ASSET PURCHASE AGREEMENT
Dated as of October 3, 1996
By and Between
FIELDCREST XXXXXX, INC.
and
PILLOWTEX CORPORATION
TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . 5
2.1 Purchase and Sale of Assets. . . . . . . . . . . . . . . . . . . 5
2.2 Nonassignable Contracts. . . . . . . . . . . . . . . . . . . . . 6
2.3 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . 7
2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Adjustment to Purchase Price for Changes in
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Transfer Taxes; Certain Costs. . . . . . . . . . . . . . . . . . 9
ARTICLE III - CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . . 10
4.1 Organization of Seller . . . . . . . . . . . . . . . . . . . . . 10
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 10
4.4 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . 10
4.5 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . 12
4.9 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 13
4.10 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 13
4.11 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 13
4.12 Absence of Certain Changes or Events . . . . . . . . . . . . . . 14
4.13 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . . 15
5.1 Organization of Purchaser. . . . . . . . . . . . . . . . . . . . 15
5.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 15
(i)
5.4 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . 15
5.5 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI - CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Actions Prior to Closing . . . . . . . . . . . . . . . . . . . . 16
6.2 Investigation by Purchaser . . . . . . . . . . . . . . . . . . . 17
6.3 Accountants' Review. . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 18
6.5 Injunctions. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . 19
7.1 Representations, Warranties and Covenants. . . . . . . . . . . . 19
7.2 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Licensing Agreement. . . . . . . . . . . . . . . . . . . . . . . 19
7.5 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . 19
7.6 Lease Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 19
7.7 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.8 No Governmental Proceedings or Litigation. . . . . . . . . . . . 20
ARTICLE VIII - CONDITIONS TO PURCHASER'S OBLIGATIONS . . . . . . . . . . . . 20
8.1 Representations, Warranties and Covenants. . . . . . . . . . . . 20
8.2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Corporate Documents. . . . . . . . . . . . . . . . . . . . . . . 20
8.4 Licensing Agreement. . . . . . . . . . . . . . . . . . . . . . . 20
8.5 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . 20
8.6 Lease Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 21
8.7 No Material Change . . . . . . . . . . . . . . . . . . . . . . . 21
8.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.9 No Governmental Proceedings or Litigation. . . . . . . . . . . . 21
ARTICLE IX - SURVIVAL AND INDEMNIFICATION. . . . . . . . . . . . . . . . . . 21
9.1 Survival of Representations, Warranties and
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Indemnification by Seller. . . . . . . . . . . . . . . . . . . . 22
9.3 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . 22
9.4 Notice of Claim; Right to Participate in and
(ii)
Defend Third Party Claim . . . . . . . . . . . . . . . . . . . . 22
9.5 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.6 Reduction by Insurance Proceeds. . . . . . . . . . . . . . . . . 23
ARTICLE X - OTHER COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 24
10.1 Storage of Purchased Inventory and
Purchased Equipment. . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Post-Closing Access. . . . . . . . . . . . . . . . . . . . . . . 24
10.3 Backlog. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.4 Processing of Work-in-Process Inventory. . . . . . . . . . . . . 24
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.4 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.5 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . 27
11.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.8 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.9 Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.10 Passage of Title and Risk of Loss. . . . . . . . . . . . . . . . 28
11.11 Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 28
11.13 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.14 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.15 Confidential Information . . . . . . . . . . . . . . . . . . . . 28
11.16 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . 29
11.17 Tax Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
EXHIBITS
Exhibit A -- Assumed Equipment Leases
Exhibit B -- June 30, 1996 Statement
Exhibit C -- Lease Agreement
Exhibit D -- Licensing Agreement
Exhibit E -- Escrow Agreement
SCHEDULES
(iii)
Schedule 4.3 -- Consents and Approvals of Seller
Schedule 4.4 -- Conflicts and Violations of Seller
Schedule 4.5(b) -- Condition of and Encumbrances on the
Inventory
Schedule 4.6(a) -- Listing of the Equipment
Schedule 4.6(b) -- Condition of and Encumbrances on the
Equipment
Schedule 4.7(a) -- Listing of the Contracts
Schedule 4.8(a) -- Listing of Owned and Licensed Blanket
Intellectual Property
Schedule 4.8(b) -- Listing of Owned Pillow Intellectual Property
Schedule 4.8(c) -- Title to and Encumbrances on the Owned
Intellectual Property
Schedule 4.8(d) -- Conflicts and Demands Relating to
Intellectual Property
Schedule 4.10 -- Legal Proceedings
Schedule 4.11 -- Compliance with Law
Schedule 4.12 -- Absence of Certain Changes or Events
Schedule 5.3 -- Consents and Approvals of Purchaser
Schedule 5.4 -- Conflicts and Violations of Purchaser
(iv)
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") dated as of October 3,
1996, is by and between FIELDCREST XXXXXX, INC., a Delaware corporation
("Seller"), and PILLOWTEX CORPORATION, a Texas corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged through its Blanket Division located in Eden,
North Carolina (the "Division"), in the business of manufacturing, designing and
selling blankets and throws; and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, certain
assets used by the Division in the conduct of such business (the "Business"),
together with certain other assets of Seller, on the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. Unless otherwise defined herein, the following terms
as used herein shall have the following respective meanings:
"AGREEMENT" shall have the meaning set forth in the introductory paragraph
hereto.
"ASSETS" shall mean the Inventory, the Owned Equipment, the Contracts and
the Owned Intellectual Property.
"ASSUMED CONTRACTS" shall mean Assumed Equipment Leases and the Other
Assumed Contracts, exclusive of, prior to the time at which Seller shall have
received all consents, waivers and approvals applicable thereto, any Contract
referred to in Section 2.2(a) hereof.
"ASSUMED EQUIPMENT LEASES" shall mean all Contracts relating to the Leased
Equipment identified on EXHIBIT A hereto.
"ASSUMED LIABILITIES" shall mean all liabilities and obligations under the
terms of the Assumed Contracts, but only to the extent such liabilities and
obligations arise or are otherwise properly attributable to periods commencing
after the Closing Date under the terms of such Assumed Contracts, and exclusive
of any liabilities or obligations that arise as a result of any breach or
default by Seller or any of its predecessors-in-interest under any Assumed
Contract.
"ASSUMPTION DOCUMENTS" shall mean such instruments of assumption and other
instruments and documents, duly executed by Purchaser in such forms and covering
such matters as Seller may
reasonably request, reflecting assumption of the Assumed Liabilities by
Purchaser in accordance with the terms of this Agreement.
"BLANKET INTELLECTUAL PROPERTY" shall mean the Owned Blanket Intellectual
Property and the Licensed Blanket Intellectual Property.
"BOOKS AND RECORDS" shall mean all books and records relating to the
Business or the Assets, including without limitation all customer and supplier
records.
"BUSINESS" shall have the meaning set forth in the recitals hereto.
"CLAIM NOTICE" shall have the meaning set forth in Section 9.1 hereof.
"CLOSING" shall have the meaning set forth in Section 3.1 hereof.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CLOSING STATEMENT" shall mean (i) a listing of the Inventory and the book
value thereof, as of the Closing Date in a form reasonably satisfactory to
Purchaser prepared using the same item costs used in the preparation of the
June 30, 1996 Statement and otherwise on a basis consistent with the June 30,
1996 Statement, except that the value of the Licensed Inventory included in the
Purchased Inventory shall be reflected as Purchased Inventory and (ii) a listing
of the Purchased Equipment as of the Closing Date.
"CONTRACTS" shall mean all agreements, contracts and contractual rights
relating to, or used by Seller in connection with the conduct of, the Business
or to which any of the Assets is subject.
"DISPUTE NOTICE" shall have the meaning set forth in Section 2.5(a) hereof.
"DISPUTE NOTICE PERIOD" shall have the meaning set forth in Section 2.5(a)
hereof.
"DIVISION" shall have the meaning set forth in the recitals hereto.
"EQUIPMENT" shall mean the Owned Equipment and the Leased Equipment.
"ERNST & YOUNG" shall mean Ernst & Young, LLP.
"ENCUMBRANCE" shall mean any lien, mortgage, pledge, security interest,
charge or encumbrance of any nature whatsoever or any right or interest
whatsoever of any third party.
"ESCROW AGREEMENT" shall have the meaning set forth in Section 2.4(c)
hereof.
"EXCLUDED INVENTORY" shall mean all Licensed Inventory other than
Licensed Inventory as to which Seller has obtained from the applicable
third-party licensor on or prior to the Closing Date a written consent or
other instrument, in form and substance reasonably satisfactory to Purchaser,
granting to Purchaser the right to sell such Licensed Inventory.
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"EXCLUDED OWNED EQUIPMENT" shall mean items included in the Owned
Equipment that are identified by Purchaser to Seller in writing not later
than the fifth business day prior to the Closing Date as items not to be
Transferred pursuant to the terms of Section 2.1 hereof.
"HOLDBACK ACCOUNT" shall have the meaning set forth in Section 2.4(c)
hereof.
"HOLDBACK AMOUNT" shall have the meaning set forth in Section 2.4(c)
hereof.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"INDEPENDENT ACCOUNTING FIRM" shall mean Xxxxxx Xxxxxxxx LLP or, if such
firm is unwilling to act in the capacity contemplated by Section 2.5 hereof,
another nationally recognized firm of independent public accountants
designated jointly by Seller and Purchaser.
"INTELLECTUAL PROPERTY" shall mean trademarks, trade names, brand names
and other marks or trade rights, and patents, copyrights, designs, patterns,
know-how, formulae, treatments, processes and all other intellectual property
or proprietary rights, whether registered or unregistered, domestic or
foreign, and all applications thereof and goodwill associated therewith.
"INVENTORY" shall mean, collectively, (a) all of Seller's inventory held
for sale to customers in the ordinary course of the Business and (b) all of
the raw materials, work in process, finished product, wrapping, supplies and
packaging items, and all similar items relating to the Business.
"JUNE 30, 1996 STATEMENT" shall mean the statement of assets and
liabilities of the Division, including a listing of the Inventory, the
Equipment and the book value thereof, as of June 30, 1996, and the related
notes thereto, attached as EXHIBIT B hereto, prepared using valuation and
other accounting practices based on Seller's standard inventory costs
consistent with Seller's past practices, reflecting the name, description,
quantity and quality of each item included in the Inventory and the cost of
each item or group of items included in the Inventory.
"KNOWLEDGE" shall mean, with respect to a party, the actual knowledge of
an officer or director of such party.
"LAW" shall mean any law, statute, rule, regulation, ordinance, code,
arbitration award, order, judgment, writ, injunction, decree or other legal
requirement of any federal, state, local or foreign court or other
governmental authority.
"LEASE AGREEMENT" shall mean a lease agreement, dated as of the Closing
Date, by and between Seller and Purchaser in the form of EXHIBIT C hereto,
with such modifications thereto as Seller and Purchaser agree.
"LEASED EQUIPMENT" shall mean the items listed on SCHEDULE 4.6(a) hereto
under the caption "Leased Equipment."
-3-
"LICENSED BLANKET INTELLECTUAL PROPERTY" shall mean the Intellectual
Property that is listed on SCHEDULE 4.8(a) hereto under the caption "Licensed
Blanket Intellectual Property."
"LICENSED INVENTORY" shall mean all Inventory bearing Intellectual
Property (including without limitation trademarks, trade names, brand names
or other marks, or copyrights, designs or patterns) licensed to Seller by
third parties.
"LICENSING AGREEMENT" shall mean a licensing agreement, dated as of the
Closing Date, by and between Seller and Purchaser in the form of EXHIBIT D
hereto, with such modifications thereto as Seller and Purchaser agree.
"LOSSES" shall mean all claims, actions, suits, demands, assessments,
judgments, losses, liabilities, damages and reasonable costs and expenses,
including without limitation interest, penalties, reasonable attorneys' fees,
reasonable accounting fees and reasonable investigation costs.
"MATERIAL ADVERSE CHANGE" shall mean a change that has resulted in a
Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" shall mean any events, circumstances or
conditions that have had a material adverse effect on (a) the Purchased
Assets, taken as a whole, or (b) the condition (financial or otherwise),
results of operations or prospects of the Business, taken as a whole.
"OTHER ASSUMED CONTRACTS" shall mean all Contracts that are identified
by Purchaser to Seller in writing not later than the fifth business day prior
to the Closing Date as Contracts to be Transferred pursuant to the terms of
Section 2.1 hereof.
"OWNED BLANKET INTELLECTUAL PROPERTY" shall mean the Intellectual
Property that is listed on SCHEDULE 4.8(a) hereto under the caption "Owned
Blanket Intellectual Property."
"OWNED EQUIPMENT" shall mean all of the tangible personal property owned
by Seller that is used by Seller in connection with the conduct of the
Business, other than computer and telecommunications equipment, including
without limitation the items listed on SCHEDULE 4.6(a) hereto under the
caption "Owned Equipment," fixtures, furnishings, furniture, equipment,
software (including disks and other embodiments of software and its source
and object codes to the extent in Seller's possession and owned by Seller),
files, books, records, libraries and archives (including lists of customers
and suppliers and other business, accounting and financial records and
information, however and wherever stored and embodied), motor vehicles, tools
and supplies.
"OWNED INTELLECTUAL PROPERTY" shall mean the Owned Blanket Intellectual
Property and the Owned Pillow Intellectual Property.
"OWNED PILLOW INTELLECTUAL PROPERTY" shall mean the Intellectual
Property that is listed on SCHEDULE 4.8(b) hereto.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4(a)
hereof.
-4-
"PURCHASED ASSETS" shall have the meaning set forth in Section 2.1
hereof.
"PURCHASED EQUIPMENT" shall mean all Owned Equipment other than Excluded
Owned Equipment.
"PURCHASED INVENTORY" shall mean all Inventory other than the Excluded
Inventory.
"PURCHASER" shall have the meaning set forth in the introductory
paragraph hereto.
"SELLER" shall have the meaning set forth in the introductory paragraph
hereto.
"STORAGE PERIOD" shall have the meaning set forth in Section 10.1 hereof.
"TERMINATION DATE" shall have the meaning set forth in Section 9.1
hereof.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 9.4(a)
hereof.
"TRANSFER" shall mean transfer, grant, convey, assign and deliver or, as
the context may require, any one or more of the foregoing.
"TRANSFER DOCUMENTS" shall mean such bills of sale, assignments,
certificates of title and other instruments of transfer, as may be necessary
or appropriate to Transfer to Purchaser all of Seller's right, title and
interest in, to and under the Purchased Assets, to be prepared and duly
executed by Seller in form and substance reasonably satisfactory to Purchaser.
"WAREHOUSE FACILITIES" shall have the meaning set forth in Section 10.1
hereof.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. At the Closing, in reliance upon the
representations and warranties contained herein and on the terms and subject
to the conditions hereof, Seller shall Transfer to Purchaser, and Purchaser
shall purchase and accept from Seller, the following assets (collectively,
the "Purchased Assets"):
(a) the Purchased Inventory;
(b) the Purchased Equipment; and
(c) the Assumed Contracts.
2.2 NONASSIGNABLE CONTRACTS.
(a) To the extent that any Contract to be Transferred pursuant to the
terms of Section 2.1 hereof is not capable of being Transferred without the
consent, approval or waiver of a third person
-5-
or entity (including a governmental authority), or if such Transfer or
attempted Transfer would constitute a breach thereof or a violation of any
Law, nothing in this Agreement shall constitute a Transfer or an attempted
Transfer thereof prior to the time at which all consents, waivers and
approvals necessary for such Transfer shall have been obtained.
(b) Seller shall use reasonable best efforts, and Purchaser shall
reasonably cooperate with Seller in such efforts, to obtain such consents,
approvals and waivers necessary to Transfer to Purchaser all of the Contracts
referred to in Section 2.2(a) hereof.
(c) To the extent that the consents, approvals and waivers referred to
in Section 2.2(a) hereof are not obtained by Seller, if and to the extent
requested by Purchaser, Seller shall, during the term of the affected
Contract, use reasonable best efforts, at no greater expense to Purchaser
than the expense that would be incurred by Purchaser were such consents,
approvals or waivers obtained, to (i) provide to Purchaser the benefits under
any Contract referred to in Section 2.2(a) hereof, (ii) cooperate in any
reasonable and lawful arrangement designed to provide such benefits to
Purchaser, and (iii) enforce, at the written request of Purchaser, for the
account of Purchaser, any rights of Seller under the affected Contract
(including the right to elect to terminate such Contract in accordance with
the terms thereof upon the direction of Purchaser). Purchaser shall
reasonably cooperate with Seller in order to enable Seller to provide the
benefits contemplated by this Section 2.2(c) to Purchaser.
(d) Purchaser shall perform the obligations of Seller arising under the
affected Contracts referred to in Section 2.2(a) hereof, but only if and to
the extent that Seller provides to Purchaser the benefits thereof pursuant to
Section 2.2(c) hereof; provided, however, that Seller shall indemnify, defend
and hold Purchaser harmless from and against any and all Losses arising from
or relating to any claim asserted by a third party in respect of any failure
to obtain any consent, approval or waiver alleged to be required in
connection with any of the actions required to be taken by Seller pursuant to
this Section 2.2.
2.3 ASSUMPTION OF LIABILITIES.
(a) Except as specifically provided in Section 2.3(b) hereof, Seller
shall retain all, and Purchaser shall not assume or be responsible or liable
for any, debts, obligations or liabilities of Seller, whether or not
associated with or arising from the Purchased Assets. Without limiting the
generality or effect of the immediately preceding sentence, Purchaser shall
not be responsible or liable for any royalties payable in connection with the
sale of any Licensed Inventory included in the Purchased Assets if, and to
the extent that, the amount of such royalty is included in Seller's cost of
the Licensed Inventory as reflected on the June 30, 1996 Statement.
(b) On the terms and subject to the conditions hereof (including
Section 2.2(d) hereof), as of the Closing, Purchaser shall assume and
thereafter in due course pay, perform and discharge the Assumed Liabilities.
Notwithstanding anything to the contrary contained in this Agreement or any
document delivered in connection herewith, Purchaser's obligations in respect
of the Assumed Liabilities shall be subject to Purchaser's right to contest
in good faith the nature and extent of any liability or obligation; provided,
however, that Purchaser shall indemnify, defend and hold Seller harmless from
and against any and all Losses arising as a result of or in connection with
Purchaser
-6-
contesting the nature or extent of any such liability or obligation, unless
such liability or obligation results from or arises in connection with a
breach by Seller of any of its representations, warranties or covenants
contained in this Agreement.
2.4 PURCHASE PRICE.
(a) In consideration for the Transfer of the Purchased Assets to
Purchaser, Purchaser shall pay to Seller an amount equal to $31,500,000,
subject to adjustment as provided in Section 2.5 hereof (as adjusted, if
applicable, the "Purchase Price"), in accordance with this Section 2.4.
(b) Purchaser shall pay to Seller upon the Transfer of the Purchased
Assets to Purchaser at the Closing $30,500,000 of the Purchase Price in cash.
At the election of Seller, such amount shall be paid by either (i) wire
transfer of immediately available funds to an account designated for such
purpose in writing by Seller to Purchaser at least two business days prior to
the Closing Date or (ii) a federal funds check.
(c) Purchaser shall deposit upon the Transfer of the Purchased Assets
to Purchaser at the Closing $1,000,000 of the Purchase Price (the "Holdback
Amount") in cash into an independent escrow account to be established in
accordance with an escrow agreement mutually acceptable to Purchaser and
Seller (the "Escrow Agreement") substantially in the form attached hereto as
Exhibit "E" (the "Holdback Account"). Purchaser may make a claim against the
Holdback Amount for any and all Losses (including without limitation (i) any
and all charges to or deductions made against Purchaser by third parties for
returns, allowances for returns, restocking fees, rebates, discounts,
chargebacks or similar fees related to sales by Seller prior to Closing and
(ii) any and all liabilities for any royalties payable in connection with the
sale of any
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Licensed Inventory included in the Purchased Assets if, and to the extent
that, the amount of such royalty is included in Seller's cost of the Licensed
Inventory as reflected on the June 30, 1996 Statement) for which Seller has
an indemnification obligation pursuant to Section 9.2 hereof. The Escrow
Agreement shall govern the claims procedures and distribution of the Holdback
Account.
2.5 ADJUSTMENT TO PURCHASE PRICE FOR CHANGES IN INVENTORY.
(a) As promptly as practicable (and, in any event, within 45 calendar
days) following the Closing Date, Seller shall prepare and deliver to
Purchaser the Closing Statement. Purchaser shall have 20 calendar days
following Purchaser's receipt of the Closing Statement to review the Closing
Statement. During such 20-day period (the "Dispute Notice Period"), Purchaser
may give notice (a "Dispute Notice") to Seller in the event that Purchaser
determines in good faith that the Closing Statement was not prepared in
accordance with this Agreement and, as a result, misstates the value of the
Purchased Inventory as of the Closing Date. If Purchaser fails to deliver a
Dispute Notice within the Dispute Notice Period, Purchaser shall be deemed to
have irrevocably waived its right to deliver a Dispute Notice. If a Dispute
Notice is delivered by Purchaser, Seller and Purchaser shall negotiate in
good faith to agree upon the book value of the Purchased Inventory as of the
Closing Date and the amount of any payment required pursuant to this Section
2.5. If Seller and Purchaser fail to agree to such matters within 30
calendar days after the Dispute Notice is delivered to Seller, the Closing
Statement and the Dispute Notice shall be submitted to the Independent
Accounting Firm, which shall then determine, in accordance with the
provisions of this Agreement, the book value of the Purchased Inventory as of
the Closing Date and the amount of the payment required by this Section 2.5.
The determination of the Independent Accounting Firm shall be made as
promptly as practicable (and, in any event, within 30 calendar days)
following its receipt of the Closing Statement and the Dispute Notice, and
such determination shall be final and binding on all parties. The fees,
costs and expenses of the Independent Accounting Firm shall be borne equally
by Seller and Purchaser.
(b) If the book value of the Purchased Inventory as of June 30, 1996 as
reflected in the June 30, 1996 Statement exceeds the book value of the
Purchased Inventory as of the Closing Date as reflected in the Closing
Statement or, in the event a Dispute Notice is delivered by Purchaser to
Seller, as determined in accordance with Section 2.5(a) hereof, Seller shall
pay to Purchaser an amount equal to such excess, and if the book value of the
Purchased Inventory as of the Closing Date as reflected in the Closing
Statement or, in the event a Dispute Notice is delivered by Purchaser to
Seller, as determined in accordance with Section 2.5(a) hereof, exceeds the
book value of the Purchased Inventory as of June 30, 1996 as reflected in the
June 30, 1996 Statement, Purchaser shall pay to Seller an amount equal to
such excess. Any amount payable pursuant to this Section 2.5(b) shall be
paid in cash promptly (but, in any event, within five business days)
following the expiration of the Dispute Notice Period or, in the event a
Dispute Notice is delivered to Seller by Purchaser, the date on which Seller
and Purchaser agree to the amount of such payment or the date on which the
determination of the Independent Accounting Firm becomes final and binding,
as the case may be.
(c) In connection with the preparation of the Closing Statement, Seller
shall (i) cause a physical inventory of the Inventory to be taken as of the
Closing Date and shall cause such physical
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inventory to be observed by Ernst & Young, (ii) cause Ernst & Young to report
on such physical inventory and the Closing Statement and shall furnish
Purchaser a copy of such report promptly upon Seller's receipt thereof, and
(iii) permit Purchaser and its representatives to observe such physical
inventory. The report to be rendered by Ernst & Young on the Closing
Statement shall be based upon reasonable procedures acceptable to Purchaser.
2.6 TRANSFER TAXES; CERTAIN COSTS. Purchaser shall be responsible for
and pay any documentary transfer taxes and any sales, use or other taxes
imposed by reason of the purchase of the Purchased Assets pursuant hereto.
Seller shall be responsible for and pay the fees and costs of recording or
filing all Transfer Documents. Ad valorem taxes, if any, applicable to the
Purchased Assets shall be pro-rated between the Seller and Purchaser as of
the Closing Date. In addition, Purchaser shall reimburse Seller for any
actual pre-payment of any Assumed Liabilities as of the Closing Date on a
pro-rata basis. Seller shall provide Purchaser a schedule of such pre-paid
amounts no later than 10 days prior to the Closing Date.
ARTICLE III
CLOSING
3.1 CLOSING.
(a) Subject to the satisfaction or waiver of the other conditions set
forth in Articles VII and VIII hereof and Section 11.1(b) hereof, the closing
of the transactions contemplated by Article II hereof (the "Closing") shall
be held at 10:00 a.m., local time, on the thirty-fifth business day following
the expiration or termination of the applicable waiting period under the HSR
Act, subject to extension as provided in Section 3.1(b) hereof. The Closing
shall be held at the offices of Womble, Carlyle, Xxxxxxxxx and Xxxx,
Xxxxxxx-Salem, North Carolina.
(b) Subject to Section 11.1(b) hereof, if the Closing has not occurred
by the date specified in Section 3.1(a) hereof, then the Closing shall occur
on the earlier of (i) the twenty-fifth business day after all of the
conditions set forth in Articles VII and VIII hereof (other than those to be
satisfied by deliveries made at the Closing) shall have been satisfied or
waived and (ii) such other date to which Seller and Purchaser agree.
3.2 CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver to Purchaser (i) the Transfer
Documents, (ii) the certificate described in Section 8.2 hereof, (iii) the
documents described in Section 8.3 hereof, and (iv) such receipts, duly
executed by Seller, as Purchaser may reasonably request.
(b) At the Closing, in addition to the action required to be taken by
Purchaser pursuant to Section 2.3 hereof, Purchaser shall deliver to Seller
(i) the Assumption Documents, (ii) the certificate described in Section 7.2
hereof, and (iii) the documents described in Section 7.3 hereof.
(c) At the Closing, Seller shall execute and deliver to Purchaser, and
Purchaser shall execute and deliver to Seller, the Licensing Agreement, the
Escrow Agreement and, at the sole
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election of Purchaser (which election shall be made at least five business
days prior to the Closing), the Lease Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
4.1 ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to carry on the Business as it is
now being conducted and to own all of the Assets. Seller is duly qualified
to do business and is in good standing in each jurisdiction in which the
conduct of the Business or the ownership of the Assets requires such
qualification.
4.2 AUTHORIZATION. Seller has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations hereunder have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Seller and is a valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors' rights generally and by general principles of equity (whether
considered in an action at law or in equity) and the discretion of the court
before which any proceeding therefor may be brought.
4.3 CONSENTS AND APPROVALS. No consent, approval or authorization of,
or declaration, filing or registration with, any federal, state, local or
foreign governmental authority, or any other person or entity, is required to
be made or obtained by Seller in connection with the execution and delivery
by Seller of this Agreement or the performance by Seller of its obligations
hereunder, except (a) for the filing of a notification and report form by
Seller under the HSR Act and the expiration or termination of the applicable
waiting period thereunder, (b) as specified on SCHEDULE 4.3 hereto, and (c)
those for which the failure to obtain such consent, approval or authorization
will not have a Material Adverse Effect.
4.4 NO CONFLICT OR VIOLATION. Except to the extent specified on
SCHEDULE 4.4 hereto, assuming that as of the Closing Date the filing referred
to in Section 4.3 hereof shall have been made and the waiting period referred
to therein shall have expired or been terminated, the execution and delivery
of this Agreement by Seller do not, and the performance by Seller of its
obligations hereunder will not, (a) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws of Seller, (b) result in a breach
of or default under any provision of any material contract or agreement to
which Seller is a party or bound or to which the Assets are subject (or an
event which, with notice, lapse of time or both, would result in any such
breach or default), (c) to Seller's knowledge result in a violation by Seller
of any Law (or an event which, with notice, lapse of time or both, would
result in any such violation), or (d) result in the creation of any
Encumbrance on the Assets. Seller has no legal obligation, absolute or
contingent, to any other person or entity to sell the Assets (other than
sales of the Inventory in the ordinary course of the Business), or to effect
any
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merger, consolidation or other reorganization of Seller or to enter into any
agreement with respect thereto.
4.5 INVENTORY.
(a) Seller has heretofore delivered to Purchaser the June 30, 1996
Statement, a copy of which is attached as EXHIBIT A hereto. The June 30,
1996 Statement presents fairly the assets and liabilities of the Division,
including listings of the Inventory, the Equipment and the book value
thereof, as of June 30, 1996 and, except as specified in the notes thereto,
was prepared in all material respects using valuation and other accounting
practices based on Seller's standard inventory costs consistent with Seller's
past practices.
(b) Except as specified on SCHEDULE 4.5(b) hereto, the Inventory is of
a quality and quantity useable and saleable in the ordinary course of the
Business. Except as specified in SCHEDULE 4.5(b) hereto, (i) Seller has
good, marketable and exclusive title to, and valid and enforceable power and
unqualified right to Transfer to Purchaser, the Inventory and (ii) the
Inventory is free and clear of any Encumbrances.
(c) The delivery to Purchaser at the Closing of the Transfer Documents
shall vest good, marketable and exclusive title to the Purchased Inventory in
Purchaser, free and clear of all Encumbrances.
(d) No material portion of the Inventory has been manufactured
specifically for delivery to a specific person or entity that is no longer a
customer of the Division or as to which Seller has a reasonable basis to
believe that such person or entity will cease to be a customer of the
Division in the foreseeable future.
4.6 EQUIPMENT.
(a) Attached as SCHEDULE 4.6(a) hereto is a true and complete listing
of all of the items of material tangible personal property used by Seller in
connection with the conduct of the Business (with the exception of computer
and telecommunication equipment), with the material tangible personal
property owned by Seller and used in connection with the conduct of the
Business being listed thereon under the caption "Owned Equipment" and the
material tangible personal property held by Seller under any Contract and
used by Seller in connection with the conduct of the Business being listed
thereon under the caption "Leased Equipment." The Equipment constitutes the
only material tangible personal property used by Seller in connection with
the conduct of the Business.
(b) The Equipment is being sold "as is" and "where is" and Seller makes
no warranties whatsoever with respect thereto. Seller expressly disclaims
all implied warranties of merchantability and fitness for a particular
purpose and all other warranties, express or implied, with respect to the
tangible personal property included in the Purchased Assets. Except as
specified on SCHEDULE 4.6(b) hereto, (i) Seller has good, marketable and
exclusive title to, and valid and enforceable power and unqualified right to
use and Transfer to Purchaser, the Owned Equipment and (ii) the Owned
Equipment is free and clear of any Encumbrances.
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(c) Except as specified in SCHEDULE 4.6(b) hereto, the delivery to
Purchaser at Closing of the Transfer Documents shall vest good, marketable
and exclusive title to the Purchased Equipment in Purchaser, free and clear
of all Encumbrances.
4.7 CONTRACTS.
(a) Attached as SCHEDULE 4.7(a) hereto is a true and complete listing
or description of each Contract other than agreements or contracts entered
into in the ordinary course of the Business which are terminable without
payment of premium or penalty at will or upon not more than 30 calendar days'
notice or which impose remaining monetary obligations not in excess of
$10,000 and which impose no material non-monetary obligations. Except for
the Contracts, Seller is not a party to any agreement or contract relating
to, or used by Seller in connection with, the conduct of the Business or to
which any of the Assets is subject. Seller heretofore has made available to
Purchaser true, complete and correct copies of each of the Contracts
(including all amendments thereto) listed or described on SCHEDULE 4.7(a)
hereto that are written and true, complete and correct written summaries of
the Contracts listed or described on SCHEDULE 4.7(a) hereto that are oral.
(b) Except as set forth on SCHEDULE 4.7(b), Seller has performed all
material obligations required to be performed by it to date under the
Contracts. Neither Seller nor, to the best of Seller's knowledge, any other
party to any Contract has improperly terminated or is in breach or default
under such Contract, and there exists no condition or event which, after the
giving of notice or lapse of time or both, would constitute any such breach,
termination or default on the part of Seller or, to the best of Seller's
knowledge, any other party. Each of the Contracts is in full force and
effect and is a legal, binding and enforceable obligation of Seller and of
each of the other parties thereto.
4.8 INTELLECTUAL PROPERTY.
(a) SCHEDULE 4.8(a) hereto sets forth a true and complete listing of
all of the Intellectual Property held for use by Seller in connection with
the manufacture and sale of any and all types of blankets and throws
(including without limitation such Intellectual Property used in connection
with the conduct of the Business), with such Intellectual Property owned by
Seller being listed thereon under the caption "Owned Blanket Intellectual
Property" and such Intellectual Property held for use by Seller under any
Contract being listed thereon under the caption "Licensed Blanket
Intellectual Property." The Blanket Intellectual Property constitutes the
only Intellectual Property held for use by Seller in connection with the
manufacture and sale of all types of blankets and throws, including without
limitation that used in connection with the conduct of the Business.
(b) SCHEDULE 4.8(b) hereto sets forth a true and complete listing of
all Intellectual Property owned by Seller and held for use in connection with
the manufacture and sale of pillows, down comforters, pillow protectors,
mattress pads, mattress covers, feather beds and related items.
(c) Except to the extent specified on SCHEDULE 4.8(c) hereto, (i)
Seller has good, marketable and exclusive title to all the Owned Intellectual
Property and (ii) all the Owned Intellectual Property is free and clear of
all Encumbrances. Except to the extent specified on SCHEDULE 4.8(c) hereto,
Seller has granted no license to, and has entered into no other contract or
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agreement with, any other person or entity relating in whole or in part to
any of the Owned Intellectual Property.
(d) Except to the extent specified on SCHEDULE 4.8(d) hereto, (i) there
is no unresolved claim or demand asserting a conflict with or infringement of
the rights of any other person or entity in connection with Seller's use of
any Intellectual Property, (ii) there is no such unasserted claim or demand
that, to the best of Seller's knowledge, is probable of assertion, and (iii)
to the best of Seller's knowledge, there is no basis for the assertion of any
such claim or demand.
4.9 BOOKS AND RECORDS. The Books and Records have been maintained in
accordance with good business practice and in all material respects in
accordance with all Laws and other requirements applicable to the conduct of
the Business.
4.10 LEGAL PROCEEDINGS. Except as specified on SCHEDULE 4.10 hereto,
there are no claims, actions, suits or proceedings, investigative or
otherwise, pending or, to the best of Seller's knowledge, threatened against
Seller arising out of or relating to this Agreement or the transactions
contemplated hereby or the conduct of the Business, or pertaining to or
affecting the Assets (including without limitation any claim, action, suit or
proceeding, investigative or otherwise, by any governmental authority, or any
other person or entity, involving allegations relating to blanket safety
requirements or blanket safety testing), and there is no unasserted claim
with respect to any of the foregoing that, to the best of Seller's knowledge,
is probable of assertion. Except as specified on SCHEDULE 4.10 hereto,
Seller is not subject to any order, judgment, writ, injunction or decree of
any federal, state, local or foreign court or other governmental authority,
and there are no unsatisfied judgments against Seller, arising out of or
relating to this Agreement or the transactions contemplated hereby or the
conduct of the Business, or pertaining to or affecting the Assets.
4.11 COMPLIANCE WITH LAW. Except as specified on SCHEDULE 4.11 hereto,
to Seller's knowledge none of the use, condition or any other aspect of any
Assets, nor Seller in connection with the conduct of the Business, is or has
been in violation in any material respect of any applicable Law except for
such matters which do not, and will not, in the aggregate, have a Material
Adverse Effect.
4.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
SCHEDULE 4.12 hereto, since June 30, 1996, there has not been:
(a) any failure to conduct the Business in the ordinary course and
consistent with past practice so as to preserve generally the goodwill of
suppliers, customers and others having relationships with the Division;
(b) any Transfer of any of the Assets, except Transfers of Inventory
in the ordinary course of the Business and consistent with past practice;
(c) any grant or creation of any Encumbrance on any of the Assets;
(d) any failure to maintain in all material respects Inventory in the
condition set forth in Section 4.5(b) hereof;
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(e) any termination, modification, amendment or waiver of any rights
under any Contract, or any new or additional Contracts entered into, except
in the ordinary course of the Business and consistent with past practice;
(f) any surrender, modification, amendment, waiver or forfeiture of
any of Seller's rights in respect of any Intellectual Property or any
failure to maintain such rights, including without limitation any failure
to file any necessary statements of use, requests for extensions of time,
renewal applications, responses to office actions or affidavits under
Sections 8 and 15 of the Xxxxxx Act, to prosecute any INTER PARTES
proceedings or to pay any necessary maintenance or other fee;
(g) any material modification in Seller's accounting policies,
practices or procedures or in the manner in which the Books and Records are
maintained;
(h) any violation of Law in any material respect in the conduct of
the Business or the use of the Assets; or
(i) any Material Adverse Change.
Except as set forth on SCHEDULE 4.12 hereto, since the date the Equipment was
inspected by Purchaser, there has not been any failure to maintain the Equipment
in all material respects in the condition (normal wear and tear excepted) as of
such date of inspection.
4.13 NO BROKERS. Other than the arrangements with respect to this
transaction between Seller and Prudential Securities Incorporated, neither
Seller nor any affiliate of Seller has entered into or will enter into any
agreement, arrangement or understanding with any person or entity which creates
any obligation to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated by this Agreement.
4.14 DISCLOSURE. None of (a) the information contained in the Schedules
hereto, (b) any other written information furnished to the Purchaser by Seller
or its representatives in connection with this Agreement or the transactions
contemplated hereby (including without limitation the Confidential Information
Memorandum prepared by Prudential Securities Incorporated and previously
delivered to Purchaser), or (c) the representations and warranties of Seller
contained in this Agreement or in any document delivered in connection herewith
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
false or misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION OF PURCHASER. Purchaser is duly organized, validly
existing and in good standing under the laws of the State of Texas and has
full corporate power and authority to conduct its business as it is now being
conducted and to own and lease its properties and assets.
5.2 AUTHORIZATION. Purchaser has all necessary corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery by Purchaser of this Agreement and the
performance by Purchaser of its obligations hereunder have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Purchaser and is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar Laws now or hereafter in effect relating to
creditors' rights generally and by general principles of equity (whether
considered in an action at law or in equity) and the discretion of the court
before any proceeding therefor may be brought.
5.3 CONSENTS AND APPROVALS. No consent, approval or authorization of,
or declaration, filing or registration with, any federal, state, local or
foreign governmental authority, or any other person or entity, is required to
be made or obtained by Purchaser in connection with the execution and
delivery of this Agreement or the performance by Purchaser of its obligations
hereunder, except (a) for the filing of a notification and report form by
Purchaser under the HSR Act and the expiration or termination of the
applicable waiting period thereunder and (b) as specified on SCHEDULE 5.3
hereto, and (c) those for which the failure to obtain such consent, approval
or authorization would have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated by this Agreement.
5.4 NO CONFLICT OR VIOLATION. Except to the extent specified on
SCHEDULE 5.4 hereto, assuming that as of the Closing Date the filing referred
to in Section 5.3 hereof shall have been made and the waiting period referred
to therein shall have expired or been terminated, the execution and delivery
of this Agreement by Purchaser do not, and the performance by Purchaser of
its obligations hereunder will not, (a) violate or conflict with any
provision of the Articles of Incorporation or Bylaws of Purchaser, (b) result
in a breach of, or a default under, any terms or provision of any contract or
agreement to which Purchaser is a party or bound or to which any property or
asset of Purchaser is subject (or an event which, with notice, lapse of time
or both, would result in any such breach or default), or (c) to Purchaser's
knowledge, result in a violation by Purchaser of any Law (or an event which,
with notice, lapse of time or both, would result in any such violation),
which breach, default or violation would have a material adverse effect on
the ability of Purchaser to consummate the transactions contemplated by this
Agreement.
5.5 LEGAL PROCEEDINGS. There are no claims, actions, suits or
proceedings pending or, to the best of Purchaser's knowledge, threatened
against Purchaser arising out of or relating to this
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Agreement or the transactions contemplated hereby or which could reasonably
be expected to have a material adverse effect on the ability of Purchaser to
consummate the transactions contemplated by this Agreement. Purchaser is not
in violation of any order, judgment, writ, injunction or decree of any court
or other governmental authority which could reasonably be expected to have a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated by this Agreement.
5.6 NO BROKERS. Neither Purchaser nor any affiliate of Purchaser has
entered into or will enter into any agreement, arrangement or understanding
with any person or entity which creates any obligation to pay any finder's
fee, brokerage commission or similar payment in connection with the
transactions contemplated by this Agreement.
5.7 DISCLOSURE. None of (a) any written information furnished to
Seller by Purchaser in connection with this Agreement or the transactions
contemplated hereby or (b) the representations and warranties of Purchaser
contained in this Agreement or in any document delivered in connection
herewith contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not false or misleading.
ARTICLE VI
CERTAIN COVENANTS
6.1 ACTIONS PRIOR TO CLOSING. Except as otherwise specifically
required or permitted by another provision of this Agreement or approved by
Purchaser in writing, from the date hereof through the Closing Date, Seller
shall conduct the Business in the ordinary course and consistent with past
practice and use its best efforts to preserve generally the goodwill of
customers, suppliers and others having relationships with the Division and
shall not:
(a) Transfer any of the Assets, except Transfers of Inventory in the
ordinary course of the Business and consistent with past practice;
(b) grant, create or permit to exist any Encumbrance on any of the
Assets (other than Encumbrances specified on SCHEDULE 4.5(b), SCHEDULE
4.6(b) or SCHEDULE 4.8(c) hereof);
(c) fail to maintain in all material respects Inventory in the
condition set forth in Section 4.5(b) hereof and the Equipment thereof as
of the date specified in the last sentence of Section 4.12;
(d) terminate, modify, amend or waive any rights under any Contract,
or enter into any new or additional Contracts, except in the ordinary
course of the Business and consistent with past practice;
(e) surrender, modify, amend, waive or forfeit any of Seller's rights
in respect of any Intellectual Property or fail to maintain such rights by
failing to file any necessary statements of use, requests for extensions of
time, renewal applications, responses to office
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actions or affidavits under Sections 8 and 15 of the Xxxxxx Act, to
prosecute any INTER PARTES proceedings or to pay any necessary maintenance
or other fee or otherwise;
(f) modify its accounting policies, practices or procedures or the
manner in which the Books and Records are maintained;
(g) violate in any material respect any Law applicable to the conduct
of the Business or the use of the Assets;
(h) take or permit to be taken any action that could reasonably be
expected to result in a Material Adverse Change; or
(i) agree or consent to do any of the foregoing.
6.2 INVESTIGATION BY PURCHASER. Prior to the Closing, Seller shall
allow Purchaser and its representatives, upon Purchaser's prior notice to
Seller and at Purchaser's expense, access to the facilities and personnel of
Seller in order to permit Purchaser to investigate and inspect the Assets and
to inspect and make copies of the Books and Records or other information
requested by Purchaser reasonably related to the Assets. Any such investigation,
inspection or duplication of documents shall be conducted at reasonable times
and under reasonable circumstances (including reasonable limits on the number
of Purchaser's representatives who may visit the Division or Seller at the
same time) designed to promote the orderly continuance of the businesses of
the Division and Seller. Purchaser shall be bound by the provisions of Section
11.15 hereto.
6.3 ACCOUNTANTS' REVIEW. Seller shall permit independent certified
public accountants designated by Purchaser to review the Books and Records
(including without limitation all financial statements included therein).
Seller shall request Ernst & Young to permit such designated firm to review
the work papers of Ernst & Young relating to Seller and its affiliates,
insofar as they cover matters relating to the Division or the Assets.
6.4 CONSENTS AND APPROVALS.
(a) Seller and Purchaser shall use their respective
reasonable best efforts to obtain any authorizations, consents, orders
and approvals of any governmental authority, or other person or entity,
necessary for the performance of their respective obligations under
this Agreement and the consummation of the respective transactions to
be consummated by each of them hereunder, and shall cooperate fully
with each other in all reasonable respects in promptly seeking to
obtain such authorizations, consents, orders and approvals. Neither
Seller nor Purchaser shall take any action that has the effect of
delaying, impairing or impeding the receipt of any required
authorization, consent, order or approvals.
(b) Without limiting the generality or effect of Section
6.4(a) hereof, each of the parties shall promptly file or cause to be
filed under the provisions of the HSR Act any required notification and
report form, together with all required documentary materials. Without
limiting the generality or effect of Section 6.4(a) hereof, each of the
parties shall use its reasonable best efforts to obtain
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early termination of the applicable waiting period under the HSR Act, and
shall provide any additional information requested in connection with the
filings made under the HSR Act promptly after receipt of any request for such
additional information.
6.5 INJUNCTIONS. Without limiting the generality or effect of any
provision of Section 6.4 or Article VII or VIII hereof, if any federal,
state, local or foreign court or other governmental authority having
jurisdiction over either party hereto issues or otherwise promulgates any
order, judgment, writ, injunction or decree prior to the Closing which
prohibits the consummation of the transactions contemplated hereby, the
parties hereto shall use their respective reasonable best efforts to have
such injunction dissolved or otherwise eliminated as promptly as possible.
6.6 CERTAIN NOTICES. From the date hereof through the Closing Date,
Seller shall notify Purchaser, and Purchaser shall notify Seller, promptly
(and in any event within two business days of obtaining knowledge thereof) of
any of the following:
(a) any material breach of any representation, warranty or covenant
of the notifying party contained in this Agreement (whether or not any
requirement for notice or lapse of time or other condition precedent has
been satisfied) which is then continuing, together with a certificate of
the notifying party specifying the details thereof and the action that the
notifying party has taken or proposes to take with respect thereto;
(b) any pending or threatened claim, action, suit or proceeding
challenging this Agreement or any of the transactions contemplated hereby;
(c) any notice or other communication from any third party alleging
that the consent of such third party (other than a consent the necessity of
which is disclosed on SCHEDULE 4.3 hereto) is or may be required in
connection with the transactions contemplated by this Agreement;
(d) Any other development that would prevent or raise a substantial
doubt regarding the satisfaction of any condition set forth in Article VII
hereof, if Seller is the notifying party, or Article VIII hereof, if
Purchaser is the notifying party; and
(e) Any notice or other communication from any federal, state, local
or foreign governmental authority regarding the transactions contemplated
by this Agreement.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions provided for in
Article II hereof are subject to the satisfaction or waiver, on or prior to the
Closing Date, of each of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects both on and
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as of the date of this Agreement and on and as of the Closing Date (with the
same force and effect as though made anew on and as of the Closing Date), and
Purchaser shall have performed in all material respects all covenants
contained in this Agreement to be performed or complied with by it prior to
or on the Closing Date.
7.2 CERTIFICATE. Purchaser shall have delivered to Seller a certificate,
dated the Closing Date and signed by an authorized officer of Purchaser,
certifying that the condition set forth in Section 7.1 hereof has been
satisfied.
7.3 CORPORATE DOCUMENTS. Seller shall have received from Purchaser copies
of the resolutions adopted by the board of directors of Purchaser approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, certified by the corporate secretary of
Purchaser.
7.4 LICENSING AGREEMENT. Purchaser shall have executed and delivered to
Seller the Licensing Agreement.
7.5 ESCROW AGREEMENT. Purchaser and the escrow agent shall have each
executed and delivered to Seller the Escrow Agreement.
7.6 LEASE AGREEMENT. If Purchaser shall have elected pursuant to Section
3.2(c) hereof to enter into the Lease Agreement at the Closing, Purchaser shall
have executed and delivered to Seller the Lease Agreement.
7.7 CONSENTS. All required consents, authorizations, approvals and
waivers from governmental authorities necessary to consummate the transactions
contemplated hereby, including without limitation the expiration or termination
of the applicable waiting period under the HSR Act, shall have been obtained.
7.8 NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. No suit, action,
investigation or other proceeding by any federal, state, local or foreign
governmental authority, or other person or entity, shall have been instituted or
threatened, which would make illegal or prohibit, or challenge the validity or
legality of, the transactions contemplated by this Agreement.
Notwithstanding the foregoing, Seller's obligations under this Agreement to
consummate the transactions contemplated by Article II hereof shall not be
relieved by the failure of any of the foregoing conditions if such failure is
the result, direct or indirect, of a breach by Seller of its obligations under
this Agreement.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions provided for in
Article II hereof are subject to the satisfaction or waiver, on or prior to the
Closing Date, of each of the following conditions:
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8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects both on and as of the date of this Agreement and on and as
of the Closing Date (with the same force and effect as though made anew on and
as of the Closing Date), and Seller shall have performed in all material
respects all covenants contained in this Agreement to be performed or complied
with by it prior to or on the Closing Date.
8.2 CERTIFICATES. Seller shall have delivered to Purchaser a certificate,
dated the Closing Date and signed by an authorized officer of Seller, certifying
that the conditions set forth in Sections 8.1 and 8.5 hereof have been
satisfied.
8.3 CORPORATE DOCUMENTS. Purchaser shall have received from Seller copies
of the resolutions adopted by the board of directors of Seller approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, certified by the corporate secretary of
Seller.
8.4 LICENSING AGREEMENT. Seller shall have executed and delivered to
Purchaser the Licensing Agreement.
8.5 ESCROW AGREEMENT. Seller and the escrow agent shall have each
executed and delivered to Purchaser the Escrow Agreement.
8.6 LEASE AGREEMENT. If Purchaser shall have elected pursuant to Section
3.2(c) hereof to enter into the Lease Agreement at the Closing, Purchaser shall
have executed and delivered to Seller the Lease Agreement.
8.7 NO MATERIAL CHANGE. Since June 30, 1996, there shall have been no
Material Adverse Change.
8.8 CONSENTS. All required consents, authorizations, approvals and
waivers from governmental authorities and other persons and entities necessary
to consummate the transactions contemplated hereby (including without limitation
the expiration or termination of the applicable waiting period under the HSR Act
and the consents, authorizations and approvals specified on SCHEDULE 4.3 hereto)
shall have been obtained.
8.9 NO GOVERNMENTAL PROCEEDINGS OR LITIGATION. No suit, action,
investigation or other proceeding by any federal, state, local or foreign
governmental authority, or other person or entity, shall have been instituted or
threatened, which would make illegal or prohibit, or challenge the validity or
legality of, the transactions contemplated by this Agreement.
Notwithstanding the foregoing, Purchaser's obligations under this Agreement
to consummate the transactions contemplated by Article II hereof shall not be
relieved by the failure of any of the foregoing conditions if such failure is
the result, direct or indirect, of a breach by Purchaser of its obligations
under this Agreement.
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ARTICLE IX
SURVIVAL AND INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties contained in this Agreement (or
in any document delivered in connection herewith) shall be deemed to have
been made on and as of the date of this Agreement and on and as of the
Closing Date and shall survive the Closing Date and shall remain operative
and in full force and effect until the second anniversary of the Closing Date
(the "Termination Date"). The covenants of the parties contained in this
Agreement (or in any document delivered in connection herewith) shall remain
operative and in full force and effect without any time limitation, except to
the extent that any such covenant is limited in duration by the express terms
thereof. Any right of indemnification pursuant to this Article IX with
respect to a claimed breach of a representation or warranty shall expire at
11:59 p.m. on the Termination Date unless, on or prior to the Termination
Date, a Claim Notice has been given to the party from whom indemnification is
sought. Provided that a Claim Notice is timely so given, the right to
indemnification pursuant to this Article IX with respect to a claimed breach
to which such Claim Notice relates shall not be affected by the occurrence of
the Termination Date. For purposes of this Agreement, a "Claim Notice" shall
mean a written notice asserting a breach of a representation or warranty
contained in this Agreement which reasonably sets forth, in light of the
information then known to the party giving such notice, a description of, and
an estimate (if it is then reasonable to make an estimate) of the amount
involved in such breach, together with copies of all available documentation
with respect thereto. The representations, warranties and covenants of
Purchaser contained in this Agreement (or in any document delivered in
connection herewith) shall not be diminished or otherwise affected as a
result of any investigation by or knowledge of Seller. The representations,
warranties and covenants of Seller contained in this Agreement (or in any
document delivered in connection herewith) shall not be diminished or
otherwise affected as a result of any investigation by or knowledge of
Purchaser.
9.2 INDEMNIFICATION BY SELLER. Seller shall indemnify, defend and hold
Purchaser harmless from and against any and all Losses (including without
limitation (i) any and all charges to or deductions made against Purchaser by
third parties for returns, allowances for returns, restocking fees, rebates,
discounts, chargebacks or similar items related to Sales by the Seller prior
to Closing and (ii) any and all liabilities for any royalties payable in
connection with the sale of any Licensed Inventory included in the Purchased
Assets if, and to the extent that, the amount of such royalty is included in
Seller's cost of the Licensed Inventory as reflected on the June 30, 1996
Statement) resulting or arising from, relating to or incurred in connection
with (a) any failure by Seller to pay, perform and discharge any debts,
obligations or liabilities of Seller (other than the Assumed Liabilities),
(b) any breach of any representation, warranty or covenant of Seller
contained in this Agreement or in any document delivered in connection
herewith, (c) the conduct of the Business or the ownership or use of the
Assets (other than the Purchased Assets) at any time, whether on, prior to or
following the Closing Date, and (d) the ownership or use of the Purchased
Assets at any time on or prior to the Closing Date.
9.3 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify, defend
and hold Seller harmless from and against any and all Losses resulting or
arising from, relating to or incurred in
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connection with (a) any breach of any representation, warranty or covenant of
Purchaser contained in this Agreement or in any document delivered in
connection herewith and (b) the ownership of the Purchased Assets at any time
following the Closing Date.
9.4 NOTICE OF CLAIM; RIGHT TO PARTICIPATE IN AND DEFEND THIRD PARTY CLAIM.
(a) If any indemnified party receives notice of the assertion of any
claim, the commencement of any suit, action or proceeding, or the imposition of
any penalty or assessment by a third party in respect of which indemnity may be
sought hereunder (a "Third Party Claim"), and the indemnified party intends to
seek indemnity hereunder, then the indemnified party shall promptly provide the
indemnifying party with written notice of the Third Party Claim (but, in any
event, not later than 30 calendar days after receipt of such notice of Third
Party Claim) and a complete description of the Third Party Claim. The failure
by an indemnified party to notify an indemnifying party of a Third Party Claim
shall not relieve the indemnifying party of any indemnification responsibility
under this Article IX, except to the extent, if any, that such failure
materially prejudices the ability of the indemnifying party to defend such Third
Party Claim.
(b) Without prejudice to the rights of the indemnified party prior
thereto, the indemnifying party shall have the right to control the defense,
compromise or settlement of the Third Party Claim with its own counsel
(reasonably satisfactory to the indemnified party) if the indemnifying party
delivers written notice to the indemnified party within 30 calendar days
following the indemnifying party's receipt of notice of the Third Party Claim
from the indemnified party setting forth its undertaking to defend such Third
Party Claim in accordance with this Article IX; provided, however, that the
indemnifying party shall not enter into any settlement of any Third Party
Claim which would impose or create any obligation or any financial or other
liability on the part of the indemnified party if such liability or
obligation (i) requires more than the payment of a liquidated sum or (ii) is
not covered by the indemnification provided to the indemnified party
hereunder. In its defense, compromise or settlement of any Third Party
Claim, the indemnifying party shall timely provide the indemnified party with
such information with respect to such defense, compromise or settlement as
the indemnified party may reasonably request, and shall not assume any
position or take any action that would impose an obligation of any kind on,
or restrict the actions of, the indemnified party. The indemnified party
shall be entitled (at the indemnified party's expense) to participate in the
defense by the indemnifying party of any Third Party Claim with its own
counsel.
(c) In the event that the indemnifying party does not undertake the
defense, compromise or settlement of a Third Party Claim in accordance with
Section 9.4(b) hereof, the indemnified party shall have the right to control the
defense or settlement of such Third Party Claim with counsel of its choosing;
provided, however, that the indemnified party shall not settle or compromise any
Third Party Claim without the indemnifying party's prior written consent, unless
(i) the terms of such settlement or compromise release the indemnified party or
the indemnifying party from any and all liability with respect to the Third
Party Claim or (ii) the indemnifying party shall not have acknowledged its
obligations to indemnify the indemnified party with respect to such Third Party
Claim in accordance with this Article IX. The indemnifying party shall be
entitled (at the indemnifying party's expense) to participate in the defense of
any Third Party Claim with its own counsel.
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(d) Any indemnifiable claim hereunder that is not a Third Party Claim
shall be asserted by the indemnified party by promptly delivering notice
thereof to the indemnifying party. If the indemnifying party does not
respond to such notice within 60 calendar days after its receipt, it shall
have no further right to contest the validity of such claim.
9.5 LIMITATION. Notwithstanding the provisions of Section 9.2, neither
party shall have any indemnification obligation to the other party under this
Agreement unless and until the aggregate amount of the Losses of such other
party exceeds $250,000; PROVIDED HOWEVER; that such limitation shall not be
applicable with respect to any claim made by Purchaser with respect to all
charges to or deductions made against Purchaser by third parties for returns,
allowances for returns, restocking fees, rebates, discounts, chargebacks or
similar fees related to sales by Seller prior to Closing.
9.6 REDUCTION BY INSURANCE PROCEEDS. The amount payable by an
indemnifying party to an indemnified party with respect to a Loss shall be
reduced by the amount of any insurance proceeds received by the indemnified
party with respect to the Loss, and each of the parties hereby agrees to use its
best efforts to collect any and all insurance proceeds to which it may be
entitled in respect of any Loss.
ARTICLE X
OTHER COVENANTS
10.1 STORAGE OF PURCHASED INVENTORY AND CERTAIN EQUIPMENT. From the
Closing Date through March 31, 1997 (the "Storage Period"), Seller shall,
without any additional cost to Purchaser (except as expressly provided below),
permit Purchaser to store the Purchased Inventory, the Purchased Equipment and
any Leased Equipment covered by an Assumed Equipment Lease at Seller's warehouse
facilities where such Inventory and Equipment are presently located
(collectively, the "Warehouse Facilities"). During the Storage Period,
Purchaser shall be responsible for the shipping and handling of the Purchased
Inventory, and Seller shall allow Purchaser full access to the Warehouse
Facilities for such purpose. Seller shall cause its employees to assist with
the shipping and handling of the Purchased Inventory as requested by Purchaser,
and, promptly upon receipt of an invoice therefor (which shall include
reasonable detail in support thereof), Purchaser shall reimburse Seller for that
portion of Seller's labor costs and other out-of-pocket costs that may
reasonably be allocated to the assistance so provided. The Purchased Inventory
shall not be shipped from the Warehouse Facilities except in accordance with the
instructions of Purchaser. During the Storage Period, Seller shall allow
Purchaser full access to such facilities for the purpose of examining or
removing such Equipment. Such Equipment shall not be removed from such
facilities except by Purchaser. Purchaser shall provide Seller a schedule of
labor requirements no later than 10 days prior to Closing.
10.2 POST-CLOSING ACCESS. From and after the Closing Date, Seller will
allow Purchaser and its representatives full access to any Books and Records,
including without limitation customer and supplier records, that are not
included in the Purchased Assets. Seller expressly acknowledges that,
notwithstanding anything to the contrary herein contained, Purchaser may use any
information contained in such Books and Records for its own benefit.
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10.3 BACKLOG. In the event that (a) prior to the Closing Seller shall have
received from any of its customers, in the ordinary course of the Business,
consistent with past practices, purchase orders for finished products included
in the Purchased Inventory and (b) as of the Closing Seller shall not have made
shipments in respect of any such purchase orders, Purchaser shall use its
reasonable best efforts to make shipments in respect of such purchase orders,
subject to normal credit terms and conditions. Seller shall instruct its
customers to remit payment in respect of such purchase orders to Purchaser
rather than Seller and, in the event any customer remits such payment to Seller,
Seller shall promptly (and, in any event, within five business days) after its
receipt thereof forward to Purchaser an amount in cash equal to such payment.
10.4 PROCESSING OF WORK-IN-PROCESS INVENTORY. During the Storage Period,
Seller shall, upon Purchaser's written request, perform processing of work-in-
process included in the Purchased Inventory as may be directed by Purchaser.
Such processing of work-in-process inventory shall be to Purchaser's reasonable
satisfaction. Purchaser agrees to reimburse Seller for that portion of Seller's
labor costs and other out-of-pocket costs that may reasonably be allocated to
the assistance so provided promptly upon receipt of an invoice therefor (which
shall include reasonable detail in support thereof). Purchaser shall provide
Seller a schedule of labor requirements no later than 10 days prior to Closing.
ARTICLE XI
MISCELLANEOUS
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) By the mutual written consent of Seller and Purchaser;
(b) By Seller, upon written notice to Purchaser, or by Purchaser,
upon written notice to Seller, if the Closing has not occurred on or before
December 6, 1996;
(c) By Seller, upon written notice to Purchaser, or by Purchaser,
upon written notice to Seller, if there shall have been entered a final,
nonappealable order of any federal, state, local or foreign court or
governmental authority prohibiting the consummation of the transactions
contemplated hereby or any material part thereof; and
(d) By Seller, upon written notice to Purchaser, upon a breach in any
material respect of any representation, warranty or covenant of Purchaser
contained in this Agreement, provided that such breach is not capable of
being cured or has not been cured within 10 calendar days after the giving
of notice thereof by Seller to Purchaser, or by Purchaser, upon written
notice to Seller, upon a breach in any material respect of any
representation, warranty or covenant of Seller contained in this Agreement,
provided that such breach is not capable of being cured or has not been
cured within 10 calendar days after the giving of notice thereof by
Purchaser to Seller.
If this Agreement is terminated as provided herein, each party hereto shall
pay all of its own fees and expenses and no party hereto shall have any
liability or further obligation to the other party
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hereto under this Agreement, except that (i) the provisions of Section 11.15
hereof shall remain in full force and effect following any termination hereof
and (ii) nothing contained herein will relieve any party of any liability for
any breach prior to such termination of any representation, warranty or
covenant contained in this Agreement and, without limiting the generality or
effect of the preceding provisions of this clause (ii), in the event of such
a pre-termination breach, the nonbreaching party shall, in addition to any
other remedy provided for hereunder or existing from time to time at law or
in equity or by statute or otherwise, be entitled to recover from the
breaching party all out-of-pocket legal, accounting and due diligence
expenses actually incurred in connection with this Agreement.
11.2 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by either party hereto without the prior
written consent of the other party hereto; except, that Purchaser may, without
such consent, assign all such rights and obligations to a direct or indirect,
wholly owned subsidiary or subsidiaries of Purchaser or to a successor to the
business of Purchaser which shall assume all obligations and liabilities
hereunder, but without releasing Purchaser with respect to any such obligations
or liabilities except with the prior written consent of Seller in its sole
discretion. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and no other person shall have any right, benefit or obligation
hereunder.
11.3 NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by either party hereto to
the other shall be in writing and shall be deemed to have been duly given when
delivered in person or when dispatched by electronic facsimile transfer
(confirmed in writing by mail simultaneously dispatched) or one business day
after having been dispatched by a nationally recognized overnight courier
service to the appropriate party at the address specified below:
If to Seller, addressed to:
Fieldcrest Xxxxxx, Inc.
Xxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Fieldcrest Xxxxxx, Inc.
000 Xxxx Xxxxxxx Xxxxx
Xxxx, Xxxxx Xxxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: M. Xxxxxxx Xxxx
General Counsel
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If to Purchaser, addressed to:
Pillowtex Corporation
0000 Xxxx Xxx
Xxxxxx, Xxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Chairman and Chief Executive Officer
With a copy to:
Pillowtex Corporation
0000 Xxxx Xxx
Xxxxxx, Xxxxx 00000
Facsimile No: (000) 000-0000
Attention: X.X. Xxxxxxx
General Counsel
or to such other address and with such other copies as either party may
designate as to itself by like notice to the other.
11.4 CHOICE OF LAW. This Agreement shall be construed and interpreted, and
the rights of the parties determined, in accordance with the laws of the State
of Delaware (without reference to the choice of law provisions thereof).
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules hereto, constitutes the entire agreement by
and between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of such parties, including without
limitation that certain letter of intent dated September 4, 1996. No
amendment, supplement, modification or waiver of this Agreement or any
provision hereof shall be binding unless executed in writing by the party
hereto to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
11.6 EXPENSES. Except as otherwise specified herein, each party hereto
shall pay its own legal, accounting and other out-of-pocket expenses incident to
this Agreement and to any action taken by such party in preparation for carrying
this Agreement into effect.
11.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party hereto. Upon any such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
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manner to the end that the transactions contemplated by this Agreement are
consummated to the extent possible.
11.8 REMEDIES. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and each remedy
shall be cumulative and shall be in addition to every other remedy provided for
hereunder or existing from time to time at law or in equity or by statute or
otherwise. The election of any one or more remedies shall not constitute a
waiver of the right to pursue other available remedies.
11.9 BULK SALES. Purchaser waives compliance by Seller with the
provisions of the so-called bulk sales law of any state. Seller shall
indemnify, defend and hold Purchaser harmless against any and all Losses
suffered by Purchaser as a result of non-compliance by Seller with any such bulk
sales laws, this indemnity being in addition to the indemnity provided elsewhere
herein.
11.10 PASSAGE OF TITLE AND RISK OF LOSS. Legal title, equitable title and
risk of loss with respect to the Purchased Assets shall not pass to Purchaser
until the Purchased Assets are Transferred at the Closing, which Transfer, once
it has occurred, shall be deemed effective for tax, accounting and other
computational purposes as of 11:59 p.m., Eastern time, on the Closing Date.
11.11 TRANSFERS. Seller and Purchaser shall cooperate and take such action
as may be reasonably requested by the other in order to effect an orderly
Transfer of the Purchased Assets.
11.12 FURTHER ASSURANCES. From time to time, as and when requested by
either party hereto, the other party hereto shall execute and deliver, or cause
to be executed and delivered, all such documents and instruments as may be
reasonably necessary to consummate the transactions contemplated by this
Agreement and to fully effectuate the purposes and intent hereof.
11.13 TITLES. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.14 PUBLICITY. Except as required by Law, neither party hereto shall
issue any press release or make any announcement or other public statement
regarding this Agreement or the transactions contemplated hereby, without the
prior approval of the other party.
11.15 CONFIDENTIAL INFORMATION. Each party hereto acknowledges that, in
connection with the negotiation of this Agreement, the preparation for the
consummation of the transactions contemplated hereby and the performance of
obligations hereunder, it will have access to confidential information relating
to the other party. Except as otherwise expressly provided herein or as required
by Law, each party shall treat such information as confidential, shall preserve
the confidentiality thereof and shall not duplicate or disclose such
information, except to advisors, consultants and affiliates who also agree to
treat such information as confidential. Seller, at a time and in a manner which
it reasonably determines and after prior notice to and consultation with
Purchaser, may notify employees, unions and bargaining agents of the
transactions contemplated
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hereby. In the event of the termination of this Agreement for any reason
whatsoever, each party hereto shall return to the other party all documents,
workpapers and other material (including all copies thereof) obtained in
connection with the transactions contemplated hereby and shall use all
reasonable efforts, including instructing its employees and others who have
had access to such information, to keep confidential and not to use any such
information, unless such information is now, or is hereafter disclosed,
through no act or omission of such party, in any manner making it available
to the general public.
11.16 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.17 TAX FILINGS. Each of the parties acknowledges its understanding of
the requirements under Section 1060 of the Internal Revenue Code for the filing
of Form 8594 for their respective tax years in which the Closing occurs. Each
of Seller and Purchaser agrees to allocate the Purchase Price among the Purchase
Assets in a manner mutually agreeable to the parties within 60 days following
Closing.
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INWITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers
thereunto duly authorized, in multiple originals, all as of the day and year
first above written.
FIELDCREST XXXXXX, INC.
By:____________________________________
Name:__________________________________
ATTEST: Title:_________________________________
____________________________________
Secretary
PILLOWTEX CORPORATION
By:____________________________________
Name:__________________________________
ATTEST: Title:_________________________________
____________________________________
Secretary
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