Exhibit 10.1
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ASSET PURCHASE AGREEMENT
by and among
WS TEXTILE CO., INC.,
NEW TEXTILE ONE, INC.,
NEW TEXTILE TWO, INC.,
TEXTILE CO., INC.,
WESTPOINT XXXXXXX INC.,
WESTPOINT XXXXXXX INC. I,
WESTPOINT XXXXXXX STORES INC.,
AND
X.X. XXXXXXX ENTERPRISES, INC.
Dated as of June 23, 2005
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TABLE OF CONTENTS
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Page
Article I. DEFINITIONS............................................................................................2
1.1. Certain Definitions...............................................................................2
1.2. Terms Defined Elsewhere in this Agreement........................................................12
1.3. Other Definitional and Interpretive Matters......................................................13
Article II. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES...............................................14
2.1. Purchase and Sale of Assets......................................................................14
2.2. Excluded Assets..................................................................................17
2.3. Assumption of Liabilities........................................................................18
2.4. Excluded Liabilities.............................................................................20
2.5. Further Conveyances and Assumptions..............................................................21
Article III. CONSIDERATION.......................................................................................22
3.1. Consideration....................................................................................22
3.2. Purchase Price Deposit...........................................................................22
3.3. Payment of Purchase Price........................................................................23
Article IV. CLOSING AND TERMINATION..............................................................................24
4.1. Closing Date.....................................................................................24
4.2. Deliveries by Sellers............................................................................24
4.3. Deliveries by Purchaser..........................................................................25
4.4. Termination of Agreement.........................................................................26
4.5. Procedure Upon Termination.......................................................................27
4.6. Effect of Termination............................................................................27
Article V. REPRESENTATIONS AND WARRANTIES OF SELLERS.............................................................28
5.1. Organization and Good Standing...................................................................28
5.2. Authorization of Agreement.......................................................................28
5.3. Conflicts; Consents of Third Parties.............................................................28
5.4. Reports; Financial Statements....................................................................29
5.5. Title to Purchased Assets........................................................................30
5.6. Taxes............................................................................................30
5.7. Real and Personal Properties.....................................................................31
5.8. Intellectual Property............................................................................33
5.9. Contracts........................................................................................34
5.10. Employee Benefits................................................................................34
5.11. Employment Matters...............................................................................35
5.12. Litigation.......................................................................................35
5.13. Compliance with Laws; Permits....................................................................36
5.14. Environmental Matters............................................................................36
5.15. Financial Advisors...............................................................................36
5.16. Representations/Warranties; Schedules............................................................36
5.17. Sufficiency of Assets............................................................................37
5.18. Equipment........................................................................................37
5.19. No Casualty......................................................................................37
5.20. Insurance........................................................................................37
5.21. Customers........................................................................................37
5.22. Suppliers........................................................................................37
5.23. Affiliate Transactions...........................................................................37
5.24. Product Warranty.................................................................................38
5.25. Inventories......................................................................................38
5.26. Notes and Accounts Receivable....................................................................38
5.27. Bank Accounts....................................................................................38
5.28. Signatories......................................................................................38
5.29. Foreign and Non-Debtor Affiliates................................................................38
5.30. Labor Matters....................................................................................38
5.31. Employee Matters.................................................................................39
5.32. Certain Payments.................................................................................40
Article VI. REPRESENTATIONS AND WARRANTIES OF PARENT, HOLDCO ONE, HOLDCO TWO AND PURCHASER.......................40
6.1. Organization and Good Standing...................................................................40
6.2. Authorization of Agreement.......................................................................40
6.3. Authorized Capital...............................................................................40
6.4. Conflicts; Consents of Third Parties.............................................................41
6.5. Litigation.......................................................................................42
6.6. Financial Advisors...............................................................................42
6.7. Financial Capability.............................................................................42
6.8. Condition of the Business........................................................................42
Article VII. post execution MATTERS..............................................................................42
7.1. Conduct After Execution of Agreement.............................................................42
7.2. Expense Reimbursement............................................................................43
7.3. Bankruptcy Court Filings.........................................................................43
Article VIII. COVENANTS..........................................................................................44
8.1. Access to Information............................................................................44
8.2. Conduct of the Business Pending the Closing......................................................47
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8.3. Consents, Lien Releases and Notices..............................................................50
8.4. Regulatory Approvals.............................................................................50
8.5. Further Assurances...............................................................................51
8.6. Confidentiality Following the Closing............................................................52
8.7. Equity Commitment and Rights Offering............................................................52
8.8. Preservation of Records..........................................................................52
8.9. Financial Statements.............................................................................53
8.10. Schedules........................................................................................54
8.11. No Inconsistent Action...........................................................................54
8.12. Accepted or Rejected Contracts...................................................................54
8.13. Specific Enforcement of Covenants................................................................55
8.14. Form of Transaction..............................................................................55
8.15. Permits..........................................................................................55
8.16. Indemnity Agreement..............................................................................56
Article IX. EMPLOYEES AND EMPLOYEE BENEFITS......................................................................56
9.1. Employment.......................................................................................56
Article X. CONDITIONS TO CLOSING.................................................................................58
10.1. Conditions Precedent to Obligations of Parent and Purchaser......................................58
10.2. Conditions Precedent to Obligations of Sellers...................................................60
10.3. Conditions Precedent to Obligations of Parent, Purchaser and Sellers.............................61
10.4. Frustration of Closing Conditions................................................................61
10.5. Force Majeure....................................................................................61
Article XI. TAXES................................................................................................62
11.1. Transfer Taxes...................................................................................62
11.2. Purchase Price Allocation........................................................................62
11.3. Tax Reporting....................................................................................62
11.4. Cooperation and Audits...........................................................................63
Article XII. MISCELLANEOUS.......................................................................................63
12.1. No Survival of Representations and Warranties....................................................63
12.2. Expenses.........................................................................................63
12.3. Injunctive Relief................................................................................64
12.4. Exclusive Remedy.................................................................................64
12.5. Submission to Jurisdiction; Consent to Service of Process........................................64
12.6. Waiver of Right to Trial by Jury.................................................................65
12.7. Entire Agreement; Amendments and Waivers.........................................................65
12.8. Governing Law....................................................................................65
12.9. Notices..........................................................................................65
12.10. Severability.....................................................................................66
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12.11. Binding Effect; Assignment.......................................................................66
12.12. Non-Recourse.....................................................................................67
12.13. Publicity........................................................................................67
12.14. Counterparts.....................................................................................67
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Registration Rights Agreement
Exhibit C Rights Offering
Exhibit D Subscription Agreement and Investor
Questionnaire and Certification
Exhibit E Shares and Rights Distribution Mechanism
Exhibit F Form of Xxxx of Sale
Exhibit G Form of Assignment and Assumption Agreement
Exhibit H Form of Assignment of Trademarks
Exhibit I Form of Assignment of Patents
Exhibit J Form of Assignment of Copyrights
Exhibit K Form of Assignment of Domain Names
Exhibit L Form of Special Warranty Deed
Exhibit M Form of Quit Claim Deed
Exhibit N Form of Assignment and Assumption of Contracts and
Real Property Leases
Exhibit O Form of Certificate or Certificates (Seller)
Exhibit P Form of Certificate or Certificates (Purchaser)
Exhibit Q Equity Commitment Agreement
Exhibit R Rights Offering Sponsor Agreement
Exhibit S X.X. Xxxxxxx & Co., Inc. Indemnity Agreement
SCHEDULES
Schedule I Company's Subsidiaries
Schedule 1.1(a) Excluded Subsidiaries
Schedule 1.1(b) Knowledge of Sellers
Schedule 5.3(a) Conflicts
Schedule 5.3(b) Third Party Consents
Schedule 5.4 Reports; Financial Statements
Schedule 5.5 Title to Purchased Assets
Schedule 5.6(a) Taxes
Schedule 5.7(a) Material Owned Real Property
Schedule 5.7(b) Leased Real Property
Schedule 5.7(d) Owned Real Property-Exceptions
Schedule 5.7(e) Taxes on Real Properties
Schedule 5.8(a) Intellectual Property-Owned
Schedule 5.8(b) Intellectual Property-Licenses
Schedule 5.8(c) Intellectual Property-Liens
Schedule 5.8(d) Intellectual Property-Claims, Infringement, Oppositions
Schedule 5.8(e) Intellectual Property-Maintenance Fees
Schedule 5.8(f) Intellectual Property-Protection of Confidentiality
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Schedule 5.9 Contracts
Schedule 5.10(a) Employee Benefits-General
Schedule 5.10(c) Employee Benefits-Effect of Transaction
Schedule 5.11 Accrued Vacation Pay
Schedule 5.12 Litigation
Schedule 5.13 Permits
Schedule 5.14 Environmental Matters
Schedule 5.15 Financial Advisors
Schedule 5.18 Equipment
Schedule 5.19 Casualty
Schedule 5.20 Insurance
Schedule 5.21 Customers
Schedule 5.22 Suppliers
Schedule 5.23 Affiliate Transactions
Schedule 5.24 Product Warranty
Schedule 5.25 Inventories
Schedule 5.27 Bank Accounts
Schedule 5.29 Foreign and Non-Debtor Affiliates
Schedule 5.30 Collective Bargaining Agreements
Schedule 5.30(c) Labor Matters-Exceptions
Schedule 5.31 Employee Matters
Schedule 5.32 Certain Payments
Schedule 6.4(a) Conflicts (Purchaser)
Schedule 6.4(b) Consents (Purchaser)
Schedule 8.1 Immaterial Owned Real Property
Schedule 8.2(a) Conduct of the Business in Ordinary Course pending
Closing
Schedule 8.2(b) Actions Affecting the Transaction
Schedule 9.1(e) COBRA
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT, dated as of June 23, 2005 (this "Agreement"),
by and among WS Textile Co., Inc., a Delaware corporation ("Parent"), New
Textile One, Inc., a Delaware corporation and wholly-owned direct subsidiary of
Parent ("Holdco One"), New Textile Two, Inc., a Delaware corporation and
wholly-owned direct subsidiary of Parent ("Holdco Two"), Textile Co., Inc., a
Delaware corporation and indirect subsidiary of Parent and direct subsidiary of
Holdco One and Holdco Two ("Purchaser"), WestPoint Xxxxxxx Inc., a Delaware
corporation (the "Company"), and WestPoint Xxxxxxx Inc. I, a Delaware
corporation, WestPoint Xxxxxxx Stores Inc., a Delaware corporation, and X.X.
Xxxxxxx Enterprises, Inc., a Delaware corporation (each individually a
"Subsidiary" and, together with the Company, each a "Seller" and, collectively,
"Sellers").
W I T N E S S E T H:
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WHEREAS, Sellers and X.X. Xxxxxxx & Co., who is not a Seller hereunder
("X.X. Xxxxxxx") are debtors and debtors in possession under title 11 of the
United States Code, 11 U.S.C. ss. 101 et seq. (the "Bankruptcy Code"), and filed
voluntary petitions for relief under chapter 11 of the Bankruptcy Code on June
1, 2003 (the "Petition Date") in the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") (Case No. 03-13532) (the
"Bankruptcy Case");
WHEREAS, certain terms used in this Agreement are defined in Section
1.1;
WHEREAS, Sellers are engaged in the business of manufacturing,
marketing and distributing bed and bath home fashions products (such business
and all other business conducted by Sellers, the "Business");
WHEREAS, subject to the terms and conditions set forth herein, Sellers
are agreeing to sell the Purchased Assets either pursuant to a plan of
reorganization or liquidation under Chapter 11 of the Bankruptcy Code or in
accordance with sections 363 and 365 of the Bankruptcy Code; and
WHEREAS, Purchaser has agreed to acquire the Purchased Assets in
exchange for which Purchaser will pay consideration consisting of a combination
of cash, shares of Parent Common Stock, rights to acquire additional shares of
Parent Common Stock and the assumption of specific liabilities, all as more
specifically provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, and intending to be bound
hereby, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Certain Definitions. For purposes of this Agreement, the following
terms shall have the meanings specified in this Section 1.1 or in other Sections
of this Agreement, as identified in Section 1.2:
"Adequate Protection Order" means that certain Final Order Pursuant to
Sections 361, 363, and 364(d)(1) of the Bankruptcy Code and Rule 4001 of the
Federal Rules of Bankruptcy Procedure Providing the Pre-Petition Secured Lenders
Adequate Protection, dated as of June 18, 2003, and includes the Stipulation and
Order (i) Providing for Deposit into Escrow of Second Lien Adequate Protection
Payments, (ii) Withdrawal of Adequate Protection Motion and (iii) Reservation of
Subscription Rights and Remedies dated as of August 18, 2004 and approved by the
Bankruptcy Court on August 23, 2004.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"Ancillary Documents" means the Escrow Agreement and the documents
delivered pursuant to Section 4.2 hereof.
"AREH" means American Real Estate Holdings Limited Partnership.
"Aretex" means Aretex LLC.
"Bidding Procedures Order" means the order of the Bankruptcy Court,
dated April 22, 2005, approving bidding procedures for the sale of all or
substantially all of the Seller's assets.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Chapter 11 Plan" means a plan of reorganization or liquidation under
Chapter 11 of the Bankruptcy Code which incorporates and implements the terms of
this Agreement and is otherwise acceptable to Sellers, Purchaser and Aretex in
their reasonable discretion.
"Charisma Agreement" means that certain license agreement between
Official Pillowtex LLC and WestPoint Xxxxxxx, Inc., dated as of October 1, 2004
and amended as of December, 2004.
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"Confirmation Order" means an Order confirming a Chapter 11 Plan and
which makes the findings of fact and conclusions of law set forth in the defined
term Sale Order plus such other findings and conclusions as Purchaser and Aretex
may reasonably request, and is otherwise in form and substance acceptable to
Sellers, Purchaser and Aretex in their reasonable discretion. An Order shall
only be a "Confirmation Order", and the defined term "Confirmation Order" shall
only be applicable under this Agreement, if, as contemplated by Section 7.3
hereof, the Bankruptcy Court determines by Order entered at the hearing to
approve the Sale Order that the transactions contemplated by this Agreement
shall be pursued through a Chapter 11 plan of reorganization or liquidation.
"Continuing Employees" means such current Employees of Sellers
designated by Purchaser in a written notice to Sellers prior to the Closing Date
as individuals to whom Purchaser intends to extend an offer of employment, and
that have accepted Purchaser's offer of employment.
"Contract" means any written contract, indenture, note, bond, lease,
license, or other agreement, whether entered into prior to or after the Petition
Date.
"Cure Costs" shall mean the cure amounts, as determined by the
Bankruptcy Court, if any, necessary to cure all defaults, if any, and to pay all
actual or pecuniary losses that have resulted from such defaults, under those
Accepted Contracts, Accepted Intellectual Property Licenses and Accepted Real
Property Leases which Purchaser has directed Sellers to accept pursuant to
Section 8.12(a) hereof.
"Current" means an obligation incurred or accrued after the Petition
Date of the type indicated in the Ordinary Course of Business by one or more
Sellers which is incurred or accrued in the Ordinary Course of Business and
which is not yet due and payable as of the Closing Date.
"December Financial Statements" means the unaudited consolidated
balance sheet as of December 31, 2004 and unaudited consolidated statements of
income and cash flows for the year then ended of the Company and its
subsidiaries previously delivered to the Purchaser.
"Debtors" means the Sellers and X.X. Xxxxxxx.
"DIP Credit Agreement" means that certain debtor in possession
financing agreement, dated as of June 5, 2003, as amended, among Sellers, Bank
of America, N.A. as Administrative Agent, Wachovia Bank, National Association as
Syndication Agent and the other lenders parties thereto.
"Distributable Value" means the value of the Parent Shares and the
Subscription Rights.
"Documents" means all files, documents, instruments, papers, books,
reports, records, tapes, microfilms, photographs, letters, budgets, forecasts,
ledgers, journals, title policies, customer lists, regulatory filings, operating
data and plans, technical documentation (design specifications, functional
3
requirements, operating instructions, logic manuals, flow charts, etc.), user
documentation (installation guides, user manuals, training materials, release
notes, working papers, etc.), marketing documentation (sales brochures, flyers,
pamphlets, web pages, etc.), and other similar materials, in each case whether
or not in electronic form.
"Employee" means any current or former employee, officer, independent
contractor, agent, consultant, leased employee or other contingent worker of any
Seller.
"Employee Plan" means each (i) "employee benefit plan", as defined in
Section 3(3) of ERISA, (ii) each employment, consulting, severance or other
individual compensation agreement between a Seller and any Employee, and (iii)
each plan, program, agreement or other arrangement providing bonus or other
incentive, equity or equity-based compensation, deferred compensation, severance
pay, sick leave, vacation pay, salary continuation, disability, hospitalization,
medical, life insurance, scholarship, or fringe benefits, which is now, or ever
has been, maintained, contributed to, or required to be contributed to, for the
benefit of any Employee.
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance, order, decision or rule of common law currently in effect
relating to the protection of human health and safety or the environment or
natural resources including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. App. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.) the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.)
and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.), and the
regulations promulgated pursuant thereto.
"Environmental Liabilities" means the Liabilities resulting from (i)
the failure to comply with or any violation of any requirement of an
Environmental Law, (ii) the failure to obtain or comply with any required
Environmental Permit, and/or (iii) Liabilities arising out of or relating to
Hazardous Materials at, on, under, or emanating from Sellers' Properties or the
business conducted thereupon.
"Environmental Permit" shall mean any Permit issued pursuant to an
Environmental Law.
"Environmental Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property.
"Equity Commitment Agreement" means the agreement between AREH, Textile
Holding, LLC and Parent in the form of Exhibit Q hereto.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder.
"Escrow Agreement" means an Escrow Agreement executed by Purchaser,
Sellers and Escrow Agent in substantially the same form and substance as Exhibit
A attached hereto.
"Excluded Subsidiary" means any subsidiary of the Company listed on
Schedule 1.1(a).
"Final Order" means an Order, the operation or effect of which has not
been stayed, reversed, modified, or amended and as to which the time to appeal,
petition for certiorari, or seek reargument, review or rehearing has expired and
as to which no appeal, petition for certiorari or motion for reargument, review
or rehearing was timely filed or, if timely filed, the Order has been affirmed
by the highest court to which the Order was appealed or from which the
reargument or rehearing was sought, or certiorari has been denied, and the time
to file any further appeal or petition for certiorari or to seek further
reargument or rehearing has expired.
"First Lien Lender Agreement" means that certain Second Amended and
Restated Credit Agreement dated as of June 9, 1998 among the Company as
Borrower, WestPoint Xxxxxxx (U.K.) Limited and WestPoint Xxxxxxx (Europe)
Limited, as Foreign Borrowers, Bank of America, N.A., as Issuing Lender,
Swingline Lender and Administrative Agent and the banks and other financial
institutions at any time parties thereto, as amended to the date hereof.
"First Lien Lenders" means the financial institutions from time to time
party to the First Lien Lender Agreement, together with their successors and
assigns permitted by the First Lien Lender Agreement.
"Furniture and Equipment" means all furniture, fixtures, furnishings,
equipment, vehicles, leasehold improvements, and other tangible personal
property owned or used by any Seller, including all such artwork, desks, chairs,
tables, Hardware, copiers, telephone lines and numbers, telecopy machines and
other telecommunication equipment, cubicles and miscellaneous office furnishings
and supplies.
"GAAP" means generally accepted accounting principles in the United
States as of the date hereof.
"Governmental Body" means any government, governmental,
quasi-governmental or regulatory body thereof, or political subdivision thereof,
whether foreign, federal, state, or local, or any agency, instrumentality or
authority thereof, or any court or arbitrator (public or private).
"Hardware" means any and all computer and computer-related hardware,
including computers, file servers, facsimile servers, scanners, color printers,
laser printers and networks.
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"Hazardous Material" means any substance, material or waste which is
regulated by any Governmental Body including petroleum and its by-products,
asbestos, and any material or substance which is defined as a "hazardous waste,"
"hazardous substance," "hazardous material," "restricted hazardous waste,"
"industrial waste," "solid waste," "contaminant," "pollutant," "toxic waste" or
"toxic substance" under any provision of Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Immaterial Owned Real Property" means each parcel of real property
owned by the respective Sellers that is not a Material Owned Real Property.
"Indebtedness" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (a) indebtedness of such Person
for money borrowed and (b) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the Ordinary Course of Business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) of any Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vi) all obligations of the type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person).
"Intellectual Property" means all intellectual property rights used
(including all Intellectual Property Licenses) or owned by any Seller,
including: (i) all patents, patent applications, patent rights, patent
disclosures and improvements thereto and all continuations, divisionals,
continuations-in-part, or reissues of patent applications and patents issuing
thereon, (ii) all trademarks, service marks, trade names, service names, brand
names, all trade dress rights, logos, Internet domain names and corporate names
and assumed business names and general intangibles of a like nature, together
with the goodwill associated with any of the foregoing, and all applications
therefor and all registrations and renewals thereof, (iii) all copyrights
(including moral rights and rights in all Internet web sites), and mask work
rights and all registrations thereof and applications therefor, (iv) all
Software and Technology, (v) all trade secrets, and (vi) all other intellectual
property rights in whatever form or medium.
"Intellectual Property Licenses" means (i) any grant to a third Person
of any right to use any of the Intellectual Property owned by any Seller, and
(ii) any grant to any Seller of a right to use a third Person's intellectual
property rights which is used by Seller.
"IRS" means the Internal Revenue Service.
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"KERP Order" means collectively the October 23, 2003 and August 12,
2004 orders referenced in the definition of KERP Program below.
"KERP Program" means the key employee retention and severance program
(including the severance program and the existing separation plan for salaried
employees) as set forth in the Motion of Debtors for Order Pursuant to 11 U.S.C.
xx.xx. 105(a) and 363(b)(1) Authorizing the Establishment of a Key Employee
Retention Plan and the Motion of Debtors pursuant to 11 U.S.C. xx.xx. 105(a) and
363(b)(1) Approving the Extension of the Debtors' Key Employee Retention Plan,
as modified, both of which were approved by separate order of the Bankruptcy
Court on October 23, 2003 and August 12, 2004, respectively.
"Knowledge of Sellers" means the actual knowledge of those officers of
Sellers identified on Schedule 1.1(b), and, in addition, as to the provisions
set forth opposite their names, certain employees of Sellers as set forth on
Schedule 1.1(b).
"Law" means any federal, state, local or foreign law, statute, code,
ordinance, rule or regulation.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims, investigations or any
other proceedings by or before a Governmental Body.
"Liability" means any duty, debt, liability, claim or obligation
(whether direct or indirect, known or unknown, absolute or contingent, accrued
or unaccrued, liquidated or unliquidated, or due or to become due), and
including all costs and expenses relating thereto.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, proxy, voting trust or agreement, transfer restriction
under any shareholder or similar agreement or encumbrance.
"Maine CBA" means that certain Collective Bargaining Agreement between
the Company and the Union of Needletrades, Industrial and Textile Employees
(AFL-CIO-CLC) dated April 11, 2004.
"Material Intellectual Property Licenses" means collectively all of the
Intellectual Property Licenses listed on Schedule 5.8(b).
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or award of a Governmental Body.
"Ordinary Course of Business" means the ordinary and usual course of
normal day to day operations of the Business through the date hereof consistent
with past practice.
"Owned Real Properties" means collectively, the Immaterial Owned Real
Properties and the Material Owned Real Properties.
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"Parent Common Stock" means the common stock of Parent, par value $.01
per share.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates issued by a Governmental Body.
"Permitted Exceptions" means (i) all covenants, conditions,
restrictions, easements, rights of way and encumbrances of record as disclosed
in policies of title insurance which have been delivered to Purchaser by Sellers
prior to the date hereof; provided same are not being violated (or if violated,
will not result in a forfeiture of the property or result in monetary liability
in excess of $100,000 as to any individual property), do not unreasonably
interfere with the continued operation of the Business as presently operated at
the respective Owned Real Properties, and any such easements do not underlie the
improvements at the respective Owned Real Properties unless servicing such
improvements; (ii) statutory liens for (a) Current Taxes, (b) Taxes incurred
after the Petition Date in the Ordinary Course of Business which are delinquent
but with respect to which the amount or validity of which is being contested in
good faith by appropriate proceedings provided an appropriate reserve is
established therefor and provided further that withholding payment during a
valid contest is otherwise permitted by applicable Law and (c) Taxes incurred
before the Petition Date and specifically assumed pursuant to Section 2.3(a)(x);
(iii) mechanics', carriers', workers', repairers' and similar Liens arising or
incurred in the Ordinary Course of Business after the Petition Date that
individually or in the aggregate do not exceed $100,000; provided, however, that
such Liens shall not include any Liens that are junior to the Lien of the First
Lien Lenders and the Second Lien Lenders or any other Liens that Purchaser takes
free and clear of under the Sale Order and, if applicable, the Confirmation
Order, or other applicable Law; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body provided that such
regulations are not being violated and do not unreasonably interfere with the
present operation of the Business at the respective Owned Real Properties; and
(v) security interest of a lessor of equipment or other personal property under
a capital lease.
"Person" means any individual, corporation, limited liability company,
partnership, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Products" means any and all products developed, manufactured, marketed
or sold by any Seller at any time.
"Purchaser Material Adverse Effect" means a material adverse effect on
the ability of Parent or Purchaser to consummate the transactions contemplated
by this Agreement or perform its respective obligations under this Agreement.
"Purchaser Selection Hearing" means the hearing before the Bankruptcy
Court held pursuant to the Bidding Procedures Order to determine the highest or
best bid for substantially all of the assets of Sellers.
8
"Registration Rights Agreement" means the Registration Rights Agreement
substantially in the form and substance attached hereto as Exhibit B.
"Remedial Action" means all actions to (i) clean up, remove, treat or
in any other way address any Hazardous Material; (ii) prevent the Environmental
Release of any Hazardous Material so it does not endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations or post-remedial monitoring and
care; or (iv) to correct a condition of noncompliance with Environmental Laws.
"Representative" means, as to a specified Person, any officer,
director, agent, employee, member, manager, attorney, accountant, consultant,
investment banker, broker or other representative of the Person specified.
"Rights Offering" means the delivery and exercise of Subscription
Rights to acquire Parent Common Stock as described in Exhibit C hereto.
"Rights Offering Sponsor Agreement" means the agreement between AREH
and Parent in the form of Exhibit R hereto.
"Sale Motion" means the motion or motions of Sellers seeking approval
and entry of the Sale Order.
"Sale Order" means an order or orders of the Bankruptcy Court in form
and substance reasonably acceptable to Purchaser and Sellers approving this
Agreement and all of the terms and conditions hereof, and approving and
authorizing Sellers to consummate the transactions contemplated hereby pursuant
to Section 363 and 365 of the Bankruptcy Code. Without limiting the generality
of the foregoing, such order shall find and provide, among other things, unless
the Purchaser agrees otherwise in its sole and absolute discretion, that (i) the
Purchased Assets sold to Purchaser pursuant to this Agreement shall be
transferred to Purchaser free and clear of all Liens (other than Liens created
by Purchaser and Permitted Exceptions relating to real property), with any other
Liens attaching to the Purchase Price (which Liens are and shall be deemed to be
fully satisfied and discharged as a result of the Closing and distributions
contemplated by the Agreement); (ii) the Parent and Purchaser have acted in
"good faith" within the meaning of section 363(m) of the Bankruptcy Code; (iii)
this Agreement was negotiated, proposed and entered into by the parties without
collusion, in good faith and from arm's-length bargaining positions; (iv) the
Bankruptcy Court shall retain jurisdiction to resolve any controversy or claim
arising out of or relating to this Agreement, or the breach hereof as provided
in Section 12.5 hereof; (v) due and adequate notice of the sale was provided;
(vi) the transfer of the Purchased Assets pursuant to this Agreement shall not
be subject to "bulk-transfer" Laws; (viii) Purchaser shall have no successor
liability as a result of its purchase of the Purchased Assets pursuant to this
Agreement; (ix) this Agreement and the transactions contemplated hereby may be
statutorily or similarly specifically enforced against and are binding upon, and
not subject to rejection or avoidance by, Sellers or any trustee of Sellers
under Chapter 7 or Chapter 11 of the Bankruptcy Code; (x) a release by Sellers
of all causes of action, including Avoidance Actions, against Parent, Purchaser,
Holdco One, Holdco Two, Aretex, AREH, and Representatives; (xi) Purchaser shall
9
not be required or deemed to purchase any Excluded Assets or assume any Excluded
Liabilities, including any Liabilities under or relating to any pension plans or
termination of any pension plan; (xii) Purchaser shall have no liability for
tort Liabilities, including all Liabilities relating to personal injury and
other tort claims of any nature and related matters, of Debtors and their
Affiliates, or relating to the Business or any assets or properties of Debtors
and their Affiliates; and (xiii) that the Parent Common Stock and Subscription
Rights purchased, retained by and/or distributed to AREH or its affiliates, the
First Lien Lenders and the Second Lien Lenders shall be received and retained by
each of them free and clear of all Liens, claims and encumbrances of any nature.
The Purchaser may, in its sole and absolute discretion and without any
obligation to do so, agree to requested modifications to provisions which are
primarily for Purchaser's benefit in the proposed form of sale order prior to
its entry and if Purchaser agrees to such modifications, Sellers agree to submit
the form of such modified sale order to the Bankruptcy Court as being reasonably
acceptable to Sellers unless such modification materially and adversely effects
Sellers. If any such modification is in fact made pursuant to the preceding
sentence, the definition of Sale Order set forth herein shall be deemed modified
to incorporate any such modification.
"Second Lien Lender Agreement" means that certain $165 million
Second-Lien Credit Facility, dated as of June 29, 2001, among the Company, as
Borrower, the banks and other financial institutions from time to time parties
thereto, and Deutsche Bank Trust Company Americas (f/k/a Bankers Trust Company),
as Administrative Agent, as amended to the date hereof.
"Second Lien Lenders" means the financial institutions from time to
time party to the Second Lien Lender Agreement, together with their successors
and assigns permitted by the Second Lien Lender Agreement.
"Selection Order" means the order of the Bankruptcy Court to be entered
following the Purchaser Selection Hearing approving this Agreement and the
transactions contemplated by this Agreement and otherwise in form and substance
reasonably acceptable to Purchaser and Seller.
"Seller Material Adverse Effect" means (i) a material adverse effect on
the business, assets, properties, results of operations or financial condition
of Sellers (taken as a whole), or (ii) a material adverse effect on the ability
of Sellers to consummate the transactions contemplated by this Agreement or
perform their obligations under this Agreement, other than an effect resulting
from an Excluded Matter. "Excluded Matter" means any one or more of the
following: (i) the effect of any change in the United States or foreign
economies or securities or financial markets in general; (ii) the effect of any
change that generally affects any industry in which Sellers operate; (iii) the
effect of any change arising in connection with hostilities, acts of war,
sabotage or terrorism or military actions or any escalation or material
worsening of any such hostilities, acts of war, sabotage or terrorism or
military actions existing or underway as of the date hereof; or (iv) the effect
of any changes in applicable Laws or accounting rules.
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"Sellers' Properties" means collectively all of the Owned Real
Properties and Leased Real Properties.
"Software" means any and all (i) computer programs, including any and
all software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, screens, user interfaces, report formats,
firmware, development tools, templates, menus, buttons and icons, and (iv) all
documentation including user manuals and other training documentation related to
any of the foregoing.
"Subscription Rights" means the rights to acquire, for an aggregate
consideration of $125,000,000, 14,250,000 shares of Parent Common Stock.
"Tax Authority" means any Governmental Body or employee thereof,
charged with the administration of any law or regulation relating to Taxes.
"Tax Code" means the Internal Revenue Code of 1986, as amended.
"Taxes" means (i) all federal, state, local or foreign taxes, charges
or other assessments, including, all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, and (ii) all
interest, penalties, fines, additions to tax or additional amounts imposed by
any taxing authority in connection with any item described in clause (i).
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Technology" means, collectively, the following intangibles owned or
used by Sellers: all designs, formulae, algorithms, procedures, methods,
techniques, ideas, know-how, research and development, technical data, programs,
subroutines, tools, materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to practice), creations,
improvements, works of authorship and other similar materials, and all
recordings, graphs, drawings, reports, analyses, and other writings and other
tangible embodiments of the foregoing in any form whether or not specifically
listed herein, and all related similar intangibles that are used in,
incorporated in, embodied in, displayed by, relates to, or is used or useful in
the design, development, reproduction, maintenance or modification of, any of
the Products.
"Trade Payables" means accounts payable to vendors or suppliers for
goods or services delivered in connection with the Business; in no event will
"Trade Payables" include any accounts payable to any employees or any royalties
payable to any Person.
"WARN Act" means the Worker Adjustment and Retraining Notification Act.
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"Winddown Costs" means professional fees of the Debtors or a Trustee
and other costs incurred by the estate after the Closing Date in connection with
the winddown of the Debtors.
1.2. Terms Defined Elsewhere in this Agreement. For purposes of
this Agreement, the following terms have meanings set forth in the sections
indicated:
Term Section
---- -------
Accepted Contracts 8.12(a)
Accepted Intellectual Property Licenses 8.12(a)
Accepted Real Property Leases 8.12(b)
Agreement Preamble
Antitrust Division 8.4(a)
Antitrust Laws 8.4(b)
Asset Acquisition Statement 11.2
Assumed Liabilities 2.3
Avoidance Actions 2.2(c)
Bankruptcy Case Recitals
Bankruptcy Code Recitals
Bankruptcy Court Recitals
Xxxx of Sale 4.2(a)
Business Recitals
Cash Purchase Price 3.1
Closing 4.1
Closing Date 4.1
COBRA 9.1(e)
Collective Bargaining Agreements 5.30(a)
Company Preamble
Company SEC Documents 5.4
Deposit Amount 3.2
ERISA Affiliate 5.10(b)
Escrow Agent 3.2
Exchange Act 5.4(a)
Excluded Assets 2.2
Excluded Liabilities 2.4
Excluded Matter 1.1 (in Seller Material
Adverse Effect
definition)
Expense Reimbursement 7.2
FIRPTA 4.2(d)
FTC 8.4(a)
Indemnified Persons 11.1
X.X. Xxxxxxx Preamble
Leased Real Properties 5.7(b)
Leased Real Property 5.7(b)
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Letter of Credit Purchase Price 3.1
Listed Employee Plan 5.10(a)
Loss 10.5
Lost Profits 10.5
Material Contracts 5.9
Material Intellectual Property License 5.8
Material Owned Real Properties 5.7(a)
Material Property Loss 10.5
Parent Preamble
Parent Shares 3.1
Personal Property Leases 5.7(g)
Petition Date Recitals
Purchased Assets 2.1(b)
Purchase Price 3.1
Purchaser Preamble
Real Property Lease 5.7(b)
Real Property Leases 5.7(b)
Referee 11.3
Rejected Contracts 8.12(a)
Subscription Rights 3.1
SEC 5.4
Securities Act 5.4(a)
Seller Preamble
Sellers Preamble
Subsidiary Preamble
Transfer Taxes 11.1
1.3. Other Definitional and Interpretive Matters.
(a) Unless otherwise expressly provided, for purposes of this
Agreement, the following rules of interpretation shall apply:
Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
Exhibits/Schedules. All Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement.
Any capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein shall be defined as set forth in this Agreement.
13
Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
Confirmation Order. Whenever the phrase "and, if applicable, the
Confirmation Order", or words to that effect are used herein, such phrase shall
be applicable only to a Confirmation Order that has become a Final Order prior
to September 15, 2005.
(b) The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE II.
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1. Purchase and Sale of Assets.
(a) On the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall purchase, acquire and accept from
Sellers, and Sellers shall sell, transfer, convey and deliver to Purchaser, all
of Sellers' right, title and interest in, to and under the Purchased Assets.
(b) For all purposes of and under this Agreement, the term "Purchased
Assets" shall mean all of the properties and assets of Sellers existing as of
the Closing other than the Excluded Assets, whether or not related to the
Business. Such Purchased Assets shall include the following:
14
(i) all cash and cash equivalents of Sellers and all marketable
securities owned by Sellers other than the securities specified in Section
2.2(a);
(ii) all bank accounts, lockbox accounts, securities accounts and other
accounts of Sellers and all phone numbers of Sellers plus all deposits,
securities and other amounts or assets held in such accounts;
(iii) all inventory of Sellers;
(iv) all deposits (including customer deposits and security deposits
for rent, electricity, telephone or otherwise) and prepaid charges and expenses
of Sellers other than any deposits or prepaid charges and expenses paid in
connection with and specifically allocable to any Excluded Assets;
(v) all accounts receivable including the rights to all checks and
other payments in transit, delivered or made in respect thereof and not yet
deposited or credited and the right to endorse any such checks or payments;
(vi) all of the Owned Real Properties designated by Purchaser as
Purchased Assets pursuant to Section 2.1(c) and all rights of Sellers under all
of the Real Property Leases designated by Purchaser as Purchased Assets pursuant
to Section 2.1(c), together with all right, title and interest of Sellers, if
any, in and to all improvements, fixtures and other appurtenances thereto and
rights in respect thereof;
(vii) the Furniture and Equipment and all vehicles owned by Sellers;
(viii) confidential and proprietary business information owned or used
by Sellers;
(ix) all rights of Sellers under or relating to the Charisma Agreement
and all rights of Sellers under or relating to the Intellectual Property
Licenses (other than any containing the "X.X. Xxxxxxx" name) designated by
Purchaser as Purchased Assets pursuant to Section 2.1(c), in each case to the
extent assignable under the terms of the respective license, pursuant to
applicable Law or order of the Bankruptcy Court, or as a result of any consents
obtained from other parties to such license pursuant to Section 8.3, and all
other Intellectual Property (other than Intellectual Property Licenses) (other
than any containing the "X.X. Xxxxxxx" name);
(x) all rights of Sellers under or relating to the Contracts (other
than Contracts referred to in Section 2.1(a)(vi), 2.1(a)(ix), and 2.1(a)(xiv),
respectively, as to which such Sections shall apply) designated by Purchaser as
Purchased Assets pursuant to Section 2.1(c) to the extent assignable under the
terms of the respective Contract, pursuant to applicable Law or order of the
Bankruptcy Court, or as a result of any consents obtained from other parties to
such Contract pursuant to Section 8.3;
15
(xi) all Documents that are used in, held for use in or intended to be
used in, or that relate to, the Business or the assets or the properties of the
Sellers, including Documents relating to Products, services, marketing,
advertising, promotional materials, Intellectual Property, personnel files for
Continuing Employees and all files, customer files and documents (including
credit information), supplier lists, records, literature and correspondence,
whether or not physically located on any of the premises assumed by the
Purchaser (other than the Documents specified in Section 2.2(b));
(xii) all Permits owned or used by Sellers to the extent assignable
under the terms of the respective Permits, pursuant to applicable Law or order
of the Bankruptcy Court, or as a result of any consents obtained from the issuer
of such Permits pursuant to Section 8.3;
(xiii) all supplies owned or used by Sellers;
(xiv) all rights of Sellers under non-disclosure or confidentiality,
non-compete, or non-solicitation agreements with Employees (other than any such
agreements included in any employment agreement with any such Employee) or with
third parties to the extent relating to the Business or to the marketing process
for the sale of assets of or reorganization of the Sellers or the Purchased
Assets (or any portion thereof) to the extent assignable under the terms of the
respective agreements or pursuant to applicable Law or order of the Bankruptcy
Court or as a result of any consents obtained from such Employee or third party
pursuant to Section 8.3;
(xv) all rights and claims of Sellers under all insurance policies to
the extent assignable under the terms of the respective insurance policies or
pursuant to applicable Law or order of the Bankruptcy Court and the Sellers'
rights to the proceeds thereof except those proceeds specifically relating to
the Excluded Assets;
(xvi) any rights, claims, offsets or causes of action of Sellers (other
than Avoidance Actions) against third parties arising out of events occurring on
or prior to the Closing Date;
(xvii) all rights of Sellers under or pursuant to all warranties,
representations and guarantees including those made by suppliers, manufacturers
and contractors to the extent relating to products sold, or services provided,
to Sellers or to the extent affecting any Purchased Assets, other than any
warranties, representations and guarantees to the extent pertaining to any
Excluded Assets;
(xviii) all goodwill and other intangible assets associated with the
Business, including the goodwill associated with the Intellectual Property;
(xix) all rights of X.X. Xxxxxxx Enterprises, Inc. in and to the
trademarks "Utica", "Cottoncale" and "Pipeline", which rights will be purchased
by a newly created subsidiary of Purchaser; and
(xx) all rights of Sellers under or relating to the Maine CBA.
16
(c) At any time and from time to time prior to the date that is 7 days
prior to the Closing Date, Purchaser shall have the right to designate in its
sole and absolute discretion any of the properties or assets of Sellers (other
than assets described in Section 2.2(a), (b), (c), (d), (l) and (m)) as
Purchased Assets and any properties or assets of Sellers, other than the
Charisma Agreement, as Excluded Assets, in each case by giving written notice
signed by an executive officer of Purchaser specifically referring to this
Section 2.1(c) to Sellers setting forth by category or specific reference the
properties or assets of Sellers so designated. There shall be no increase or
reduction in the Purchase Price if Purchaser elects to treat any properties or
assets of Sellers as Purchased Assets or Excluded Assets.
2.2. Excluded Assets. Nothing herein contained shall be deemed to
sell, transfer, assign or convey the Excluded Assets to Purchaser, and Sellers
shall retain all right, title and interest to, in and under the Excluded Assets.
For all purposes of and under this Agreement, the term "Excluded Assets" shall
mean the following assets:
(a) all shares of capital stock or other equity interest issued by any
Seller or any Excluded Subsidiary and all securities convertible into,
exchangeable or exercisable for, shares of capital stock or other equity
interests issued by any Seller or any Excluded Subsidiary;
(b) any minute books, stock ledgers, corporate seals and stock
certificates of Sellers, Tax Returns and financial statements of Sellers, and
corporate or other entity filings made by Sellers; provided, however, that
Purchaser shall have the right to make copies of any portions of such retained
books and records that relate to the Business or any of the Purchased Assets and
Sellers agree to preserve such records in accordance with Section 8.8 hereof;
(c) all avoidance actions or similar causes of action of Sellers
arising under sections 544 through 553 of the Bankruptcy Code, including any
proceeds thereof (collectively, the "Avoidance Actions");
(d) all amounts held in escrow pursuant to the Adequate Protection
Order and all amounts held in escrow pursuant to the KERP Order (unless the
amounts held in escrow pursuant to the KERP Order are to be returned to the
Company pursuant to the terms of the KERP Order, in which case such amounts
shall be paid to Purchaser in lieu of the Company);
(e) all properties and assets of Sellers designated by Purchaser as
Excluded Assets pursuant to Section 2.1(c) hereof;
(f) (i) all Contracts other than Contracts designated as Purchased
Assets pursuant to Section 2.1(c) and (ii) all rights of Sellers under or
relating to all oral agreements to which any Seller is a party;
(g) all Employee Plans, and all trust funds and contracts relating
thereto, including pension plans;
(h) all Permits, non-disclosure or confidentiality, non-compete or
non-solicitation agreements other than those included as Purchased Assets
pursuant to Section 2.1(b)(xii) and 2.1(b)(xiv);
17
(i) all rights and claims of Sellers under all insurance policies other
than the rights and claims under the insurance policies included as Purchased
Assets to Section 2.1(b)(xv);
(j) all of the Owned Real Properties and Real Property Leases, in each
case other than those specifically designated as Purchased Assets pursuant to
Section 2.1(c) ;
(k) all rights of Sellers under Intellectual Property Licenses and
other Contracts other than those designated by Purchaser as Purchased Assets
pursuant to Section 2.1(c);
(l) all intercompany receivables of Sellers;
(m) any Tax refunds, credits and rebates to the extent applied to Taxes
of Sellers that are Excluded Liabilities;
(n) all assets and properties of X.X. Xxxxxxx Enterprises, Inc., other
than the assets referred to in Section 21(b)(xix);
(o) rights of Sellers under or pursuant to warranties, representations
and guaranties to the extent pertaining to Excluded Assets; and
(p) all proceeds resulting from the liquidation of WestPoint Xxxxxxx
(UK) Ltd.
2.3. Assumption of Liabilities.
(a) On the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall assume, effective as of the Closing,
and shall timely perform and discharge in accordance with their respective
terms, only the specific liabilities of Sellers set forth below (collectively,
the "Assumed Liabilities"):
(i) Current accruals and related Cure Costs for those Accepted
Contracts (including Accepted Real Property Leases and Accepted Intellectual
Property Licenses) which Purchaser directed Sellers to accept pursuant to
Section 8.12 for which Purchaser has not changed its direction prior to the
Closing, or as to any Accepted Contract which Purchaser directed Sellers to
accept pursuant to Section 8.12 where the hearing to determine the amount of
Cure Costs is not held until after the Closing Date, current accruals and Cure
Costs for such Accepted Contracts will be paid by Purchaser to the applicable
counterparty promptly after an Order determining the amount of such Cure Costs
is entered by the Bankruptcy Court (unless Purchaser has changed its direction
to assume prior to entry of such Order);
(ii) Current wages, salary and commissions for Employees payable by
Sellers (provided, however, Assumed Liabilities shall be deemed to not include
any other obligation to, or benefits for, Employees including any severance,
continuation, bonuses or benefits payable in connection with change of control
provisions or otherwise, except to the extent specifically assumed pursuant to
Sections 2.3(a)(iii), 2.3(a)(iv), and 2.3(a)(v));
18
(iii) Up to $438,000 in Current bonuses payable pursuant to incentive
plans for sales employees and retail store employees existing as of the date
hereof;
(iv) accrued vacation costs for the Continuing Employees to the extent
accrued on Seller's books and records as of the Closing;
(v) costs for reimbursement claims of Continuing Employees submitted
after the Closing and related to medical and dental costs incurred by the
Continuing Employees prior to Closing;
(vi) Current premiums under insurance policies that are Purchased
Assets;
(vii) Current payroll Taxes payable by the Sellers in connection with
the operation of its Business on or prior to the Closing Date;
(viii) Current Trade Payables existing on the Closing Date (including
accrued but unbilled Trade Payables);
(ix) quarterly U.S. Trustee fees accrued and unpaid through the Closing
Date;
(x) real and personal property taxes and any miscellaneous secured
claims related to Purchased Assets allowed in the Bankruptcy Case with priority
over the liens of the First Lien Lenders and the Second Lien Lenders;
(xi) Transfer Taxes applicable to the transfer of the Purchased Assets
pursuant to this Agreement to the extent not exempt under Section 1146(c) of the
Bankruptcy Code or otherwise;
(xii) Current sales and use Taxes and similar Taxes including gross
receipts Taxes plus up to an additional $645,000 of sales and use Taxes and
similar Taxes including gross receipts Taxes (including, solely for this
purpose, the Michigan Single Business Tax) whether incurred before or after the
Petition Date;
(xiii) any other accrued and unpaid expenses or obligations incurred by
the Sellers prior to the Closing Date that Purchaser expressly agrees to assume
in a writing signed by an executive officer of Purchaser that specifically
refers to this Section 2.3(a)(xiii) delivered to the Company prior to the
Closing Date;
(xiv) up to $25,000,000 of Liabilities arising after the Petition Date
in the Ordinary Course of Business that would have been recorded as "Customer
Accommodations" in the line item "Accrued Liabilities" in a consolidated balance
sheet of the Business prepared in accordance with GAAP and using the same
accounting principles, policies and practices used in the preparation of the
December Financial Statements; and
19
(xv) up to an aggregate of $3,000,000 in Winddown Costs, to be paid by
Purchaser upon presentation by Debtors of invoices reflecting the payee, the
amounts due and other reasonable documentation.
(b) Nothing in this Section 2.3 shall prohibit Purchaser from asserting
or pursuing any claims or offsets it may have against any Person related to any
Assumed Liability or contesting any Assumed Liability, whether pursuant to any
agreement or contract, under Law or in equity.
(c) To the extent that any Liability under any clause of Section 2.3(a)
exceeds the aggregate amount of such Liability specifically assumed by Purchaser
pursuant to such clause, Purchaser shall, in its sole and absolute discretion,
select which of such Liabilities it shall assume pursuant to such clause. Any
such Liability under any such clause shall be deemed selected to be assumed by
Purchaser under such clause if Purchaser makes payment or otherwise satisfied
such Liability. In no event will Purchaser be required to or deemed to assume
any Liability under any clause of Section 2.3(a) to the extent it exceeds any
dollar limitation in such clause or is otherwise outside any other limitation in
such clause.
2.4. Excluded Liabilities. Purchaser shall not assume, and shall
be deemed not to have assumed, any Liabilities of the Debtors and their
Affiliates or any other Liabilities related to or arising out of the Business or
the Purchased Assets other than the Assumed Liabilities (all such Liabilities
other than the Assumed Liabilities, collectively, the "Excluded Liabilities").
Debtors and their Affiliates, as applicable, shall be solely and exclusively
liable for the Excluded Liabilities. Such Excluded Liabilities shall include the
following:
(a) all Liabilities existing prior to the Petition Date, other than
priority claims assumed by Purchaser pursuant to Section 2.3(a)(x) or any claim
assumed by Purchaser pursuant to Section 2.3(a)(xii);
(b) all Liabilities of Debtors and their Affiliates under the DIP
Credit Agreement;
(c) except to the extent set forth in Sections 2.3(a)(ii), 2.3(a)(iii),
2.3(a)(iv), and 2.3(a)(v), all Liabilities of Debtors and their Affiliates to
Employees including under or related to any Employee Plan including, but not
limited to, any plan or arrangement providing pension benefits, bonus or
incentive compensation, or any plan or arrangement providing retirement benefits
or post retirement medical, life or other welfare benefits;
(d) all Liabilities relating to amounts required to be paid by Debtors
and their Affiliates hereunder;
(e) all Environmental Liabilities of the Debtors and their Affiliates,
including all Liabilities of Debtors and their Affiliates relating to or arising
from any Environmental Release (and including all Liabilities relating to real
properties owned or leased or formerly owned or leased by Debtors and their
20
Affiliates including, but not limited, the formerly owned Piedmont Chemical
Plant located at 000 Xxx Xxxxxx Xxxx, Xxxxxxxx, SC) except Environmental
Liabilities relating to the Purchased Assets that Purchaser would have liability
for under any applicable Environmental Laws solely as a result of Purchaser
owning or operating the Purchased Assets after Closing;
(f) all Liabilities under or related to the KERP Program;
(g) all Liabilities of Debtors and their Affiliates relating to Taxes
accrued through or imposed on the Closing Date, except the Liabilities for Taxes
to the extent set forth in Sections 2.3(a)(vii), 2.3(a)(x), 2.3(a)(xi) and
2.3(a)(xii) or Taxes otherwise expressly assumed herein;
(h) all obligations under or in connection with the WARN Act or any
state counterpart;
(i) all intercompany Liabilities of Debtors and their Affiliates;
(j) all tort Liabilities, including all Liabilities relating to
personal injury and other tort claims of any nature and related matters, of
Debtors and their Affiliates, or relating to the Business or any assets or
properties of Sellers;
(k) all Liabilities dischargeable in the Bankruptcy Case or of a type
that would be dischargeable if a reorganization plan were confirmed under
Chapter 11 of the Bankruptcy Code; (other than any such Liabilities specifically
included in Assumed Liabilities pursuant to Section 2.3);
(l) all Liabilities arising out of or relating to Excluded Assets;
(m) all Liabilities of the Debtors and their Affiliates for legal fees
and expenses, and fees and expenses of brokers, finders and financial advisors
but without prejudice to the Purchaser's obligation to pay $5 million cash at
closing pursuant to Section 3.1(a)(f) hereof; and
(n) all Liabilities that the Sale Order, and, if applicable, the
Confirmation Order, provides will not be assumed by Purchaser.
2.5. Further Conveyances and Assumptions. From time to time at or
following the Closing, Sellers and Purchaser shall, and shall cause their
respective Affiliates to, execute, acknowledge and deliver all such further
conveyances, notices, assumptions, releases and acquittances and such other
instruments, and shall take such further actions, as may be reasonably necessary
or appropriate to assure fully to Purchaser and its respective successors or
assigns, all of the properties, rights, titles, interests, estates, remedies,
powers and privileges intended to be conveyed to Purchaser under this Agreement
and to assure fully to each Seller and its respective successors and assigns,
the assumption of the liabilities and obligations expressly intended to be
assumed by Purchaser under Section 2.3(a) of this Agreement, and to otherwise
make effective the transactions contemplated hereby.
21
ARTICLE III.
CONSIDERATION
3.1. Consideration.
(a) The aggregate consideration for the Purchased Assets (the "Purchase
Price") shall be (a) cash in an amount equal to the lesser of (i) $120,000,000
and (ii) an amount necessary to pay indebtedness outstanding under the DIP
Credit Agreement, including all outstanding principal, accrued and unpaid
interest, fees, expenses or other amounts owing thereunder at the time of
Closing (the "Cash Purchase Price"), (b) 10,500,000 shares of Parent Common
Stock (the "Parent Shares"), (c) the Subscription Rights, (d) the assumption of
the Assumed Liabilities, (e) tender of a back-to-back standby letter of credit
or cash, not to exceed, in the aggregate $35,000,000, delivered or payable to
the administrative agent under the DIP Credit Agreement (the "Letter of Credit
Purchase Price"), backing up any trade payables and workers' compensation
obligations, issued pursuant to Article 1.3 of the DIP Credit Agreement,
together with documentation reflecting Purchaser's right to receive back any
portion of the Letter of Credit Purchase Price in excess of any amounts not
drawn under any such letters of credit; and (f) $5,000,000 in cash at Closing
for payment of professional fees within the carveout set forth in Paragraph 8(a)
of that certain Order, captioned Final Order (1) Authorizing
Debtors-in-Possession to Obtain Financing, Grant Security Interests and Accord
Priority Status Pursuant to 11 U.S.C. Sections 361, 364(c) and 364(d); (2)
Authorizing Debtors to Use Cash Collateral Pursuant to 11 U.S.C. sections 361
and 363; and (3) Modifying Automatic Stay, approved by the United States
Bankruptcy Court, dated June 18, 2003.
(b) The recipients of the Parent Shares and Subscription Rights that
are part of the Purchase Price will be given the opportunity to become parties
to the Registration Rights Agreement and thereby be entitled to registration
rights pursuant to the Registration Rights Agreement.
3.2. Purchase Price Deposit. Pursuant to the terms of the Escrow
Agreement, Purchaser shall deposit with Citibank, N.A., in its capacity as
escrow agent (the "Escrow Agent"), the sum of $12,500,000 ("Deposit Amount"), by
wire transfer of immediately available funds, to be released by the Escrow Agent
and delivered to either Purchaser or the Company in accordance with the
provisions of the Escrow Agreement. The Deposit Amount (together with all
interest thereon) shall be distributed as follows:
(a) if the Closing shall occur, the Deposit Amount shall be applied
toward the Cash Purchase Price payable by Purchaser to Sellers under Section 3.3
hereof, with all interest thereon and any amount in excess of the Cash Purchase
Price delivered to Purchaser;
(b) if this Agreement is terminated by Sellers pursuant to Section
4.4(f), the Deposit Amount, together with all interest thereon, shall be
delivered to the Sellers; or
22
(c) if this Agreement is terminated for any reason other than by
Sellers pursuant to Section 4.4(f), the Deposit Amount, together with all
interest thereon, shall be delivered to Purchaser.
3.3. Payment of Purchase Price. (a) On the Closing Date, Purchaser
shall, and Parent shall cause Purchaser to, (i) pay the Cash Purchase Price
(less the Deposit Amount) to the administrative agent under the DIP Credit
Agreement on behalf of Sellers, by wire transfer of immediately available funds
into an account or accounts designated in writing by the administrative agent
under the DIP Credit Agreement, (ii) deliver to the administrative agent under
the DIP Credit Agreement on behalf of Sellers the Letter of Credit Purchase
Price to satisfy obligations under the DIP Credit Agreement, and (iii) deliver
the Parent Shares and the Subscription Rights on behalf of Sellers in accordance
with the provisions of Section 3.3(c) hereof. On the Closing Date the Company
and Purchaser shall cause the Escrow Agent to deliver the Deposit Amount and all
accrued interest thereon as provided in Section 3.2(a) hereof.
(b) The Parent Shares and Subscription Rights shall only be required to
be delivered in reliance upon an exemption afforded by the Securities Act,
Regulation D promulgated under the Securities Act, any applicable state and
foreign securities laws and any rules and regulations promulgated pursuant
thereto. As a condition of any issuance of Parent Shares and Subscription Rights
to any particular Person, the Parent and Purchaser will require the execution of
a definitive subscription agreement and an investor questionnaire and
certification in the form of Exhibit D hereto and which will be completed by
each such Person in a manner reasonably acceptable to Parent to evidence
compliance with applicable exemptions.
(c) The Parent Shares and the Subscription Rights shall be delivered as
set forth in this Section 3.3(c). Parent shall issue at the Closing or as soon
thereafter as practicable (i) 4,198,845 Parent Shares to Aretex, in its capacity
as a First Lien Lender, and (ii) 6,301,155 Parent Shares to the other First Lien
Lenders on a pro rata basis pursuant to the instructions of the First Lien
Agent. If the Distributable Value of the Parent Shares as determined by the
Bankruptcy Court is less than the amount due to the First Lien Lenders under the
First Lien Lender Agreement (such difference referred to as the "Shortfall"),
then Parent shall allocate to the First Lien Lenders all or such portion of the
Subscription Rights as necessary (based on the Bankruptcy Court's determination
of Distributable Value of the Subscription Rights) up to an amount equal to the
Shortfall, and the balance of the Subscription Rights, if any, shall be
allocated to the Second Lien Lenders. Parent shall issue at the Closing or as
soon thereafter as practicable (i) 39.989% of the Subscription Rights allocated
as set forth above to the First Lien Lenders to Aretex, in its capacity as a
First Lien Lender, (ii) the balance of the Subscription Rights allocated to the
First Lien Lenders as set forth above to the other First Lien Lenders on a pro
rata basis pursuant to the instructions of the First Lien Agent, (iii) 51.212%
of the Subscription Rights allocated as set forth above to the Second Lien
Lenders to Aretex, in its capacity as a Second Lien Lender, and (iv) the balance
of the Subscription Rights allocated as set forth above to the Second Lien
Lenders to the other Second Lien Lenders on a pro rata basis pursuant to the
instructions of the Second Lien Agent. To the extent Aretex acquires any
additional First Lien Debt or Second Lien Debt, it shall receive its pro rata
share of Parent Shores and Subscription Rights in addition to the amounts
specified above as a First Lien Lender or Second Lien Lender as the case may be.
An example of the method distribution is set forth at Exhibit E.
23
ARTICLE IV.
CLOSING AND TERMINATION
4.1. Closing Date. Subject to the satisfaction of the conditions
set forth in Sections 10.1 10.2 and 10.3 hereof (or the waiver thereof by the
party entitled to waive that condition), the closing of the purchase and sale of
the Purchased Assets and the assumption of the Assumed Liabilities provided for
in Article II hereof (the "Closing") shall take place at the offices of Weil,
Gotshal & Xxxxxx LLP located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or at such
other place as the parties may designate in writing) at 10:00 a.m. (New York
City time) on the date that is two (2) Business Days following the satisfaction
or waiver of the conditions set forth in Article X (other than conditions that
by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of such conditions), unless another time or date, or
both, are agreed to in writing by the parties hereto; provided, that if such
date occurs prior to forty-five (45) days after the later of the date of the
entry of the Selection Order or the date of this Agreement the Closing shall
take place on such forty-fifth day after such later date (or, if such day is not
a Business Day, then on the next Business Day) unless Purchaser selects an
earlier date by giving Sellers not less than two (2) Business Days notice of
such date. The date on which the Closing shall be held is referred to in this
Agreement as the "Closing Date."
4.2. Deliveries by Sellers. At the Closing, Sellers shall deliver
to Purchaser with respect to the Purchased Assets:
(a) a duly executed xxxx of sale in the form of Exhibit F hereto (the
"Xxxx of Sale");
(b) a duly executed general assignment and assumption agreement in the
form of Exhibit G hereto;
(c) duly executed assignments of the trademark registrations and
applications, patent registrations and applications, copyrights and domain
names, in the form suitable for recording in the U.S. Patent and Trademark
Office, substantially in the forms annexed as Exhibits H, I, J and K hereto,
respectively, and general assignments of all other Intellectual Property;
(d) duly executed special warranty deeds, as that term is commonly
understood in the respective jurisdictions (subject only to Permitted
Exceptions), substantially in the form of Exhibit L for each of the Material
Owned Real Properties, quit claim deeds, as that term is commonly understood in
the respective jurisdictions, substantially in the form of Exhibit M for each of
the Immaterial Owned Real Properties, a certificate in compliance with the
Foreign Investment in Real Property Tax Act ("FIRPTA") certifying that the
24
respective Seller is not a person or entity subject to withholding under FIRPTA,
a "No Mechanic's Lien" affidavit, GAP Undertaking, and all other customary title
clearance documents required by the title insurance company issuing the policies
with respect to each of the Owned Real Properties and each of the Leased Real
Properties for which title insurance policies are being obtained by Purchaser,
including, without limitation, a survey affidavit, executed by the appropriate
Seller, together with any necessary state, county or municipal transfer
declarations as required by Law.
(e) a duly executed assignment and assumption of Contracts and Real
Property Leases in the form of Exhibit N hereto;
(f) the officer's certificate required to be delivered pursuant to
Section 10.1(c);
(g) all assignments and transfer instruments necessary to transfer
control, ownership and signature authority of all bank accounts, lockbox
accounts, securities accounts, and other accounts under the name of any Seller
as of the Closing Date along with a schedule of all such bank accounts, lockbox
accounts, securities accounts, and other accounts with account numbers, bank
name and address and other information reasonably requested by Purchaser with
respect thereto;
(h) UCC-3 termination Statements, control agreement terminations and
other release documents releasing all Liens of the agents and lenders under the
DIP Credit Agreement;
(i) all assignments and transfers of certificates of title and
registrations for all vehicles owned by Sellers as of the Closing Date along
with a schedule of all such vehicles and information reasonably requested by
Purchaser with respect thereto;
(j) a written notice to the Escrow Agent, executed by the Company, of
the Closing pursuant to Section 3(e) of the Escrow Agreement;
(k) the indemnity agreement executed by X.X. Xxxxxxx & Co., Inc. in the
form of Exhibit S hereto, and the executed notice to its insurance company that
it is entering into the indemnity agreement.
(l) all other instruments of conveyance and transfer, in form and
substance reasonably acceptable to Purchaser, as may be necessary to convey the
Purchased Assets to Purchaser or any of its Affiliates designated by Purchaser
pursuant to Section 12.11.
4.3. Deliveries by Purchaser. At the Closing, Purchaser shall, and
Parent shall cause Purchaser to, deliver pursuant to Section 3.3, as applicable:
(a) the Cash Purchase Price (less the Deposit Amount), in immediately
available funds, as set forth in Section 3.3 hereof;
(b) the Parent Shares and the Subscription Rights in accordance with
Section 3.3;
25
(c) a duly executed general assignment and assumption agreement in the
form attached hereto as Exhibit G;
(d) the officer's certificate required to be delivered pursuant to
Section 10.2(e);
(e) a duly executed assignment and assumption of Contracts and Real
Property Leases in the form of Exhibit N attached hereto;
(f) the Registration Rights Agreement executed by Parent; and
(g) a written notice to the Escrow Agent, executed by Purchaser, of the
Closing pursuant to Section 3(e) of the Escrow Agreement.
4.4. Termination of Agreement. This Agreement may be terminated
prior to the Closing as follows:
(a) (i) by Purchaser, if the Closing shall not have occurred by the
close of business on September 30, 2005, time being of the essence for the
Closing, provided, that if the Closing shall not have occurred on or before
September 30, 2005 due to a material breach of any representations, warrants,
covenants or agreements contained in this Agreement by Purchaser, then Purchaser
may not terminate this Agreement pursuant to this Section 4.4(a), or (ii) by
Sellers, if the Closing shall not have occurred by the close of business on
October 31, 2005; provided, however, that if the Closing shall not have occurred
on or before October 31, 2005 due to a material breach of any representations,
warranties, covenants or agreements contained in this Agreement by any Seller,
or due to the failure of the condition to Closing set forth in Section 10.1(l)
relating to Section 8.9(d) to be satisfied, then Sellers may not terminate this
Agreement pursuant to this Section 4.4(a);
(b) by mutual written consent of Sellers and Purchaser;
(c) by Purchaser, if any of the conditions to the obligations of
Purchaser set forth in Sections 10.1 (other than Sections 10.1(a) and (b)) and
10.3 shall have become incapable of fulfillment other than as a result of a
breach by Purchaser of any covenant or agreement contained in this Agreement,
and such condition is not waived by Purchaser;
(d) by Sellers, if any condition to the obligations of Sellers set
forth in Sections 10.2 (other than Sections 10.2(a) and (b))and 10.3) shall have
become incapable of fulfillment other than as a result of a breach by any Seller
of any covenant or agreement contained in this Agreement, and such condition is
not waived by any Seller;
(e) by Purchaser, if there shall be a breach by any Seller of any
representation or warranty, or any covenant or agreement contained in this
Agreement which results in a failure of a condition set forth in Sections
10.1(a) or (b) and such breach has not been cured by the earlier of (i) twenty
(20) Business Days after the giving of written notice by Purchaser to Sellers of
such breach and (ii) September 30, 2005, time being of the essence for the
Closing;
26
(f) by Sellers, if there shall be a breach by Purchaser of any
representation or warranty, or any covenant or agreement contained in this
Agreement which results in a failure of a condition set forth in Sections
10.2(a) or (b) and such breach has not been cured by twenty (20) Business Days
after the giving of written notice by Sellers to Purchaser of such breach;
provided, that Seller shall not have the right to terminate this Agreement if
Purchaser has a right to terminate this Agreement at such time or would have the
right to terminate with the passage of time;
(g) by Sellers or Purchaser, if there shall be in effect a Final Order
of a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
(h) by Purchaser or Sellers, if the Bankruptcy Court shall enter an
order approving any sale or other disposition of the assets and properties of
Sellers to a Person other than Purchaser or its Affiliates and Subsidiaries, or
Sellers select, or announce a selection of, a Person other than Purchaser as the
Successful Bidder (as defined in the Bidding Procedures Order) in the auction
conducted pursuant to the Bidding Procedures Order;
(i) by Purchaser, pursuant to the provisions of Section 10.5;
(j) by Purchaser, if the Selection Order is not entered by July 13,
2005, time being of the essence for entry of such Order;
(k) by Purchaser, if Sellers file a motion seeking to revoke or modify
the Bidding Procedures Order without the prior written consent of Purchaser;
(l) by Purchaser, pursuant to Section 7.3(b)(i) or 7.3(b)(ii); and
(m) by Sellers, pursuant to Section 7.3(b)(i).
4.5. Procedure Upon Termination. In the event of an election to
terminate by Purchaser or Sellers, or both, pursuant to Section 4.4 hereof,
written notice thereof shall forthwith be given to the other party or parties,
and this Agreement shall terminate, without further action by Purchaser or
Sellers. If this Agreement is terminated as provided herein each party shall
return to the other party all documents, work papers and other material of such
other party furnished to it by such other party and in its possession and
relating to the transactions contemplated hereby, whether so obtained before or
after the date hereof.
4.6. Effect of Termination. In the event that this Agreement is
terminated as provided herein, then each of the parties shall be relieved of its
duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to Parent, Purchaser
or Sellers; provided, however, that the obligations and rights of the parties
set forth in Section 3.2 and under the Escrow Agreement, Section 7.2 and Article
XII hereof shall survive any such termination and shall be enforceable hereunder
and Sellers shall remain liable to Parent and Purchaser for any breach occurring
prior to termination. The sole and exclusive remedy of Sellers upon any such
termination shall be as described in Section 12.4.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby jointly and severally represents and warrants to
Parent and Purchaser that:
5.1. Organization and Good Standing. Each Seller is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and, subject to the limitations imposed on such
Seller as a result of having filed a petition for relief under the Bankruptcy
Code, has the requisite power and authority to own, lease and operate its
properties and to carry on its business as now conducted and is qualified to do
business in every jurisdiction where the conduct of its business requires it to
be so qualified except where failure to so qualify would not reasonably be
expected to have a Seller Material Adverse Effect. Each Subsidiary is wholly
owned directly or indirectly by the Company. No Seller, other than X.X. Xxxxxxx
Enterprises, Inc., is a subsidiary of X.X. Xxxxxxx & Co., Inc.
5.2. Authorization of Agreement. Subject to entry of the Selection
Order, the Sale Order and, if applicable, the Confirmation Order and such other
authorization as is required by the Bankruptcy Court, each Seller has the
requisite power and authority to execute and deliver this Agreement and the
Ancillary Documents and to perform its respective obligations hereunder and
thereunder. The execution and delivery of this Agreement has and upon execution
and delivery of all Ancillary Documents, such Ancillary Documents will be and
the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of each Seller and no
other corporate action is necessary to authorize such agreements and such
transactions. This Agreement has been, and upon execution and delivery thereof
all Ancillary Documents will be, duly and validly executed and delivered by each
Seller party thereto and (assuming the due authorization, execution and delivery
by the other parties hereto, the entry of the Selection Order, the Sale Order
and, if applicable, the Confirmation Order) constitutes and will constitute the
legal, valid and binding obligations of each Seller enforceable against such
Seller in accordance with its respective terms, subject, as to enforceability,
to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
5.3. Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 5.3(a), the execution and delivery
by each Seller of this Agreement and the Ancillary Documents, the consummation
of the transactions contemplated hereby, or compliance by such Seller with any
of the provisions hereof or thereof do not and will not (A) conflict with, or
result in any violation of or default (with or without notice or lapse of time,
or both) under, or (B) give rise to, (x) the creation of a Lien upon any
Seller's properties or assets or (y) a right of termination, cancellation or
acceleration of any obligation or (z) a loss of a benefit under any provision
of:
28
(i) the certificate of incorporation and by-laws or comparable
organizational documents of such Seller;
(ii) subject to entry of the Sale Order and, if applicable, the
Confirmation Order, any Contract or Permit to which such Seller is a party or by
which any of the properties or assets of such Seller are bound other than such
conflicts, violations, defaults, terminations or cancellations as would not
reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect;
(iii) subject to entry of the Sale Order and, if applicable, the
Confirmation Order, any Order of any Governmental Body applicable to such Seller
or any of the properties or assets of such Seller; or
(iv) subject to entry of the Sale Order and, if applicable, the
Confirmation Order, any applicable Law.
(b) Except as set forth on Schedule 5.3(b), and except to the extent
not required if the Sale Order and, if applicable, the Confirmation Order, is
entered, no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Sellers in connection with the execution and delivery
of this Agreement and the Ancillary Documents, the assignment of the Material
Contracts, the assignment of the Real Property Leases, the assignment of
Permits, the assignment of Material Intellectual Property Licenses, the
compliance by Sellers with any of the provisions hereof or thereof, the
consummation of the transactions contemplated hereby or thereby or the taking by
Sellers of any other action contemplated hereby or thereby, except for:
(i) compliance with the applicable requirements of the HSR Act;
(ii) the entry of the Selection Order and the Sale Order or, if
applicable, the Confirmation Order; and
(iii) such other consents, waivers, approvals, Orders, permits,
authorizations, declarations, filings and notifications, the failure of which to
obtain or make would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect. The parties acknowledge and agree
that Schedule 5.3(b) is not an admission that any consent to assignment or any
contractual clause forbidding assignment that is listed on Schedule 5.3(b) is
enforceable under or is overridden by Section 365 of the Bankruptcy Code or any
other applicable Law.
5.4. Reports; Financial Statements.
(a) Except as set forth on Schedule 5.4, since January 1, 2004, the
Company has filed all reports, schedules, forms, statements and other documents
(including exhibits and other information incorporated therein) with the
29
Securities and Exchange Commission (the "SEC") required to be filed by the
Company (such documents, the "Company SEC Documents"). Except as set forth on
Schedule 5.4, as of their respective dates, the Company SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933, as
amended, (the "Securities Act") or the Securities Exchange Act of 1934, as
amended, (the Exchange Act") as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Company SEC Documents, and,
as of their respective dates, none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth on Schedule 5.4, the financial statements of the Company included in
the Company SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto as of their respective dates, were prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and present fairly in
all material respects the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(b) The December Financial Statements were prepared in accordance with
GAAP applied on a consistent basis during the period involved (except as
indicated in the notes thereto) and present fairly in all material respects the
financial position of the Company and its consolidated Subsidiaries as of
December 31, 2004 and the consolidated results of their operations and cash
flows for the period then ended (subject to normal year-end audit adjustments).
5.5. Title to Purchased Assets. Except as set forth in Schedule
5.5, and other than the real property subject to the Real Property Leases,
Intellectual Property licensed to Sellers and the personal property subject to
the Personal Property Leases, Sellers own the Purchased Assets, and, subject to
the entry of the Sale Order and, if applicable, the Confirmation Order, and
consummation of the Closing, Purchaser will be vested with good title to the
Purchased Assets, free and clear of all Liens other than Permitted Exceptions
and Intellectual Property Licenses.
5.6. Taxes.
(a) Except as set forth on Schedule 5.6(a), and except for matters that
would not reasonably be expected to have, individually or in the aggregate, a
Seller Material Adverse Effect, (i) Sellers have timely filed all Tax Returns
required to be filed with the appropriate Tax Authorities in all jurisdictions
in which such Tax Returns are required to be filed (taking into account any
extension of time to file granted or to be obtained on behalf of Sellers); (ii)
except as to Taxes of Sellers the payment of which is prohibited or stayed by
the Bankruptcy Code, all Taxes shown to be due and payable on such Tax Returns
have been paid; (iii) the amounts set up as a provision for Taxes on the
30
unaudited consolidated statement of Sellers' financial position as of December
31, 2004 are sufficient for the payment of all accrued and unpaid Taxes of
Sellers, as of such date whether or not disputed; (iv) the statute of
limitations with respect to all Tax Returns for Tax periods of the Sellers
ending on or prior to December 31, 2000 (in the case of Tax Returns that have a
four year statute of limitations, December 31, 1999) have expired; (v) no Tax
Authority has asserted any additions to Tax to the Sellers; (vi) none of Sellers
(a) during the last seven years has been a member of a consolidated, combined or
unitary group (an "Affiliated Group") for federal, state or local income tax
purposes other than an Affiliated Group of which the Company is the common
parent and (b) has any transferee or successor liability in respect of Taxes
(whether by contract or otherwise); and (vii) based on Sellers' best estimate,
the amount of Transfer Taxes applicable to the transfer of the Purchased Assets
pursuant to this Agreement to the extent not exempt under Section 1146(c) of the
Bankruptcy Code or otherwise shall not exceed $500,000.
(b) None of Sellers is a foreign person within the meaning of Section
1445 of the Tax Code.
5.7. Real and Personal Properties.
(a) Schedule 5.7(a) sets forth the street addresses and legal
descriptions (which will be delivered no later than fifteen (15) days after the
date of this Agreement pursuant to Section 8.10) of each parcel of real property
owned by the respective Sellers that is necessary for or utilized in the
operation of the Business, as well as each parcel of real property owned by the
respective Sellers that contains a closed facility that has not otherwise been
sold as of the date of this Agreement (each a "Material Owned Real Property"
and, collectively, the "Material Owned Real Properties"). Each of the Sellers
listed on Schedule 5.7(a) holds fee simple title to their respective Material
Owned Real Properties, subject only to Permitted Exceptions. Except as set forth
on Schedule 5.7(a), and except for recorded leases with railroads or utility
providers shown on surveys previously provided to Purchaser, the Material Owned
Real Properties are not subject to any leases or tenancies or other rights of
occupancy. None of the Sellers has received notice that any of the improvements
comprising the Material Owned Real Properties or the business conducted by the
respective Sellers thereon is in violation of any building line, use or
occupancy restriction, limitation, easement, condition or covenant of record.
There are no physical defects in the buildings or other facilities or machinery
or equipment located at any of the Material Owned Real Properties which
individually or in the aggregate would reasonably be expected to have a Seller
Material Adverse Effect.
(b) Schedule 5.7(b) sets forth the street addresses of each parcel of
real property that is leased by the respective Sellers (each a "Leased Real
Property" and, collectively, the "Leased Real Properties"). The Leased Real
Properties are leased to the respective Sellers listed on Schedule 5.7(b)
pursuant to written leases (each a "Real Property Lease" and collectively, the
"Real Property Leases"). With respect to each Leased Real Property, (i) the
Seller that is the tenant under such Real Property Lease has not received any
notice of default under the Real Property Lease in the twelve (12) month period
prior to the date hereof. None of the Sellers has received notice that any of
the improvements comprising the Leased Real Properties or the business conducted
by the respective Sellers thereon is in material violation of any building line,
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use or occupancy restriction, limitation, easement, condition or covenant of
record. There are no physical defects in the buildings or other facilities or
machinery or equipment located at any of the Leased Real Properties which
individually or in the aggregate would reasonably be expected to have a Seller
Material Adverse Effect.
(c) Each facility located on the Material Owned Real Properties and
Leased Real Properties is served by such utilities as are adequate to operate
such facility at its current rate of production. Such utilities either enter the
Material Owned Real Properties or Leased Real Properties through adjoining
public streets or, if they pass through adjoining private land, do so in
accordance with valid, permanent public or private easements which, following
the Closing, will inure to the benefit of Purchaser, its successors and assigns
(except that no representation is made herein with respect to any utility lines
owned by Sellers or any of Seller's predecessors in interest that serve the
Material Owned Real Properties located in Valley, Alabama and Opelika, Alabama
for which easements, rights-of-way or other rights to retain, operate, use or
maintain such utility lines were reserved or intended to have been reserved when
the land(s) upon which such lines are located were sold or otherwise conveyed to
third parties and, no representation is made herein as to utility lines owned by
public or private third party utility providers which may cross private lands
owned by third parties). All of said utilities are installed and operating
(except with respect to any closed facilities where the utility service has been
cancelled) and all installation and connection charges have been paid for in
full.
(d) Except as set forth on Schedule 5.7(d), the continued maintenance
and operation of the Material Owned Real Properties as currently maintained and
operated is not dependent on facilities located at any other property, and the
continued maintenance and operation of any other property is not dependent on
facilities located on any of the Material Owned Real Properties; no building or
other improvement not part of an Owned Real Property relies on an Material Owned
Real Property or any part thereof or any interest therein to fulfill any
governmental requirement; and no building or other improvement on an Material
Owned Real Property relies on any property not included within the Material
Owned Real Property to fulfill any governmental requirement.
(e) Except as disclosed in Schedule 5.7(e), there are no challenges or
appeals pending regarding the amount of the Taxes on, or the assessed valuation
of, any of the Material Owned Real Properties or, to the Knowledge of Sellers,
the Leased Real Properties, and no special arrangements or agreements exist with
any governmental authority with respect thereto. Except as set forth on Schedule
5.7(e), there are no Tax abatements with respect to Taxes on any of the Owned
Real Properties or any of the Leased Real Properties. None of the Sellers has
received notice of any new Tax assessment for any of the Material Owned Real
Properties or, to the extent any Seller is liable for payment therefor, the
Leased Real Properties, not otherwise included in any previous real estate Tax
xxxx, requiring payments in excess of $100,000.
(f) There is no pending or, to the Knowledge of Sellers, threatened
condemnation proceeding, administrative action or judicial proceeding of any
type relating to any of the Material Owned Real Properties or the Leased Real
Properties, or other proceedings adversely affecting the current use, occupancy
or value of the Material Owned Real Properties or the Leased Real Properties.
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(g) None of the Material Owned Real Properties is located within any
flood plain or subject to any similar type of restriction for which any permits
or licenses necessary for the use thereof have not been obtained.
(h) With respect to leases of personal property involving annual
payments in excess of $100,000 relating to personal property used by a Seller in
the Business and to which a Seller is a party or by which its properties or
assets are bound (collectively, the "Personal Property Leases"), to the
Knowledge of Sellers, no Seller has received any written notice of any default
or event that with notice or lapse of time or both would constitute a default by
Sellers under any of the Personal Property Leases, in each case with such
exceptions as would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect and except as a result of the
Bankruptcy Cases.
5.8. Intellectual Property. Schedule 5.8(a) sets forth a complete
list of all material Intellectual Property (other than Intellectual Property
Licenses) owned by Sellers which are either (a) subject to registrations and
applications for registration or (b) to the Knowledge of Sellers, material
unregistered trademarks, service marks, trade names and service names (whether
or not any material unregistered trademark, service xxxx, trade name and service
name was the subject of a registration or application which has expired or been
abandoned). The Sellers own all right, title and interest in the items set forth
on Schedule 5.8(a) except as set forth otherwise on such Schedule and any
Intellectual Property Licenses relating thereto. Schedule 5.8(b) sets forth a
complete list of all (i) written Intellectual Property Licenses and (ii) to the
Knowledge of Sellers, oral Intellectual Property Licenses, except for in the
case of both of the foregoing (i) and (ii) such Intellectual Property Licenses
that do not involve annual payments by or to a Seller of more than $100,000.
Notwithstanding the foregoing, Schedule 5.8(b) shall also include (i) all
material written Intellectual Property Licenses and (ii) to the Knowledge of
Sellers, material oral Intellectual Property Licenses, that in the case of both
of the foregoing (i) and (ii) grant any right to use any trademark, service
xxxx, trade name or service name, regardless of whether such Intellectual
Property Licenses involve annual payments by or to a Seller of more than
$100,000. Except as set forth on Schedule 5.8(c), to the Knowledge of the
Sellers, the Sellers own the right, title and interest in, or have licenses or
all other rights necessary to use all material Intellectual Property free and
clear of all liens other than Permitted Exceptions and Intellectual Property
Licenses. Except as set forth on Schedule 5.8(d), (i) there are no claims,
investigations or Legal Proceedings that were asserted after the Petition Date
that are pending as of the date hereof or, to the Knowledge of Sellers,
threatened as of the date hereof against any Seller before any Governmental Body
with regard to the ownership by Sellers of any of the Intellectual Property,
(ii) Sellers have not received any written notice alleging that they have
misappropriated any material Intellectual Property, or that any of the material
Intellectual Property or the exercise of any material Intellectual Property
right has infringed upon any intellectual property rights of third parties and
to the Knowledge of Sellers, Sellers have a reasonable basis to believe no such
claim may be successfully asserted by any third party, (iii) to the Knowledge of
Sellers, no third party has infringed upon or misappropriated any of the
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Intellectual Property, (iv) there are no claims, investigations or Legal
Proceedings that were asserted after the Petition Date that are pending as of
the date hereof or, to the Knowledge of Sellers, threatened as of the date
hereof against any Seller before any Governmental Body which challenge the
legality, validity, enforceability, use or ownership of any Intellectual
Property. Except as set forth on Schedule 5.8(e), to the Knowledge of Sellers,
the Sellers have taken commercially reasonable efforts to pay all maintenance
and renewal fees and take other maintenance actions that are required to be paid
or taken as of the date hereof in connection with the registrations and
applications set forth on Schedule 5.8(a). No Seller is in violation or default
under any Intellectual Property License set forth on Schedule 5.8(b), except for
violations or defaults disclosed on Schedule 5.8(b) or violations or defaults
that are not material. To the Knowledge of Sellers, no other party is in
violation or default that could be the basis of termination under any material
Intellectual Property License granting any right to use any trademark, service
xxxx, trade name or service name. None of the Sellers is subject to any
agreement (other than Intellectual Property Licenses), or Order which restricts
or impairs the use of any Intellectual Property except for Orders entered into
in connection with the Bankruptcy Case as would not reasonably be expected to
have, individually or in the aggregate, a Seller Material Adverse Effect. Except
as set forth on Schedule 5.8(f), Sellers have taken such efforts that are
commercially reasonable in accordance with applicable industry standards to
protect the confidentiality of any material trade secrets and other material
confidential and proprietary business information included in the Purchased
Assets. Sellers have used commercially reasonable efforts to cause each of their
employees, consultants and independent contractors to enter into a written
invention assignment agreement with the Sellers, where, in Seller's reasonable
business judgment, such employees, consultants and independent contractors
require such agreements. Notwithstanding anything to the contrary contained in
this Section 5.8, none of the representations in Section 5.8 shall apply to off
the shelf or shrink wrap Software that is generally available for purchase or
license from a third Person and the term Intellectual Property License as used
in this Section 5.8 shall be deemed to exclude such off the shelf or shrink wrap
Software.
5.9. Contracts. Schedule 5.9 is a complete listing of all
Contracts (other than purchase and sale orders entered into by Sellers in the
Ordinary Course of Business and Real Property Leases) to which any Seller is a
party or by which it or any of its properties or other assets is bound except
for such Contracts that (i) do not restrict Seller from freely engaging in
business and (ii) do not involve annual payments by or to any Seller of more
than $250,000 (collectively, the "Material Contracts"). No Seller is in
violation of or in default under any Material Contract to which it is a party or
by which it or any of its properties or other assets is bound, except for
violations or defaults disclosed on Schedule 5.9 or that would not reasonably be
expected to have, individually or in the aggregate, a Seller Material Adverse
Effect. Sellers have made available to Purchaser true, correct and complete
copies of all Material Contracts.
5.10. Employee Benefits.
(a) Generally. Schedule 5.10(a) contains a true and complete list of
each Employee Plan with respect to which Sellers have any obligation or
liability, contingent or otherwise, for Employees (each such Employee Plan a
"Listed Employee Plan"). The Sellers will make available to the Purchaser true
and complete copies of all documents, if any, embodying each Listed Employee
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Plan, including all amendments thereto; the three most recent annual reports
filed (Form 5500 Series with applicable schedules) with respect to each Listed
Employee Plan required under ERISA; the most recent summary plan description, if
any, with respect to each Listed Employee Plan required under ERISA; the most
recent favorable determination letter from the IRS, if applicable, with respect
to each Employee Plan; and all material communications; if any, provided after
January 1, 2003 to the Employees generally relating to each Employee Plan.
(b) Multiemployer Plans. None of Sellers nor any other trade or
business that together with any Seller would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA (an "ERISA Affiliate") has
contributed to any Employee Plan that is a multiemployer plan as defined in
Section 3(37) of ERISA.
(c) Effect of Transaction. Schedule 5.10(c) contains a list of all
compensation and benefits which will or may be made by the Sellers, or any of
their respective Affiliates, to any Employee which is contingent upon a change
of control within the meaning of Section 280G of the Tax Code.
5.11. Employment Matters. Each Seller: (1) is in compliance with
all applicable federal and state laws and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours, in
each case, with respect to its Employees, except where the failure to be in
compliance would not reasonably be expected to have individually or in the
aggregate, a Seller Material Adverse Effect; (2) has withheld all amounts
required by law or by agreement to be withheld from the wages, salaries and
other payments to Employees and has remitted such withholding to the appropriate
authorities and is not subject to any pending audit regarding the same; (3) is
not liable for any arrears of wages, including vacation pay, overtime pay or pay
equity adjustments or any taxes or any penalty for failure to comply with any of
the foregoing; and (4) is not liable for any payment to any trust or other fund
or to any governmental or administrative authority, with respect to unemployment
compensation benefits, Social Security, or other benefits for Employees (other
than routine payments to be made in the normal course of business and consistent
with past practice). Schedule 5.11 contains a true and accurate list of accrued
vacation pay for Employees as of June 17, 2005.
5.12. Litigation. Except as set forth on Schedule 5.12, there are
no Legal Proceedings that were asserted after the Petition Date and pending as
of the date hereof or to the Knowledge of Sellers, threatened as of the date
hereof, against any Seller before any Governmental Body that (i) seeks to
restrain, materially modify, prevent, or materially delay the consummation of
the transactions contemplated by this Agreement or the Ancillary Documents, or
(ii) questions the validity of this Agreement or any of the Ancillary Documents,
or any action taken or to be taken by a Seller in connection with this Agreement
or any of the Ancillary Documents. Other than the Bankruptcy Case or obligations
that will be discharged in the Bankruptcy Case, there is no Legal Proceeding
that was asserted after the Petition Date and is pending as of the date hereof
that involves a dispute of more than $250,000 or seeks to obtain injunctive
relief against any Seller.
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5.13. Compliance with Laws; Permits. Except with respect to
Environmental Laws (which are addressed in Section 5.14), each Seller (i) is in
compliance with all Laws applicable to its respective operations or assets or
the Business, except where the failure to be in compliance would not reasonably
be expected to have, individually or in the aggregate, a Seller Material Adverse
Effect and (ii) currently has all Permits which are required for the operation
of the Business as presently conducted, except where the absence of which would
not reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect. Schedule 5.13 sets forth a list of all Permits owned or
used by any Seller.
5.14. Environmental Matters. Except as set forth on Schedule 5.14
and except for facts, circumstances or conditions that would not reasonably be
expected to have, individually or in the aggregate, a Seller Material Adverse
Effect, (a) the operations of Sellers are in compliance with all applicable
Environmental Laws and Environmental Permits, (b) none of Sellers is the subject
of any outstanding Order with any Governmental Body respecting (i) Environmental
Laws, (ii) a Remedial Action, or (iii) Environmental Permits, (c) there is no
investigation, action or proceeding pending, or, to the Knowledge of Sellers,
threatened that could reasonably be expected to result in Sellers incurring any
material liability pursuant to any applicable Environmental Law, (d) the Sellers
have not received any notice, report or other communication regarding (x) any
violation of any Environmental Laws or any Environmental Permits, or (y) any
Environmental Liabilities, including any investigatory, remedial or corrective
obligations, relating to the Sellers, or that it is responsible (or partly
responsible) for the removal, remediation, or other clean-up of any Hazardous
Materials at, on, under, or emanating from the Sellers' Properties or properties
used in connection with the Business, (e) the Sellers possess all Environmental
Permits necessary for their respective operation, and all such Environmental
Permits are valid and in good standing, and there is no pending, or to the
knowledge of the Sellers, threatened action to revoke, modify, terminate or
otherwise materially change the terms or conditions of any such Environmental
Permits, and (f) there is (i) no friable asbestos contained in or forming a part
of any building, building component, structure or office space included in the
Sellers' Properties, (ii) no polychlorinated biphenyls are used, stored, or
released on any of the Sellers' Properties, or (iii) there are no underground
storage tanks or surface impoundments containing Hazardous Materials located on,
under or at any of the Sellers' Properties.
5.15. Financial Advisors. Except as set forth on Schedule 5.15, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Sellers in connection with the transactions contemplated by this
Agreement. No Person is entitled to any fee or commission or like payment from
Purchaser in respect thereof.
5.16. Representations/Warranties; Schedules. Sellers makes no
representations or warranties to Purchaser regarding the probable success or
profitability of the Business. The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed or is material or that such matter would
result in a Seller Material Adverse Effect. The representations of Sellers shall
be unaffected by any investigation made heretofore or hereafter by or on behalf
of Purchaser.
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5.17. Sufficiency of Assets. The Purchased Assets and other assets
and property owned or used by Sellers and which will be owned or used by
Purchaser upon Closing together with the Excluded Assets, taken as a whole, are
sufficient for the continued conduct of the business of Sellers as currently
conducted.
5.18. Equipment. Schedule 5.18 lists all machinery, equipment,
vehicles or furniture owned by a Seller with a depreciated book value of
$100,000 or more and sets forth the original cost and current depreciated value
of each such item listed by location.
5.19. No Casualty. Except as set forth on Schedule 5.19, as of the
date hereof to the Seller's Knowledge, none of the assets of the Sellers has
been affected by any fire, explosion, accident, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that has not been repaired or restored and
that would reasonably be expected to have a Seller Material Adverse Effect.
5.20. Insurance. The Sellers have in place insurance policies
listed on Schedule 5.20. Except as set forth on Schedule 5.20, all such policies
are, and until Closing will remain, in full force and effect except for those
policies, the failure to maintain which individually or in the aggregate, would
not be reasonably expected to have a Seller Material Adverse Effect. The Sellers
have made available to Purchaser a description of such policies and any
applicable self-insurance programs.
5.21. Customers. The attached Schedule 5.21 lists Sellers' ten
(10) largest customers for the period beginning July 1, 2004 and ending on the
date hereof. As of the date hereof (except as set forth in such Schedule 5.21),
Sellers have not received any notice that any such customer, and to the
Knowledge of Sellers, no such customer, intends to terminate or materially
reduce its business with Sellers and no such customer has terminated or
materially reduced its business with Sellers from July 1, 2004 to the date
hereof.
5.22. Suppliers. The attached Schedule 5.22 lists Sellers' twenty
(20) largest vendors for the period beginning July 1, 2004 and ending on the
date hereof. As of the date hereof (except as set forth in such Schedule 5.22),
Sellers have not received any notice that any such vendor, and to the Knowledge
of Sellers, no such vendor, intends to terminate or materially reduce its
business with Sellers and no such vendor has terminated or materially reduced
its business with Sellers from July 1, 2004 to the date hereof.
5.23. Affiliate Transactions. Except as set forth on Schedule
5.23, no officer, manager, member or Affiliate (including any of the
shareholders) of any Seller or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person or
individual owns any beneficial interest, is a party to any agreement, contract,
commitment or transaction with any Seller or has any interest in any property
used by any Seller.
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5.24. Product Warranty. Except as set forth on Schedule 5.24, to
the Knowledge of Sellers, all products manufactured, merchandised, serviced,
distributed, sold or delivered by Sellers in connection with the Business during
the six year period prior to the Closing Date have been in conformity with all
applicable contractual commitments and all express or implied warranties. No
liability exists for replacement thereof or other damages in connection with
such sales or deliveries during the six year period prior to the Closing Date
except for liabilities which would not reasonably be expected to have a Seller
Material Adverse Effect. No products heretofore sold by Sellers in connection
with the Business are now subject to any guarantee or warranty other than
Sellers' standard terms and conditions of sale, except to the extent described
on the attached Schedule 5.24.
5.25. Inventories. The inventory of Sellers is properly reflected,
and appropriate reserves exist therefor, on the books and records of Sellers in
accordance with GAAP. All of the inventories of Sellers (other than inventory in
transit, inventory at public warehouses and inventory held at other locations
for finishing, which warehouses and other locations are listed on Schedule 5.25)
are located at either the Owned Real Properties or the Leased Real Properties
subject to the Real Property Leases.
5.26. Notes and Accounts Receivable. All notes and accounts
receivable of Sellers (a) are valid receivables incurred in the ordinary course
of business and (b) are properly reflected on Sellers' books and records and
properly reserved for with respect to doubtful accounts, all in accordance with
GAAP.
5.27. Bank Accounts. Schedule 5.27 hereto sets forth a complete
and accurate list of all bank accounts, lockbox accounts, securities accounts,
and other accounts maintained by the Sellers with any bank or other financial
institution, as of the date hereof, which Schedule shall be updated as of the
Closing Date.
5.28. Signatories. All of the domestic Subsidiaries of the
Company, other than X.X. Xxxxxxx & Co., Inc., are signatories to this Agreement
except those that have no assets (other than insignificant assets not used in
the Business).
5.29. Foreign and Non-Debtor Affiliates. Except as set forth on
Schedule 5.29, (i) none of the assets of the Sellers' foreign Affiliates are
used in operation of the Business, (ii) none of the assets of the Business are
used in the operation of any of Sellers' foreign Affiliates, and (iii) none of
Sellers' foreign Affiliates have the right to use the name "WestPoint" or any
rights to use any Intellectual Property of Sellers. None of the Sellers' foreign
Affiliates are signatories to this Agreement. Sellers are all debtors in the
Bankruptcy Case and have no domestic non-debtor Affiliates except for those
Affiliates with insignificant assets.
5.30. Labor Matters.
(a) Schedule 5.30 identifies all collective bargaining agreements
covering Employees of Sellers (collectively, the "Collective Bargaining
Agreements"). The Company made available to Purchaser correct and complete
copies of all such Collective Bargaining Agreements including any amendments or
supplements thereto or related agreements(including any side letter,
38
supplemental agreement or memorandum of understanding that would materially
alter a Collective Bargaining Agreement). The Company has informed Purchaser of
all material communications and current written proposals of the Sellers, or any
union in all ongoing negotiations with representatives of any unions
representing any organized employee groups and all material matters on which any
tentative agreements have been reached in the course of such negotiations.
(b) The Company has made available to Purchaser a true, correct and
complete list of all employees (including inactive employees and employees on
leave) and independent contractors of the Sellers who are members of an
organized labor unit or union covered by any of the Collective Bargaining
Agreements, their current respective positions or job classifications and their
current respective wage scales or salaries, as the case may be.
(c) Except as set forth in Schedule 5.30(c):
(i) None of the Sellers has breached or otherwise failed to comply in
any material respect with any provision of any Collective Bargaining Agreement
or other labor union contract applicable to persons employed by Sellers (because
of the transactions contemplated by this Agreement or otherwise), and there are
no material grievances outstanding against any Seller under any such agreement
or contract;
(ii) As of the date hereof, to the Knowledge of Sellers, there is no
union organizing activity, petition or application pending before the National
Labor Relations Board or other labor relations boards or tribunals seeking
certification or any change in certification of a labor union with respect to
any employees of any Seller;
(iii) As of the date hereof, there is no strike, slowdown, work
stoppage, labor action or lockout, or, to the Knowledge of Sellers, express
threat thereof, by or with respect to any employees of Sellers; and
(iv) As of the date hereof, no Sellers have received any written notice
of any, and to the Knowledge of Sellers, there is no unfair labor practice or
analogous complaint, application or claim against any Seller pending before the
National Labor Relations Board or any similar board or agency or before any
court of competent jurisdiction or any other forum.
5.31. Employee Matters. Schedule 5.31 contains a true, correct and
complete list of all the unrepresented, non-unionized Employees (including
inactive Employees and Employees on leave) employed on June 17, 2005, and any
officer of Sellers or any Employee in a supervisory or managerial role employed
on June 17, 2005, their respective (i) positions or job classifications, (ii)
wage scales or salaries, as the case may be, (iii) annual target bonus and/or
annual target sales commissions, and (iv) target long-term incentive payments,
in each case as of such date. With respect to the foregoing clauses (ii) through
(iv), disclosure may be in the form of either a written description or copies of
any applicable plan, policy or program with regard to employees subject to
company-wide policies; provided, however, that disclosure shall be on an
individual basis with regard to all exceptions from such company-wide policies
or from any other individual arrangements.
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5.32. Certain Payments. Except as set forth on Schedule 5.32, from
the date which is 30 days prior to the date hereof through the date hereof,
Sellers have not made any payments in excess of $25,000 under, in respect of or
pursuant to the KERP Program or fees and expenses of any broker, finder or
financial advisor of Sellers.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARENT,
HOLDCO ONE, HOLDCO TWO AND PURCHASER
Parent, Holdco One, Holdco Two and Purchaser each hereby jointly and
severally represents and warrants to Sellers that:
6.1. Organization and Good Standing. Each of Parent and Purchaser
is an entity duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on is business
as now conducted.
6.2. Authorization of Agreement. Each of Parent and Purchaser has
the requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Documents and to perform its obligations hereunder
and thereunder. The execution and delivery of this Agreement has, and upon
execution and delivery of all Ancillary Documents, such Ancillary Documents will
be, and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of each of Parent and
Purchaser. This Agreement has been, and upon execution and delivery thereof all
Ancillary Documents will be, duly and validly executed and delivered by each of
Parent and Purchaser and (assuming the due authorization, execution and delivery
by the other parties hereto) this Agreement constitutes legal, valid and binding
obligations of each of Parent and Purchaser enforceable against each such entity
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
6.3. Authorized Capital.
(a) As of and after giving effect to the Closing, (i) the authorized
capital of Parent shall consist of 200,000,000 shares of common stock and
10,000,000 shares of preferred stock, (ii) 15,750,000 shares of Parent Common
Stock will be issued and outstanding, and (iii) 14,250,000 shares of Parent
Common Stock will be reserved for issuance pursuant to the Subscription Rights.
As of the Closing, the authorized capital of Purchaser shall consist of 10,000
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shares of common stock and 1,000 shares of preferred stock, of which 200 shares
will be issued and outstanding and held equally by Holdco One and Holdco Two.
Except as set forth in the Equity Commitment Letter, as of the Closing, no other
shares of capital stock of Parent or Purchaser will be issued or issuable
pursuant to outstanding options, agreements, exchangeable securities or
otherwise.
(b) The shares of Parent Common Stock to be issued pursuant to the
terms hereof and upon exercise of the Subscription Rights will, as of the
Closing, be duly authorized and, upon issuance pursuant to the terms hereof or
upon payment of the purchase price therefor pursuant to the Rights Offering,
validly issued, fully paid and non-assessable.
6.4. Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 6.4(a), the execution and delivery
by Parent and Purchaser of this Agreement and the Ancillary Documents, the
consummation of the transactions contemplated hereby or thereby , or compliance
by Parent and Purchaser with any of the provisions hereof or thereof do not and
will not (A) conflict with, or result in any violation or default (with or
without notice or lapse of time or both) under, or (B) give rise to a right of
termination or cancellation under any provision of:
(i) the certificate of incorporation and by-laws or comparable
organizational documents of Parent and Purchaser;
(ii) any Contract or Permit to which Parent or Purchaser is a party or
by which any of the properties or assets of Parent or Purchaser are bound, other
than such conflicts, violations, defaults, terminations or cancellations that
would not reasonably be expected to have, individually or in the aggregate, a
Purchaser Material Adverse Effect;
(iii) any Order of any Governmental Body applicable to Parent or
Purchaser or any of the properties or assets of Parent or Purchaser as of the
date hereof; or
(iv) any applicable Law.
(b) Except as set forth on Schedule 6.4(b), no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of
Parent or Purchaser in connection with the execution and delivery of this
Agreement and the Ancillary Documents, the compliance by Parent or Purchaser
with any of the provisions hereof or thereof, the consummation of the
transactions contemplated hereby or thereby or the taking by Purchaser of any
other action contemplated hereby or thereby, except for (i) compliance with the
applicable requirements of the HSR Act, and (ii) such other consents, waivers,
approvals, Orders, Permits, authorizations, declarations, filings and
notifications, the failure of which to obtain or make, would not reasonably be
expected to have, individually or in the aggregate, a Purchaser Material Adverse
Effect.
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6.5. Litigation. As of the date hereof, there are no Legal
Proceedings pending or, to the knowledge of Purchaser, threatened against Parent
or Purchaser, or to which Parent or Purchaser is otherwise a party before any
Governmental Body, which, if adversely determined, would reasonably be expected
to have, individually or in the aggregate, a Purchaser Material Adverse Effect.
As of the date hereof, Parent or Purchaser is not subject to any Order of any
Governmental Body except to the extent the same would not reasonably be expected
to have, individually or in the aggregate, a Purchaser Material Adverse Effect.
6.6. Financial Advisors. No Person has acted, directly or
indirectly, as a broker, finder or financial advisor for Parent or Purchaser in
connection with the transactions contemplated by this Agreement and no Person is
entitled to any fee or commission or like payment in respect thereof.
6.7. Financial Capability. Purchaser will have, and Parent will
cause Purchaser to have, at the Closing sufficient funds available to pay the
Cash Purchase Price. Purchaser has delivered to the Company copies of the fully
executed Equity Commitment Agreement and the Rights Offering Sponsor Agreement,
pursuant to which it will obtain such funds.
6.8. Condition of the Business. Notwithstanding anything contained
in this Agreement to the contrary, Purchaser acknowledges and agrees that
Sellers are not making any representations or warranties whatsoever, express or
implied, beyond those expressly given by Sellers in Article V hereof and each of
Parent and Purchaser acknowledges and agrees that, except for the
representations and warranties contained herein, the Purchased Assets are being
transferred on a "where is" and, as to condition, "as is" basis. Each of Parent
and Purchaser acknowledges that it has conducted to its satisfaction, its own
independent investigation of the Business and, in making the determination to
proceed with the transactions contemplated by this Agreement, each of Parent and
Purchaser has relied on the results of its own independent investigation and the
representations, warranties, covenants and agreements of Sellers set forth
herein.
6.9 Aretex's Holdings. Aretex (i) as a First Lien Lender, holds a
claim as of June 17, 2005 in the approximate face amount of $193,503,839.26,
plus interest, (reduced by any payments made after the date hereof) representing
not less than 39.989% of the amount due to all First Lien Lenders; and (ii) as a
Second Lien Lender, holds an allowed claim in the approximate face amount of
$84,500,000, plus interest, and representing not less than 51.212% of the amount
due to all Second Lien Lenders.
ARTICLE VII.
POST EXECUTION MATTERS
7.1. Conduct After Execution of Agreement. Each Seller agrees that
neither it nor its Affiliates nor its Representatives will, after execution of
this Agreement (a) solicit, initiate, encourage, enter into, conduct or continue
any discussions (other than with other Qualified Bidders (as defined in the
Bidding Procedures) prior to the Purchaser Selection Hearing), or enter into any
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agreement or understanding, with any Person other than the Purchaser, regarding
the transfer, directly or indirectly, of any capital stock of, or any other
interest in, any Seller or any material portion of any Seller's assets or
business (including by way of license), or (b) disclose any non-public
information relating to any Seller or afford access to the properties, books or
records of any Seller to any Person other than the Purchaser, that may be
considering acquiring an interest in any Seller or any material portion of any
Seller's assets unless such Person first enters into an appropriate
confidentiality agreement with the Sellers. If any Seller receives any request
for information or indication of interest from any Person regarding a possible
acquisition, such Seller shall promptly disclose to the Purchaser the identity
of such Person, such receipt of such request or indication of interest and shall
provide the Purchaser with copies of any correspondence or other written
material received by such Seller setting forth any material terms or conditions
of such possible acquisition.
7.2. Expense Reimbursement. In the event that this Agreement is
terminated by Purchaser pursuant to Section 4.4(a), 4.4(c), 4.4)(d), 4.4(e),
4.4(g), 4.4(h), 4.4(i), 4.4(j), 4.4(k) or 4.4(l), Sellers agree to pay to
Purchaser, upon such termination, reimbursement of up to $1,000,000 of the out
of pocket expenses, including, without limitation, reasonable attorneys' fees
and costs, consultant fees and costs, travel costs, title, survey and search
costs and other out-of-pocket costs incurred by Purchaser from and after the
date hereof to such date of termination (the "Expense Reimbursement"), as a
super priority administrative expense and Debtors will promptly seek any further
authority needed in connection with the same.
7.3. Bankruptcy Court Filings.
(a) Pursuant to the Bidding Procedures Order, Sellers have sought
authority to sell their assets and take actions related thereto and shall seek
entry of the Selection Order and the Sale Order by the Bankruptcy Court. The
Sellers shall seek to cause the Sale Order to be entered simultaneously with, or
within three (3) Business Days following, the entry of the Selection Order.
Unless the Bankruptcy Court determines by Order entered at the hearing to
approve the Sale Order that the transactions contemplated by this Agreement
shall be pursued through a Chapter 11 plan of reorganization or liquidation, the
transactions shall proceed in accordance with this Agreement and pursuant and
subject to the Sale Order. If the Bankruptcy Court: (i) determines by Order
entered at the hearing to approve Sale Order that the transactions contemplated
by this Agreement shall be pursued through a Chapter 11 plan of reorganization
or liquidation; and (ii), prior to September 15, 2005, the Confirmation Order
shall have been entered and shall have become a Final Order, then the
transaction set forth herein shall proceed based on the Chapter 11 Plan and the
Confirmation Order. The September 15, 2005 date is of the essence. In the event
that clause (ii) above is not satisfied, the transactions contemplated by this
Agreement shall proceed in accordance with the terms of this Agreement and
pursuant and subject to the Sale Order.
(b) (i) If the Bankruptcy Court in a statement on the record at the
Purchaser Selection Hearing indicates that it is prepared to enter the Sale
Order within two (2) Business Days after the Purchaser Selection Hearing (the
"Initial Sale Order Entry Period") except for the omission of either clause
(viii) and/or (xii) of the definition of "Sale Order", then within two (2)
Business Days of the end of the Initial Sale Order Entry Period, Purchaser shall
either (x) waive in writing clause (viii) and/or (xii) to the extent not
43
acceptable to the Bankruptcy Court, (y) terminate this Agreement, which right
may be exercised by Purchaser only within two (2) Business Days following the
Initial Sale Order Entry Period, or (z) not waive those conditions and not
terminate this Agreement, provided, that if Purchaser does not waive in writing
the requirement that the Sale Order contain those provisions or terminate this
Agreement within such time period, then Sellers may terminate this Agreement
within two (2) Business Days after the expiration of the period within which
Purchaser may terminate this Agreement pursuant to this Section 7.3(b)(i), which
right may be exercised by Sellers only within such two (2) Business Days.
(ii) If the Bankruptcy Court (x) in a statement on the record at the
Purchaser Selection Hearing indicates that is not prepared to enter, within the
Initial Sale Order Entry Period (A) any sale order with respect to the
transactions contemplated by this Agreement or (B) the Sale Order except for the
omission of either clause (viii) and/or (xii) of the definition of "Sale Order",
or (y) fails to enter the Sale Order during the Initial Sale Order Entry Period,
then the Purchaser may terminate this Agreement within two (2) Business Days
following the Initial Sale Order Entry Period, which right may be exercised by
Purchaser only within such two (2) Business Days.
(c) Purchaser and Sellers agree that they will assist in obtaining
entry of the Selection Order, the Sale Order and if necessary, the Confirmation
Order, and a finding of adequate assurance of future performance by Purchaser,
by taking the following actions: furnishing affidavits or other documents or
information for filing with the Bankruptcy Court for the purposes, among others,
of providing necessary written assurance of performance by Purchaser under this
Agreement and demonstrating that Purchaser is a "good faith" purchaser under
Section 363(m) and if applicable, Section 1129(a)(3) of the Bankruptcy Code. In
the event the entry of the Selection Order, the Sale Order or the Confirmation
Order shall be appealed, Sellers and Purchaser shall use their respective
reasonable efforts to defend such appeal. Sellers shall seek approval of the
Selection Order, the Sale Order and the Confirmation Order, if any, only in
accordance with the terms and conditions thereof.
(d) Sellers agree that they will comply in all respects with the terms
and conditions of the Bidding Procedures Order, the Selection Order, the Sale
Order and, if applicable, the Confirmation Order, and will not file a motion
seeking to revoke, modify or amend any such order after it is entered without
Purchaser's prior written consent.
ARTICLE VIII.
COVENANTS
8.1. Access to Information. (a) Sellers agree that, prior to the
Closing Date, Purchaser shall be entitled and Sellers shall afford Purchaser the
opportunity, through the respective Representatives of Purchaser or its
Affiliates, to make such investigation of the assets, properties, employees,
businesses and operations of the Business and such examination of the books and
44
records of the Business, the Purchased Assets and the Assumed Liabilities as
Purchaser determines and to make extracts and copies of such books and records.
Any such investigation and examination shall be conducted upon reasonable
advance notice. Sellers shall cause their Representatives to cooperate with
Purchaser and Purchaser's or its Affiliates' Representatives in connection with
such investigation and examination, and Purchaser, its Affiliates and their
Representatives shall use their reasonable efforts to minimize any disruption to
the Business.
(b) The Sellers shall promptly deliver to Purchaser all financial,
management or operational reports delivered to any agent and/or the lenders
under the DIP Credit Agreement or consultants for the same. The Sellers shall
promptly deliver to Purchaser such copies of all pleadings, motions, notices,
statements, schedules, applications, reports and other papers filed by the
Sellers, or by any Person in connection with or related to the Sellers, the
Business, the Purchased Assets or the Assumed Liabilities. The Sellers shall
promptly deliver to Purchaser all pleadings, motions, notices, statements,
schedules, applications, reports and other papers filed in any other judicial or
administrative proceeding as Purchaser may reasonably request. Without limiting
the generality of this Section 8.1, if requested by Purchaser, Sellers, upon
reasonable notice, shall provide access to the Sellers' Properties to Purchaser,
its Affiliates and their respective Representatives for purposes of conducting
such building inspections and environmental assessments as Purchaser determines.
Purchaser agrees that, in the event that an inspection or environmental
assessment results in a determination that invasive sampling may be necessary,
Purchaser will not conduct such invasive sampling without first obtaining
Seller's consent, provided that such consent will not be unreasonably withheld.
To the extent that any applicable lease or sublease (whether any Seller is a
lessor/sublessor or lessee/sublessee) restricts the ability of any Seller to
grant access to any property, the Seller shall use commercially reasonable
efforts to provide for such access to Purchaser, its Affiliates and their
respective Representatives. Notwithstanding anything herein to the contrary, no
such investigation or examination shall be permitted to the extent that it would
require Sellers to disclose information subject to any confidentiality
obligations to which Sellers are bound as of the date of this Agreement;
provided Sellers shall take commercially reasonable efforts to obtain waivers of
such confidentially obligations.
(c) From and after the date hereof, Parent may designate up to two
individuals as Parent's and Purchaser's representatives to monitor the conduct
and operations business of the Sellers on a day-to-day basis. Such persons shall
be given full access by Sellers to all of the books, records and premises of the
Business as they may reasonably request. From and after the date hereof:
(i) Sellers shall, not later than 7:00 a.m. on each Thursday and
simultaneously with delivery to the Company's controller, deliver to such
representatives the "accounts payable register" setting forth all payments
proposed to be made by Sellers, including the name of the proposed payee and the
amount. If, prior to 2:00 p.m. on such date any of such representatives notifies
Sellers that any such payment in excess of $1,000 (other than payroll for hourly
45
employees) would be in violation of the terms and provisions of this Agreement,
Sellers shall not make such payment unless and until resolved as set forth in
clause (v) below. If Sellers fail to deliver such register by 7:00 a.m. on any
such Thursday, then the 2:00 p.m. deadline referred to above shall be extended
for each hour that delivery of such schedule is late so that such
representatives have two consecutive hours on a Business Day to review such
schedule, provided, that if such two hour period extends past 5:00 p.m. Eastern
Time, such representatives shall have such time at the commencement of the next
Business Day (beginning at 8:00 a.m. Eastern) to complete their review.
(ii) Sellers shall advise Purchaser of all applicable information
pertaining to any proposed wire transfer not less than two hours on a Business
Day prior to the time such wire is proposed to be sent. If prior to the
expiration of such two hours any of such representatives notifies Sellers that
any such payment by wire would be in violation of the terms and provisions of
this Agreement, Sellers shall not make such payment unless and until resolved as
set forth in clause (v) below;
(iii) Sellers shall provide Purchaser with a schedule of all proposed
"manual checks" (i.e, checks not on the accounts payable register) not less than
two hours on a Business Day prior to any such checks being issued. If prior to
the expiration of such two hours any of such representatives notifies Sellers
that any such payment would be in violation of the terms and provisions of this
Agreement, Sellers shall not make such payment unless and until resolved as set
forth in clause (v) below;
(iv) Sellers shall provide Purchaser with a schedule of letters of
credit proposed to be issued not less than two hours on a Business Day prior to
any such letter of credit being issued. If prior to the expiration of such two
hours any of such representatives notifies Sellers that any such issuance of
letter of credit would be in violation of the terms and provisions of this
Agreement, Sellers shall not issue such letter of credit unless and until
resolved as set forth in clause (v) below;
(v) Any disputed payments or issuance of a letter of credit hereunder
shall not be made by Sellers unless and until resolved by agreement of
Purchaser, Parent and Sellers or a determination by the Bankruptcy Court is made
that such payment or issuance of a letter of credit does not violate the terms
and provisions of this Agreement. Purchaser and Parent agree to cooperate with
Sellers to resolve any such issue and, if not so resolved, to obtain an
expedited determination by the Bankruptcy Court with respect to any such payment
or payments;
(vi) Failure of Sellers to make any payment or issuance of a letter of
credit disputed by any representative prior to resolution of the issue shall not
constitute a breach of any representation, warranty, covenant or agreement by
Sellers under this Agreement. Representatives may give notice hereunder by
telephone communication, confirmed by email, to the General Counsel of the
Company at the email address set forth in Section 12.9, or such other Person as
the Company shall designate to Purchaser pursuant to Section 12.9. Sellers shall
notify the representatives by telephone communication and email at the numbers
and email addresses provided by such representatives from time to time.
46
(d) Sellers shall use commercially reasonable efforts to identify on
Schedule 8.1, (i) each parcel of Immaterial Owned Real Property by street
address (or no street address exists, by city and state), together with a legal
description or tax identification number, which Schedule 8.1 shall be delivered
to Purchaser not later than ten days following the entry of the Sale Order,
together with copies of relevant deeds and other title and survey documents in
the respective Sellers' possession and (ii) all Permits necessary to operate the
retail stores operated by Sellers.
8.2. Conduct of the Business Pending the Closing.
(a) Except (1) as set forth on Schedule 8.2(a), (2) as required by
applicable Law, or (3) with the prior written consent of Purchaser in its sole
and absolute discretion, during the period from the date of this Agreement to
and through the Closing Date, Sellers shall:
(i) conduct the Business only in the Ordinary Course of Business,
including, without limitation, with respect to (a) the pricing and terms of sale
of inventory, (b) the timing, discounting and other practices in connection with
the collection of accounts receivable, (c) the timing and other practices for
payment of account payables and (d) compensation, bonuses, benefits and
severance payable to Employees, subject to and in accordance with the further
limitations set forth in Section 9.1(a);
(ii) use their commercially reasonable efforts to (a) keep their assets
intact and maintain their assets in at least as good a condition as their
current condition (reasonable wear and tear excepted), (b) preserve the present
business operations, organization and goodwill of the Business, and (c) preserve
the present relationships with customers and suppliers of the Business;
(iii) perform in all material respects its obligations arising after
the Petition Date under any Contract (including Real Property Leases);
(iv) comply in all material respects with all applicable Laws that
relate to or affect its assets and business or such Person's ownership and/or
use or operation thereof, including the timely, complete and correct filing of
all reports and maintenance of all records required by any Governmental
Authority to be filed or maintained;
(v) continue to use and operate all assets and all aspects of its
business used or operated by the Sellers as of the date hereof in a manner
consistent with prior practice and in accordance in all material respects with
all applicable Laws, and not enter into any contract nor otherwise act, nor
suffer or permit any other Person to act, to restrict, interfere with or prevent
the use or operation of such assets or business;
(vi) promptly notify Purchaser in writing of any incidents or accidents
occurring on or after the date hereof involving any assets or property owned or
operated by the Sellers that resulted or could reasonably be expected to result
in damages or losses to any portion of the business of the Sellers or damages in
excess of $100,000;
47
(vii) promptly notify Purchaser in writing of the existence of any
adverse business conditions arising on or after the date hereof threatening the
continued, normal business operations of the Sellers or of any agreement,
consent or order of any Governmental Authority involving any of the Sellers;
(viii) promptly notify Purchaser of any Legal Proceeding of the type
described in Section 5.12 commenced after the date hereof and/or, to the
Knowledge of Sellers, threatened after the date hereof against the Sellers;
(ix) provide prompt written notice to Purchaser (i) of any change in
any of the information contained in the representations and warranties made by
the Sellers in Article V hereof or any exhibits or schedules referred to herein
or attached hereto, including any Schedules and shall promptly furnish any
information that Purchaser may reasonably request in relation to such change;
provided, however, that such notice shall not operate to cure any breach of the
representations and warranties made by the Company herein or any exhibits or
schedules referred to herein or attached hereto, including any Schedules; and
(x) provide prompt written notice to Purchaser of the occurrence of any
event that results in or would reasonably be expected to result in a failure to
satisfy any of the conditions set forth in Article X.
(b) Except (1) as set forth on Schedule 8.2(b), (2) as required by
applicable Law, or (3) with the prior written consent of Purchaser in its sole
and absolute discretion, during the period from the date of this Agreement to
and through the Closing Date, Sellers shall not:
(i) take any action as a result of which any representation or warranty
of the Sellers made in Article V would be rendered untrue or incorrect if such
representation or warranty were made immediately following the taking or failure
to take such action;
(ii) make or rescind any material election relating to Taxes, settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, or except as
may be required by applicable Law or GAAP, make any material change to any of
its methods of accounting or methods of reporting income or deductions for Tax
or accounting practice or policy from those employed in the preparation of its
most recent Tax Returns;
(iii) subject any of the Purchased Assets to any Lien, except for Liens
existing as of the date hereof;
(iv) acquire any material properties or assets other than in the
Ordinary Course of Business, or enter into any partnership, joint venture or
similar arrangement (including, but not limited to, the contemplated joint
venture with a Pakistani company for the formation and operation of a
manufacturing facility near Lahore, Pakistan), or sell, assign, license,
transfer, convey, lease or otherwise dispose of any of the Seller's assets other
than inventory in the Ordinary Course of Business and obsolete or worthless
equipment permitted to be sold pursuant to the DIP Credit Agreement;
(v) cancel, compromise or settle any debt or claim or waive or release
any right in excess of $20,000 individually and $250,000 in the aggregate or, in
connection with Trade Payables, accounts payable to employees for travel and
entertainment expense, workers' compensation payments, or trade receivables,
other than in the Ordinary Course of Business;
(vi) enter into any commitment for capital expenditures in excess of
$250,000 for all commitments in the aggregate except for capital expenditure
projects described by project and amount as line items as set forth on Schedule
8.2(b) hereof not to exceed the amount for each such category as described and
set forth in such schedule;
48
(vii) enter into, modify or terminate any labor or Collective
Bargaining Agreement or, through negotiation or otherwise, make any commitment
or incur any liability to any labor organization;
(viii) incur any Indebtedness other than in the Ordinary Course of its
Business;
(ix) assign, modify, cancel, otherwise impair or permit to lapse any
Material Contract (other than expiration in accordance with the terms thereof as
a result of the passage of time and other than Real Property Leases as to which
Section 8.2(b)(x) applies ) involving annual expenditures, purchases or revenues
in excess of $100,000 annually;
(x) assign, sublease, amend in any material respect, terminate,
exercise (or waive) or permit to lapse any options to renew, options to expand
or options to purchase pursuant to any Real Property Leases involving
expenditures in excess of $100,000 annually (other than expiration in accordance
with the terms thereof as a result of the passage of time);
(xi) make any payments (a) in respect of professional fees for
attorneys and accountants except to the extent and on the timing permitted under
existing interim compensation and fee application procedures (other than
professional fees payable to ordinary course professionals to the extent
authorized to be paid under the existing Order of the Bankruptcy Court signed on
6/3/03 Authorizing Retention and Compensation of Professionals Utilized in the
Ordinary Course of Business), (b) under, in respect of or pursuant to the KERP
Program (other than the existing scheduled payment for the second quarter of
2005 pursuant to the KERP Order), or fees and expenses of any financial advisor
of Sellers (other than monthly fees in currently approved amounts pursuant to
existing procedures) or (c) in respect of fees and expenses of any broker or
finder of Sellers except as consented to by Purchaser and except for such fees
and expenses of a broker or finder relating to the sale of real property by
Sellers which are approved by the Bankruptcy Court prior to June 30, 2005; or
(xii) agree to do anything prohibited by this Section 8.2.
(c) During the period from the date of this Agreement to and through
the Closing Date, Sellers shall not declare, authorize, make or enter into a
commitment to make (x) any dividend, distribution or other payment in respect of
any Seller's capital stock or other equity or rights to acquire the same or
engage in any similar payment or distribution or (y) any payment, prepayment or
distribution with respect to any Indebtedness of the Sellers other than payments
in respect of the DIP Credit Agreement as required or permitted pursuant to the
terms of the DIP Credit Agreement or payment pursuant to the Adequate Protection
Order.
49
8.3. Consents, Lien Releases and Notices. Sellers shall use their
commercially reasonable efforts, and Purchaser shall, and Parent shall cause
Purchaser to, reasonably cooperate with Sellers, to obtain at the earliest
practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, the consents and
approvals listed in Schedule 5.3(b) hereof; provided, however, that neither
Sellers nor Purchaser shall be obligated to pay any consideration therefor to
any third party from whom consent or approval is requested; provided, further,
however, that Sellers shall be obligated to initiate any Legal Proceedings
necessary, at the Purchaser's expense, to obtain any such consent or approval,
unless Seller's counsel reasonably believes that Sellers have no good faith
basis to initiate any such proceeding, in which event Purchaser may seek
authority from the Bankruptcy Court to do so on the Sellers' behalf and Sellers
will not object to such application by Purchaser. Sellers shall provide Parent
and Purchaser, for their approval, a proposed form of request for consent not
later than five (5) days following the date of the Sale Order. Sellers shall
send initial requests for such consents in the form approved by the Purchaser
not later than two (2) Business Days following the date Purchaser designates any
applicable asset as a Purchased Asset. Sellers shall use their commercially
reasonable efforts to obtain, prior to the Closing, and deliver to Purchaser
releases of all Liens on all of the Purchased Assets. Sellers shall, at the
request of Purchaser and at Purchaser's expense if so requested after the
Purchaser Selection Hearing, provide additional actual or publication notice of
the "free and clear sale" to those Persons, and in the manner, requested by
Purchaser.
8.4. Regulatory Approvals.
(a) If necessary, Parent, Purchaser and Sellers shall (i) make or cause
to be made all filings required of each of them or any of their respective
Affiliates under the HSR Act or other Antitrust Laws with respect to the
transactions contemplated hereby as promptly as practicable and, in any event,
within ten (10) Business Days after the later of the date of the entry of the
Selection Order and the date of this Agreement in the case of all filings
required under the HSR Act and within four weeks in the case of all other
filings required by other Antitrust Laws, (ii) comply at the earliest
practicable date with any request under the HSR Act or other Antitrust Laws for
additional information, documents, or other materials received by each of them
or any of their respective Subsidiaries from the Federal Trade Commission (the
"FTC"), the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") or any other Governmental Body in respect of such filings
or such transactions and (iii) cooperate with each other in connection with any
such filing. Subject to applicable Law, the parties hereto will consult and
cooperate with one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto relating to proceedings under the
HSR Act or other Antitrust Laws. Sellers and Purchaser may, as each deems
advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section 8.4 as "outside counsel only."
Such materials and the information contained therein shall be given only to the
outside legal counsel of the recipient and will not be disclosed by such outside
counsel to employees, officers, or directors of the recipient, unless express
written permission is obtained in advance from the source of the materials
(Parent, Sellers or Purchaser, as the case may be). Parent or Purchaser shall
not be obligated to share a copy of their HSR Act filing or drafts thereof with
Sellers.
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(b) Sellers shall use commercially reasonable efforts to initiate the
transfer of all Permits included in the Purchased Assets owned or used by any
Seller into the name of Purchaser effective as of the Closing Date. Each such
party shall use commercially reasonable efforts to furnish to each other all
information required for any application or other filing to be made pursuant to
any applicable Law in connection with the transactions contemplated by this
Agreement. Each such party shall promptly inform the other parties hereto of any
oral communication with, and provide copies of written communications with, any
Governmental Body regarding any such filings or any such transaction. No party
hereto shall independently participate in any formal meeting with any
Governmental Body in respect of any such filings, investigation, or other
inquiry without giving the other parties hereto prior notice of the meeting and,
to the extent permitted by such Governmental Body, the opportunity to attend
and/or participate.
(c) Each of Parent, Purchaser and Sellers shall use its commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Body with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the "Antitrust Laws"). In
connection therewith, if any Legal Proceeding is instituted (or threatened to be
instituted) asserting that any transaction contemplated by this Agreement is in
violation of any Antitrust Law, each of Purchaser and Sellers shall cooperate
and use its commercially reasonable efforts to contest and resist any such Legal
Proceeding. Each of Purchaser and Sellers shall use its commercially reasonable
efforts to take such action as may be required to cause the expiration of the
notice periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, in
complying with this Section 8.4, neither Purchaser nor any of its Affiliates
shall be required to (i) divest any assets or discontinue or modify any of its
operations or (ii) accept or become subject to any condition or requirement
unacceptable to Purchaser in its sole and absolute discretion. No party shall
withdraw any such filing or submission prior to the termination of this
Agreement without the written consent of the other party.
8.5. Further Assurances. Each of Parent, Purchaser and Sellers
shall use its commercially reasonable efforts to take all actions necessary or
appropriate to consummate the transactions contemplated by this Agreement.
Parent and Purchaser shall use their commercially reasonable efforts to cause
the fulfillment at the earliest practicable date of all of the conditions to the
obligations to consummate the transactions contemplated by this Agreement set
forth in Sections 10.2 and 10.3. Sellers shall use their commercially reasonable
efforts to cause the fulfillment at the earliest practicable date of all of the
51
conditions to the obligations to consummate the transactions contemplated by
this Agreement set forth in Sections 10.1 and 10.3. At the Purchaser's sole cost
and direction, Sellers shall have prepared and duly executed assignments of any
non-U.S. trademark registrations and applications and non-U.S. patent
registrations and applications in a form suitable for recording in the
applicable foreign intellectual property offices. For U.S. trademark
registrations and applications and U.S. patent registrations and applications,
Sellers shall ensure that the owner of each trademark and patent registration
and application, as set forth on Schedule 5.8(a), is also listed as the current
owner as shown in the U.S. Patent and Trademark Office's records for each such
trademark and patent registration and application.
8.6. Confidentiality Following the Closing. Sellers acknowledge
that from and after the Closing, all non-public information relating to the
Business, including, but not limited to the Purchased Assets and the Assumed
Liabilities, will be valuable and proprietary to Purchaser and its Affiliates.
Sellers agree that, from and after the Closing, neither the Sellers nor any of
their Affiliates or Representatives will disclose to any Person any non-public
information relating to the Purchaser and its Affiliates, or the Business,
including but not limited to the Purchased Assets and the Assumed Liabilities,
except as required by law. The provisions of this Section 8.6 shall survive the
Closing.
8.7. Equity Commitment and Rights Offering. Simultaneously with
the execution of this Agreement, Purchaser has delivered to Sellers an executed
copy of each of the Equity Commitment Agreement and the Rights Offering Sponsor
Agreement. It is expressly understood by the parties hereto that the aggregate
net proceeds to be received by Purchaser in connection with the exercise of the
Subscription Rights, the Rights Offering Sponsor Agreement and the Equity
Commitment Agreement shall be $312,000,000. Each of Parent and Purchaser hereby
agrees to take all actions that are necessary to consummate the Rights Offering,
including, if necessary, enforcing its rights under the Equity Commitment
Agreement and the Rights Offering Sponsor Agreement, to cause the other parties
thereto to perform their respective duties, obligations and covenants
thereunder. Each of Parent and Purchaser agrees that it will not release any
party to the Equity Commitment Agreement and the Rights Offering Sponsor
Agreement from any of its duties, obligations and covenants under such
agreements without the Company's prior written consent.
8.8. Preservation of Records. Sellers, Parent and Purchaser agree
that each of them shall preserve and keep the records held by it or their
Affiliates relating to the Business for a period of seven (7) years from the
Closing Date (except as provided below) and shall make such records and
personnel available to the other as may be reasonably required by such party in
connection with, among other things, any insurance claims by, Legal Proceedings
or tax audits against Sellers or Purchaser or any of their Affiliates or in
order to enable Sellers or Purchaser to comply with their respective obligations
under this Agreement and each other agreement, document or instrument
contemplated hereby. In the event Sellers or Purchaser wishes to destroy such
records before or after that time, such party shall first give ninety (90) days
prior written notice to the other and such other party shall have the right at
its option and expense, upon prior written notice given to such party within
such ninety (90) day period, to take possession of the records within one
hundred and eighty (180) days after the date of such notice.
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8.9. Financial Statements
(a) Sellers shall provide AREH and its representatives with such access
to and copies of the books and records of Sellers and their subsidiaries as may
be required in order for AREH and its Affiliates and subsidiaries to prepare any
financial statements, including historical or pro forma financial statements,
for inclusion or incorporation by reference by AREH or its Affiliates and
subsidiaries in filings by any of them with the SEC, including, without
limitation, any registration, proxy or information statement or any periodic or
current report under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the SEC (each
a "Report" and collectively "Reports"). Sellers shall use commercially
reasonable efforts to provide to AREH unaudited consolidating balance sheets and
income statements covering the periods covered by each consolidated financial
statement required to be delivered by the Sellers pursuant to Section 8.9(d)
below.
(b) Sellers shall use their best efforts to cause their finance and
accounting personnel, including, but not limited to, their Chief Financial
Officer, to provide AREH, its subsidiaries and their respective representatives
with such assistance as AREH shall reasonably request in order to permit AREH
and its subsidiaries to prepare any Report and comply with any requirement
pursuant to the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the
SEC thereunder with respect to Sellers. Sellers shall continue to maintain their
books and records, so as to enable the preparation and review or audit, as
applicable, by an independent public accounting firm of financial statements
meeting the requirements of Regulation S-X of the SEC and in accordance with
GAAP.
(c) Sellers shall use their best efforts to cause and permit the
independent registered public accounting firm or firms that have audited, or
will audit pursuant to paragraph (d), their consolidated financial statements as
of December 31, 2003 and 2004 and for each of the years during the three year
period ended December 31, 2004 (and if the financial statements for any
subsidiaries included in such consolidated financial statements or which
otherwise are required to be presented separately have been audited by any
independent registered public accounting firm other than the firm auditing the
consolidated financial statements of the Company, such firm or firms as well) to
provide AREH, its Affiliates and subsidiaries and their respective
representatives with such assistance as AREH shall reasonably request in order
to permit AREH and its Affiliates and subsidiaries to prepare and file any
Report, including, without limitation, by issuing or providing an original
executed copy of any required audit report or consent to the inclusion of such
report and the identification of such audit firm or firms as experts.
(d) In furtherance of the covenants contained in paragraphs (a) - (c),
Sellers shall prepare and deliver to Purchaser prior to the Closing,
consolidated financial statements of the Company meeting the requirements of
Regulation S-X of the SEC applicable to an Annual Report on Form 10-K as of
December 31, 2003 and 2004 and for each of the three years during the three year
53
period ended December 31, 2004. Such financial statements shall be prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as maybe indicated in the notes thereto) and shall be audited by Ernst &
Young LLP or another independent registered public accounting firm reasonably
acceptable to AREH, and shall be accompanied by a signed currently dated report
covering all three years by Ernst & Young LLP or such other independent
registered accounting firm reasonably acceptable to AREH. Sellers also shall
prepare and deliver to Purchaser prior to the Closing consolidated financial
statements of the Company for each of its fiscal quarters (including the
corresponding period for the preceding fiscal year) for which a Quarterly Report
on Form 10-Q is required to have been filed during the fiscal year ending
December 31, 2005 through and including the Closing Date, meeting the
requirements of Regulation S-X of the SEC applicable to Quarterly Reports on
Form 10-Q. Such quarterly financial statements shall be prepared in accordance
with GAAP (except as permitted by Form 10-Q of the SEC).
8.10. Schedules. Sellers may, at their option, include in the
Schedules items that are not material in order to avoid any misunderstanding,
and such inclusion, or any references to dollar amounts, shall not be deemed to
be an acknowledgement or representation that such items are material, to
establish any standard of materiality or to define further the meaning of such
terms for purposes of this Agreement. No later than fifteen (15) days after the
date of this agreement, Sellers will deliver legal descriptions for each of the
Material Owned Real Properties.
8.11. No Inconsistent Action. No Seller shall take any action that
is inconsistent with the Sellers' obligations under this Agreement.
8.12. Accepted or Rejected Contracts.
(a) For each Material Contract (other than Real Property Leases) listed
on Schedule 5.9 and each Material Intellectual Property License listed on
Schedule 5.8(b), the Sellers shall timely indicate to Purchaser whether or not,
in connection with the Bankruptcy Cases, the Company or any of its Subsidiaries,
as the case may be, desires to accept or reject or prior to the date hereof has
accepted or rejected such Material Contract or Material Intellectual Property
License. From and after the date hereof, the Purchaser, in its sole and absolute
discretion, may direct the Sellers to cause each such Material Contract or
Material Intellectual Property License not accepted or rejected prior to the
date hereof, to be either accepted or rejected, and the Sellers shall accept or
reject each such Material Contract or Material Intellectual Property License in
accordance with the Purchaser's direction effective as of the Closing (any
Material Contracts and Material Intellectual Property Licenses so accepted
hereby at the direction of Purchaser are referred to herein as the "Accepted
Contracts" and "Accepted Intellectual Property Licenses," as applicable).
Purchaser shall provide Sellers with at least 14 days notice prior to a hearing
to determine Cure Costs of the Accepted Contracts and Accepted Intellectual
Property Licenses.
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(b) For each Real Property Lease listed on Schedule 5.7(b), the Sellers
shall timely indicate to Purchaser whether or not, in connection with the
Bankruptcy Cases, the Company or any of it Subsidiaries, as the case may be,
desires to accept or reject or prior to the date hereof has accepted or
rejected, such Real Property Lease. From and after the date hereof, the
Purchaser, in its sole and absolute discretion, may direct the Sellers to cause
each such Real Property Lease not accepted or rejected prior to the date hereof,
to be either accepted or rejected, and the Sellers shall accept or reject each
such Real Property Lease in accordance with the Purchaser's direction effective
as of Closing (any Real Property Leases so accepted hereby at the direction of
the Purchaser are referred to herein as the "Accepted Real Property Leases").
(c) Any motions filed with, and the proposed orders submitted to, the
Bankruptcy Court seeking authorization to, or any proceedings undertaken to,
accept or reject any one or more of the Material Contracts, Material
Intellectual Property Licenses or Real Property Leases shall be satisfactory in
form and substance to the Purchaser in its reasonable discretion. The
Purchaser's written consent shall be required prior to the Sellers (i)
compromising or commencing litigation with respect to any Material Contract,
Material Intellectual Property Licenses or Real Property Lease, or (ii) making
material payments required to be made under the Bankruptcy Code in connection
therewith.
8.13. Specific Enforcement of Covenants. The Sellers acknowledge
that irreparable damage may occur in the event that any of the covenants and
agreements of the Sellers set forth in this Section 8.13 or in any other part of
this Agreement were not timely performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that Purchaser and Parent
shall be entitled to an injunction or injunctions, without the posting of any
bond, to prevent or cure any breach of this Section 8.13 or any breach of such
other covenants or agreements of the Sellers, and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
it may be entitled at law or in equity. In the event the Bankruptcy Court
abstains from exercising or declines to exercise jurisdiction with respect to
any matter provided for in this sentence or is without jurisdiction with respect
to any matter provided for in this sentence or is otherwise without
jurisdiction, such abstention, refusal or lack of jurisdiction shall have no
effect upon and shall not control, prohibit or limit the exercise of
jurisdiction of any other court having competent jurisdiction with respect to
any such matter.
8.14. Form of Transaction. The Sellers, Parent and Purchaser
hereby agree that the acquisition of the Purchased Assets pursuant to this
Agreement is intended to be treated as a taxable transaction for U.S. federal
income tax purposes. The Sellers, Parent and Purchaser hereby further agree to
continue to review the relevant information of the Sellers and to discuss the
acquisition structure. If the Parent and Purchaser desire to modify the
structure of the acquisition of the Purchased Assets pursuant to this Agreement,
the structure of such acquisition and this Agreement shall be accordingly
modified subject to the consent of the Sellers, which consent shall not be
unreasonably withheld or delayed.
8.15. Permits. Following the date hereof, Sellers shall from time
to time, at the request of Purchaser use their commercially reasonable efforts
to assist Purchaser with preparing such applications or other documents
necessary or desirable in connection with applications for or transfers of
Permits to Purchaser. Until any necessary Permits are transferred or issued to
55
Purchaser, and to the extent not prohibited by Law or the terms of such Permits
except where such prohibitions are overridden by order of the Bankruptcy Court
or by other applicable Law, Sellers hereby grant to Purchaser effective at the
Closing, and Purchaser shall have, the right and license to use such Permits of
Sellers as Purchaser shall determine. The provisions of this Section 8.15 shall
survive the Closing.
8.16. Indemnity Agreement. The Company shall cause its subsidiary,
X.X. Xxxxxxx & Co., Inc. to execute and deliver to Purchaser and Parent at the
Closing, the indemnity agreement in the form of Exhibit S and a notice to its
insurance company that it is entering into the indemnity agreement.
ARTICLE IX.
EMPLOYEES AND EMPLOYEE BENEFITS
9.1. Employment.
(a) No Material Employment Changes. Without Purchaser's prior written
consent, no increase shall be made in the compensation, bonuses or commissions
payable, or to become payable, by it to any Employees except as required by
Employment Agreements existing as of the date hereof and except for such
increases in annual salary as are made in the Ordinary Course of Business and
are reflected in the budget for Sellers for calendar year 2005 delivered to
Purchaser prior to the date hereof. Sellers shall make no arrangement for any
new Employee Plan relating to Employees, and no material change shall be
effected in management, personnel policies or employee benefits.
(b) Employee Hirings. On or before the Closing Date, the Purchaser
shall extend offers of employment to such Employees as it determines on such
terms as it considers to be competitive in the marketplace.
(c) Terms of Employment. Sellers hereby expressly acknowledge and agree
that the Purchaser shall have the right to fix the level of compensation and
benefits and other terms and conditions of employment to be provided to
Continuing Employees, and that the Purchaser may modify the terms and conditions
of employment of any Continuing Employee from time to time and may terminate the
employment of any Continuing Employee at any time.
(d) No Rights to Employment. Nothing expressed or implied in this
Agreement is intended to confer upon any Employee or his or her legal
representatives any rights or remedies, including, without limitation, any
rights of employment for any specified period, of any nature or kind whatsoever
under or by reason of this Agreement.
(e) Benefits. As of the Closing Date, the Purchaser or an ERISA
Affiliate thereof will offer continuation coverage for the duration of the
coverage period required under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"), as set forth in Section 4980B(f)(2)(B) of the
Tax Code (and the regulations thereunder), under the health care plans covering
the Continuing Employees after the Closing to the M&A Qualified Beneficiaries
(as defined below). An "M&A Qualified Beneficiary" is (i) any Employee who
56
incurred a "qualifying event" (within the meaning of Section 4980B(f)(3) of the
Tax Code and the regulations thereunder) prior to, or in connection with, the
Closing if his or her last employment with the Sellers prior to incurring such
qualifying event was associated with the Purchased Assets or (ii) any eligible
dependent of an Employee described in clause (i) above. For purposes of clause
(i) of the preceding sentence, an Employee's last employment will be deemed to
be associated with the Purchased Assets unless the Employee's last employment
was associated with Sellers' Xxxxxx or Xxxxxxxx Xxxxx operations. In addition,
any Employee who is actively employed by the Sellers immediately prior to the
Closing Date and who continues in employment with the Sellers after the Closing
Date for the purpose of winding down the affairs of the Debtor shall be treated
as having incurred a qualifying event on the closing date. Notwithstanding the
foregoing, a person will not be considered an M&A Qualified Beneficiary if (i)
such person's COBRA continuation coverage expired or was terminated prior to the
Closing or (ii) such person had not made a COBRA continuation coverage election
and the period of time for making a COBRA continuation coverage election (as set
forth in Section 4980B(f)(5) of the Tax Code and regulations thereunder) has
expired. Schedule 9.1(e) states the name and address of each M&A Qualified
Beneficiary, the date on which the qualifying event occurred, the date on which
COBRA continuation coverage expires, the reason the M&A Qualified Beneficiary is
entitled to COBRA continuation coverage, and the offices, facilities or plants
at which the Employee worked.
(f) Credit for Past Service. As of the Closing Date, the Purchaser or
an ERISA Affiliate thereof will offer health plan coverage to Continuing
Employees. The Purchaser shall either continue the health plan offered by the
Sellers prior to the Closing Date or establish another health plan as the
Purchaser determines in its sole discretion. Purchaser and its Affiliates shall
be under no obligation to grant Continuing Employees credit in any of its
employee benefit plans for any past service with the Sellers, for eligibility
and vesting purposes or otherwise. It is understood and agreed that the
Purchaser shall have the right, in its sole discretion, to amend, modify, or
terminate such plans at any time. Nothing herein shall entitle any Continuing
Employees to any coverage or benefits under any employee benefit plans of any
Affiliate of Purchaser.
(g) Cooperation. Purchaser shall cooperate with Sellers in providing
reasonable access to Continuing Employees so that such Employees may assist on
an incidental basis only in the winddown of the Sellers' operation following the
Closing Date, provided Sellers furnish reasonable advance notice to Purchaser of
the reason and extent of such access. Sellers will cooperate with Purchaser as
is reasonably requested by Purchaser in connection with extending any offers of
employment to Employees. Sellers will exercise their commercially reasonable
efforts to cause Persons who are to become Continuing Employees to provide
Purchaser with such information as may be requested by Purchaser to enroll such
Person in any benefit plan of Purchaser and to execute Purchaser's form of
confidentiality agreement and acknowledgement of Purchaser's ethics policies.
57
ARTICLE X.
CONDITIONS TO CLOSING
10.1. Conditions Precedent to Obligations of Parent and Purchaser.
The obligation of Parent and Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, as of the Closing
Date, of each of the following conditions (any or all of which may be waived by
Parent or Purchaser in their sole discretion in whole or in part to the extent
permitted by applicable Law, such waiver to be in writing signed by an executive
officer of Parent or Purchaser referencing this section and the specific
condition to be waived):
(a) All representations and warranties of the Sellers in this Agreement
or in any exhibit, schedule or document delivered pursuant hereto shall be true,
complete and correct in all respects (with respect to representations and
warranties qualified or limited by materiality or Seller Material Adverse
Effect) or in all material respects (with respect to representations and
warranties not so qualified or limited), in each case when made (unless cured as
provided in Section 4.4(e)) and as of the Closing Date as if made on the Closing
Date, other than any such representations or warranties that expressly speak
only as of an earlier date, which shall be true, complete and correct in all
respects (with respect to representations and warranties qualified or limited by
materiality or Seller Material Adverse Effect) or in all material respects (with
respect to representations and warranties not so qualified or limited), as of
such earlier date.
(b) All of the terms, covenants and conditions to be complied with and
performed by the Sellers on or prior to the Closing Date (other than the
covenants contained in Section 8.2 (a)(i), Sections 8.2(b)(iii) through (xi),
Section 8.2(b)(xii) (to the extent it relates to commitments to do items covered
in Sections 8.2(b)(iii) through (xi)) , Section 8,2(c), and Section 8.9(d), as
to which Section 10.1(l) applies) shall have been complied with or performed in
all material respects and all breaches of any such covenants in the aggregate do
not result in a Seller Material Adverse Effect.
(c) Purchaser shall have received a certificate or certificates, dated
as of the Closing Date, executed on behalf of the Company, by an authorized
executive officer thereof, in the form of the attached Exhibit O.
(d) Any Governmental Authorities whose consent is required for
consummation of the transactions contemplated hereby (other than the HSR Act as
more particularly described in Section 10.3(c)) shall have issued all consents
required for the transactions contemplated hereby, without any unreasonable
condition or limitation.
(e) There shall not be in effect any Law or Order of any Governmental
Body of competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement.
(f) [Intentionally Omitted]
58
(g) Purchaser, in its reasonable discretion, shall be satisfied with
the terms and conditions of the Ancillary Documents (with Purchaser deemed to be
satisfied with Ancillary Documents with respect to which forms have been
attached hereto to the extent the Ancillary Documents delivered at Closing are
in the form of such attachments).
(h) The title company selected by Purchaser shall be committed to
issue, at normal premium rates an ALTA Owner's Title Insurance Policy for each
of the Material Owned Real Properties and an ALTA Leasehold Title Insurance
Policy for each of the Leased Real Properties for which the Real Property Lease
or a memorandum thereof has been placed of record (or may be placed of record in
accordance with the terms of the Real Property Lease), insuring Purchaser's fee
or leasehold interest, as applicable, in an amount equal to the fair market
value of each of the Material Owned Real Properties and such amount as is
customary for leasehold title policies with respect to the Leased Real
Properties, subject only to the Permitted Exceptions, together with extended
coverage over the so-called "general" exceptions, (to the extent available in
the respective States where the Material Owned Real Properties and Leased Real
Properties are located) and such endorsements as Purchaser may reasonably
request.
(i) The amount of Current Trade Payables to be assumed by Purchaser
under Section 2.3(a)(viii) shall not exceed $47,500,000 in the aggregate;
(j) Sellers shall have delivered, or caused to be delivered, to
Purchaser all of the items set forth in Section 4.2;
(k) As of the Closing Date, neither Sellers nor Purchaser and its
Affiliates shall have received any notice from a Governmental Body, no Order
shall have been issued stating and no Governmental Body shall have taken any
position in any action before the Bankruptcy Court or any other Governmental
Body, asserting, that Purchaser is required under Law or otherwise to purchase
any Excluded Assets or to assume any Excluded Liabilities, which notice, Order
or position has not been withdrawn with prejudice or dismissed with prejudice by
a Final Order of the Bankruptcy Court and/or a court of competent jurisdiction;
(l) Sellers shall have fully complied with and performed their
obligations set forth in Sections 8.2(a)(i), Sections 8.2(b)(iii) through (xi),
Section 8.2(b)(xii) (to the extent it relates to commitments to do items covered
in Sections 8.2(b)(iii) through (xi)), Section 8.2(c) and Section 8.9(d) hereof;
(m) The amount of all obligations (other than those in respect of
letters of credit issued in respect of trade payables and workers compensation
obligations) outstanding under the DIP Credit Agreement shall not exceed
$120,000,000, and the amount of all obligations outstanding in respect of
letters of credit issued in respect of trade payables and workers compensation
obligations shall not exceed $35,000,000;
(n) Assuming the accuracy of the representation set forth in Section
6.9 hereof, the Bankruptcy Court shall have determined, in the Sale Order and,
if applicable, the Confirmation Order, that Aretex (i) as a First Lien Lender,
shall have an allowed claim in the face amount of $193,503,839.26, plus
59
interest, (reduced by any payments made after the date hereof) and be entitled
to not less than 39.989% of any securities or other property or assets delivered
and allocated among the First Lien Lenders; and (ii) as a Second Lien Lender,
shall have an allowed claim in the face amount of $84,500,000, plus interest,
and be entitled to not less than 51.212% of any securities or other property or
assets delivered and allocated among the Second Lien Lenders; and
(o) The Distributable Value shall have been determined by the
Bankruptcy Court.
10.2. Conditions Precedent to Obligations of Sellers. The
obligations of Sellers to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, as of the Closing Date, of each of the
following conditions (any or all of which may be waived by Sellers in whole or
in part to the extent permitted by applicable Law, such waiver to be in writing
signed by an executive officer of each of the Sellers referencing this section
and the specific condition to be waived):
(a) the representations and warranties of Parent and Purchaser set
forth in this Agreement or in any exhibit, schedule or document required to be
delivered in accordance with the terms of this Agreement shall be true, complete
and correct in all respects (with respect to representations and warranties
qualified or limited by materiality or Purchaser Material Adverse Effect) or in
all material respects (with respect to representations and warranties not so
qualified or limited), in each case as of the date hereof (unless cured as
provided in Section 4.4(f)) and as of the Closing Date as if made on the Closing
Date, other than any such representations or warranties that expressly speak
only as of an earlier date, which shall be true, complete and correct in all
respects as of such date (with respect to representations and warranties
qualified or limited by materiality or Purchaser Material Adverse Effect) or in
all material respects (with respect to representations and warranties not so
qualified or limited), as of such earlier date;
(b) All of the terms, covenants and conditions to be complied with and
performed by Purchaser on or prior to the Closing Date shall have been complied
with or performed in all material respects and all breaches of any such
covenants in the aggregate do not result in a Purchaser Material Adverse Effect;
(c) Purchaser shall have delivered, or Parent shall have caused to be
delivered, to Sellers all of the items set forth in Section 4.3;
(d) Seller, in its reasonable discretion, shall be satisfied with the
terms and conditions of the Ancillary Documents (with Seller deemed to be
satisfied with Ancillary Documents with respect to which forms have been
attached hereto to the extent the Ancillary Documents delivered at Closing are
in the form of such attachments); and
(e) Seller shall have received a certificate or certificates, dated as
of the Closing Date, executed on behalf of the Purchaser, by an authorized
executive officer thereof, in the form of the attached Exhibit P.
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10.3. Conditions Precedent to Obligations of Parent, Purchaser and
Sellers. The respective obligations of Parent, Purchaser and Sellers to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment of each of the following conditions (any or all of which may be
waived by Parent, Purchaser and Sellers in whole or in part to the extent
permitted by applicable Law, such waiver to be in writing signed by an executive
officer of Parent, Purchaser or the applicable Seller, referencing this section
and the specific condition to be waived):
(a) there shall not be in effect any Order by a Governmental Body of
competent jurisdiction restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby as of the Closing Date;
(b) the Bankruptcy Court shall have entered the Selection Order, the
Sale Order and, if applicable, the Confirmation Order; and
(c) the waiting period applicable to the transactions contemplated by
this Agreement under the HSR Act shall have expired or early termination shall
have been granted as of the Closing Date.
10.4. Frustration of Closing Conditions. Neither Sellers nor
Purchaser may rely on the failure of any condition set forth in Section 10.1,
10.2 or 10.3, as the case may be, if such failure was caused by such party's
failure to comply with any provision of this Agreement.
10.5. Force Majeure. If, prior to Closing, any damage or loss to
any of the Sellers properties and assets, including, without limitation, the
Owned Real Properties and the Leased Real Properties, occurs due to fire, flood,
riot, theft, act of God or other casualty, or by reason of condemnation, and if
individually or in the aggregate the Losses associated therewith that are not
covered by any insurance or condemnation awards exceeds $25,000,000 (such Loss,
a "Material Property Loss"), then Purchaser may terminate this Agreement with no
cost or obligation on the part of Purchaser. "Loss" means the sum of the
reasonably estimated total cost necessary to repair or replace the damage or
loss to any such asset, plus the amount of Lost Profits associated with such
Loss minus reasonably estimated insurance recoveries or condemnation awards that
will be assigned to Purchaser, all as reasonably determined by Purchaser and as
set forth by Purchaser in writing to Sellers describing such calculation of
Loss. "Lost Profits" means the amount of profits lost or reasonably expected to
be lost in connection with the operation of the Business as a result of any
damage or loss to any of the properties or assets during the period from the
date of such damage or Loss to the expected date of completion of any rebuilding
or replacement of such damaged property or asset, all as reasonably determined
by Purchaser and as set forth by Purchaser in writing to Sellers describing such
calculation of Lost Profits. Sellers shall cooperate with Purchaser and provide
such information as reasonably necessary for Purchaser to determine such Lost
Profits.
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ARTICLE XI.
TAXES
11.1. Transfer Taxes. Purchaser shall be responsible for (and
shall indemnify and hold harmless Sellers and their respective directors,
officers, employees, Affiliates, agents, successors and permitted assigns (the
"Indemnified Persons") against any sales, use, stamp, documentary stamp, filing,
recording, transfer or similar fees or taxes or governmental charges (including
any interest and penalty thereon) payable in connection with the transactions
contemplated by this Agreement ("Transfer Taxes"). Sellers shall, however, seek
to include (to the extent permitted under applicable Law) in the Sales Order a
provision that provides that the transfer of the Purchased Assets shall be free
and clear of any stamp or similar taxes under Section 1146(c) of the Bankruptcy
Code. To the extent that any Transfer Taxes are required to be paid by Sellers
(or such Transfer Taxes are assessed against Seller), Purchaser shall promptly
reimburse Seller, as applicable, for such Transfer Taxes. Sellers and Purchaser
shall cooperate and consult with each other prior to filing any Tax Returns in
respect of Transfer Taxes; provided, however, Sellers may initially pay any
Transfer Taxes (for which Purchaser shall promptly reimburse Sellers) and,
thereafter, in reliance on Section 1146(c) of the Bankruptcy Code (if
applicable) apply for a refund (which refund shall be remitted to the Purchaser
to the extent such Transfer Taxes were previously reimbursed by Purchaser).
Sellers and Purchaser shall cooperate and otherwise take commercially reasonable
efforts to obtain any available refunds for Transfer Taxes.
11.2. Purchase Price Allocation. As soon as reasonably practicable
after the Closing Date, the Purchase Price for the Purchased Assets shall be
determined and allocated in accordance with a statement provided by Purchaser to
Sellers (the "Asset Acquisition Statement"). The Asset Acquisition Statement as
prepared by Purchaser shall be final provided the entries in the Statement are
reasonable. Sellers and Purchaser shall allocate the Purchase Price among
Sellers and among the Purchased Assets of each Seller as specified in the Asset
Acquisition Statement. In accordance with the Asset Acquisition Statement and
Section 1060 of the Tax Code and the Treasury Regulations issued thereunder,
Purchaser shall prepare and file Form 8594 and any exhibits thereto and any
other forms or supplements required to be filed. All income Tax Returns and
reports filed by Purchaser and Sellers shall be prepared consistently with such
Asset Acquisition Statement.
11.3. Tax Reporting.
(a) Purchaser shall prepare and file (or cause to be prepared and
filed) on behalf of the Sellers all Tax Returns, whether related to income taxes
or non-income taxes, required to be filed or that Purchaser otherwise deems
appropriate, including the filing of amended Tax Returns, for all Tax periods
through and including any Tax period that includes the Closing Date. Purchaser
shall furnish a completed copy of any such Tax Return (including any supporting
workpapers) to be filed by Purchaser to Sellers for Sellers' review at least
thirty (30) days prior to the due date for filing such returns. Sellers shall
have the right to raise reasonable objections to such Tax Returns. In the event
that the parties are unable to resolve in good faith any dispute prior to
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fifteen (15) days before the due date, the parties shall jointly request that an
independent accountant mutually agreed upon by Sellers and Purchaser (the
"Referee") to resolve any dispute as promptly as possible; provided, however,
that Purchaser's position shall prevail provided such position is reasonable. If
the Referee is unable to make a determination with respect to a disputed issue
prior to the date which is five (5) days prior to the due date for the filing of
the Tax Return in question, then Purchaser may file such Tax Return on the due
date therefor without such determination having been made and without Sellers'
consent. Notwithstanding the filing of such Tax Return, the Referee shall make a
determination with respect to the disputed issue in accordance with this Section
11.3. All fees and expenses of the Referee shall be paid by Purchaser.
(b) Purchaser shall pay, and indemnify and hold harmless Sellers and
the Indemnified Persons against, all Taxes of the Sellers included in the
Assumed Liabilities. Sellers shall indemnify and hold harmless Purchaser
against, all Taxes of Sellers that are included in Excluded Liabilities pursuant
to Section 2.4(g).
11.4. Cooperation and Audits. Purchaser, its affiliates and the
Sellers shall cooperate fully with each other regarding Tax matters (including
the execution of appropriate powers of attorney) and shall make available to the
other as reasonably requested all information, records and documents relating to
Taxes governed by this Agreement until the expiration of the applicable statute
of limitations or extension thereof or the conclusion of all audits, appeals or
litigation with respect to such Taxes. Each of the Sellers shall deliver to the
Purchaser any written notices, information, documents or records received from
any Tax Authority for taxable periods prior to the Closing Date, within five (5)
days of receipt of such notices, information, documents or records. Without
limiting the generality of the foregoing, the Sellers shall execute on or prior
to the Closing Date a power of attorney authorizing Purchaser to correspond,
sign, collect, negotiate, settle and administer all Tax payments and Tax
Returns.
ARTICLE XII.
MISCELLANEOUS
12.1. No Survival of Representations and Warranties. The parties
hereto agree that the representations and warranties contained in this Agreement
shall not survive the Closing hereunder, and none of the parties shall have any
liability to each other after the Closing for any breach thereof. The parties
hereto agree that the covenants contained in this Agreement to be performed at
or after the Closing shall survive the Closing hereunder, and each party hereto
shall be liable to the other after the Closing for any breach thereof.
12.2. Expenses. Except as otherwise provided in this Agreement,
each of Sellers, Parent and Purchaser shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby; provided, that Purchaser
shall pay all filing fees with respect to the HSR Act payable in connection with
this Agreement.
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12.3. Injunctive Relief. Damages at law may be an inadequate
remedy for the breach of any of the covenants, promises and agreements contained
in this Agreement, and, accordingly, any party hereto shall be entitled to
injunctive relief, without the requirement to post any bond, with respect to any
such breach, including specific performance of such covenants, promises or
agreements or an order enjoining a party from any threatened, or from the
continuation of any actual, breach of the covenants, promises or agreements
contained in this Agreement; provided, however, Sellers shall not be entitled to
any injunctive relief or other equitable remedy for any reason until after the
Closing has occurred. Subject to the limitations in the preceding proviso and in
Section 12.4, the rights set forth in this Section 12.3 shall be in addition to
any other rights which a party hereto may have at law or in equity or pursuant
to this Agreement.
12.4. Exclusive Remedy. The parties hereto agree that prior to the
Closing, the right, if any, to receive the Deposit Amount pursuant to Section
3.2 shall be the sole and exclusive remedy that Sellers have against Purchaser
for any claim or action or liability arising out of or related to this Agreement
or the Ancillary Documents or any termination of this Agreement. Such payment of
the Deposit Amount shall be liquidated damages and Sellers and Purchaser agree
in advance that actual damages would be difficult to ascertain and that the
amount of such liquidated damages is a fair and equitable amount to reimburse
Sellers, as applicable, for damages sustained by them prior to Closing.
12.5. Submission to Jurisdiction; Consent to Service of Process.
(a) Without limiting any party's right to appeal any order of the
Bankruptcy Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction
to enforce the terms of this Agreement and to decide any claims or disputes
which may arise or result from, or be connected with, this Agreement, any breach
or default hereunder, or the transactions contemplated hereby, and (ii) any and
all proceedings related to the foregoing shall be filed and maintained only in
the Bankruptcy Court, and the parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at such
locations as indicated in Section 12.9 hereof; provided, however, that if the
Bankruptcy Case has closed, the parties agree to unconditionally and irrevocably
submit to the exclusive jurisdiction of the United States District Court for the
Southern District of New York sitting in New York County or the Commercial
Division, Civil Branch of the Supreme Court of the State of New York sitting in
New York County and any appellate court from any thereof, for the resolution of
any such claim or dispute. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by Law.
(b) Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action or proceeding by delivery of
a copy thereof in accordance with the provisions of Section 12.9.
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12.6. Waiver of Right to Trial by Jury. Each party to this
Agreement waives any right to trial by jury in any action, matter or proceeding
regarding this Agreement or any provision hereof.
12.7. Entire Agreement; Amendments and Waivers. This Agreement
(including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof. This Agreement can be amended, supplemented or changed,
and any provision hereof can be waived, only by written instrument making
specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
No action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
12.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and performed in such State without regard to the conflict of
laws principles thereof.
12.9. Notices. Except as specifically contemplated by or permitted
in Section 8.1(c), all notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one business day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
If to Sellers, to:
WestPoint Xxxxxxx Inc.
000 X. 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
Email: xxxxxxxxx.xxxx@xxxxx.xxx
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With a copy (which shall
not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
If to Purchaser or Parent, to:
Textile Co., Inc.
WS Textile Co., Inc.
000 Xxxxx Xxxxxxx Xxxx
Xx. Xxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
With a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
12.10. Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any law or
public policy, all other terms or 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 any party. Upon 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
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
12.11. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person or entity not a party to this
Agreement (other than AREH pursuant to Section 8.9), including any Person who is
party to, or benefits from the assumption of, any Assumed Liability. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by either Sellers, Parent or Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void; provided, however, that
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Purchaser may, prior to Closing, designate any one or more of its Affiliates to
purchase, and transfer to any Affiliate, its rights under this Agreement to
purchase, any Purchased Asset. No assignment of any obligations hereunder shall
relieve the parties hereto of any such obligations. Upon any permitted
assignment, the references in this Agreement to Sellers, Parent or Purchaser
shall also apply to any such assignee unless the context otherwise requires.
Nothing herein shall prevent Parent, Purchaser or their permitted assignees from
assigning this Agreement or any rights or obligations hereunder or transferring
any Purchased Assets to any Person after the Closing Date.
12.12. Non-Recourse. Except for fraud, no past, present or future
director, officer, employee, incorporator, member, partner or equityholder of
Sellers, Parent or Purchaser or their Affiliates shall have any liability for
the respective obligations or liabilities of such Person under this Agreement or
any agreement entered into in connection herewith or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby and thereby.
12.13. Publicity. Prior to the Closing, none of the Purchasers,
Parent or Sellers shall issue, and after the Closing, none of Sellers shall
issue, any press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party, which approval will not be unreasonably withheld or delayed,
unless, in the reasonable judgment of the party intending to issue such release,
disclosure is otherwise required by applicable Law, or by the Bankruptcy Court
with respect to filings to be made with the Bankruptcy Court in connection with
this Agreement, provided the party intending to issue such release shall use its
commercially reasonable efforts consistent with such applicable Law or
Bankruptcy Court requirement to consult with the other party with respect to the
text thereof.
12.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
WS TEXTILE CO., INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: President
TEXTILE CO., INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: President
NEW TEXTILE ONE, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: President
NEW TEXTILE TWO, INC.
By: /s/ Xxx X Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: President
SELLERS:
WESTPOINT XXXXXXX INC.
By: /s/ X.X. Xxxxxxxx
--------------------------------------------
Name: M.L. "Chip" Xxxxxxxx
Title: President and Chief Executive
Officer
WESTPOINT XXXXXXX INC. I
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
WESTPOINT XXXXXXX STORES INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
X.X. XXXXXXX ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
