EXHIBIT 10(f)
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ASSET PURCHASE AGREEMENT
BETWEEN
THE XXXX COMPANY
AND
WESTPOINT XXXXXXX INC.
Dated as of February 13, 1997
TABLE OF CONTENTS
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Section Page
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1. Sale and Purchase of Assets....................................... 1
1.1 Purchased Assets.......................................... 1
1.2 Excluded Assets........................................... 3
1.3 Liens..................................................... 4
1.4 Liabilities............................................... 4
2. Purchase Price.................................................... 6
2.1 Deposit................................................... 6
2.2 Amount of Purchase Price.................................. 6
2.3 Allocation of Purchase Price.............................. 7
2.4 Payment of Purchase Price................................. 7
2.5 Adjustments to Purchase Price............................. 7
2.6 Statement of Inventory.................................... 8
2.7 Prorations................................................ 9
3. Closing........................................................... 9
3.1 Date of Closing............................................. 9
3.2 Outside Date for Closing.................................... 10
3.3 Returns..................................................... 10
3.4 Cooperation on Collection of Accounts
Receivable.................................................. 10
3.5 Remittances by Seller and Buyer............................. 11
3.6 All Proceedings............................................. 12
4. Representations and Warranties of Seller.......................... 12
4.1 Due Organization; Good Standing;
Qualification............................................... 12
4.2 Due Authority; Due Execution and Delivery;
Binding Effect.............................................. 12
4.3 No Conflicts; Consents...................................... 12
4.4 Litigation; Compliance with Laws............................ 13
4.5 Permits..................................................... 14
4.6 Taxes....................................................... 14
4.7 Contracts................................................... 15
4.8 Absence of Defaults......................................... 16
4.9 Employee Benefit Plans and Employee Relations............... 16
4.10 Real Property............................................... 19
4.11 Tangible Personal Property.................................. 22
4.12 Intangible Property......................................... 22
4.13 Title to Purchased Assets................................... 22
4.14 Inventory................................................... 23
4.15 Absence of Changes.......................................... 23
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4.16 Environmental Matters....................................... 24
4.17 Financial Statements........................................ 27
4.19 Accuracy of Documents....................................... 27
4.20 Pre-1988 Claims............................................. 28
5. Representations and Warranties of Buyer........................... 28
5.1 Due Organization; Good Standing............................. 28
5.2 Due Authority; Due Execution and Delivery;
Binding Effect.............................................. 28
5.3 No Conflicts; Consents...................................... 28
5.4 Litigation.................................................. 29
6. Further Agreements of the Parties................................. 29
6.1 Access to Information....................................... 29
6.2 Conduct of the Business Pending the Closing................. 29
6.3 Other Action................................................ 31
6.4 HSR Act Filings............................................. 31
6.5 Expenses.................................................... 31
6.6 Publicity................................................... 31
6.7 Preservation of Records..................................... 32
6.8 Employee and Employee Benefit Matters....................... 32
6.9 Title....................................................... 32
6.10 Casualty Event.............................................. 33
6.11 Transition Agreement........................................ 34
6.12 Payment of Sales Taxes and Transfer Taxes, Etc.............. 34
6.13 Cooperation................................................. 34
6.14 Delivery of Monthly Financial Statements and
Inventory Statements........................................ 34
6.15 Indemnification of Brokerage................................ 34
6.16 Assignment of Assumed Contracts............................. 35
7. Conditions to Closing............................................. 35
7.1 Conditions Precedent to Obligations of Buyer................ 35
7.2 Conditions Precedent to Obligations of Seller............... 37
8. Documents to Be Delivered at the Closing.......................... 38
8.1 Documents to Be Delivered by Seller......................... 38
8.2 Documents to Be Delivered by Buyer.......................... 39
9. Indemnification and Related Matters............................... 40
9.1 Indemnification by Seller................................... 40
9.2 Indemnification by Buyer.................................... 41
9.3 Limitations................................................. 42
9.4 Conditions of Indemnification............................... 42
9.5 Treatment of Payment........................................ 44
9.6 Insurance Proceeds.......................................... 44
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9.7 Remedies.................................................... 44
9.8 Survival of Representations, Warranties and Covenants....... 44
10. Miscellaneous.................................................... 45
10.1 Further Instruments of Transfer............................ 45
10.2 Entire Agreement........................................... 45
10.3 Governing Law.............................................. 45
10.4 Schedules, Table of Contents and Headings.................. 45
10.5 Notices.................................................... 45
10.6 Separability............................................... 46
10.7 Waiver..................................................... 47
10.8 Assignment................................................. 47
10.9 Parties in Interest; No Third-Party Beneficiaries.......... 47
10.10 Counterparts............................................... 48
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SCHEDULES
1.1(b) Fixed Assets
1.1(e) Assumed Contracts
1.2(f) Excluded Assets
1.3 Liens
4.3 Consents
4.4 Litigation
4.5 Permits
4.7 Contracts, Etc.
4.9(a) Employee Benefit Plans
4.9(c) Employee Benefit Plan - Compliance
4.9(e) Employee Benefit Plan - Title IV of ERISA
4.9(g) Employee Benefit Plan - Multiemployer Plan
4.9(h) Employee Benefit Plan - Welfare Benefits
4.9(j) Employee Benefit Plan - Pension Plan
4.9(l) Labor Agreements
4.9(m) Labor Practices
4.10(a) Real Property
4.10(b) Real Property - Permitted Encumbrances
4.10(k) Real Property - Tax Assessments
4.10(l) Real Property - Service, Maintenance, or
Employment Agreements
4.10(m) Real Property - Insurance
4.10(n) Real Property - Leases
4.13 Title to Purchased Assets - Liens
4.15(c) Absence of Changes - Salary
4.16 Environmental Matters
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EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Form of December 28, 1996 Merchandise Inventory
Exhibit C Form of Human Resources Agreement
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Opinion of Xxxxx, Day, Xxxxxx & Xxxxx
Exhibit F Form of Opinion of Weil, Gotshal & Xxxxxx LLP
Exhibit G Form of limited or special warranty deeds
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of February 13,
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1997, is between The Xxxx Company, a Delaware corporation ("Seller"), and
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WestPoint Xxxxxxx Inc., a Delaware corporation ("Buyer"). Attached hereto as
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Annex A is an Index of Defined Terms indicating the location herein of the
definitions of capitalized terms that are used herein but not defined when used.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller is engaged in the manufacture and sale of xxxxx products
(the "Business") and conducts such Business at Seller's Xxxxxxxx Complex located
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in Roanoke Rapids, North Carolina (the "Plant") and at the Seller's Roanoke
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Rapids No. 2 plant also located in Roanoke Rapids, North Carolina ("Plant II"
and, together with the Plant, the "Plants"); and
WHEREAS, Seller wishes to sell, and Buyer wishes to purchase, substantially
all of the assets and properties of Seller employed or held in connection with
the Business, including without limitation, the Plant;
NOW, THEREFORE, in consideration of the representations, warranties and
covenants of the parties herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
1. Sale and Purchase of Assets.
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1.1 Purchased Assets. Subject to the terms and conditions of this
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Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller, all
of Seller's right, title and interest in and to all of the assets of the
Business as set forth in this Section 1.1, other than the Excluded Assets
referred to in Section 1.2, with such changes, deletions or additions thereto as
may occur from the date hereof to the Closing in the ordinary course of business
and consistent with the terms and conditions of this Agreement, including,
without limitation, the following:
(a) the Plant, including all real property on which it is situated
(including all buildings, improvements
and structures located thereon and all appurtenances thereto) and real property
interests (including real property leases, rights of way and easements),
consisting of the properties and interests listed on Schedule 4.10(a)
(collectively, the "Real Property");
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(b) all of the furnishings, fixtures, furniture, vehicles, tools, machinery
and equipment listed on Schedule 1.1(b) hereof, and all other fixed assets, as
of the Closing Date, owned by Seller and used primarily in the Business, located
at the Plants or at Seller's divisional office in Roanoke Rapids, North Carolina
(collectively, the "Fixed Assets"), which includes certain manufacturing
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equipment that is currently located at Plant II (the "Additional Equipment");
(c) all quantities of inventory, including raw materials, work-in-process,
finished goods, stores and supplies owned by Seller as of the Closing Date and
used exclusively in the Business (other than the Excluded Inventory)
(collectively, the "Inventory");
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(d) all research, development and commercially practiced processes, trade
secrets, know-how, inventions, and manufacturing, engineering and other
technical information, whether owned by Seller or licensed from third parties by
Seller, which are used primarily in the operation of the Business (the
"Technology"), and all notebooks, records, reports and data relating to the
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Technology; provided that Buyer will permit Seller (and its successors and
assigns) to continue to use the Technology in the operations of Seller's napery
business or the businesses of Seller other than the Business;
(e) all contracts, agreements, leases (other than real property leases
referred to in Section 1.1(a)), unfilled purchase and sale orders or
commitments, arrangements, commitments or understandings of any kind that relate
exclusively to the Business or the Purchased Assets and are listed on Schedule
1.1(e), as well as other such agreements relating exclusively to the Business
that are (i) entered into by Seller in the ordinary course of business
subsequent to the date hereof and (ii) by their terms provide for Seller's
obligations thereunder to be performed in the ordinary course of business within
30 days of the Closing Date (the "Assumed Contracts");
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(f) all catalogs, sales promotion literature and advertising material
relating exclusively to the Business;
(g) all files and documents (including credit information) to the extent
such documents relate to customers and vendors of the Business, and other
business and financial records, files, books and documents relating to the
Purchased Assets and/or the Business; provided that Seller (and its successors
and assigns) shall retain possession (or copies) of files, documents and records
relating to the napery business or to the businesses of Seller other than the
Business;
(h) all municipal, state and federal franchises, licenses, authorizations
and permits used in or necessary or appropriate to the Business;
(i) all prepaid charges, sums and fees to the extent that they relate to
the Business; and
(j) all books and records relating to the Business; provided that Seller
(and its successors and assigns) shall retain possession (or copies) of books
and records relating to the napery business or to the businesses of Seller other
than the Business (the assets referred to in clauses (d) through (j) are
collectively referred to herein as the "Other Assets" and, together with the
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Real Property, the Fixed Assets, the Inventory and the Additional Equipment, the
"Purchased Assets").
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1.2 Excluded Assets. The parties to this Agreement expressly understand
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and agree that Seller is not hereunder selling, assigning, transferring or
conveying to Buyer, and Buyer is not purchasing, acquiring or accepting from
Seller, any assets that are not primarily used in the conduct of the Business,
as well as the following assets, rights and properties, which shall be
specifically excluded from the transactions contemplated by this Agreement
(collectively, the "Excluded Assets"):
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(a) cash;
(b) any other assets of Seller not primarily relating to the Business,
including the assets related to the napery business of Seller which is conducted
at the Plant;
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(c) any assets relating to or used in the corporate, administrative and
marketing operations of the Business that are performed at the Seller's
corporate or administrative offices;
(d) any accounts receivable and rights to invoice customers for goods which
have been sold and shipped to the customers of Seller prior to the Closing Date;
and
(e) any "Xxxx-and-Hold" inventory, any inventory located at Plant II, any
licensed juvenile inventory, as well as any other inventory manufactured under
license where a consent for Buyer to sell products pursuant to any such license
has not been obtained prior to the Closing Date (collectively, the "Excluded
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Inventory").
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(f) the additional Excluded Assets designated on Schedule 1.2(f).
1.3 Liens. Seller shall on or before Closing cause the release or
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termination of any liens, pledges, mortgages, security interests, claims,
leases, charges, options, rights of first refusal, unsatisfied preemptive
rights, easements, servitudes, transfer restrictions under any agreement or any
other encumbrance, restriction or limitation whatsoever (collectively, "Liens")
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on the Purchased Assets, except for any Liens listed on Schedule 1.3.
1.4 Liabilities. Buyer shall assume, pay, perform and discharge when due
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only those liabilities and obligations arising from and after the Closing Date
with respect to the Purchased Assets (collectively, the "Assumed Liabilities").
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The parties expressly understand and agree that except for the Assumed
Liabilities, Buyer does not assume or agree to pay, perform or discharge when
due any liabilities or obligations with respect to the Purchased Assets or the
Business, whether accrued, absolute, contingent or otherwise arising from or
attributable to the period of time between May 13, 1988 and the Closing Date.
Buyer is not hereunder assuming, without limitation, the following liabilities,
which shall be specifically excluded from the transactions contemplated by this
Agreement (the "Excluded Liabilities") and shall be satisfied by Seller as they
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become due:
(a) all liabilities with respect to any and all Excluded Assets;
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(b) any and all taxes levied and arising by any federal, state, local or
foreign taxing authority with respect to the ownership or use of the Purchased
Assets or conduct of the Business on or prior to the Closing;
(c) all liabilities with respect to annual employee bonus payments by
Seller to its employees at the Plants incurred or arising during or otherwise
attributable to any period prior to the Closing;
(d) all liabilities of the Business with respect to any intercompany
loans;
(e) all liabilities and obligations of Seller or any predecessor of Seller
resulting from, caused by or arising out of the conduct of the Business by
Seller or Seller's ownership, operation or lease of any properties or assets
included in the Purchased Assets during the period of time between May 13, 1988
and the Closing Date, including, without limitation, any such liabilities or
obligations that constitute, may constitute or are alleged to constitute a
violation of or a liability or obligation under any Environmental Law during the
period that the Business was operated, or the Purchased Assets were owned, by
Seller, such as, among other things, any liability or obligation to contribute
to the cost of investigation or remediation under CERCLA, RCRA and any state or
local analogues;
(f) all obligations of Seller under any leases relating to the Business or
the Purchased Assets that are outstanding as of, or otherwise relate to any
period prior to, the Closing;
(g) all warranty obligations to customers of the Business with respect to
products sold to customers by Seller on or prior to the Closing;
(h) all product liability, strict liability or negligence claims with
respect to products sold to customers by Seller on or prior to the Closing;
(i) all worker's compensation expenses and claims for any accident or
injury occurring, arising or attributable to any period prior to the Closing
(whether discovered before or after such time);
(j) all claims, liabilities and obligations under all of Seller's group
health plans, including, without
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limitation, medical, dental, life insurance, disability, accident and sickness
claims and other welfare plan expenses and claims (including retiree medical and
dental claims), incurred by any of Seller's employees and their eligible
dependents relating to any accident, injury, illness, sickness or disease
occurring, arising or attributable to any period prior to the Closing;
(k) all obligations of Seller to pay severance benefits, salary, bonuses
or any vacation pay to any employee or consultant as a result of the
transactions contemplated by this Agreement or as a result of Seller's
employment of such employee or engagement of such consultant at any time;
(l) all liabilities arising on or prior to the Closing Date relating to
rebates, price loads, advertising loads, co-op support, new store and/or retail
incentives; and
(m) all other indebtedness, obligations, accounts, suits, liens, claims or
proceedings that arise out of real property leases, or which arise out of
contracts or dealings with customers, suppliers, sales representatives,
distributors, insurers, employees, agents, personal property lessors, lessees,
licensors, licensees, consignors or consignees, relating to the Business or the
Purchased Assets with respect to any period prior to the effective time of the
Closing.
2. Purchase Price.
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2.1 Deposit. On or prior to the date hereof, Buyer has paid the sum of
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Two Hundred Fifty Thousand Dollars ($250,000) in cash (the "Deposit") into
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escrow under the Escrow Agreement, dated as of February 13, 1997 (the "Escrow
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Agreement") substantially in the form of Exhibit A hereto among Buyer, Seller
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and Weil, Gotshal & Xxxxxx LLP, as escrow agent (the "Escrow Agent") (which
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deposit shall be released pursuant to the Escrow Agreement (i) to Seller at the
Closing as part of the Purchase Price or (ii) upon the earlier termination of
this Agreement as set forth in Section 3.2).
2.2 Amount of Purchase Price. The aggregate purchase price (the "Purchase
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Price") for the Purchased Assets shall be an amount equal to the sum of (i)
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$22,500,000 payable for the Real Property, the Fixed Assets, the
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Additional Equipment and the Other Assets and (ii) an amount equal to the
difference between the value of the Inventory as of the Closing Date and
$2,000,000 (such value shall be set forth in the Closing Date Inventory as
provided in Sections 2.5(a) and 2.5(b)). The Purchase Price and any adjustments
to the Purchase Price shall be payable as provided in Sections 2.4 and 2.5.
2.3 Allocation of Purchase Price. The Purchase Price and the Assumed
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Liabilities shall be allocated among the Purchased Assets in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").
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Seller and Buyer each shall file a Form 8594 (Asset Acquisition Statement under
Section 1060) on a timely basis reporting such party's allocation of the
Purchase Price and the Assumed Liabilities. In addition, Seller and Buyer each
shall file any amendment to its Form 8594 required by any adjustment to the
Purchase Price pursuant to this Agreement reallocating any portion of the
Purchase Price and the Assumed Liabilities to the Purchased Assets.
2.4 Payment of Purchase Price. At the Closing, Buyer shall pay to Seller,
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by wire transfer of immediately available funds to an account designated by
Seller to Buyer in writing prior to the Closing, the cash amount of the sum of
(i) $22,500,000, less the Deposit and (ii) an amount equal to the Initial
Inventory Purchase Price. "Initial Inventory Purchase Price" means an amount in
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cash equal to 90% of the difference between (i) the value of the Inventory
stated on the inventory statement as at the end of the month immediately
preceding the Closing (the "Pre-Closing Inventory Statement") and (ii)
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$2,000,000. The Pre-Closing Inventory Statement shall be prepared by Seller in
accordance with the provisions of Section 2.6.
2.5 Adjustments to Purchase Price.
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(a) On the Closing Date, representatives of Seller, Buyer and Ernst & Young
LLP shall conduct and complete a physical count of the Inventory located at the
Plant, or such other alternative procedures as Buyer shall determine to be
necessary or appropriate, provided such count is solely for the purpose of
calculating the quantity of Inventory and shall not constitute an assessment of
the quality or value of such Inventory, which shall be determined in accordance
with the process described in Section 2.6. As soon as practicable (but not
later than 10 days) after the Closing Date, Seller and Buyer shall jointly
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prepare an inventory statement for the Inventory as of the Closing Date (the
"Closing Date Inventory"), which shall include a computation of the Inventory
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Adjustment. The "Inventory Adjustment" shall equal the positive or negative
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difference between (i) the total dollar amount of the Inventory reflected on the
Closing Date Inventory, less $2,000,000 (which amount Buyer and Seller hereby
acknowledge is a supplemental inventory value reduction that will be applied in
lieu of any other valuation adjustment to be made (the "Valuation Reduction"),
other than pursuant to Section 2.6 hereof, in any instance with respect to the
Inventory) and (ii) the Initial Inventory Purchase Price.
(b) If Seller and Buyer cannot agree on a Closing Date Inventory within 10
days after the Closing Date, then Buyer shall designate one of the "Big Six"
independent public accounting firms (which firm shall not have any material
business relationship with Buyer or Seller or their affiliated entities) (the
"Arbiter") to be retained to prepare such Closing Date Inventory for delivery to
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Seller and Buyer not later than 5 days following the 10th day after the Closing
Date and the Arbiter's determinations contained therein shall be final and
binding on Seller and Buyer. All fees and expenses of the Arbiter shall be
borne equally by Seller and Buyer.
(c) Within 3 business days after Seller and Buyer agree on the Closing Date
Inventory or the Closing Date Inventory otherwise becomes binding on Seller and
Buyer in accordance with this Agreement, (i) if the Inventory Adjustment is
positive, then Buyer shall pay (or cause to be paid) to Seller the amount of the
Inventory Adjustment by wire transfer of immediately available funds to an
account designated by Seller to Buyer in writing prior to such payment, and (ii)
if the amount of the Inventory Adjustment is negative, then Seller shall pay (or
cause to be paid) to Buyer the amount of the Inventory Adjustment by wire
transfer of immediately available funds to an account designated by Buyer to
Seller in writing prior to such payment.
2.6 Statement of Inventory. Prior to the Closing Date, Seller shall
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deliver to Buyer the Pre-Closing Inventory Statement certified by Seller's Chief
Financial Officer as having been prepared in a manner consistent with Seller's
past practices, which Pre-Closing Inventory Statement shall set forth the
Inventory of Seller valued at the lower of Seller's cost (on a FIFO basis) or
market
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thereof, and shall be calculated on the basis of Seller's December 28, 1996
standard cost figures, giving effect to variances for raw materials, overhead,
and lower of cost or market reserves, such cost figures, variances and reserves
to be as maintained by Seller in a manner consistent with past practice as
reflected in the form of the December 28, 1996 Merchandise Inventory as set
forth in Exhibit B. Seller shall make available to Buyer complete supporting
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detail reports and schedules with respect to such calculations. The Closing
Date Inventory shall be prepared on the same terms and basis as the Pre-Closing
Inventory Statement.
2.7 Prorations. At the Closing (or after the Closing to the extent the
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necessary calculations cannot be made at the Closing), all operational expenses
incurred directly in the operation of the Business, including, without
limitation, utility bills, the expense of supplies, the expense of fuel and the
like, shall be prorated as of the Closing, with Seller being responsible for and
entitled to such items relative to periods prior to the Closing Date and Buyer
being responsible for and entitled to such items relative to periods including
and after the Closing Date. All personal and real property taxes and special
and general assessments relating to the ownership or use of the Purchased Assets
or conduct of the Business applicable to any period of time prior to the Closing
shall be the sole obligation, responsibility and expense of Seller and shall be
paid by the Seller. All such assessments and taxes applicable to periods from
and after the Closing shall be the sole obligation, responsibility and expense
of Buyer.
3. Closing.
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3.1 Date of Closing. The closing of the sale and purchase of the
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Purchased Assets provided for in Section 1 (the "Closing") shall take place at
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the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 0000 Xxx Xxxxxxxxx Xxxxxx, X.X.,
Xxxxxxx, Xxxxxxx 00000 (or at such other place as the parties may agree) on a
date no earlier than one business day and no later than five business days after
each of the conditions to the consummation of the sale and purchase hereunder
that is specified in Section 7 has been fulfilled (or waived by the party
entitled to waive that condition), or as otherwise mutually agreed upon by
Seller and Buyer. (The date on which the Closing is held is referred to in this
Agreement as the "Closing Date.") At the Closing, the
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parties shall execute and deliver the documents referred to in Section 8.
3.2 Outside Date for Closing. If the Closing has not been held on or
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before February 21, 1997 (the "Termination Date"), Buyer or Seller may terminate
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this Agreement by written notice to the other. Upon any such termination, this
Agreement shall be null and void and neither of the parties shall have any
liability arising out of this Agreement except for any liability resulting from
breach by such party of this Agreement prior to such termination; provided, that
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the parties' obligations under Section 6.5 and the confidentiality and
nondisclosure provisions contained in this Agreement and in the Confidentiality
Agreement dated November 1996, between Buyer and Seller shall survive any
termination of this Agreement. In the event this Agreement is terminated prior
to Closing and Seller shall not be in breach of any obligation of Seller
contained herein that is within Seller's control and is not remedied within 30
days after receipt by Seller of notice in writing specifying the nature of such
breach and requesting that it be remedied, then the Deposit will be released to
Seller.
3.3 Returns. Buyer shall notify Seller promptly in writing of any returns
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to Buyer after the Closing Date of any product sold by Seller prior to the
Closing Date. Buyer may elect in the notice to Seller of any such returned
product to keep and resell the same at a price at least equal to the price at
which such product was originally sold by Seller prior to the Closing Date. If
Buyer elects to keep and resell any returned product, Buyer shall promptly pay
to Seller the amount of the outstanding account receivable relating to such
returned product. If Buyer elects not to keep and resell any returned product,
such product shall be shipped at Seller's instruction and cost, and Buyer shall
cease to have any responsibility to make any payment to Seller with respect to
such returned product.
3.4 Cooperation on Collection of Accounts Receivable. Buyer will
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cooperate with Seller and will use its best efforts to assist Seller in
connection with Seller's collection of accounts receivable owing to Seller by
customers of the Business. In the event that any account receivable of Seller
relating to the Business that arises from goods sold and shipped on or before
the Closing Date and not in dispute or more than 90 days past due on the Closing
Date (an "Account Receivable") shall, during a
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period of 6 months following the Closing Date, become more than 30 days past
due, then upon receipt of written notice from Seller to such effect, Buyer shall
either (i) purchase such Account Receivable from Seller at the face amount
thereof, or (ii) promptly refrain from accepting orders from the Plants to such
obligor (and Buyer will not fill any such orders so received using Buyer's other
plant facilities) until the past due Account Receivable shall have been paid in
full or otherwise settled. The foregoing shall not apply (i) to any sales to
X.X. Penney, (ii) any Account Receivable where the obligor has asserted, in good
faith, a claim that the unpaid amount is not due and payable because of an
alleged defect, short-fall or other deficiency with regard to the merchandise
which is the subject of such Account Receivable or (iii) to any orders for
merchandise received and accepted by Buyer prior to the receipt of a written
notice from Seller.
3.5 Remittances by Seller and Buyer.
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(a) If Seller shall receive on or after the Closing Date any sums with
respect to the Purchased Assets, including, without limitation, any sums under
an Assumed Contract that are attributable to any period of time subsequent to
the Closing, Seller shall promptly cause the same to be remitted to Buyer in the
same form received by Seller and, if required, endorsed over to Buyer. Any such
sums so received by Seller shall be held in trust by Seller for Buyer to be
remitted to or endorsed over as aforesaid.
(b) If Buyer shall receive, on or after the Closing Date, any sums with
respect to the Purchased Assets or the Business, including any payments relating
to an account receivable, that in any such case are attributable to any period
of time prior to the Closing, then Buyer shall promptly cause the same to be
remitted to Seller in the same form received by Buyer and, if required, endorsed
over to Seller.
(c) Any such sums so received by Seller or Buyer shall be held in trust by
Seller for Buyer, or by Buyer for Seller, respectively, to be remitted to or
endorsed over as provided in this Section 3.5.
(d) In connection with the foregoing, Buyer and Seller hereby agree to
enter into a "Three Party Agreement" by and among Buyer, Seller and Congress
Financial
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Corporation (Southern) as Agent under Seller's loan agreement
3.6 All Proceedings. All proceedings to be taken and all documents to be
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executed and delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously and no proceedings shall be deemed taken
or documents executed or delivered until all have been taken, executed and
delivered.
4. Representations and Warranties of Seller. Seller represents and
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warrants to Buyer as follows:
4.1 Due Organization; Good Standing; Qualification. Seller is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Seller has full corporate power and authority to
carry on the Business as now conducted and to own, lease and operate the assets
and properties included in the Business. Seller is qualified to do business and
is in good standing in each jurisdiction in which the conduct of the Business by
it or the ownership of the Real Property by it requires qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect upon any of the Purchased Assets or upon the condition
(financial or otherwise), prospects and other operations of the Business, taken
as a whole.
4.2 Due Authority; Due Execution and Delivery; Binding Effect. The
---------------------------------------------------------
execution, delivery and performance by Seller of this Agreement and the other
agreements, documents or instruments to be delivered pursuant to this Agreement,
and the consummation by Seller of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action by Seller.
Each of this Agreement and any other agreement, document and instrument to be
delivered pursuant to this Agreement by Seller has been duly executed and
delivered by Seller and constitutes the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting the enforcement of creditors' rights generally.
4.3 No Conflicts; Consents. The execution, delivery and performance of
----------------------
this Agreement or the other
12
agreements, documents or instruments to be delivered pursuant to this Agreement
by Seller, or the consummation of the transactions contemplated hereby or
thereby, will not (i) conflict with Seller's certificate of incorporation or by-
laws, each as currently in effect, (ii) conflict with, or result in a breach or
termination of, or constitute a default under, any material lease, agreement,
commitment or other instrument, or any material order, judgment or decree,
including, without limitation, the Order Confirming Debtor's Plan of
Reorganization dated September 12, 1996, with respect to In re The Xxxx Company
----------------------
(Case No. 96-1050), to which Seller is a party and by which the Purchased Assets
or the Business may be bound, (iii) constitute a violation of any law,
regulation, rule or ordinance applicable to Seller, the Purchased Assets or the
Business, or (iv) result in the creation of any Lien upon the Purchased Assets
or the Business. Except as set forth on Schedule 4.3, no material consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority, any lender or lessor or any other person or entity is
required in connection with the execution, delivery and performance by Seller of
this Agreement or the other agreements, documents or instruments to be delivered
pursuant to this Agreement. The representation and warranty contained in the
immediately preceding sentence of this Section 4.3 does not include or relate or
pertain to environmental matters, which matters shall be governed by Section
4.16.
4.4 Litigation; Compliance with Laws. There are no judicial or
--------------------------------
administrative actions, proceedings or investigations pending or, to the best of
Seller's knowledge, threatened, that question the validity of the execution,
delivery or performance by Seller of this Agreement and the other agreements,
documents or instruments to be delivered by Seller pursuant to this Agreement,
or any action taken or to be taken by Seller in connection with this Agreement.
Except as set forth on Schedules 4.4 and 4.9(m), there is no litigation,
proceeding or governmental investigation pending or, to the best of Seller's
knowledge, threatened, or any order, injunction or decree outstanding, against
or relating to any of the Purchased Assets or the Business, and the Business is
not in violation in any material respect of any applicable law, regulation,
ordinance or any other applicable requirement of any governmental body or court,
and no notice has been received by Seller alleging any such violation.
13
4.5 Permits. Seller possesses all material licenses, franchises, permits
-------
and governmental authorizations to conduct the business as now conducted
(collectively, the "Permits"), all of which are listed on Schedule 4.5. The
-------
Permits are in full force and effect, no violations are or have been recorded in
respect of any Permit and no proceeding is pending, or to the best of Seller's
knowledge, threatened, to revoke or limit any Permit. The representation and
warranty contained in this Section 4.5 does not include or relate or pertain to
environmental matters, which matters shall be governed by Section 4.16.
4.6 Taxes.
-----
(a) All tax returns required to be filed by or with respect to Seller have
been properly prepared and duly and timely filed with the appropriate taxing
authorities in all jurisdictions in which such tax returns are required to be
filed; and all such tax returns are true, complete and correct in all material
respects. Seller has duly and timely paid all taxes that are due, or claimed or
asserted by any taxing authority to be due, from or with respect to it for
periods covered by such tax returns. There are no outstanding agreements,
waivers, or arrangements extending the statutory period of limitation applicable
to any claim for, or the period for the collection or assessment of, taxes due
from or with respect to the Seller. No claim has been made by a taxing
authority in a jurisdiction where Seller does not file tax returns that it is or
may be subject to taxation by that jurisdiction in connection with the ownership
or use of the Purchased Assets or the conduct of the Business.
(b) With respect to the employees of the Business, Seller has duly and
timely withheld from employee salaries, wages and other compensation and has
paid over to the appropriate taxing authorities all amounts required to be so
withheld and paid over for all periods under all applicable laws.
(c) There are no Liens with respect to taxes upon any of the Purchased
Assets of Seller.
(d) Seller is not a foreign person within the meaning of Section 1441 of
the Code.
14
(e) Seller is not, and during each of the immediately preceding three
fiscal years has not been, a member of an affiliated group of corporations
filing a consolidated combined or unitary tax return.
(f) For purposes of this Agreement, the term "tax" means all taxes,
---
charges, fees, levies, imposts, duties, and other assessments, including,
without limitation, any income, alternative minimum or add-on tax, estimated,
gross income, gross receipts, sales, use, transfer, gains, transactions,
intangibles, ad valorem, value-added, franchise, registration, title, license,
capital, paid-up capital, profits, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, recording, real property, personal
property, Federal highway use, commercial rent, environmental, windfall profit
tax, custom, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest, penalties, or
additions to tax, and any interest or penalties imposed by any Federal, state,
local or foreign taxing authority with respect to the filing, obligation to file
or failure to file any tax return and the term "tax return" means any return,
----------
declaration, report, claim for refund, information return, statement, or other
similar document relating to taxes, including any schedule or attachment
thereto, and including any amendment thereof.
4.7 Contracts. Schedules 1.1(e) and 4.7 contain a list of: (a) all
---------
commitments and agreements for the purchase of any materials or supplies
relating primarily to the Business that involve an expenditure by Seller of more
than $25,000 for any one contract or from any one person; (b) all leases and
other rental agreements for real property relating primarily to the Business
under which Seller is either lessor or lessee; (c) all other orders, leases,
commitments, agreements and instruments (including, without limitation,
mortgages, indentures and other agreements and instruments relating to
indebtedness for borrowed money) to which Seller is a party that involve amounts
of more than $25,000 and by which the Purchased Assets or the Business may be
bound, other than any agreements which are listed on Schedule 4.9(a) and other
than any agreements required elsewhere in this Section 4.7; (d) all contracts
with the United States Federal government relating to the Business and to which
Seller is a party; (e) all other agreements or understandings with customers of
the Business that involve a payment to Seller of more than $25,000 for any one
contract or any one customer; and (f) all fire, liability and other
15
insurance carried by Seller with respect to the Business or the Purchased
Assets, except that Schedules 1.1(e) and 4.7 do not include any contracts,
agreements, instruments or other arrangements that constitute or relate to any
Excluded Assets. True and complete copies of the orders, leases, commitments,
agreements and insurance policies referred to on Schedule 4.7 have been
delivered or made available to Buyer, each as amended to date, and each of them
is in full force and effect.
4.8 Absence of Defaults. Seller has not received notice of any default by
-------------------
any party under any order, lease, commitment or agreement referred to in Section
4.7 that has not been cured, and neither Seller nor, to the best of Seller's
knowledge, any other party to any such order, lease, commitment or agreement is
now in violation or breach of, or in default in complying with, any material
provision thereof. Seller has not received notice of any plan or intention of
any other party to any order, lease, commitment or agreement referred to in
Section 4.7 to exercise any right to cancel or terminate any such order, lease,
commitment or agreement and, to the best of Seller's knowledge, no such
cancellation or termination has been threatened. None of the customers or
suppliers of the Business has refused, or communicated or threatened that it
will or may refuse, to purchase or supply goods or services, as the case may be,
in any material respect, or has communicated that it will or may substantially
reduce the amounts of goods or services that it is willing to purchase from, or
sell to, the Business.
4.9 Employee Benefit Plans and Employee Relations.
---------------------------------------------
(a) Schedule 4.9(a) lists each pension, retirement, disability, medical,
dental or other health insurance plan, life insurance or other death benefit
plan, profit sharing, deferred compensation, stock option, bonus or other
incentive plan, vacation benefit plan, severance plan, payroll practice or other
employee benefit plan or arrangement, including any employee plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), or any other written or unwritten program, arrangement,
-----
agreement or understanding covering any Business Employee to which Seller is a
party or bound or by which Seller otherwise may have any liability to any
Business Employee (all such plans or arrangements being hereinafter referred to
collectively as the "Benefit
-------
16
Plans"). For purposes of the preceding sentence, the term "Business Employee"
----- -----------------
includes all current or former employees, officers, directors and consultants
who are or were employed or otherwise entitled to compensation in connection
with activities directly involving the Purchased Assets.
(b) Seller has delivered or made available to Buyer true, correct, and
complete copies of all documents relating to the Benefit Plans, including,
without limitation: (i) all plan documents, amendments, trust instruments and
other material agreements adopted or entered into in connection with each of the
Benefit Plans; (ii) all insurance and annuity contracts related to any Benefit
Plans; (iii) all administrative notices and forms used for the Benefit Plans,
including the notices and election forms used to notify employees and their
dependents of their continuation coverage rights under Seller's group health
plans; and (iv) the most recently available Form 5500 annual reports, certified
financial statements, actuarial reports, summary plan descriptions and favorable
determination letters for the Benefit Plans. Since the date these documents
were supplied to Buyer, no plan amendments have been adopted and no changes to
these documents have been made.
(c) Except as set forth on Schedule 4.9(c), all of the Benefit Plans in
all material respects comply and have been administered in compliance with (i)
the provisions of ERISA; (ii) all provisions of the Code applicable to secure
the intended tax consequences; (iii) all applicable state and federal securities
laws; and (iv) all other applicable laws, rules, regulations and collective
bargaining agreements. Seller has not received any written notice from any
governmental agency or instrumentality questioning or challenging such
compliance.
(d) Seller has complied in all material respects with the continuation
coverage requirements of Section 1001 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and ERISA Sections 601 through 608
("COBRA").
-------
(e) Except as set forth on Schedule 4.9(e), no Benefit Plan is subject to
Title IV of ERISA, and neither Seller nor any ERISA Affiliate has incurred any
liability under Title IV of ERISA arising in connection with the termination of
any plan covered or previously covered by
17
Title IV of ERISA that could become, after the Closing Date, an obligation of
Buyer or any of its affiliates. For purposes of this Section 4.9, "ERISA
-----
Affiliate" means any person or entity that is required to be aggregated with
---------
Seller under Section 414(b), (c), (m) and/or (o) at any time prior to the
Closing.
(f) The Purchased Assets are not, and will not become, subject to any
obligation or liability regarding the Benefit Plans.
(g) Except as set forth on Schedule 4.9(g), neither Seller nor its ERISA
Affiliates currently are parties to any multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). Neither Seller nor any
------------------
ERISA Affiliates (i) currently have any liability to make any withdrawal
liability payment to any Multiemployer Plan; (ii) will incur any such liability
for which Buyer or its affiliates may become liable; (iii) are delinquent in
making any contributions required to be paid to any Multiemployer Plan; or (iv)
are involved in any pending dispute with any Multiemployer Plan.
(h) Except as identified on Schedule 4.9(h), none of the Benefit Plans
provides welfare benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to Business Employees beyond
their retirement or other termination service (other than coverage required by
COBRA or any similar state law).
(i) Buyer shall not, as a result of the Closing and consummation of the
transactions contemplated by this Agreement, become subject to any liability
relating to any Multiemployer Plan.
(j) Except as set forth on Schedule 4.9(j), all contributions required to
have been made by Seller to any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA (a "Pension Plan"), without regard to any
------------
waivers granted under Section 412 of the Code, have been timely made. Each
Pension Plan is intended to be qualified under Section 401 of the Code and its
related trust exempt from federal income taxation under Section 501 of the Code,
and Seller has not been notified to the contrary by the Internal Revenue
Service.
(k) With respect to the Business, Seller is in compliance with all
applicable requirements of the
18
Immigration and Nationality Act of 1952, as amended by the Immigration Reform
and Control Act of 1986, and the regulations promulgated thereunder.
(l) Except as set forth on Schedule 4.9(l), Seller is not a party to any
collective bargaining or other labor agreement relating to the Business.
Current versions of any agreements listed on Schedule 4.9(l) have been delivered
to Buyer.
(m) With respect to the Business, except as set forth on Schedule 4.9(m),
Seller (i) has been and is in compliance with all laws, rules, regulations and
ordinances respecting employment and employment practices, terms and conditions
of employment and wages and hours; and (ii) is not liable for any arrears of
wages or penalties for failure to comply with any of the foregoing. With
respect to the Business, Seller has not engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin, age
or handicap in its employment conditions or practices. With respect to the
Business, except as set forth in Schedule 4.9(m), there are no (i) unfair labor
practice charges or complaints or racial, color, religious, sex, national
origin, age or handicap discrimination charges or complaints pending or
threatened against Seller before any federal, state or local court, board,
department, commission or agency, nor does any basis therefor exist; or (ii)
recent, existing or threatened labor strikes, disputes, grievances,
controversies or other labor troubles affecting the Business, nor does any basis
therefor exist.
4.10 Real Property.
-------------
(a) Schedule 4.10(a) sets forth a list of all of the real property
relating to the Business and owned, leased or licensed by Seller, including all
unrecorded easements or rights of way granted to Seller.
(b) The interests of Seller in the parcels of Real Property are free and
clear of all Liens, except Permitted Encumbrances (as hereinafter defined).
"Permitted Encumbrances" shall include all easements, servitudes, covenants or
-----------------------
restrictions appearing in the public real estate records, liens for current
taxes not yet due and payable, minor imperfections of title, none of which,
individually or in the aggregate, materially detracts from the value of or
impairs the use of the Real Property for the
19
operation of the Business, and all encumbrances set forth on Schedule 4.10(b)
attached hereto. The warranties and representations set forth in this
subparagaraph 4.10(b) shall merge with and be replaced and superseded at the
Closing by the warranties and representations in the Deeds (as hereinafter
defined).
(c) The copies of the real property tax bills for the Real Property for the
current tax year which have been furnished by Seller to Buyer are true and
correct copies of all of the tax bills received and paid for the Real Property.
(d) To Seller's actual knowledge the Real Property and the present
condition thereof does not violate any applicable deed restrictions or other
covenants, restrictions or agreements, site plan approvals, zoning or
subdivision regulations or urban redevelopment plans applicable to the Real
Property, as modified by any duly issued variances.
(e) No written notices of violation of law or municipal ordinances
(including but not limited to all building, fire, zoning and other ordinances
and regulations applicable to the Real Property) or of Federal, state, county or
municipal or other governmental agency regulations, orders or requirements
relating to the Real Property have been received by Seller, and Seller has no
reason to believe that any such notice will be entered or received.
(f) To the best of Seller's knowledge, all water, sewer, gas, electricity,
telephone and other utilities serving the Real Property are supplied directly to
the Real Property by facilities of public utilities and the cost for
installation of such utilities has been fully paid.
(g) There is no action or proceeding (zoning or otherwise) or governmental
investigation pending, or, to Seller's actual knowledge, threatened, against or
relating to the Real Property or the transfer thereof as contemplated by this
Agreement, nor, to Seller's actual knowledge, is there any basis for such
action.
(h) Seller has no actual knowledge of any Federal, state, county or
municipal plans to change the highway or road system in the vicinity of the Real
Property or to restrict or change access from any such highway or
20
road to the Real Property or of any pending or threatened condemnation of the
Real Property or any part thereof or of any plans for improvements which might
result in a special assessment against the Real Property.
(i) The Deeds are the only instruments necessary to convey to Buyer full
access to the Real Property pursuant to the roads bounding the Real Property as
well as all rights appurtenant to the Real Property in such roads.
(j) To Seller's actual knowledge, the buildings which are on the Real
Property are in an operating condition that is adequate and sufficient for the
use to which they are currently put in the Business.
(k) Except as set forth on Schedule 4.10(k), Seller has not retained
anyone to file notices of protest against, or to commence actions to review,
real property tax assessments against the Real Property.
(l) Except as set forth on Schedule 4.10(l), there are no material
service, maintenance, employment or any other contracts or agreements which
affect the Real Property and to which Seller is a party.
(m) Schedule 4.10(m) sets forth an accurate schedule of all types and
amounts of insurance now maintained by Seller and affecting the Real Property
and the only insurance policies carried on the Real Property are those set forth
on said Schedule.
(n) Except as set forth on Schedule 4.10(n), there are no leases executed
with respect to the Real Property and, to Seller's knowledge, no person or
entity other than Seller has any right of possession to all or any portion of
the Real Property, except a right of possession that is a Permitted Encumbrance.
(o) To the best of Seller's knowledge, to the extent that the Plant
encumbers on Real Property not owned by Seller, Seller has obtained appropriate
easements therefor and shall transfer Seller's interest in the same to Buyer.
(p) No person or entity has any option or other right to purchase the Real
Property.
21
(q) As of December 31, 1996, the aggregate annual lease or easement
obligations with respect to the Real Property listed on Schedule 4.10(a) is less
than $500.00. All of the leases and licenses referred to on Schedule 4.10(a)
are in full force and effect.
4.11 Tangible Personal Property. The Fixed Assets and the Additional
--------------------------
Equipment (i) constitute the only tangible personal property located at the
Plants used exclusively in the Business (other than the Inventory and the
Excluded Assets) as operated by Seller and (ii) are in an operating condition
and repair, subject to normal wear and tear consistent with the age of such
properties or assets, that is adequate and sufficient for the use to which it is
currently put in the Business.
4.12 Intangible Property. Seller owns or possesses adequate licenses or
-------------------
other rights to use all computer software, software programs, patents, patent
applications, trademarks, trademark applications, trade secrets, service marks,
trade names, copyrights, inventions, drawings, designs, customer lists,
proprietary know-how or information or other rights ("Proprietary Rights") used
------------------
in the Business and necessary or appropriate for the operation thereof as
operated by Seller. To the best of Seller's knowledge, none of the Proprietary
Rights or the Business conflict with or infringe in any respect, and no one has
asserted that any of the Proprietary Rights or the Business conflict with or
infringe, any Proprietary Right of any third party. To the best of Seller's
knowledge, no person is infringing or threatening to infringe on any of the
Proprietary Rights of the Business.
4.13 Title to Purchased Assets. Seller owns outright and has good and
-------------------------
marketable title to the Purchased Assets, free and clear of any Liens, except
for (i) immaterial assets and properties; (ii) assets and properties disposed of
or subject to purchase or sales orders in the ordinary course of business; (iii)
Liens set forth on Schedule 1.3 and Schedule 4.13, and liens or other
encumbrances securing taxes, assessments, governmental charges or levies, or the
claims of materialmen, carriers, landlords and like persons, which are not yet
due and payable; (iv) minor liens or other encumbrances of a character which do
not materially detract from the Business; and (v) liens that will be discharged
at or before the Closing; provided, however, that the representation and
-------- -------
warranty contained in this Section 4.13 does not include or
22
relate to the Real Property, which is addressed by the representations and
warranties contained in Section 4.10.
4.14 Inventory. The Inventory as reflected on the December 28, 1996
---------
Merchandise Inventory statement is valued at the lower-of-cost (on a FIFO basis)
or market, subject to the Valuation Reduction, in accordance with generally
accepted accounting principles ("GAAP") on a consistent basis in accordance with
----
Seller's past practice. Seller has received no notice of any condition that
would adversely affect, in any material respect, the supply of materials
available to Seller.
4.15 Absence of Changes. Since December 31, 1996, the Business has
------------------
been operated in the ordinary course and, except as contemplated by Section 6.2,
Seller has not:
(a) entered into any transaction, or incurred any liability or
obligation with respect to the Business, except in the ordinary course of
business;
(b) purchased, sold or transferred, or entered into any agreement
for the purchase, sale or transfer of, any assets that are material to the
Business, except in the ordinary course of business;
(c) except as set forth on Schedule 4.15(c), granted or agreed to
grant any increase in the salary or compensation of any employee or agent of the
Business, or made or entered into any bonus payment, loan or similar arrangement
with any employees or agents of the Business, other than annual or other
periodic compensation increases in the ordinary course of business (but not a
general increase) and in accordance with past practice and other than reasonable
and customary travel advances;
(d) made any change in the accounting methods or practices or made
any change in depreciation or amortization policies or rates adopted by Seller
with respect to the Business;
(e) materially changed any of the business policies of the
Business, including, without limitation, advertising, marketing, pricing,
purchasing, personnel, sales, returns, budget or product acquisition policies;
or
23
(f) suffered or incurred any damage, destruction or loss (whether
or not covered by insurance) affecting the Business.
4.16 Environmental Matters.
---------------------
(a) Except as set forth in the Phase I Environmental Assessments of
the Plants prepared by Water & Air Research, Inc., and dated August 1996, any
other reports identified in Section 4.16(b) herein, or on Schedule 4.16:
(1) the operation of the Seller with respect to the Business and the
Business itself are in material compliance with all applicable Environmental
Laws;
(2)(i) Seller has obtained and currently maintains all Environmental
Permits necessary for the operation of the Business and is in compliance with
such Environmental Permits, (ii) there are no judicial or administrative
actions, proceedings or investigations pending or, to the best of Seller's
knowledge, threatened to revoke such Environmental Permits, and (iii) Seller has
not received any notice to the effect that there is lacking any Environmental
Permit required for the current operation of the Business or any property owned,
operated or leased by or for the Business;
(3) there are no judicial or administrative actions, proceedings or
investigations pending or, to the best of Seller's knowledge, threatened against
Seller with respect to the Business or the assets of the Business alleging the
violation of or seeking to impose liability under any Environmental Law or
Environmental Permit;
(4) neither Seller nor, to the best of Seller's knowledge, any predecessor
or any former owner or operator of the Plant or any of the Real Property has any
knowledge, or has filed any notice under any Environmental Law indicating, with
respect to the Business or the operations of the Plant or any of the Real
Property, past or present treatment, storage, or disposal of or reporting a
Release of Hazardous Material at or from the Plant or any of the Real Property;
(5) neither Seller with respect to the Business nor any of the Purchased
Assets is subject to any outstanding written order, injunction, judgment,
decree, ruling, assessment or arbitration award or any agreement under or
24
pursuant to any Environmental Laws or with respect to any Hazardous Material;
(6) there is not now, nor to the best of Seller's knowledge for all
periods prior to Seller's ownership, lease or operation of the Real Property has
there been in the past, on, in or under the Real Property (i) any underground
storage tanks, (ii) above-ground storage tanks, dikes or impoundments containing
Hazardous Materials, (iii) any asbestos-containing materials, (iv) any
polychlorinated biphenyls or (v) any radioactive substances except in
substantial compliance with applicable Environmental Law; and
(7) Seller is not subject to any material Environmental Costs and
Liabilities, and no facts or circumstances exist that could give rise to
Environmental Costs and Liabilities with respect to compliance with
Environmental Laws which would materially adversely affect the value of the Real
Property.
(b) Seller has provided Buyer with copies of all environmentally
related audits, assessments, studies, reports, analyses and results of
investigations relating to the Business and the assets of the Business that are
known to Seller or are in Seller's possession, custody or control as follows:
(1) Phase I Environmental Assessment of the Roanoke Plant 2/Roanoke Yarn Dye
Property in Roanoke Rapids, North Carolina (August 1996), (2) Phase I
Environmental Assessment of the Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxx
(August 1996); (3) Comprehensive Site Assessment, Roanoke No. 2 Plant, Roanoke
Rapids, North Carolina (January 1995); (4) Report of Four Tank Removals,
Xxxxxxxx and Roanoke Xx. 0 Xxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxx (December
1993); and (5) Environmental Audit Report, Roanoke Rapids (December 1995).
(c) For purposes of the foregoing Section 4.16:
"Environmental Costs and Liabilities" shall mean any and all losses,
-----------------------------------
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses (including fees, disbursements and expenses of legal counsel,
experts, engineers and consultants and the costs of investigation and
feasibility studies, remedial or removal actions and cleanup activities) arising
from or under any Environmental Law or Environmental Claim or any
25
order or agreement now in effect with any governmental entity or other person.
"Environmental Law" means any applicable federal, state, local or
-----------------
foreign law (including common law), statute, code, ordinance, rule, regulation
or other requirement relating to the environment, natural resources, or public
and employee health and safety and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S)(S) 9601, et seq. ("CERCLA"), the Hazardous Materials Transportation Act, 49
-- ---- ------
U.S.C. (S)(S) 1801, et seq. ("RCRA"), the Resource Conservation and Recovery
-- ---- ----
Act, 42 U.S.C. (S)(S) 6901, et seq., the Clean Water Act, 33 U.S.C. (S)(S) 1251
-- ----
et seq., the Clean Air Act, 33 U.S.C. (S)(S) 2601, et seq., the Toxic Substances
-- ----
Control Act, 15 U.S.C. (S)(S) 2601, et seq., the Federal Insecticide, Fungicide,
-- ----
and Rodenticide Act, 7 U.S.C. (S)(S) 136, et seq., the Oil Pollution Act of
-- ----
1990, 33 U.S.C. (S)(S) 2701, et seq., the Federal Safe Drinking Water Act, 42
-- ----
U.S.C. (S)(S) 300F, et seq., and the Occupational Safety and Health Act, 29
-- ----
U.S.C. (S)(S) 651, et seq., as such laws have been amended or supplemented, and
-- ----
the regulations promulgated pursuant thereto, and all analogous state or local
statutes, all as in effect on the date hereof.
"Environmental Permit" means any permit, approval, authorization,
--------------------
license, variance, registration or permission required under any applicable
Environmental Law.
"Hazardous Material" means any substance, material or waste that is
------------------
regulated by any governmental entity as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous substance," "restricted
hazardous waste," "contaminant," "toxic waste," "toxic substance" or words of
similar import, including, without limitation, petroleum, petroleum products
(including crude oil and any fraction thereof), asbestos, asbestos-containing
materials, urea formaldehyde and polychlorinated biphenyl.
"Release" means any release, spill, emission, leaking, pumping,
-------
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the indoor or outdoor environment or into or
out of any property.
(d) The representations and warranties contained in this Section 4.16
are the only representations and warranties that include or relate or pertain to
26
environmental matters, and environmental matters are specifically excluded from
all other representations and warranties contained in this Article 4.
4.17 Financial Statements. All of the financial statements
--------------------
identified below (collectively, the "Financial Statements"), copies of which
--------------------
have been delivered to Buyer, (a) have been prepared in accordance with the
books and records of the Business, on a consistent basis, and (b) present
fairly the financial condition and results of operations of the Business, as
of the dates and for the periods indicated, subject to normal year-end
adjustments in the case of the interim statements; provided, however, that there
-------- -------
shall be no extraordinary year-end adjustments. The Financial Statements consist
of:
(i) unaudited statement of net assets of the Business at each
of December 31, 1994, December 31, 1995 and December 31, 1996, and statements of
income and cash flows of the Business for the years then ended, as prepared
from, and in conformity with, the audited consolidated financial statements of
Seller and its subsidiaries for the years then ended except as otherwise set
forth in the notes thereto;
(ii) unaudited statement of net assets of the Business at
March 30, 1996, June 30, 1996 and September 30, 1996, and statements of income
and cash flows of the Business for the periods then ended; and
(iii) unaudited monthly statement of net assets and statements
of income and cash flows for the past six months prior to the date hereof.
4.18 Certain Payments. To the knowledge of Seller, none of Seller
----------------
or any director, officer or employee of Seller has paid or caused to be paid,
directly or indirectly, in connection with the Business (a) to any government or
agency thereof, any supplier or customer or any agent of any supplier or
customer any bribe, kickback or other similar payment, or (b) any contribution
to any political party or candidate (other than from personal funds of
directors, officers or employees not reimbursed by their respective employers or
as otherwise permitted by applicable law).
4.19 Accuracy of Documents. All copies of documents and agreements
---------------------
delivered to Buyer by or on behalf of Seller in connection with this Agreement
and the
27
transactions contemplated hereby are true and accurate copies of such documents
and agreements.
4.20 Pre-1988 Claims. Seller has no knowledge of any claims or
---------------
liabilities relating to the Purchased Assets arising from or attributable to the
period of time before May 13, 1988.
5. Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to Seller as follows:
5.1 Due Organization; Good Standing. Buyer is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has full corporate power and authority to enter into and to
perform this Agreement and any other agreement, document or instrument to be
delivered by Buyer pursuant to this Agreement and to consummate the transactions
contemplated hereby and thereby.
5.2 Due Authority; Due Execution and Delivery; Binding Effect. The
---------------------------------------------------------
execution, delivery and performance by Buyer of this Agreement and the other
agreements, documents and instruments to be delivered pursuant to this
Agreement, and the consummation by Buyer of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action by
Buyer. Each of this Agreement and any other agreement, document and instrument
to be delivered pursuant to this Agreement by Buyer has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
5.3 No Conflicts; Consents. The execution, delivery and performance
----------------------
by Buyer of this Agreement or the other agreements, documents or instruments to
be delivered pursuant to this Agreement by Buyer, or the consummation of the
transactions contemplated hereby or thereby, will not (i) conflict with the
certificate of incorporation or by-laws of Buyer, each as currently in effect,
(ii) conflict with, or result in a breach or termination of, or constitute a
default under, any lease, agreement, commitment or other instrument, or any
order, judgment or decree, to which Buyer is a party or by which it or its
properties are bound or (iii) constitute a violation of any law, regulation,
rule or ordinance applicable to Buyer. No consent, approval or authorization of,
or designation, declaration or filing with, any governmental authority, any
lender or lessor or
28
any other person or entity is required on the part of Buyer in connection with
the execution, delivery and performance by Buyer of this Agreement and the other
agreements, documents or instruments to be delivered pursuant to this Agreement,
except for required filings with the Federal Trade Commission and the Department
of Justice pursuant to the HSR Act with respect to its acquisition of the
Purchased Assets.
5.4 Litigation. There are no judicial or administrative actions,
----------
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, that question the validity of the execution, delivery or performance
by Buyer of this Agreement and the other agreements, documents or instruments to
be delivered by Buyer pursuant to this Agreement, or any action taken or to be
taken by Buyer in connection with this Agreement.
6. Further Agreements of the Parties.
---------------------------------
6.1 Access to Information. Seller shall give to Buyer and its
---------------------
counsel, accountants, environmental consultants and other representatives
reasonable access during normal business hours, and in such a manner as not to
disrupt normal business activities, throughout the period prior to the Closing
to the property, books, commitments, agreements, records, tax returns and other
tax records, files and personnel of the Business and the Purchased Assets so as
to afford Buyer full opportunity to make such review, examination and
investigation of the Business as Buyer may desire to make and, at Buyer's sole
expense, Seller shall furnish to Buyer all copies of documents and information
concerning the business and affairs of the Business as Buyer may reasonably
request. Buyer shall hold all such information and documents so received in
accordance with and subject to the terms of the Confidentiality Agreement, dated
November 1996, between Buyer and Seller.
6.2 Conduct of the Business Pending the Closing. Until the Closing,
-------------------------------------------
Seller shall comply with the provisions set forth below and, except as otherwise
expressly permitted by this Agreement, shall not take any of the actions or do
any of the things proscribed in such provisions without the prior written
consent of Buyer:
(a) the Business shall be operated only in the ordinary course
consistent with the Company's historical
29
practice and shall not incur or pay any obligation or liability that is unusual
in nature or amount;
(b) Seller shall promptly notify Buyer in writing of, and furnish to
Buyer any information Buyer may request with respect to, the occurrence of any
event or the existence of any state of facts that would result in any of
Seller's representations and warranties not being true if they were made at any
time prior to or as of the date of the Closing;
(c) Seller shall not enter into any merger or consolidation agreement
affecting the Purchased Assets or the Business in any respect;
(d) Seller shall maintain and preserve the organization of the
Business intact, retain the Business' present employees located in Roanoke
Rapids, North Carolina, so that they will be available to Buyer, in accordance
with the terms of this Agreement and the Human Resources Agreement, after the
Closing, and maintain Seller's relationships with the Business' customers,
suppliers and others having business relations with the Seller;
(e) Seller shall maintain in full force and effect all insurance
coverage relating to the Purchased Assets and set forth on Schedule 4.10(m) (or
policies at least providing substantially the same coverage);
(f) Seller shall not grant or agree to grant any increase in rate of
salaries or compensation of any employee or agent of the Business nor shall
Seller make any loan or advance to any employees or agents of the Business,
other than annual or other periodic compensation increases in the ordinary
course of business and consistent with past practice and other than reasonable
and customary travel advances;
(g) Seller shall maintain the Purchased Assets in good and
merchantable condition consistent with historical practice, ordinary wear and
tear excepted, in order to conduct the Business on the Closing Date as
contemplated to be conducted by Buyer;
(h) Seller shall not enter into or be a party to any transaction
relating to the Business with any of its affiliates or with any third party in
which the amount of such transaction exceeds $25,000;
30
(i) Seller shall not materially change, nor enter into any transaction
inconsistent with, any of its business policies relating to the Business,
including, without limitation, advertising, investment, marketing, pricing,
purchasing, production, personnel, sales, returns, budget or production
acquisition policies;
(j) Seller shall not make any change in its accounting methods or
practices, or make any change in depreciation or amortization policies or rates
adopted by it, with respect to the Business or the Purchased Assets; and
(k) Seller shall not sell or otherwise dispose of any of the Fixed Assets.
6.3 Other Action. Each of the parties shall use its best efforts to cause
------------
the fulfillment at the earliest practicable date of all of the conditions to
their respective obligations to consummate the sale and purchase of the
Purchased Assets under this Agreement.
6.4 HSR Act Filings. Each party hereto shall, in cooperation with the
---------------
other, file any additional reports or notifications that may be required to be
filed by it under the HSR Act with the Federal Trade Commission and the
Antitrust Division of the Department of Justice, and shall furnish to the other
all such information in its possession as may be necessary for the completion of
the reports or notifications to be filed by the other.
6.5 Expenses. Except as otherwise specifically provided in this
--------
Agreement, Buyer and Seller shall bear their own respective expenses incurred in
connection with this Agreement and in connection with all obligations required
to be performed by each of them under this Agreement.
6.6 Publicity. Neither Buyer nor Seller nor their respective affiliates
---------
shall issue or cause publication of any press release or other announcement or
public communication of any kind with respect to this Agreement or the
transactions contemplated hereby or otherwise disclose this Agreement or the
transactions contemplated hereby to any third party (other than attorneys,
advisors and accountants to Seller or Buyer) without the consent of the other
party hereto, which consent shall not be unreasonably withheld; provided, that
--------
nothing herein shall prohibit any
31
party from issuing or causing publication of any press release, announcement or
public communication to the extent that such party deems such action to be
required by law; and provided, further, that such party shall, whenever
-------- -------
practicable, consult with the other party concerning the timing and content of
such press release, announcement or communication before the same is issued or
published.
6.7 Preservation of Records. Each of Buyer and Seller agree that it shall
-----------------------
preserve and keep the records of the Business acquired pursuant to this
Agreement or retained by Seller, as the case may be, for a period of 5 years
from the Closing, or for any longer period as may be required by any government
agency or ongoing audit, administrative proceeding or litigation, and shall make
such records and personnel available to the other as may be reasonably required
by the other in connection with, among other things, the filing of any tax
return or report by, or any insurance claims by, legal proceedings against or
governmental investigations (including tax audits) of Buyer or Seller. If a
party wishes to destroy such records after that time, it shall first give 90
days' prior written notice to the other party and the other party shall have the
right, at its option and expense, upon prior written notice given within that
90-day period, to take possession of the records within 180 days after the date
of such notice.
6.8 Employee and Employee Benefit Matters. Concurrently with the
-------------------------------------
execution of this Agreement, Seller and Buyer shall enter into the Human
Resources Agreement in the form attached hereto as Exhibit C.
---------
6.9 Title.
-----
(a) Buyer represents, warrants and agrees that it has ordered or shall
order from a reputable title insurance company (the "Title Company") a title
-------------
report with respect to the properties designated as fee parcels on Schedule
4.10(a) in order to obtain ALTA Form B owner's extended coverage title insurance
policies (or such equivalent policies as may conform with local practices) and
agrees to deliver to Seller a copy thereof promptly upon receipt of the same.
If the title report discloses title defects or exceptions to title that are not
included on Schedule 4.10(a) hereof, Buyer, within 10 days of receipt of the
same, shall notify Seller of such defects or exceptions. Seller shall have the
right to attempt to cause the Title Company to omit such defects or exceptions
from the title insurance policy or
32
affirmatively to insure such defects or exceptions, unless such defects or
exceptions shall individually, or in the aggregate, have a material adverse
effect on the value or operation of the Business, taken as a whole (a
"Substantial Title Defect"), and, for such purposes, Seller shall be entitled to
-------------------------
one reasonable extension of the date set forth in Section 3.2. If (a) there
shall be a Substantial Title Defect that would continue in effect beyond such
extension of the Closing Date, or (b) if the Title Company or any other title
company reasonably acceptable to Buyer shall refuse to issue title policies
substantially in the form referred to above, Buyer may elect (i) to terminate
this Agreement or (ii) to purchase all of the Purchased Assets subject to such
Substantial Title Defect and without any reduction in the Purchase Price.
(b) Seller agrees to undertake all reasonable actions and to incur all
reasonable expenses that are customarily borne by a seller to permit Buyer to
obtain such title insurance.
(c) The premium for Buyer's title insurance policy and all related charges
and survey costs shall be borne by Buyer.
6.10 Casualty Event. The provisions of this Section 6.10 shall apply in
--------------
the event ("Casualty Event") of (i) any damage or destruction to the Purchased
--------------
Assets or any other event which in any material respect prevents the normal and
usual conduct of the Business or (ii) any other damage or destruction to the
Purchased Assets which would result in the non-occurrence of a condition
precedent to Buyer's obligation to consummate this Agreement. If a Casualty
Event shall occur and Seller has not remedied the Casualty Event as of the
Closing Date so as to restore in all material respects the normal and usual
conduct of the Business or fulfill such condition precedent to Buyer's
obligation to consummate the Agreement, Seller shall be entitled to one
reasonable extension of the date set forth in Section 3.2. In the event that
Seller has not remedied the Casualty Event by the end of the applicable
extension period, or if the Closing Date is not so extended, Buyer may terminate
this Agreement or proceed to close this Agreement on the Closing Date, in which
event Seller shall, as Buyer's sole and exclusive remedy for the Casualty Event,
pay or assign to Buyer the proceeds from any insurance policies covering the
Purchased Assets subjects to the Casualty Event to the extent such proceeds are
received by Seller and have
33
not been used in or committed to the restoration or replacement of the Purchased
Assets subject to the Casualty Event as of the Closing Date.
6.11 Transition Agreement. On or prior to the Closing, the parties shall
--------------------
enter into a transition agreement (the "Transition Agreement") substantially in
--------------------
the form of Exhibit D hereto.
---------
6.12 Payment of Sales Taxes and Transfer Taxes, Etc. On or prior to the
-----------------------------------------------
Closing, Seller shall timely file all sales tax returns with respect to sales
occurring in connection with the Business prior to or on the Closing Date (other
than sales or transfers pursuant to this Agreement). All filing fees and sales,
use, transfer, document, recording (real estate or otherwise), gross receipt and
similar taxes, of any nature whatsoever, applicable to or resulting from the
sale and purchase of the Purchased Assets and the Business shall be borne by
Seller.
6.13 Cooperation. Seller shall cooperate with Buyer and identify for
-----------
Buyer all Permits necessary or appropriate to operate the Business from and
after the Closing and will either, where permissible, transfer existing Permits
of Seller to Buyer or, where not permissible, assist Buyer in obtaining new
Permits for Buyer.
6.14 Delivery of Monthly Financial Statements and Inventory Statements.
-----------------------------------------------------------------
Until the Closing Date, the Seller shall furnish (or cause to be furnished), to
Buyer (a) within 25 days after the end of each fiscal month, an unaudited
statement of net assets and income and cash flows statements and an Inventory
statement of the Business for such month and (b) a certificate of Seller's Chief
Financial Officer certifying that such statements are true, correct and complete
in all material respects.
6.15 Indemnification of Brokerage. Seller and Buyer each represent and
----------------------------
warrant to the other that no broker, finder, agent or similar intermediary has
acted on its behalf in connection with this Agreement or the transactions
contemplated hereby, and that there are no brokerage commissions, finders' fees
or similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding. Seller and Buyer each agree to
indemnify the other and save the other harmless from any claim or demand for
commission or other
34
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on its behalf and to bear the cost of the legal
expenses incurred by the other in defending against any such claim.
6.16 Assignment of Assumed Contracts.
-------------------------------
(a) To the extent that any Assumed Contract is not capable of being
transferred or assigned by Seller to Buyer (a "Transfer") without the consent,
--------
approval or waiver of a third party or other entity, or if such Transfer or
attempted Transfer would constitute a breach of such Assumed Contract or a
violation of any law, statute, rule, regulation, ordinance, order, code,
arbitration award, judgment, decree or other legal requirement of any
governmental entity, nothing in this Agreement will constitute a Transfer or an
attempted Transfer thereof.
(b) Seller will use its best efforts, and Buyer will cooperate with Seller
in such efforts, to obtain such consents, approvals and waivers to resolve the
impracticalities of Transfer referred to in Section 6.16(a) and to obtain any
other consents, approvals and waivers necessary to Transfer to Buyer all of such
Assumed Contracts.
(c) To the extent that the consents, approvals and waivers referred to in
Section 6.16(a) are not obtained by Seller, or until the impracticalities of
Transfer referred to therein are resolved, Seller will, during the terms of the
affected Assumed Contract, use its best efforts to (i) cooperate in any
reasonable and lawful arrangement designed to provide such benefits to Buyer,
and (ii) enforce, at the written request of Buyer, for the account of Buyer, any
rights of Seller arising from any such Assumed Contract (including the right to
elect to terminate such Assumed Contract in accordance with the terms thereof,
upon the prior written consent and advice of Buyer).
7. Conditions to Closing.
---------------------
7.1 Conditions Precedent to Obligations of Buyer. The obligation of Buyer
--------------------------------------------
to consummate the purchase under this Agreement is subject to the fulfillment,
prior to or at the Closing, of each of the following conditions (any or all of
which may be waived by Buyer):
35
(a) all representations and warranties of Seller shall be true and correct
in all material respects (except as to those representations and warranties
which by their terms are qualified by some standard of materiality, which
representations and warranties shall be true and correct in all respects) at and
as of the time of the Closing with the same effect as if made at and as of that
time;
(b) Seller shall have performed and complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by Seller prior to or at the Closing;
(c) Buyer shall have been furnished with a certificate (dated the Closing
Date and in form and substance reasonably satisfactory to Buyer) executed by the
Chief Executive Officer of Seller certifying to the fulfillment of the
conditions specified in Sections 7.1(a) and 7.1(b);
(d) Buyer shall have been furnished with an opinion of Xxxxx, Day, Xxxxxx
& Xxxxx, counsel to Seller, substantially in the form of Exhibit E hereto;
---------
(e) the waiting period under the HSR Act, if applicable, shall have
expired or been earlier terminated;
(f) there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction in an action or proceeding against
the consummation of the sale and purchase of the Purchased Assets pursuant to
this Agreement;
(g) Seller shall have delivered to Buyer evidence of its payment, on or
prior to the Closing, of all obligations to The Bank of New York relating to
leased equipment included in the Purchased Assets;
(h) Since the date hereof, there shall not have been any material adverse
change in the Purchased Assets or in the condition (financial or otherwise),
prospects or operations of Seller or the Business and no such change shall have
been threatened;
(i) Seller shall have delivered to Buyer the Pre-Closing Inventory
Statement; and
36
(j) all proceedings to be taken and all documents to be executed and
delivered by Seller in connection with the consummation of the transactions
contemplated hereby, including, without limitation, the documents listed in
Section 8.1, shall be reasonably satisfactory in form and substance to Buyer and
its counsel and shall be delivered to Buyer.
7.2 Conditions Precedent to Obligations of Seller. The obligation of
---------------------------------------------
Seller to consummate the sale under this Agreement is subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by Seller):
(a) all representations and warranties of Buyer shall be true in all
material respects (except as to those representations and warranties which by
their terms are qualified by some standard of materiality, which representations
and warranties shall be true and correct in all respects) at and as of the time
of the Closing with the same effect as though those representations and
warranties had been made at and as of that time;
(b) Buyer shall have performed and complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by it prior to or at the Closing;
(c) Seller shall have been furnished with a certificate (dated the Closing
Date and in form and substance reasonably satisfactory to Seller) executed by
the Chief Operating Officer of Buyer certifying to the fulfillment of the
conditions specified in Sections 7.2(a) and 7.2(b);
(d) Seller shall have been furnished with an opinion of Weil, Gotshal &
Xxxxxx LLP, counsel to Buyer, substantially in the form of Exhibit F hereto;
---------
(e) the waiting period under the HSR Act, if applicable, shall have
expired or been earlier terminated;
(f) there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction in an action or proceeding against
the consummation of the sale and purchase of the Purchased Assets pursuant to
this Agreement;
37
(g) all proceedings to be taken and all documents to be executed and
delivered by Buyer in connection with the consummation of the transactions
contemplated hereby, including, without limitation, the documents listed in
Section 8.2, shall be reasonably satisfactory in form and substance to Seller
and its counsel and shall be delivered to Seller;
(h) Seller shall have obtained any consents, approvals or waivers required
pursuant to that certain Loan and Security Agreement, by and among Congress
Financial Corporation (Southern), as Agent, the Lenders parties thereto, and
Seller (f/k/a The New Xxxx Company), dated as of September 12, 1996, as amended,
for the execution of this Agreement and the consummation of the transactions
contemplated hereby; and
(i) Buyer shall have paid to Seller the portion of the Purchase Price
described in Section 2.4.
8. Documents to Be Delivered at the Closing.
----------------------------------------
8.1 Documents to Be Delivered by Seller. At the Closing, Seller shall
-----------------------------------
deliver, or cause to be delivered, to Buyer the following:
(a) a xxxx of sale and assignment in a form that is mutually acceptable to
Buyer and Seller and certificates of title, dated the Closing Date, transferring
to Buyer the Purchased Assets;
(b) executed limited or special warranty deeds (each of such deeds
substantially in the form of Exhibit G, with such additional changes as are
mutually agreed upon between Buyer and Seller) (collectively, the "Deeds"), in
-----
proper statutory short form for recording, so as to convey to Buyer Seller's
right, title and interest in and to the Real Property;
(c) a copy of the resolutions of the board of directors of Seller
authorizing the execution, delivery and performance of this Agreement and any
agreements, documents or instruments to be delivered pursuant to this Agreement
by Seller, and a certificate of Seller's secretary or assistant secretary, dated
the Closing Date, that such resolutions were duly adopted and are in full force
and effect as certified;
38
(d) the certificate referred to in Section 7.1(c);
(e) the opinion referred to in Section 7.1(d);
(f) the Transition Agreement;
(g) the Human Resources Agreement;
(h) a certificate of the Secretary or Assistant Secretary of Seller
certifying as to the incumbency and signatures of the officers of Seller who
have executed documents delivered at the Closing on behalf of Seller;
(i) a certificate of good standing, dated within 5 days of the Closing
Date, from the Secretary of State of the State of Delaware, establishing that
Seller is in existence and is in good standing to transact business in such
state;
(j) foreign qualification certificates, dated within 5 days of the Closing
Date, of the Secretaries of State of the states in which Seller, with respect to
the Business, is qualified to do business, to the effect that Seller is
qualified to do business and is in good standing as a foreign corporation in
each of such states;
(k) all authorizations, consents, approvals, permits and licenses
referenced on Schedule 4.3, to the extent obtained by the Closing Date;
(l) copies of all owners' title insurance policies insuring Seller; and
(m) such other documents as Buyer may reasonably request.
8.2 Documents to Be Delivered by Buyer. At the Closing, Buyer shall
----------------------------------
deliver to Seller the following:
(a) an executed instrument of assumption, dated the Closing Date, pursuant
to which Buyer shall assume all of the Assumed Liabilities;
(b) a copy of the resolutions of the board of directors of Buyer
authorizing the execution, delivery and performance of this Agreement and any
agreements, documents or instruments to be delivered pursuant to this Agreement
by
39
Buyer, and a certificate of Buyer's secretary or assistant secretary, dated the
Closing Date, that such resolutions were duly adopted and are in full force and
effect as certified;
(c) the certificate referred to in Section 7.2(c);
(d) the opinion referred to in Section 7.2(d);
(e) the Transition Agreement;
(f) copies of all title insurance policies obtained by Buyer with respect
to the Real Property;
(g) the Human Resources Agreement;
(h) a certificate of the Secretary or Assistant Secretary of Buyer
certifying as to the incumbency and signatures of the officers of Buyer who have
executed documents delivered at the Closing on behalf of Buyer;
(i) a certificate of good standing, dated within five (5) days of the
Closing Date, from the Secretary of State of the State of Delaware, establishing
that Buyer is in existence, has paid all franchise taxes that are due and
payable and otherwise is in good standing to transact business in such state;
and
(j) such other documents as Seller may reasonably request.
9. Indemnification and Related Matters.
-----------------------------------
9.1 Indemnification by Seller. Subject to the terms and conditions of
-------------------------
this Article 9, Seller shall indemnify, defend and hold harmless Buyer, its
Affiliates and each of their respective directors, officers, employees agents,
shareholders, partners or other representatives (collectively, "Buyer's
-------
Indemnitees") from and against any and all losses, claims, obligations,
-----------
assessments, penalties, liabilities, costs, damages and reasonable attorneys'
fees and expenses (collectively, "Damages"), asserted against or incurred by
-------
Buyer by reason of or resulting from:
(a) a breach by Seller of any representation, warranty, covenant or
agreement of Seller contained herein;
40
(b) any taxes for which Seller is liable pursuant to Section 6.12;
(c) any violation of, or failure to comply with the fraudulent conveyance
or preferential transfer laws of the United States (including any bulk sales
laws) or any state in connection with the transactions contemplated herein; or
(d) any liability of Seller that is not an Assumed Liability (including,
without limitation, any Excluded Liabilities);
provided, however, that (x) Seller shall not be required to indemnify Buyer's
-------- -------
Indemnitees pursuant to Section 9.1(a) unless and until the amount of all
Damages for which indemnity is sought with respect thereto shall exceed
$100,000, at which point Seller shall be obligated to indemnify Buyer's
Indemnitees only for additional Damages in excess of $100,000, and (y) in no
event shall Seller be liable to Buyer's Indemnitees pursuant to Section 9.1(a)
in an amount in excess of $11,250,000, and further provided that in no event
shall Seller have any indemnity obligation pursuant to this Section 9 with
respect to any claims or demands for Damages with respect to actions, matters or
events that are asserted to have occurred or arisen from, or are attributable or
related to, the Business or the Purchased Assets during any period of time prior
to May 13, 1988.
9.2 Indemnification by Buyer. Subject to the terms and conditions of this
------------------------
Article 9, Buyer shall indemnify, defend and hold harmless Seller, its
Affiliates and each of their respective directors, officers, employees agents,
shareholders, partners or other representatives from and against any and all
Damages asserted against or incurred by Seller by reason of or resulting from:
(a) a breach by Buyer of any representation, warranty, covenant or
agreement of Buyer contained herein or in any agreement, document or instrument
delivered by or binding upon Buyer pursuant to this Agreement;
(b) the failure of Buyer to pay, perform and discharge when due any of the
Assumed Liabilities; or
41
(c) any claims by third parties against Seller relating solely to the
performance by Buyer under the Assumed Contracts from and after the Closing.
9.3 Limitations.
-----------
(a) Notice. All claims made by Buyer or Seller for indemnification from
------
Damages shall be in writing and shall set forth in reasonable detail the
identity and nature of such claim and be made in accordance with the other
procedures set forth in this Article 9.
(b) Time Limits. In no event shall Seller or Buyer be obligated to
-----------
indemnify Buyer or Seller, as the case may be, under Section 9.1 or 9.2,
respectively, if Buyer or Seller first notifies the other party of such breach
after the expiration date of such representation or warranty as set forth in
Section 9.8.
9.4 Conditions of Indemnification. The respective obligations and
-----------------------------
liabilities of any party obligated to provide indemnification under Sections 9.1
and 9.2 (each, an "indemnifying party") to the parties entitled to
------------------
indemnification under Sections 9.1 and 9.2 (each, the "party to be indemnified")
-----------------------
with respect to claims of any person or entity who is not a party to this
Agreement shall be subject to the following terms and conditions:
(a) Within 30 days (or by the date 10 days prior to such earlier date as
might be required to avoid prejudicing the indemnifying party's position) after
receipt of written notice of the assertion of any claim or the commencement of
any action by any person or entity who is not a party to this Agreement
evidenced by service of process or other legal pleading and a written estimate
(if reasonably possible) of the Damages that have been or could be sustained by
the party to be indemnified, the party to be indemnified shall give the
indemnifying party written notice thereof together with a copy of such claim,
process or other legal pleading, and the indemnifying party shall have the right
to undertake the defense thereof by representatives of its own choosing and at
its own expense; provided, that the party to be indemnified may participate in
--------
the defense (subject to the indemnifying party's right to control) with counsel
of its own choice, the fees and expenses of which counsel shall be paid by the
party to be indemnified unless (i) the indemnifying party has agreed to pay such
fees and expenses, (ii) the indemnifying party has failed to assume
42
the defense of such action as specified in Section 9.4(b) below or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnifying party and the party to be indemnified and the party to be
indemnified has been advised by counsel that there may be one or more legal
defenses available to it that are different from or additional to those
available to the indemnifying party, such that the same counsel cannot in good
faith represent both the indemnifying party and the party to be indemnified (in
which case, if the party to be indemnified informs the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of the party to be indemnified, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the party to be indemnified, which
firm shall be designated in writing by the party to be indemnified).
(b) If the indemnifying party has not, by the 30th day after receipt of
notice of any such claim (or the date 10 days prior to such earlier date after
receipt of such notice by which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting such
claim), elected to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying party and at the indemnifying party's expense,
subject to the right of the indemnifying party to assume the defense of such
claims at any time prior to settlement, compromise or final determination
thereof, it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the party to be
indemnified (and one separate firm of local counsel, as necessary), which firm
shall be designated in writing by the party to be indemnified.
43
(c) Notwithstanding the foregoing, the indemnifying party or the party to
be indemnified shall not settle any claim without the consent of the other party
(which consent shall not be unreasonably withheld).
(d) The party to be indemnified and the indemnifying party will each
cooperate with all requests of the other with respect to any matter involving
indemnification under this Section 9.
(e) A notice of facts that are the basis of an indemnification claim under
this Article 9 shall specify in reasonable detail (a) the nature of the claim,
(b) if known, the approximate date of the claim and the amount or an estimate of
the amount of the claim, and (c) the basis upon which the claim for
indemnification is made.
9.5 Treatment of Payment. Buyer and Seller agree to treat any indemnity
--------------------
payment made pursuant to this Agreement as an adjustment to the Purchase Price
for federal, state, local and foreign income tax purposes.
9.6 Insurance Proceeds. To the extent a party to be indemnified has
------------------
received proceeds of insurance with respect to a matter for which it is to be
indemnified hereunder, the indemnification obligation of the indemnifying party
shall be reduced to the extent of the net insurance proceeds received by the
party to be indemnified, unless the insurance company is subrogated to the
rights of the party to be indemnified.
9.7 Remedies. The remedies provided in this Article 9 shall be exclusive
--------
of any other rights or remedies available to one party against the other for the
matters described in Sections 9.1 and 9.2, except with respect to any remedy
based upon actual fraud.
9.8 Survival of Representations, Warranties and Covenants.
-----------------------------------------------------
Notwithstanding any provision in this Agreement or in any agreement, document or
instrument delivered pursuant to this Agreement, the representations, warranties
and covenants of the parties contained herein and in any such agreements,
documents or instruments, shall survive the Closing for a period of one (1) year
except for: (a) representations, warranties and indemnification with respect to
any tax or tax-related matters and representations and warranties by Seller to
Buyer and indemnification by Seller to Buyer for environmental and
44
ERISA or other employment or labor-related matters, including, without
limitation, such matters as are set forth in the Human Resources Agreement, all
of which shall survive the Closing and continue for the full period of any
applicable federal, state, local or foreign statute of limitations, and (b) the
representations and warranties by Seller to Buyer contained in Sections 4.2, 4.3
and 4.13, which shall survive the Closing and continue indefinitely.
10. Miscellaneous.
-------------
10.1 Further Instruments of Transfer. Following the Closing, each of
-------------------------------
Seller and Buyer shall execute such documents and other papers and perform such
further acts as may be reasonably required or desirable to carry out the
provisions set forth herein or in any agreement or instrument delivered pursuant
to this Agreement and the transactions contemplated hereby and thereby.
10.2 Entire Agreement. This Agreement (with its Schedules and Exhibits)
----------------
contains, and is intended as, a complete statement of all of the terms of the
arrangements between the parties with respect to the matters provided for
herein, supersedes any previous agreements and understandings between the
parties with respect to those matters, and cannot be changed or terminated
orally.
10.3 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the substantive laws (but not the rules governing conflicts of
laws) of the State of Georgia.
10.4 Schedules, Table of Contents and Headings. Any matter disclosed on
-----------------------------------------
any Schedule to this Agreement shall be deemed to have been disclosed in all
other Schedules to this Agreement. The table of contents and section headings
of this Agreement are for reference purposes only and are to be given no effect
in the construction or interpretation of this Agreement.
10.5 Notices. All notices and other communications under this Agreement
-------
shall be in writing and shall be deemed given when delivered personally or 3
days after its deposit in the mail, by registered mail, return receipt
requested, to the parties at the following addresses (or to such other address
as a party may have specified by notice given to the other parties pursuant to
this provision):
45
If to Seller:
The Xxxx Company
000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxx
Tel: No.: (000) 000-0000
Fax No.: (000) 000-0000
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
3500 One Peachtree Center
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
If to Buyer:
WestPoint Xxxxxxx Inc.
Xxxx Xxxxx, Xxxxxxx 00000
Attention: M. Xxxxxxx Xxxxxxxxx, Xx., Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
10.6 Separability. If any provision of this Agreement is held to be
------------
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its
46
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
10.7 Waiver. Buyer may waive compliance by Seller, and Seller may waive
------
compliance by Buyer, with any of the provisions of this Agreement. No waiver of
any provision shall be construed as a waiver of any other provision. Any waiver
must be in writing. No waiver by either party of any default or breach by the
other party of any representation, warranty, covenant or condition contained in
this Agreement, any exhibit or any document, instrument or certificate
contemplated hereby shall be deemed to be a waiver of any subsequent default or
breach by such party of the same or any other representation, warranty, covenant
or condition. No act, delay, omission or course of dealing on the part of
either party in exercising any right, power or remedy under this Agreement or at
law or in equity shall operate as a waiver hereof or thereof or otherwise
prejudice any of such party's rights, powers and remedies. All remedies,
whether at law or in equity, shall be cumulative and the election of any one or
more shall not constitute a waiver of the right to pursue other available
remedies.
10.8 Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of the parties and their respective successors and permitted assigns.
No assignment of this Agreement or of any rights or obligations hereunder may be
made by any party (by operation of law or otherwise) without the prior written
consent of the others and any attempted assignment without the required consent
shall be void; provided, however, that Buyer may assign this Agreement to an
-------- -------
affiliate without the prior written consent of Seller, and provided, further,
-------- -------
(i) that no such assignment shall relieve any party hereto of any of its
obligations or liabilities under this Agreement and (ii) that the assignee shall
expressly agree, in writing, to assume all obligations and liabilities of the
assignor under this Agreement.
10.9 Parties in Interest; No Third-Party Beneficiaries. Except as
-------------------------------------------------
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the parties hereto. Except as otherwise provided
47
herein or therein, neither this Agreement nor any other agreement, document or
instrument to be delivered pursuant to this Agreement shall be deemed to confer
upon any person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
10.10 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each binding upon the party signing same, and all of such
counterparts, when taken together, shall constitute one agreement.
48
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the date first above written.
WESTPOINT XXXXXXX INC.
By: /s/ Xxxxxx X. Xxxx
---------------------------
Name: Xxxxxx X. Xxxx
Title: President and Chief
Operating Officer
THE XXXX COMPANY
By: /s/ A. Xxxxxxx Xxx
---------------------------
Name: A. Xxxxxxx Xxx
Title: Vice President and Chief
Financial Officer
49
Annex A
INDEX OF DEFINED TERMS
Page
----
Account Receivable......................................................... 10
Agreement.................................................................. 1
Arbiter.................................................................... 8
Assumed Contracts.......................................................... 2
Assumed Liabilities........................................................ 4
Benefit Plans.............................................................. 16
Business................................................................... 1
Business Employee.......................................................... 17
Buyer...................................................................... 1
Buyer's Indemnitees........................................................ 40
Casualty Event............................................................. 33
CERCLA..................................................................... 26
Closing.................................................................... 9
Closing Date............................................................... 9
Closing Date Inventory..................................................... 8
COBRA...................................................................... 17
Code....................................................................... 7
Damages.................................................................... 40
Deeds...................................................................... 38
Deposit.................................................................... 6
Environmental Costs and Liabilities........................................ 25
Environmental Law.......................................................... 26
Environmental Permit....................................................... 26
ERISA...................................................................... 16
ERISA Affiliate............................................................ 18
Escrow Agent............................................................... 6
Escrow Agreement........................................................... 6
Excluded Assets............................................................ 3
Excluded Liabilities....................................................... 4
Financial Statements....................................................... 27
Fixed Assets............................................................... 2
GAAP....................................................................... 23
Hazardous Material......................................................... 26
Indemnifying party......................................................... 42
Initial Inventory Purchase Price........................................... 7
Inventory.................................................................. 2
Inventory Adjustment....................................................... 8
Liens...................................................................... 4
Multiemployer Plan......................................................... 18
Other Assets............................................................... 3
Party to be indemnified.................................................... 42
Pension Plan............................................................... 18
Permits.................................................................... 14
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Page
----
Permitted Encumbrances................................................ 19
Plant...................................................................... 1
Pre-Closing Inventory Statement............................................ 7
Proprietary Rights......................................................... 22
Purchase Price............................................................. 6
Purchased Assets........................................................... 3
RCRA....................................................................... 26
Real Property.............................................................. 2
Release.................................................................... 26
Seller..................................................................... 1
Substantial Title Defect................................................... 33
Tax........................................................................ 15
Tax return................................................................. 15
Technology................................................................. 2
Termination Date........................................................... 10
Title Company.............................................................. 32
Transfer................................................................... 35
Transition Agreement....................................................... 34
51
