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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
BORGSTENA TEXTILE NORTH AMERICA, INC.,
and
CMI INDUSTRIES, INC.
DATED AS OF OCTOBER 26, 2000
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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................................................................3
ARTICLE 2 ASSUMPTION OF LIABILITIES......................................................4
2.1 Assumption.....................................................................4
2.2 Excluded Liabilities...........................................................5
ARTICLE 3 AMOUNT AND PAYMENT OF PURCHASE PRICE...........................................8
3.1 Calculation of Purchase Price..................................................8
3.2 Payment of Purchase Price; Establishing Escrow.................................8
3.3 Adjustment to Purchase Price...................................................8
3.4 Intercompany Obligations.......................................................9
3.5 Transfer Expenses.............................................................10
3.6 Allocation of Purchase Price..................................................10
ARTICLE 4 PROCEDURE FOR CLOSING.........................................................10
4.1 Time and Place of Closing.....................................................10
4.2 Transactions at the Closing...................................................10
4.3 Certain Consents..............................................................12
4.4 Further Assurances............................................................13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER......................................13
5.1 Organization and Qualification................................................13
5.2 Power and Authority...........................................................13
5.3 Due Authorization; Validity; Enforceability...................................13
5.4 No Violation or Consent.......................................................14
5.5 Subsidiaries; Joint Ventures..................................................14
5.6 Financial Statements..........................................................14
5.7 Inventories...................................................................15
5.8 Accounts Receivable...........................................................15
5.9 Personal Property.............................................................15
5.10 [Reserved]....................................................................16
5.11 Contracts.....................................................................16
5.12 Intellectual Property.........................................................17
5.13 Insurance.....................................................................18
5.14 Environmental Matters and OSHA................................................18
5.15 Litigation....................................................................20
5.16 Absence of Changes............................................................20
5.17 Brokers and Finders...........................................................20
5.18 Labor Matters.................................................................20
5.19 Approvals; Permits; Licenses..................................................21
5.20 Taxes.........................................................................21
5.21 Employee Benefit Plans........................................................22
5.22 Compliance with Laws..........................................................23
5.23 Governmental Approval and Consents............................................23
5.24 Customer Relations............................................................23
5.25 Correctness of Representations................................................23
5.26 Definition of knowledge.......................................................23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................24
6.1 Organization and Qualification................................................24
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6.2 Power and Authority...........................................................24
6.3 No Violation or Consent.......................................................24
6.4 Litigation....................................................................24
6.5 Correctness of Representations................................................24
6.6 Brokers and Finders...........................................................24
6.7 Governmental Approval and Consents............................................24
ARTICLE 7 MUTUAL COVENANTS..............................................................25
7.1 Governmental Filings..........................................................25
7.2 Prorations....................................................................25
ARTICLE 8 POST CLOSING MATTERS..........................................................26
8.1 Provision of Finishing Services...............................................26
8.2 Employment of Employees.......................................................26
8.3 Sellers' Employee Benefit Plans...............................................26
8.4 Non-Solicitation..............................................................26
8.5 Covenant Not to Compete.......................................................27
8.6 Discharge of Automotive Business Obligations..................................27
8.7 Maintenance of Books and Records..............................................27
8.8 Payments Received.............................................................27
8.9 UCC Matters...................................................................28
8.10 Cooperation...................................................................28
8.11 Insurance.....................................................................28
8.12 Payment of Incentive Contracts................................................28
8.13 Termination of Certain Agreements.............................................28
8.14 Chatham & Borgstena Lease; Guaranty; Letter of Credit; Release................29
ARTICLE 9 INDEMNIFICATION...............................................................29
9.1 Agreement of Seller to Indemnify..............................................29
9.2 Agreement of Purchaser to Indemnify Seller....................................30
9.3 Procedures for Indemnification................................................30
9.4 Third Party Claims............................................................31
9.5 Time Limitations..............................................................32
9.6 Limitations as to Amount......................................................32
9.7 Tax Effect and Insurance......................................................32
9.8 Subrogation...................................................................33
9.9 Interest......................................................................33
9.10 Exclusions from Limitations...................................................33
9.11 Remedies Exclusive............................................................33
9.12 Limitations with Respect to Environmental Conditions; Release.................33
ARTICLE 10 GENERAL PROVISIONS............................................................34
10.1 Arbitration...................................................................34
10.2 Investigation.................................................................35
10.3 Fees and Expenses.............................................................35
10.4 Notices.......................................................................35
10.5 Assignment; Binding Effect....................................................36
10.6 No Benefit to Others..........................................................37
10.7 Headings, Gender, and Person..................................................37
10.8 Counterparts..................................................................37
10.9 Integration of Agreement......................................................37
10.10 Time of Essence...............................................................37
10.11 Governing Law.................................................................37
10.12 Jurisdiction; Service of Process..............................................37
10.13 Partial Invalidity............................................................37
10.14 Remedies Cumulative; Specific Performance.....................................37
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SCHEDULES
Schedule 1.1(a) Equipment
Schedule 1.1(b) Contracts
Schedule 1.1(d) Vehicles
Schedule 1.1(f) Acquired Intellectual Property
Schedule 1.1(h) Scheduled Permits
Schedule 1.1(i) Liens, Encumbrances and Related Matters
Schedule 1.2(b) Consumer Products Assets
Schedule 2.1(b) Trade Payables and Expense Accruals
Schedule 2.2(f) Known Warranty Claims and Charge-backs
Schedule 3.3.1 Accrued Expenses
Schedule 3.3.2 GAAP Procedures
Schedule 3.5 Allocation of Purchase Price
Schedule 5.1.1 Jurisdictions Where Qualified As a Foreign Corporation
Schedule 5.6.1 Financial Statements
Schedule 5.6.2 Unreserved Liabilities
Schedule 5.6.3 Changes in Accounting Policies and Procedures
Schedule 5.7.1 Title to Inventory
Schedule 5.9.1 Personal Property Liens
Schedule 5.9.2 Leased Personal Property
Schedule 5.9.3 Leased Personal Property Consents Required
Schedule 5.11.1 Contracts
Schedule 5.11.2 Commitments for Capital Expenditures
Schedule 5.11.3 Pending or Threatened Contract Terminations
Schedule 5.12.1 Intellectual Property Royalties and Fees
Schedule 5.12.2 Intellectual Property Consents
Schedule 5.13.1 Insurance
Schedule 5.13.2 Insurance Changes
Schedule 5.14.1 Environmental Matters
Schedule 5.14.2 Environmental Permits and Licenses
Schedule 5.14.3 Environmental Treatment Facilities
Schedule 5.14.4 Storage Tanks and Audits
Schedule 5.14.5 Environmental Audits
Schedule 5.14.6 Employee Health and Safety Matters
Schedule 5.14.7 Asbestos and PCBs
Schedule 5.15 Litigation Matters
Schedule 5.16 Certain Changes
Schedule 5.17 Brokers and Finders
Schedule 5.18.1 Employees
Schedule 5.18.2 Employees Earning Over $75,000
Schedule 5.18.3 Bonus and Severance Agreements
Schedule 5.19 Approvals, Permits and Licenses
Schedule 5.20.1 Tax Returns; Federal, State and Local Tax Disputes
Schedule 5.20.2 Tax Bills
Schedule 5.20.3 Disputes and Audits
Schedule 5.20.4 Tax Agreements
Schedule 5.21 Employee Benefit Plans
Schedule 5.24 Customer Relations
Schedule 8.3 Non-hired Employees
Schedule 8.5 Territory
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CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
---- ------------------------
Accounts Receivable Section 1.1(e)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 5.2
Adjustment Amount Section 3.3(c)
Agreement Preamble
Assignment and Assumption Agreement Section 4.2(a)(viii)
Assumed Liabilities Section 2.1
Audited Statements Section 5.6
Automotive Business Recital A
Beneficiary Section 7.2(d)
Books and Records Section 1.1(g)
CERCLA Section 2.2(k)(ii)
Chatham Recital A
Chatham & Borgstena Recital A
Closing Section 4.1
Closing Date Section 4.1
Closing Date Working Capital Schedule Section 3.3(a)
Consumer Products Business Recital B
Contract(s) Section 1.1(b)
Current Material Customer Section 5.24
Divisional Change In Control Agreements Section 2.1(i)
Effective Time Section 4.1
Employee Benefit Plan Section 5.21(a)
Employees Section 5.21(a)
Environmental Condition(s) Section 2.2(k)(i)
Environmental Law(s) Section 2.2(k)(ii)
Environmental Liability Section 2.2(k)
Environmental Permits Section 5.14(a)(i)
Equipment Section 1.1(a)
Equipment Charges Section 7.2(b)(i)
ERISA Section 5.21(b)
Escrow Section 3.2
Escrowed Amount Section 3.2
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
Financial Statements Section 5.6
GAAP Section 3.3(a)
Hazardous Material(s) Section 2.2(k)(iii)
Hired Employee(s) Section 8.3
HSR Filing Fee Section 3.2
Indemnification Claim Section 9.3(a)
Indemnitee Section 9.3
Indemnitor Section 9.3
Intellectual Property Section 1.1(f)
Inventory Section 1.1(c)
JV Interest Section 1.1(j)
XX Xxxxxx Agreement Section 2.1(c)
knowledge Section 5.26
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Xxxxxxxx Agreement Section 2.1(e)
Losses Article 9
Management Prepared Statements Section 5.6
Xxxxxx Agreement Section 2.1(d)
Material Adverse Effect Section 5.9(b)
Medical Tail Cap Section 2.1(b)
Negotiation Period Section 9.3(c)
Party or Parties Preamble
Payor Section 7.2(d)
Payee Section 7.2(d)
PCBs Section 5.14(d)
Permits Section 1.1(h)
Permitted Encumbrances Section 1.1
Person Section 10.7
Personal Property Taxes Section 7.2(b)(ii)
Prime Rate Section 9.9
Prohibited Business Section 8.5
Proration Items Section 7.2(a)
Purchase Price Section 3.1
Purchaser Preamble
Purchaser Indemnitees Section 9.1
Purchaser Opinion Section 4.2(b)(vii)
Purchaser's Auditor Section 3.3(a)
RCRA Section 2.2(k)(ii)
Recipient Section 7.2(d)
Remedial Action Section 2.2(k)(iv)
Resolving Accountants Section 3.3(e)
Seller Preamble
Seller's Auditor Section 3.3(a)
Seller's Maximum Amount Section 9.6
Seller's Opinion Section 4.2(a)(vii)
Seller's Threshold Amount Section 9.6
Service Contracts Section 7.2(b)(iii)
Vehicles Section 1.1(d)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of this 26th day of October, 2000, by and between Borgstena Textile
North America, Inc., a Delaware corporation ("Purchaser"), and CMI INDUSTRIES,
INC., a Delaware corporation ("Seller"). Purchaser and Seller are sometimes
collectively referred to as the "Parties" and individually as a "Party."
A. Seller, through its Chatham Manufacturing Division ("Chatham")
and its interest in Chatham & Borgstena, Inc., a Delaware corporation ("Chatham
& Borgstena"), is engaged in the manufacture and marketing of fabrics for use in
automotive seats and interiors (the "Automotive Business").
B. Seller, through Chatham, is also engaged in the manufacture
and marketing of products for sale to the retail, institutional and health care
markets (the "Consumer Products Business").
C. Subject to the limitations and exclusions contained in the
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and assign and Purchaser desires to purchase and assume substantially
all of the assets and certain of the obligations of the Automotive Business and
certain other assets of Chatham.
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. Subject to Section 1.2 hereof, at
the Closing, 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 Automotive Business, and (ii)
all of the assets, properties, and rights of Seller constituting the Automotive
Business or used by Seller exclusively therein, of every type and description,
tangible and intangible, wherever located and whether or not reflected on the
books of the Seller (except as may be specifically excluded by this Agreement),
in each case free and clear of all liens, claims, charges, security interests,
and encumbrances of any kind or nature other than Permitted Encumbrances,
including, without limitation, all right, title and interest of Seller in and to
the following, as the same shall exist at the Closing Date:
(a) (i) All manufacturing equipment, tools, computers,
terminals, computer equipment and systems, furniture, office equipment, business
machines, telephones and telephone systems, (including parts, accessories, and
the like, with respect to the foregoing), wherever located, used exclusively in
the Automotive Business including the personal property identified on SCHEDULE
1.1(A) and (ii) any and all assignable warranties of third parties with respect
thereto (the "Equipment");
(b) All those contracts, leases, warranties, commitments,
agreements, arrangements, guaranties of payment and/or performance, and purchase
and sales orders, whether oral or written, identified on SCHEDULE 1.1(B)
together with all contracts, leases, warranties, commitments, agreements,
arrangements, guaranties of payment and/or performance pertaining to the
Acquired Assets or relating to the Automotive Business and not required to be
disclosed pursuant to Section 5.11, all purchase and sale orders entered into
after the date of SCHEDULE 1.1(B) in the ordinary course of business and to the
extent relating to the Automotive Business, and the right to receive income in
respect of such contracts, leases,
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warranties, commitments, agreements, arrangements, guaranties, and purchase and
sales orders on and after the Closing Date (individually, a "Contract" and
collectively, the "Contracts");
(c) All raw materials, work-in-progress, finished goods,
goods held for resale, spare parts, waste materials, scrap, samples, promotional
literature, and supplies, wherever located relating exclusively to the
Automotive Business (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;
(d) All motor vehicles, trucks, forklifts, and other
rolling stock identified on SCHEDULE 1.1(D)and any and all assignable warranties
of third parties with respect thereto (the "Vehicles");
(e) All accounts receivable, including, without
limitation, trade and miscellaneous accounts receivable, related to the
Automotive Business (the "Accounts Receivable");
(f) (i) As they relate exclusively to the Automotive
Business: all patents, art work, labels, designs, specifications,
designs-in-progress, formulations, know-how, prototypes, inventions,
discoveries, trademarks, trade names, logos, 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 is owned by Seller
or as to which Seller has rights as licensee; and (ii) all intellectual property
rights in those items and the intellectual property identified on SCHEDULE
1.1(F), if any, (the "Intellectual Property");
(g) As they relate exclusively to the Automotive
Business, all existing data, databases, books, records (except those records in
Seller's corporate offices or at off-site storage facilities that are duplicates
of the books and records of the Automotive Business), correspondence, business
plans and projections, records of sales, customer and vendor lists, files,
papers, all manuals and printed instructions of Seller relating to the Acquired
Assets and to the operation of the Automotive Business; and, a copy of the
aforementioned types of items which relate to the Automotive Business but are
not exclusive in nature to the Automotive Business. As they relate exclusively
to the Automotive Business and to the extent permitted under applicable law or
regulation, copies of employment applications, notices of transfer, notices of
rate changes, historical personnel payroll and similar documents (and any
summaries of such documents) regularly prepared by Seller of each of the Hired
Employees (as defined in Section 11.3 hereof), and to the extent a Hired
Employee grants his or her employer permission to release, medical records,
corrective action reports and disciplinary reports in the possession of Seller.
The documents referred to in this Section 1.1(g) shall be collectively referred
to in this Agreement as the "Books and Records";
(h) To the extent permitted under applicable law or
regulation, (x) as they relate exclusively to the operation of the Automotive
Business, all licenses, franchises, permits, certificates, consents, and other
governmental or quasi-governmental authorizations of Seller (the "Permits"); and
(y) those Permits identified on SCHEDULE 1.1(H) not exclusively related to the
operation of the Automotive Business;
(i) Seller's 65 percent ownership interest in Chatham &
Borgstena, which is represented by stock certificate numbers 1, 4, 6, 8, 9, 11,
13 and 15 issued for an aggregate of 1,448.9 shares of common stock and held by
CMI (the "JV Interest");
(j) The right to receive the $100,000 payment to be made
by Interface Fabrics Group, Inc. under Section 11.18 of that certain Asset
Purchase Agreement (the "Interface Agreement") dated as of May 1, 2000 between
Seller and Interface Fabrics Group, Inc. ("Interface"); provided, that
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Seller shall not be obligated to assist in satisfying the conditions to such
payment except that, if all other conditions for the payment of the $100,000
early termination fee have been met, then Seller shall deliver to Interface the
release of Interface required by Section 11.18 of the Interface Agreement as a
condition to such payment; and
(k) With respect exclusively to either the Automotive
Business or the Acquired Assets, but not with respect to any Excluded
Liabilities: (i) all prepaid expenses and prepaid assets, including without
limitation all deposits on equipment purchases, security deposits, service
contracts or arrangements, and utility deposits and all prepaid rental amounts;
(ii) all causes of action, claims, and demands of Seller, including, without
limitation, rights to returned or repossessed goods and rights as an unpaid
vendor; and (iii) all other assets used exclusively in the Automotive 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).
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 arising out of the transactions contemplated
by this Agreement); (ii) all liens, encumbrances and matters listed on SCHEDULE
1.1(I); (iii) other nonmonetary liens, claims, and encumbrances relating to the
Acquired Assets that (A) secure the Assumed Liabilities and (B) have been
properly disclosed to Purchaser on an appropriate Schedule to this Agreement;
(iv) liens imposed by applicable law and incurred in the ordinary course of
business for obligations not yet due and payable to lessors, carriers,
warehousemen, laborers, materialmen and the like; and (v) any other matters
approved as Permitted Encumbrances by Purchaser in writing prior to Closing.
1.2 Excluded Assets. Seller shall not sell and Purchaser shall not
purchase or acquire and the Acquired Assets shall not include:
(a) Any cash and cash equivalents (other than cash of
Chatham & Borgstena to the extent reflected on the Audited Closing Date Working
Capital Schedule), stock certificates (except as contemplated by Section 1.1(i))
and negotiable instruments;
(b) Any assets, properties, or rights of Seller (i) used
in the Consumer Products Business or as identified on SCHEDULE 1.2(B), except
Acquired Assets, and (ii) for the avoidance of doubt, any assets, properties or
rights at the Seller's facilities in New York, New York; Stuart, Virginia;
Clarksville, Georgia; Greensboro, North Carolina; Clinton, South Carolina;
Columbia, South Carolina and Geneva, Alabama;
(c) The assets of any Employee Benefit Plan maintained by
Seller for the benefit of the employees of the Automotive Business or to which
Seller has made any contribution;
(d) Seller's corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders or members, 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 Automotive
Business (except as provided in Sections 8.8 and 8.11 hereof);
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(g) Any rights to any of Seller's claims for any federal,
state, local, or foreign tax refund;
(h) The stock of Chatham Real Property, Inc. and the
membership interests in Chatham, LLC, or any of their respective assets (other
than to the extent an asset is specifically included in the Acquired Assets);
(i) The finishing frame located in Seller's facility in
Greensboro, North Carolina and used in the Automotive Business; provided that
the Bianca weft straightener attached to such finishing frame is an Acquired
Asset; and
(j) Those receivables not reflected on the Financial
Statements that have been written off because the debtors are in bankruptcy.
The assets described in this Section 1.2 are hereinafter collectively
referred to as the "Excluded Assets".
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 of Seller (collectively, the "Assumed
Liabilities"), but in each case (except as described in Section 2.1(f))
excluding any obligations or liabilities arising from or relating to any breach
or violation of or any default under the leases, contracts and agreements
underlying the Assumed Liabilities (unless reflected on the Audited Closing Date
Working Capital Schedule):
(a) All of the executory obligations and liabilities of
Seller arising from and after the Closing Date, pursuant to the Contracts;
(b) The trade payables of the Automotive Business
(including any normal inter-company payables to Elastic Fabrics of America); and
the (categories of) expense accruals related to the Automotive Business
identified on SCHEDULE 2.1(B) to this Agreement to the extent they are not
otherwise included in trade payables referred to above, and, with respect to
such accruals that are employee-related, only to the extent they pertain to the
Hired Employees; provided, however, the aggregate amount of claims of Hired
Employees assumed by Purchaser hereunder related to (i) incurred but not
reported medical claims and unpaid medical claims occurring prior to the
Effective Time and (ii) the cost associated with any hospital confinement which
commences prior to the Effective Time shall not exceed $75,000 (the "Medical
Tail Cap");
(c) Indirectly through the acquisition of CMI's 65
percent ownership interest in Chatham & Borgstena, the Independent Sales Agent
Agreement, dated August 12, 1996, between Chatham & Borgstena and Xxxx X.
Xxxxxx, Inc. (the "XX Xxxxxx Agreement");
(d) The Independent Sales Agent Agreement, dated August
12, 1996, between CMI and Xxxx X. Xxxxxx, Inc. (the "Xxxxxx Agreement");
(e) Seller's liabilities arising under that certain
letter agreement, dated May 23, 1995, as amended through the Closing Date,
between Xxxxxxxx Industries, Division of Mount Xxxxxx Xxxxx, Inc. ("Xxxxxxxx")
and Chatham (the "Xxxxxxxx Agreement");
(f) Warranty claims, reserves for returns and
charge-backs that are not Excluded Liabilities described in Section 2.2(f);
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(g) Seller's liabilities arising under that certain
Partnership Agreement dated November 11, 1992 between CMI and Tatsumura Textile
Co.;
(h) Seller's liabilities arising under that certain
Cooperation Agreement dated June 16, 1995 with Etablissements Treves;
(i) The Divisional Change In Control Agreement dated
August 1, 2000 between CMI and Xxxxx Xxxx (the "Divisional Change In Control
Agreement"), provided that Purchaser shall not assume the agreement unless Xxxxx
Xxxx becomes a Hired Employee; and
(k) The obligation, if any, of Seller to reimburse
Interface, under section 18 of the Services Agreement dated May 1, 2000 between
Seller and Interface, for one-half (not to exceed $25,000) of the cost of the
installation of Cisco routers.
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 not specifically described in Section 2.1 hereof, including without
limitation, the following:
(a) Except as assumed by Purchaser as provided in Section
2.1(b), (i) any liabilities arising out of any Employee Benefit Plan (as defined
in Section 5.21) and (ii) any liability in excess of the Medical Tail Cap;
(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 any applicable laws
governing the bulk transfer of assets or any similar statute(s) as enacted in
any jurisdiction, domestic or foreign, affecting title to the Acquired Assets
except such liability as arises as a result of Purchaser's failure to pay
Assumed Liabilities;
(c) Except as described in Section 2.1(b) or (f), any
liability or obligation arising or accruing prior to the Effective Time under
any Contract 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;
(d) Except as described in Section 1.1(b) or otherwise in
Section 2.1, contracts, leases, warranties, commitments, agreements,
arrangements, guaranties of payment and/or performance, and purchase and sale
orders not assumed pursuant to Section 2.1(b);
(e) Except to the extent otherwise assumed pursuant to
Section 2.1 or as otherwise provided in Section 2.2(f), any liability of Seller
with respect to any claim or cause of action, regardless of when made or
asserted, which arises out of or in connection with the operations of the
Automotive Business by Seller prior to the Effective Time;
(f) Warranty claims and charge-backs that (i) are based
solely on defective products, (ii) are not listed on SCHEDULE 2.2(F) as updated
as of the Closing Date, and (iii) are individually in excess of $10,000, but
only to the extent that the excess of (A) the aggregate amount of such warranty
claims and charge-backs, over (B) the unutilized amount of all reserves on the
Audited Closing Date Working Capital Schedule, is greater than $250,000
("Material Warranty Claims and Charge-backs). To establish that a warranty claim
or charge-back is based solely on a defective product when the product has
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not been returned by the customer, the Purchaser will have to be able to
establish, with clear and convincing evidence, that the product in question is
defective and that the warranty claim or charge-back was not directly or
indirectly granted as a customer accommodation;
(g) All payments, obligations, actions or causes of
action, assessments, claims, demands, judgments, losses, damages, liabilities,
penalties, fines, forfeitures, costs and expenses related to, arising out of (i)
injury to persons or property alleged to have been caused by products sold by
the Automotive Business prior to the Effective Time ("Product Liability Claims")
and (ii) injury to employees, the factual basis for which occurred prior to the
Closing Date, including, without limitation, injuries arising from or related to
an Environmental Condition ("Employee Tort Claims");
(h) Any liabilities or obligations of Seller relating to
the Excluded Assets;
(i) Any liabilities or obligations relating to income
taxes levied on the Seller relating to the transfer of the Acquired Assets;
(j) Except as assumed by Purchaser as provided in
Sections 2.1(b), (c) and (d) and as contemplated by the Employee Lease Agreement
or the Services Agreement, (i) any claim, cause of action, liability or
obligation, whether or not arising or occurring in the ordinary course of
business (including, without limitation, performance, success,
longevity/duration, year 2000 compliance, incented and/or any other bonuses,
salaries, vacation pay, sick pay, holiday pay, severance pay and other like
obligations or payments), arising prior to or as a result of the Closing, or
(ii) any claim, cause of action, liability or obligation arising upon or after
the Closing under any change in control agreement, in either case, to any
present or former employee, agent, or independent contractor of Seller, whether
or not employed or retained by Purchaser after the Closing except that Purchaser
shall assume the Divisional Change In Control Agreement under the condition
described in Section 2.1(i) hereof;
(k) All payments, obligations, actions or causes of
action, claims, demands, judgments, assessments, losses, damages, liabilities,
penalties, fines, forfeitures, costs and expenses 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 any Environmental
Condition existing or occurring as of or prior to the Effective Time
("Environmental Liability"). As used in this Agreement, the following
definitions shall apply:
(i) "Environmental Condition" shall mean (x) the
presence, generation, discharge, emission, release, spill, dumping, leak,
burial, placement, migration, receiving, handling, use, storage, containment,
treatment, disposal or transportation of any Hazardous Material (A) with respect
to any real property owned or formerly owned or operated by Seller or any
improvements thereon, (B) caused by Seller or any of its predecessors in
interest, or (C) otherwise arising out of the operation of Chatham as to which
Remedial Action is currently or in the future shall be required under any
Environmental Law or as to which any liability is currently or in the future
shall be imposed under any Environmental Law on Seller or Purchaser with respect
to any such Hazardous Material or reporting with respect thereto and (y) any
violation of or noncompliance with any Environmental Law by Seller or any of its
predecessors in interest;
(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) as in effect as of the date of this Agreement,
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
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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 statutes, laws or ordinances similar
or analogous to the federal statutes listed in parts (i) - (viii) of this
subparagraph, (x) any amendments to the statutes, laws or ordinances listed in
parts (i) - (ix) of this subparagraph, (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 relating to environmental, health or
safety matters.
(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, pesticides and
other agricultural chemicals, oil and petroleum products or byproducts and any
constituents thereof, asbestos and asbestos-containing materials, and
polychlorinated biphenyls (PCBs).
(iv) "Remedial Action" shall mean any
investigation, feasibility study, monitoring, testing, sampling, removal
(including without limitation the removal of underground storage tanks),
restoration, clean-up, remediation, corrective action, closure, site
restoration, remedial response or remedial work with respect to any Hazardous
Material contamination or pollution, required by applicable Environmental Law or
ordered by any governmental authority in accordance with applicable
Environmental Law.
(l) 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 advisers;
(m) Except as assumed pursuant to Section 2.1(b) or as
contemplated by the Employee Lease Agreement or the Services Agreement, any
liability or obligation of Seller or Chatham & Borgstena (in the case of Chatham
& Borgstena, only to the extent any such liability or obligation arises as a
member of any affiliated group or any combined or consolidated group on account
of Seller or Chatham or under any tax sharing arrangement or other agreement)
for all federal, state, local or foreign income, excise, franchise, transfer 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 Chatham & Borgstena or any
member of any affiliated group or any combined or consolidated group on account
of Seller or Chatham or under any tax sharing arrangement or agreement, for all
periods through and including the period ending at the Effective Time,
including, without limitation, liability arising as a result of the transactions
contemplated herein (other than sales, transfer or documentary taxes 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 Automotive 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 Automotive Business operates;
(n) Any liability of Seller for its actual or alleged
breach of, or noncompliance with, any federal, state, or local law, rule,
regulation, order or decree (other than Environmental Laws) applicable to the
Automotive Business or Seller prior to the Effective Time;
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(o) All indebtedness of Seller, whether secured or
unsecured, due or to become due, except Assumed Liabilities; and
(p) Any inter-company or intra-company debt or funding
obligations related thereto (except any inter-company payables to Elastic
Fabrics of America).
ARTICLE 3
AMOUNT AND PAYMENT OF PURCHASE PRICE
3.1 Calculation of Purchase Price. The total consideration to be
paid to Seller for the sale, transfer, and conveyance of the Acquired Assets and
the covenant not to compete provided for in Section 11.7 hereof (the "Purchase
Price"), in addition to the assumption of the Assumed Liabilities, shall be an
amount equal to Nineteen Million Dollars ($19,000,000), subject to adjustment as
provided in Section 3.3.
3.2 Payment of Purchase Price; Establishing Escrow. Subject to the
fulfillment of the conditions set forth herein, on the Closing Date, Purchaser
shall pay or deliver to Seller the Purchase Price minus (i) Twenty Two Thousand
Five Hundred Dollars ($22,500) as Seller's payment for one-half of the filing
fee paid by Purchaser under the HSR Act (the "HSR Filing Fee"); minus (ii) the
Escrowed Amount. Seller and Purchaser shall establish at Closing an escrow (the
"Escrow") in an aggregate amount of One Million Dollars ($1,000,000) (the
"Escrowed Amount"), pursuant to the terms of an escrow agreement to provide, as
a nonexclusive remedy, a fund for satisfaction of post-closing indemnification
claims by Purchaser pursuant to Section 14.1 hereof.
3.3 Adjustment to Purchase Price.
(a) Within sixty (60) days following the Closing Date,
Seller shall deliver to Purchaser a schedule of the net working capital as of
the Closing Date, for the Automotive Business (including the automotive
businesses of Chatham and Chatham & Borgstena) audited by Xxxxxx Xxxxxxxx LLP,
the independent public accountants to Seller ("Seller's Accountants"), (the
"Audited Closing Date Working Capital Schedule"). The Closing Date net working
capital shown on the Closing Date Working Capital Schedule shall equal the sum
of (i) inventory (net of reserves); (ii) accounts receivable (net of reserves);
and (iii) prepaid expenses and assets, less the sum of (iv) trade payables and
(v) accrued expenses set forth on SCHEDULE 2.1(B) and shall include (x)
intercompany accounts due to CMI from Chatham & Borgstena as current
liabilities, (y) intercompany accounts due from CMI to Chatham & Borgstena as
current assets, and (z) Chatham & Borgstena cash as a current asset. For
purposes of the computation of Closing Date net working capital, subject to the
previous sentence as it relates to intercompany accounts and Chatham & Borgstena
cash, inventory, accounts receivable and prepaid expenses shall include only
those items and amounts included in the Acquired Assets pursuant to Sections
1.1(c), (e) and (j) (including all related reserves) and trade payables and
accrued expenses shall include only those items and amounts included in the
Assumed Liabilities pursuant to Sections 2.1(b) and (f). The Audited Closing
Date Working Capital Schedule shall be prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied consistently with the
Management Prepared Statements following the procedures set forth on SCHEDULE
3.3.1 (except Management Prepared Statements do not have year-end adjustments)
and shall include a full physical audit of all Inventory located in Elkin, North
Carolina or at XxXxxxxx Industries on the Closing Date and confirmations of the
remainder of the Inventory. Purchaser and PricewaterhouseCoopers LLP,
independent public accountants to Purchaser ("Purchaser's Auditor"), may observe
the Closing Date inventory and other procedures of Seller and Seller's Auditor,
in the preparation of the Audited Closing Date Working Capital Schedule and
shall be provided with reasonable access to the workpapers of Seller and
Seller's Auditor supporting the Audited Closing Date Working Capital Schedule.
If placements are canceled or curtailed after the Closing Date, any effect such
cancellations or curtailments may have on the Inventory will not be considered
in the preparation of the Audited Closing Date Working Capital Schedule or the
calculation of the Adjustment
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Amount. The Audited Closing Date Working Capital Schedule prepared by Seller's
Auditors shall also set forth a computation of the Adjustment Amount.
(b) In the event that the Closing Date working capital
shown on the Audited Closing Date Working Capital Schedule is greater than $5.1
million or less than $4.9 million, then the Purchase Price shall be increased or
reduced, respectively, by the amount of the difference (the "Adjustment
Amount").
(c) Purchaser shall have thirty (30) days in which to
review the Audited Closing Date Working Capital Schedule and to the extent that
Purchaser disputes either the amount of, or basis for, the Adjustment Amount as
shown on the Audited Closing Date Working Capital Schedule, then within thirty
(30) days from the date of receipt by Purchaser of the Audited Closing Date
Working Capital Schedule, Purchaser shall provide written notice thereof to
Seller stating any objection and the basis for such objection. If Purchaser does
not timely deliver a notice of objection to Seller, (i) if the Adjustment Amount
is a reduction in the Purchase Price, Purchaser first shall receive the
Adjustment Amount from the Escrowed Amount, to the extent of the Escrowed
Amount, and Seller will promptly execute any certificate or other document
required to release such funds to Purchaser and shall deliver such certificate
or document to the Escrow Agent, and any remaining balance of the Adjustment
Amount shall be paid by Seller to Purchaser by wire transfer of immediately
available funds within ten (10) days after the lapse of the 30-day notice period
or (ii) if the Adjustment Amount is an increase in the Purchase Price, Purchaser
shall pay Seller the Adjustment Amount by wire transfer of immediately available
funds within ten (10) days after the lapse of the 30-day notice period.
(d) If any amount claimed as an Adjustment Amount is
timely disputed in a written notice of objection delivered to Seller, Purchaser
and Seller shall undertake to resolve the amount so disputed. If Purchaser and
Seller are unable to resolve the dispute within thirty (30) days from the date
of Seller's receipt of the notice of objection, then the issues in dispute will
be submitted to a mutually agreed upon office of a nationally recognized
accounting firm (the "Resolving Accountants"), with which neither Purchaser nor
Seller has had a business relationship during the two (2) years prior to the
closing Date. If issues in dispute are submitted to the Resolving Accountants,
each Party will furnish to the Resolving Accountants such work papers and other
documents and information relating to the disputed issues as the Resolving
Accountants may request and are available to that Party (or its independent
public accountants), and will be afforded the opportunity to present to the
Resolving Accountants any material relating to the determination and to discuss
the determination with the Resolving Accountants. The determination by the
Resolving Accountants, as set forth in a written notice delivered to Purchaser
and Seller by the Resolving Accountants, will be binding and conclusive on the
Parties, and Purchaser and seller will each bear the fees of the Resolving
Accountants for such determination based upon the Resolving Accountants'
determination of the extent to which each Party was correct or incorrect as to
the dispute.
(e) Upon resolution of such dispute, whether by agreement
between Purchaser and Seller or by determination of the Resolving Accountants,
the Adjustment Amount, if any, shall be paid (i) if a reduction in Purchase
Price, to Purchaser by deduction of such amount from the Escrowed Amount, to the
extent of the Escrowed Amount, and Seller will promptly execute any certificate
or other document required to release such funds to Purchaser and shall deliver
such certificate or document to the Escrow Agent, and any remaining balance of
the Adjustment Amount shall be paid by Seller to Purchaser by wire transfer of
immediately available funds within ten (10) days of the resolution of the
dispute or (ii) if an increase in Purchase Price, to Seller by Purchaser's wire
transfer of immediately available funds within ten (10) days of the resolution
of the dispute.
3.4 Intercompany Obligations. At the time the adjustment to the
Purchase Price, if any, is to be paid pursuant to Section 3.3(c) or Section
3.3(e), Seller shall, or Purchaser shall cause Chatham & Borgstena to, as the
case may be, satisfy in full the outstanding amount owed under the
Seller/Chatham & Borgstena intercompany obligation, as reflected on the Audited
Closing Date Working Capital Schedule.
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3.5 Transfer Expenses. Purchaser shall pay any and all sales and
use, transfer or documentary taxes levied on the transfer of the Acquired
Assets. All Inventory shall be claimed as exempt from sales tax by Purchaser.
Purchaser shall timely report and remit any such taxes to the appropriate
revenue authorities on or before the Closing Date and shall promptly remit any
increases in such taxes determined to be due after the Closing Date.
3.6 Allocation of Purchase Price. The consideration paid for the
Acquired Assets and covenant not to compete set forth in Section 8.5 hereof
(which shall equal the Purchase Price) and the assumption of the Assumed
Liabilities that are taken into account in determining the amount realized for
tax purposes shall be allocated among the Acquired Assets in accordance with the
allocation set forth on SCHEDULE 3.6. Such allocation will comply with the
requirements of Code Section 1060. Purchaser and Seller each agree to file IRS
Form 8594, and all federal, state, local and foreign tax returns in a manner
consistent with SCHEDULE 3.6. Purchaser and Seller each agree to provide the
other promptly with any information required to complete SCHEDULE 3.6.
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, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, on
October 26, 2000 or at such other time and place 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 and the assumption by Purchaser of the Assumed
Liabilities 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,
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, good, marketable,
insurable and 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 rights under all Contracts;
(ii) stock certificate numbers 1, 4, 6, 8, 9, 11,
13 and 15 for an aggregate of 1,448.9 shares of common stock of Chatham &
Borgstena, Inc., which represents the JV Interest, as well as an executed Stock
Power;
(iii) a certificate of incumbency of Seller
executed by the Secretary or Assistant Secretary of Seller listing the officers
of Seller authorized to execute this Agreement, the other Acquisition Documents
to which Seller is a party and the instruments of transfer on behalf of Seller
and certifying the authority of each such officer to execute the agreement, and
other documents, and instruments on behalf of Seller in connection with the
consummation of the transactions contemplated herein;
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(iv) a certificate of the Secretary or Assistant
Secretary of Seller containing a complete and correct copy of the resolutions
duly adopted by the board of directors of Seller, approving and authorizing each
Acquisition Document and the transactions contemplated hereby and thereby and
certifying that such resolutions have not been rescinded, revoked, modified, or
otherwise affected and remain in full force and effect;
(v) a Services Agreement (the "Services
Agreement") executed by Seller;
(vi) a Lease between Purchaser and Seller's
affiliate, Chatham Fabrics, LLC, with respect to Seller's Elkin, NC circular
knit facility (the "Facility Lease") executed by Seller;
(vii) an opinion of Xxxxxxxxxx Xxxxxx & Xxxxxxx
LLP, counsel to Seller (the "Seller Opinion");
(viii) an agreement of assignment and assumption of
the Contracts and the Assumed Liabilities (the "Assignment and Assumption
Agreement") duly executed by Seller;
(ix) to the extent permitted by law, all
environmental permits related to the Acquired Assets;
(x) certificates of existence or certificates of
good standing of Seller, as of a date within twenty (20) days prior to the
Closing Date, from the State of Delaware and each jurisdiction listed in
SCHEDULE 5.1.1 hereto;
(xi) a 1099 certificate to the extent applicable;
(xii) a Xxxx of Sale executed by Seller;
(xiii) an Employee Lease Agreement executed by
Seller;
(xiv) an Office Sublease, executed by Seller;
(xv) a Termination of Joint Venture Agreement,
executed by Seller;
(xvi) all clearance certificates or similar
documents that may be required by any state, local or other taxing authority in
order to relieve Purchaser of any obligation to withhold or escrow any portion
of the Purchase Price; and
(xvii) evidence of the satisfaction, termination
and discharge of all liens, claims, charges, security interests, mortgages,
deeds of trust, security agreements, judgments, pledges, assignments, or any
other title exceptions or defects created, caused, suffered or incurred by
Seller that are monetary in nature, or encumbrances relating to the Acquired
Assets that are not Permitted Encumbrances; and
(xviii) such other evidence of the performance of
all covenants 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 the Parties and their counsel.
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(b) Purchaser shall deliver to Seller the following:
(i) (A) a wire transfer in immediately available
funds in the amount equal to the Purchase Price minus (i) the Escrowed Amount,
minus (ii) the HSR Filing Fee; and (B) a wire transfer of the Escrowed Amount to
the account designated in the Escrow Agreement;
(ii) the Assignment and Assumption Agreement
executed by Purchaser;
(iii) 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;
(iv) a certificate executed by the Secretary or
Assistant Secretary of Purchaser containing a complete 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 and
certifying that such resolutions have not been rescinded, revoked, modified, or
otherwise affected and remain in full force and effect;
(v) the Services Agreement executed by
Purchaser;
(vi) the Employee Lease Agreement, executed by
Purchaser;
(vii) the Facility Lease executed by Purchaser;
(viii) the Office Lease, executed by Purchaser;
(ix) the Termination of Joint Venture Agreement,
executed by AB Borgstena Textile;
(x) an opinion of Xxxxxx & Bird LLP, counsel to
Purchaser, (the "Purchaser Opinion");
(xi) an irrevocable letter of credit issued by
Skandinaviska Enskilda Xxxxxx XX (publ) with Seller as beneficiary in the face
amount of US $1,386,735 and on terms otherwise acceptable to Seller (the "Letter
of Credit");
(xii) such other evidence of the performance of
all covenants required of Purchaser by this Agreement, at or before the Closing
Date, as Seller or its counsel may reasonably require; and
(xiii) appropriate certificates to satisfy state
statutory exemptions for the imposition of sales and use tax under applicable
state law.
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 Parties and their counsel.
4.3 Certain Consents. To the extent that Seller's rights under any
agreement, Contract, commitment, lease, Permit, 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 shall use its reasonable good faith efforts to obtain any such required
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consent(s) as promptly as possible. Notwithstanding the preceding sentence,
Seller shall not be obligated to obtain any consent required under the XxXxxxxx
Agreement. If any necessary 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, shall act after the Closing as Purchaser's agent in
order to obtain for the Purchaser the benefits thereunder, and Purchaser shall
reimburse Seller for its out-of-pocket costs with respect to such action.
Furthermore, 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. Purchaser, and not Seller, shall be
responsible for any amounts that may become due or other obligations that may
arise as a result of Seller's actions pursuant to this Section 4.3.
4.4 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
Seller hereby represents and warrants to Purchaser that:
5.1 Organization and Qualification.
(a) CMI is a corporation validly existing and in good
standing under the laws of the State of Delaware. SCHEDULE 5.1.1 lists the
jurisdictions in which Seller is qualified to do business as a foreign
corporation by reason of its business, and nothing requires Seller by reason of
its business to be qualified in any other jurisdiction where the failure to be
so qualified would subject it to any material cost, restriction or penalty for
failing to qualify.
(b) Chatham & Borgstena is a corporation validly existing
and in good standing under the laws of the State of Delaware. Chatham &
Borgstena is duly qualified and is in good standing in the State of North
Carolina.
5.2 Power and Authority. Seller has full right, power and
authority to own and operate the Acquired Assets, to enter into and to perform
its obligations under 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.
5.3 Due Authorization; Validity; Enforceability. The Acquisition
Documents executed by Seller have been duly executed and delivered by Seller and
constitute legal, valid, and binding obligations of Seller enforceable against
Seller in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, by the exercise of judicial
discretion in accordance with general equitable principles or by equitable
defenses that may be applied to the remedy of specific performance. No other
action on the part of Seller or its stockholders is required in connection
therewith.
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5.4 No Violation or Consent. Neither the execution and delivery by
Seller of any of the Acquisition Documents to which it is a party nor, subject
to obtaining the consents and approvals described in SCHEDULES 5.9.4, 5.11.1 and
5.19 the consummation by Seller of the transactions contemplated thereby will
(i) violate 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
Seller or Chatham & Borgstena is subject, or by which the Acquired Assets may be
bound or require Seller or Chatham & Borgstena to approve, consent to, or waive,
or make any filing with any person or entity (governmental or otherwise) that
has not been obtained or made, where such violation reasonably would be expected
to have a Material Adverse Effect on the Acquired Assets or the Automotive
Business, (iii) conflict with, result in a breach of, or constitute a default
under any indenture, mortgage, lease, agreement, authorization, permit, order,
writ, judgment, injunction, decree, arbitration award, or other instrument to
which Seller is a party or by which it or any of the Acquired Assets may be
bound or affected, where such conflict, breach or default reasonably would be
expected to have a Material Adverse Effect on the Acquired Assets or the
Automotive Business or (iv) result in the creation of any lien, charge, security
interest or other charge or encumbrance upon or affecting 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
Seller under any of the Assumed Liabilities.
5.5 Subsidiaries; Joint Ventures. The Acquired Assets include
CMI's 65 percent ownership interest in Chatham & Borgstena, which is represented
by stock certificate numbers 1, 4, 6, 8, 9, 11, 13 and 15 issued for an
aggregate of 1,448.9 shares of common stock and held by Seller. Other than the
JV Interest, 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.
5.6 Financial Statements. Attached as SCHEDULE 5.6.1 are complete
and correct copies of the audited balance sheets and related statements of
income and cash flows of Seller as, at and for the fiscal years ended January 2,
1999 and January 1, 2000 and for the periods then ended (the "Audited
Statements") and the balance sheet and statement of income of the Automotive
Business (which shall include Chatham & Borgstena on a consolidated basis) as,
at and for the three quarters ended September 30, 2000 and for the period then
ended, in each case prepared by management of Seller (the "Management Prepared
Statements").
The Audited Statements and the Management Prepared Statements are collectively
referred to herein as the "Financial Statements." The Audited Statements have
been prepared in accordance with GAAP consistently applied, and present fairly
in all material respects the financial position, assets, liabilities, revenues
and expenses and results of operation of Seller, as at the dates and for the
periods indicated. The Management Prepared Statements (i) have been prepared in
accordance with SCHEDULE 3.3.2 and GAAP (except as otherwise disclosed in
SCHEDULE 3.3.1), (ii) do not contain footnotes (that, if presented, would not
differ materially from those included in the Audited Statements) and are subject
to normal year-end adjustments, and (iii) present fairly in all material
respects the financial position, assets, liabilities, revenues and expenses, and
results of operations of the Automotive Business as at the date and for the
periods indicated. Except as disclosed on SCHEDULE 5.6.2 and except for
liabilities that have been or will be incurred in the ordinary course of
business, the Automotive Business has no liabilities or obligations (secured or
unsecured, whether accrued, absolute, direct, indirect, contingent or otherwise,
and whether due or to become due regardless of whether claims in respect thereto
have been asserted as of such date) that would be required by GAAP with respect
to the Audited Statements and that would be required to be prepared consistent
with SCHEDULE 3.3.1 and GAAP (except as otherwise disclosed on SCHEDULE 3.3.1)
with respect to the Management Prepared Statements, to be accrued or reserved
against that are not fully and adequately accrued or reserved against in the
Financial Statements. The books, records, and accounts of Seller maintained with
respect to the Automotive Business accurately and fairly reflect, in reasonable
detail, the transactions and the assets and liabilities of Seller with respect
to the Automotive Business.
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Except as set forth on SCHEDULE 5.6.3, Seller has not changed any of its
accounting policies or procedures since March 3, 2000. Seller has made available
to Purchaser complete and correct copies of all internal management and control
reports and balance sheets and income statements related to Chatham and related
to the Automotive Business (which include Chatham & Borgstena on a consolidated
basis), including, without limitation, the "XXXX Xxxxxx" and balance sheets (in
the same format as provided to Purchaser for the period ended October 3, 1999)
for the periods ended January 29, 2000, February 26, 2000 and for each fiscal
period thereafter, together with all supporting schedules in the same format as
provided to Purchaser for the period ended October 2, 1999. Each such report was
in accordance with the books and records of Seller.
5.7 Inventories. All Inventory, whether reflected on the Financial
Statements or subsequently acquired, has been or will be acquired by Seller only
in bona fide transactions entered into in the ordinary course of business.
Except as described in SCHEDULE 5.7.1, Seller has valid legal title to its
Inventory free and clear of any consignments, liens, claims, charges, and
encumbrances.. Purchase commitments made for raw materials and parts are not in
excess of normal requirements.
5.8 Accounts Receivable. All Accounts Receivable shown on the
Financial Statements are, valid and represent amounts properly invoiced by
Seller. The reserves for doubtful or uncollectible Accounts Receivable reflected
on the Financial Statements were established in accordance with GAAP with
respect to the Audited Statements and as required to be consistent with SCHEDULE
3.3.2 and GAAP (except as otherwise disclosed on SCHEDULE 3.3.2) with respect to
the Management Prepared Statements.
5.9 Personal Property.
(a) Seller has good and marketable title to all Acquired
Assets (other than leased personal property referred to in Section 5.9(b)), free
and clear of all liens, claims, charges, security interests, and other
encumbrances of any kind and of any nature, except Permitted Encumbrances and as
disclosed on SCHEDULE 5.9.1.
(b) SCHEDULE 5.9.2 contains a list of all of Seller's and
Chatham & Borgstena's leases for Vehicles, Equipment or other items of personal
property included among the Acquired Assets (except miscellaneous leases having
an aggregate value, if capitalized, of remaining lease payments of less than
$10,000; provided, however, the aggregate of remaining lease payments on all
such excluded leases shall not exceed $100,000). Complete and correct copies of
each lease listed on SCHEDULE 5.9.2 and any amendments, extensions, and renewals
thereof have been made available to Purchaser. Each of the leases described on
SCHEDULE 5.9.2 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 a default by Seller or, to the knowledge of Seller, any
other party to such lease, the consequences of which, severally or in the
aggregate, would have a Material Adverse Effect. Except as described on SCHEDULE
5.9.3, all such leases are fully assignable without the consent of any third
party. No rights of Seller under such leases have been assigned or otherwise
transferred as security for any obligation of Seller. For purposes of this
Agreement, a violation or other matter will be deemed to have a "Material
Adverse Effect" if such violation or other matter would have a material adverse
effect on the Acquired Assets, the Automotive Business or the operations,
financial condition or performance of the Automotive Business taken as a whole.
(c) Except as set forth on SCHEDULE 5.9.3 and except for
the Excluded Assets, the Acquired Assets constitute all the assets used in or
necessary and sufficient for the operation of the Automotive Business in the
manner heretofore conducted, except where the failure to so include such asset,
either individually or in the aggregate, would not have a Material Adverse
Effect. Except as disclosed on SCHEDULE 5.9.4, the tangible assets included in
the Acquired Assets are in good operating condition and repair, reasonable wear
and tear in ordinary usage excepted.
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5.10 Reserved.
5.11 Contracts.
(a) SCHEDULE 5.11.1 contains a complete and correct list
of all contracts of the Automotive Business not otherwise listed on SCHEDULES
5.9.2, 5.12, 5.18 or 5.21, each of which (i) requires or could require any party
thereto to pay $25,000 or more in the aggregate for the remaining term of such
Contract annually, or (ii) is between Seller and any officer, stockholder,
director, employee, or affiliate and all modifications, amendments, renewals, or
extensions thereof. Seller has made available to Purchaser a complete and
correct copy of (and, if oral, a description) of each contract. Except as
disclosed on SCHEDULE 5.11.1, each of such 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 and is fully assignable without
the consent of any third party. Except as listed on SCHEDULES 5.9.2, 5.11.1,
5.12, 5.18 or 5.21, with respect to the Automotive Business 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 Automotive
Business, including, without limitation, agreements providing for bonuses,
incentive payments, pensions, stock packages or severance payments;
(ii) agreement, contract, or commitment for the
future purchase of, or payment for, supplies or products (which agreements do
not include purchase orders entered into in the ordinary course of business), or
for the performance of services by a third party which supplies, products or
services are used in the conduct of the Automotive Business, that would limit
Purchaser's ability to terminate such agreement, contract or commitment without
penalty or delay and enter into a similar agreement, contract or commitment with
a different party;
(iii) agreement, contract or commitment to sell or
supply products or to perform maintenance, services or similar duties in
connection with the Automotive Business involving in any one case $25,000 or
more;
(iv) distribution, dealer, representative, or
sales agency agreement, contract, or commitment relating to the Automotive
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 specifically relating to the
Automotive Business (other than security arrangements for worker's compensation
and similar governmental requirements) or agreement or arrangement for a line of
credit or guarantee, pledge, or undertaking of the indebtedness of any other
person relating to the Automotive Business;
(vii) agreement, contract, or commitment for any
charitable or political contribution specifically relating to the Automotive
Business;
(viii) other than the XxXxxxxx Agreement, the
Cooperation Agreement with Establissements Treves, the Partnership Agreement
with Tatsumura Textile Co. and the Fabric Supply Agreement with Interface
Fabrics Group, Inc., any agreement, contract, or commitment limiting or
restraining the Automotive Business or any successor thereto from engaging or
competing in any manner or
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in any business, nor, to Seller's knowledge, is any Hired Employee of Seller
engaged in the conduct of the Automotive Business subject to any such agreement,
contract, or commitment;
(ix) material agreement, contract, or commitment
relating to the Automotive Business not made in the ordinary course of business;
or
(x) agreement, contract or transaction with
Seller or any affiliate of Seller.
(b) SCHEDULE 5.11.2 contains a complete and correct list
of all commitments for capital expenditures related to the Automotive Business
that have been approved or made prior to the date of this Agreement in excess of
$25,000 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 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
5.9.3, 5.11.1, 5.12.2 or 5.19, each such Contract listed thereon is fully
assignable without the consent of any third party.
(d) Except as indicated on SCHEDULE 5.11.3, there exists
no actual or, to the knowledge of Seller, any threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to any
Contract, which would have a Material Adverse Effect on the Automotive 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 Automotive 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
Automotive Business, or (iii) the business relationship of Seller with any
material supplier to the Automotive Business.
(e) Seller has not granted any power of attorney
affecting or with respect to the Automotive Business or the Acquired Assets that
remains outstanding.
(f) The Contracts, together with the contracts and
agreements disclosed on SCHEDULE 5.11.1 or not required to be disclosed thereon,
collectively constitute all of the contracts necessary to enable Purchaser to
conduct the Automotive Business after the Closing in the manner in which the
Automotive Business is currently being conducted.
5.12 Intellectual Property. SCHEDULE 1.1(F) contains a complete and
correct list of the Intellectual Property and a brief description of each item
of Intellectual Property and the nature of Seller's interest therein, all of
which are valid, and to the knowledge of Seller, uncontested. Seller owns, or
has the right to use, the Intellectual Property. The Acquired Assets include
and, upon the purchase of those assets and the obtaining of any necessary
consents and licenses, Purchaser will own or have the uncontested right to use
the Intellectual Property necessary for or used in the conduct of the Automotive
Business as presently conducted. No claim is pending or, to Seller's knowledge,
threatened, and Seller has not received notice that the conduct of the
Automotive 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. No claim is pending, or to the best of 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. Except as shown on SCHEDULE 5.12.1, no royalties
or fees are payable by Seller to anyone for use of the Intellectual Property and
none will become payable as a result of the transactions contemplated
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under this Agreement. Complete and correct copies of all agreements pursuant to
which Seller has any license or right to use any Intellectual Property have been
made available to Purchaser. All such agreements are in full force and effect,
and there are no existing defaults or events of default, real or claimed, by
Seller, or, to the knowledge of Seller, by any other party to such agreements,
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. All of 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 5.12.2.
5.13 Insurance. The Acquired Assets and the Automotive Business are
currently insured under various policies of general liability and other forms of
insurance, which are set forth on SCHEDULE 5.13.1, and which policies are in
amounts adequate in the reasonable judgment of Seller to protect the Acquired
Assets from significant loss. All such policies are in force and effect with
premiums thereon timely paid and no act or failure to act has occurred which
caused or may cause any such policy to be canceled or terminated. Seller has not
been refused any insurance with respect to the Automotive 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. Except as set forth on
SCHEDULE 5.13.2, there are no outstanding requirements or recommendations by any
current insurer or underwriter with respect to the Automotive Business or the
Acquired Assets that require or recommend changes in the conduct of the
Automotive Business, or require any repairs or other work to be done with
respect to any of the Acquired Assets or operations of the Automotive Business.
5.14 Environmental Matters and OSHA.
(a) Except as set forth in SCHEDULE 5.14.1 hereto, and
except as may be reflected in any of the environmental reports referred to on
such Schedule, to the knowledge of Seller and with respect to the circular knit
plant to be leased by Purchaser under the Facility Lease (the "Knit Plant"),
Seller,
(i) is in compliance with all Environmental
Laws. In addition, Seller has obtained all permits, identification numbers,
licenses, registrations, approvals, consents, orders, and authorizations, and
has complied with all applicable notification and reporting requirements, which
are required under Environmental Laws ("Environmental Permits") and SCHEDULE
5.14.2 contains a complete list and description of each such Environmental
Permit. Except as described in SCHEDULE 5.14.2, Seller is in 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
operated;
(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) Except as set forth in SCHEDULE 5.14.1 hereto, and
except as may be reflected in any of the environmental reports referred to on
such Schedule, with respect to the Automotive Business or the Acquired Assets
and to the knowledge of Seller,
(i) there are no actions, suits, claims,
arbitration proceedings, penalties, fines or complaints pending or threatened by
any governmental authority, municipality, community, citizen, or other entity,
against Seller relating to environmental protection, Environmental Laws, or the
condition of the Knit Plant. Seller has not been notified in writing that Seller
is potentially liable under CERCLA or any other Environmental Law;
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(ii) there has been no dumping, discharge,
emission spillage, migration, leakage, disposal, release, burial, or placement
of Hazardous Materials on the site of the Knit Plant or any facilities used for
or in connection with the Automotive Business in violation of the Environmental
Laws;
(iii) Seller's removal of any and all waste and
debris, hazardous or otherwise, from the Knit Plant and offsite disposition
thereof have to the extent applicable been in accordance with Environmental Laws
and Environmental Permits, except for non-hazardous waste which is temporarily
held in dumpsters at the Knit Plant pending pickup and offsite disposal. To the
extent Seller has contracted with third parties for the transportation or
disposal of waste and debris, hazardous and otherwise, such third parties have
been duly authorized under applicable Environmental Laws to transport such waste
and have transported or disposed of such wastes in compliance with all
applicable Environmental Laws;
(iv) all on-site and off-site locations where
Seller has stored, disposed or arranged for the disposal of Hazardous Materials
within the last five years are identified in SCHEDULE 5.14.3.;
(v) all above-ground and underground storage
tanks and associated pipes, valves and appurtenances ("Tanks"), surface
impoundments, underground injection xxxxx, oil/water separators, septic systems,
wastewater discharge or treatment systems, and hydraulic lift equipment
currently located on the site of the Knit plant have been identified in SCHEDULE
5.14.4, together with a description of the materials stored by Seller therein
and a statement as to whether such tanks, separators, systems, and equipment are
currently used by Seller. All Tanks have been registered and comply with
Environmental Laws, including all requirements for corrosion protection, leak
detection, and spill and overflow protection, and no removal of, alteration of,
or addition to such Tanks will be required. There has been no material
discharge, spillage, migration, leakage, disposal, or release of Hazardous
Materials by Seller in connection with the use of such tanks, separators,
systems, and equipment;
(vi) no lien has arisen or is threatened on or
against any of the Acquired Assets under or as a result of any Environmental
Laws;
(vii) except as identified in SCHEDULE 5.14.5 and
except for the environmental reports referred to in the Schedules to this
Section 5.14, no audit, assessment, or other investigation has been conducted as
to environmental matters at the Knit Plant or any facilities used for or in
connection with the Automotive Business by any party during or, to Seller's
knowledge, prior to the period during which Seller owned, leased or operated
such properties. Complete and correct copies of all reports or documents or data
that are related to the items identified in SCHEDULE 5.14 in the possession of
Seller have been made available to Purchaser.
(c) Except as set forth in SCHEDULE 5.14.6 and except as
may be reflected in any of the environmental reports referred to on Schedule
5.14.1, to Seller's knowledge, Seller is in 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.
(d) Except as set forth in SCHEDULE 5.14.7 and except as
may be reflected in any of the environmental reports referred to on Schedule
5.14.1, to Seller's knowledge, neither the Knit Plant, or the buildings,
fixtures, and improvements located thereon, contains any polychlorinated
biphenyls ("PCBs") or substances containing PCBs.
(e) Notwithstanding the foregoing, as to any and all
Environmental Conditions and Environmental Liabilities, the Acquired Assets and
the Automotive Business are being sold on an "AS IS-WHERE IS" basis, and Seller
hereby expressly disclaims all other oral, written, statutory or nonstatutory
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warranties or representations whatsoever (including, without limitation, any
express or implied representations or warranties of merchantability, fitness for
a particular purpose, habitability, operability, condition, utility, or
otherwise) with respect to Environmental Conditions or Environmental
Liabilities, including, without limitation, with respect to any Environmental
Conditions or Environmental Liabilities reflected in any of the investigations
or remedial work undertaken by Seller and its predecessors with respect to any
Environmental Conditions and notwithstanding the discovery or existence of any
additional or different set of facts.
5.15 Litigation. Except as listed and briefly described on SCHEDULE
5.15, there are no claims, charges, arbitrations, grievances, actions, suits,
proceedings, or investigations pending, or to Seller's knowledge, threatened
against, or adversely affecting the Automotive Business or any of the Acquired
Assets, at law or in equity, or before or by any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign. To the knowledge of Seller, there is no
set of facts which could reasonably be expected to lead to such litigation,
proceeding or claim. 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 Automotive Business or the
Acquired Assets. Seller has not received any written inquiry from any federal,
state, or local agency concerning the Automotive Business since January 1, 1996.
5.16 Absence of Changes. Except as set forth on SCHEDULE 5.16, from
the date of the balance sheet included in the Management Prepared Statements
through the date of this Agreement, the Automotive Business has been conducted
in the ordinary course and in substantially the same manner as it was before the
date of the balance sheet included in the Management Prepared Statements. Since
the date of such balance sheet, except as disclosed on SCHEDULE 5.16, there has
been no (i) material adverse change in the business condition (financial or
otherwise) or results of operations of the Automotive Business; (ii) any event
that has had or may reasonably be expected to have a Material Adverse Effect on
the Automotive Business; (iii) write down or write up of the value of any
Inventory (including write-downs by reason of shrinkage or markdowns), except
for write-downs, write-ups, and write-offs in the ordinary course of business
consistent with past practice; (iv) sale, transfer or other disposition of any
of the Acquired Assets, except in the ordinary course of business consistent
with past practice; (v) grant or incurrence of any obligation for any increase
in the salary, perquisite, fringe benefits or other compensation of any Hired
Employee of Seller (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; or (vi) agreement, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this Section 5.16 and not
otherwise disclosed pursuant to or permitted by this Agreement.
5.17 Brokers and Finders. Except as set forth on SCHEDULE 5.17,
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.
5.18 Labor Matters. SCHEDULE 5.18.1 contains a correct and complete
list of all present employees and sales representatives employed or engaged by
Seller in the Automotive Business, and SCHEDULE 5.18.2 contains a complete and
correct list of such employees and sales representatives who earn $75,000 or
more in base salary, which schedule shall set forth such employee's base salary,
any bonus received by any of them during or in respect of the twelve (12) months
ended December 31, 1999, their current remuneration, the amount of any increase
in salary, perquisite, fringe benefits or other compensation since December 31,
1998, 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 Automotive 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
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or working conditions of any of the employees of Seller engaged in the
Automotive Business, nor is Seller obligated under any agreement to recognize or
bargain with any labor organization or union on behalf of such employees. With
respect to the Automotive 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 5.18.3, Seller is not a party to or obligated
under any outstanding agreement, policy, practice, plan, program or arrangement
with respect to bonus or severance payments or any form of severance
compensation, change in control payments or bonuses related to a sale of Chatham
or the Automotive Business with respect to any Employee.
5.19 Approvals; Permits; Licenses. Except as described on SCHEDULE
5.19, Seller and Chatham & Borgstena, with respect to the Automotive Business,
have obtained all governmental approvals, authorizations, permits, licenses, and
orders required for the lawful operation of the Automotive Business as presently
conducted, the absence of which reasonably would be expected to have a Material
Adverse Effect.
5.20 Taxes.
(a) Except as set forth on SCHEDULE 5.20.1, Seller, with
respect to the Automotive Business, have timely filed, and as of the Closing
Date will have timely filed, all federal and foreign income tax returns, and all
state, county, and local income, franchise, property, sales, use, unemployment,
and all 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.
Seller, with respect to the Automotive 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 such taxes and
assessments, in which event Seller has disclosed the details of such contests on
SCHEDULE 5.20.1. Seller has disclosed on SCHEDULE 5.20.1 any agreement or
document extending or having the effect of extending the period for assessment
or collection of any taxes. Attached as SCHEDULE 5.20.2 are complete and correct
copies of all personal property, ad valorem, tax bills of Seller for the year
1999 that have been received by Seller prior to the date hereof, relating to the
Acquired Assets, including the Vehicles.
(b) SCHEDULE 5.20.3 provides a brief description of any
pending federal, state and local tax disputes in which Seller, with respect to
the Automotive 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) Seller has withheld and paid all income and social
security taxes required to have been withheld and paid to or deposited with the
appropriate government agency in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(d) With respect to the Automotive Business, 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 5.20.1 or 5.20.2, nor has Seller received
any notice or questionnaire from any such jurisdiction which suggests or asserts
that Seller, with respect to the Automotive Business, may have a duty to file
such returns and pay such taxes, or otherwise is subject to the taxing authority
of such jurisdiction.
(e) Seller has not filed a consent under Code Section
341(f), relating to collapsible corporations. Seller has not made any payments,
is not obligated to make any payments, and is not a party to any agreement that
could obligate it to make any payments that will be nondeductible under Code
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Section 280G. Seller has not been a United States real property holding
corporation, within the meaning of Code Section 897(c)(2), during the applicable
period specified in Code Section 897(c)(1)(A)(ii). Except as listed on SCHEDULE
5.20.4, Seller is not a party to any tax allocation or sharing agreement
currently in effect. Except with respect to other members of Seller's affiliated
group filing a consolidated federal income tax return, Seller has no liability
for the taxes of any person under Treasury Regulations Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(f) The unpaid taxes as of the most recent balance sheet
of Seller do not exceed the reserve for tax liability (rather than any reserve
for deferred taxes established to reflect timing differences between book and
tax income) set forth on the face of or included in the footnotes to the most
recent balance sheet.
(g) Except as set forth in SCHEDULE 5.20.3, Seller is not
currently, nor within the last five (5) years has it been, the subject of any
audit, examination, investigation or inquiry of any federal, state, local or
foreign jurisdiction concerning any filing or any tax return or information.
5.21 Employee Benefit Plans.
(a) SCHEDULE 5.21 contains a list of every Employee
Benefit Plan (as defined below) that covers or has covered employees of Seller
engaged in the Automotive Business ("Employees"). Correct and complete copies of
such Employee Benefit Plans, and any amendments thereto, determination letters,
actuarial valuations and reports, summary annual reports, the most recent
summary plan description, including any summaries of material modifications,
prepared for any Employee Benefit Plan with respect to the most recent three
plan years have been furnished or made available to Purchaser.
"Employee Benefit Plan" means collectively, each pension,
retirement, profit-sharing, executive compensation, deferred compensation,
flexible spending account, cafeteria plan, stock option, share purchase,
employee stock ownership, severance pay, vacation, holiday, bonus or incentive
plan, or any other written or unwritten employee plan, policy, practice,
program, arrangement, agreement or understanding, whether arrived at through
collective bargaining or otherwise, any disability, medical, vision, dental or
other health plan, including retiree health plans, any life insurance plan,
including any split-dollar life insurance agreement and retiree life insurance
plan, or any other employee benefit plan or fringe benefit plan, including,
without limitation, any "employee benefit plan," as that term is defined in
Section 3(3) of ERISA currently or previously adopted, maintained by, sponsored
in whole or in part by, or contributed to by the Sellers or any member of its
controlled group (as defined in Code Section 414(b), (c), (m), or (o)).
(b) Each Employee Benefit Plan and their related trusts
are in material compliance with applicable requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code and other
applicable laws. Each Employee Benefit Plan that is a group health plan (as
defined in Code Section 5000(b)(1)) has been operated in material compliance
with COBRA 4980B and Part 6 of Title I of ERISA. Sellers shall be responsible
for complying with the requirements of Code Section 4980B and Part 6 of Title I
of ERISA for its employees (including those employees who are hired by the
Purchaser on or after the Closing) and their "qualified beneficiaries" whose
"qualifying event" (as such terms are defined in Code Section 4980B) occurs on
or prior to the Closing Date.
(c) To Seller's knowledge, no "party in interest" (as
defined in ERISA Section 3(14)) or "disqualified person" (as defined in Code
Section 4975(e)(2)) of any Employee Benefit Plan has engaged in any nonexempt
"prohibited transaction" (described in Code Section 4975(c) or ERISA Section
406) with respect to any Employee Benefit Plan. There has been no "reportable
event" (as defined in ERISA Section 4043), or event described in ERISA Sections
4041, 4042, 4062 (including 4062(e)), 4063, 4064 or 4069.
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(d) All contributions with respect to each Employee
Benefit Plan that is subject to Code Section 412 or ERISA Section 302 have been
timely made and there is no lien or expected to be a lien under Code Section
412(n) or ERISA Section 302(f) or tax under Code Section 4971. No Employee
Benefit Plan has a "liquidity shortfall" as defined in Code Section 412(m)(5).
Neither Sellers nor any member of a group of trades or businesses under common
control with the Sellers (as defined in Code Sections 414(b), (c), (m), or (o))
have had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)) or
been party to any collective bargaining agreement.
5.22 Compliance with Laws. Neither Seller nor Chatham & Borgstena,
with respect to the Automotive Business (except with respect to environmental
matters, Taxes represented in Section 5.20 and Employee Benefit Plans
represented in Section 5.21), is engaging in any activity or omitting to take
any action with respect to the Automotive Business or the Acquired Assets that
is or creates a violation of any law, statute, ordinance, or regulation
applicable to the Automotive Business, or to the Acquired Assets which would
have a Material Adverse Effect. Neither the Automotive 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 that
has a Material Adverse Effect . Seller and Chatham & Borgstena possess all of
the permits and licenses material to the operation of the Automotive Business as
presently conducted and are 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
Automotive Business or the Acquired Assets.
5.23 Governmental Approval and Consents. 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 of this Agreement by each Seller or the consummation by each
Seller of the transactions contemplated hereby.
5.24 Customer Relations. To the knowledge of Seller, there has not
been any material adverse change in relations with any Current Material Customer
of Seller as a result of the disclosure of the transactions contemplated by this
Agreement. Except as set forth on SCHEDULE 5.24, no Current Material Customer of
Seller has notified Seller that it intends to either (i) terminate its
contractual arrangements with Seller or (ii) curtail the amount of business it
currently does with Seller. For purposes of this Section 5.24, "Current Material
Customer" means the 20 largest customers of the Automotive Business (determined
by gross revenue) from which payments were received in Seller's fiscal years
ended January 2, 1999 and January 2, 2000.
5.25 Correctness of Representations. No representation or warranty
of Seller in this Agreement or in any certificate, or Schedule attached hereto
or furnished pursuant hereto, contains any untrue statement of material fact or
omits to state any fact necessary in order to make the statements contained
therein not misleading in any material respect.
5.26 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 Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxxx and Xxxxx Xxxxxxxx.
Information shall be deemed to be known to Seller if that information is
actually known or reasonably should have been known by any such persons in each
case after due inquiry by such person.
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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
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 Power and Authority. Purchaser has full power and authority to
enter into and to perform its obligations under this Agreement and the other
Acquisition Documents 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 hereafter
as the Acquisition Documents) and to consummate the transactions contemplated
hereby and thereby. The Acquisition Documents executed by Purchaser have been
duly executed and delivered and constitute legal, valid, and binding obligations
of Purchaser enforceable against Purchaser in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, by the exercise of judicial discretion in accordance with general
equitable principles or by equitable defenses that may be applied to the remedy
of specific performance.
6.3 No Violation or Consent. Neither the execution and delivery by
Purchaser of any of the Acquisition Documents to which Purchaser is a party nor
the consummation by Purchaser of the transactions contemplated thereby will (i)
violate Purchaser's corporate documents, (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, (iii) conflict with, result in a breach of, or
constitute a default under any indenture, mortgage, lease, agreement, or other
instrument to which Purchaser is a party or by which it or any of its assets may
be bound, or (iv) result in the creation of a lien, charge or encumbrance upon
any of its assets, or result in the acceleration of the maturity of any payment
date of any of its liabilities.
6.4 Litigation. There is no suit, action, proceeding, claim or
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser in respect of the consummation of the transactions contemplated
hereby, or in which an adverse outcome will affect the Purchaser's business,
operations, assets or financial condition.
6.5 Correctness of Representations. No representation or warranty
of Purchaser in this Agreement or in any certificate, or Schedule attached
hereto or furnished pursuant hereto contains any untrue statement of material
fact or omits to state any fact necessary in order to make the statements
contained therein not misleading in any material respect.
6.6 Brokers and Finders. Neither Purchaser nor any affiliate of
Purchaser has incurred any obligation or liability to any party, other than
SunTrust Equitable Securities Corporation, for any brokerage fees, agent's
commissions, or finder's fees in connection with the transactions contemplated
by the Acquisition Documents.
6.7 Governmental Approval and Consents. 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.
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ARTICLE 7
MUTUAL COVENANTS
7.1 Governmental Filings. To the extent not already completed,
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.
7.2 Prorations.
(a) To the extent not included in the Acquired Assets or
the Assumed Liabilities, Equipment Charges, Personal Property Taxes and Service
Contracts (relating to the Automotive Business) including, without limitation,
accruals or prepayments thereof (all as individually defined below and
collectively called the "Proration Items"), shall be prorated directly between
Seller and the Purchaser as provided in this Section 7.2.
(b) For purposes of this Section 7.2, the capitalized
terms set forth below shall have the following meanings:
(i) "Equipment Charges" shall mean rental
charges payable or receivable and other payments or receipts applicable to the
Equipment;
(ii) "Personal Property Taxes" shall mean ad
valorem taxes imposed upon the Acquired Assets; and
(iii) "Service Contracts" shall mean contracts for
the provision of services relating to the Automotive Business.
(c) All Proration Items relating to the Automotive
Business that are not included in the Acquired Assets or the Assumed Liabilities
shall be apportioned to the Closing Date, and Purchaser shall pay, when due,
such Proration Items. The Proration Items 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 and shall be prorated on a
calendar year basis. 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 for which the other Party (the "Payee") is obligated in whole or
in part under this Section 7.2, 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.
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ARTICLE 8
POST CLOSING MATTERS
8.1 Provision of Finishing Services. Seller shall finish
automotive circular knit products for Purchaser for a period not to exceed
twenty-four (24) months from the Closing Date in accordance with the terms and
conditions set forth in the Services Agreement.
8.2 Employment of Employees. (a) On the Closing Date, Purchaser
agrees to offer employment to Xxx Xxxx at a competitive salary and benefits to
perform substantially the same responsibilities as on the date hereof.
(b) Pursuant to the terms and conditions of the Employee
Lease Agreement, as of the Effective Time, (i) Purchaser agrees to lease from
Seller and Seller agrees to lease to Purchaser all of the employees of the
Automotive Business except for those listed on SCHEDULE 8.2 (the "Leased
Employees"), and (ii) Purchaser will offer employment to the Leased Employees.
All employees of the Automotive Business accepting Purchaser's offer of
employment, including Xxx Xxxx, are hereinafter referred to as the "Hired
Employees."
(c) Except for Assumed Liabilities for which Purchaser
shall be responsible and except as provided in the Employee Lease Agreement,
Seller shall be responsible for the payment of any amounts due to its employees
(including the Leased Employees and the Hired Employees) pursuant to the
Employee Benefit Plans as a result of the employment of its employees prior to
the Effective Time Except as specifically set forth in SCHEDULE 2.1(B), except
for Assumed Liabilities for which Purchaser shall be responsible and except as
provided in the Employee Lease Agreement, Seller shall be responsible for all
incurred but unreported medical claims and 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 (i)
all liabilities arising under the Employee Benefit Plans, other than the
Divisional Change In Control Agreement, prior to the Effective Time or (b)
liabilities associated with any leaves taken prior to the Effective Time in
connection with the Family and Medical Leave Act of 1993. Effective on the
Employment Date (as such term is defined in the Employee Lease Agreement),
Seller shall, and hereby does, release all Hired Employees from any employment
and/or confidentiality agreement previously entered into between either Seller
and such Hired Employees relating to the Automotive Business to the extent (but
only to the extent) necessary for Purchaser to operate the Automotive Business
in the same manner as operated by Seller prior to the Closing Date.
8.3 Sellers' Employee Benefit Plans. Purchaser shall not be liable
for any severance pay, change in control payment, bonus related to a sale of
Chatham or the Automotive Business, bonus related to duration of employment,
year 2000 compliance or similar compensation due to any employee of Seller,
including any Hired Employee, other than the Divisional Change In Control
Agreement assumed by Purchaser in accordance with Section 2.1(h) hereof. Except
for Assumed Liabilities for which Purchaser shall be responsible and except as
provided in the Employee Lease Agreement, Purchaser shall assume no
responsibility with regard to any Employee Benefit Plans of Seller.
8.4 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 (it being understood that general newspaper
advertisements or other general circulation materials not targeted at Hired
Employees will not be deemed to be solicitations hereunder) any Hired Employee
who is then an employee of Purchaser or Chatham & Borgstena. Until the
expiration of two (2) years after the Closing Date, Purchaser shall not directly
or indirectly solicit (it being understood that general newspaper advertisements
or other general circulation materials not targeted at Seller's employees will
not be deemed to be solicitations hereunder) any person who is an employee of
Seller immediately following the Closing.
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8.5 Covenant Not to Compete. Seller agrees that for a period of
five (5) years commencing on the Closing Date, it will not, (i) within the
Territory, either directly or indirectly, 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 and marketing of fabrics for use in the
OEM automotive fabrics industry ("Prohibited Business") or (ii) sell or solicit
to sell any products or services in the Prohibited Business to any person, firm,
corporation, partnership or association that has been a customer of the
Automotive Business during the one (1) year period immediately preceding the
Closing. As used herein, the term "Territory" means those jurisdictions and
areas set forth on SCHEDULE 8.5. 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 8.5
should ever be deemed to exceed the limitation permitted by applicable law, then
the parties hereto agree that such provisions shall be reformed to set forth the
maximum limitations permitted.
8.6 Discharge of Automotive Business Obligations. From and after
the Closing Date, Seller shall pay and discharge, in accordance with past
practice, all obligations and liabilities incurred prior to the Closing Date in
respect of the Automotive 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
customers of the Automotive Business.
8.7 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 Automotive 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. After the Closing
Date, where there is a legitimate purpose, each 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 operations of the Automotive Business prior to the Closing Date
or the performance of the Assumed Liabilities, 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.
8.8 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 Automotive Business and the
Acquired Assets transferred to Purchaser hereunder.
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8.9 UCC Matters. From and after the Closing Date, Seller will
promptly refer all inquiries with respect to ownership of the Acquired Assets or
the Automotive 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.
8.10 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,
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 and subject to reimbursement for all reasonable expenses associated
therewith that are pre-approved by the Party.
8.11 Insurance.
(a) Following the date hereof, the Parties hereto shall give to
each other prompt notice of the assertion by any person of any claim against
Seller or any of their affiliates, or Purchaser or any of its affiliates, which
might be subject to the insurance coverage maintained and/or made available by
Seller prior to the Closing under any insurance policy, including, without
limitation, the insurance policies identified on SCHEDULES 5.13.1. The Parties
hereto shall cooperate with each other, and their respective affiliates, and any
applicable insurance carrier in any investigation by any such Party, or any
applicable insurance carrier, of any such claim, including, without limitation,
any currently pending claim which relates to a pre-Closing occurrence; and the
Parties hereto shall give to each other, and their respective affiliates, and
any applicable insurance carrier, unrestricted access to the books, records and
personnel of such Parties to the extent reasonably necessary to enable such
other Party and its affiliates, and any applicable insurance carrier, to
investigate such claim.
(b) No covenant or agreement by Purchaser to indemnify Seller, by
Seller to indemnify Purchaser or by Seller and Purchaser regarding the
apportionment of Liabilities of the Automotive Business shall release, or be
deemed to release, any insurer of any claim under their policies of insurance.
(c) To the extent the policies are "claims made" rather than
"occurrences" policies, following the Closing Date, Seller shall maintain in
full force and effect those policies of insurance set forth on SCHEDULE 5.13, or
policies providing similar coverage for the same claims period, with the same
policy limits, for a period of five (5) years following the Closing with respect
to general liability or products liability policies.
8.12 Payment of Incentive Contracts. Seller shall pay in accordance
with the terms and conditions contained therein all amounts due and owing under
those certain (i) letter agreements dated on or about August 10, 1999 with Xxxx
Xxxxxxxx, Xxx Xxxxxxxxx, Xxx Xxxxxxxx, Xxxxxx Xxxxx and Xxxxxx Xxxxxxxx
regarding year 2000 compliance, and (ii) agreement dated on or about August 4,
1999 with Xxxxx X. Xxxx, Xx., regarding incentive bonuses.
8.13 Termination of Certain Agreements. Upon payment in full of all
amounts owed by Chatham & Borgstena to Seller as contemplated by Section 3.4 as
of the Effective Time, Seller agrees to deliver the Replacement Revolving Line
of Credit Note dated January, 1999 in the maximum principal amount of $2 million
and made by Chatham & Borgstena in favor of Seller to Purchaser marked
"cancelled." In addition, in connection therewith, CMI terminates any further
rights it has under the Security Agreement dated September 1996, as amended by
Amendment No. 1 dated January 1997.
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8.14 Chatham & Borgstena Lease; Guaranty; Letter of Credit;
Release. Promptly following the Closing, and in any event on or before December
20, 2000, Purchaser shall deliver to Seller duly executed instruments of
release, releasing Seller from all of its obligations under the Unlimited
Guaranty dated as of December 20, 1996, as the same may have been supplemented
or amended from time to time, in favor of BancBoston Leasing Inc., its
successors and assigns (the "CB guaranty"), pursuant to which Seller guaranteed
the obligations of Chatham & Borgstena under the Master Lease Agreement dated as
of December 20, 1996 between BancBoston Leasing Inc. and Chatham & Borgstena, as
supplemented or amended from time to time, and the schedules thereto (the "CB
Lease"). To provide Seller assurances that it will have no liability under the
CB Guaranty, at the Closing Purchaser is delivering to Seller the Letter of
Credit. Seller shall be entitled to draw upon the Letter of Credit (a) in the
amount the Seller has paid or will pay under or in respect of the CB Guaranty,
if Seller has made a payment under or in respect of, or has received a demand or
request for payment under or in respect of, the CB Guaranty (assuming, in the
event that Seller has not yet made the payment requested or demanded, that such
payment will be made on the fifth business day after presentation of the draft
under the Letter of Credit); or (b) in entire amount of the Letter of Credit, if
Seller has not received the instruments of release contemplated by the first
sentence of this Section 8.14 in a timely way. In the case of a draw as
permitted by clause (a) of the preceding sentence, Seller may include in the
amount of the draws interest calculated at the rate of 8% per annum from the
date payment was made until the fifth business day after presentation of the
draft under the Letter of Credit, and shall use the proceeds to either pay or to
reimburse its obligation under or in respect of the CB Guaranty; and in the case
of a draw under clause (b) of the preceding sentence, Seller shall use the
proceeds to prepay obligations outstanding under the CB Lease, so that Seller
can obtain instruments of release as contemplated by the first sentence of this
Section 8.14 (and Seller may require as a condition to such payment that it
receive such instruments). Seller shall upon receipt of instruments of release
as contemplated by the first sentence of this Section 8.14 deliver the Letter of
Credit to Purchaser for cancellation. Until Seller has received the instruments
of release contemplated by this Section 8.14, (x) Purchaser shall cause Chatham
& Borgstena to keep current all payments due under the CB Lease; and (y)
Purchaser shall cause Chatham & Borgstena not to add additional leased equipment
under the CB Lease or to incur or permit to remain outstanding any obligations,
other than those under the CB Lease, to any party entitled to enforce Seller's
obligations under the CB Guaranty in whole or in part.
ARTICLE 9
INDEMNIFICATION
For the purposes of this Article 9, "Losses" shall mean any and all
payments, obligations, actions or causes of action, assessments, losses,
damages, liabilities, penalties, fines, forfeitures, costs, and expenses,
including without limitation, interest, penalties, cost of investigation and
defense, and reasonable attorneys' and other professional fees and expenses;
provided, however, that any Losses asserted against, relating to, imposed upon,
or incurred by the Purchaser Indemnitees by reason of, resulting from, based
upon, in respect of, or arising out of the breach of any representation,
warranty, covenant or agreement of Seller relating to Chatham & Borgstena for
purposes of this Article 9 shall be reduced by thirty-five percent (35%) to
reflect Purchaser's interest in Chatham & Borgstena on the date of this
Agreement.
9.1 Agreement of Seller to Indemnify. Subject to the terms and
conditions of this Article 9, Seller agrees, jointly and severally, 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, in respect of, or arising out of:
(a) the breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement or any other Acquisition
Document or in any certificate, or Schedule furnished by Seller in connection
herewith or therewith ; provided that Sellers shall not indemnify the Purchaser
Indemnitees for Losses asserted against, relating to, imposed upon, or incurred
by the Purchaser
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Indemnitees by reason of, resulting from, based upon, in respect of, or arising
out of any breach of the representations and warranties contained in Section
5.14 or in Schedules referenced therein;
(b) the breach of any covenant or agreement of Seller
contained in or made pursuant to this Agreement or any other Acquisition
Document; and
(c) any Excluded Liability other than an Environmental
Liability, which defined term for purposes of this Section 9.1(c) shall not
include Employee Tort Claims.
9.2 Agreement of Purchaser to Indemnify Seller. Subject to the
terms and conditions of this Article 9, Purchaser agrees to indemnify, defend,
and hold harmless Seller and its officers, directors, shareholders, members,
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 Indemnitees by reason of, resulting from, based
upon, or 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 or Schedule 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 Automotive Business by Purchaser after the Closing
Date, except for any liability against which Purchaser is entitled to
indemnification pursuant to Section 9.1.
9.3 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 providing
reasonable detail with respect to the basis on which indemnification is sought
and the amount of asserted Losses and, in the case of a Third Party Claim ,
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 9.4 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 9.3(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 thirty (30) business
days from the date (such period is hereinafter referred to as the "Negotiation
Period") the Indemnitee receives such objection prior to commencing any
arbitration under Section 10.1.
(d) Upon determination of the amount of an
Indemnification Claim (including any Third Party Claim) that is binding on both
the Indemnitor and the Indemnitee, the Indemnitor shall pay the amount of such
Indemnification Claim by check within ten (10) business days of the date such
amount is determined; provided, that if the Indemnitor is Seller, the Indemnitee
shall give notice of such
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Indemnification Claim under the Escrow Agreement and the Indemnification Claim
shall be satisfied, to the extent funds remain in the Escrow, first from the
Escrowed Amount and any remaining amount of such Indemnification Claim shall be
paid by the Indemnitor as provided in this subsection 9.3(d).
9.4 Third Party Claims. The obligations and liabilities of the
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) The Indemnitee shall give the Indemnitor written
notice of a Third Party Claim promptly after receipt by the Indemnitee of notice
thereof, and the Indemnitor may undertake and have control of the defense,
compromise and settlement thereof with counsel of its own choosing reasonably
acceptable to the Indemnitee. The failure of the Indemnitee to notify promptly
the Indemnitor of such claim shall not relieve the Indemnitor for any liability
that it may have with respect to such claim except to the extent the Indemnitor
demonstrates that the defense of such claim is prejudiced by such failure. The
assumption of the defense, compromise and settlement of any such Third Party
Claim by the Indemnitor shall be an acknowledgment of the obligation of the
Indemnitor to indemnify the Indemnitee with respect to such claim hereunder,
unless the Indemnitor gives written notice to the Indemnitee within thirty (30)
days after receipt of the Indemnitee's notice that it disputes its liability to
Indemnitee with respect to such Third Party Claim, notwithstanding its
assumption of the defense thereof. If the Indemnitee desires to participate in,
but not control, any such defense, compromise and settlement, it may do so at
its sole cost and expense; provided, however, in the event of a conflict of
interest between Indemnitor and Indemnitee such that Indemnitor's attorney would
have a conflict of interest in representing Indemnitor and Indemnitee,
Indemnitor shall pay Indemnitee's reasonable attorneys' fees for separate legal
counsel.
(b) If the Indemnitor fails or refuses to undertake the
defense of a Third Party Claim within thirty (30) days after written notice has
been given to the Indemnitor by the Indemnitee, the Indemnitee shall have the
right to control the defense, compromise and settlement of the Third Party Claim
with counsel of its own choosing, and the reasonable costs and expenses of the
Indemnitee in connection therewith shall be included as part of the
indemnification claim of the Indemnitee hereunder. If the Indemnitee shall elect
to exercise such right, the Indemnitor shall have the right to participate in,
but not control, the defense, compromise and settlement of such Third Party
Claim at its sole cost and expense.
(c) No settlement of a Third Party Claim as to which
notice has been given to Indemnitor by Indemnitee pursuant to Section 9.4(a)
shall be made without the prior written consent by or on behalf of the
Indemnitor, which consent shall not be unreasonably withheld or delayed. Consent
shall be presumed in the case of settlements of $10,000 or less where the
Indemnitor has not responded with thirty (30) business days of notice of a
proposed settlement. If the Indemnitor assumes the defense of a Third Party
Claim, no compromise or settlement thereof may be effected by the Indemnitor
without the Indemnitee's consent (which will not be unreasonably withheld or
delayed ) unless (i) there is no finding or admission of any violation of law or
any violation of the rights of any person, (ii) the sole relief provided is
monetary damages and (iii) the compromise or settlement includes, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
Indemnitee of a release, in form and substance reasonably satisfactory to the
Indemnitee, from all liability in respect of such Third Party Claim.
(d) In connection with the defense, compromise or
settlement of any Third Party Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate to permit
participation of counsel selected by any Party hereto and, as may reasonably be
related to any such claim or action, shall provide access to the counsel,
accountants and other representatives of each Party during normal business hours
to all properties, personnel, books, tax records, contracts, commitments and all
other business records of such other Party and will furnish to such other party
copies of all such documents as may reasonably be requested (certified, if
requested); provided that all requests for information and exercise of rights of
access hereunder shall be conducted through a representative designated by the
Party upon whom such request is made and in a manner that will not impact
adversely and unreasonably the normal conduct of such Party's business;
provided, further, that the
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provisions of this Section 9.4(d) shall not require any Party to breach, violate
or waive any privilege that would otherwise be available to such Party
(including, without limitation, the attorney-client privilege).
9.5 Time Limitations. The indemnification rights of the parties
hereto for Losses resulting from each of the occurrences or conditions specified
below shall be subject to the condition that the Indemnitor shall have received
an Indemnification Claim for the Losses for which Indemnity is sought within the
corresponding time period set forth below:
(i) Indemnification Claims resulting from a breach of
representations and warranties or for breaches of covenants that are related to
tax matters shall be brought prior to the fifth (5th) business day after the
expiration of the applicable statute of limitations therefor;
(ii) Indemnification Claims resulting from a breach of any
representation and warranty with respect to title to any of the Acquired Assets
or Assumed Liabilities shall be brought prior to the fifth (5th) anniversary of
the Closing Date;
(iii) Indemnification Claims resulting from, based upon, in respect
of, or arising out of Excluded Liabilities (except Environmental Liabilities for
which there shall be no right to seek indemnification and except for Product
Liability Claims, Employee Tort Claims, and Material Warranty Claims and
Charge-backs) shall be brought prior to the third (3rd) anniversary of the
Closing Date;
(iv) Indemnification Claims with respect to Product Liability
Claims, Employee Tort Claims, and Material Warranty Claims and Charge-backs and
breaches of representations and warranties set forth in Section 5.21 hereof
shall be brought prior to the fifth (5th) anniversary of the Closing Date; and
(v) All other Indemnification Claims of the Parties hereunder not
specifically identified in subsections (i) through (iv) above shall be brought
prior to the second anniversary of the Closing Date.
9.6 Limitations as to Amount. Seller shall be obligated
to indemnify Purchaser only when and only to the extent the aggregate of all
Losses suffered or incurred by Purchaser as to which a right of indemnification
is provided under this Article 9 exceeds Two Hundred Fifty Thousand Dollars
($250,000) (the "Seller's Threshold Amount"). After the aggregate of all Losses
suffered or incurred by Purchaser exceeds the Seller's Threshold Amount, subject
to the other limitations set forth herein, Seller shall be obligated to
indemnify Purchaser for all such Losses in excess of the Seller's Threshold
Amount. In no event shall the aggregate liability of Seller to Purchaser
Indemnitees under this Article 9 or otherwise with respect to the transactions
contemplated hereby, whether based upon contract, statutory or regulatory law,
tort or otherwise, exceed One Million Dollars ($1,000,000) (the "Seller's
Maximum Amount"). Notwithstanding the above, neither the Seller's Threshold
Amount nor the Seller's Maximum Amount limitations shall apply to the
indemnification rights of Purchaser (i) under Section 9.1(c) hereof for Losses
resulting from those Excluded Liabilities described in Section 2.2(f) or (ii)
under Section 9.1(b) for Losses resulting from Seller's breach of any covenant
or agreement of Seller contained in Section 8.14 hereof and the payment of such
amounts by Seller shall not count toward the calculation of Seller's Maximum
Amount. Notwithstanding the above, Seller's Maximum Amount shall not apply to
(a) claims based on ERISA or Seller's Benefit Plans; (b) claims based on the
failure of the parties to comply with applicable bulk sales laws; (c) Product
Liability Claims and Employee Tort Claims; and (d) claims based on Excluded
Liabilities as defined in Section 2.2(d), and the payment of such amounts by
Seller shall not count toward the calculation of the Seller's Maximum Amount.
9.7 Tax Effect and Insurance. The liability of the Indemnitor with
respect to any Indemnification Claim shall be reduced by the tax benefit
actually received and any insurance proceeds actually received by the
Indemnitees as a result of any Losses upon which such Indemnification Claim is
based, and shall include any tax detriment actually suffered by the Indemnitees
as a result of such Losses or Indemnification payment. Following the payment of
the Indemnification Claim (to the extent such
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payment has not already been adjusted under this Section 9.7), payment of any
such tax benefits or detriment shall be made between Indemnitors and Indemnitees
as the tax benefits are received or tax detriment is suffered. In determining
such tax benefit or detriment, the Indemnitee shall make available to the
Indemnitor calculations (in reasonable detail) setting forth the tax benefit or
detriment and such calculations shall be based on information contained or to be
contained in applicable tax returns; provided, however, the amount of such
reduction shall be net of (i) any out-of-pocket expenses, (ii) increases in
premiums or (iii) any deductible incurred in obtaining such reduction. This
Section 9.7 shall be interpreted so that the payment by the Indemnitor of the
Indemnification Claim, as adjusted hereunder, will, subject to the limitations
set forth in this Article, make the Indemnitee as economically whole as is
reasonably practical with respect to the Losses upon which the Indemnification
Claim is based. Any dispute as to the amount of such tax benefit or detriment
shall be resolved by arbitration as provided in Section 10.1.
9.8 Subrogation. Upon payment in full of any Indemnification
Claim, the Indemnitor shall be subrogated to the extent of such payment to the
rights of the Indemnitee against any person or entity with respect to the
subject matter of such Indemnification Claim.
9.9 Interest. Any Indemnitor who is required to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Article 9
with respect to any Losses other than Third Party Claims shall also be liable,
subject to the limitations set forth herein, to such Indemnitee for interest on
the amount of such Losses (for the period commencing as of the later of the
incurrence of the Loss or the date on which such Indemnitor first received
notice of a claim for recovery by such Indemnitee and ending on the date on
which the liability of such Indemnitor to such Indemnitee is fully satisfied by
such Indemnitor) at the Prime Rate (established on the date of notice of such
claim). For the purposes of this Agreement, "Prime Rate" shall be the per annum
rate equal to the rate announced in The Wall Street Journal as the prime rate in
effect at the close of business.
9.10 Exclusions from Limitations. The limitations that are set
forth in Sections 9.5, 9.6 and 9.11 shall not apply in the case of fraud or
intentional misrepresentations.
9.11 Remedies Exclusive. Except as specifically provided in
Sections 8.5 and 9.10, the remedies provided for in this Section 9 shall be the
exclusive remedies of the parties hereto after the Closing in connection with
any (i) breach of a representation or warranty, (ii) non-performance, partial or
total, of any covenant or agreement contained herein or (iii) any other matter
relating to the transactions contemplated hereby, whether based upon breach of
contract, statutory or regulatory law, tort or otherwise.
9.12 Limitations with Respect to Environmental Conditions; Release.
The Purchaser acknowledges that with respect to the Knit Plant (a) it has been
provided copies of all of the reports and studies referred to in Schedule
5.14.5, (b) it has been provided the opportunity to make its own investigations
and analyses of the environmental condition of the Knit Plant, (c) it has hired
consultants to assist it in that evaluation and (d) Purchaser has made
investigations and analyses of such condition to its satisfaction. The Acquired
Assets will be transferred on an "AS IS--WHERE IS" basis, and Seller will have
no liability to the Purchaser whatsoever with respect to any Environmental
Condition. The parties agree that Seller shall have no indemnification
obligations whatsoever under this Article 9 with respect to any and all Losses
asserted against, relating to, imposed upon, or incurred by any Purchaser
Indemnitee by reason of, resulting from, based upon, in respect of, or arising
out of any Environmental Condition, and Seller has no liability or obligation to
Purchaser or its successors or assigns whatsoever with respect to any and all
Losses asserted against, relating to, imposed upon, or incurred by any Purchaser
Indemnitee by reason of, resulting from, based upon, in respect of, or arising
out of any Environmental Condition under any other theory, basis, claim, cause
of action or contribution whatsoever, whether based in whole or in part on
contract, statutory or regulatory law (including without limitation any
contribution or other rights that the Purchaser may have under any of the
Environmental Laws, including without limitation CERCLA), tort or otherwise. For
purposes of this Section, (i) "Environmental Condition" shall include any
Environmental Conditions existing before or after the Closing Date and (ii)
"Environmental Laws" shall include any
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changes or amendments to or modifications of Environmental Laws enacted or
coming into effect after the Closing Date. Effective as of the Closing, to the
maximum extent permitted by law, Purchaser, on behalf of itself, the Purchaser
Indemnitees and their respective subsidiaries, directors, officers, agents and
employees, successors and assigns and beneficiaries does hereby completely
release and forever discharge Seller, the Seller Indemnitees and their
respective subsidiaries, directors, officers, agents and employees, successors
and assigns and beneficiaries from any and all claims, demands, actions, and
causes of action of every kind, nature, and character whatsoever, known or
unknown, xxxxxx, inchoate or otherwise, based upon breach of contract, tort or
otherwise, now existing or hereafter arising, which Purchaser, the Purchaser
Indemnitees or their respective successors and assigns may now have or has ever
had, or which may in the future arise, as a result of any acts, events or facts
occurring prior to the Closing which causes or results in, directly or
indirectly, any Environmental Condition including without limitation, all
investigations and remedial work undertaken by Seller and its predecessors with
respect to any Environmental Condition. Purchaser, on behalf of itself, the
Purchaser Indemnitees and their respective subsidiaries, directors, officers,
agents and employees, successors and assigns and beneficiaries, acknowledges
that it may hereafter discover claims or facts occurring prior to the Closing
which cause or result in, directly or indirectly, an Environmental Condition in
addition to, or different from, those which it now knows, or believes to exist,
and which, if known or suspected at the time of executing this Agreement, may
have materially affected this settlement. Nevertheless, Purchaser, on behalf of
itself, the Purchaser Indemnitees and their respective subsidiaries, directors,
officers, agents and employees, successors and assigns and beneficiaries hereby
waives and relinquishes any and all rights or benefits which any of them may now
have, or in the future may have, under the terms of all statutes, rights,
remedies, and benefits of all jurisdictions which provide that a general release
does not extend to claims which the creditor does not know or suspect to exist
at the time of executing the release.
ARTICLE 10
GENERAL PROVISIONS
10.1 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 10.1. The
interpretation and enforceability of this Section 10.1 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.
(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
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appropriate by the arbitrator(s); provided that the arbitrator(s) shall be bound
by and shall limit their awards based upon the limitations of liability
contained in this Agreement. A Party may, however, seek an emergency temporary
restraining order, if appropriate under governing law, in any court having
jurisdiction over the subject matter and the parties. Following the ruling on
the request for temporary restraining order, the matter shall proceed in
arbitration as set forth herein.
(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 10.1, 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 10.1 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
with respect to the subject matter of the dispute while the procedures specified
in this Section 10.1 are pending. The Parties will take such action, if any,
required to effectuate such tolling.
10.2 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 Acquired Assets, relating to the Automotive Business
that they have requested to examine. Any inspection, preparation, or compilation
of information or Schedules, or audit of the inventories, properties, financial
condition, or other matters relating to Seller or the Automotive Business
conducted by or on behalf of Purchaser pursuant to this Agreement shall in no
way limit, affect, or impair the ability of Purchaser to rely upon the
representations, warranties, covenants, and agreements of Seller set forth
herein; provided, that to the extent that Seller prove by competent evidence
that Purchaser's executive officer, Lennarth Wernvik, or Purchaser's attorneys,
accountants or investment bankers had actual knowledge before the Effective Time
of facts contrary to the statements made in any representation or warranty of
Seller set forth herein which could reasonably be expected to lead to a Loss in
excess of Two Hundred Fifty Thousand Dollars ($250,000), and Purchaser completes
the Closing without requiring correction or amendment of such contrary
statements, Purchaser shall be estopped from asserting reliance on such contrary
representation or warranty in connection with any post-Closing claim for
indemnification pursuant to Article 9 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 1.5;
provided, however, the covenant not to compete of Seller shall survive the
Closing and the execution and delivery of all instruments of conveyance for the
periods set forth in Section 7.7.
10.3 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.
10.4 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:
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(a) If to Seller:
CMI Industries, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to Purchaser:
Borgstena Textile North America, Inc.
c/o Alston & 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
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 10.4. 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.
10.5 Assignment; Binding Effect. At the Closing Purchaser may
assign all of its rights to be indemnified as provided in Article 9 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. After the Closing, Purchaser and Seller may assign its
interest in this Agreement to any person or entity (subject to all rights,
remedies and defenses that the other party could assert against assigning party)
without the consent of the other party. From and after any such assignment, the
word "Purchaser" or "Seller," as the case may be, shall include such assignee.
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43
10.6 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 9 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.
10.7 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, limited liability company, partnership, trust,
governmental authority or body, association, unincorporated organization or any
other entity.
10.8 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 Parties hereto.
10.9 Integration of Agreement. This Agreement supersedes all prior
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof, including without limitation the letter agreement dated
October 4, 2000 among Seller, Purchaser and AB Borgstena Textile. 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.
10.10 Time of Essence. Time is of the essence in this Agreement.
10.11 Governing Law. This Agreement shall be construed under the
laws of the State of North Carolina without regard to conflict of laws
principles.
10.12 Jurisdiction; Service of Process. Subject to Section 10.1, any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in the
courts of the State of North Carolina, County of Mecklenburg, or in the United
States District Court for the Eastern District of North Carolina if it has or
can acquire jurisdiction, and each of the Parties consents to the jurisdiction
of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the proceeding sentence may be served on any Party
anywhere in the world.
10.13 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.
10.14 Remedies Cumulative; Specific Performance. The rights and
remedies of the Parties hereto shall be cumulative (and not alternative). The
Parties to this Agreement agree that, in the event of any breach or threatened
breach by any Party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other Party to this
Agreement, such other Party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of
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44
specific performance or mandamus to enforce the observance and performance of
such covenant, obligation or other provision, and (b) an injunction restraining
such breach or threatened breach.
(Signatures Appear on the Following Page)
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45
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:
BORGSTENA TEXTILE NORTH AMERICA, INC.
By: /s/ Ulf Ellwen
--------------------------------------------------
Title: President
-----------------------------------------------
SELLER:
CMI INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------------
Title: President and Chief Executive Officer
----------------------------------------------
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