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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
ALADDIN MANUFACTURING CORPORATION
"PURCHASER,"
AND
IMAGE INDUSTRIES, INC.
AND
THE MAXIM GROUP, INC.
"SELLER"
DATED AS OF NOVEMBER 12, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1 PURCHASE AND SALE OF ASSETS....................................................1
1.1 Purchase and Sale of Assets....................................................1
1.2 Excluded Assets................................................................4
ARTICLE 2 ASSUMPTION OF LIABILITIES......................................................5
2.1 Assumption.....................................................................5
2.2 Excluded Liabilities...........................................................5
ARTICLE 3 CALCULATION AND PAYMENT OF PURCHASE PRICE......................................7
3.1 Calculation of Final Purchase Price............................................7
3.2 Determination of Estimated Purchase Price......................................8
3.3 Determination of Final Purchase Price..........................................9
3.4 Reconciliation of Estimated and Final Purchase Price; Other Adjustments.......10
3.5 Payment of Estimated Purchase Price and Purchase Price Adjustment.............11
3.6 Transfer Expenses.............................................................11
3.7 Allocation of Purchase Price..................................................12
ARTICLE 4 PROCEDURE FOR CLOSING.........................................................12
4.1 Time and Place of Closing.....................................................12
4.2 Transactions at the Closing...................................................12
4.3 Conveyance of Title to Real Property..........................................15
4.4 Survey and Inspection of Property.............................................16
4.5 Environmental Liabilities.....................................................17
4.6 Year 2000.....................................................................20
4.7 Certain Consents..............................................................21
4.8 Eminent Domain................................................................21
4.9 Further Assurances............................................................22
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER......................................22
5.1 Organization and Qualification................................................22
5.2 Authority.....................................................................23
5.3 Subsidiaries; Joint Ventures..................................................23
5.4 Financial Statements..........................................................23
5.5 Inventories...................................................................24
5.6 Accounts Receivable...........................................................24
5.7 Personal Property.............................................................25
5.8 Real Property: Leased Real Property...........................................25
5.9 Contracts.....................................................................27
5.10 Intellectual Property.........................................................29
5.11 Insurance.....................................................................30
5.12 Environmental Matters and OSHA................................................30
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5.13 Litigation....................................................................32
5.14 Absence of Changes............................................................32
5.16 Labor Matters.................................................................34
5.17 Governmental Approval and Consents............................................35
5.18 Taxes.........................................................................35
5.19 Employee Benefit Plans........................................................36
5.20 Compliance with Laws..........................................................37
5.21 Governmental Approval and Consents............................................37
5.22 Adequacy of Acquired Assets...................................................38
5.23 Compliance with the Immigration Reform and Control Act........................38
5.24 Correctness of Representations................................................38
5.25 Definition of "knowledge".....................................................38
5.26 Year 2000.....................................................................38
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................39
6.1 Organization and Qualification................................................39
6.2 Authority.....................................................................39
6.3 Litigation....................................................................39
6.4 Correctness of Representations................................................40
6.5 Brokers and Finders...........................................................40
6.6 Governmental Approval and Consents............................................40
ARTICLE 7 COVENANTS OF SELLER...........................................................40
7.1 Conduct of Business Prior to Closing..........................................40
7.2 Access and Information........................................................41
7.3 Notification of Changes.......................................................41
7.4 Certain Acts Prohibited.......................................................42
7.5 Other Transactions............................................................42
7.6 Consents......................................................................42
7.7 Supplemental Disclosure.......................................................42
7.8 Additional Reports............................................................43
7.9 Conditions Precedent..........................................................43
7.10 Environmental Permits.........................................................43
7.11 Capital Expenditures..........................................................43
7.12 Discharge of Liens and Encumbrances...........................................43
7.13 Environmental Fines...........................................................43
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER..............................44
8.1 Certificate Regarding Schedules and Representations and Warranties............44
8.2 Compliance by Seller..........................................................44
8.3 No Injunction; Etc............................................................44
8.4 Operation in the Ordinary Course..............................................44
8.5 Consents; Authorizations; Approval of Legal Matters...........................44
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8.6 Transfer of Environmental Permits.............................................45
8.7 Leases........................................................................45
8.8 Incumbency....................................................................45
8.9 Certified Resolutions.........................................................45
8.10 Basic Corporate Documents.....................................................45
8.11 Satisfaction of Title Objections and Release of Certain Liens.................46
8.12 Accuracy of Schedules.........................................................46
8.13 No Adverse Change.............................................................46
8.14 Instruments of Transfer.......................................................46
8.15 Acquisition Documents.........................................................46
8.16 Opinion of Seller's Counsel...................................................46
8.17 Title Commitments; Surveys....................................................46
8.18 Real and Leased Property Certificates.........................................47
8.19 Proceedings...................................................................47
8.20 Names.........................................................................47
8.21 Condition of Acquired Assets..................................................47
8.22 HSR Act.......................................................................47
8.23 Completion of Environmental Audit.............................................47
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.................................48
9.1 Certificate Regarding Representations and Warranties..........................48
9.2 Compliance by Purchaser.......................................................48
9.3 Certified Resolutions.........................................................48
9.4 Basic Corporate Documents.....................................................48
9.5 No Injunction; Etc............................................................48
9.6 Incumbency....................................................................49
9.7 Certificates..................................................................49
9.8 Acquisition Documents.........................................................49
9.9 Opinion of Purchaser's Counsel................................................49
9.10 Xxxx-Xxxxx-Xxxxxx Act.........................................................49
9.11 Proceedings...................................................................49
ARTICLE 10 MUTUAL COVENANTS..............................................................49
10.1 Governmental Filings..........................................................49
10.2 Further Mutual Covenants......................................................50
10.3 Prorations....................................................................50
ARTICLE 11 POST CLOSING MATTERS..........................................................51
11.1 Employment of Employees.......................................................51
11.2 Seller's Benefit Plans........................................................52
11.3 Vacation Pay..................................................................52
11.4 Purchaser's Benefit Plans.....................................................53
11.5 Employee Files................................................................53
11.6 Non-Solicitation..............................................................53
11.7 Discharge of Business Obligations.............................................53
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11.8 Maintenance of Books and Records..............................................54
11.9 Payments Received.............................................................54
11.10 UCC Matters...................................................................55
11.11 Covenant Not to Compete.......................................................55
11.12 Cooperation...................................................................55
ARTICLE 12 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS.........................................55
12.1 Confidentiality...............................................................55
12.2 Public Announcements..........................................................55
ARTICLE 13 TERMINATION...................................................................56
13.1 Termination...................................................................56
13.2 Effect of Termination; Termination Fee........................................56
ARTICLE 14 INDEMNIFICATION...............................................................57
14.1 Agreement of Seller to Indemnify..............................................57
14.2 Agreement of Purchaser to Indemnify Seller....................................57
14.3 Procedures for Indemnification................................................58
14.4 Defense of Third Party Claims.................................................59
14.5 Settlement of Third Party Claims..............................................60
14.6 Duration......................................................................60
14.7 Limitations...................................................................60
ARTICLE 15 GENERAL PROVISIONS............................................................61
15.1 Arbitration...................................................................61
15.2 Fees and Expenses.............................................................62
15.3 Notices.......................................................................62
15.4 Assignment; Binding Effect....................................................63
15.5 No Benefit to Others..........................................................64
15.6 Headings, Gender, and Person..................................................64
15.7 Counterparts..................................................................64
15.8 Integration of Agreement......................................................64
15.9 Time of Essence...............................................................64
15.10 Governing Law.................................................................64
15.11 Partial Invalidity............................................................64
15.12 Investigation.................................................................64
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TABLE OF EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Seller Opinion
Exhibit C Purchaser Opinion
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SCHEDULES
Schedule 1.2 Additional Excluded Assets
Schedule 4.3(b) Key Facilities
Schedule 5.1.1 Jurisdictions Where Qualified As a Foreign Corporation
Schedule 5.1.2 Locations of the Acquired Assets and Trade Names
Schedule 5.4 Financial Statements
Schedule 5.7.1 Vehicles
Schedule 5.7.2 Equipment
Schedule 5.7.3 Other Personal Property
Schedule 5.7.4 Personal Property Liens
Schedule 5.7.5 Leased Personal Property
Schedule 5.8.1 Real Property
Schedule 5.8.2 Leased Real Property
Schedule 5.9.1 Contracts
Schedule 5.9.2 Commitments for Capital Expenditures
Schedule 5.9.3 Customer List
Schedule 5.10 Intellectual Property
Schedule 5.10A Excluded Intellectual Property
Schedule 5.12.1 Environmental Matters
Schedule 5.12.2 Environmental Permits and Licenses
Schedule 5.12.3 Storage Tanks and Audits
Schedule 5.12.4 Employee Health and Safety Matters
Schedule 5.13 Litigation Matters
Schedule 5.15 Brokers and Finders
Schedule 5.14 Certain Changes
Schedule 5.16 Employees
Schedule 5.17 Permits and Licenses
Schedule 5.18.1 Tax Bills
Schedule 5.18.2 Federal and State Tax Disputes
Schedule 5.19 Employee Benefit Plans
** Certain schedules and exhibits have been omitted from the Asset Purchase
Agreement in accordance with Item 601 of Regulation S-K. The Registrant agrees
to furnish supplementally to the Commission a copy of any omitted schedule or
exhibit upon request.**
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CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
Accounting Arbitrator Section 3.3(c)
Accounts Receivable Section 1.1(l)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 5.2
Acquisition Proposal Section 7.5
Adjustment Date Section 3.4
Agreement Preamble
Arbitration Decision Section 3.3(c)
Assumed Employment Obligations Section 3.1(c)
Assumed Liabilities Section 2.1
Beneficiary Section 10.3(d)
Books and Records Section 1.1(g)
Book Value of the Acquired Assets Section 3.1(a)
Business Recital A
CERCLA Section 4.5(a)
Closing Section 4.1
Closing Balance Sheet Section 3.3(a)
Closing Date Section 4.1
Closing Net Asset Value Section 3.1(d)
Closing Schedule Section 3.3(a)
Company Benefit Plans Section 5.19(a)(ii)
Competing Business Section 11.11
Contract(s) Section 1.1(c)
Determination Materials Section 3.3(b)
EBITDA Adjustment Section 3.1(a)
Effective Time Section 4.1
Employees Section 5.19(a)
Environmental Audit Report(s) Section 4.5(a)
Environmental Consultants Section 4.5(a)
Environmental Laws Section 4.5(a)
Environmental Liabilities Section 4.5(a)
Environmental Permits Section 5.12(a)(i)
Equipment Section 1.1(b)
Equipment Charges Section 10.3(b)(iii)
ERISA Section 5.19(a)(i)
Escrow Amount Section 3.5(a)(ii)
Estimated Net Asset Value Section 3.1(d)
Estimated Purchase Price Section 3.2
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
Final Purchase Price Section 3.1(a)
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Financial Statements Section 5.4
Furniture and Fixtures Section 1.1(i)
GAAP Section 3.1(b)
Goods Contracts Section 5.9(a)(iii)
Hazardous Materials Section 4.5(a)
Hired Employee(s) Section 11.1
HSRA Section 4.5(a)
Identified Environmental Liabilities Section 4.5(a)
Immigration Laws Section 5.22
Indemnification Claim Section 14.3(a)
Indemnitee Section 14.3
Indemnitor Section 14.3
Information Section 12.1
Intellectual Property Section 1.1(f)
Interim Balance Sheet Section 3.1(c)
Inventory Section 1.1(d)
Key Facilities Section 4.3(b)
Knowledge Section 5.24
KPMG Section 3.3
Labor Claims Section 5.16
Leased Real Property Section 1.1(a)
Lender(s) Section 8.22
Losses Article 14
Maximum Amount Section 14.7(a)
Migration Period Section 4.5(c)(ii)
Negotiation Period Section 14.3(c)
Notice Period Section 14.4(a)
Objection Section 3.3(b)
Offsite Migration Section 4.5(c)(ii)
Payor Section 10.3(d)
Payee Section 10.3(d)
Permits Section 1.1(h)
Permitted Encumbrances Section 1.1
Person Section 15.5
Personal Property Taxes Section 10.3(b)(v)
Pollution Control Bonds Section 3.1(c)
Proration Items Section 10.3(a)
Purchaser Preamble
Purchaser Indemnitees Section 14.1
Purchaser Opinion Section 4.2(b)(vi)
Purchaser's Proportionate Share Section 4.5(c)(ii)
RCRA Section 4.5(a)
Real Property Section 1.1(a)
Real Property Leases Section 5.8(b)
Real Property Taxes Section 10.3(b)(iv)
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Recipient Section 10.3(d)
Rental Charges Section 10.3(b)(ii)
Seller Preamble
Seller Indemnitees Section 14.2
Seller Opinion Section 4.2(a)(iv)
Services Contracts Section 5.9(a)(iii)
Suspected Environmental Liabilities Section 4.5(a)
Territory Section 11.11
Threshold Amount Section 14.7(a)
Third Party Claim Section 14.4
Title Commitments Section 8.17
Utility Charges Section 10.3(b)(i)
Vehicles Section 1.1(e)
Y2K Liabilities Section 4.6(a)
Y2K Report Section 4.6(a)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of November 12, 1998, between ALADDIN MANUFACTURING CORPORATION, a
Delaware corporation ("Purchaser") and IMAGE INDUSTRIES, INC., a Delaware
corporation ("Image"), and THE MAXIM GROUP, INC., a Delaware corporation
("Maxim") (Image and Maxim collectively referred to herein as "Seller").
A. Image is engaged in the business of the manufacture, from new and
recycled materials, of polyethlene terephthalate ("PET") flake, pellets and
fiber, and the manufacture of carpet products from such fiber (the "Business).
B. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and Purchaser desires to purchase the Business, its operations, and
substantially all of the assets of Seller used therein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. At the Closing (as hereinafter
defined), on and subject to the terms and conditions of this Agreement, Seller
shall sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser
shall purchase, acquire, and accept from Seller, all of the right, title, and
interest of Seller in and to (i) the Business and all goodwill related
exclusively to the Business, (ii) the names "Image and Image Industries" and all
marks and goodwill associated therewith (whether or not registered), and (iii)
all of the assets, properties, and rights of Seller constituting the Business or
used by Seller therein, of every type and description, tangible and intangible,
in Seller's possession or reasonably accessible to Seller and whether or not
reflected on the books of the Seller (except as may be specifically excluded by
this Agreement), free and clear of all liens, claims, charges, security
interests, and encumbrances of any kind or nature other than Permitted
Encumbrances (as hereinafter defined), including, without limitation, the
following, as the same shall exist at the Closing Date (as hereinafter defined)
and to the extent the same are used exclusively in the Business:
(a) All real property owned by Seller and used in the
Business, and all of Seller's right, title, and interest in the buildings,
fixtures, and improvements located thereon, together with all water lines,
rights of way, uses, licenses, easements, hereditaments, tenements, and
appurtenances belonging or appertaining thereto and any
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and all assignable warranties of third parties with respect thereto (the "Real
Property") and, by assignment of leases, all of Seller's rights in, to, and
under any real estate leases (including, without limitation, any assignment of a
real estate lease or sublease) to which Seller is a party which are used in the
Business, together with all of Seller's right, title, and interest in the
buildings, fixtures and improvements, including construction-in-progress, and
appurtenances thereto, located on the real property subject to such real estate
leases, and any and all assignable warranties of third parties with respect
thereto (the "Leased Real Property");
(b) All machinery, equipment, tools, computers, terminals,
computer equipment, office equipment, business machines, telephones and
telephone systems, parts, accessories, and the like, wherever located, and any
and all assignable warranties of third parties with respect thereto (the
"Equipment");
(c) To the extent permitted by applicable law, all of the
contracts, leases, warranties, commitments, agreements, arrangements, credit
guaranties and purchase and sales orders (including, but not limited to, those
listed on SCHEDULES 5.7.5, 5.8.2, 5.9.1, and 5.10), whether oral or written,
pursuant to which Seller enjoys any right or benefit with respect to the
Business, together with the right to receive income in respect of such
contracts, leases, warranties, commitments, agreements, arrangements, and
purchase and sales orders on and after the Closing Date (individually, a
"Contract" and collectively, the "Contracts");
(d) All raw materials, work-in-progress, finished goods, goods
held for resale, spare parts, waste materials, scrap, samples, promotional
literature, and supplies wherever located (the "Inventory"), together with all
rights of Seller against suppliers of the Inventory including, without
limitation, Seller's rights to receive refunds or rebates in connection with its
purchase of such Inventory;
(e) All motor vehicles, trucks, forklifts, and other rolling
stock and all assignable warranties of third parties related thereto (the
"Vehicles");
(f) All patents, designs, art work, labels, designs,
specifications, designs-in-progress, formulations, know-how, prototypes,
inventions, trademarks, trade names, trade styles, service marks, together with
all goodwill associated therewith, and copyrights; all registrations and
applications therefor, both registered and unregistered, foreign and domestic;
all trade secrets, technology or processes; all computer software (including
documentation and related object and, if applicable, source codes); and all
confidential or proprietary information that are either (i) owned by or
negotiated in the name of Seller or (ii) as to which Seller has rights as
licensee; but excluding such rights or property listed on Schedule 5.10A;
constituting (with such exclusion) all of the intellectual property of Seller
used or contemplated for use by Seller exclusively in the Business (the
"Intellectual Property");
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(g) All existing data, data bases, books, records (except
those records in Seller's corporate offices or at off-site storage facilities
which are duplicates of the books and records of the Business), correspondence,
business plans and projections, records of sales, customer and vendor lists,
files, papers, and, to the extent permitted under applicable law or regulation,
the historical personnel and payroll records of each of the Hired Employees (as
defined in Section 11.1 hereof) in the possession of Seller, including without
limitation, employment applications, corrective action reports, disciplinary
reports, notices of transfer, notices of rate changes, other similar documents,
and any summaries of such documents regularly prepared by Seller; all reported
medical claims made for each Hired Employee; and all manuals and printed
instructions of Seller relating to the Acquired Assets (as hereinafter defined)
and to the operation of the Business (the "Books and Records");
(h) To the extent permitted under applicable law or
regulation, all licenses, franchises, permits, certificates, consents, and other
governmental or quasi-governmental authorizations of Seller (the "Permits");
(i) All furniture, fixtures, and leasehold improvements
wherever located, and any and all assignable warranties covering such furniture,
fixtures, and leasehold improvements owned by Seller or in which Seller has an
interest ("Furniture and Fixtures");
(j) All cash and cash equivalents in transit, on hand and/or
in banks or other financial institutions in an amount equal to the amount set
forth on the Interim Balance Sheet (as herein defined); all prepaid expenses;
all causes of action (except for those causes of action which are not related to
the Acquired Assets), claims, and demands of Seller, including without
limitation, rights to returned or repossessed goods and rights as an unpaid
vendor; all security deposits and utility deposits; and all other assets used in
the Business by Seller wherever located, tangible or intangible, provided,
however, that the Acquired Assets shall not include, and Purchaser shall not
acquire, any right, title, or interest of Seller in or to the Excluded Assets
(as defined in Section 1.2 hereof);
(k) All noncurrent assets of Seller used or held for use in
the Business;
(l) All accounts, notes and other receivables of Seller
arising out of the conduct of the Business (the "Accounts Receivable"); and
(m) All of Seller's right, title and interest in the lockboxes
referenced as Lockbox No. 244 located at First Union National Bank of Georgia,
First Union Service Center, Atlanta.
All of the items described in this Section 1.1 to be purchased by
Purchaser and which are not Excluded Assets as defined in Section 1.2 hereof are
hereinafter collectively referred to as the "Acquired Assets." For purposes of
this Agreement, "Permitted Encumbrances" shall mean (i) liens for taxes not yet
due and payable (other than taxes
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arising out of the transactions contemplated by this Agreement); (ii) such minor
imperfections of title not otherwise waived by Purchaser as set forth on
Schedule B to the final title binders delivered at Closing related to the Real
Property and such encumbrances, if any, that, in the aggregate, do not
materially and adversely detract from the value, or materially and adversely
interfere with the present use of any of the Acquired Assets, including the Real
Property or Leased Real Property; and (iii) other nonmonetary liens, claims, and
nonmonetary encumbrances relating to the Acquired Assets that (A) secure the
Assumed Liabilities (as hereinafter defined) and (B) have been properly
disclosed to Purchaser on an appropriate Schedule to this Agreement.
1.2 Excluded Assets. Seller shall not sell and Purchaser shall not
purchase or acquire and the Acquired Assets shall not include:
(a) Any assets, properties, or rights of Seller not used in
the Business;
(b) The assets of any "employee benefit plan," as defined in
Section 3(3) of ERISA, maintained by Seller for the benefit of the employees of
the Business or to which Seller has made any contribution;
(c) The assets and properties used in the Business which have
been disposed of since the date of this Agreement, provided such disposition has
been made in accordance with the terms hereof;
(d) Seller's corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders, tax returns and records, books of account and ledgers, and such
other records having to do with Seller's organization or stock capitalization;
(e) Any rights which accrue or will accrue to Seller under
this Agreement;
(f) Any rights to any of Seller's insurance policies,
premiums, or proceeds from insurance coverages relating to the Business (except
as provided in Section 8.21 hereof );
(g) Any rights to any of Seller's claims for any federal,
state, local, or foreign tax refund or any federal, state, local or foreign tax
credit earned by Seller prior to closing;
(h) The assets, properties, and rights specifically listed and
described on SCHEDULE 1.2.
The assets described in this Section 1.2 are hereinafter collectively
referred to as the "Excluded Assets".
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ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Assumption. Subject to Section 2.2 hereof, as of the Effective
Time, Purchaser shall assume responsibility for the performance and satisfaction
of the following liabilities (collectively, the "Assumed Liabilities"):
(a) The Balance Sheet Liabilities (as defined in Section
3.1(c)) in the amount and only to the extent reflected on the Closing Balance
Sheet (as defined in Section 3.3(a)); and
(b) All of the executory obligations and liabilities of Seller
arising from and after the Closing Date, pursuant to (i) the terms of the Real
Property Leases identified in SCHEDULE 5.8.2 and (ii) the Contracts identified
in SCHEDULES 5.9.1 and 5.9.2, and those Contracts which by the terms of Section
5.9(a) are not required to be identified on SCHEDULE 5.9.1, but in each case
excluding any obligations or liabilities arising from or relating to any breach
or violation of the Real Property Leases or Contracts by Seller or default under
the Real Property Leases or Contracts by Seller.
2.2 Excluded Liabilities. Purchaser shall not assume or become liable
for any obligations, commitments, or liabilities of Seller, whether known or
unknown, absolute, contingent, or otherwise, and whether or not related to the
Acquired Assets, except for the Assumed Liabilities (the obligations and
liabilities of Seller not assumed by Purchaser are hereinafter referred to as
the "Excluded Liabilities"). Without limiting the generality of the preceding
sentence, the Excluded Liabilities include all obligations and liabilities of
Seller (i) not reflected in or reserved against in the Closing Balance Sheet,
and (ii) not specifically described in subsection Section 2.1(b) hereof,
including without limitation, the following:
(a) All liabilities arising out of any Company Benefit Plan
(as defined in Section 5.19(a)) other than pursuant to the Employment Contract
dated as of the 30th day of July, 1993 by and between Image and H. Xxxx Xxxxxxx,
as amended (the "Xxxxxxx Employment Contract");
(b) Any losses, costs, expenses, damages, claims, demands and
judgments of every kind and nature (including the defenses thereof and
reasonable attorneys' and other professional fees) related to, arising out of,
or in connection with Seller's failure to comply with the Bulk Transfer Act or
any similar statute as enacted in any jurisdiction, domestic or foreign, except
such liability as arises as a result of Purchaser's failure to pay Assumed
Liabilities;
(c) Any liability or obligation arising or accruing under any
Contract or Real Property Lease prior to the Effective Time, and any liability
or obligation arising from or related to any breach or violation by Seller of or
default by Seller under any provision of any Contract or Real Property Lease
prior to the Effective Time;
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(d) Any liability of Seller with respect to any claim or cause
of action, regardless of when made or asserted, which arises (i) out of or in
connection with the operations of the Business by Seller prior to the Effective
Time and which is not specifically listed or described in Section 2.1 hereof, or
(ii) out of or in connection with the operations of the Business prior to the
Effective Time under any federal, state, or local law, rule, or regulation
relating to (A) environmental protection or clean-up, (B) taxation, or (C)
employment or termination of employment;
(e) Any liabilities or obligations of Seller relating to the
Excluded Assets;
(f) Any liabilities or obligations of Seller relating to sales
and use, transfer, documentary, income or other taxes levied on the transfer of
the Acquired Assets;
(g) Except for the Assumed Employment Obligations, any
liability or obligation (including, without limitation, salaries, bonus,
vacation pay, sick pay, holiday pay, severance pay and other like obligations or
payments), arising prior to or as a result of the Closing, to any present or
former employee, agent, or independent contractor of Seller, whether or not
employed or retained by Purchaser after the Closing;
(h) All Environmental Liabilities (as hereinafter defined);
(i) Any liability or obligation of Seller arising or incurred
in connection with the negotiation, preparation and execution of this Agreement
and the consummation of the transactions contemplated hereby, including without
limitation, fees and expenses of its counsel, accountants, and other experts;
(j) Any liability or obligation of Seller for all federal,
state or local income, excise, franchise and capital stock taxes, charges, fees,
levies or other assessments measured on the basis of net income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding, payroll,
employment, social security, unemployment, severance, property or other taxes,
duties, fees, assessments or charges of any kind whatsoever, including any
interest, penalties, or additional amounts attributable thereto imposed by any
federal, state, local or foreign governmental authority and payable by Seller or
any member of any affiliated group or any combined or consolidated group on
account of the Business, for all periods through and including the period ending
at the Effective Time, including, without limitation, income arising as a result
of the transactions contemplated herein. For the period that ends at the
Effective Time, the taxable income attributable to such period shall be
determined based on a full closing of the books of the Business in a manner
sufficient to support for tax purposes the allocation to such period of each
item of income and expense accrued on the books in each jurisdiction in which
the Business operates;
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(k) The amount of all issued and outstanding checks as of the
Closing Date in excess of $3,470,000;
(l) Any liability of Seller for any actual or alleged breach
of, or noncompliance with, any federal, state, or local law, rule, regulation,
order or decree applicable to any Contract, Real Property Lease, or otherwise
applicable to the Seller prior to the Effective Time;
(m) All indebtedness of Seller (other than the Balance Sheet
Liabilities), whether secured or unsecured, due or to become due, including, but
not limited to, capitalized leases (other than those listed on SCHEDULES 5.7.5
and 5.8.2), intercompany indebtedness, and senior notes; and
(n) Any liability set forth on SCHEDULE 2.2(N).
ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 Calculation of Final Purchase Price.
(a) The aggregate consideration to be paid to the Seller for
the sale, transfer, and conveyance of the Acquired Assets and the covenant not
to compete set forth in Section 11.11 hereof (the "Final Purchase Price") shall
be an amount equal to Two Hundred Ten Million Dollars ($210,000,000) (of which
$30,000,000 shall be attributable to Purchaser's assumption of the Pollution
Control Bonds, as defined in Section 3.1(c) hereof), assuming (i) that the
Closing Net Asset Value is equal to or greater than One Hundred Seventy-Four
Million One Hundred Ninety Thousand Dollars ($174,190,000) and (ii) the adjusted
EBITDA for the Business for the trailing twelve-month period ended on July 31,
1998 is equal to or greater than Thirty-Two Million Eight Hundred Sixteen
Thousand Dollars ($32,816,000). If the Closing Net Asset Value is less than One
Hundred Seventy-Four Million One Hundred Ninety Thousand Dollars ($174,190,000),
then the difference shall constitute a dollar-for-dollar reduction in the Final
Purchase Price. In the event that the adjusted EBITDA for the Business for the
trailing twelve-month period ended on July 31, 1998 is less than Thirty-Two
Million Eight Hundred Sixteen Thousand Dollars ($32,816,000), then the Final
Purchase Price shall be reduced by an amount equal to six times the difference
thereof (the "EBITDA Adjustment"). In no event shall the Final Purchase Price
exceed Two Hundred Ten Million Dollars ($210,000,000) (of which $30,000,000
shall be attributable to Purchaser's assumption of the Pollution Control Bonds).
(b) As used herein: (i) the term "Book Value of the Acquired
Assets" means the book value of the Acquired Assets determined in accordance
with generally accepted accounting principles ("GAAP") consistently applied,
except that, with respect to Inventory, Inventory shall be valued at the lower
of cost (reduced by the effects of any applicable manufacturers' rebates
previously available to Seller) or net realizable market value and adjusted to
reflect reserves for mill ends, short rolls, obsolete, damaged,
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discontinued and slow moving Inventory in accordance with GAAP consistently
applied; and (ii) the term "adjusted EBITDA" means the amount determined for the
trailing twelve month period ended July 31, 1998 by adding to Earnings Before
Interest and Taxes (EBIT) for such period, as determined in accordance with
GAAP, the following: (1) depreciation, as determined in accordance with GAAP;
(2) the amount of intercompany corporate charges for such period from Maxim to
Image for sales and marketing expense; (3) the amount of intercompany corporate
charges for such period from Maxim to Image for administrative expense; and (4)
the sum of $500,000.
(c) As used herein, the term "Balance Sheet Liabilities" means
the amount of (i) trade accounts payable of the Seller (including the liability
for payment of outstanding checks up to $3,470,000) to the extent reflected on
the Closing Balance Sheet; (ii) the accrued (earned but not paid) salaries,
wages, holiday pay, sick pay and vacation pay for the fiscal year in which the
Closing Date occurs, with respect to the Hired Employees in the amount and to
the extent reflected on the Closing Balance Sheet (the "Assumed Employment
Obligations"), but excluding (A) any performance bonuses payable to the Hired
Employees or (B) any severance pay obligations of Seller to the Hired Employees,
other than pursuant to the Xxxxxxx Employment Contract, resulting from Seller's
consummation of the transactions contemplated by this Agreement, (iii) all
obligations of Image in connection with the $30,000,000 Development Authority of
the City of Summerville, Georgia Exempt Facility Revenue Bonds (Image
Industries, Inc. Project), Series 1997 (the "Pollution Control Bonds"), and (iv)
all current liabilities of the Seller other than the Excluded Liabilities, but
only to the extent such liabilities are reflected on the Closing Balance Sheet.
The liabilities described in subsections (i) and (iv) of this Section 3.1(c)
shall be limited to the types of liabilities included in the line items
substantially of the same name in the unaudited balance sheet of the Business as
of the end of fiscal July, 1998, furnished to Purchaser (the "Interim Balance
Sheet") and shall be determined in accordance with and based upon Seller's
historical practices and methods, provided that if such practices and methods
deviate from GAAP, Balance Sheet Liabilities shall be determined in accordance
with GAAP. All amounts of the type described in clause (ii) of this Section
3.1(c) that are payable with respect to any period ending on or prior to the
Closing Date or that are required by GAAP to be accrued on the financial
statements of the Seller as of the Closing Date, shall be fully reflected and
accrued on the Closing Balance Sheet. Balance Sheet Liabilities shall not
include any Excluded Liabilities.
(d) As used herein, the term "Closing Net Asset Value" means
the Book Value of the Acquired Assets, as of the Effective Time, less the
Balance Sheet Liabilities other than the $30,000,000 amount attributable to the
Pollution Control Bonds, as of the Effective Time, and the term "Estimated Net
Asset Value" means the unaudited net asset value determined in accordance with
Section 3.2 hereof.
3.2 Determination of Estimated Purchase Price. Not later than ten (10)
days prior to the Closing Date, the Seller shall furnish to Purchaser its
calculation of the "Estimated Purchase Price." The "Estimated Purchase Price"
shall be determined by
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computing the Estimated Net Asset Value based upon (i) the unaudited Book Value
of the Acquired Assets as of the previous month's end, plus or minus any known
adjustments agreed to by Purchaser, minus (ii) the unaudited Balance Sheet
Liabilities other than the $30,000,000 amount attributable to the Pollution
Control Bonds, as of the previous month's end, plus or minus any known
adjustments agreed to by Purchaser; provided, however, that solely for purposes
of this Section 3.2, all references in the definition of Balance Sheet
Liabilities to amounts reflected on the Closing Balance Sheet shall be deemed to
mean amounts as of the previous month's end. The Estimated Purchase Price shall
be an amount equal to Two Hundred Ten Million Dollars ($210,000,000) (of which
$30,000,000 shall be attributable to Purchaser's assumption of the Pollution
Control Bonds), assuming that the Estimated Net Asset Value is equal to or
greater than One Hundred Seventy-Four Million One Hundred Ninety Thousand
Dollars ($174,190,000). If the Estimated Net Asset Value is less than One
Hundred Seventy-Four Million One Hundred Ninety Thousand Dollars ($174,190,000),
then the difference shall constitute a dollar-for-dollar reduction in the
Estimated Purchase Price. In no event shall the Estimated Purchase Price exceed
Two Hundred Ten Million Dollars ($210,000,000) (of which $30,000,000 shall be
attributable to Purchaser's assumption of the Pollution Control Bonds). Such
calculation shall be accompanied by a written analysis, supported by
documentation which shall be attached to such written analysis, of the adequacy
of the reserves for doubtful accounts and the reserves for inventory valuation
used in the determination of Book Value, which is used in the calculation of the
Estimated Purchase Price. The Estimated Purchase Price shall be determined from
the books and records of the Seller; provided, however, that the Book Value of
the Acquired Assets shall be determined in accordance with Section 3.1(b) hereof
and the Balance Sheet Liabilities shall be determined in accordance with Section
3.1(c).
3.3 Determination of Final Purchase Price.
(a) Not later than ninety (90) days following the Closing
Date, Purchaser shall furnish to the Seller (i) audited statements of the Book
Value of the Acquired Assets and Balance Sheet Liabilities, as of the Effective
Time (the "Closing Balance Sheet"), prepared by Purchaser and reported upon by
KPMG Peat Marwick LLP ("KPMG") and (ii) a calculation of Final Purchase Price
and Closing Net Asset Value, respectively, in accordance with the respective
formulas therefor set forth in Section 3.1(a) and Section 3.1(d), based on the
data contained in such Closing Balance Sheet. The fees and expenses of KPMG in
carrying out the work called for by this Section 3.3 shall be borne by
Purchaser. The Closing Balance Sheet shall (i) be prepared in accordance with
the books and records of Seller, (ii) be prepared in accordance with GAAP,
applied consistently with the accounting principles used to prepare annual
financial statements of Seller without regard to accounting practices that
normally may be followed at interim dates; provided that the Book Value of the
Acquired Assets shall be determined in accordance with Section 3.1(b) hereof and
the Balance Sheet Liabilities shall be determined in accordance with Section
3.1(c), and (iii) reflect adequate reserves for all known liabilities and
reasonably anticipated losses to the extent required by GAAP that (A) affect or
are related to the Acquired Assets or the Assumed Liabilities, and (B) are
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determined in accordance with and based upon Seller's historical calculations of
reserves for liabilities and losses so long as the same are not inconsistent
with GAAP, provided that if any of the foregoing deviate from GAAP, then such
reserves shall be determined in accordance with GAAP. The Closing Balance Sheet
shall be accompanied by a schedule showing the difference, if any, between the
Estimated Purchase Price and the Final Purchase Price, as determined from the
Closing Balance Sheet and the amount of the EBITDA Adjustment, if any (the
"Closing Schedule").
(b) Representatives of the Seller shall receive not less than
five (5) business days' advance notice thereof and shall have the right to be
present when Purchaser and its representatives conduct a physical inventory of
the Inventory. Purchaser and the Seller shall each provide access to the other
to the books and records which are under their respective control or custody
which are necessary to prepare the Closing Balance Sheet and will cause their
respective accountants to provide access to work papers.
(c) The Seller shall have thirty (30) days from the date of
its receipt of the Closing Balance Sheet and the Closing Schedule to review the
Closing Balance Sheet and the Closing Schedule and to agree or disagree as to
the Final Purchase Price reflected thereon. If the Seller does not agree with
the Final Purchase Price reflected on the Closing Balance Sheet or the Closing
Schedule, then the Seller shall, within such thirty (30) day period, deliver a
written objection to Purchaser which shall specify in reasonable detail the
basis for the objection on a line item basis, and a computation of the Final
Purchase Price asserted by the Seller (collectively, the "Objection"). Upon
Purchaser's receipt of such Objection, Purchaser and the Seller shall negotiate
in good faith to resolve the Objection, but if the Objection cannot be resolved
by negotiation between the parties within thirty (30) days after Purchaser's
receipt of the Objection, Purchaser shall cause the Closing Balance Sheet, the
Closing Schedule, the Objection, and all work papers related thereto
(collectively, the "Determination Materials"), to be submitted to Deloitte &
Touche, LLP (the "Accounting Arbitrator"), which shall review the Determination
Materials and determine on a line item basis which of the positions asserted,
either that asserted by Purchaser in the Closing Balance Sheet and Closing
Schedule or that asserted by the Seller in the Objection, is the more correct
per line item, and notify the parties in writing of its determination based upon
the net amount of all line items disputed within thirty (30) days following the
receipt of the Determination Materials, which determination shall be final and
conclusive (the "Arbitration Decision").
(d) The fees and expenses of the Accounting Arbitrator shall
be shared by Seller and Purchaser in inverse proportion to the amount in dispute
for which each of the parties is successful.
3.4 Reconciliation of Estimated and Final Purchase Price; Other
Adjustments.
(a) If the Final Purchase Price (as determined in Section 3.3
hereof) is greater than the Estimated Purchase Price (as determined in Section
3.2 hereof), Purchaser
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shall pay the difference between such amounts to Seller and the Escrow Amount
shall be released to Seller. If the Final Purchase Price is less than the
Estimated Purchase Price, Seller shall pay the difference between such amounts
to Purchaser. Any payment required to be made by Seller to Purchaser shall first
be funded from the Escrow Amount pursuant to the terms of the escrow agreement
contemplated by subsection 3.5(a)(ii) below.
(b) If the amount of bank overdrafts on the Closing Date
exceeds $3,470,000, then Seller shall pay the amount of the excess to Purchaser.
Any such payment shall first be funded from the Escrow Amount pursuant to the
terms of the escrow agreement contemplated by subsection 3.5(a)(ii) below.
(c) The payments required by this subsection shall be made by
wire transfer in immediately available funds to an account designated in writing
by the recipient within ten (10) days after the earlier to occur of (i) the date
Purchaser and Seller agree as to the Final Purchase Price or (ii) the Accounting
Arbitrator notifies Purchaser and Seller of its determination of the Final
Purchase Price according to the provisions of Section 3.3 hereof (the
"Adjustment Date").
3.5 Payment of Estimated Purchase Price and Final Purchase Price
Adjustment. Subject to the fulfillment of the conditions set forth herein:
(a) on the Closing Date, Purchaser shall pay or deliver to
Seller (i) an amount equal to the Estimated Purchase Price reduced by (A) the
$30,000,000 amount attributable to Purchaser's assumption of the Pollution
Control Bonds, and (B) Five Million Dollars ($5,000,000) by wire transfer in
immediately available funds to an account designated in writing by Seller and
(ii) the balance of the Estimated Purchase Price net of the $30,000,000 amount
attributable to Purchaser's assumption of the Pollution Control Bonds (being an
amount equal to Five Million Dollars ($5,000,000)) into escrow (the "Escrow
Amount"), pending the final determination of the Final Purchase Price, pursuant
to the terms of an escrow agreement in substantially the form of Exhibit A
hereto. A Federal Reserve Reference Number shall be requested by Purchaser at
the time of the transfer for the purpose of assisting Seller in confirming
receipt of the transfer; and
(b) on the Adjustment Date (as defined in Section 3.4 hereof),
Purchaser shall pay Seller or Seller shall pay Purchaser, as the case may be and
as provided in Section 3.4(a), such amount resulting from the adjustments
provided for in Section 3.4 hereof to reach the Final Purchase Price, by wire
transfer in immediately available funds to an account designated in writing by
Seller or Purchaser, as the case may be.
3.6 Transfer Expenses. Seller shall pay any sales and use, transfer,
documentary, or other taxes levied on the transfer of the Acquired Assets. All
Inventory shall be claimed as exempt from sales or use tax by Purchaser and
Purchaser shall furnish Seller at Closing with appropriate sales tax exemption
certificates as reasonably requested
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by Seller for the Inventory. Seller shall timely report and remit any such taxes
to the appropriate revenue authorities.
3.7 Allocation of Purchase Price. The consideration paid for the
covenant not to compete set forth in Section 11.11 hereof, the assumption of the
Assumed Liabilities that are taken into account in determining the amount
realized for tax purposes, and for the Acquired Assets (which shall equal the
Final Purchase Price) shall be allocated among the Acquired Assets in accordance
with the provisions contained in Treasury Regulation Section 1.1060-1T(d). The
parties agree to be bound by such allocation and to report the transaction
contemplated herein for federal income tax purposes in accordance with such
allocation; provided, however, that if adjustments are made to the Estimated
Purchase Price in calculating the Final Purchase Price, then corresponding
adjustments shall be made to the allocation. In furtherance of the foregoing,
the parties hereto agree to execute and deliver Internal Revenue Service Form
8594 reflecting such allocation.
ARTICLE 4
PROCEDURE FOR CLOSING
4.1 Time and Place of Closing. The closing for the purchase and sale
contemplated by this Agreement (the "Closing") shall be held at the offices of
Xxxxxx & Bird LLP, One Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000, commencing at 9:00 A.M., Eastern Standard Time, on such date as
the parties hereto may agree in writing (the date on which the Closing actually
occurs is hereinafter referred to as the "Closing Date"). Subject to the
consummation of the Closing on the Closing Date, the sale, assignment, transfer,
and conveyance to Purchaser of the Acquired Assets will be effective as of 12:01
AM Eastern Standard Time on the Closing Date (the "Effective Time").
4.2 Transactions at the Closing. At the Closing, each of the following
items shall be delivered:
(a) Seller shall deliver to Purchaser the following:
(i) such bills of sale, motor vehicle titles,
warranty deeds, quitclaim deeds, assignments, endorsements, and other good and
sufficient instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as shall be necessary and
effective to transfer and assign to, vest in, and purchase all of Seller's
right, title, and interests in and to the Acquired Assets, including without
limitation, valid title in and to all of the Acquired Assets owned by Seller, in
each case free and clear of all liens (subject only to Permitted Encumbrances),
and all of Seller's right, title and interest in and to all of the Acquired
Assets leased by Seller as lessee, and all of Seller's rights under all
Contracts;
(ii) a certificate of Seller with respect to the
matters described in Sections 8.1, 8.2, 8.5, 8.6, 8.13, and 8.21 hereof;
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(iii) a certificate of the Secretary or Assistant
Secretary of Seller with respect to the matters
described in Sections 8.8, 8.9 and 8.10 hereof;
(iv) the opinion of Xxxxx, Xxxxxxxx & Xxxxxxx LLP,
counsel to Seller, in substantially the form
of Exhibit B hereto (the "Seller Opinion");
(v) copies of the consents and waivers described in
Section 8.5 hereof;
(vi) satisfactory evidence of the approvals described
in Section 8.5 hereof;
(vii) certificates of existence of each of Maxim and
Image, as of a date within twenty (20) days prior to the Closing Date, from the
State of Delaware;
(viii) the Agreements of Estoppel, Consent and Waiver
and the Landlords' Consent to Lease Assignment described in Section 8.18 hereof;
(ix) affidavit(s) of title stating that (a) there are
no parties in possession of any of the Real Property or Leased Real Property
other than Seller (or otherwise specifically setting forth any such other
parties' rights and the source and extent of such parties' rights), and (b)
Seller has not caused any work to be performed on any of the Real Property or
Leased Real Property within one hundred (100) days of the date of such
affidavit(s), or if Seller has caused any such work to be performed within one
hundred (100) days of such date(s) that all such work has been completed and
fully paid for (with respect to work in progress, to and through a date
reasonably proximate to the Closing Date), and such other documentation as
Purchaser's title insurance company may reasonably request in order to permit
Purchaser's title insurance policy to be issued without exceptions as to matters
arising in the "gap", mechanic's or materialman's liens, third parties in
possession (other than specifically enumerated third parties as set forth above
that are reasonably acceptable to Purchaser pursuant to the terms of this
Agreement), and rights or claims of real estate brokers;
(x) a 1099 certificate to the extent applicable;
(xi) a duly executed certificate stating that each of
Image and Maxim is a Georgia resident, or that each of Image and Maxim is
otherwise exempt from withholding under O.C.G.A. ss.48-7-128, as applicable;
(xii) a duly executed certificate stating that Seller
is not a "foreign person" for United States income tax purposes, in accordance
with Section 1445 and Section 897 of the Internal Revenue Code of 1986, as
amended;
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(xiii) originals (to the extent possessed by Seller,
and in the absence of such originals, complete copies) of the Real Property
Leases; and
(xiv) such other evidence of the performance of all
covenants and the satisfaction of all conditions required of Seller by this
Agreement at or prior to the Closing Date as Purchaser or its counsel may
reasonably require.
The documents and certificates to be delivered hereunder by or on
behalf of Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Purchaser shall deliver to Seller the following:
(i) wire transfers in aggregate amount equal to the
Estimated Purchase Price less the Escrow Amount in immediately available funds
to accounts designated by Seller, as more specifically set forth in Section
3.5(a) hereof;
(ii) an instrument or instruments of assumption of
the Assumed Liabilities, duly executed by Purchaser, and reasonably satisfactory
in form and substance to Seller and its counsel;
(iii) a certificate of Purchaser with respect to the
matters described in Sections 9.1 and 9.2;
(iv) a certificate of the Secretary or Assistant
Secretary of Purchaser with respect to the matters described in Sections 9.3,
9.4 and 9.6 hereof;
(v) the opinion of Xxxxxx & Bird LLP, counsel to
Purchaser, in substantially the form of Exhibit C hereto (the "Purchaser
Opinion");
(vi) certificates of existence or certificates of
good standing of Purchaser, as of a date within twenty (20) days prior to the
Closing Date, from the State of Delaware; and
(vii) such other evidence of the performance of all
covenants and satisfaction of all of the conditions required of Purchaser by
this Agreement, at or before the Closing Date, as Seller or its counsel may
reasonably require.
The documents and certificates to be delivered hereunder by or on
behalf of the Purchaser on the Closing Date shall be in form and substance
reasonably satisfactory to the Seller and its counsel.
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4.3 Conveyance of Title to Real Property.
(a) Seller shall convey title to the Real Property to
Purchaser by limited or "special" warranty deed in a form customarily used in
the locality in which the Real Property is located, subject, however, to
Permitted Encumbrances. Each such deed shall be executed in accordance with the
requirements of the laws of the state in which such Real Property is located and
shall be in such form as will permit the deed to be recorded. Seller shall
transfer and assign to Purchaser its rights under the Real Property Leases (and
its rights in and to all deposits thereunder and all buildings, other
structures, and improvements permitted to be retained or removed by the lessee
thereunder) by transfer and assignment in form reasonably acceptable to
Purchaser and its counsel. Regardless of whether Purchaser objects to the same
as provided hereinbelow, the Real Property and the Leased Real Property shall
not be subject to (i) any mortgage, deed of trust, security deed, security
agreement, judgment, lien or claim of lien, or any other title exception or
defect created, caused, suffered or incurred by Seller that is monetary in
nature, Seller hereby agreeing to pay and satisfy of record any such monetary
title defects or encumbrances prior to or at Closing at Seller's expense, or
(ii) any leases, rental agreements or other rights of occupancy of any kind
(other than the Real Property Leases), whether oral or written, except as
disclosed to and accepted by Purchaser as provided elsewhere herein.
(b) Prior to the Closing Date, Purchaser shall have examined
the title and, at Purchaser's option, the survey to each parcel of Real Property
and Leased Real Property and notified Seller in writing of any objections to,
defects in or encumbrances upon Seller's title to or interest in such Real
Property or Leased Real Property other than Permitted Encumbrances. Seller shall
use its reasonable good faith efforts to satisfy those title defects and
encumbrances of which Purchaser has notified Seller prior to the Closing Date,
provided that Seller shall not be obligated to expend more than $10,000 per
identified defect or encumbrance and $100,000 in the aggregate per property, to
satisfy such defects and encumbrances. If Seller satisfies all such title
defects and encumbrances, then the transaction contemplated hereby shall be
closed in accordance with the terms and conditions set forth herein. If Seller
does not satisfy all such title defects and encumbrances prior to the Closing
Date, then Purchaser shall elect either: (i) not to close the transaction
contemplated hereby, if any of such title defects or encumbrances could
reasonably be expected to have a material adverse effect on the conduct of the
Business at any of the Real Property set forth in Schedule 4.3(b) (the "Key
Facilities"), in which event all parties shall be released from any further
obligations or liability, except as expressly set forth in Article 13 or
otherwise; (ii) to close the transaction contemplated hereby without regard to
such unsatisfied defects and encumbrances, in which event the transaction
contemplated hereby shall be closed in accordance with its terms, without a
reduction in Final Purchase Price, and all such unsatisfied title defects and
encumbrances shall be exceptions to Seller's warranty of title; or (iii) to
close the transaction contemplated hereby, excluding, however, the portion of
the Real Property or Leased Real Property having such title defects and
encumbrances with a corresponding reduction in the Final Purchase Price
applicable to such Real Property or Leased Real Property so excluded.
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(c) In the event Purchaser does not notify Seller of any such
unacceptable defects in or encumbrances upon Seller's title to such Real
Property, as provided in Section 4.3(b) hereof, Purchaser shall be deemed to be
satisfied with Seller's title to such Real Property and to have elected to close
pursuant to clause (ii) of Section 4.3(b) hereof.
(d) Seller shall not transfer, assign, sublease or encumber
the Real Property or Leased Real Property or any part thereof from the date
hereof until the first to occur of the Closing Date or the termination of this
Agreement pursuant to Article 13 hereof, except for Permitted Encumbrances.
Notwithstanding anything in Section 4.3(b) hereof to the contrary, Purchaser
shall have the right to object to any title matters which come into existence
after the date of Purchaser's title examination but prior to Closing.
4.4 Survey and Inspection of Property.
(a) Purchaser and Purchaser's agents, employees and
independent contractors shall have the right and privilege to enter upon the
Real Property and the Leased Real Property, during normal working hours and upon
the giving to Seller of reasonable advance notice, prior to the Closing Date to
inspect the Real Property and the Leased Real Property and to conduct soil
borings and other environmental, geological, engineering, percolation,
hydrologic, feasibility, or landscaping tests or studies, all at Purchaser's
sole cost and expense, provided such testing does not unreasonably interfere
with the operation of the Business at that location. Purchaser indemnifies
Seller from and against any liability arising out of the acts of Purchaser or
Purchaser's agents in connection with such entry or testing by Purchaser or
Purchaser's agents under this subsection; provided, however, that in no event
shall this indemnity include or cover the fact of detection (without more) of
environmental conditions or contamination in connection with such entry or
testing.
(b) Each parcel of Real Property shall be described in the
deed conveying such parcel and other closing documents by the metes and bounds
description of such parcel set forth in the deed vesting title to such parcel in
Seller, as said metes and bounds descriptions may be modified by mutual
agreement of the parties acting in good faith with respect thereto, provided,
however, in the event Purchaser or Seller causes a new survey of a parcel of
Real Property to be made by a land surveyor registered or licensed in the state
in which such Real Property is located, and the resulting plat of survey
accurately depicts the boundaries of such Real Property and those
characteristics of such Real Property that would be revealed by a careful
inspection of such Real Property and is otherwise reasonably acceptable to
Seller, then reference shall be made to such new plat in the description of such
Real Property in a quitclaim deed to be delivered to Purchaser in addition to
the limited or "special" warranty deed relating to such Real Property.
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4.5 Environmental Liabilities.
(a) Purchaser shall, at its cost and expense, and using
environmental consultants selected by Purchaser (the "Environmental
Consultants"), obtain Phase I, and as determined necessary by Purchaser, Phase
II, environmental audit reports on each of the parcels of Real Property and
Leased Real Property (individually an "Environmental Audit Report" and
collectively, the "Environmental Audit Reports"). Each Environmental Audit
Report shall include a statement of all environmental liabilities, conditions
and instances of non-compliance, if any, identified by the Environmental
Consultants that involve dumping, storage, use, release, discharge, disposal,
spillage, migration, leakage, burial or placement of any Hazardous Materials (as
that term is defined below) at, on, from, near or under the Real Property or
Leased Real Property to which such Environmental Audit Report relates (the
"Identified Environmental Liabilities") and an estimate of the cost of any
recommended removal, remediation, compliance and/or clean up action with respect
to the Identified Environmental Liabilities (the "Environmental Remediation
Estimate"). As used in this Agreement:
(i) "Environmental Liabilities" means the Identified
Environmental Liabilities;
(ii) "Environmental Law" or "Environmental Laws"
shall mean any and all statutes, codes, laws (including, without limitation,
common law), ordinances, agency rules, regulations, and guidance, and reporting
or licensing requirements relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata), including, without limitation (i) the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
ss.ss.9601 et seq. ("CERCLA"); (ii) the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.ss.6901 et
seq., ("RCRA"); (iii) the Emergency Planning and Community Right to Know Act (42
U.S.C. ss.ss.11001 et seq.); (iv) the Clean Air Act (42 U.S.C. xx.xx. 7401 et
seq.); (v) the Clean Water Act (33 U.S.C. I 1251 et seq.); (vi) the Toxic
Substances Control Act (15 U.S.C. I 2601 et seq.); (vii) the Hazardous Materials
Transportation Act (49 U.S.C. xx.xx. 5101 et seq.); (viii) the Safe Drinking
Water Act (41 U.S.C. I 300f et seq.); (ix) any state, county, municipal or local
statues, laws or ordinances similar or analogous to the federal statutes listed
in parts (i) - (viii) of this subparagraph, including, but not limited to, the
Georgia Solid Waste Management Act, O.C.G.A. ss.ss.13-8-20 et seq., the Georgia
Hazardous Waste Management Act, O.C.G.A. ss.ss.12-8-60 et seq., and the Georgia
Hazardous Site Response Act, O.C.G.A. ss.ss.12-8-90 et seq. ("HSRA"), (x) any
amendments to the statutes, laws or ordinances listed in parts (i) - (ix) of
this subparagraph in effect as of the date of this Agreement, (xi) any rules,
regulations, guidelines, directives, orders or the like adopted pursuant to or
implementing the statutes, laws, ordinances and amendments listed in parts (i) -
(x) of this subparagraph; and (xii) any other law, statute, ordinance,
amendment, rule, regulation, guideline, directive, order or the like in effect
as of the date of this Agreement relating to environmental protection.
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(iii) "Hazardous Material" or "Hazardous Materials"
shall mean any and all chemicals, substances, wastes, materials, pollutants,
contaminants, equipment or fixtures defined as or deemed hazardous or toxic or
otherwise regulated under any Environmental Law, including, without limitation,
RCRA hazardous wastes, CERCLA hazardous substances, HSRA regulated substances,
pesticides and other agricultural chemicals, oil and petroleum products or
byproducts and any constituents thereof, asbestos containing materials, and
polychlorinated biphenyls (PCBs).
(b) (i) As soon as practical following the date hereof,
to the extent requested in writing by Purchaser, Seller shall, for each parcel
of Real Property or Leased Real Property, begin removal, remedial, compliance,
and/or clean up action with respect to all Identified Environmental Liabilities
disclosed in the Environmental Audit Reports utilizing the services of such
independent professional and qualified environmental consulting firm of
recognized standing as Purchaser determines and that is reasonably acceptable to
Seller. The cost and expense of any action described in the preceding sentence
shall be paid by Purchaser, to the extent such costs and expenses do not exceed
One Million Dollars ($1,000,000); provided, however, that the Purchaser shall
not be liable for any aggregate costs or expenses with respect to Identified
Environmental Liabilities and Y2K Liabilities in excess of One Million Five
Hundred Thousand Dollars ($1,500,000). Aggregate costs and expenses with respect
to Identified Environmental Liabilities and Y2K Liabilities in excess of One
Million Five Hundred Thousand Dollars ($1,500,000) shall be borne exclusively by
Seller and Seller shall indemnify Purchaser for any such costs and expenses
incurred by Purchaser. In addition and not by way of limitation of Seller's
obligations under this Agreement, Seller shall make all required notifications
to the appropriate governmental agencies or authorities and comply with other
applicable requirements of the Environmental Laws with respect to the Identified
Environmental Liabilities.
(ii) Subject to the second sentence of Section
4.5(b)(i) above, Seller hereby agrees to indemnify, defend, and hold harmless
Purchaser as provided in Section 14.1(d) hereof, for all costs and expenses
incurred by Purchaser in effecting such action or any other removal, remedial,
compliance, or clean up action or assessment required by any governmental agency
or instrumentality or any court or arbitration panel having jurisdiction over
the parcel.
(iii) Seller's obligations to assess, remove,
remediate, or clean up Hazardous Materials under Section 4.5(b)(i) shall be
deemed discharged when all concentrations of Hazardous Material(s) in
environmental media have been reduced to a level that is fully protective of
human health and the environment, as determined by, for each such response
action, (I) approval of and issuance of a written "no further action"
determination for each such response action and final concentration levels
achieved by the Georgia Environmental Protection Division ("EPD"), the Alabama
Department of Environmental Management ("ADEM"), or the South Carolina
Department of Health and Environmental Control ("DHEC"), as appropriate for the
location of the action, or in the absence of oversight by EPD, ADEM, or DHEC, by
the U.S. Environmental Protection
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Agency ("EPA"), or (II) in the absence of EPD, ADEM, DHEC, or EPA oversight of
the response action, compliance with applicable standards for contaminant
concentrations set forth in the Environmental Laws, or (III) in the absence of
applicable standards, achievement of contaminant concentrations established by
an appropriate and scientifically defensible risk assessment performed by an
independent professional and qualified environmental consulting firm experienced
in performing risk assessments in U.S. EPA Region IV that is selected by Seller
and acceptable to Purchaser; provided, however, that such consultant's risk
assessment proposal, protocols, and assumptions shall be provided to Purchaser
for review prior to acceptance by Seller and that the scope and content of such
proposal, protocols, and assumptions shall be mutually acceptable to Seller and
Purchaser.
(iv) Notwithstanding, anything in Section 4.5(b)(iii)
to the contrary, Seller agrees that, in the event that any of the Environmental
Audit Reports for the parcels of Real Property and Leased Real Property located
in Georgia reveal concentrations of HSRA regulated substances that require
notification to the EPD, Seller shall, to the extent practicable, remove,
remediate or clean up such substances to below HSRA notification concentrations
("NCs") prior to the applicable notification deadline. To the extent that such
NCs are not attained prior to the notification deadline, Seller agrees that it
shall make the appropriate HSRA notifications to EPD and comply with all other
HSRA requirements, including, without limitation, the preparation and
implementation of any compliance status reports and corrective action plans that
may be required.
(v) Notwithstanding, anything in Section 4.5(b)(iii)
to the contrary, Seller agrees that, in the event that any of the Environmental
Audit Reports reveal concentrations of total petroleum hydrocarbons or petroleum
constituents in soil that are not subject to notification or clean up
requirements under the Environmental Laws, the "applicable standards for
contaminant concentrations set forth in the Environmental Laws" under Section
4.5(b)(iii)(II) shall be deemed to be at least 100 mg/kg for TPH in soil and
HSRA NCs for petroleum constituents in soil, regardless of the location of the
subject parcel.
(vi) Purchaser hereby grants Seller, its employees
and representatives, the non-exclusive and unrestricted right of access to such
parcels requiring action under this Section 4.5(b), as necessary to allow Seller
to perform and complete such action, and Purchaser agrees that it shall not, and
shall cause its employees and representatives not to, interfere with such
actions. All such actions shall be completed in a manner so as not to
unreasonably interfere with Purchaser's use of the parcels.
(c) If at any time during the period commencing on the Closing
Date and ending on the tenth anniversary thereof, any monitoring, removal, clean
up, remediation, notification or further assessment activity with respect to any
Environmental Liability with respect to any Real Property or Leased Real
Property is required by any governmental agency or instrumentality or any court
or arbitrator having jurisdiction over
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the parcel to which such Environmental Liability relates or is required under
Environmental Laws, (i) Seller shall, on demand, indemnify, defend, and hold
harmless Purchaser as provided in Section 14.1(d) for all cost and expense
incurred by Purchaser in effecting such monitoring, removal, clean up,
remediation, notification or further assessment, and in effecting any removal,
remediation or clean up of any condition revealed by such monitoring or further
assessment that involves the dumping, storage, use, release, discharge,
disposal, migration, spillage, leakage, burial, or placement of Hazardous
Materials but only to the extent that such condition comprises an Identified
Environmental Liability, and excluding the effect of any exacerbation of such
condition by action of Purchaser subsequent to the Closing.
(d) The provisions herein with respect to Environmental
Liabilities shall in no way limit or affect any rights or remedies against third
parties available at law or in equity to either Purchaser or Seller with respect
to any Environmental Liability.
(e) Except as otherwise provided in this Section 4.5(e), the
parties hereto shall keep confidential and shall not disclose to any person
except each party's counsel, accountants, and representatives, all on a "need to
know" basis in connection with the consummation of the transactions contemplated
hereby, the existence or content of any Environmental Audit Report. The
confidentiality obligations of this Section 4.5(e) shall not apply where the
disclosure of such information is needed to (i) enforce the Agreement; (ii)
fulfill a contractual obligation with an insurer; (iii) comply with applicable
laws or regulations; or (iv) comply with the terms of an administrative or
judicial formal request or order requiring such disclosure.
4.6 Year 2000.
(a) Purchaser shall select a nationally recognized consultant
to conduct a review of all of Seller's operations and internal systems for Year
2000 compliance and provide a written report to Purchaser (the "Y2K Report").
The Y2K Report shall include the following: (i) identification of all systems
and equipment that are being transferred to Purchaser under this Agreement that
include computer software and are date dependent; (ii) identification of all
suppliers, vendors and customers that are material to the Business and the
Acquired Assets; (iii) identification of those systems, equipment and third
parties that are not Year 2000 compliant; (iv) recommendations for corrective
actions to achieve Year 2000 compliance of those systems and equipment being
transferred to Purchaser hereunder in time to avoid a Year 2000 failure and the
estimated cost of such corrective actions (which estimates shall include the
cost of software upgrades or replacements and any outside support and services
the consultant deems necessary to install and test such upgrades or replacement
systems for Year 2000 compliance); and (v) identification of any systems,
equipment or third parties that the consultant believes are material to the
Business and its operations and are at risk for a Year 2000 related failure
because corrective action is impracticable in time to avoid such failure. The
Y2K Report shall also include an estimate of the cost to remediate or otherwise
address any Year 2000 deficiencies set forth in the Y2K Report (the "Y2K
Liabilities") and shall be delivered to
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Seller at least twenty (20) days prior to Closing. If the estimate of the Y2K
Liabilities exceeds One Million Dollars ($1,000,000), the Seller shall have ten
(10) days from the date of its receipt of the Y2K Report to object to the amount
of the Y2K Liabilities estimated by Purchaser's consultant. Seller's consultant
shall be entitled to examine and discuss the Y2K Report with Purchaser's
consultant. Purchaser's consultant and Seller's consultant shall negotiate in
good faith to resolve the amount of the Y2K Liabilities. If Purchaser's
consultant and Seller's consultant are unable to agree on an estimated amount of
the Y2K Liabilities, the Y2K Report shall be submitted to an arbitrator for
resolution of the amount of the Y2K Liabilities in accordance with Section 15.1
hereof. Seller agrees to cooperate with the Purchaser's consultant and to
provide reasonable access to all systems, equipment and relevant personnel that
are the subject of the consultant's review.
(b) The cost and expense of any Y2K Liabilities shall be paid
by Purchaser, to the extent such costs and expenses do not exceed One Million
Dollars ($1,000,000); provided, however, that the Purchaser shall not be liable
for any aggregate costs and expenses with respect to Y2K Liabilities and
Identified Environmental Liabilities in excess of One Million Five Hundred
Thousand Dollars ($1,500,000). Aggregate costs and expenses with respect to Y2K
Liabilities and Identified Environmental Liabilities in excess of One Million
Five Hundred Thousand Dollars ($1,500,000) shall be borne exclusively by Seller
and Seller shall indemnify Purchaser for any such costs and expenses incurred by
Purchaser.
4.7 Certain Consents. To the extent that Seller's rights under any
agreement, Contract, commitment, lease, Permit, Real Property Lease or other
Acquired Asset to be assigned to Purchaser hereunder may not be assigned without
the consent of another person which has not been obtained prior to the Closing
Date, and which is material to the ownership, use or disposition by Purchaser of
an Acquired Asset, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment would constitute a breach thereof or be
unlawful, and Seller, at its expense, shall use its reasonable good faith
efforts to obtain any such required consent(s) as promptly as possible. If any
such consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Purchaser's rights under the Acquired Asset in
question so that Purchaser would not in effect acquire the benefit of all such
rights, Seller, to the maximum extent permitted by law and the specific Acquired
Asset and at Seller's expense, shall act after the Closing as Purchaser's agent
in order to obtain for the Purchaser the benefits thereunder, and Seller shall
cooperate, to the maximum extent permitted by law and the specific Acquired
Assets with Purchaser in any other reasonable arrangement designed to provide
such benefits to Purchaser, including any sublease or subcontract or similar
arrangement. The obligation of Seller hereunder shall not be in limitation of
Purchaser's right to terminate this Agreement as provided in Section 13.1(b)
hereof in accordance with the terms thereof, at or prior to the Closing Date.
4.8 Eminent Domain. If, after the date hereof and prior to the Closing,
Seller receives notice of the commencement or threatened commencement of eminent
domain or other like proceedings against any portion of the Real Property or the
Leased Real
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Property material to the conduct of the Business, Seller shall immediately
notify Purchaser, and Purchaser shall elect within fourteen (14) days from and
after such notice, by written notice to Seller, either (a) if such portion of
the Real Property or the Leased Real Property is located at a Key Facility, not
to close the transaction contemplated hereby, in which event except as expressly
set forth in Article 13, this Agreement shall be void and of no further force
and effect; (b) to close the transaction contemplated hereby in accordance with
its terms but subject to such proceedings, in which event the Final Purchase
Price shall not be reduced, and Seller shall assign to Purchaser Seller's rights
in any condemnation award or proceeds; or (c) to close the transaction
contemplated hereby, excluding, however, the portion of the Real Property or
Leased Real Property subject to such proceedings with a corresponding reduction
in the Purchase Price applicable to such Real Property or Leased Real Property
so excluded. Purchaser shall be deemed to have elected to close the transaction
contemplated hereby in accordance with clause (b) of this Section 4.7 if either:
(a) Seller has received any notice of the type described in the first sentence
of this Section 4.7, but with respect to an immaterial portion of the Real
Property or the Leased Real Property; or (b) with respect to any other notice
described in the first sentence hereof, Seller does not make the election
described in the preceding sentence within the aforesaid fourteen (14) day
period.
4.9 Further Assurances. Seller from time to time after the Closing
Date, at Purchaser's request, will execute, acknowledge, and deliver to
Purchaser such other instruments of conveyance and transfer and will take such
other actions and execute and deliver such other documents, certifications, and
further assurances as Purchaser may reasonably require in order to vest more
effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Acquired Assets, or to better enable Purchaser to complete, perform, or
discharge any of the Assumed Liabilities. Each of the Parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of Maxim and Image hereby represents and warrants to Purchaser
that:
5.1 Organization and Qualification. Each of Maxim and Image is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Image is duly qualified and is in good standing
as a foreign corporation in each of the jurisdictions set forth on SCHEDULE
5.1.1, which constitute all of the jurisdictions where such qualification is
required by law, except for jurisdictions with respect to which the failure to
so qualify would not have a material adverse effect on the Business or the
Acquired Assets. SCHEDULE 5.1.2 hereto contains the address (including city,
county, state, or other jurisdiction and zip code) of each location where any of
the Acquired Assets are located and each trade name under which Image operates
at each such address
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and any additional business and trade names under which the Business has been
operated at each such address in the five (5) years preceding the date of this
Agreement.
5.2 Authority. Each of Maxim and Image has full power and authority to
enter into this Agreement and the agreements to which it is a party contemplated
hereby, or executed in connection herewith (collectively, this Agreement and the
other documents or agreements to be executed in connection herewith shall be
referred to hereinafter as the "Acquisition Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by each of Maxim and Image of each of the Acquisition Documents to
which it is a party has been duly and validly authorized and approved by all
necessary action on its part. Each of the Acquisition Documents to which it is a
party is the legal, valid, and binding obligation of Maxim or Image,
respectively, enforceable against such Seller in accordance with its terms,
except as enforceability may be limited by applicable equitable principles
(whether applied in a proceeding at law or in equity) or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors'
rights generally, to the exercise of judicial discretion in accordance with
general equitable principles, and to equitable defenses that may be applied to
the remedy of specific performance. Neither the execution and delivery by either
Seller of any of the Acquisition Documents to which it is a party nor, subject
to obtaining the consents and approvals described in SCHEDULES 5.7.5, 5.8.2, and
5.9.1, and the transfer of the Permits , the consummation by Seller of the
transactions contemplated thereby will (i) violate such Seller's Certificate of
Incorporation or Bylaws, (ii) violate any provisions of law or any order of any
court or any governmental entity to which such Seller is subject, or by which
the Acquired Assets may be bound, (iii) conflict with, result in a breach of, or
constitute a default under any indenture, mortgage, lease, agreement, or other
instrument to which such Seller is a party or by which it or any of the Acquired
Assets may be bound, or (iv) result in the creation of any lien, charge, or
encumbrance upon any of the Acquired Assets, or result in the acceleration of
the maturity of any payment date of any of the Assumed Liabilities, or increase
or adversely affect the obligations of such Seller under any of the Assumed
Liabilities.
5.3 Subsidiaries; Joint Ventures. No shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity
are included in the Acquired Assets.
5.4 Financial Statements. Attached as SCHEDULE 5.4 are true, correct,
and complete copies of the Interim Balance Sheet, the unaudited balance sheets
and related statements of income and cash flows of the Business as, at and for
the fiscal years ended January 31, 1997, January 31, 1998 and for the periods
then ended, and the unaudited financial statements of the Business prepared by
Seller at and for the six-month period ended with fiscal July 1998
(collectively, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Seller, and present fairly in accordance
with GAAP consistently applied the financial position and results of operation
of the Business as at the dates and for the periods indicated. The Business has
no
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liabilities or obligations (secured or unsecured, whether accrued, absolute,
direct, indirect, contingent or otherwise, and whether due or to become due)
which are not fully and adequately accrued or reserved against in the Financial
Statements if and to the extent required in accordance with GAAP consistently
applied. Since January 1, 1998, Seller has not received any advice or
notification from its independent certified public accountants that Seller has
used any improper accounting practice that would have the effect of not
reflecting or incorrectly reflecting in the Financial Statements or the books
and records, any properties, assets, liabilities, revenues, or expenses material
to the financial condition or results of operations of the Business. Except as
set forth in SCHEDULE 5.4, the Financial Statements do not contain any items of
special or nonrecurring income, or other income not earned in the ordinary
course of business, individually in excess of $50,000 and in the aggregate in
excess of $250,000. The books, records, and accounts of Seller maintained with
respect to the Business accurately and fairly reflect, in reasonable detail, the
transactions and the assets and liabilities of Seller with respect to the
Business.
5.5 Inventories. All Inventory, except inventory in transit, whether
reflected on the Financial Statements or subsequently acquired, (a) is now and
at the Closing Date will be located on the Real Property described on SCHEDULE
5.8.1 or on the Leased Real Property described on SCHEDULE 5.8.2 consistent with
past practices, (b) has been or will be acquired by Seller only in bona fide
transactions entered into in the ordinary course of business, (c) is of good and
merchantable quality except to the extent adequately reserved for in the
Financial Statements, consistent with past practice, (d) is not now and at the
Closing Date will not be subject to any write-down or write-off in excess of the
reserves established based on past practice, and (e) is valued at the lesser of
cost or net realizable market value, on a "first-in, first-out" basis, with
appropriate adjustments for mill ends, short rolls, obsolete, damaged,
discontinued and slow moving Inventory in accordance with GAAP consistently
applied. Seller has now and on the Closing Date will have valid legal title to
its Inventory free and clear of any consignments, liens, claims, charges, and
encumbrances, other than encumbrances which shall be removed prior to Closing.
Seller is not under any liability or obligation with respect to the return of
inventory in the possession of wholesalers, retailers, or other customers which
shall not be reserved against in the Closing Balance Sheet.
5.6 Accounts Receivable. All Accounts Receivable shown on the Financial
Statements represent, and the Accounts Receivable of Seller outstanding on the
Closing Date will represent, sales actually made or services actually performed
in the ordinary course of business in bona fide transactions completed in
accordance with the terms and provisions contained in any documents relating
thereto and are fully collectible to the extent not reserved for in the Closing
Balance Sheet. The reserves for uncollectible Accounts Receivable reflected on
the Financial Statements were established in accordance with generally accepted
accounting principles and are adequate in light of all the facts then known to
Seller and Seller's historical methods and practices in establishing such
reserves. The Accounts Receivable outstanding on the Closing Date are subject to
no defenses, counterclaims, or rights of setoff other than those arising in the
ordinary course of business and for which adequate reserves have been
established.
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5.7 Personal Property.
(a) SCHEDULE 5.7.1 contains a true and correct list and a
description (including serial number, tag number and location) of all Vehicles
indicating, with respect to each, those which are owned by Seller and those
which are leased by Seller. SCHEDULE 5.7.2 contains a true and correct list of
all Equipment (excluding items of Equipment having a value of less than $10,000
individually, or $100,000 in the aggregate) indicating, with respect to each,
those which are owned by Seller and those which are leased by Seller. SCHEDULE
5.7.3 contains a true and correct list of all Furniture and Fixtures and all
other items of personal property (excluding items of Furniture and Fixtures and
other personal property having a value of less than $10,000 individually, or
$100,000 in the aggregate), all of which are owned by Seller. Seller has good
title to, or valid leasehold rights in, all of its Furniture and Fixtures,
Equipment, Vehicles, and other items of personal property included among the
Acquired Assets (whether or not disclosed in SCHEDULES 5.7.1, 5.7.2, or 5.7.3),
free and clear of all liens, claims, charges, security interests, and other
encumbrances of any kind and of any nature, except as disclosed on SCHEDULE
5.7.4, all of which, with the exception of protective UCC filing in connection
with leases, shall be removed prior to Closing.
(b) SCHEDULE 5.7.5 contains a list of all leases for Vehicles,
Equipment, Furniture and Fixtures, or other items of personal property included
among the Acquired Assets (except miscellaneous leases having an aggregate value
of remaining lease payments of less than $10,000) leased by Seller and included
in the Acquired Assets. Each of the leases described on SCHEDULE 5.7.5 is in
full force and effect and there are no existing defaults or events of default,
real or claimed, or events which with notice or lapse of time or both would
constitute defaults, the consequences of which, severally or in the aggregate,
would have a material adverse effect on the Business. No rights of Seller under
such leases have been assigned or otherwise transferred as security for any
obligation of Seller. Except as described on SCHEDULE 5.7.5, all such leases are
fully assignable without the consent of any third party.
5.8 Real Property: Leased Real Property.
(a) SCHEDULE 5.8.1 contains a true and correct list of each
parcel of Real Property and a summary description of all plants and structures
located thereon.
(b) SCHEDULE 5.8.2 contains a true and correct list of each
parcel of Leased Real Property and a summary description of all plants and
structures located on each parcel of Leased Real Property, as well as an
identification of each Lease pursuant to which Seller leases the Leased Real
Property and any amendments, extensions, and renewals thereof (the "Real
Property Leases"). Seller hereby represents that it is the lessee under each of
the Real Property Leases. Each Real Property Lease is in full force and effect
and there is no existing default or event of default, real or claimed, or event
which with notice or lapse of time or both would constitute a default thereunder
by Seller or, to
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the knowledge of Seller, any other party to such Real Property Leases. Except
for Permitted Encumbrances, or as described in SCHEDULE 5.8.2, Seller's interest
in the Real Property Leases is free and clear of any mortgages and liens, and is
not subject to any deeds of trust, assignments, subleases, or rights of any
third parties known to or created or permitted by Seller other than the lessor
thereof or any mortgagees of such lessors. The assignment of any of the Leased
Real Property to Purchaser shall not cause a breach, default, or event of
default under any lease or, to Seller's knowledge, mortgage relating to such
parcel except for those leases or mortgages identified on SCHEDULE 5.8.2 as
requiring consents. Seller shall use its commercially reasonable efforts to
obtain the necessary consents or estoppels pursuant to Sections 7.6 and 8.18.
(c) To the best of Seller's knowledge and belief (but without
independent investigation thereof), all improvements on the Real Property and
the Leased Real Property conform to all applicable state and local laws, use
restrictions, building ordinances, and health and safety ordinances the
noncompliance of which would have a material adverse effect on Seller's current
rights in such property or its use in the Business, and the Real Property and
the Leased Real Property and improvements thereon are presently being used in
all material respects in compliance with applicable zoning, if any.
(d) Seller has received no written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
the Real Property or the Leased Real Property.
(e) There is no private restrictive covenant or governmental
use restriction (including zoning) known to Seller (but without inquiry with
respect thereto) on all or any portion of the Real Property or the Leased Real
Property which prohibits the current use of the Real Property and the Leased
Real Property.
(f) All material licenses, permits and approvals required for
the occupancy and operation of the Real Property and the Leased Real Property
(with appurtenant parking uses) as presently being used have been obtained and
are in full force and effect and Seller has received no notices of violations in
connection with such items.
(g) Seller does not have in its possession any studies or
reports specifying any material defects in the design or construction of any of
the improvements on the Real Property or the Leased Real Property.
(h) Seller has not failed to pay any taxes, assessments, or
other charges adversely affecting the use of the Real Property or Leased Real
Property.
(i) There is no pending litigation or dispute, and Seller has
received no notice of any disputes, concerning the location of the lines and
corners of the Real Property, and Seller has not been served with any legal
action concerning the location of the lines and corners of the Real Property.
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(j) Neither Image nor Maxim has granted to any person or
entity, other than Purchaser, any right, agreement, commitment, option, right of
first refusal or any other agreement, whether oral or written, with respect to
the purchase, assignment or transfer of all or any portion of the Real Property,
and, to the best of Seller's knowledge, no person or entity, other than Image or
Purchaser, has any right, agreement, commitment, option, right of first refusal
or any other agreement, whether oral or written, with respect to the purchase,
assignment or transfer of all or any portion of the Real Property.
(k) To the best of Seller's knowledge and belief (but without
independent investigation thereof), the Real Property is not subject to any
special assessment for public improvements or otherwise, whether or not
presently a lien upon the Real Property of which either Image or Maxim has
received a notice. Seller has made no commitment to any governmental authority,
utility company, school board, church or other religious body, homeowner or
homeowner's association or any other organization, group or individual relating
to the Real Property which would impose an obligation upon Seller or its
successors or assigns to make any contributions or dedications of money or land,
or to construct, install or maintain any improvements of a public or private
nature as part of the Real Property. No governmental authority has imposed any
requirement that Seller pay any special fees or contributions or incur any
expenses or obligations in connection with the development of the Real Property
or any portion thereof, other than any regular and nondiscriminatory local real
estate or school taxes assessed against the Real Property. The parcels
comprising the Real Property are separately assessed for real property tax
assessment purposes and are not combined with any other real property for tax
assessment purposes. Seller has received no notice of any contemplated or actual
reassessment of the Real Property or any portion thereof for general real estate
tax purposes. As of the date hereof, all due and payable taxes, assessments,
water charges and sewer charges affecting the Real Property and, to Seller's
knowledge, the Leased Real Property, or any portion thereof have been paid.
(l) There is no default or breach by Seller nor, to Seller's
knowledge, any other party thereto, under any covenants, conditions,
restrictions or easements which may affect the Real Property or the Leased Real
Property or any portion or portions thereof which are to be performed or
complied with by the owner of the Real Property or the Leased Real Property, and
no condition or circumstance exists which, with the giving of notice or the
passage of time, or both, would constitute a default or breach by Seller nor, to
Seller's knowledge, any other party thereto, under any such covenants,
conditions, restrictions, rights-of-way or easements.
5.9 Contracts.
(a) SCHEDULE 5.9.1 contains a true and correct list of all
Contracts not otherwise listed on SCHEDULES 5.7.5, 5.8.2, 5.10 or 5.16 (other
than purchase orders) that (i) has a duration of twelve (12) months or more,
(ii) requires or could require any party
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thereto to pay $250,000 or more, or (iii) is between Image and any officer,
stockholder, director or employee of Image or Maxim, or between Image and Maxim,
or between Image or Maxim and any affiliate of Image and all modifications,
amendments, renewals, or extensions thereof. Each of the Contracts was entered
into prior to the Closing Date in the ordinary course of business on terms
substantially consistent with Seller's practice prior thereto. Except as listed
on SCHEDULES 5.7.5, 5.8.2, 5.9.1, 5.10 or 5.16, Seller is not a party to any
written or legally binding oral:
(i) agreement, contract, or commitment with any
present or former employee or consultant or for the employment of any person,
including any consultant, who is engaged in the conduct of the Business;
(ii) agreement, contract, or commitment for the
future purchase of, or payment for, supplies or
products, or for the performance of services by a third party which supplies,
products or services are used in the conduct of the Business involving in any
one case $250,000 or more;
(iii) agreement, contract or commitment to sell or
supply products ("Goods Contracts") or to perform maintenance, services or
similar duties ("Services Contracts") in connection with the Business involving
in any one case $250,000 or more;
(iv) distribution, dealer, representative, or sales
agency agreement, contract, or commitment relating to the Business;
(v) lease under which Seller is lessor relating to
the Acquired Assets or any property at which the Acquired Assets are located;
(vi) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement, or other contract or
commitment for the borrowing or lending of money relating to the Business or
agreement or arrangement for a line of credit or guarantee, pledge, or
undertaking of the indebtedness of any other person relating to the Business;
(vii) agreement, contract, or commitment for any
charitable or political contribution relating to the Business;
(viii) agreement, contract, or commitment limiting or
restraining the Business or any successor thereto from engaging or competing in
any manner or in any business, nor, to Seller's knowledge, is any employee of
Seller engaged in the conduct of the Business subject to any such agreement,
contract, or commitment;
(ix) material agreement, contract, or commitment
relating to the Business not made in the ordinary course of business; or
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(x) agreement, contract or transaction with the
Seller or any affiliate thereof.
(b) SCHEDULE 5.9.2 contains a true and correct list of all
commitments for capital expenditures that have been approved or made prior to
the date of this Agreement in excess of $50,000 by Seller and that remain
outstanding as of the date hereof.
(c) Each of the Contracts is in full force and effect and
there exists no material breach or violation of or default under any of such
Contracts by Seller or, to the knowledge of Seller, any other party to such
Contracts or any event which, with notice or the lapse of time, or both, will
create a breach or violation thereof or default thereunder by Seller or, to the
knowledge of Seller, any other party to such Contracts. Except as set forth on
SCHEDULES 5.7.5, 5.8.2, 5.9.1, 5.10 or 5.16, each such Contract listed therein
is fully assignable without the consent of any third party.
(d) Except as indicated on SCHEDULE 5.14, there exists no
actual or, to the best knowledge of Seller, any threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to any
Contract, which would have an adverse effect on the business or condition,
financial or otherwise, of the Business, including without limitation, (i) the
business relationship of Seller with any customer, distributor, or related group
of customers or distributors whose purchases individually or in the aggregate
are material to the operations and financial condition of the Business, (ii) the
requirements of any customer or related group of customers of Seller whose
purchases individually or in the aggregate are material to the operations and
financial condition of the Business, or (iii) the business relationship of
Seller with any material supplier to the Business.
(e) Except as set forth in Schedule 5.9.1, Seller has not
granted any power of attorney affecting or with respect to the Business or the
Acquired Assets that remains outstanding.
(f) Schedule 5.9.3 contains a true and correct list of the
fifty largest customers, as measured and ranked by revenues and gross margins
received from such customers, of the Business during the fiscal year ended
January 31, 1998, and for the period commencing February 1, 1998 through the
last day of the month preceding the date hereof.
5.10 Intellectual Property. SCHEDULE 5.10 contains a true and correct
list of the Intellectual Property used or contemplated for use by Seller in the
Business (other than the property and rights listed on SCHEDULE 5.10A),
containing a brief description of each item of Intellectual Property and the
nature of Seller's interest therein. The Acquired Assets include and, upon the
purchase of those assets, Purchaser will own or have the uncontested right to
use, all patents, designs, art work, designs-in-progress, formulations,
know-how, inventions, trademarks, trade names, trade styles, service marks,
copyrights,
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manufacturing processes, logos, and confidential or proprietary information
necessary for the conduct of the Business as presently conducted, except for the
intellectual property listed on SCHEDULE 5.10A, which is not included in the
Intellectual Property and is not being conveyed to Purchaser hereby. No claim is
pending or, to the best of Seller's knowledge, threatened, and Seller has
received no notice that the conduct of the Business (including without
limitation, Seller's use of any Intellectual Property) infringes upon or
conflicts with any rights claimed therein by any third party, nor is Seller
aware of any unasserted claim the assertion of which is probable. No use by
Seller of any Intellectual Property licensed to it violates the terms of any
agreement pursuant to which it is licensed. Except as set forth in SCHEDULE
5.10, no claim is pending, or to Seller's knowledge, threatened, which alleges
that any Intellectual Property owned or licensed by Seller or which Seller
otherwise has the right to use is invalid or unenforceable by Seller, nor is
Seller aware of any such claim that is unasserted, but the assertion of which is
probable. To the best of Seller's knowledge, Seller does not manufacture
products which are the subject of patents, patent applications, copyrights,
copyright applications, trademarks, trademark applications, trade styles,
service marks, or trade secrets owned by or licensed from third parties. No
royalties or fees are payable by Seller to anyone for use of the Intellectual
Property. To the best of Seller's knowledge, all agreements pursuant to which
Seller has any license or right to use any Intellectual Property are in full
force and effect and there are no existing defaults or events of default, real
or claimed, or events which with or without notice or lapse of time or both
would constitute defaults under such agreements that would give the
non-defaulting party a right to terminate such agreement or a right to receive
any payment pursuant to such agreement. Seller has not received any notice that
the manufacture, use, or sale by Seller of its products, or any component or
part thereof, nor any manufacturing operation or machinery employed by Seller,
violates or infringes upon any claims of any United States or foreign patent or
patent application owned or held by any third party, nor is Seller aware of any
unasserted claim the assertion of which is probable. To the best of Seller's
knowledge, all Seller's Intellectual Property and registrations, applications,
and agreements related thereto are fully assignable to Purchaser without the
consent of any third party except as shown on SCHEDULE 5.10.
5.11 Insurance. The Acquired Assets and the Business are insured under
various policies of general liability and other forms of insurance, which
policies are in adequate amounts in the judgment of Seller. Seller has not been
refused any insurance with respect to the Business, by any insurance carrier to
which it has applied for insurance or with which it has carried insurance during
the past five (5) years.
5.12 Environmental Matters and OSHA.
(a) Except as set forth in SCHEDULE 5.12.1 hereto and except
as may be disclosed in the Environmental Audit Reports, Seller, with respect to
the Business or the Acquired Assets,
(i) is in material compliance with all Environmental
Laws. In addition, Seller has obtained all permits, licenses, approvals,
consents, orders, and
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authorizations which are required under Environmental Laws ("Environmental
Permits") in connection with the Business or the ownership, use, or lease of the
Acquired Assets, and which, if not so obtained, would cause an adverse effect on
the ownership, operation or disposal of the Business or the Acquired Assets,
taken as a whole, and SCHEDULE 5.12.2 contains a complete list and description
of each such Environmental Permit. Except as described in SCHEDULE 5.12.2,
Seller is in material compliance with each such Environmental Permit (including
any information provided on the applications therefor) and no Environmental
Permit restricts Seller from operating any Equipment covered by such
Environmental Permit as currently being conducted;
(ii) has not entered into or received nor is Seller
in default under any consent decree, compliance order, or administrative order
issued by any agency, or any judgment, order, writ, injunction or decree of any
federal, state, or municipal court or other governmental authority relating to
Environmental Laws;
(b) With respect to the Business or the Acquired Assets,
(i) there are no actions, suits, claims, arbitration
proceedings, or complaints pending or, to Seller's knowledge, threatened by any
governmental authority, municipality, community, citizen, or other entity,
against Seller relating to environmental protection, compliance with
Environmental Laws, or the condition of the Real Property or the Leased Real
Property, nor is Seller aware of any unasserted action, suit, claim, proceeding,
or complaint the assertion of which is probable. Seller has not (A) been
notified that it is potentially liable under or (B) received any requests for
information or other correspondence concerning any site or facility under, nor
has Seller received any notice that it is considered potentially liable under
CERCLA, HSRA, or any similar law;
(ii) except as set forth on SCHEDULE 5.12.1 and
except as may be disclosed in the Environmental Audit Reports, there has been no
dumping, discharge, spillage, migration, leakage, disposal, release, burial, or
placement of Hazardous Materials by Seller or, to Seller's knowledge, by any
other party on, in, at, from or about any of the Real Property or Leased Real
Property or any facilities used for or in connection with the Business;
(iii) all above-ground and underground storage tanks,
oil/water separators, and septic systems located on the Real Property and the
Leased Real Property have been identified in SCHEDULE 5.12.3, together with a
description of the materials stored therein and a statement as to whether such
tanks are currently used by Seller;
(iv) no lien has arisen or is, to the knowledge of
Seller, threatened on or against any of the Acquired Assets under or as a result
of any Environmental Laws;
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(v) except as identified in SCHEDULE 5.12.3 and
except for the Environmental Audit Reports, no audit or other investigation has
been conducted as to environmental matters at any of the Real Property or Leased
Real Property or any facilities used for or in connection with the Business by
any private party during or, to Seller's knowledge, prior to the period during
which Seller owned, leased or operated such properties. A true and complete copy
of each such item identified in SCHEDULE 5.12.3 has been delivered to Purchaser.
(c) Except as set forth in SCHEDULE 5.12.4, Seller is in
material compliance with all applicable laws relating to employee health and
safety; and Seller has not received any notice that past or present conditions
of the Acquired Assets violate any applicable legal requirements or otherwise
can be made the basis of any claim, citations, proceeding, or investigation,
based on or related to violations of employee health and safety requirements.
5.13 Litigation. Except as listed and briefly described on SCHEDULE
5.13, there are no claims, charges, arbitrations, grievances, actions, suits,
proceedings, or investigations pending, or to Seller's knowledge, threatened
against, or adversely affecting the Business or any of the Acquired Assets, at
law or in equity or admiralty, or before or by any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, which could reasonably be expected to have
a material adverse effect on the Business or any of the Acquired Assets. Seller
is not in default under or in violation of any order, writ, injunction, or
decree of any federal, state, municipal court, or other governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting the Business or the Acquired Assets.
5.14 Absence of Changes. Except as set forth on SCHEDULE 5.14, since
July 31, 1998, there has not been any transaction or occurrence in which Seller,
with respect to the Business, has:
(a) suffered any material adverse change in the business,
operations, condition (financial or otherwise), liabilities, assets, or earnings
of the Business nor, to Seller's knowledge, has there been any event which has
had or may reasonably be expected to have a material adverse effect on any of
the foregoing;
(b) incurred any obligations or liabilities of any nature
other than items incurred in the regular and ordinary course of business,
consistent with past practice, or increased (or experienced any change in the
assumptions underlying or the methods of calculating) any bad debt, contingency,
or other reserve, other than in the ordinary course of business consistent with
past practice;
(c) paid, discharged, or satisfied any claim, lien,
encumbrance, obligation, or liability (whether absolute, accrued, contingent,
and whether due or to become due), other than the payment, discharge, or
satisfaction in the ordinary course of
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business consistent with past practice of claims, liens, encumbrances,
obligations, or liabilities of the type reflected or reserved against in the
Financial Statements or which were incurred since July 31, 1998 in the ordinary
course of business consistent with past practice;
(d) permitted, allowed, or suffered any of its properties or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, lien, encumbrance, restriction, or charge of any kind, other
than Permitted Encumbrances;
(e) written down or written up the value of any Inventory
(including write-downs by reason of shrinkage or markdowns) in excess of
$25,000, determined as collectible any Accounts Receivable in excess of $25,000,
or any portion thereof in excess of $25,000, which were previously considered
uncollectible, or written off as uncollectible any Accounts Receivable or any
portion thereof, except for write-downs, write-ups, and write-offs in the
ordinary course of business consistent with past practice, none of which is
material in amount;
(f) canceled any debts or waived any claims or rights in
excess of $10,000 individually or $50,000 in the aggregate;
(g) disposed of or permitted to lapse any right to the use of
any patent, trademark, assumed name, service xxxx, trade name, copyright,
license, or application therefor or disposed of or, to Seller's knowledge,
disclosed to any person not authorized to have such information any trade
secret, proprietary information, formula, process, or know-how not previously a
matter of public knowledge or existing in the public domain;
(h) except for the capital expenditure commitments described
on SCHEDULE 5.9.2, made any material capital expenditure or commitment for
additions to property, plant, equipment, intangible, or capital assets or for
any other purpose, other than for emergency repairs or replacement;
(i) incurred any long term indebtedness;
(j) paid, loaned, distributed, or advanced any amounts to,
sold, transferred, or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, purchased, leased, licensed, or otherwise acquired
any properties or assets from, or entered into any other agreement or
arrangement with (i) any officer, employee, or director of Image, or any
officer, director, employee or controlling person of Maxim, (ii) any corporation
or partnership in which any officer, director or controlling person of either
Image or Maxim is an officer, director, or holder directly or indirectly of five
percent (5%) or more of the outstanding equity or debt securities, or (iii) any
person controlling, controlled by, or under common control with any such
partner, stockholder, officer, director, or controlling person except for
compensation not exceeding the rate of compensation set forth on SCHEDULE 5.16
or permitted by Section 5.14(m) and for routine travel advances to officers and
employees;
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(k) entered into any collective bargaining or labor agreement
(oral and legally binding or written), or experienced any organized slowdown,
work interruption, strike, or work stoppage;
(l) sold, transferred, or otherwise disposed of any of the
Acquired Assets except in the ordinary course of business consistent with past
practice;
(m) granted or incurred any obligation for any increase in the
compensation of any officer or employee of Image (including, without limitation,
any increase pursuant to any bonus, pension, profit-sharing, retirement, or
other plan or commitment) except for raises to employees in the ordinary course
of business consistent with past practice;
(n) made any material change in any method of accounting or
accounting principle, practice, or policy;
(o) suffered any casualty loss or damage in excess of $50,000
in the aggregate (whether or not insured against);
(p) made or agreed to make any charitable contributions or
incurred or agreed to incur any non-business expenses in excess of $5,000 in the
aggregate;
(q) taken any other action which is not either in the ordinary
course of business and consistent with past practice or provided for in this
Agreement; or
(r) agreed, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this Section 5.14 and not
otherwise permitted by this Agreement.
5.15 Brokers and Finders. Except as set forth on SCHEDULE 5.15, neither
Seller nor any affiliate has incurred any obligation or liability to any party
for any brokerage fees, agent's commissions, or finder's fees in connection with
the transactions contemplated by the Acquisition Documents.
5.16 Labor Matters. SCHEDULE 5.16 contains a true and correct and
complete list of all present employees and sales representatives employed or
engaged by Seller in the Business, any bonus received by any of them during the
twelve months ended October 31, 1998, their current remuneration, and a
description of all perquisites and fringe benefits they receive or are eligible
to receive. Seller, within the last three (3) years, has not experienced any
organized slowdown, work interruption, strike, or work stoppage by employees of
Seller engaged in the Business. Seller is not a party to nor does Seller have
any obligation pursuant to any oral and legally binding or written agreement,
collective bargaining or otherwise, with any party regarding the rates of pay or
working conditions of any of the employees of Seller engaged in the Business,
nor is Seller obligated under
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45
any agreement to recognize or bargain with any labor organization or union on
behalf of such employees. Neither Seller, with respect to the Business, nor any
of its officers, directors, or employees has been charged or, to Seller's
knowledge, threatened with the charge of any unfair labor practice, with respect
to the Business within the last two (2) years. Seller, with respect to the
Business, is in material compliance with all applicable federal, state, local
and foreign laws and regulations concerning the employer-employee relationship
and with all agreements relating to the employment of Seller's employees,
including applicable wage and hour laws, fair employment laws, safety laws,
worker compensation statutes, unemployment laws, and social security laws.
Except as set forth in SCHEDULE 5.13 hereof, with respect to the Business, there
are no pending or, to Seller's knowledge, threatened claims, investigations,
charges, citations, hearings, consent decrees, or litigation concerning: wages,
compensation, bonuses, commissions, awards, or payroll deductions; equal
employment or human rights violations regarding race, color, religion, sex,
national origin, age, handicap, veteran's status, marital status, disability, or
any other recognized class, status, or attribute under any federal, state, local
or foreign equal employment law prohibiting discrimination; representation
petitions or unfair labor practices; grievances or arbitrations pursuant to
current or expired collective bargaining agreements; occupational safety and
health; workers' compensation; wrongful termination, negligent hiring, invasion
of privacy or defamation; immigration or any other claim based on the employment
relationship or termination of the employment relationship (collectively, "Labor
Claims"). With respect to the Business, Seller is not liable for any unpaid
wages, bonuses, or commissions (other than those not yet due) or any tax,
penalty, assessment, or forfeiture for failure to comply with any of the
foregoing. Except as set forth on SCHEDULE 5.16, there is no outstanding
agreement or arrangement with respect to severance payments with respect to any
Employee.
5.17 Governmental Approval and Consents. Except as described on
SCHEDULE 5.17, Seller, with respect to the Business, has obtained all
governmental approvals, authorizations, permits, licenses, and orders required
for the lawful operation of the Business as presently conducted, the absence of
which would materially and adversely affect the operation of the Business.
5.18 Taxes.
(a) Seller has timely filed, and as of the Closing Date will
have timely filed, all federal and foreign income tax returns, and, with respect
to the Business, all state, county, and local income, franchise, property,
sales, use, unemployment, and other tax returns in each other jurisdiction where
such returns are required to be filed on or prior to the Closing Date, taking
into account any extensions of the filing deadlines which have been validly
granted to Seller, and such returns are and will be true and correct in all
material respects. Seller, with respect to the Business, has paid, or by the
Closing Date will have paid, all federal, state, county, and local income,
franchise, property, sales, use, and all other taxes and assessments (including
penalties and interest in respect thereof, if any) that have become or are due
with respect to any period ended on or prior to the Closing Date whether shown
as due on such returns or not, or is contesting in good faith
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such taxes and assessments, in which event Seller has disclosed the details of
such contests on SCHEDULE 5.18.2. SCHEDULE 5.18.1 lists all real estate,
personal property, ad valorem, and property tax bills of Seller for the year
1998 which have been received by the Seller prior to the date hereof, relating
to the Acquired Assets, including the Real Property and Vehicles.
(b) SCHEDULE 5.18.2 provides a brief description of any
pending federal and state tax disputes in which Seller, with respect to the
Business, is alleged to be liable or in which Seller is claiming a refund,
including the nature and amount of the controversy, the respective positions of
the parties as to any amounts claimed to be due thereunder, and the current
status thereof.
(c) All taxes required to be withheld prior to the Closing
Date from employees of Seller engaged in the Business for income taxes and
social security taxes have been properly withheld and, if required prior to the
Closing Date, have been deposited with the appropriate governmental agency.
(d) No claim or investigation is pending, or to the best of
Seller's knowledge, threatened, by any state, local, or other jurisdiction
alleging that Seller has a duty to file tax returns and pay taxes or is
otherwise subject to the taxing authority of any jurisdiction not included in
SCHEDULES 5.18.1 or 5.18.2 with respect to any taxes covered by Section 10.3,
nor has Seller received any notice or questionnaire from any such jurisdiction
which suggests or asserts that Seller, with respect to the Business, may have a
duty to file such returns and pay such taxes, or otherwise is subject to the
taxing authority of such jurisdiction.
5.19 Employee Benefit Plans.
(a) SCHEDULE 5.19 contains a true and complete list of all the
following agreements or plans which are presently in effect or which have
previously been in effect and which cover employees of Seller engaged in the
Business ("Employees"), including, without limitation, incentive, bonus,
vacation and severance programs:
(i) Any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA") or under
which Seller, with respect to Employees, has any outstanding, present, or future
obligation or liability, or under which any Employee has any present or future
right to benefits which are covered by ERISA; or
(ii) Any other fringe benefit, pension, profit
sharing, retirement, deferred compensation, stock purchase, stock option, stock
appreciation, phantom stock or other equity-based, incentive, bonus, performance
vacation, termination, retention, change of control, severance, "golden
parachute," disability, hospitalization, medical, life insurance, or other
employee benefit plan, program, policy, or arrangement, which Seller, with
respect to the Business, maintains or to which Seller, with respect to the
Business,
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has any outstanding, present, or future obligations to contribute or make
payments under, whether voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements described in subparagraph (i) or
(ii) are hereinafter collectively referred to as the "Company Benefit Plans."
(b) 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. Seller shall be responsible for complying with the requirements of Code
Section 4980 B and Part 6 of Title 1 of ERISA for its employees (including the
Hired Employees, as hereinafter defined) and their "qualified beneficiaries"
whose "qualifying event" (as such terms are defined in Code Section 4980 B)
occurs on or prior to the Closing Date.
(c) The Seller's Code Section 401(k) plan, together with any
related trust, and each trustee or administrator of such plan, are in compliance
in all material respects with the requirements prescribed by all applicable
statutes or regulations including, without limitation, ERISA and the Code; and
such plan has received a favorable determination letter from the Internal
Revenue Service and the Seller is not aware of any circumstances (including any
amendment) reasonably likely to result in the revocation of such favorable
determination letter.
5.20 Compliance with Laws. Seller, with respect to the Business, is not
engaging in any activity or omitting to take any action with respect to the
Business or the Acquired Assets that is or creates a material violation of any
law, statute, ordinance, or regulation applicable to the Business, or to the
Acquired Assets. Neither the Business nor any of the Acquired Assets are subject
to any judgment, order, writ, injunction, or decree issued by any court or any
governmental or administrative body or agency which has a material effect on
either of them. Seller possesses all permits and licenses material to the
operation of the Business as presently conducted and is in compliance with all
applicable laws, regulations, and orders issued by any court or governmental or
administrative body or agency where a failure so to comply would have a material
adverse effect on either the Business or the Acquired Assets. To Seller's
knowledge, Seller, with respect to the Business, has not at any time during the
last five (5) years (i) made any unlawful contribution to any political
candidate, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal, state or local governmental, regulatory or
administrative officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof.
5.21 Governmental Approval and Consents. Except for the filing of the
appropriate documents pertaining to the Xxxx-Xxxxx-Xxxxxx Anti-trust
Improvements Act of 1976, as amended (the "HSR Act") with the United States
Federal Trade Commission and the United States Department of Justice, and the
expiration of or receipt of an order of termination of the waiting period
therefrom, no consent, approval, or authorization of
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or declaration, filing, or registration with any governmental or regulatory
authority is required in connection with the execution, delivery, and
performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby.
5.22 Adequacy of Acquired Assets. The Acquired Assets include all
rights, properties, interests in properties, and assets necessary to permit
Purchaser to carry on the Business as presently conducted by Seller.
5.23 Compliance with the Immigration Reform and Control Act. To the
best of Seller's knowledge, Seller is in full compliance with and has not
violated the terms and provisions of the Immigration Reform and Control Act of
1986, and all related regulations promulgated thereunder (the "Immigration
Laws"). With respect to each employee (as defined in Section 274a.1(f) of Title
8, Code of Federal Regulations) of the Seller for whom compliance with the
Immigration Laws by an employer (as defined in Section 274a.1(g) of Title 8,
Code of Federal Regulations) is required, the Seller, upon request of Purchaser,
will make available to Purchaser prior to the Closing Date, such employee's Form
I-9 (Employment Eligibility Verification Form) and all other records, documents
or other papers which are retained with the Form I-9 by the employer pursuant to
the Immigration Laws. The Seller has never been the subject of any inspection or
investigation relating to its compliance with or violation of the Immigration
Laws, nor has it been warned, fined or otherwise penalized by reason of any
failure to comply with the Immigration Laws, nor is any such proceeding pending
or, to the best of Seller's knowledge, threatened.
5.24 Correctness of Representations. No representation or warranty of
Seller in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto, contains, or on the Closing Date will
contain, any untrue statement of material fact or omits, or on the Closing Date
will omit, to state any fact necessary in order to make the statements contained
therein not misleading in any material respect, and all such statements,
representations, warranties, Exhibits, certificates, and Schedules shall be true
and complete in all material respects on and as of the Closing Date as though
made on that date.
5.25 Definition of "knowledge". The phrases "to the knowledge of
Seller", "Seller has not received notice", "to Seller's knowledge", "Seller has
not been notified," "Seller is not aware" and any other similar phrases as used
in this Article 5 refer to executive officers of Seller and, as to specific
areas which are the subject of the representations and warranties, those
employees of Seller having management or operational responsibilities related to
such specific areas.
5.26 Year 2000. Seller does not make any claim or warranty that its
hardware or software systems include calendar year 2000 date conversion and
compatibility capabilities. Compatibility capabilities shall include date data
century recognition, same century and multiple century formula value
calculations, and user interface date data values that reflect the century.
Seller is in the process of conducting an inventory and
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business risk assessment of its hardware and software systems used in the
Business to determine what steps, if any, need to be taken to ensure these
systems include calendar year 2000 date conversion and compatibility
capabilities. Based on the business risk assessment, Seller may develop
remediation plans for those systems that need to be modified. Notwithstanding
the foregoing, except as provided in Section 4.6 and Section 14.1(a), Seller
shall not become liable for any damages that occur after the Closing Date and
result from the failure of its hardware or software systems to include calendar
year 2000 date conversion and compatibility capabilities.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all corporate power and authority to conduct its business, to
own, lease, or operate its properties in the places where such business is
conducted and such properties are owned, leased, or operated.
6.2 Authority. Purchaser has full power and authority to enter into
this Agreement and each of the other Acquisition Documents to which it is a
party, to consummate the transactions contemplated hereby and thereby and to own
and operate the Acquired Assets and carry on the Business. The execution,
delivery and performance by Purchaser of this Agreement and each of the other
Acquisition Documents to which Purchaser is a party have been duly and validly
authorized and approved by all necessary action on the part of Purchaser. This
Agreement and each of the other Acquisition Documents to which Purchaser is a
party are the legal, valid, and binding obligations of Purchaser enforceable
against Purchaser in accordance with their terms, except as enforceability may
be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and by the exercise of judicial discretion in accordance with
equitable principles. Neither the execution and delivery by Purchaser of this
Agreement or any of the other Acquisition Documents to which Purchaser is a
party nor the consummation by Purchaser of the transactions contemplated hereby
or thereby, nor the Purchaser's ownership and operation of the Acquired Assets
and the Business will (i) violate Purchaser's Certificate of Incorporation or
Bylaws, (ii) violate any provisions of law or any order of any court or any
governmental unit to which Purchaser is subject, or by which its assets are
bound, or (iii) conflict with, result in a breach of, or constitute a default
(with or without notice or passage of time) under any indenture, mortgage,
lease, agreement, or other instrument to which Purchaser is a party or by which
its assets or properties are bound.
6.3 Litigation. There is no suit, action, proceeding, claim or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser in respect of the
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consummation of the transactions contemplated hereby, or in which an adverse
outcome will materially affect the Purchaser's business, operations, assets or
financial condition.
6.4 Correctness of Representations. No representation or warranty of
Purchaser in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto contains, or on the Closing Date will
contain, any untrue statement of material fact or omits or, on the Closing Date,
will omit, to state any fact necessary in order to make the statements contained
therein not misleading in any material respect, and all such statements,
representations, Exhibits, and certificates shall be true and complete on and as
of the Closing Date as though made on that date.
6.5 Brokers and Finders. Neither Purchaser nor any affiliate of
Purchaser has incurred any obligation or liability to any party for any
brokerage fees, agent's commissions, or finder's fees in connection with the
transactions contemplated by the Acquisition Documents.
6.6 Governmental Approval and Consents. Except for the filing of the
appropriate documents pertaining to the HSR Act with the United States Federal
Trade Commission and the United States Department of Justice, and the expiration
of or receipt of an order of termination of the waiting period therefrom, no
consent, approval, or authorization of or declaration, filing, or registration
with any governmental or regulatory authority is required in connection with the
execution, delivery, and performance by Purchaser of this Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE 7
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser as follows:
7.1 Conduct of Business Prior to Closing. From the date hereof to the
Closing Date, and except to the extent that Purchaser shall otherwise consent in
writing, Seller, with respect to the Business, shall:
(a) operate the business substantially as previously operated
and only in the regular and ordinary course;
(b) not purchase or acquire any assets or properties, whether
real or personal, tangible or intangible, that if acquired would be an Acquired
Asset hereunder, and not sell or otherwise dispose of any real or personal
property or asset that would have been an Acquired Asset hereunder, except in
the ordinary course of business and consistent with past practices;
(c) maintain the Acquired Assets in their present order and
condition, reasonable wear and use excepted, and deliver the Acquired Assets to
Purchaser on the
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Closing Date in such condition, and maintain all policies of insurance covering
the Acquired Assets in amounts and on terms substantially equivalent to those in
effect on the date hereof;
(d) take all steps reasonably necessary to maintain the
Intellectual Property and other intangible assets of Seller;
(e) pay all accounts payable in accordance with past practice
and collect all accounts receivable in accordance with past practice, but not
less than in accordance with prudent business practices;
(f) comply with all laws applicable to the conduct of the
Business of Seller where the failure to so comply would have a material and
adverse effect on the Business or the Acquired Assets;
(g) maintain the Books and Records of the Business in the
usual, regular, and ordinary manner, on a basis consistent with past practices
and prepare and file all foreign, federal, state, and local tax returns and
amendments thereto required to be filed by Seller after taking into account any
extensions of time granted by such taxing authorities; and
(h) use reasonable best efforts to preserve the goodwill and
patronage of its customers, Employees, suppliers and others having a business
relationship with Seller.
7.2 Access and Information. Subject to the confidentiality restrictions
set forth in Section 12.1 hereof, from the date hereof to the Closing Date and
during normal business hours, Seller shall afford to Purchaser, its lenders,
counsel, accountants, and other representatives, reasonable access to the
offices, properties, books, contracts, commitments, records, vendors, and
customers of Seller, insofar as the same relate to the Business and the Acquired
Assets, and shall furnish such persons with all information (including financial
and operating data) concerning the Business and the Acquired Assets as they
reasonably may request. Requests for such information shall be coordinated with
Seller's designated representatives, and Seller shall use its best efforts to
assist Purchaser, its lenders, counsel, accountants, and other representatives
in their examination. Purchaser shall cause its lenders, counsel, accountants,
and representatives to, hold in strict confidence all information so obtained
from Seller.
7.3 Notification of Changes. Between the date hereof and the Closing
Date, Seller shall promptly notify Purchaser in writing of any material adverse
change in the financial condition of the Business, any material damage to or
loss of any of the Acquired Assets, or the institution of or, if known by
Seller, the threat of institution of legal, administrative, or other proceedings
against Seller, related to the Business, in which an adverse outcome could
reasonably be expected to have a material adverse effect on the Acquired Assets
or the Business or the occurrence or existence of any unasserted
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proceedings known to Seller that are probable of assertion in which an adverse
outcome could reasonably be expected to have a material adverse effect on the
Acquired Assets or the Business.
7.4 Certain Acts Prohibited. Except as may be necessary to discharge or
deal with the Excluded Liabilities (subject to the limitations of Section 15.1
hereof), from the date hereof to the Closing Date, Seller shall not, without the
prior written consent of Purchaser, take any of the actions described in Section
5.14 hereof.
7.5 Other Transactions. Seller shall deal exclusively and in good faith
with Purchaser with regard to the sale of the Acquired Assets to Purchaser and
will not, and will direct its officers, directors, financial advisors,
accountants, agents, and counsel not to (i) solicit submission of proposals or
offers from any person other than Purchaser relating to any acquisition of all
or any material part of the Acquired Assets (an "Acquisition Proposal"), (ii)
subject to fiduciary obligations under applicable law as advised in writing by
counsel participate in any discussions or negotiations regarding, or furnish any
non-public information to any other person regarding the Business other than
Purchaser and its representatives or otherwise cooperate in any way or assist,
facilitate, or encourage any Acquisition Proposal by any person other than the
Purchaser or, (iii) subject to the provisions of Section 13.2, enter into any
agreement or understanding, whether in writing or, if legally binding, oral,
that would have the effect of preventing the consummation of the transactions
contemplated by this Agreement. If, notwithstanding the foregoing, Seller, or
its representatives or agents should receive any Acquisition Proposal or any
inquiry regarding such proposal from a third party, such persons shall promptly
inform Purchaser and its counsel thereof.
7.6 Consents. Seller shall use its reasonable good faith efforts to
obtain, at its sole cost and expense, prior to the Closing all consents and
estoppels which, in the reasonable judgment of Purchaser, are necessary or
appropriate for the transfer or assignment of each of the material Acquired
Assets and the Business to Purchaser and the consummation of the transactions
contemplated hereby. All such consents and estoppels shall be in writing and in
form and substance reasonably satisfactory to Purchaser, and executed
counterparts thereof will be delivered to Purchaser promptly after receipt
thereof but in no event later than the Closing. In any case where a necessary
consent or approval has not been obtained at or prior to the Closing, Seller
shall assist Purchaser, at Purchaser's request, after Closing in every
reasonable effort to obtain such consent or approval.
7.7 Supplemental Disclosure. Seller shall have the continuing
obligation up to and including the Closing Date to supplement promptly or amend
the Schedules (except that Seller shall be obligated to supplement SCHEDULE
5.9.1 only as of the Closing Date with respect to purchase orders issued or
received by Seller in accordance with Section 7.1) with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or listed in the Schedule;
provided, however, that for the purpose of the rights and obligations of the
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parties hereunder, any such supplemental disclosure shall not be deemed to have
been disclosed for purposes of Section 8.1 hereof unless so agreed to in writing
by Purchaser.
7.8 Additional Reports. Subject to the confidentiality restrictions set
forth in Section 12.1 hereof, promptly after they become available, Seller will
make available to Purchaser true and correct copies of all internal management
and control reports (including aging of accounts receivables, listings of
accounts payable, and inventory control reports) and financial statements
related to the Business and furnished to management of the Business or Seller.
Each such report shall be in accordance with the books and records of Seller,
and, in the case of financial statements shall be prepared in accordance with
the past practices of the Seller.
7.9 Conditions Precedent. Seller shall use its reasonable good faith
efforts to satisfy the conditions enumerated in Article 8 hereof.
7.10 Environmental Permits. Seller shall, at Purchaser's cost and
expense, cause the Environmental Permits, if any, to be assigned or transferred,
to the extent assignable or transferrable, and reissued at the Closing to
Purchaser to the extent permitted by law or the terms of such Environmental
Permits.
7.11 Capital Expenditures. Seller shall cause its management to discuss
with Purchaser any proposed material capital expenditure with respect to the
Business, not committed to by Seller as of the date of this Agreement, to be
made prior to the Closing Date prior to entering into any contract or commitment
for such capital expenditure, other than emergency capital expenditures. No such
material capital expenditure (other than emergency capital expenditures for
repairs and maintenance of the Acquired Assets) shall be made by Seller prior to
the Closing Date without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld or delayed. Seller will promptly notify
Purchaser of the nature and extent of emergency capital expenditures made by
Seller without the prior written consent of Purchaser.
7.12 Discharge of Liens and Encumbrances. All liens, claims, charges,
security interests, pledges, assignments, or encumbrances relating to the
Acquired Assets that are not Permitted Encumbrances shall be satisfied,
terminated, and discharged by Seller on or prior to the Closing Date and
evidence reasonably satisfactory to Purchaser and its counsel of such
satisfaction, termination, and discharge shall be delivered to Purchaser at or
prior to the Closing.
7.13 Environmental Fines. Seller shall upon demand, promptly (but not
before due) pay all fines and assessments that Seller is not disputing in good
faith and by appropriate proceedings, and that are attributable to (a) Seller's
operation of Equipment which was not in compliance with applicable federal,
state, and local laws or regulations relating to environmental protection or (b)
Seller's failure to possess all required Environmental Permits; such fine or
assessment shall be payable to any agency enforcing
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compliance with such laws and regulations or to the Purchaser should the
Purchaser be required to pay such fine or assessment.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions all or any of which may be waived in
writing, in whole or in part, by Purchaser:
8.1 Certificate Regarding Schedules and Representations and Warranties.
All material information required to be furnished or delivered by Seller
pursuant to this Agreement shall have been furnished or delivered as of the date
hereof and as of the Closing Date, as required hereunder; the representations
and warranties made by Seller in Article 5 shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date (except that such representations and warranties may be untrue or
incorrect as a result of actions or transactions expressly permitted by this
Agreement or actions or transactions of Seller made with the prior written
consent of Purchaser); and Purchaser shall have received a certificate dated as
of the Closing Date executed by an authorized officer of Seller to such effect.
8.2 Compliance by Seller. Seller shall have duly performed in all
material respects all of the covenants, agreements, and conditions contained in
this Agreement to be performed by Seller on or prior to the Closing Date, and
Purchaser shall have received a certificate, dated as of the Closing Date,
executed by an authorized officer of Seller, to such effect.
8.3 No Injunction; Etc. No action, proceeding, investigation,
regulation, or legislation shall be pending or threatened which seeks to enjoin,
restrain, or prohibit Purchaser, or to obtain substantial damages from
Purchaser, in respect of the consummation of the transactions contemplated
hereby, or which seeks to enjoin the operation of all or a material portion of
the Business or the Acquired Assets, which, in the reasonable judgment of
Purchaser, would make it inadvisable to consummate the transactions contemplated
by this Agreement.
8.4 Operation in the Ordinary Course. Since July 31, 1998, Seller shall
have operated the Business of Seller in the ordinary course (except as otherwise
permitted by this Agreement or as agreed to by Purchaser as evidenced by
Purchaser's prior written consent).
8.5 Consents; Authorizations; Approval of Legal Matters. Purchaser
shall have received a true and correct copy of each consent and waiver
identified on any Schedule hereto as being requested by Purchaser that is (a)
required for the assignment of
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the Contracts (including, without limitation, all documents evidencing Seller's
interest in the Leased Real Property, and all sidetrack and industrial track
agreements benefiting the Leased Real Property or the Real Property with respect
to tracks presently being used by Seller), Permits, Intellectual Property, and
other agreements and assets and (b) otherwise required for the execution,
delivery, and performance of this Agreement by Seller. All authorizations,
orders, or approvals of any governmental commission, board, or other regulatory
body, shall have been obtained. Purchaser shall have received a certificate
dated as of the Closing Date, executed by an authorized officer of Seller to the
foregoing effect, and Purchaser shall be reasonably satisfied with the terms,
conditions, and restrictions of and obligations under each such authorization,
order, or approval. Additionally, Seller shall have complied with any and all
options, repurchase agreements, and rights of first refusal relating to the
Acquired Assets such that all applicable rights of third parties thereunder have
either expired, lapsed or been waived.
8.6 Transfer of Environmental Permits. The Environmental Permits shall
have been assigned to or transferred to Purchaser to the extent permitted by law
or the terms of the Environmental Permits, and Purchaser shall have received a
certificate dated as of the Closing Date, executed by an authorized officer of
Seller to the foregoing effect.
8.7 Leases. Seller shall have obtained the written consent of each
lessor of the Leased Real Property, to the extent required by the terms of the
applicable Lease, to the assignment of the Real Property Leases to Purchaser and
Seller shall have delivered copies of such consents to Purchaser.
8.8 Incumbency. Purchaser shall have received a certificate of
incumbency of Seller executed by the Secretary or Assistant Secretary of Seller
listing the officers of Seller authorized to execute the agreement and the
instruments of transfer on behalf of Seller, certifying the authority of each
such officer to execute the agreements, documents, and instruments on behalf of
Seller in connection with the consummation of the transactions contemplated
herein.
8.9 Certified Resolutions. Purchaser shall have received a certificate
of the Secretary or Assistant Secretary of Seller containing a true and correct
copy of the resolutions duly adopted by the respective boards of directors of
each of Image and Maxim, approving and authorizing each Acquisition Document and
the transactions contemplated hereby and thereby. The Secretary or Assistant
Secretary of Seller shall also certify that such resolutions have not been
rescinded, revoked, modified, or otherwise affected and remain in full force and
effect.
8.10 Basic Corporate Documents. Seller shall have delivered to
Purchaser on the Closing Date copies of certificates from the Secretaries of
State in each jurisdiction listed on SCHEDULE 5.1.1, indicating that, as of a
date within twenty (20) days prior to the Closing Date, Seller was in good
standing and had paid all taxes required to have been paid as of such date.
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8.11 Satisfaction of Title Objections and Release of Certain Liens.
Seller shall have satisfied Purchaser's title objections to the extent required
under Section 4.3 and, in addition, Purchaser at its discretion shall have
received Uniform Commercial Code searches (which searches shall be made or
caused to be made by and at the expense of Purchaser) of filings made pursuant
to Article 9 thereof in all jurisdictions where any of the Acquired Assets are
located, in form, scope, and substance reasonably satisfactory to Purchaser and
its counsel, which searches shall reflect the release or termination of liens,
claims, security interests, or encumbrances against any of the Acquired Assets
disclosed thereby that are not Permitted Encumbrances, and to the extent any
such release or termination is not reflected of record, Purchaser shall have
received evidence reasonably satisfactory to it, that all such liens and
encumbrances against the Acquired Assets other than Permitted Encumbrances have
been released or terminated prior to or at the Closing.
8.12 Accuracy of Schedules. Examination by Purchaser shall not have
disclosed any material inaccuracy in the representations and warranties of
Seller, set forth in this Agreement or in the Schedules delivered to Purchaser
pursuant hereto.
8.13 No Adverse Change. There shall not have been any material adverse
change in the Acquired Assets or the Business since July 31, 1998, and Purchaser
shall have received a certificate dated as of the Closing Date, executed by an
authorized officer of Seller to such effect.
8.14 Instruments of Transfer. Seller shall have delivered to Purchaser
such deeds, bills of sale, motor vehicle titles, endorsements, assignments,
licenses, and other good and sufficient instruments of conveyance and transfer
and any other instruments reasonably deemed appropriate by counsel to Purchaser
all in form and substance reasonably satisfactory to counsel to Purchaser to
vest in Purchaser all of Seller's rights, title, and interest with respect to
the Acquired Assets, free and clear of all liens, charges, encumbrances,
pledges, or claims of any nature except for Permitted Encumbrances.
8.15 Acquisition Documents. Purchaser shall have received the
Acquisition Documents to which Seller is a party, executed by Seller.
8.16 Opinion of Seller's Counsel. Purchaser shall have received the
Seller Opinion, executed by Xxxxx, Xxxxxxxx & Xxxxxxx LLP, counsel for Seller,
which opinion may be based upon and incorporate the 1992 edition of the
Interpretive Standards applicable to Legal Opinions to Third Parties in
Corporate Transactions adopted by the Legal Opinion Committee of the Corporate
and Banking Law Section of the State Bar of Georgia.
8.17 Title Commitments; Surveys. Purchaser, provided that Purchaser has
used its best efforts to acquire the following at Purchaser's sole cost and
expense, shall have received title commitments from a nationally recognized
title company selected by Purchaser for the issuance to Purchaser at the Closing
of an owner's policy of title
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insurance on ALTA Form A, and surveys, for the Real Property (the "Title
Commitments"), which shall be reasonably satisfactory to Purchaser.
8.18 Real and Leased Property Certificates. Purchaser shall have
received prior to Closing, in form and substance reasonably satisfactory to
Purchaser, the Agreements of Estoppel, Consent and Waiver and Landlords' Consent
to Lease Assignments for the Leased Real Property.
8.19 Proceedings. The form and substance of all opinions, certificates,
assignments, orders, and other documents and instruments, hereunder shall be
satisfactory in all reasonable respects to Purchaser and its counsel.
8.20 Names. Seller shall, simultaneously with Closing, cease to use in
any manner whatsoever the trade names included among the Acquired Assets and
described on SCHEDULE 5.10, except in connection with tax returns, filings with
other governmental authorities, and similar purposes. Image agrees, concurrently
with the Closing, to change its corporate name to a name which does not contain
the word "Image."
8.21 Condition of Acquired Assets. On the Closing Date, all of the
Acquired Assets shall be in substantially the same condition as at the close of
business on the date hereof, except for ordinary use and wear thereof and
changes occurring in the ordinary course of business or expressly permitted by
this Agreement between the date hereof and the Closing Date, and Purchaser shall
have received a certificate dated as of the Closing Date, executed by an
authorized officer of Seller to such effect; provided, however, if on or prior
to the Closing Date any of the Acquired Assets shall have suffered loss or
damage on account of fire, flood, accident, act of war, civil commotion, or any
other cause or event beyond the reasonable power and control of Seller (whether
or not similar to the foregoing) to an extent which, in the reasonable opinion
of Purchaser, materially affects the value of the Acquired Assets, taken as a
whole, Purchaser shall have the right either (a) to terminate this Agreement and
all of Purchaser's obligations hereunder without incurring any liability to
Seller as a result of such termination or (b) to consummate the transactions
provided for herein and be paid the full amount of all insurance proceeds, if
any, paid or payable to Seller, in respect of such loss plus an amount equal to
any deductible or co-insurance reserve applicable to such loss. If under the
circumstances described in the foregoing sentence, Purchaser shall elect to
consummate the transactions provided for herein, Seller shall, on demand, pay to
Purchaser the full amount of any insurance proceeds received by Seller in
respect of any such loss, together with any deductible or co-insurance reserve
applicable to such loss.
8.22 HSR Act. The consent or approval of, or the expiration of the
applicable waiting period imposed by, any governmental authority under the
Xxxx-Xxxxx-Xxxxxx Act, shall have been obtained or shall have expired.
8.23 Completion of Environmental Audit. Purchaser shall have received
the Environmental Audit Reports not less than ten (10) days prior to the Closing
Date, and
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Purchaser shall be reasonably satisfied with the arrangements made by Seller to
remediate the Environmental Liabilities, if any, set forth on the Environmental
Audit Report.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date hereunder, of each of the following conditions, all or any of which may be
waived, in whole or in part, by Seller.
9.1 Certificate Regarding Representations and Warranties. All material
information required to be furnished or delivered by Purchaser pursuant to this
Agreement shall have been furnished or delivered as of the date hereof and the
Closing Date as required hereunder; the representations and warranties made by
Purchaser in Article 6 hereof shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date; and
Seller shall have received a certificate dated the Closing Date, executed by an
authorized officer of Purchaser to such effect.
9.2 Compliance by Purchaser. Purchaser shall have duly performed in all
material respects all of the covenants, agreements, and conditions contained in
this Agreement to be performed by Purchaser on or before the Closing Date, and
Seller shall have received a certificate dated the Closing Date, executed by an
authorized officer of Purchaser, to such effect.
9.3 Certified Resolutions. Seller shall have received from Purchaser a
certificate executed by the Secretary of Purchaser containing a true and correct
copy of resolutions duly adopted by Purchaser's Board of Directors approving and
authorizing this Agreement and each of the other Acquisition Documents to which
Purchaser is a party and each of the transactions contemplated thereby. The
Secretary or Assistant Secretary of Purchaser shall also certify that such
resolutions have not been rescinded, revoked, modified, or otherwise affected
and remain in full force and effect.
9.4 Basic Corporate Documents. Purchaser shall have delivered to Seller
on the Closing Date a copy of a certificate from the Secretary of State in
Delaware, indicating that, as of a date within twenty (20) days prior to the
Closing Date, Purchaser was in good standing, and had paid all taxes required to
have been paid as of such date.
9.5 No Injunction; Etc. No action, proceeding, investigation,
regulation, or legislation shall be pending or overtly threatened which seeks to
enjoin, restrain, or prohibit Seller, or to obtain substantial damages from
Seller, in respect of the consummation of the transactions contemplated hereby,
which, in the reasonable judgment of Seller, would make it inadvisable to
consummate such transactions.
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9.6 Incumbency. Seller shall have received a certificate of incumbency
of Purchaser executed by the Secretary or Assistant Secretary of Purchaser
listing the officers of Purchaser authorized to execute this Agreement and the
other Acquisition Documents to which Purchaser is a party and the instruments of
assumption on behalf of Purchaser and certifying the authority of each such
officer to execute the agreements, documents, and instruments on behalf of
Purchaser in connection with the consummation of the transactions contemplated
herein.
9.7 Certificates. Seller shall have received from Purchaser all such
certificates, dated as of the Closing Date, as Seller shall reasonably request
to evidence the fulfillment by Purchaser, or such other satisfaction as of the
Closing Date, of the terms and conditions of this Agreement.
9.8 Acquisition Documents. Seller shall have received the Acquisition
Documents to which Purchaser is a party (particularly including, but not limited
to, such documents and instruments necessary to evidence Purchaser's assumption
of the Assumed Liabilities, including the Pollution Control Bonds), executed by
Purchaser.
9.9 Opinion of Purchaser's Counsel. Seller shall have received the
Purchaser Opinion, executed by Xxxxxx & Bird LLP, counsel for Purchaser, which
opinion may be based upon and incorporate the 1992 edition of the Interpretive
Standards applicable to Legal Opinions to Third Parties in Corporate
Transactions adopted by the Legal Opinion Committee of the Corporate and Banking
Law Section of the State Bar of Georgia.
9.10 Xxxx-Xxxxx-Xxxxxx Act. The consent or approval of, or the
expiration of the applicable waiting period imposed by, any governmental
authority under the Xxxx-Xxxxx-Xxxxxx Act, shall have been obtained or shall
have expired.
9.11 Resignations. Image and Maxim shall have each received the written
resignation of H. Xxxxxxx Xxxxxxx from all positions as an officer and director
of each such corporation.
9.12 Proceedings. The form and substance of all opinions, certificates,
assignments, orders and other documents and instruments hereunder shall be
satisfactory in all reasonable respects to Seller and its counsel.
ARTICLE 10
MUTUAL COVENANTS
10.1 Governmental Filings. Purchaser and Seller, to the extent legally
required, shall promptly prepare, file, and diligently prosecute at the earliest
practicable time after the date hereof all applications and filings required by
federal or state law in order to effect the transactions contemplated by this
Agreement.
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10.2 Further Mutual Covenants. Purchaser and Seller shall each take all
actions contemplated by this Agreement, and, subject to Purchaser's and Seller's
right to terminate this Agreement pursuant to Article 13 hereof, do all things
reasonably necessary to effect the consummation of the transactions contemplated
by this Agreement. Except as otherwise provided in this Agreement, Purchaser and
Seller shall each refrain from knowingly taking or failing to take any action
which would render any of the representations or warranties contained in
Articles 5 or 6 of this Agreement in any material respect inaccurate as of the
Closing Date. Each party shall promptly notify the other party of any action,
suit, or proceeding that shall be instituted or threatened against such party to
restrain, prohibit, or otherwise challenge the legality of any transaction
contemplated by this Agreement.
10.3 Prorations.
(a) To the extent not included in the Assumed Liabilities,
Utility Charges, Rental Charges, Equipment Charges, Real Property Taxes,
Personal Property Taxes, and Service Contracts including, without limitation,
accruals or prepayments thereof (all as individually defined below and
collectively called the "Proration Items"), shall be prorated directly between
the Seller and the Purchaser as provided in this Section 10.3.
(b) For purposes of this Section 10.3, the capitalized terms
set forth below shall have the following meanings:
(i) "Utility Charges" shall mean water, sewer,
electricity, gas and other utility charges, if any, applicable to the Real
Property or the Leased Real Property;
(ii) "Rental Charges" shall mean common area
maintenance charges, merchant association dues, insurance reimbursement and
rental charges payable or receivable and other payments or receipts (other than
Real Property Taxes) applicable to the Leased Real Property;
(iii) "Equipment Charges" shall mean rental charges
payable or receivable and other payments or receipts applicable to the
Equipment;
(iv) "Real Property Taxes" shall mean ad valorem
taxes imposed upon the Real Property and any portion of the Leased Real
Property, general assessments imposed with respect to the Leased Real Property
and special assessments upon the Leased Real Property, whether payable in full
or by installments prior to the Closing Date; and
(v) "Personal Property Taxes" shall mean ad valorem
taxes imposed upon the Acquired Assets other than the Real Property or the
Leased Real Property.
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(c) As soon as practicable after the Closing Date, all Utility
Charges, Rental Charges, Equipment Charges, Real Property Taxes, Personal
Property Taxes, and Service Contracts (including amounts owed pursuant to
transferable state licenses applicable to the Acquired Assets and transferred to
Purchaser hereunder) which are not included in the Assumed Liabilities shall be
apportioned to the Closing Date, and representatives of the Seller and Purchaser
will examine all relevant books and records as of the Closing Date in order to
make the determination of the apportionments, which determinations shall be
calculated in accordance with past practices. Payments in respect thereof shall
be made to the appropriate party by check within thirty (30) days after such
determination, except that payments for Real Property Taxes and Personal
Property Taxes shall initially be determined based on the previous year's taxes
and shall later be adjusted to reflect the current year's taxes when the tax
bills are finally rendered. The parties shall fully cooperate to avoid, to the
extent legally possible, the payment of duplicate Personal Property Taxes, and
each party shall furnish, at the request of the other, proof of payment of any
Personal Property Taxes or other documentation which is a prerequisite to
avoiding payment of a duplicate tax.
(d) In the event that either party (the "Payor") pays a
Proration Item (other than if and to the extent included in the Assumed
Liabilities) for which the other party (the "Payee") is obligated in whole or in
part under this Section 10.3, the Payor shall present to the Payee evidence of
payment and a statement setting forth the Payee's proportionate share of such
Proration item, and the Payee shall promptly pay such share to the Payor. In the
event either party (the "Recipient") receives payments of a Proration Item to
which the other party (the "Beneficiary") is entitled in whole or in part under
this Agreement, the Recipient shall promptly pay such share to the Beneficiary.
(e) In the event there exists as of the Closing Date any
pending appeals of ad valorem tax assessments with regard to any Acquired
Assets, the continued prosecution and/or settlement of such appeals shall be
subject to the direction and control of Purchaser with respect to assessments
for the year within which the Closing occurs.
ARTICLE 11
POST CLOSING MATTERS
11.1 Employment of Employees. On or before the Closing Date, Purchaser
shall offer employment to all salaried and nonsalaried employees of the Business
(except for (a) employees who are on Seller's salary continuation program for
employees of the Business, or (b) employees who are otherwise on any leave or
part-time status, other than vacation leave, maternity leave or any leaves taken
in connection with the Family and Medical Leave Act of 1993 at the Closing Date
or (c) Xxxx XxXxxxx and Xxxxx Xxxxxx, each of whom is an employee of the
Business as of the date of this Agreement, but who will become employees of
Maxim on or prior to the Closing Date, and thereafter will provide services to
the Business on an independent contractor or consulting basis as reasonably
requested by Purchaser) at substantially equivalent rates of pay and working
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conditions, respectively, offered by Purchaser to similarly situated employees
of Purchaser on the date of this Agreement. All employees of the Business
accepting Purchaser's offer of employment are hereinafter referred to as the
"Hired Employees." Seller shall be responsible for the payment of all earned but
unpaid salaries, bonus, vacation pay, sick pay, holiday pay, severance pay and
other like obligations and payments to the employees of the Business for all
periods ending on or prior to the Effective Time, other than such of the
foregoing that are included in Assumed Employment Obligations, and Purchaser
shall be responsible for all Assumed Employment Obligations. Seller shall be
responsible for the payment of any amounts due to its employees (including the
Hired Employees) pursuant to the Company Benefit Plans as a result of the
employment of its employees, and, in determining bonuses and other similar
payments due to Hired Employees for any period ended on or prior to the
Effective Time, Seller shall, if payment thereof will occur after the Effective
Time, waive any requirement that such employees be employees of Seller on the
date such bonuses or other similar payments are paid. Seller shall be
responsible for all incurred but unreported or unpaid medical claims occurring
prior to the Effective Time and for the cost associated with any hospital
confinement which commences prior to the Effective Time. Seller shall be
responsible for (a) all liabilities arising under the Company Benefit Plans or
(b) liabilities associated with any leaves taken prior to the Closing Date in
connection with the Family and Medical Leave Act of 1993. Effective on the
Closing Date, Seller shall, and hereby does, release all Hired Employees from
any employment and/or confidentiality agreement previously entered into between
Seller and such Hired Employees relating to the Business to the extent (but only
to the extent) necessary for Purchaser to operate the Business in the same
manner as operated by Seller prior to the Closing Date. Seller does not release
any Hired Employee from any confidentiality agreement executed by such Hired
Employee in favor of third parties relating to receipt of confidential
information in connection with potential business acquisitions.
11.2 Seller's Benefit Plans. Purchaser shall assume no responsibility
with regard to any Company Benefit Plans of Seller. To the extent necessary,
Seller may continue to communicate with the Hired Employees regarding their
rights and entitlement to any benefits under the Company Benefit Plans, subject
to Purchaser's prior approval, which shall not be unreasonably withheld, and the
parties shall cooperate with each other in the administration of all applicable
employee benefit plans and programs. In the event that the Seller's Code Section
401(k) plan terminates, Seller shall file such plan with the Internal Revenue
Service for a determination that the plan is qualified upon termination prior to
distributing any assets held under the Seller's Code Section 401(k) plan.
Purchaser agrees to use its best efforts to enable Hired Employees with
outstanding loan balances under the Seller's Code Section 401(k) plan to
continue loan repayments or to permit rollovers of such outstanding loan
balances to the Purchaser's Code Section 401(k) plan.
11.3 Vacation Pay. Purchaser agrees to give each Hired Employee credit
for prior years of service with Seller for purposes of calculating vacation pay
that may be received pursuant to the vacation pay policy of Purchaser as is or
may be in effect from time to time after the Closing, and will waive any
eligibility requirements of such policy
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with respect to Hired Employees. Purchaser will allow the Hired Employees to
take any unused vacation days during the remainder of the calendar year in which
the Closing Date occurs provided that such vacation days are accrued on the
Closing Balance Sheet but unused under the Company Benefit Plans.
11.4 Purchaser's Benefit Plans. For purposes of Purchaser's employee
benefit plans, each Hired Employee shall receive credit for prior years of
service with Seller for purposes of eligibility and vesting under such plans and
shall be entitled to participate in any such Purchaser's employee benefit plans
without the application of any applicable waiting periods. Purchaser shall also
permit the Hired Employees and their eligible dependents to participate in its
applicable group medical plans immediately. Purchaser shall not be required to
waive any waiting periods or any restrictions and limitations on preexisting
medical conditions under its medical plans, except as required by law. Purchaser
shall recognize all medical expenses incurred by Hired Employees and their
eligible dependents during the remainder of the calendar year in which the
Closing occurs for purposes of satisfying the existing calendar year deductibles
and such calendar year's co-payment limitations, if any.
11.5 Employee Files. To the extent permitted by law, on the Closing
Date, or as soon as practicable thereafter, Seller shall deliver to a designee
of Purchaser all historical personnel records of each of the Hired Employees,
including, but not limited to, employment agreements, confidentiality and
noncompete agreements, employment applications, corrective action reports,
disciplinary reports, notices of transfer, notices of rate changes and other
similar documents. Seller shall be entitled to make, at Seller's expense, and to
retain copies of all such employee files and records as described in the
preceding sentence. Both Seller and Purchaser acknowledge and agree that the
employee files and records described in such preceding sentence constitute part
of the Acquired Assets, and Purchaser hereby further covenants and agrees to
maintain the confidentiality of such records, and not to release any information
contained therein to any person not legally entitled to receive such information
or to permit such files and records to be used for any unlawful purpose.
11.6 Non-Solicitation. Seller shall terminate effective as of the
Closing Date all employment agreements it has with any of the Hired Employees.
Until the expiration of two (2) years after the Closing Date, Seller shall not
directly or indirectly solicit or offer employment to any Hired Employee who is
then an employee of Purchaser, or who has terminated such employment without the
consent of Purchaser within one (1) year of such solicitation or offer, and
Purchaser shall not directly or indirectly solicit or offer employment to any
person who, after the Closing Date is then an employee of Seller or who has
terminated such employment without the consent of Seller within one (1) year of
such solicitation or offer.
11.7 Discharge of Business Obligations. From and after the Closing
Date, Seller shall pay and discharge, in accordance with past practice but not
less than on a timely basis, all obligations and liabilities incurred prior to
the Closing Date in respect of the
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Business, its operations or the assets and properties used therein (except for
those expressly assumed by Purchaser hereunder), including without limitation
any liabilities or obligations to employees and clients of the Business.
11.8 Maintenance of Books and Records. Each of Seller and Purchaser
shall preserve until the seventh anniversary of the Closing Date all Books and
Records possessed or to be possessed by such party relating to any of the
assets, liabilities or business of the Business prior to the Closing Date.
Seller shall give Purchaser written notice of any Books and Records discovered
by Seller that were not transferred to Purchaser because such Books and Records
were not located on the Real Property or the Leased Real Property. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties and their representatives with access, upon prior reasonable
written request specifying the need therefor, during regular business hours, to
(i) the officers and employees of such party and (ii) the books of account and
records of such party, but, in each case, only to the extent relating to the
assets, liabilities or business of the Business prior to the Closing Date, and
the other parties and their representatives shall have the right to make copies
of such books and records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further, provided, that, as to
so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party, its affiliates,
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may then
be destroyed after the 60th day after such notice is given unless another party
objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
11.9 Payments Received. Seller and Purchaser each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation, any insurance
proceeds, and will account to the other for all such receipts. From and after
the Closing, Purchaser shall have the right and authority to endorse without
recourse the name of Seller on any check or any other evidences of indebtedness
received by Purchaser on account of the Business and the Acquired Assets
transferred to Purchaser hereunder.
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11.10 UCC Matters. From and after the Closing Date, Seller will
promptly refer all inquiries with respect to ownership of the Acquired Assets or
the Business to Purchaser. In addition, Seller will execute such documents and
financing statements as Purchaser may reasonably request from time to time to
evidence transfer of the Acquired Assets to Purchaser, including any necessary
assignments of financing statements.
11.11 Covenant Not to Compete. Each of Maxim and Image agrees that for
a period of three (3) years commencing on the Closing Date, neither Maxim, Image
nor any subsidiary of either, nor any joint venture or other entity in which
Maxim, Image, or any subsidiary of either has a controlling interest, within the
Territory (as hereinafter defined), will own, manage, operate, join, control or
participate in the ownership, management, operation or control of, any business,
whether in corporate, proprietorship or partnership form or otherwise where such
business is engaged in the manufacture, from new and recycled materials, of PET
flake, pellets and fiber (a "Competing Business"). As used herein, the term
"Territory" means the territorial United States. The parties hereto specifically
acknowledge and agree that the remedy at law for any breach of the foregoing
will be inadequate and that the Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage. In the event that the provisions
of this Section 11.11 should ever be deemed to exceed the limitation provided by
applicable law, then the parties hereto agree that such provisions shall be
reformed to set forth the maximum limitations permitted.
11.12 Cooperation. Seller and Purchaser shall cooperate with each other
in all reasonable respects in connection with the defense of any claim included
within any Assumed Liability or Excluded Liability, as the case may be,
including making available records relating to such claim and furnishing,
without expense, management employees of the party as may be reasonably
necessary for the preparation of the defense of any such claim or for testimony
as a witness in any proceeding relating to such claim; provided, however, that
the foregoing right to cooperation shall not be exercisable by one party in such
a manner as to interfere unreasonably with the normal operations and business of
the other party.
ARTICLE 12
CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS
12.1 Confidentiality. The provisions of that certain Confidentiality
Agreement dated September 28, 1998 by and between Purchaser and Maxim are hereby
incorporated herein in their entirety.
12.2 Public Announcements. Seller and Purchaser will consult with each
other before issuing any press releases or otherwise making any public
statements or filings with governmental entities with respect to this Agreement
or the transactions contemplated hereby and shall not issue any press releases
or make any public statements or filings with
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governmental entities prior to such consultation and shall modify any portion
thereof if the other party reasonably objects thereto, unless the same may be
required by applicable law.
ARTICLE 13
TERMINATION
13.1 Termination. This Agreement may be terminated:
(a) by the mutual consent of Purchaser and Seller;
(b) by Purchaser: (i) if any material condition in Article 8
becomes impossible of performance or has not been satisfied in full or
previously waived by Purchaser in writing at or prior to the Closing Date, (ii)
as provided in Sections 4.3(b), 4.6(c), 4.7, or 8.21 hereof;
(c) by Seller if any material condition in Article 9 becomes
impossible of performance or has not been satisfied in full or previously waived
by Seller in writing at or prior to the Closing Date;
(d) by Seller if the combined amount of the Environmental
Remediation Estimate and the Y2K Liabilities exceeds Three Million Dollars
($3,000,000); or
(e) by either party (other than a party that is in material
breach of its obligations under this Agreement) if the Closing shall not have
occurred on or before January 31, 1999.
13.2 Effect of Termination; Termination Fee.
(a) In the event of the termination of this Agreement by
either Seller or Purchaser pursuant to Section 13.1, this Agreement shall
forthwith become null and void and there shall be no liability or obligation on
the part of Seller or Purchaser or their respective officers or directors except
with respect to Section 12.1 and Article 15.
(b) If, notwithstanding the satisfaction of all the conditions
set forth in Article 8, unless the Agreement has been terminated pursuant to
Section 13.1, Purchaser is not willing to consummate the transactions
contemplated by this Agreement, then Purchaser shall pay to Seller a termination
fee of $5,000,000. Such payment shall constitute liquidated damages in full and
complete satisfaction of, and shall be Seller's sole and exclusive remedy for,
any loss, liability, damage or claim arising out of or in connection with any
such termination of this Agreement or the facts and circumstances resulting in
such termination or otherwise related to or otherwise arising out of or in
connection with this Agreement. The payment required to be made pursuant to this
Section 13.2(b) shall be made not later than two (2) business days after the
date of any such willful failure of Purchaser to close.
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(c) If: (1) notwithstanding the satisfaction of all the
conditions set forth in Article 9, unless the Agreement has been terminated
pursuant to Section 13.1, Seller is not willing to consummate the transactions
contemplated by this Agreement or (2) Seller commits a breach of Section
7.5(iii) hereof, then Seller shall pay to Purchaser a termination fee of
$5,000,000. Such payment shall constitute liquidated damages in full and
complete satisfaction of, and shall be Purchaser's sole and exclusive remedy
for, any loss, liability, damage or claim arising out of or in connection with
any such termination of this Agreement or the facts and circumstances resulting
in such termination or otherwise related to or otherwise arising out of or in
connection with this Agreement. The payment required to be made pursuant to this
Section 13.2(c) shall be made not later than two (2) business days after the
date of any such willful failure of Seller to close or Seller's breach of
Section 7.5(iii).
ARTICLE 14
INDEMNIFICATION
For the purposes of this Article 14, "Losses" shall mean any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, diminution of value, removal and remediation requirements
and expenses, including without limitation, interest, penalties, and reasonable
attorneys' and other professional fees and expenses.
14.1 Agreement of Seller to Indemnify. Subject to the terms and
conditions of this Article 14, Seller agrees to indemnify, defend, and hold
harmless Purchaser and its officers, directors, shareholders, employees and
agents (collectively, the "Purchaser Indemnitees") from, against, for, and in
respect of any and all Losses asserted against, relating to, imposed upon, or
incurred by the Purchaser Indemnitees by reason of, resulting from, based upon,
or arising out of:
(a) the breach of any representation or warranty of Seller
contained in or made pursuant to this Agreement or in any certificate, Schedule,
or Exhibit furnished by Seller in connection herewith;
(b) the breach of any covenant or agreement of Seller
contained in or made pursuant to this Agreement;
(c) any Excluded Liability;
(d) any Environmental Liabilities as and to the extent
provided in Section 4.5; and
(e) any Y2K Liabilities as and to the extent provided in
Section 4.6.
14.2 Agreement of Purchaser to Indemnify Seller. Subject to the terms
and conditions of this Article 14, Purchaser agrees to indemnify, defend, and
hold harmless
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Seller and its officers, directors, shareholders, employees and agents
(collectively, the "Seller Indemnitees") from, against, for, and in respect of
any and all Losses asserted against, relating to, imposed upon, or incurred by
the Seller Indemnities arising out of:
(a) the breach of any representation or warranty of Purchaser
contained in or made pursuant to this Agreement or any other Acquisition
Document or in any certificate, Schedule, or Exhibit furnished by Purchaser in
connection herewith or therewith;
(b) the breach of any covenant or agreement of Purchaser
contained in or made pursuant to this Agreement or any other Acquisition
Document; and
(c) any (i) Assumed Liability and (ii) liability arising out
of the operation of the Business by Purchaser after the Closing Date, except for
any liability against which Purchaser is entitled to indemnification pursuant to
Section 14.1.
14.3 Procedures for Indemnification. As used herein, the term
"Indemnitor" means the party against whom indemnification hereunder is sought,
and the term "Indemnitee" means the party seeking indemnification hereunder.
(a) A claim for indemnification hereunder ("Indemnification
Claim") shall be made by the Indemnitee by delivery of a written declaration to
the Indemnitor requesting indemnification and specifying the basis on which
indemnification is sought and the amount of asserted Losses and, in the case of
a Third Party Claim (as hereinafter defined), containing (by attachment or
otherwise) such other information as the Indemnitee shall have concerning such
Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim,
the procedures set forth in Section 14.4 hereof shall be observed by the
Indemnitee and the Indemnitor.
(c) If the Indemnification Claim involves a matter other than
a Third Party Claim, the Indemnitor shall have thirty (30) business days to
object to such Indemnification Claim by delivery of a written notice of such
objection to the Indemnitee specifying in reasonable detail the basis for such
objection. Failure to timely so object shall constitute a final and binding
acceptance of the Indemnification Claim by the Indemnitor and the
Indemnification Claim shall be paid in accordance with Section 14.3(d) hereof.
If an objection is timely interposed by the Indemnitor, then the Indemnitee and
the Indemnitor shall negotiate in good faith for a period of sixty (60) business
days from the date (such period is hereinafter referred to as the "Negotiation
Period") the Indemnitee receives such objection prior to commencing any formal
legal action, suit or proceeding with respect to such Indemnification Claim.
(d) Upon determination of the amount of an Indemnification
Claim that is binding on both the Indemnitor and the Indemnitee, the Indemnitor
shall pay the amount
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of such Indemnification Claim by check within ten (10) business days of the date
such amount is determined.
14.4 Defense of Third Party Claims. Should any claim be made, or suit
or proceeding (including, without limitation, a binding arbitration or an audit
by any taxing authority) be instituted against the Indemnitee which, if
prosecuted successfully, would be a matter for which the Indemnitee is entitled
to indemnification under this Agreement (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) The Indemnitor shall have thirty (30) days (or such lesser
time as may be necessary to comply with statutory response requirements for
litigation claims, provided the notice from the Indemnitee specifies the last
day for response within such lesser time, and the statutory provision requiring
such shortened response period) from receipt of the Indemnification Claim (the
"Notice Period") to notify the Indemnitee, (i) whether or not the Indemnitor
disputes its liability to the Indemnitee with respect to such claim, and (ii)
notwithstanding any such dispute, whether or not the Indemnitor desires, at its
sole cost and expense, to defend the Indemnitee against such claim.
(i) In the event that the Indemnitor notifies the
Indemnitee within the Notice Period that it desires to defend the Indemnitee
against such claim then, except as hereinafter provided, the Indemnitor shall
have the right to defend the Indemnitee by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by the Indemnitor to a final
conclusion in such a manner as to minimize the risk of the Indemnitee becoming
subject to liability for any other significant matter. If the Indemnitee desires
to participate in, but not control, any such defense or settlement, it may do so
at its sole cost and expense. If any such claim or the litigation or resolution
of any such claim involves (i) the administration of the tax returns and
responsibilities of the Indemnitee under the tax laws or (ii) a dispute with a
then-current significant (being one of the 25 largest, as measured by revenue
volume of business with the Business during the preceding twelve months)
customer or supplier of the Business, then the Indemnitee shall have the right
to control the defense or settlement of any such claim or demand and its
reasonable costs and expenses shall be included as part of the indemnification
obligation of the Indemnitor. If the Indemnitee should elect to exercise such
right, the Indemnitor shall have the right to participate in, but not control,
the defense or settlement of such claim at its sole cost and expense.
(ii) Except where the Indemnitor (A) timely elects to
defend the Indemnitee against such claim or demand (in which case Section
14.4(a)(i) shall govern), or (B) Indemnitor disputes its liability in a timely
manner under this Section 14.4, the Indemnitor shall be conclusively liable for
the amount of any Loss resulting from such claim or defense which is
unsuccessful.
(b) The Indemnitee and the Indemnitor shall cooperate with
each other in all reasonable respects in connection with the defense of any
Third Party Claim,
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including making available records relating to such claim and furnishing,
without expense to the Indemnitor, management employees of the Indemnitee as may
be reasonably necessary for the preparation of the defense of any such claim or
for testimony as witness in any proceeding relating to such claim.
14.5 Settlement of Third Party Claims. No settlement of a Third Party
Claim involving the asserted liability of the Indemnitee under this Article 14
shall be made without the prior written consent by or on behalf of the
Indemnitee, which consent shall not be unreasonably withheld or delayed. Consent
shall be presumed in the case of settlements of $20,000 or less where the
Indemnitee has not responded within twenty (20) business days of written notice
of a proposed settlement.
14.6 Duration. The indemnification rights of the parties hereto for
Losses resulting from a breach of representations and warranties or for breaches
of covenants contained in this Agreement or any other Acquisition Document
(other than for tax, employee benefit, and environmental matters) is subject to
the condition that the Indemnitor shall have received written notice of the
Losses for which indemnity is sought within two (2) years after the Closing
Date. The indemnification rights of the parties hereto for Losses resulting from
a breach of representations and warranties or for breaches of covenants that are
related to environmental matters is subject to the condition that the Indemnitor
shall have received written notice of the Losses for which indemnity is sought
within ten (10) years of the Closing Date. The indemnification rights of the
parties hereto for Losses resulting from a breach of representations and
warranties or for breaches of covenants that are related to tax or employee
benefit matters is subject to the condition that the Indemnitor shall have
received written notice of the Losses for which indemnity is sought prior to the
expiration of the applicable statute of limitations therefor. The
indemnification rights of the parties hereto for Losses resulting from a breach
of any representation and warranty with respect to title to any of the Acquired
Assets, or with respect to the breach of any agreement or undertaking with
respect to payment of the Excluded Liabilities or Assumed Liabilities shall be
effective for all purposes hereunder without limitation as to the time within
which such notice may be given; provided, however, that as to title to the Real
Property conveyed hereunder, Purchaser shall pursue all rights and remedies
available to it first through the title insurance policies purchased by
Purchaser prior to seeking indemnification from Seller hereunder.
14.7 Limitations.
(a) The Indemnitor shall be obligated to indemnify the
Indemnitee only when the sum of: (i) the aggregate of all Identified
Environmental Liabilities paid by Purchaser and Y2K Liabilities paid by
Purchaser and (ii) the aggregate of all other Losses suffered or incurred by the
Indemnitee as to which a right of indemnification is provided under this Article
14 exceeds One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Threshold Amount"). After the aggregate of all Losses suffered or incurred by
the Indemnitee exceeds the Threshold Amount, the Indemnitee shall be obligated
to indemnify the Indemnitee for all such Losses in excess of the Threshold
Amount. In no event shall
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the aggregate liability of Seller, or the aggregate liability of Purchaser,
under this Article 14 exceed Fifty Million Dollars ($50,000,000) (the "Maximum
Amount"). Notwithstanding the above, (i) neither of the Threshold Amount nor the
Maximum Amount limitations shall apply to the indemnification rights of the
parties hereto for Losses resulting from those liabilities described in Sections
14.1(c) and 14.2(c) and the payment of such amounts by the Indemnitor shall not
count toward the calculation of the Maximum Amount of the Indemnitor and (ii)
the Maximum Amount limitations shall not apply to the indemnification rights of
the parties hereto for Losses resulting from those liabilities described in
Section 14.1(d) and the payment of such amounts by the Indemnitor shall not
count toward the calculation of the Maximum Amount of Indemnitor.
(b) The Indemnitor shall not be liable for Losses in excess of
the actual Losses suffered by the Indemnitee as a result of the act,
circumstance, or condition for which indemnification is sought net of any
insurance proceeds received by the Indemnitee or any tax benefits realized by
the Indemnitee as a result of the Losses for which indemnification is claimed.
ARTICLE 15
GENERAL PROVISIONS
15.1 Arbitration.
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or any contract or agreement entered into pursuant
hereto or the performance by the parties of its or their terms shall be settled
by binding arbitration held in Atlanta, Georgia in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, except as specifically otherwise provided in this Section 15.1. The
interpretation and enforceability of this Section 15.1 shall be governed
exclusively by the Federal Arbitration Act, 9 U.S.C. ss. 1-16.
(b) If the matter in controversy (exclusive of attorney fees
and expenses) shall appear, as at the time of the demand for arbitration, to
exceed $100,000, then the panel to be appointed shall consist of three neutral
arbitrators; otherwise, one neutral arbitrator.
(c) The arbitrator(s) shall allow such discovery as the
arbitrator(s) determine appropriate under the circumstances and shall resolve
the dispute as expeditiously as practicable, and if reasonably practicable,
within one hundred twenty (120) days after the selection of the arbitrator(s).
The arbitrator(s) shall give the parties written notice of the decision, with
the reasons therefor set out, and shall have thirty (30) days thereafter to
reconsider and modify such decision if any party so requests within ten (10)
days after the decision. Thereafter, the decision of the arbitrator(s) shall be
final, binding, and nonappealable with respect to all persons, including
(without limitation) persons who have failed or refused to participate in the
arbitration process.
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(d) The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys' fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
(e) Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having in personam and subject matter jurisdiction.
(f) All proceedings under this Section 15.1, and all evidence
given or discovered pursuant hereto, shall be maintained in confidence by all
parties.
(g) The fact that the dispute resolution procedures specified
in this Section 15.1 shall have been or may be invoked shall not excuse any
party from performing its obligations under this Agreement and during the
pendency of any such procedure all parties shall continue to perform their
respective obligations in good faith, subject to any rights to terminate this
Agreement that may be available to any party.
(h) All applicable statutes of limitation shall be tolled
while the procedures specified in this Section 15.1 are pending. The parties
will take such action, if any, required to effectuate such tolling.
15.2 Fees and Expenses. Except as specifically provided in this
Agreement, Seller and Purchaser each shall pay their respective fees and
expenses in connection with the transactions contemplated by this Agreement.
Purchaser shall pay for any and all owner's title insurance policies, surveys
and fees related to the title insurance company's participation in the Closing
in connection with the Acquired Assets. Purchaser shall pay all filing fees
required in connection with notice filings required for purposes of compliance
with the Xxxx-Xxxxx-Xxxxxx Act.
15.3 Notices. All notices, requests, demands, and other communications
hereunder shall be in writing (which shall include communications by telex and
telecopy) and shall be delivered (a) in person or by courier or overnight
service, (b) mailed by first class registered or certified mail, postage
prepaid, return receipt requested, or (c) by facsimile transmission, as follows:
(a) If to Seller:
Image Industries, Inc.
The Maxim Group, Inc.
000 Xxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: X. X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxx, Xxxxxxxx & Xxxxxxx XXX
Xxxxxxxxx XX, Xxxxx 0000
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Purchaser:
Aladdin Manufacturing Corporation
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 15.3. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and if delivered by facsimile transmission or mail as aforesaid, the date
on which such notice, request, instruction or document is received shall be the
date of delivery.
15.4 Assignment; Binding Effect. Except as provided in this Section
15.4, prior to the Closing, this Agreement shall not be assignable by any of the
parties hereto without the written consent of the other; provided, however, that
at the Closing Purchaser may assign all of its rights to be indemnified as
provided in Article 14 to any lender or lenders providing financing to Purchaser
subject to all of the provisions hereof and all rights, remedies and defenses
that Seller could assert against Purchaser.
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15.5 No Benefit to Others. The representations, warranties, covenants,
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article 14 hereof, the Purchaser Indemnitees
and the Seller Indemnitees and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
15.6 Headings, Gender, and "Person". All section headings contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine, or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.
15.7 Counterparts. This Agreement may be executed in two (2) or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one counterpart has been signed by each party and
delivered to the other party hereto.
15.8 Integration of Agreement. This Agreement supersedes all prior
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented, or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge, or termination is sought.
15.9 Time of Essence. Time is of the essence in this Agreement.
15.10 Governing Law. This Agreement shall be construed under the laws
of the State of Georgia.
15.11 Partial Invalidity. Whenever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
15.12 Investigation. Purchaser acknowledges that its officers,
directors, employees and authorized representatives and agents have been given
an opportunity to examine the agreements, instruments, documents and other
information, including the
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Acquired Assets, relating to the Business that they have requested to examine.
To the extent that as a result of any such investigation or examination,
Purchaser has actual knowledge of facts contrary to the statements made in any
representation, warranty, covenant, or agreement of Seller set forth herein
which, in each case, could reasonably be expected to lead to a Loss in excess of
One Million Five Hundred Thousand Dollars ($1,500,000), and completes the
Closing without requiring correction or amendment of such contrary statements,
Purchaser shall be estopped from asserting reliance on such contrary
representation, warranty, covenant or agreement in connection with any
post-Closing claim for indemnification pursuant to Article 14 hereof. Any
disclosure made on one Schedule shall not be deemed made on any other Schedule,
unless appropriate cross-referencing is made. The covenants and representations
and warranties of Seller and Purchaser shall survive the Closing and the
execution and delivery of all instruments of conveyance for the periods set
forth in Section 14.6.
(signatures appear on the following page)
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
PURCHASER:
ALADDIN MANUFACTURING CORPORATION
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Name: Xxxxx X. Xxxx
-----------------------------------------
Title: Chairman and Chief Executive Officer
----------------------------------------
SELLER:
IMAGE INDUSTRIES, INC.
By: /s/ H. Xxxxxxx Xxxxxxx
-------------------------------------------
Name: H. Xxxxxxx Xxxxxxx
-----------------------------------------
Title: President
----------------------------------------
THE MAXIM GROUP, INC.
By: /s/ X. X. Xxxxxx
--------------------------------------
Name: X. X. Xxxxxx
------------------------------------
Title: President/CEO
-----------------------------------
As an inducement to Seller to enter into this Agreement, Mohawk
Industries, Inc. hereby unconditionally guarantees to Seller all of the
obligations of Purchaser under this Agreement and any other instrument, document
or agreement related to or arising out of this Agreement. Such guarantee is
absolute. Seller may pursue the enforcement of any obligations so guaranteed
directly against Mohawk Industries, Inc., without first pursuing any remedies
against Purchaser.
MOHAWK INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
---------------------------------------
Title: Chairman and Chief Executive Officer
--------------------------------------
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EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of ______________,
1998 by and among ALADDIN MANUFACTURING CORPORATION, a Delaware corporation
("Aladdin"), IMAGE INDUSTRIES, INC., a Delaware corporation ("Image"), and
_________________, a __________________ (the "Escrow Agent").
BACKGROUND
A. Contemporaneously with the execution and delivery hereof, Aladdin has
acquired all of Image's right, title and interest in and to certain assets
owned by Image pursuant to an Asset Purchase Agreement dated November __, 1998
by and among Aladdin, Image and The Maxim Group, Inc. (the "Asset Purchase
Agreement"). Any capitalized term used but not defined herein shall have the
meaning set forth in the Asset Purchase Agreement.
B. The Asset Purchase Agreement contemplates the establishment of an
escrow account to provide a source of funds for the payment required upon
determination of the Final Purchase Price (the "Adjustment Amount").
C. Escrow Agent is willing to accept the escrow fund and to hold and
distribute the escrow fund in accordance with the terms and conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Appointment of Escrow Agent. Aladdin and Image hereby designate and
appoint Escrow Agent to serve as escrow agent hereunder, and Escrow Agent
hereby confirms its agreement to act as escrow agent upon the terms,
conditions, and provisions of this Agreement.
2. Creation of Escrow Account. Concurrently with the execution and
delivery of this Agreement, Aladdin has deposited with Escrow Agent the cash
sum of Five Million Dollars ($5,000,000) (the "Escrow Amount") to provide a
source of funds for payment of the Adjustment Amount. The Escrow Amount shall
be invested in direct obligations of the United States of America or
obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America. The Escrow Amount is to be held,
administered, and paid by Escrow Agent as provided herein. Escrow Agent
acknowledges receipt of the Escrow Amount and agrees to hold,
78
administer, and pay the same in accordance with the terms of this Agreement and
not permit any withdrawal thereof except pursuant to the terms hereof.
3. Disposition and Payment of Escrow Amount.
(a) Escrow Agent shall pay and disburse the Escrow Amount or such
portion thereof as is specified in the respective Notice, as follows:
(i) To Aladdin or Image as specified in any Notice of Release
received by Escrow Agent, or
(ii) To Aladdin or Image as specified in an Arbitration Decision
received by Escrow Agent.
All disbursements hereunder shall be made by Escrow Agent within one (1)
Business Day following its receipt of the applicable Notice.
(b) Interest earnings with respect to the Escrow Amount shall be held
by the Escrow Agent and reinvested as specified with respect to the Escrow
Amount in Section 2 hereof. Simultaneously with the disbursement of funds which
leaves the balance of the Escrow Amount held by the Escrow Agent at zero ($0),
the Escrow Agent shall also disburse the entire balance of such interest
earnings, with each of Image and Aladdin receiving an amount thereof determined
by multiplying the total of such interest earnings by a fraction, the numerator
of which is the aggregate number of dollars of the Escrow Amount disbursed by
the Escrow Agent to such party pursuant to Section 3(a) hereof, and the
denominator of which is the Escrow Amount.
4. Escrow Agent's Duties. Escrow Agent shall be obligated to perform only
such duties as expressly set forth in the Escrow Agreement, and shall not be
required, in carrying out its duties under this Escrow Agreement, to refer to
the Asset Purchase Agreement.
5. Remedies of Escrow Agent.
(a) In the event of any disagreement or controversy hereunder, or if
conflicting demands or notices are made upon Escrow Agent, or in the event
Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the parties expressly agree and consent that Escrow Agent shall
have the absolute right, at its option, to do either or both of the following
things: (i) stop all further proceedings in, and performance of, this Agreement
and of all instructions received hereunder; and (ii) file a suit in
interpleader and obtain an order from a court of competent jurisdiction
requiring all persons involved to interplead their several claims and rights
among themselves and with Escrow Agent.
(b) While any interpleader proceeding arising out of or relating to
this Agreement is pending, whether the same be initiated by Escrow Agent or by
others,
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Escrow Agent shall have the right, at its option, to stop all further
proceedings in, and performance of, this Agreement and instructions received
hereunder until all differences shall have been resolved by agreement or until
the rights of all parties shall have been fully and finally determined by the
interpleader proceedings. The rights of Escrow Agent under this Section 5 are
in addition to all other rights which it may have by law or otherwise.
6. Escrow Agent's Fees and Expenses. The reasonable compensation of
Escrow Agent as set forth in SCHEDULE A hereto and all expenses, disbursements
and advances (including reasonable attorney's fees) incurred by the Escrow
Agent directly in connection with carrying out Escrow Agent's duties hereunder
shall be paid by Aladdin, with one-half of such compensation, expenses,
disbursements or advances actually paid by Aladdin to be reimbursed to Aladdin
by Image not later than ten (10) days following Image's receipt from Aladdin of
evidence of such payment by Aladdin.
7. Indemnification. Aladdin and Image, jointly and severally, agree to
indemnify, protect and save and hold Escrow Agent and its successors and
assigns harmless from all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses (including reasonable attorneys'
fees) of whatsoever kind or nature imposed on, incurred by or asserted against
Escrow Agent which in any way relate to or arise out of the execution and
delivery of this Agreement or any action taken hereunder; provided, however,
that Aladdin and Image shall have no such obligation to indemnify and save and
hold Escrow Agent harmless from any liability incurred by, imposed upon or
asserted against Escrow Agent resulting from the gross negligence or willful
misconduct of Escrow Agent.
8. Resignation by or Termination of Escrow Agent. Escrow Agent may resign
as such by delivering written notice to such effect at least thirty (30) days
prior to the effective date of such resignation to Aladdin and Image. Aladdin
and Image, acting jointly, may terminate Escrow Agent from its position as such
by delivering written notice to Escrow Agent to such effect executed
by Aladdin and Image at least thirty (30) days prior to the effective date of
such termination (unless such termination is as a result of Escrow Agent's
breach of its obligations hereunder, in which case the effective date of such
termination shall be any date specified in such notice by Aladdin and Image).
In the event of such resignation by or termination of Escrow Agent, a successor
Escrow Agent shall be appointed by mutual agreement between Aladdin and Image,
and Escrow Agent which has been so terminated or has so resigned shall promptly
deliver to the successor Escrow Agent the entire Escrow Amount (together with
copies of all records pertaining thereto) upon presentation of evidence
reasonably satisfactory to it of the appointment and authorization of such
successor Escrow Agent by Aladdin and Image. From and after the appointment of
a successor Escrow Agent pursuant to this Section 8, all references herein to
Escrow Agent shall be deemed to be to such successor Escrow Agent. Should
Aladdin and Image fail to appoint a successor Escrow Agent within thirty (30)
days of the effective date of any resignation or termination pursuant to this
Section 8, then Escrow Agent may institute suit in a court of competent
jurisdiction to have a successor Escrow Agent appointed.
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9. Definitions. As used herein:
(a) "Arbitration Decision" means a true copy of the final
nonappealable decision of the Accounting Arbitrator rendered in any dispute
resolved by arbitration pursuant to Section 3.3(c) of the Asset Purchase
Agreement, executed by the Accounting Arbitrator.
(b) "Notice of Release" means a written declaration, executed by
Aladdin and Image, specifying the disposition to be made of the Escrow Amount
or any portion thereof.
(c) "Notice" means either an Arbitration Decision or a Notice of
Release.
10. General Provisions.
(a) Assignment. Neither this Agreement nor any right or benefit of
any party hereunder may be assigned or transferred by such party without the
prior written consent of all other parties hereto.
(b) Amendment. This Agreement may not be amended or modified except
in a writing signed by all parties hereto.
(c) Waiver. Failure to insist upon strict compliance with any of
the terms or conditions of this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time; nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
(d) Governing Law. Notwithstanding the place where this Agreement
may be executed by any of the parties, the parties expressly agree that this
Agreement shall in all respects be governed by, and construed in accordance
with, the laws of the State of Georgia, without regard for its conflict of laws
doctrine.
(e) Notices. Any notice or other communication to be given
hereunder shall be in writing and shall be deemed sufficient when (i) mailed by
United States certified mail, return receipt requested, (ii) mailed by
overnight express mail, (iii) sent by facsimile or telecopy machine, followed
by confirmation mailed by first-class mail or overnight express mail, or (iv)
delivered in person, at the address set forth below, or such other address as a
party may provide to the other in accordance with the procedure for notices set
forth in this Section:
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If to Aladdin:
Aladdin Manufacturing Corporation
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Image:
Image Industries, Inc.
000 Xxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: X. X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx, Xxxxxxxx & Xxxxxxx, XXX
Xxxxxxxxx XX, Xxxxx 0000
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Escrow Agent:
________________________________
________________________________
________________________________
Attn: __________________________
Telephone: _____________________
Telecopy: ______________________
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(f) Invalid Provision. If any provision of this Agreement shall be
determined to be invalid or unenforceable, this Agreement shall be deemed
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
(g) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
(h) Further Assurances. Each party agrees to execute and deliver
all such further instruments and do all such further acts as may be reasonably
necessary or appropriate to effectuate this Agreement.
(i) Headings. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way
define, limit, extend or prescribe the scope of this Agreement or the intent of
any provision.
(j) Person and Gender. The masculine gender shall include the
feminine and neuter genders and the singular shall include the plural.
(k) Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to matters set forth in this Agreement,
and supersedes any prior understanding or agreement, oral or written, with
respect to such matters.
(l) Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
(m) Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original, and all such
counterparts shall constitute one and the same Agreement, binding on all the
parties notwithstanding that all the parties are not signatories to the same
counterpart.
[Signatures on next page]
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83
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ALADDIN MANUFACTURING CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
IMAGE INDUSTRIES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[NAME], AS ESCROW AGENT
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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SCHEDULE A
[Escrow Agent Compensation Schedule]
85
EXHIBIT B
[FORM OF SELLER OPINION]
[XXXXX, XXXXXXXX & XXXXXXX, LLP LETTERHEAD]
_____________, 1998
Aladdin Manufacturing Corporation
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Image Industries, Inc., a Delaware corporation
("Image"), and The Maxim Group, Inc., a Delaware corporation ("Maxim") (Image
and Maxim are sometimes hereinafter collectively referred to as the
"Companies"), in connection with the transactions provided for in the Asset
Purchase Agreement, dated as of _________, 1998, by and among Aladdin
Manufacturing Corporation, a Delaware corporation, Image and Maxim (the
"Purchase Agreement"). This opinion letter is rendered in connection with
Section 8.16 of the Purchase Agreement.
This opinion letter is governed by, and shall be interpreted in accordance
with, the January 1, 1992 edition of the Interpretive Standards Applicable to
Certain Legal Opinions to Third Parties in Corporate Transactions adopted by
the Legal Opinion Committee of the Corporate and Banking Law Section of the
State Bar of Georgia (the "Interpretive Standards"), which Interpretive
Standards are incorporated in this opinion letter by this reference. As a
consequence, this opinion letter is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Interpretive Standards, and this opinion
letter should be read in conjunction therewith. Capitalized terms used in this
opinion letter and not otherwise defined herein shall have the meanings
assigned to such terms in the Interpretive Standards and the Purchase Agreement.
The opinions expressed herein are limited to the federal laws of the
United States, the laws of the State of Georgia and the General Corporation Law
of the State of Delaware.
In connection with rendering the opinions set forth herein, we have
considered such matters of law and fact, including the examination of originals
or copies, certified or otherwise identified to our satisfaction, of such
corporate records of the Companies, certificates of officers and representatives
of the Companies, a certificate, dated _______, 1998, as to the good standing
and legal corporate existence of Image in the State of Delaware (the ""Image
Certificate"), a certificate, dated __________, 1998, as to the good standing
and legal corporate existence of Maxim in the State of Delaware (the "Maxim
Certificate") (the Image Certificate and the Maxim Certificate are hereinafter
referred to as the "Certificates of Existence") and such other documents as we
have deemed appropriate as a basis for the opinions hereinafter set forth.
86
Aladdin Manufacturing Corporation
_______________, 1998
Page 2
Based upon and subject to the foregoing and such further qualifications as
are hereinafter set forth, we are of the opinion that:
1. Each of the Companies is a corporation validly existing and in good
standing under the laws of the State of Delaware. Our opinions herein with
respect to good standing are given solely in reliance on, and are based solely
on, the Certificates of Existence.
2. Each of the Companies has the full power and authority to execute and
deliver the Purchase Agreement and to perform its obligations thereunder.
3. Each of the Companies has duly authorized the execution and delivery
of the Purchase Agreement and all performances of its respective obligations
thereunder, and has duly executed and delivered the Purchase Agreement.
4. The Purchase Agreement is enforceable against each of the Companies.
This opinion letter is limited to the matters stated herein and no opinion
is implied or may be inferred beyond the opinions expressly stated. This
opinion letter is provided to you in connection with the transactions
contemplated by the Purchase Agreement and may not be relied upon by any other
person or entity or for any other purpose without our express prior written
permission. Without limitation of the restrictions contained in the preceding
sentence, we consent to you furnishing copies of this opinion letter to (a)
your independent auditors and attorneys, (b) any state or federal authority
having regulatory jurisdiction over you pursuant to any order, rule or
regulation of such authority, and (c) any court or governmental agency pursuant
to any order, writ, injunction or decree of such court or agency. We expressly
disclaim any duty to update this opinion letter in the future in the event
there are any changes in relevant fact or law that may change or otherwise
affect any of the opinions expressed herein.
Very truly yours.
XXXXX, XXXXXXXX & XXXXXXX, LLP
By: ________________________________
_________________, a Partner
87
EXHIBIT C
[FORM OF PURCHASER OPINION]
[XXXXXX & BIRD LLP LETTERHEAD]
-------------, 1998
The Maxim Group, Inc.
Image Industries, Inc.
000 Xxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Gentlemen:
We have acted as counsel to Aladdin Manufacturing Corporation, a Delaware
corporation ("Purchaser") and Mohawk Industries, Inc., a Delaware corporation
("Mohawk"), in its capacity as guarantor of the obligations of Purchaser, in
connection with the transactions provided for in the Asset Purchase Agreement,
dated as of ________, 1998, by and among Purchaser, Image Industries, Inc. and
The Maxim Group, Inc. (the "Agreement"). This opinion letter is rendered
pursuant to Section 9.9 of the Agreement. Capitalized items used in this opinion
letter and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement.
This opinion letter is limited by, and is in accordance with, the
January 1, 1992 edition of the Interpretive Standards Applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal Opinion
Committee of the Corporate and Banking Law Section of the State Bar of Georgia,
which Interpretive Standards are incorporated in this opinion letter by
reference.
In the capacity described above, we have considered such matters of law
and of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of such records and documents of
Purchaser and Mohawk, certificates of officers and representatives of Purchaser
and Mohawk, certificates of public officials, a certificate, dated _________,
1998, as to the good standing and legal corporate existence of Aladdin in the
State of Delaware (the "Aladdin Certificate"), a certificate, dated ________,
1998, as to the good standing and legal corporate existence of Mohawk in the
State of Delaware (the "Mohawk Certificate") (the Aladdin Certificate and the
Mohawk Certificate are hereinafter referred to as the "Certificates of
Existence"), and such other documents as we have deemed appropriate as a basis
for the opinions hereinafter set forth.
88
The Maxim Group, Inc.
Image Industries, Inc.
_____________, 1998
Page 2
The opinions set forth in this opinion letter are limited to the laws of
the State of Georgia, the General Corporation Law of the State of Delaware and
applicable federal laws.
Based upon the foregoing, it is our opinion that:
(1) Each of Purchaser and Mohawk is a corporation validly existing and in
good standing under the laws of the State of Delaware. Our opinions
herein with respect to good standing are given solely in reliance on,
and are based solely on, the Certificates of Existence.
(2) Each of Purchaser and Mohawk has the full power and authority to
execute and deliver the Agreement and to perform its obligations
thereunder.
(3) Each of Purchase and Mohawk has duly authorized the execution and
delivery of the Agreement and all performance of its obligation
thereunder, and has duly executed and delivered the Agreement.
(4) The Agreement is enforceable against Purchaser.
(5) The guarantee of Mohawk set forth in the Agreement is enforceable
against Mohawk.
This opinion letter is limited to the matters stated herein and no opinion
is implied or may be inferred beyond the opinions expressly stated. This
opinion letter is provided to you in connection with the transactions
contemplated by the Agreement and may not be relied upon by any other person or
entity or for any other purpose without our express prior written permission.
Without limitation of the restrictions contained in the preceding sentence, we
consent to you furnishing copies of this opinion letter to (a) your independent
auditors and attorneys, (b) any state or federal authority having regulatory
jurisdiction over you pursuant to any order, rule or regulation of such
authority, and (c) any court or governmental agency pursuant to any order,
writ, injunction or decree of such court or agency. We expressly disclaim any
duty to update this opinion letter in the future in the event there are any
changes in relevant fact or law that may change or otherwise affect any of the
opinions expressed herein.
Very truly yours,
XXXXXX & BIRD LLP
By: _________________________________
A Partner
