become Final
Orders;
(b) each of the licenses, permits, authorizations and
approvals set forth on Schedule 7.1(b) shall have been obtained or waived;
(c) no action, suit or proceeding (including any proceeding
over which the Bankruptcy Court has jurisdiction under 28 U.S.C. 'SS' 157(b) and
(c)) brought by any Governmental Entity shall be pending to enjoin, restrain or
prohibit the Acquisition, or that would be reasonably likely to prevent or make
illegal the consummation of the transactions contemplated by this Agreement; and
28
(d) no Governmental Entity shall have issued any order, decree
or ruling, and there shall not be any statute, rule or regulation, restraining,
enjoining or prohibiting the consummation of the Acquisition.
Section 7.2 Conditions Precedent to Obligation of the Sellers. The
obligation of the Sellers to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the Purchaser shall have performed in all material
respects its obligations under this Agreement required to be performed by the
Purchaser at or prior to the Closing Date;
(b) each of the representations and warranties of the
Purchaser contained in this Agreement shall be true and correct as of the
Closing Date as if made at and as of such date, except where the failure of such
representation and warranty to be true and correct would not have a material
adverse effect on the Purchaser or on the ability of the Purchaser to consummate
the Acquisition;
(c) the Sellers shall have received from the Purchaser a
certificate, dated the Closing Date, duly executed by the Chief Executive
Officer or President of the Purchaser, satisfactory in form to the Sellers, to
the effect of paragraphs (a) and (b) above; and
(d) the Sellers shall have received from the Purchaser the
Purchaser LC.
Section 7.3 Conditions Precedent to Obligation of the Purchaser. The
obligation of the Purchaser to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Closing Date of the following additional conditions:
(a) the Sellers shall have performed in all material respects
their obligations under this Agreement required to be performed by the Sellers
at or prior to the Closing Date;
(b) each of the representations and warranties of the Sellers
contained in this Agreement shall be true and correct as of the Closing Date as
if made at and as of such date, except where the failure of such representation
and warranty to be true and correct would not be reasonably likely to have a
Material Adverse Effect; and
(c) the Purchaser shall have received from each of the Sellers
a certificate, dated the Closing Date, duly executed by an officer of each of
the Sellers, satisfactory in form to the Purchaser, to the effect of paragraphs
(a) and (b) above.
29
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated or abandoned
at any time prior to the Closing Date:
(a) by the mutual written consent of the Purchaser and the
Sellers;
(b) by either the Purchaser or the Sellers if the Bankruptcy
Court or any other Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other action
the parties hereto shall use their reasonable efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the consummation of the
Acquisition and such order, decree, ruling or other action shall have become
final and non-appealable;
(c) by either the Purchaser or the Sellers upon written notice
given to the other party in the event that the Closing shall not have taken
place on or before February 28, 2002 (the "Termination Date"), provided that the
failure of the Closing to occur on or before such date is not the result of a
breach of any covenant, agreement, representation or warranty hereunder by the
party seeking such termination;
(d) by the Sellers if the Purchaser shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has not been
cured within ten business days after the giving of written notice by the Sellers
to the Purchaser specifying such breach and so that the conditions set forth in
Section 7.2(a) or Section 7.2(b) would not be satisfied at the time of such
breach; and
(e) by the Purchaser if the Sellers shall have breached in any
material respect any of their representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has not been
cured within ten business days after the giving of written notice by the
Purchaser to the Sellers specifying such breach and so that the conditions set
forth in Section 7.3(a) or Section 7.3(b) would not be satisfied at the time of
such breach.
Section 8.2 Termination for Alternative Transaction. This Agreement
shall be deemed terminated upon the sale of the Business to another Qualified
Bidder other than the Purchaser pursuant to the Bidding Procedures.
Section 8.3 Effect of Termination and Abandonment. In the event of
termination of this Agreement pursuant to this Article VIII, written notice
thereof shall be given as promptly as practicable to the other party to this
Agreement and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without further action by
30
any of the parties hereto. If this Agreement is terminated as provided herein,
(a) there shall be no liability or obligation on the part of the Sellers, the
Purchaser or their respective officers, directors and Affiliates, and all
obligations of the parties shall terminate, except (i) for the obligation of the
Sellers to pay a Termination Fee (as defined and in accordance with the
provisions specified in Exhibit G hereto), (ii) that a party that has committed
fraud or willfully breached its representations, warranties, covenants or
agreements set forth in this Agreement shall be liable for damages occasioned
thereby, including, without limitation, any expenses, including the reasonable
fees and expenses of attorneys, accountants and other agents incurred by the
other party in connection with this Agreement and the transactions contemplated
hereby, and (b) all filings, applications and other submissions made pursuant to
the transactions contemplated by this Agreement shall, to the extent
practicable, be withdrawn from the agency or person to which made.
Section 8.4 Extension; Waiver. At any time prior to the Closing, each
of the parties hereto may (i) extend the time for the performance of any of the
obligations or acts of any other party hereto, (ii) waive any inaccuracies in
the representations and warranties of any other party contained herein or in any
document delivered pursuant hereto, (iii) waive compliance with any of the
agreements of the other party contained herein, or (iv) waive any condition to
its obligations hereunder. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Survival of Representations, Warranties and Agreements. No
representations or warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive beyond the Closing Date.
Section 9.2 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (c) the expiration of
five business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
(a) If to the Purchaser, to:
Luen Thai Overseas Limited
Offshore Group ▇▇▇▇▇▇▇▇
5/F, Nanyang Plaza
▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇
▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
with a copy to:
Tan Holdings Corporation
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and
(b) If to the Sellers, to:
Warnaco Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Sidley, Austin, ▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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Section 9.3 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 9.4 Entire Agreement; Assignment. This Agreement (including the
Exhibits, Schedules and the other documents and instruments referred to herein)
(a) constitutes the entire agreement and supersedes all other prior agreements
and understandings, both written and oral, among the parties or any of them,
with respect to the subject matter hereof, including, without limitation, any
transaction between or among the parties hereto and (b) may not be assigned by
the Sellers or by the Purchaser without the prior written consent of the other;
provided, that notwithstanding anything to the contrary herein a party shall
have the right to assign this Agreement to an Affiliate of such party, provided
that the assigning party shall remain fully liable for all of such party's and
its assignee's obligations pursuant to this Agreement. Any purported assignment
in violation of this Section shall be void.
Section 9.5 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to the rules of conflict of laws of the State of New York or any
other jurisdiction that would require the application of any other
jurisdiction's laws. The Purchaser and the Sellers irrevocably and
unconditionally consent to submit to the jurisdiction of the Bankruptcy Court
for any litigation arising out of or relating to this Agreement and the
transactions contemplated thereby (and agree not to commence any litigation
relating thereto except in the Bankruptcy Court).
Section 9.6 Expenses. Except as provided in Section 6.9(a), whether or
not the transactions contemplated by this Agreement are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expenses.
Section 9.7 Amendment and Modification. This Agreement may be amended,
modified and supplemented in any and all respects, but only by a written
instrument signed by all of the parties hereto expressly stating that such
instrument is intended to amend, modify or supplement this Agreement.
Section 9.8 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party.
Section 9.9 Severability; Validity; Parties in Interest. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Nothing in this Agreement, express or implied, is
intended to confer upon any person not a party to this Agreement any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
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IN WITNESS WHEREOF, the Sellers and the Purchaser have caused
this Agreement to be executed on their behalf by their officers thereunto duly
authorized, as of the date first above written.
WARNACO INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
WARNER'S (U.K.) LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Director
WARNACO (HK) LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Director and Secretary
LUEN THAI OVERSEAS LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇
Title: President
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