ASSET PURCHASE AGREEMENT
by and among
XXXXXXX & XXXXXX PRODUCTS CO.,
WESTERN AVENUE DYERS, L.P.,
XXXXX XxXXXXXX,
XXXXX XxXXXXXX,
XXXXX XXXXXXXX
and
TYNG TEXTILES LLC
Dated as of August 17, 2001
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions..........................................................1
ARTICLE II
SALE AND PURCHASE
2.1 Sale and Purchase of Assets..........................................9
2.2 Excluded Assets.....................................................11
2.3 Purchase Price......................................................12
2.4 Assumption of Liabilities...........................................12
2.5 Closing.............................................................13
2.6 Nonassignable Contracts and Leases..................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WAD AND SELLERS
3.1 Due Incorporation and Formation.....................................14
3.2 Due Authorization...................................................14
3.3 Consents and Approvals; Authority Relative to This Agreement........15
3.4 Financial Statements; Undisclosed Liabilities; Other Documents......15
3.5 No Material Adverse Effects; No Material Adverse Change.............16
3.6 Title to Properties.................................................17
3.7 Condition and Sufficiency of Transferred Assets.....................17
3.8 Real Property.......................................................18
3.9 Personal Property...................................................19
3.10 Inventory...........................................................19
3.11 Accounts Receivable.................................................19
3.12 Intellectual Property...............................................19
3.13 Contracts; No Default or Violations.................................20
3.14 Permits.............................................................22
3.15 Insurance...........................................................22
3.16 Employee Benefit Plans; ERISA.......................................22
3.17 Employment and Labor Matters........................................25
3.18 Capital Improvements................................................25
3.19 Taxes...............................................................25
3.20 Product Claims......................................................26
3.21 Environmental Matters...............................................26
3.22 Litigation..........................................................27
3.23 No Conflict of Interest.............................................27
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3.24 Brokers.............................................................27
3.25 Customers and Suppliers.............................................28
3.26 WAD Disclosure Schedule.............................................28
3.27 Operation of the Business...........................................28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PRODUCTS
4.1 Existence and Power.................................................28
4.2 Due Authorization...................................................28
4.3 Consents and Approvals; Authority Relative to This Agreement........28
4.4 No Violation of Other Instruments or Laws...........................29
4.5 Brokers.............................................................29
ARTICLE V
COVENANTS
5.1 Implementing Agreement..............................................29
5.2 Access to Information and Facilities................................29
5.3 Consents and Approvals..............................................29
5.4 Retention of Certain Employees......................................30
5.5 Supplemental Information............................................30
5.6 Use of Name.........................................................30
5.7 Termination of Certain Agreements...................................30
5.8 Transfer Taxes......................................................30
5.9 Confidentiality.....................................................30
5.10 Publicity...........................................................31
5.11 Preservation of Business............................................31
5.12 Tax Matters.........................................................33
5.13 Maintenance of Insurance............................................33
5.14 Non-Compete.........................................................33
5.15 Non-Disparagement...................................................34
5.16 Personnel Matters...................................................35
5.17 WAD Financial Statements............................................37
5.18 EPCRKA..............................................................38
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
6.1 Actions or Proceedings..............................................38
6.2 WAD Refinancing.....................................................38
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PRODUCTS
7.1 Warranties True as of both Present Date and Closing Date............39
7.2 Compliance with Agreements and Covenants............................39
7.3 Consents and Approvals..............................................39
7.4 Financial Statements................................................39
7.5 Documents...........................................................39
7.6 Working Capital.....................................................39
7.7 Employee Matters....................................................39
7.8 Transfer Documents..................................................39
7.9 Consummation of Transactions Under Plan of Merger...................40
7.10 No Material Adverse Change..........................................40
7.11 Title Policies......................................................40
7.12 Surveys.............................................................40
7.13 Consents and Estoppels..............................................41
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF WAD AND EACH SELLER
8.1 Warranties True as of both Present Date and Closing Date............41
8.2 Compliance with Agreements and Covenants............................41
8.3 Documents...........................................................41
8.4 Consents and Approvals..............................................41
8.5 Consummation of Transactions Under Plan of Merger...................42
ARTICLE IX
CLOSING
9.1 Deliveries by WAD...................................................42
9.2 Deliveries by Products..............................................42
ARTICLE X
TERMINATION
10.1 Termination.........................................................43
10.2 Effect of Termination...............................................43
ARTICLE XI
INDEMNIFICATION
11.1 Survival............................................................44
11.2 Indemnification by WAD..............................................44
11.3 Indemnification by Products.........................................44
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11.4 Claims..............................................................45
11.5 Notice of Third Party Claims; Assumption of Defense.................45
11.6 Settlement or Compromise............................................46
11.7 Failure of Indemnifying Person to Act...............................46
11.8 Limitations on Indemnification......................................46
11.9 Assignment of Claims................................................47
11.10 Exclusive Remedies..................................................47
ARTICLE XII
MISCELLANEOUS
12.1 Expenses............................................................47
12.2 Amendment...........................................................47
12.3 Notices.............................................................47
12.4 Waivers.............................................................48
12.5 Counterparts........................................................49
12.6 Headings............................................................49
12.7 Interpretation......................................................49
12.8 Applicable Law......................................................49
12.9 Jurisdiction; Waiver of Jury Trial..................................49
12.10 Assignment..........................................................49
12.11 No Third Party Beneficiaries........................................49
12.12 Further Assurances..................................................50
12.13 Severability........................................................50
12.14 Remedies Cumulative.................................................50
12.15 Entire Understanding................................................50
12.16 WAD Disclosure Schedule.............................................50
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SCHEDULES
Schedule 2.1(a) - Owned Property
Schedule 2.1(b) - Leased Property
Schedule 2.1(f) - List of Machinery, Equipment, etc.
Schedule 2.1(g) - List of Leases of Vehicles and Tangible Assets
Schedule 2.1(j) - Intellectual Property
Schedule 2.3.1 - Payment
Schedule 2.3.2 - Allocation of Purchase Price
Schedule 2.4 - Assumed Liabilities
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT made as of August 17, 2001, by and among
Xxxxxxx & Xxxxxx Products Co., a Delaware corporation ("Products"), Western
Avenue Dyers, L.P., a Delaware limited partnership ("WAD"), Xxxxx XxXxxxxx ("X.
XxXxxxxx"), Xxxxx XxXxxxxx ("X. XxXxxxxx"), Xxxxx Xxxxxxxx ("Xxxxxxxx," together
with X. XxXxxxxx and X. XxXxxxxx, collectively referred to as the "Individual
Sellers") and Tyng Textiles LLC, a Delaware limited liability company ("Tyng,"
together with the Individual Sellers, collectively referred to as "Sellers").
WHEREAS, WAD is currently engaged in the business of dyeing yarn and
fabrics (the "Business");
WHEREAS, WAD desires to sell and assign to Products, and Products desires
to purchase and assume from WAD, the Transferred Assets and the Assumed
Liabilities, all on the terms and subject to the conditions of this Agreement;
WHEREAS, on the terms and subject to the conditions herein, each partner of
WAD has approved the sale of the Transferred Assets and the Assumed Liabilities
to Products;
WHEREAS, on the terms and subject to the conditions herein, the board of
directors of Products has approved the purchase of the Transferred Assets and
the Assumed Liabilities from WAD;
WHEREAS, X. XxXxxxxx is the record and beneficial owner of a 49% limited
partner interest, X. XxXxxxxx is the record and beneficial owner of a 24.5%
limited partner interest, Xxxxxxxx is the record and beneficial owner of a 24.5%
limited partner interest and Tyng is the record and beneficial owner of a 2%
general partner interest in WAD; and
WHEREAS, Products wishes to gain assurances that the Individual Sellers
will not compete with the Business or make any statements that disparage
Products or any of its present or future Subsidiaries or Affiliates;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements and warranties herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless otherwise defined in this Agreement, the following
terms shall have the meaning herein ascribed to such terms:
"Affiliate" shall mean, with respect to any specified Person: (1) any other
Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person;
and (2) any immediate family member of the specified Person or any of the
foregoing Persons referred to in clause (1) who is an individual.
"Agreement" shall mean this Asset Purchase Agreement, including all
exhibits and schedules hereto, as amended from time to time.
"Agreement of Limited Partnership" shall mean the Agreement of Limited
Partnership of WAD dated May 25, 1994, as amended.
"Assets" shall have the meaning set forth in Section 2.2.
"Assumed Liabilities" shall have the meaning set forth in Section 2.4(a).
"Benefits Transition Period" shall have the meaning set forth in Section
5.16(g).
"Business" shall have the meaning set forth in the recitals to this
Agreement.
"Business Day" shall mean a day other than Saturday, Sunday or any other
day on which commercial banks in New York, New York are authorized or required
by Law to be closed for business.
"CERCLA" shall have the meaning set forth in Section 3.21(d).
"Closing" shall have the meaning set forth in Section 2.5.
"Closing Date" shall have the meaning set forth in Section 2.5.
"Cobra" shall have the meaning set forth in Section 3.16(m).
"COBRA Coverage" shall have the meaning set forth in Section 5.16(b)(iii).
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall mean, with respect to any Person, all
nonpublic technical, proprietary, commercial, financial and other information
(irrespective of the form of such information) owned by or concerning such
Person and its Subsidiaries and their respective businesses and operations.
"Continuing Employees" shall have the meaning set forth in Section 5.16(a).
"Contract" shall mean any contract, lease, license (other than a license
which is a Permit, a Governmental Approval or Environmental Permit), commitment,
understanding, sales order, purchase order, agreement, indenture, mortgage,
note, bond, right, warrant, instrument or plan, whether written or oral.
"Customer Lists" shall have the meaning set forth in Section 2.1(k).
"Dollars" or numbers preceded by the symbol "$" shall mean amounts in
United States Dollars.
"X. XxXxxxxx" shall have the meaning set forth in the recitals to this
Agreement.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.16(a).
"End Date" shall have the meaning set forth in Section 10.1(b)(i).
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"Environmental Claim" shall mean any written notice, claim, demand, action,
suit, complaint, proceeding or final communication by any Governmental Authority
or Person alleging liability or potential liability arising out of, relating to,
based on or resulting from (i) the presence, discharge, emission, release or
threatened release of any Hazardous Material at any location, whether or not
owned, leased or operated by WAD, or (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or Environmental Permit.
Environmental Claim shall not include claims that were made in the past and that
have been resolved leaving WAD without further liability, contingently or
otherwise.
"Environmental Laws" shall mean the common law and all applicable federal,
state, local and foreign statutes, rules, regulations, ordinances, and orders
and decrees of any Governmental Authority, relating in any manner to
contamination, pollution or protection of human health or the environment, or
occupational safety and health.
"Environmental Permits" shall mean all permits, licenses, registrations and
other governmental authorizations and approvals required for WAD, and the
operations of WAD's facilities, to conduct the Business under Environmental
Laws.
"Environmental Reports" shall mean all applications, notifications,
reports, studies, assessments and audits that address any issue of site
assessment or noncompliance with, or liability under, any Environmental Law that
may affect WAD, the Business or the Transferred Assets in any material respect.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.16(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
"GAAP" shall mean U.S. generally accepted accounting principles at the time
in effect.
"Governmental Approvals" shall mean any consent, approval, authorization,
waiver, permit, grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with, or report or
notice of, with or to, any Governmental Authority.
"Governmental Authority" shall mean the government of the United States or
any foreign country or any state or political subdivision thereof, and any
entity, body or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
the PBGC and other quasi-governmental entities established to perform such
functions.
"Hazardous Material" shall mean any chemical, material or substance defined
as or included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "hazardous constituents", "restricted hazardous
materials", "extremely hazardous substances", "toxic
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substances", "contaminants", "pollutants", "toxic pollutants", or words of
similar meaning and regulatory effect under any applicable Environmental Law,
including, without limitation, petroleum (including, without limitation, crude
oil or any fraction thereof) and asbestos.
"Heartland" shall mean Heartland Industrial Partners, L.P.
"Indebtedness" of any Person shall mean (a) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all capital lease obligations
of such Person, (d) all obligations of such Person in respect of bankers'
acceptances issued or created for the account of such Person, (e) all
indebtedness of others secured by (or for which the holder of such indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
any property owned or acquired by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, and (f) all
guarantees by such Person of indebtedness of others.
"Indemnified Person" shall mean the Person or Persons entitled to, or
claiming a right to, indemnification under Article XI.
"Indemnifying Person" shall mean the Person or Persons claimed by the
Indemnified Person to be obligated to provide indemnification under Article XI.
"Individual Sellers" shall have the meaning set forth in the recitals to
this Agreement.
"Intellectual Property" shall have the meaning set forth in Section 2.1(j)
"Inventory" shall have the meaning set forth in Section 2.1(h).
"IRS" shall mean the Internal Revenue Service.
"JAII Acquisition" shall mean JAII Acquisition Co., a Delaware corporation
and a wholly owned Subsidiary of Parent.
"Xxxx" shall mean Xxxx Fabrics Corporation, a Delaware corporation and an
Affiliate of WAD.
"Xxxx Automotive" shall mean Xxxx Automotive Industries, Inc., a Delaware
corporation and a wholly owned Subsidiary of Xxxx.
"X. XxXxxxxx" shall have the meaning set forth in the recitals to this
Agreement.
"Key Employee" shall mean each Continuing Employee identified on the WAD
Disclosure Schedule as a "Key Employee."
"Knowledge" and similar phrases such as "aware" and "known" shall mean,
whenever used to qualify a representation or warranty herein, (i) with respect
to WAD, the actual knowledge of X. XxXxxxxx, Treasurer of WAD, Xxxxxx Xxxxx,
Chief Financial Officer of Xxxx, Xxxx Xxxxxx, General Counsel to Xxxx, X.
XxXxxxxx, Executive Vice-President and Chief Operating Officer of WAD, or Xxxxx
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Figal, Vice President of Operations of WAD, (ii) with respect to Tyng, the
actual knowledge of X. XxXxxxxx, Chief Executive Officer and Treasurer of Tyng,
X. XxXxxxxx, Executive Vice President and Chief Operating Officer of WAD,
Xxxxxxxx, President and Chief Operating Officer of Tyng, or Xxxxxx Xxxxx, Chief
Financial Officer of Xxxx and (iii) with respect to each Individual Seller, such
Individual Seller, in each case, with respect to clauses (i), (ii), and (iii)
after reasonable inquiry of the individuals whom such Persons would ordinarily
consult with when investigating the type of matter to which the representation
or warranty relates in the ordinary course of performing their duties and
obligations to WAD or Tyng.
"Latest Balance Sheet" shall mean the audited consolidated balance sheet of
the Tyng Textiles Group dated as of July 1, 2000.
"Latest Financial Information Date" shall mean December 30, 2000.
"Law" shall mean any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed to or imposed by any
Governmental Authority.
"Leased Real Property" shall have the meaning set forth in Section 2.1(b).
"Letter of Intent" shall mean the letter agreement among E. XxXxxxxx, Xxxx
Automotive, Xxxx, Parent and Products dated April 17, 2001.
"Lenders" shall have the meaning set forth in Section 6.2.
"Lien" shall mean any mortgage, lien, charge, restriction, pledge,
assessment, security interest, option, lease or sublease, claim, right of any
third party, easement, encroachment or encumbrance.
"Loss" or "Losses" shall mean any and all liabilities, losses, costs,
claims, damages (including out-of-pocket consequential damages), penalties and
expenses (including reasonable attorneys' fees and expenses and costs of
investigation and litigation). In the event any of the foregoing are
indemnifiable hereunder, the terms "Loss" and "Losses" shall include any and all
reasonable attorneys' fees and expenses and costs of investigation and
litigation incurred by the Indemnified Person in enforcing such indemnity.
"Material Adverse Change" shall mean a change (or circumstance or event
involving a prospective change) in the business, operations, assets,
liabilities, results of operations, cash flows or condition (financial or
otherwise) of the Business, taken as a whole, that has Materially Adverse
Effect.
"Material Adverse Effect" shall mean with respect to a Person an effect or
circumstance that is or is reasonably likely to be materially adverse on either
(i) the business, operations, assets, liabilities, results of operations, cash
flows or condition (financial or otherwise) of such Person or, (ii) the ability
of such Person to consummate the Transaction. Notwithstanding the foregoing,
each of the parties hereto agrees that any such effect or circumstance that
relates to the matters contemplated by any Section of this Agreement that does
not have an effect upon such Person which would reasonably be expected to result
in a claim, Loss or obligation of an amount greater than $25,000 individually
shall not constitute a Material Adverse Effect, provided, however, that, with
respect to WAD, in no event shall an
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effect or circumstance that affects the national economy or the business of yarn
and fabric dyeing generally in substantially the manner and to substantially the
extent that it affects the Business be deemed to be a Material Adverse Effect
even if the same would otherwise qualify as such.
"Material Contract" shall mean a Contract that provides for or which would
reasonably be expected to result in the relevant party thereto making payments
in excess of $10,000 per year, for at least one year, or which would otherwise
be reasonably expected to have a Material Adverse Effect if not performed by
either party to such Contract.
"Mortgages" shall have the meaning set forth in Section 3.8(b).
"Non-Assigned Contracts" shall have the meaning set forth in Section 2.6.
"Non-Compete Period" shall have the meaning set forth in Section 5.14.
"Owned Real Property" shall have the meaning set forth in Section 2.1(a).
"Parent" shall mean Xxxxxxx & Xxxxxx Corporation.
"PBGC" shall have the meaning set forth in Section 3.16(f).
"Pension Plans" shall have the meaning set forth in Section 3.16(a).
"Permits" shall have the meaning set forth in Section 3.14.
"Permitted Liens" shall mean (i) the Liens set forth in Section 1.1(P) of
the WAD Disclosure Schedule, (ii) any easements, covenants, restrictions,
encroachments and similar encumbrances that do not materially interfere with,
and do not materially adversely effect, the value or the use of the Owned Real
Property or the Leased Real Property as currently used and improved; and (iii)
the right of lessors in or to (a) any lease of assets or Real Property or (b)
any assets which are subject to a lease where the existence of the lease or the
fact that the assets are leased is reflected in Schedule 1.1(P) of the WAD
Disclosure Schedule.
"Person" shall mean any individual, corporation, proprietorship, firm,
partnership, limited partnership, trust, association or other entity.
"Plan of Merger" shall mean the Agreement and Plan of Merger by and among
Parent, Products, JAII, E. XxXxxxxx, Xxxx and Xxxx Automotive dated August 17,
2001.
"Pre-paid Expenses" shall mean all prepaid expenses, including without
limitation, ad valorem taxes, leases and rentals.
"Product" shall have the meaning set forth in Section 3.20.
"Product Damages Claims" shall have the meaning set forth in Section
11.2(g)
"Product Warranty Claims" shall have the meaning set forth in Section
11.2(f).
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"Products" shall have the meaning set forth in the recitals to this
Agreement.
"Products 401(k) Plan" shall have the meaning as set forth in Section
5.16(c)(ii).
"Products Indemnified Parties" shall mean Products and each of its
Affiliates, and their respective officers, directors, employees, members,
managers, agents and representatives; provided that in no event shall WAD or any
Seller be deemed a Products Indemnified Party.
"Purchase Price" shall have the meaning set forth in Section 2.3.1.
"Purchased Contracts" shall have the meaning set forth in Section 2.1(i).
"Real Property" shall have the meaning set forth in Section 2.1(b).
"Xxxxxxxx" shall have the meaning set forth in the recitals to this
Agreement.
"Seller" shall have the meaning set forth in the recitals to this
Agreement.
"Subsidiary" shall mean, with respect to a specified Person, any
corporation, partnership or other entity in which the specified Person owns or
controls, directly or indirectly, through one or more intermediaries, more than
50% of the stock or other interests having general voting power in the election
of directors or Persons performing similar functions.
"Supply Agreement" shall mean the Supply and Looms Agreement by and among
Xxxx, Main Street and Products to be in form and substance mutually satisfactory
to Products and WAD.
"Tax Return" shall mean any report, return or other information required to
be supplied to a Governmental Authority in connection with any Taxes.
"Taxes" shall mean taxes, charges, fees, duties, levies or other
assessments, including income, gross receipts, net proceeds, ad valorem,
turnover, real and personal property (tangible and intangible), sales, use,
franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel,
excess profits, occupational, interest equalization, windfall profits,
severance, employee's income withholding, other withholding, unemployment and
Social Security taxes, which are imposed by any Governmental Authority, and such
term shall include any interest, penalties or additions to tax attributable
thereto.
"Title Company" shall have the meaning set forth in Section 7.11.
"Transaction" shall mean the purchase of the Transferred Assets and the
assumption of the Assumed Liabilities, as contemplated by this Agreement.
"Transfer Taxes" shall have the meaning set forth in Section 5.8.
"Transferred Assets" shall have the meaning set forth in Section 2.1.
"Transition Services Agreement" shall mean the Transition Services
Agreement by and between Seller and Products to be in form and substance
mutually satisfactory to WAD and Products.
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"Tyng" shall have the meaning set forth in the recitals to this Agreement.
"Tyng Financial Statements" shall mean all of the following: (i) the
audited consolidated financial statements of Tyng Textiles Group as of July 3,
1999 and July 1, 2000, consisting of the consolidated balance sheets at such
dates and the related consolidated statements of earnings and retained earnings
and cash flows for the years then ended, and (ii) the unaudited consolidated
financial statements of Tyng as of April 1, 2000 and March 31, 2001, consisting
of the consolidated balance sheets at such dates and the related consolidated
statements of earnings and retained earnings and cash flows for the nine-month
periods then ended. The term "Tyng Financial Statements" shall also include any
and all interim consolidated financial statements of Tyng, prepared by or at the
request of management of Tyng, for the periods with respect to which a
representation is made hereunder which have been delivered to Products prior to
the date hereof.
"Tyng Textiles Group" shall mean WAD, the Xxxxxx Yarn Co., L.P., Main
Street Textiles, L.P. and Tyng.
"VEBA" shall have the meaning set forth in Section 5.16(k).
"WAD" shall have the meaning set forth in the recitals to this Agreement.
"WAD Defined Benefits Plan" shall have the meaning set forth in Section
5.16(c).
"WAD Disclosure Schedule" shall have the meaning set forth in Article III.
"WAD Employees" shall have the meaning set forth in Section 5.16(a).
"WAD Financial Information" shall mean, to the extent relating to WAD, the
supplemental information setting forth the consolidating financial information
for Tyng Textiles Group which is part of the Tyng Financial Statements as of
June 30, 2000 and the management prepared unaudited balance sheet of WAD, dated
as of December 30, 2000.
"WAD Financial Statements" shall have the meaning set forth in Section
5.17.
"WAD's 401(k) Plan" shall have the meaning set forth in Section 5.16(c).
"WAD Indemnified Parties" shall mean WAD and each of its Affiliates and
their respective officers, directors, employees, members, managers, agents and
representatives.
"WAD Intellectual Property" shall mean any and all Intellectual Property
owned by WAD.
"WAD Retirement Plans" shall have the meaning set forth in Section 5.16(c).
"WARN Act" shall have the meaning set forth in Section 11.2(e).
"Welfare Plans" shall have the meaning set forth in Section 3.16(a).
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"Working Capital" shall mean, at any time, (i) the consolidated trade
accounts receivable (less reserve for doubtful accounts) and product inventory
(less reserve for obsolescence) and corporate tooling inventory of WAD, less
(ii) the consolidated accounts payable and accrued current liabilities not
related to Indebtedness of WAD, in each case calculated on a basis consistent
with the historical consolidated financial information of WAD previously
delivered to Products.
ARTICLE II
SALE AND PURCHASE
2.1 Sale and Purchase of Assets. On the terms and subject to the conditions
of this Agreement, at the Closing, WAD shall sell, transfer, assign and deliver
to Products, or cause to be sold, transferred, assigned and delivered to
Products, free and clear of any Liens (other than Permitted Liens), and Products
shall purchase and assume from WAD, all of WAD's right, title and interest in
and to the Transferred Assets. To the extent that the Transferred Assets consist
of written documents (including microfilms and computer files) which are
necessary to the maintenance of WAD's records in accordance with reasonable
practice, WAD may either deliver to Products a duplicate copy of such documents
and retain the original or deliver to Products the original of such documents
and retain a duplicate copy; provided, however, that WAD shall deliver the
original of any such document when delivery of the original is necessary to
effectuate the transfer of any Transferred Asset.
For purposes of this Agreement, "Transferred Assets" shall mean all of the
assets (including lease rights) and properties that were owned, held or used by
WAD on the date of the Letter of Intent (other than Excluded Assets) in the
conduct of the Business as the same existed on the date of the Letter of Intent
and as the same may exist on the Closing Date and except for (i) Inventory sold
in the ordinary course of business and consistent with past practice and (ii)
materials consumed in the ordinary course in the process of operating the
Business, wherever located, real, personal or mixed, tangible or intangible,
including without limitation, the following assets:
(a) the real property owned in fee and listed on Schedule 2.1(a) (the
"Owned Real Property"), together with all improvements, fixtures, rights
and other appurtenances thereto of WAD;
(b) the leasehold interest in all possessory leases of real property
listed on Schedule 2.1(b) (the "Leased Real Property"; together with the
Owned Real Property, collectively referred to as the "Real Property"),
together with all improvements, leasehold improvements, fixtures and other
appurtenances thereto;
(c) to the extent their transfer is permitted by Law, all Permits
relating to the Real Property issued to WAD by any Governmental Authority;
(d) all rights in and to products sold (including, without limitation,
products hereafter repossessed or returned and unpaid, WAD's rights of
replevin, rescission, reclamation and rights to stoppage in transit);
(e) all rights of way, easements, appurtenances and similar realty
interests of WAD pertaining to the Real Property;
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(f) all machinery, equipment, furniture, furnishings, vehicles and
other fixed assets which are listed on Schedule 2.1(f);
(g) all leases of vehicles and of tangible assets which are listed on
Schedule 2.1(g);
(h) all inventories of raw materials, work-in-progress, spare parts,
replacement and component parts, office and other supplies and finished
goods (the "Inventory");
(i) all Contracts (the "Purchased Contracts"), including, without
limitation, any right to receive payment for products sold or services
rendered, and to receive goods and services, pursuant to such agreements;
(j) all trademarks, service marks, trade names, registered user names,
patents, copyrights, technology, trade secrets, research records, designs,
inventions, processes, know-how and all applications, registrations and
licenses for any of the foregoing, and all associated trade and fictitious
names if any and all other names under which the Business has been carried
on in each case, whether or not registered or filed, and all symbols and
logos utilized in connection with the Business or as all or part of a trade
or corporate name relating to the Business or otherwise, including, without
limitation, those listed on Schedule 2.1(j) (the "Intellectual Property");
(k) all customer lists (the "Customer Lists");
(l) all Pre-paid Expenses, credits, deferred charges, advance
payments, security deposits and other prepaid items related to the
Transferred Assets;
(m) all rights, claims, credits, causes of action or rights of set-off
against third parties related to the Transferred Assets or the Assumed
Liabilities, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties and rights under insurance policies
covering the Transferred Assets, other than in relation to liabilities that
are the obligations of WAD and rights to xxx for and remedies against past,
present and future infringements of any Intellectual Property rights;
(n) all trade accounts and notes receivable and payments for services
as of the Closing Date which arose from the operation of the Business in
the ordinary course prior to the Closing Date;
(o) all books, records, manuals and other materials (in any form or
medium), including, without limitation, all advertising materials,
catalogues, price lists, correspondence, mailing lists, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and
quality control records and procedures, blueprints, research and
development files, records, data and laboratory books, Intellectual
Property disclosures, media materials and plates, accounting records,
customer records, sales order files and litigation files;
(p) to the extent their transfer is permitted by Law, all Governmental
Approvals, including all applications therefor;
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(q) all guarantees, warranties, indemnities and similar rights in
favor of WAD with respect to any Transferred Asset;
(r) any and all of the databases, software, source codes, object
codes, documentation, technical data, manuals, comments and instructions,
and computer processes;
(s) all goodwill related to the Business and any other intangible
assets including without limitation all relationships with brokers and
representatives relating to the sales, marketing, distribution or promotion
of products manufactured in the Business;
(t) all notes receivable, negotiable instruments and chattel paper as
of the Closing Date;
(u) to the extent provided in Section 5.16(c)(ii), the assets of WAD's
401(k) Plan;
(v) financial assurance instruments, including, without limitation,
letters of credit and surety or other bonds, related to permits and
licenses, which shall be canceled at Closing; and
(w) any and all other assets and rights that are not of the type or
character referenced in Section 2.1(a)-(w) and which are used in, or are
necessary for the continuation after the Closing Date of, the Business to
the extent such assets are not Excluded Assets.
2.2 Excluded Assets. Anything herein to the contrary notwithstanding, the
Transferred Assets shall not include the following (the "Excluded Assets,"
together with Transferred Assets, collectively referred to as the "Assets"):
(a) WAD's rights under this Agreement;
(b) WAD's minute book and partnership records;
(c) WAD's ledgers, journals and Tax Returns and any Tax Returns
relating to the Business;
(d) except as otherwise provided in Section 5.16, any assets relating
to any benefits provided or plans maintained by WAD for any WAD employees;
(e) all cash (including xxxxx cash) in hand, cash equivalents and bank
accounts as of the Closing Date;
(f) Tax and other refunds and claims for refunds thereto with respect
to Taxes paid or to be paid by WAD with respect to events occurring on or
before the Closing Date and other rights and assets to the extent related
to any of the Excluded Liabilities;
(g) insurance policies or other insuring agreements of WAD, and all
rights of every nature and description under or arising out of such
policies or agreements, including the right to insurance proceeds, claims
against insurers and similar rights;
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(h) any and all intercompany receivables or other obligations from
Tyng, other than trade accounts receivable; and
(i) any and all cash rebates from WAD's suppliers, whether received
before or after the Closing, for raw materials purchased and delivered
prior to Closing, except to the extent such raw materials are part of
Inventory at Closing as raw materials, work-in-progress or finished goods.
2.3 Purchase Price.
2.3.1 Determination and Payment. In addition to assuming the Assumed
Liabilities, Products shall pay to WAD, at Closing, $10,000,000 (collectively,
the "Purchase Price") by wire transfer to the account designated by WAD on
Schedule 2.3.1.
2.3.2 Allocation. The Purchase Price will be allocated as mutually agreed
upon by the parties prior to Closing among the Transferred Assets by Products
and WAD in accordance with the allocation set forth on Schedule 2.3.2. The
parties agree that the form of the transaction, and the consideration therefor,
provided for in this Agreement were arrived at on the basis of arm's-length
negotiation between the parties and, to the extent permitted by applicable Law,
that they will report the federal, state, local and other Tax consequences of
the purchase and sale hereunder (including, without limitation, in filings on
IRS Form 8594) in a manner consistent with such allocation and that they will
not take any position inconsistent therewith in connection with any Tax Return,
refund claim, litigation or otherwise.
2.3.3 Proration of Certain Taxes. Real property, personal property and
other ad valorem Taxes of WAD related to the Transferred Assets shall be
allocated between Products and WAD on the basis of a daily proration and the net
amount owing from Products to WAD or from WAD to Products on account of such
proration shall be paid promptly upon written request by the party entitled to
receive such payment. If an assessment for the tax period that includes the
Closing Date (the "Current Period") has not been made by the time that payment
is due under the preceding sentence, a tentative payment shall be made at that
time based on the assessment for the immediately preceding tax period, and
Products or WAD, as the case may be, shall make an appropriate adjusting payment
within sixty (60) days following receipt of the assessment for the Current
Period.
2.4 Assumption of Liabilities. (a) In addition to the payment of the
Purchase Price in accordance with Section 2.3, Products shall, by appropriate
instruments to be executed and delivered at Closing (including, without
limitation, an assumption agreement as described in Section 9.2), assume and
agree to pay, perform and discharge in accordance with the terms thereof, when
due, all of the liabilities and obligations of WAD on the Closing Date of
whatever kind or nature, primary or secondary, direct or indirect, absolute or
contingent, known or unknown, whenever arising, whether or not accrued, that are
set forth on Schedule 2.4 (the "Assumed Liabilities").
(b) Notwithstanding clause (a) above, the Assumed Liabilities shall not
include any liability for the following:
(i) any liabilities, obligations or commitments of WAD relating to or
arising out of the operation of the Business or the ownership of the Assets
prior to the Closing or otherwise other than the Assumed Liabilities;
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(ii) any liabilities of WAD under any Environmental Laws or
Environmental Claim, arising out of or in connection with the operation of
the Business prior to the Closing Date;
(iii) any liabilities under Contracts included in the Transferred
Assets which by the terms of such Contracts were due or to be performed
prior to Closing except where such Contracts or liabilities are expressly
assumed by Products;
(iv) any liabilities relating to WAD Employees relating to the
Employee Benefit Plans, including without limitation, liabilities under
ERISA, workers compensation laws or employment laws, except as provided in
Section 5.16;
(v) any liabilities relating to former employees of WAD;
(vi) any liabilities arising out of any action, suit or proceeding
based upon an event occurring or a claim arising (a) prior to the Closing
Date or (b) after the Closing Date with respect to claims relating to
products sold by WAD prior to the Closing Date including warranty and
product liability claims;
(vii) any Tax liabilities of WAD;
(viii) any liabilities for indebtedness for money borrowed for
indebtedness incurred by WAD or any of its Affiliates;
(ix) any brokers' or finders' fees, or other liability of WAD for
costs and expenses (including fees and expenses relating to professional
advisors (legal, financial, accounting or otherwise)) incurred in
connection with this Agreement (except as otherwise provided in Section
12.1);
(x) any obligation or liability arising as a result of or whose
existence is a breach of WAD's representations, warranties, agreements or
covenants under this Agreement;
(xi) any obligation or liability arising in connection with the
Excluded Assets;
(xii) any costs of curing any breach occurring or accruing on or prior
to the Closing Date, with respect to any and all Contracts that are
included in the Transferred Assets; and
(xiii) any obligation or liability of WAD in respect of WAD's
insurance policies.
The foregoing liabilities set forth in clauses (i) through (xiii) are
referred to herein collectively as the "Excluded Liabilities."
2.5 Closing. On the terms and subject to the conditions of this Agreement,
the closing of the Transaction (the "Closing") shall take place at the offices
of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx as promptly as
practicable, but no later than two (2) Business Days following the satisfaction
or waiver of the conditions set forth in Articles VI, VII and VIII (other than
conditions which by their nature are to be satisfied at Closing, but subject to
those conditions) or at such other time, date or place as Products and WAD may
agree. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
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2.6 Nonassignable Contracts and Leases. In the case of any Governmental
Approvals or any Contracts relating to the Business to which WAD or any of its
Affiliates is a party which by their terms or by virtue of their subject matter
are not assignable to Products without consent (but are assignable with consent)
and which are not designated as Excluded Assets (collectively, the "Non-Assigned
Contracts"), WAD agrees to use its reasonable best efforts to obtain, as soon as
is reasonably practicable prior to the Closing Date, any written consents
necessary to convey to Products the benefit thereof; provided, however, that
reasonable best efforts shall not require the payment of any consideration
therefor to the party from whom the consent or waiver is requested unless such
payment is contemplated by such Non-Assigned Contract. In the event that any
such consent is not obtained by the Closing Date, WAD agrees to use its
reasonable best efforts to continue to obtain such written consent and to
cooperate with Products so that Products can obtain the benefits of such
Non-Assigned Contract until such consent is obtained; provided, however, that
reasonable best efforts shall not require the payment of any consideration
therefor to the party from whom the consent or waiver is requested unless such
payment is contemplated by such Non-Assigned Contract. Nothing in this Agreement
shall be construed as an attempt or an agreement to assign or cause the
assignment of any Non-Assigned Contract unless such consent shall thereafter be
given.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WAD and SELLERs
WAD and Sellers (but as to Sellers only with respect to those
representations and warranties relating to Sellers) jointly and severally
represent and warrant to Products except as set forth in the corresponding
section or subsection of the document entitled the "WAD Disclosure Schedule"
(the "WAD Disclosure Schedule"):
3.1 Due Incorporation and Formation. WAD is duly formed, validly existing
and in good standing under the Laws of the State of Delaware, with all requisite
power and authority to own, lease and operate its properties and to carry on the
Business as they are now being owned, leased, operated and conducted. WAD is
qualified to do business and is in good standing as a foreign partnership in
each jurisdiction where the nature of the properties owned, leased or operated
by it and the businesses and operations transacted by it require qualification,
except where the failure to be so qualified would not have, individually or in
the aggregate, a Material Adverse Effect. The States set forth on the WAD
Disclosure Schedule are the only jurisdictions in which WAD is formed or
qualified to do business. WAD has no Subsidiaries and has no investment in and
does not hold any other direct or indirect economic, voting or management
interest in any Person or directly or beneficially own any security issued by
any other Person. Accurate and complete copies of the Certificate of Formation
and the Agreement of Limited Partnership of WAD as currently in effect have been
delivered to Products.
3.2 Due Authorization. Each of WAD and Tyng has full power and authority to
enter into this Agreement and to consummate the Transaction. The execution,
delivery and performance by WAD and Tyng of this Agreement has been duly and
validly approved by the board of directors, managers, general partners, members
and stockholders, as the case may be, of each of WAD and Tyng, and no other
actions or proceedings on the part of WAD or Tyng are necessary to authorize
this Agreement or the Transaction. Each of WAD and each Seller has duly and
validly executed and delivered this Agreement. This Agreement constitutes
(assuming due execution and delivery by Products) the legal, valid and binding
obligation of each of WAD and each Seller, in each case enforceable in
accordance with its
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terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar Laws in effect which affect
the enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies.
3.3 Consents and Approvals; Authority Relative to This Agreement. (a)
Schedule 3.3(a) of the WAD Disclosure Schedule sets forth all the consents,
authorizations and approvals of, or filings and registrations with, any
Governmental Authority or any other Person not a party to this Agreement that
are necessary in connection with the execution, delivery and performance by WAD
or each Seller of this Agreement or the consummation of the Transaction and
identifies which of such consents, authorizations, approvals, filings and
registrations will be conditions to the obligations of Products under Section
7.3 hereof under the heading "Condition Consents" and which are not conditions
to the obligations of Products under the heading "Non-Condition Consents." The
failure to obtain any such consent, authorization, approval, filing and
registration listed under the heading "Non-Condition Consents" would not have,
individually or in the aggregate, a Material Adverse Effect.
(b) The execution, delivery and performance by WAD or each Seller of this
Agreement does not and will not: (i) violate any Law; (ii) violate or conflict
with, result in a breach or termination of, constitute a default or give any
third party any additional right (including a termination right) under, permit
cancellation of, result in the creation of any Lien upon any of the Transferred
Assets or the Assumed Liabilities under, or result in or constitute a
circumstance which, with or without notice or lapse of time or both, would
constitute any of the foregoing under, any Contract that is a Purchased
Contract; (iii) permit the acceleration of the maturity of any Indebtedness of
WAD that is an Assumed Liability; or (iv) violate or conflict with any provision
of any of the Certificate of Formation or Agreement of Limited Partnership, as
the case may be, articles of organization, bylaws or similar organizational
instruments of WAD or Tyng.
3.4 Financial Statements; Undisclosed Liabilities; Other Documents. (a)
Accurate and complete copies of the Tyng Financial Statements have previously
been provided to Products. The Tyng Financial Statements consistently and fairly
present the consolidated financial position, assets and liabilities of Tyng
Textiles Group as of the dates thereof and the consolidated revenues, expenses
and results of operations of Tyng Textiles Group for the periods covered
thereby, in each case in accordance with GAAP. The Tyng Financial Statements
have been prepared in accordance with the books and records of Tyng Textiles
Group. The Tyng Financial Statements do not reflect any transactions which are
not bona fide transactions. The Tyng Financial Statements do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
(b) Accurate and complete copies of the WAD Financial Information have
previously been provided to Products. The WAD Financial Information consistently
and fairly presents the financial position, assets and liabilities of WAD as of
the dates thereof and the revenues, expenses and results of operations of WAD
for the periods covered thereby, in each case in accordance with GAAP. The WAD
Financial Information has been prepared in accordance with the books and records
of WAD. The WAD Financial Information does not reflect any transactions which
are not bona fide transactions. The WAD Financial Information does not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
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(c) The WAD Financial Information does not: (i) include any assets not
intended to constitute a part of the Business or the Transferred Assets after
giving effect to the Transaction (other than the Excluded Assets); (ii) include
any liabilities other than the Assumed Liabilities and the Excluded Liabilities;
or (iii) fail to present fairly the results of operations and financial
condition of the Business as at its respective dates. The statements of income
included in the WAD Financial Information (i) do not reflect the operations of
any entity or business not intended to constitute a part of the Business after
giving effect to all such transactions, (ii) reflect all costs that historically
have been incurred by the Business and (iii) present fairly the results of
operations of the Business for the periods indicated.
3.5 No Material Adverse Effects; No Material Adverse Change. Since the
Latest Financial Information Date, WAD has conducted the Business in the
ordinary course consistent with past practices and has not:
(a) suffered any Material Adverse Change (provided, that for the
purpose of this Section 3.5(a), $125,000 in the aggregate shall be
substituted for $25,000 individually in the definition of "Material Adverse
Effect");
(b) suffered any damage, destruction or Loss to any of its assets or
properties (whether or not covered by insurance) that has had or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (provided, that for the purpose of this Section
3.5(b), $125,000 in the aggregate shall be substituted for $25,000
individually in the definition of "Material Adverse Effect");
(c) taken any action or failed to take any action, or made any
expenditure or failed to make any expenditure, or entered into or
authorized any Material Contract or transaction, other than in the ordinary
course of business and consistent with past practice;
(d) sold, transferred, conveyed, assigned or otherwise disposed of any
of the Transferred Assets or any of its other material assets or
properties, except sales of Inventory in the ordinary course of business
and consistent with past practice;
(e) waived, released or canceled any claims against third parties or
debts owing to it, or any rights which have any value, other than in the
ordinary course of business and consistent with past practice pursuant to
Contracts which are not Material Contracts with Persons that are not
Affiliates of WAD;
(f) made any changes in its accounting systems, policies, principles
or practices;
(g) entered into, authorized or permitted any transaction with any
Seller or any Affiliate of WAD from the Latest Financial Information Date
through the Closing Date, other than in the ordinary course of business and
consistent with past practice;
(h) made any borrowings, incurred any Indebtedness or assumed,
guaranteed, endorsed (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business
and consistent with past practice) or otherwise become liable (whether
directly, indirectly or contingently) for the obligations or Indebtedness
of any other
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Person, or made any payment or repayment in respect of any obligations or
Indebtedness (other than accrued expenses in the ordinary course of
business and consistent with past practice);
(i) made any loans, advances or capital contributions to, or
investments in, any other Person;
(j) entered into, adopted, amended or terminated any bonus, profit
sharing, compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
Continuing Employees, or increased in any manner the compensation or fringe
benefits of any Continuing Employee or paid any benefit not required by any
existing plan or arrangement or entered into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(k) acquired or leased any assets outside the ordinary course of
business or any assets which are material to WAD or made any property owned
by WAD subject to any Lien other than a Permitted Lien;
(l) authorized or made any capital expenditures which individually or
in the aggregate are in excess of $25,000;
(m) made any Tax election or settled or compromised any federal,
state, local or foreign Tax liability, or waived or extended the statute of
limitations in respect of any such Taxes;
(n) paid any amount, performed any obligation or agreed to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against WAD or any of its officers, members,
managers, employees or agents; or
(o) terminated, modified, amended or otherwise altered or changed any
of the terms or provisions of any Material Contract.
3.6 Title to Properties. WAD has good and marketable title to, is the
lawful owner of (other than the Leased Real Property, and the leased assets
under the leases set forth on the WAD Disclosure Schedule), and has the right to
sell, transfer, assign and deliver to Products (except as to any Non-Assigned
Contracts), all of the Transferred Assets, in each case, free and clear of any
Liens except for Assumed Liabilities and Permitted Liens. At and as of the
Closing Date, WAD will convey the Transferred Assets to Products by bills of
sale, certificates of title and other instruments of assignment and transfer
which will be effective to vest in Products, and Products will have, good and
valid record and marketable title to, all of the Transferred Assets, free and
clear of all Liens except for Assumed Liabilities and Permitted Liens.
3.7 Condition and Sufficiency of Transferred Assets. WAD owns or leases all
Transferred Assets and all other assets and rights used for the continued
conduct of WAD's Business as conducted by WAD as of the date of this Agreement.
All of the tangible Transferred Assets, whether real or personal, owned or
leased (with respect to leased Transferred Assets, during the term of the lease
therefor), have been well maintained and are in good operating condition and
repair (with the exception of normal wear and tear), and are free from defects
other than such minor defects as do not interfere with the intended use thereof
in the conduct of normal operations of the Business or have, individually or in
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the aggregate, a Material Adverse Effect on the resale value thereof. The
Transferred Assets comprise all assets and services required for the continued
conduct of the Business in the manner in which it is being conducted as of the
date of this Agreement. The Transferred Assets, taken as a whole, constitute all
the properties and assets relating to or used or held for use in connection with
the Business during the past twelve months (except Inventory sold, cash disposed
of, accounts receivable collected, Prepaid Expenses realized, Contracts fully
performed or properties or assets replaced by equivalent or superior properties
or assets, in each case in the ordinary course of business). Except for the
Excluded Assets, there are no assets or properties included in the Transferred
Assets and owned by any Person other than WAD that will not be leased or
licensed to Products under valid, current leases or license arrangements (except
to the extent any such lease or license is a Non-Assigned Contract).
3.8 Real Property. Schedules 2.1(a) and 2.1(b) set forth an accurate and
complete list of all Real Property and set forth, in the case of Owned Real
Property, the address of each parcel and, in the case of Leased Real Property,
the landlord and tenant for such lease. Accurate and complete copies of each
deed, title insurance policy, survey and lease related to such Real Property
have previously been provided to Products. With respect to Real Property to the
Knowledge of WAD or any Seller:
(a) the activities carried on by WAD in all buildings, plants,
facilities, installations, fixtures and other structures or improvements
included as part of, or located on or at, the Real Property, and the
buildings, plants, facilities, installations, fixtures and other structures
or improvements themselves, are not in violation of, or in conflict with,
any applicable zoning, environmental or health regulations or ordinance or
any other similar Law; and
(b) WAD has not used, deposited, stored or located at, on, under or
beneath any Real Property or portion thereof, any Hazardous Material,
including, without limitation, any asbestos, asbestos-containing materials,
PCB compounds or other pollutants, or contaminants, except as would not
reasonably be expected to give rise to a material Environmental Claim
against or material liability of WAD.
Except as set forth on the WAD Disclosure Schedule and other than Permitted
Liens, WAD has good, clear, record and marketable fee simple title to the Owned
Real Property, free and clear of all Liens, rights of first refusal, deeds of
trust, ground leases, assessments, leases and tenancies, covenants, conditions,
restrictions, easements or other encumbrances and free of encroachments onto or
off of the Owned Real Property. All of the mortgages, deeds of trust, ground
leases, security interests or similar encumbrances on the Owned Real Property
are set forth on the WAD Disclosure Schedule (collectively, the "Mortgages").
Except as set forth on the WAD Disclosure Schedule, WAD as of the Closing shall
have caused the release of such Mortgages or obtained the consent of the holder
of any Mortgage if the transfer of the Owned Real Property to Products would
otherwise cause a default under the Mortgage, and such transfer will not give
the holder of any Mortgage any remedy, or the right to charge any premium or
penalty.
Other than Permitted Liens, WAD holds a good, clear, marketable, valid and
enforceable leasehold interest in the Leased Real Property pursuant to the
leases relating thereto, subject only to the right of reversion of the landlord
or lessor in the Leased Real Property, free and clear of all subordinate
interests, including, without limitation, Liens, rights of first refusal, deeds
of trust, ground leases, assessments, subleases and subtenancies, covenants,
conditions, restrictions, easements or other encumbrances, and free of
encroachments onto or off of the Leased Real Property.
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There are no material defects in the physical condition of any improvements
constituting a part of the Real Property, including, without limitation,
structural elements, mechanical systems, roofs or parking and loading areas, and
all of such improvements are in good operating condition and repair, have been
well maintained and are free from infestation by rodents or insects. None of the
Real Property is subject to special flood or mudslide hazards or within a 100
year flood plain. All water, sewer, gas, electric, telephone, drainage and other
utilities required by Law or necessary for the current operation of the Real
Property in connection with the Business have been installed and connected
pursuant to valid permits, and are sufficient to service the Business as
operated in the Real Property.
WAD has received no written notice from any Governmental Authority of any
violation of any Law or Permit issued with respect to any of the Real Property
that has not been corrected heretofore, and no such violation exists which could
have a Material Adverse Effect on the operation or value of any of the Real
Property. All improvements constituting part of the Real Property have been
completed and are now in compliance in all material respects with all applicable
Laws and there are presently in effect all Permits required by Law.
WAD has received no written notice of any pending or threatened real estate
Tax deficiency or reassessment or condemnation of all or any portion of any of
the Real Property.
3.9 Personal Property. The WAD Disclosure Schedule sets forth an accurate
and complete list of all of the tangible personal property included in the
Transferred Assets having an original acquisition cost of $10,000 or more for
each such item or group of related or similar items. The WAD Disclosure Schedule
also sets forth all Contracts that are leases of such tangible personal property
binding upon WAD and that are Purchased Contracts. All of such tangible personal
property is presently utilized by WAD in the ordinary course of business.
3.10 Inventory. Section 3.10 of the WAD Disclosure Schedule sets forth an
itemized list of all Inventories of WAD as of June 30, 2001 and all reserves in
connection therewith as of such date; and all such Inventories are of good,
usable and merchantable quality subject to such reserves. The net value of such
Inventories does not include the value of any obsolete, irregular, slow moving
or discontinued items. Since June 30, 2001, no Inventory items have been sold or
disposed of except through sales in the ordinary course of business and at gross
margins consistent with past practice.
3.11 Accounts Receivable. All accounts, notes receivable and other
receivables included in the Transferred Assets are, and as of the Closing Date
will be, valid, genuine and fully collectible in the aggregate amount thereof,
subject to normal and customary trade discounts, less any reserves for doubtful
accounts and other allowances established in the ordinary course of business.
All accounts, notes receivable and other receivables arising out of or relating
to the Business as of the Latest Financial Information Date were included in the
management prepared balance sheet of WAD (which is included in the WAD Financial
Information) in accordance with GAAP consistently applied.
3.12 Intellectual Property. The WAD Disclosure Schedule sets forth an
accurate and complete list of all WAD Intellectual Property and all Intellectual
Property used by WAD in the conduct of the Business as of the date hereof. With
respect to such Intellectual Property and such WAD Intellectual Property:
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(a) All of the WAD Intellectual Property is owned by WAD free and
clear of all Liens, and is not subject to any license, royalty or other
agreement, and WAD has not granted any license or agreed to pay or receive
any royalty in respect of any WAD Intellectual Property and all applicable
fees relating thereto have been timely paid;
(b) except for WAD Intellectual Property, all of the Intellectual
Property used by WAD is the subject of a valid license, and all royalties
and other fees to be paid by WAD with respect to such licenses are set
forth on the WAD Disclosure Schedule;
(c) no Intellectual Property has been or is the subject of any pending
or, to the Knowledge of WAD or any Seller, threatened litigation claim of
infringement or misappropriation in the United States or any foreign
country, and WAD owns or possesses adequate rights for the remainder of the
normal term of protection under Law of such WAD Intellectual Property to
preclude any infringement;
(d) to the Knowledge of WAD or any Seller, no Person is
misappropriating or infringing the rights of WAD with respect to
Intellectual Property owned or used by WAD;
(e) to the Knowledge of WAD or any Seller, no party to any license or
royalty agreement to which WAD is a party is in breach or default, and no
written notice of termination has been given or is threatened;
(f) to the Knowledge of WAD or any Seller, the Business as now being
conducted by WAD does not infringe on or misappropriate any intellectual
property or confidential or proprietary rights of any other Person in the
United States or in any foreign country in which WAD has operated prior to
the Closing Date, and WAD has not received any notice contesting its right
to use any Intellectual Property; and
(g) WAD owns or possesses adequate rights in and to all Intellectual
Property necessary to conduct the Business as presently conducted.
The Intellectual Property listed on Schedule 2.1(j) comprises all of the
Intellectual Property necessary for Products to conduct and operate the Business
as now being conducted by WAD.
3.13 Contracts; No Default or Violations. (a) The WAD Disclosure Schedule
sets forth an accurate and complete list of all the Contracts of the following
types to which WAD is a party or by which it is bound, or to which the
Transferred Assets or the Assumed Liabilities are subject:
(i) any collective bargaining agreement, as well as any document
modifying, terminating or extending such agreement and any letters of
understanding or side agreements with respect to such agreements, in each
case whether oral or written;
(ii) any Material Contract with any Continuing Employee, or any
Contract or other arrangement of any kind with any Affiliate of WAD;
(iii) any Material Contract with a sales representative,
manufacturer's representative, promoter, producer, sponsor, distributor,
dealer, broker, sales agency, advertising agency or other Person engaged in
sales, distributing or promotional activities, or any Material Contract to
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act as one of the foregoing on behalf of any Person; any Material Contract
of any nature which involves the payment or series of payments or receipt
of cash or other property, an unperformed commitment, or goods or services,
or any combination thereof having a value in excess of $10,000; any
Contract pursuant to which WAD has made or will make loans or advances, or
has or will have incurred debts or become a guarantor or surety or pledged
its credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business);
(iv) any indenture, credit agreement, loan agreement, note, mortgage,
security agreement, lease of Real Property or personal property, loan
commitment or other Contract or financing statements relating to
Indebtedness, the borrowing of funds, an extension of credit or financing;
(v) any Contract involving a partnership, joint venture or other
cooperative undertaking in which WAD is a partner, joint venturer or the
like;
(vi) any Contract involving any restrictions with respect to the
geographical area of operations or scope of the Business or any Continuing
Employee;
(vii) any power of attorney or agency agreement or arrangement with
any Person pursuant to which such Person is granted the authority to act
for, or on behalf of, WAD, or WAD is granted the authority to act for, or
on behalf of, any Person in connection with any of the Transferred Assets
or the Assumed Liabilities;
(viii) any Material Contract for which full performance thereof may
extend beyond sixty (60) days from the Closing Date;
(ix) any Material Contract (other than this Agreement) not made in the
ordinary course of business which is to be performed in whole or in part at
or after the Closing Date;
(x) any Contract (other than this Agreement), whether or not fully
performed, relating to any acquisition or disposition of any Transferred
Assets, division or line of business of WAD;
(xi) any Contract containing an option to purchase or sell any
Transferred Assets, or containing any right of first refusal to acquire or
sell any Transferred Assets;
(xii) any Material Contract involving the licensing of any
Intellectual Property from any third party and any Contract involving the
licensing of WAD Intellectual Property by WAD to any third party; and
(xiii) any Contract not specified above that is a Material Contract.
(b) WAD has delivered or made available to Products accurate and complete
copies of each Contract listed on the WAD Disclosure Schedule, and the WAD
Disclosure Schedule contains a written description of each oral arrangement of
the kind listed. (i) All such Contracts that are Purchased Contracts with any of
WAD's or any of Sellers' Affiliates are on terms that are no less favorable to
WAD than the terms that could have been obtained as of the date of such Contract
from an unrelated
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third party; (ii) all such Contracts that are Purchased Contracts are valid and
enforceable obligations of WAD and, to the Knowledge of WAD or any Seller, each
other party thereto and are not subject to termination as a result of the
Transaction provided that required consents to or approvals of the Transaction
listed on Schedule 3.3(a) of the WAD Disclosure Schedule are received; and (iii)
none of the Sellers nor WAD has received any notice of default or termination
(or threatened termination) with respect to any such Contract.
(c) WAD has not breached any provision of, nor is it in default under the
terms of, its Certificate of Formation, Agreement of Limited Partnership or any
Purchased Contract and no other party to any such Purchased Contract has
breached such Contract or is in default (with or without notice or the passage
of time, or both) thereunder.
(d) WAD is in compliance with, and no violation exists under, any and all
applicable Laws, except such as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect (provided, that for the
purpose of this Section 3.13(d), $125,000 as an aggregate shall be substituted
for $25,000 individually in the definition of "Material Adverse Effect");
(e) No written notice from any Governmental Authority has been received by
WAD (i) claiming any violation of any Law (including any building, zoning or
other ordinance) which claimed violation has not been corrected, and any related
liability (contingent or otherwise) resolved, prior to the date of this
Agreement or (ii) requiring any work, construction or expenditure, or asserting
any Tax, assessment or penalty.
3.14 Permits. The WAD Disclosure Schedule sets forth an accurate and
complete list of all licenses, certificates, permits, franchises, rights, code
approvals and private product approvals (together, the "Permits") that are held
by WAD. WAD holds all Permits, whether federal, state or local, that are
necessary for the lawful operation of the Business as presently conducted,
except where the failure to hold or maintain any such Permit would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.15 Insurance. (a) The WAD Disclosure Schedule sets forth an accurate and
complete list of all policies of fire, liability, workers' compensation, title
and other forms of insurance owned, held by or applicable to WAD, the Business
or the Transferred Assets. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no written notice of cancellation or
termination has been received with respect to any such policy, except with
respect to any such cancellation or termination that would not reasonably be
expected to have a Material Adverse Effect. Such policies are sufficient for
compliance with all requirements of Law and compliance with all Purchased
Contracts, and valid, outstanding and enforceable policies. Such insurance
policies provide types and amounts of insurance customarily obtained by
businesses similar to the Business. WAD has not been refused any insurance with
respect to the Transferred Assets or the Business, and its coverage has not been
limited by any insurance carrier to which it has applied for any such insurance
or with which it has carried insurance during the last three (3) years.
(b) The WAD Disclosure Schedule sets forth an accurate and complete list of
all claims which have been made by WAD in the last three (3) years under any
workers' compensation, general liability, property or other insurance policy
applicable to the Business or the Transferred Assets.
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There are no pending or, to the Knowledge of WAD or any Seller, threatened
claims under any insurance policy. Such claim information includes all available
information with respect to each accident, loss, or other event, including (i)
the identity of the claimant; (ii) the date of the occurrence; (iii) the status
as of the report date; and (iv) the amounts paid or expected to be paid or
recovered.
3.16 Employee Benefit Plans; ERISA. (a) The WAD Disclosure Schedule sets
forth an accurate and complete list of all "employee pension benefit plans" as
defined in Section 3(2) of ERISA ("Pension Plans"), "welfare benefit plans" as
defined in Section 3(1) of ERISA ("Welfare Plans") and stock bonus, stock
option, restricted stock, stock appreciation right, stock purchase, bonus,
incentive, deferred compensation, severance, and vacation plans, employment or
consulting agreements, and all other employee benefit plans, programs, policies
or arrangements, covering WAD employees (or former employees), maintained or
contributed to by WAD or any of its ERISA Affiliates (as hereinafter defined) on
behalf of WAD Employees, or to which WAD contributes or is obligated to make
payments thereunder (collectively, the "Employee Benefit Plans"). For purposes
of this Agreement, "ERISA Affiliate" shall mean any person (as defined in
Section 3(9) of ERISA) that is or has been a member of any group of persons
described in Section 414(b), (c), (m), (o) or (t) of the Code including WAD.
(b) WAD and each of the Pension Plans and Welfare Plans are in compliance
in all material respects with the applicable provisions of ERISA, the Code and
other applicable Laws in connection with the Employee Benefit Plans.
(c) All contributions to, and payments from, the Pension Plans that are
required to have been made in accordance with the Pension Plans have been timely
made.
(d) Any Pension Plans intended to qualify under Section 401 of the Code
have been determined by the IRS to be so qualified and no event has occurred and
no condition exists with respect to the form or operation of such Pension Plans
that would cause the loss of such qualification or exemption or the imposition
of any material liability, penalty or Tax under ERISA or the Code.
(e) Each Pension Plan that is not qualified under Code Section 401(a) or
403(a) is exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan
that is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, pursuant to
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. None of the Transferred
Assets are allocated to or held in a "rabbi trust" or similar funding vehicle.
(f) There are (i) no investigations pending by any governmental entity
(including the Pension Benefit Guaranty Corporation (the "PBGC")) involving the
Pension Plans or Welfare Plans, and (ii) no pending or, to the Knowledge of WAD
or any Seller, threatened claims (other than routine claims for benefits), suits
or proceedings against any Pension Plan or Welfare Plan, against the assets of
any of the trusts under any Pension Plan or Welfare Plan or against any
fiduciary of any Pension Plan or Welfare Plan with respect to the operation of
such plan or asserting any rights or claims to benefits under any Pension Plan
or against the assets of any trust under such plan nor, to the Knowledge of WAD
or any Seller, are there any facts that would give rise to any material
liability.
(g) None of WAD or any WAD Employee, nor any trustee, administrator, other
fiduciary or any other "party in interest" or "disqualified person" with respect
to the Pension Plans or Welfare Plans, has engaged in a "prohibited transaction"
(as such term is defined in Section 4975 of the Code
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or Section 406 of ERISA) that could result in a material tax or penalty on WAD
under Section 4975 of the Code or Section 502(i) of ERISA.
(h) With respect to any employee benefit pension plan subject to Section
412 of the Code or Section 302 of ERISA maintained by WAD or an ERISA Affiliate
with respect to WAD Employees: (i) all contributions required to be made by WAD
or any ERISA Affiliate under Section 302 of ERISA and Section 412 of the Code
have been timely made, (ii) there has been no application for or waiver of the
minimum funding standards imposed by Section 412 of the Code, and (iii) no such
plan has incurred an "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code as of the end of the most recently completed plan
year.
(i) No employee benefit pension plan subject to Title IV of ERISA
maintained by WAD or an ERISA Affiliate has been terminated or has been the
subject of a "reportable event" (as defined in Section 4043 of ERISA and the
regulations thereunder) for which the thirty (30) day notice requirement has not
been waived by the PBGC.
(j) WAD has not incurred, and would not reasonably be expected to incur,
liability under Title IV of ERISA with respect to the Employee Benefit Plans.
(k) No Pension Plan is a "multiemployer plan" as defined in Section 3(37)
of ERISA.
(l) With respect to each of the Employee Benefit Plans, true, correct and
complete copies of the following documents have been made available to Products:
(i) the plan document and any related trust agreement, including amendments
thereto, (ii) any current summary plan descriptions and other material
communications to participants relating to the Employee Benefit Plans, (iii) the
most recent Forms 5500, if applicable, (iv) the most recent IRS determination
letter, if applicable and (v) the most recent actuarial report or valuation with
respect to each Pension Plan subject to Title IV of ERISA.
(m) None of the Welfare Plans maintained by WAD with respect to WAD
Employees provide for continuing benefits or coverage for any participant or any
beneficiary of a participant following termination of employment, except as may
be required under Section 4980B of the Code and Part 6 of Subtitle B of Title I
of ERISA ("COBRA"), or except at the expense of the participant or the
participant's beneficiary. WAD and any ERISA Affiliates which maintain a "group
health plan" within the meaning of Section 5000(b)(1) of the Code with respect
to WAD Employees or former employees have complied in all material respects with
the COBRA notice and continuation requirements.
(n) No liability under any Pension Plan or Welfare Plan has been funded nor
has any such obligation been satisfied with the purchase of a contract from an
insurance company as to which WAD has received notice that such insurance
company is in rehabilitation or a comparable proceeding.
(o) As of the Closing, neither WAD nor any entity with which WAD could be
considered a single employer under 29 U.S.C. Section 2101(a)(1) or under any
relevant case law with respect to WAD Employees or former employees has incurred
any liability or obligation under the Worker Adjustment and Retraining
Notification Act, as it may be amended from time to time.
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(p) Except pursuant to Section 5.16(c), the consummation of the Transaction
will not result in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits or compensation
payable to or in respect of any employee of WAD.
(q) The consummation of the Transaction will not result in or satisfy a
condition to the payment of compensation that would, in combination with any
other payment, result in an "excess parachute payment" within the meaning of
Section 280G(b) of the Code.
(r) WAD does not maintain or contribute to any plan, program, policy,
arrangement or agreement with respect to employees (or former employees)
employed outside the United States.
3.17 Employment and Labor Matters. (a) WAD has no employment contract or
consulting agreement currently in effect that is not terminable at will (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions). The WAD Disclosure
Schedule sets forth an accurate and complete list of all WAD Employees and their
respective positions.
(b) WAD (i) has never been nor is now subject to a union organizing effort
with respect to WAD Employees, (ii) is not subject to any collective bargaining
agreement, (iii) is not currently negotiating any collective bargaining
agreement, mid-term bargaining agreement, effects bargaining agreement or plant
closure agreement with respect to any WAD Employees, (iv) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization with respect to WAD Employees, and (v) has
no current labor disputes with respect to WAD Employees. WAD has good labor
relations, and has no Knowledge of any facts indicating that the consummation of
the Transaction will have a Material Adverse Effect on such labor relations, and
to the Knowledge of WAD or any Seller, no Continuing Employee intends to leave
its employ as of the date of this Agreement.
(c) WAD is in compliance with all Contracts relating to employment,
employment practices, wages, hours and terms and conditions of employment of WAD
Employees. WAD is in compliance with all applicable Laws with respect to
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health.
3.18 Capital Improvements. The WAD Disclosure Schedule sets forth an
accurate and complete list of all Transferred Assets that are purchases or other
capital expenditures of WAD that have not been completed prior to the date
hereof, and also sets forth the cost and expense reasonably estimated to
complete such work and purchases.
3.19 Taxes. (a) All federal, state, local and foreign income, partnership
and other Tax Returns required to have been filed by WAD have been timely filed
by or for WAD, or are subject to a valid extension of the filing date, for all
periods through and including the Closing Date as required by applicable Law.
All Taxes shown as due on all such Tax Returns and other filings, and all other
Taxes of WAD, have been timely paid. Each such Tax Return and filing is accurate
and complete in all material respects. The WAD Disclosure Schedule sets forth an
accurate and complete list of such Tax Returns filed by WAD at any time after
January 1, 1998; a copy of each such Tax Return has previously been provided to
Products. WAD does not currently have nor will WAD have any additional liability
for Taxes with respect to any such Tax Return or other filing heretofore filed
or which was required by Law
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to be filed, other than (i) as reflected as liabilities in the WAD Financial
Information; or (ii) liabilities which have arisen since the Latest Financial
Information Date in the ordinary course of business of the Business consistent
with past practice.
(b) No material Tax Return of WAD is under audit or examination by any
taxing authority, and no written notice of such an audit or examination has been
received by WAD. The WAD Disclosure Schedule sets forth an accurate and complete
list of all Tax audits of WAD completed at any time after January 1, 1998 and an
accurate and complete description in reasonable detail of any Tax audit or Tax
claim with respect to WAD that was initiated but not completed in that time.
Each material deficiency resulting from any audit or examination relating to
Taxes by any taxing authority has been paid, except for deficiencies being
contested in good faith and described on the WAD Disclosure Schedule.
(c) All Taxes that WAD is required by Law to withhold or collect, including
sales and use taxes, and amounts required to be withheld for Taxes of WAD
Employees and other withholding taxes, have been duly withheld or collected and,
to the extent required, have been paid over to the proper Governmental
Authorities or are held in separate bank accounts for such purpose. All
information returns required to be filed by WAD prior to the date hereof have
been filed (and prior to the Closing Date will have been filed), and all
statements required to be furnished to payees by WAD prior to the date hereof
have been furnished (and prior to the Closing Date will have been furnished) to
such payees, and the information set forth on such information returns and
statements is accurate and complete in all material respects. The WAD Disclosure
Schedule sets forth an accurate and complete description in reasonable detail of
any Tax consulting services provided to or for the benefit of WAD at any time
since January 1, 1998. WAD has engaged no independent contractors.
(d) WAD is not a "foreign person" as defined in Section 1445(f)(3) of the
Code.
3.20 Product Claims. The WAD Disclosure Schedule sets forth an accurate and
complete list of all notices, demands, claims, actions, notices of violation or
investigation or classes of claims or lawsuits involving any product
manufactured, produced, distributed or sold by or on behalf of WAD (a "Product")
that are pending or, to the Knowledge of WAD or any Seller, threatened by or on
behalf of any Governmental Authority or any direct or indirect purchaser of any
Product resulting from an alleged defect in design, manufacture, materials or
workmanship of any Product, or any alleged failure to warn or from any breach of
express or implied specifications or warranties or representations. There has
not been, nor is there under consideration or investigation by WAD, any recall,
rework, retrofit or post-sale warning concerning any Product or, to the
Knowledge of WAD or any Seller, any recall conducted by or on behalf of any
entity involving any Product.
3.21 Environmental Matters. (a) (i) WAD is in compliance in all material
respects with all Environmental Laws applicable to the properties, assets and
business of WAD and possesses and complies in all material respects with all
Environmental Permits required under such Environmental Laws, and (ii) there are
no present or past events, conditions, circumstances, practices or plans that
have been asserted in writing to have violated any Environmental Law which have
not been corrected and any and all related liability (contingent or otherwise)
resolved, prior to the date of this Agreement or that could reasonably be
expected to materially increase the burden on WAD of complying with
Environmental Laws or of obtaining, renewing or complying with all Environmental
Permits required under Environmental Laws in order to conduct the Business as
currently conducted;
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(b) (i) WAD has not received any Environmental Claim and (ii) there is no
pending or, to the Knowledge of WAD or any Seller, threatened Environmental
Claim against WAD or any Environmental Claim pending or, to the Knowledge of WAD
or any Seller, threatened against any entity for which WAD may be liable;
(c) There are no Hazardous Materials or other conditions at, under or
emanating from any property or facility owned, leased or operated by WAD now or
in the past that could reasonably be expected to give rise to a material
Environmental Claim against or material liability of WAD;
(d) (i) No property owned, leased or operated by WAD is (A) listed or
proposed for listing on the National Priorities List promulgated under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), or (B) listed on the Comprehensive Environmental
Response, Compensation, and Liability Information System promulgated under
CERCLA or (C) listed on any comparable list promulgated or published by any
Governmental Authority (including, without limitation, any such list relating to
gasoline or petroleum or oil) and (ii) no Lien has been recorded under any
Environmental Law with respect to any property, facility or asset owned, leased
or operated by WAD;
(e) WAD has not assumed, contractually or by operation of Law, any
liabilities or obligations of any third party under any Environmental Law;
(f) The execution and delivery of this Agreement and the consummation of
the Transaction and the exercise by Products of rights to own the Transferred
Assets and operate the Business (i) will not affect the validity or require the
transfer of any Environmental Permits held by WAD under any Environmental Law
and (ii) will not require any notification, disclosure, registration, reporting,
filing, or investigatory, remedial, removal or other response action under any
Environmental Law; and
(g) The WAD Disclosure Schedule sets forth an accurate and complete list of
all Environmental Reports in the possession or control of WAD relating to its
businesses and operations. A copy of each such Environmental Report has
previously been provided or made available to Products.
3.22 Litigation. (a) There are no actions, suits, claims, notices of
potential claims, requests for accommodation, arbitrations, regulatory
proceedings or other litigation, proceedings or governmental investigations
pending or, to the Knowledge of WAD or any Seller, threatened against or
affecting any of the Transferred Assets, WAD, or any WAD Employee in their
capacity as such, relating to the Business, and there are no facts or
circumstances which would reasonably be expected to give rise to any of the
foregoing. Any proceeding pending or, to the Knowledge of WAD or any Seller,
threatened against WAD is fully covered by insurance policies (or other
indemnification agreements with third parties) and is being defended by the
insurers (or such third parties), subject to such deductibles as are set forth
on the WAD Disclosure Schedule. The Transferred Assets and the Assumed
Liabilities are not subject to any order, judgment, decree, injunction,
stipulation or consent order of or with any court or other Governmental
Authority. The Transferred Assets and the Assumed Liabilities are not subject to
any agreement to settle or compromise any proceeding pending or, to the
Knowledge of WAD or any Seller, threatened against WAD or the Business which
involves any obligation other than the payment of money or for which WAD has any
continuing obligation.
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(b) There are no claims, actions, suits, proceedings or investigations
pending or, to the Knowledge of WAD or any Seller, threatened by or against WAD,
any of WAD Employees or the Transferred Assets or the Business with respect to
this Agreement, or in connection with the Transaction, and WAD has no reason to
believe there is a valid basis for any such claim, action, suit, proceeding or
investigation.
3.23 No Conflict of Interest. No Seller nor any of its Affiliates has or
claims to have any direct or indirect interest in any of the Transferred Assets
or the Business except in the case of each Seller as record and beneficial owner
of the outstanding partnership interests in WAD.
3.24 Brokers. Neither WAD nor any Seller has used any broker or finder in
connection with the Transaction, and neither Products nor any Affiliate of
Products has or shall have any liability or otherwise suffer or incur any Loss
as a result of, or in connection with, any brokerage or finder's fee or other
commission of any Person retained by WAD or any Seller in connection with this
Agreement or the Transaction.
3.25 Customers and Suppliers. Since January 1, 2000, none of the top five
customers of or top ten suppliers (including subcontractors thereof) to WAD, in
each case measured by dollar volume for the twelve months ended as of December
31, 2000, has (i) notified any Seller or WAD that it intends to discontinue its
relationship with WAD, (ii) notified any Seller or WAD that it intends to reduce
its trading with or provision of supplies to WAD or (iii) materially changed the
terms on which it is prepared to purchase from, trade with or supply WAD. The
WAD Disclosure Schedule sets forth an accurate and complete list of each
Material Contract with the customers and suppliers of WAD. Copies of each such
Material Contract and of each standard business agreement (i.e., purchase
orders, invoices and the like) used by WAD have previously been provided or made
available to Products.
3.26 WAD Disclosure Schedule. WAD has previously provided or made available
to Products accurate and complete copies of each document listed or referred to
on the WAD Disclosure Schedule.
3.27 Operation of the Business. No part of the Business is operated by WAD
through any other Person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF products
Products represents and warrants to WAD that:
4.1 Existence and Power. Products is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State of Delaware,
with all requisite power and authority to own, lease and operate its properties
and to conduct its business and operations as they are now being owned, leased,
operated and conducted.
4.2 Due Authorization. Products has full power and authority to enter into
this Agreement and to consummate the Transaction. The execution, delivery and
performance by Products of this Agreement has been duly and validly approved by
the board of directors of Products and no other actions or proceedings on the
part of Products are necessary to authorize this Agreement and the Trans-
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action. Products has duly and validly executed and delivered this Agreement.
This Agreement constitutes (assuming due execution and delivery by WAD and each
Seller) the legal, valid and binding obligation of Products, enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws in
effect which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
4.3 Consents and Approvals; Authority Relative to This Agreement. No
consent, authorization or approval of, filing or registration with, or
cooperation from, any Governmental Authority or any other Person not a party to
this Agreement is necessary in connection with the execution, delivery and
performance by Products of this Agreement or the consummation of the
Transaction.
4.4 No Violation of Other Instruments or Laws. The execution, delivery and
performance by Products of this Agreement does not (a) violate, breach or
constitute any material event of default, or result in the acceleration of any
material obligation, under any Material Contract, order, writ, injunction,
arbitration award, judgment or decree to which Products is a party or by which
it is bound; or (b) violate any Law.
4.5 Brokers. Products has not used any broker or finder in connection with
the Transaction, and neither WAD nor any Affiliate of WAD has or shall have any
liability or otherwise suffer or incur any Loss as a result of, or in connection
with, any brokerage or finder's fee or other commission of any Person retained
by Products in connection with the Transaction.
ARTICLE V
COVENANTS
Each party hereto covenants and agrees, to the extent applicable to such
party (and as to WAD, except as set forth in the corresponding section or
subsection of the WAD Disclosure Schedule) that:
5.1 Implementing Agreement. On the terms and subject to the conditions
hereof, from and after the date hereof, each party hereto shall use its
commercially reasonable efforts to take all action required of it to fulfill its
obligations under the terms of this Agreement, and to facilitate the
consummation of the Transaction. Each party hereto agrees that it shall not,
directly or indirectly, take any action (or refrain from taking any action) that
would have the effect of preventing or disabling such party's performance of its
obligations under this Agreement.
5.2 Access to Information and Facilities. From and after the date hereof,
WAD shall give Products and Products' representatives reasonable access during
WAD's normal business hours to all of the facilities, properties, books,
Contracts, commitments and records which relate to the Transferred Assets and
the Assumed Liabilities, and shall be available to Products and its
representatives and shall give reasonable access to Products and its
representatives, WAD's officers, managers and employees, as Products and its
representatives, in each case, shall from time to time reasonably request.
5.3 Consents and Approvals. (a) Each party hereto shall use its
commercially reasonable efforts to obtain all consents, approvals, certificates
and other documents required in connection
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with the performance by it of this Agreement and the consummation of the
Transaction, including all consents and approvals referred to in the WAD
Disclosure Schedule. Each of WAD, each Seller and Products shall make all
filings, applications, statements and reports to all Governmental Authorities
and other Persons that are required to be made by it prior to the Closing Date
by, or on behalf of, any such party pursuant to any applicable Law or Contract
in connection with this Agreement and the Transaction.
(b) If WAD, despite its reasonable best efforts, is unable to obtain any
consent, authorization or approval listed on Schedule 3.3(a) of the WAD
Disclosure Schedule under the heading "Non-Condition Consents" with respect to
any Contract or Permit, WAD shall cause Products to receive the benefits of such
Contract or Permit, provided that Products shall, at WAD's option, either
reimburse WAD for reasonable out-of-pocket costs incurred by WAD or its
Affiliates in providing Products the benefits of such Contract or Permit or pay
such costs directly promptly after, or when, as the case may be, such costs are
incurred or owing, as the case may be. Products' obligations to WAD with respect
to such Contracts shall be equivalent in all applicable respects to WAD's
obligations to the other party or parties to such Contracts.
5.4 Retention of Certain Employees. Prior to the Closing Date, WAD shall
use its commercially reasonable efforts in cooperation with Products to bring
about each Key Employee's agreement to be employed by Products following the
Closing Date. WAD shall promptly notify Products whenever WAD becomes aware or
reasonably believes that any Continuing Employee intends to leave its employ.
5.5 Supplemental Information. From time to time after the date hereof, each
party shall promptly disclose in writing to the other party any matter hereafter
arising which, if existing, occurring or known as of the date hereof or the
Closing Date would have been required to be disclosed to Products or which would
render inaccurate any of the representations, warranties or statements of such
party set forth in Article III or IV, as the case may be. No information
provided to a party pursuant to this Section 5.5 shall be deemed to cure any
breach of any representation, warranty or covenant made in this Agreement.
5.6 Use of Name. From and after the Closing Date, WAD agrees that it shall
not, and that it shall cause its Affiliates not to, directly or indirectly, use
in any manner any trade name, trademark, service xxxx, logo, or other name owned
or used by WAD, or any trade name, trademark, service xxxx, logo, or other name
that is similar thereto in sound or appearance, in each case other than those
which constitute the Excluded Assets.
5.7 Termination of Certain Agreements. WAD and each Seller shall, and shall
cause their respective Affiliates to, effective as of the Closing, without any
cost to Products, terminate, rescind, cancel and render void and of no effect
any and all Contracts between WAD, on the one hand, and any Affiliates of WAD or
such Seller, on the other hand, which relate to the Business or the Transferred
Assets.
5.8 Transfer Taxes. (a) WAD shall be responsible for the timely payment of,
and shall indemnify and hold harmless Products against, all sales (including,
without limitation, bulk sales), use, value added, documentary, stamp, gross
receipts, registration, transfer, conveyance, real property gains or transfer,
excise, recording, license and other similar taxes and fees ("Transfer Taxes"),
arising out of or in connection with or attributable to the transactions
effected pursuant to this Agreement.
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(b) As between WAD, on the one hand, and Products, on the other hand, the
party that has the primary responsibility under applicable Law for filing any
Tax Return required to be filed in respect of Transfer Taxes shall prepare and
timely file such Tax Return; provided that such party's preparation of such Tax
Return shall be subject to the other party's approval, which approval shall not
be withheld unreasonably.
(c) Products and WAD will cooperate with each other in attempting to
minimize Transfer Taxes.
5.9 Confidentiality. Each party hereto agrees that they shall hold in
confidence, shall not disclose to any third party and shall not use for their
own benefit or for the benefit of any other Person any Confidential Information,
knowledge or data which has been or will be disclosed pursuant to this Agreement
or in connection with the Transaction by the other party in any manner,
including, but not limited to, orally or in writing concerning the business or
affairs of such other party or its Affiliates, in each case, except as required
or permitted by this Agreement to fulfill its obligations, or exercise its
rights, hereunder. Access to any such Confidential Information, knowledge or
data of the disclosing party shall be limited to those officers, employees,
advisors and agents to the recipient who need to know it in connection with the
purposes specified above and who agree to be bound by provisions similar to this
Section 5.9.
The obligations of confidentiality, nondisclosure and nonuse in this
Section 5.9 shall not apply to Confidential Information, knowledge or data which
is or becomes generally available to the public through no act in contravention
of this Agreement; or to Confidential Information, knowledge or data which is
received by the recipient on a non-confidential basis from a third party
entitled to make disclosure thereof; or in the case of Products and its
Affiliates after the Closing, Confidential Information, knowledge or data
relating to the Business or affairs of WAD disclosed pursuant to this Agreement.
If a party either reasonably determines that it is required to disclose any
Confidential Information, knowledge or data of the other party pursuant to
applicable law or receives any demand under lawful process from a court of
competent jurisdiction to disclose or provide Confidential Information,
knowledge or data of the other party that is subject to the confidentiality
provisions hereof, such party shall provide reasonable prior written notice of
the same to the other party and shall cooperate at the expense of the requesting
party in seeking any reasonable protective arrangements requested by such other
party. Subject to the foregoing, the party that receives such request may
thereafter disclose or provide Confidential Information, knowledge or data to
the extent required by such law or by lawful process.
The parties hereto agree that, upon the request of the disclosing party,
they shall immediately deliver to such disclosing party all papers, books,
manuals, lists, correspondence and documents (in electronic format or otherwise)
containing or relating to the Confidential Information, together with all copies
thereof unless ownership thereto has transferred pursuant to this Agreement. All
Confidential Information disclosed pursuant to this Agreement by any party shall
be and remain the property of the disclosing party, except to the extent it
constitutes a Transferred Asset ownership of which has been transferred pursuant
to this Agreement.
5.10 Publicity. Each of WAD, each Seller and Products agree that no public
release or announcement concerning this Agreement and the Transaction shall be
issued without the prior consent of the other parties, except as such release or
announcement may be required by Law or the rules or
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regulations of any securities exchange; provided that, prior to issuing any such
release, the issuing party shall provide each other party in interest with a
reasonable opportunity to review such release.
5.11 Preservation of Business. From and after the date hereof until the
Closing Date, except as otherwise required by this Agreement, WAD shall operate
the Business only in the ordinary and usual course of business and consistent
with past practice of the Business, and shall use its commercially reasonable
efforts to (a) preserve intact the present business organization and personnel
of WAD and maintain the Transferred Assets in good repair, working order and
operating condition, subject only to ordinary wear and tear; (b) preserve the
goodwill and advantageous relationships of WAD with customers, suppliers,
independent contractors, managers, employees and other Persons material to the
operation of the Business; (c) preserve in full force and effect its Permits;
and (d) not permit any action or omission that would cause any of the
representations or warranties of WAD contained herein to become inaccurate or
any of the covenants of WAD to be breached. Without limiting the generality of
the foregoing, from the date hereof until the Closing Date, WAD shall not with
respect to the Business, the Transferred Assets or the Assumed Liabilities,
without the prior written consent of Products, except as required by this
Agreement:
(i) waive, release or cancel any claims against third parties or debts
owing to it, or any rights which have any value, other than in the ordinary
course of business and consistent with past practice of the Business
pursuant to Contracts which are not Material Contracts with Persons that
are not Affiliates of WAD or any Seller;
(ii) make any changes in its accounting systems, policies, principles
or practices;
(iii) enter into, authorize or permit any transaction with any Seller
or any Affiliate of Seller other than in the ordinary course and consistent
with past practice;
(iv) make any borrowings, incur any Indebtedness or assume, guarantee,
endorse other than in the ordinary course of business and consistent with
past practice, or otherwise become liable (whether directly, indirectly or
contingently) for the obligations or Indebtedness of any other Person, or
make any payment or repayment in respect of any obligations or Indebtedness
(other than in the ordinary course and consistent with past practice) to
the extent that any of the foregoing would be included in the Assumed
Liabilities;
(v) make any loans, advances or capital contributions to, or
investments in, any other Person;
(vi) except as may be required pursuant to this Agreement, enter into,
adopt, amend or terminate any bonus, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or
other arrangements for the benefit or welfare of any WAD Employees, or
increase in any manner the compensation or fringe benefits of any WAD
Employees or pay any benefit not required by any existing plan and
arrangement or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing;
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(vii) sell, transfer or assign any of the Transferred Assets, other
than the sale of Inventory in the ordinary course of business and
consistent with past practice or acquire or lease any assets outside of the
ordinary course of business or any assets that are material to WAD and that
would be required to be included in the Transferred Assets or make any
Transferred Asset subject to any Lien whatsoever other than a Permitted
Lien;
(viii) authorize or make any capital expenditures which individually
or in the aggregate are in excess of $25,000;
(ix) make any Tax election or settle or compromise any federal, state,
local or foreign Tax liability, or waive or extend the statute of
limitations in respect of any such Taxes;
(x) pay any amount, perform any obligation or agree to pay any amount
or perform any obligation, in settlement or compromise of any suits or
claims of liability against WAD or any of its directors, officers,
employees or agents;
(xi) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) or
repay or discharge any Indebtedness other than (a) as required by the
instruments evidencing the claims, liabilities, obligation or Indebtedness
and (b) the payments, discharges or satisfactions, in the ordinary course
of business and consistent with past practice, of liabilities reflected or
reserved against in the Latest Financial Information or subsequently
incurred in the ordinary course of business and consistent with past
practice or collect, or accelerate the collection of, any amounts owed
(including accounts receivable) other than collection in the ordinary
course, in each case, which relate to or affect the Business, the
Transferred Assets or the Assumed Liabilities;
(xii) terminate, modify, amend or otherwise alter or change any of the
terms or provisions of any Material Contract, or pay any amount not
required by Law or by any Material Contract;
(xiii) agree to any repricing, giveback or discount pursuant to or in
connection with any Material Contract; or
(xiv) take any action, or refrain from taking any action, that would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
5.12 Tax Matters. (a) After the Closing Date, each of Products and WAD
shall (and shall cause their respective Affiliates to) (i) assist the other
party in preparing any Tax Returns which such other party is responsible for
preparing and filing, and (ii) cooperate fully in preparing for any audits of,
or disputes with any tax authority regarding any Tax to the extent such audit or
dispute (y) relates to or arises from the Transaction or the conduct of the
business of WAD or the Business or (z) would reasonably be expected to have an
impact on WAD or any of its Affiliates, in the case of an audit or dispute
involving Products or any of its Affiliates, or Products or any of its
Affiliates, in the case of an audit or dispute involving WAD or any of its
Affiliates. WAD shall not dispose of any Tax work papers, books or records
relating to WAD during the six (6) year period following the Closing Date, and
thereafter, if Products provides notice of this requirement within six (6)
months of the end of the six (6) year period, WAD shall give Products reasonable
written notice before disposing of such items.
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(b) Notwithstanding any other provision of this Agreement, WAD shall
indemnify each Products Indemnified Party from and against and in respect of any
and all Losses incurred by such Products Indemnified Party, which may be imposed
on, sustained, incurred or suffered by or assessed against such Products
Indemnified Party, directly or indirectly, to the extent relating to or arising
out of any liability for Taxes imposed on WAD for any taxable year or period and
any Taxes otherwise resulting from the Transaction.
5.13 Maintenance of Insurance. WAD shall continue to carry its existing
insurance through the Closing Date, and shall not allow any breach, default,
termination or cancellation of such insurance policies or agreements to occur or
exist prior to the Closing Date.
5.14 Non-Compete. None of WAD, Sellers or any of their respective present
or future Subsidiaries or Affiliates or the Individual Sellers or any of their
present or future Affiliates shall during the period beginning from the Closing
Date and ending on the later of the (i) fifth anniversary of the Closing Date
and (ii) termination of the Supply Agreement (the "Non-Compete Period"),
directly or indirectly, on its or his own behalf, or on behalf of any other
Person:
(a) acquire or own in any manner any interest in any Person (other
than Parent or its Affiliates) that is engaged in the business of package
dyeing yarn, or dyeing fabrics, for use in the automotive industry;
(b) engage, through or in connection with any Person (other than
Parent or its Affiliates) in, or compete in any way, with the business of
package dyeing yarn, or dyeing fabrics, for use in the automotive industry;
(c) be employed in any capacity by, serve as an employee, agent or
officer or director of, serve as a consultant or advisor to, or otherwise
participate in the management or operation of, any Person (other than
Parent or its Affiliates) which engages in, or competes in any way with,
the business of package dyeing yarn, or dyeing fabrics, for use in the
automotive industry;
(d) solicit, entice or induce any employee, agent, officer or director
of Products or any of its present or future Subsidiaries or Affiliates to
terminate his or her employment or other relationship with Products or any
of its present or future Subsidiaries or Affiliates, as the case may be,
provided, however, that with respect to any third party which is not an
Affiliate of XxXxxxxx and which is the successor to all or substantially
all the assets of WAD, the application of this clause (d) shall be limited
to the individuals who are Continuing Employees;
(e) knowingly solicit, entice or induce any vendor or solicit, entice
or induce any customer, in each case, of Products or any of its present or
future Subsidiaries or Affiliates to terminate or diminish its relationship
with Products or any of its present or future Subsidiaries or Affiliates,
as the case may be; or
(f) assist others engaging in the conduct described in the foregoing
clauses (a) through (e).
Nothing in Section 5.14(a) or (f) shall prohibit, during the Non-Compete
Period, (i) each Seller, each of their respective Subsidiaries and Affiliates,
and WAD from (A) owning capital stock of Parent, (B) owning in the aggregate for
all such Persons not in excess of five percent (5%) of the out-
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standing equity interests of any other publicly traded company that is engaged
in the business of manufacture of automotive fabrics (provided that each shall
nonetheless remain subject to the restrictions described in clauses (b) through
(f), inclusive, above with respect to such investment) in this clause (B), or
(C) participating as investors in Heartland. Nothing in Section 5.14(b), (c) or
(f) shall prohibit (i) Sellers, their Affiliates and WAD from complying with
their obligations under and enjoying the benefits of the Supply Agreement, or
any other agreement among WAD or any of Sellers and Products, Parent or any
Subsidiary or Affiliate of Products or Parent, and (ii) X. XxXxxxxx from serving
as a director of or consultant to Parent or Products or any of their respective
Subsidiaries or Affiliates from time to time.
5.15 Non-Disparagement. None of WAD or Tyng or any of their respective
Subsidiaries or Affiliates or the Individual Sellers or any of their Affiliates
shall at any time following the date of this Agreement make any statements in
writing or otherwise that disparage the reputation or character of Products or
any of its present or future Subsidiaries, Affiliates or divisions or any of its
directors, officers, employees or stockholders at any time for any reason
whatsoever, except that nothing in this Section 5.15 shall prohibit the
respective directors, officers, employees or partners of WAD, Tyng or each of
the Individual Sellers from giving truthful testimony on any litigation or
administrative proceedings either between each Seller or WAD on the one hand and
Products on the other hand, or in connection with which each Seller or WAD or
such director, officer, employee or partner is required by law to give
testimony.
5.16 Personnel Matters.
(a) Employees and Employee Benefit Plans. (i) Subject to Section 5.16(d),
effective as of the Closing, Products will, or will cause one of its
Subsidiaries or Affiliates to, offer employment to each active employee of WAD
(including, without limitation, employees taking advantage of the Family and
Medical Leave Act of 1993 but excluding inactive employees of WAD who are not
actively employed on the Closing Date due to a short-term disability or other
illness or injury and who within six months after the Closing Date become
eligible under WAD's applicable long-term disability plans without an
intervening return to active employment, and excluding former employees of WAD
who, as of the Closing Date, are on a long-term disability leave) ("WAD
Employees") identified on the WAD Disclosure Schedule (such identified WAD
Employees, the "Continuing Employees") commencing as of the Closing Date with
compensation that is substantially equivalent to the compensation of such
Continuing Employee immediately prior to the Closing.
(ii) The WAD Disclosure Schedule shall separately identify all employees of
WAD who are not actively employed on the Closing Date due to a short-term
disability or other illness or injury on the Closing Date.
(iii) Products agrees that, under any employee benefit plan made available
or established after the Closing Date, Continuing Employees will receive credit
for their years of service with WAD or any of its Affiliates prior to the
Closing Date in determining eligibility and vesting thereunder, and in
determining the amount of benefits under any applicable sick leave, vacation or
severance plan. Products will, or will cause one of its Subsidiaries or
Affiliates to, cover Continuing Employees as of the end of the Benefits
Transition Period (as defined in Section 5.16(g) below) under a group health
plan and waive any preexisting condition limitations applicable to Continuing
Employees under any group health plan made available to Continuing Employees to
the extent that a Continuing Employee's condition would not have operated as a
preexisting condition limitation under any applicable group health plan of
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or sponsored by WAD or any of its Affiliates prior to the Closing Date, and
Products will, or will cause one of its Subsidiaries or Affiliates to, take all
action necessary to ensure that Continuing Employees are given full credit for
all co-payments and deductibles incurred under any group health plan for the
plan year that includes the end of the Benefits Transition Period.
(b) Assumption of Obligations. (i) Except as set forth in Section 5.16(g),
effective as of the Closing, Products will, or will cause one of its
Subsidiaries or Affiliates to, assume and be solely responsible for all
liabilities and obligations relating to termination (actual or constructive) of
employment by Products or any of its Subsidiaries or Affiliates of any
Continuing Employee after the Closing Date. WAD will retain and be solely
responsible for all liabilities and obligations relating to termination (actual
or constructive) of employment of any WAD Employee (or other employee of any
Subsidiary or Affiliate of WAD) occurring on or prior to the Closing Date
(including those employees deemed terminated because they are not required to be
rehired by Products or its Subsidiary or Affiliate under Section 5.16(a)), and
Products will have no liability with respect to thereto.
(ii) Effective as of the Closing, Products will, or will cause one of its
Subsidiaries or Affiliates to, assume and be solely responsible for all
liabilities and obligations of WAD with respect to Continuing Employees for
accrued wages, recorded vacation or sick pay, (including any claims for such
benefits incurred but not reported), but only to the extent taken into account
in the determination of Working Capital at the Closing Date.
(iii) Subject to Section 5.16(g) below, WAD shall have sole responsibility,
liability and obligation to provide Continuing Employees and their qualified
beneficiaries with continuation coverage (within the meaning of Section
4980B(f)(2) of the Code) under each Employee Benefit Plan that is a group health
plan ("COBRA Coverage"), and any liability or obligation relating to such
coverage, with respect to "qualifying events" (within the meaning of Section
4980B(f)(3) of the Code) that occur on or prior to the Closing Date including
without limitation any liability or obligation to provide such WAD Employees
with the notice required under Section 4980B(f)(6) of the Code with respect to
qualifying events that occur as a result of the Transaction. Products shall have
sole responsibility, liability and obligation to provide Continuing Employees
and their qualified beneficiaries with COBRA Coverage, and any liability or
obligation relating to such coverage, with respect to qualifying events that
occur after the Closing Date.
(c) Retirement Plans. (i) As of the Closing, WAD will cause Continuing
Employees to be fully vested in their accrued benefits under the Tyng Profit
Sharing Retirement and Personal Savings Plan ("WAD's 401(k) Plan") and the Xxxx
Fabrics Factory Hourly and Office Employee's Pension Plan and Trust ("WAD's
Defined Benefit Plan" and, collectively, "WAD's Retirement Plans"). Neither
Products nor any of its Subsidiaries or Affiliates will assume any liabilities
or obligations with respect to WAD's Retirement Plans (except as provided in
subparagraph (ii) below), which will be retained by WAD, or with respect to any
claims made with respect to benefits allegedly payable thereunder.
(ii) As soon as practical after the Closing, and following (A) delivery by
Products to WAD of a favorable IRS determination letter regarding a defined
contribution plan of Products (the "Products 401(k) Plan") or an opinion,
reasonably satisfactory to WAD, of Products' counsel to the effect that the
terms of the Products 401(k) Plan and its related trust qualify, as to form,
under Section 401(a) and Section 501(a) of the Code, and (B) delivery by WAD to
Products of a favorable IRS deter-
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mination letter regarding WAD's 401(k) Plan or an opinion, reasonably
satisfactory to Products, of WAD's counsel to the effect that the terms of WAD's
401(k) Plan and its related trust qualify, as to form, under Section 401(a) and
Section 501(a) of the Code, WAD shall cause the trustee of WAD's 401(k) Plan to
transfer all of the assets and liabilities thereof attributable to Continuing
Employees to the Products 401(k) Plan. Unless otherwise agreed by WAD and
Products, the assets to be transferred shall be cash and promissory notes for
loans made to Continuing Employees.
(d) Employment Terminations and Plan Amendments. Subject to Products'
obligations under Purchased Contracts, no provision of this Section 5.16 will
limit Products' or any of its Subsidiaries' or Affiliates' right and authority
to discontinue, suspend or modify the employment of any Continuing Employee or
benefits provided to any or all Continuing Employees after the Closing.
(e) Cease Participation in WAD's Plans. Effective as of the end of the
Benefits Transition Period, Continuing Employees shall cease active
participation in all Continuing Benefits. Effective as the Closing Date,
Continuing Employees shall cease active participation in all Employee Benefit
Plans.
(f) Welfare Plans. Effective as of the end of the Benefits Transition
Period, Products shall maintain group welfare plans as defined in Section 3(1)
of ERISA for the benefit of Continuing Employees and their dependents and
beneficiaries. Subject to Section 5.16(g) below, WAD shall retain responsibility
for all medical or dental services incurred on or prior to the end of the
Benefits Transition Period and Products shall retain responsibility for claims
incurred after the end of the Benefits Transition Period. For purposes of the
preceding sentence, a claim shall be deemed to have been incurred on the date on
which medical or other treatment or service was rendered and not the date of
inception of the related illness or injury or the date of submission of a claim
related thereto; provided that in the case of a claim involving hospitalization,
all expenses incurred during a continuous hospital stay shall be deemed to be
one claim and shall be deemed to have been incurred on the first day of such
hospital stay.
(g) Benefits Transition Period. WAD shall continue to make available during
the Benefits Transition Period (as defined below) to Continuing Employees the
medical, dental, life insurance, disability, cafeteria and flexible spending
account plans, but not the WAD's 401(k) Plan, provided by WAD or its Affiliates
and available to Continuing Employees immediately prior to the Closing Date (the
"Continuing Benefits"). The Benefits Transition Period shall commence on the
Closing Date and end on the earlier of a date specified by Products or December
31, 2001. Products shall pay to WAD, or any administrative representative of
WAD, all premium rates, plan contributions and other costs payable for the
Continuing Benefits with respect to Continuing Employees during the Benefits
Transition Period, plus any third party administrative service fees directly
related to such premiums, costs or contributions incurred by WAD in connection
with the Continuing Benefits for Continuing Employees during the Benefits
Transition Period.
(h) Disability. WAD shall continue to be responsible, in accordance with
its applicable long-term disability plans, for all disability income benefits
and other applicable benefits payable to inactive employees or former employees
who are not Continuing Employees.
(i) Employee Information. Each of WAD and Products will provide the other,
in a timely manner, any information with respect to any WAD Employee's or former
employee's employment with and compensation from WAD, any of its Affiliates or
Products or any of its Subsidiaries or
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Affiliates, as the case may be, or rights of benefits under any employee benefit
plan or arrangement which the other party hereto may reasonably request.
(j) W-2 Matters. Pursuant to the alternate procedure described by Revenue
Procedure 96-60, Products will assume WAD's entire obligation to furnish Forms
W-2 for the year ending December 31, 2001 to Continuing Employees. WAD will
provide Products the information not available to Products and relating to
periods ending on the end of the Benefits Transition Period necessary for
Products to prepare and distribute Forms W-2 to Continuing Employees for the
year ending December 31, 2001, which Forms W-2 will include all remuneration
earned by Continuing Employees from WAD and Products during the year ending
December 31, 2001, and Products will prepare and distribute such Forms. WAD will
indemnify, defend and hold harmless Products against any fines or penalties to
the extent resulting from WAD's provision of incorrect information pursuant to
this Section 5.16(j).
(k) VEBA. Neither Products nor any of its Subsidiaries or Affiliates will
assume any liabilities or obligations with respect to the Xxxx Fabrics voluntary
employees' beneficiary association ("VEBA").
5.17 WAD Financial Statements. WAD shall prepare, in cooperation with
Products and deliver to Products, (i) by August 31, 2001 audited financial
statements of WAD for each of the three fiscal years of WAD ended June 30, 2001,
2000 and 1999, (ii) if determined subsequent to August 31, 2001 to be necessary
or advisable as soon as practical after such determination, an unaudited
statement of financial position for the interim period ended September 30, 2001
and unaudited statements of income and cash flows for the interim period ended
September 30, 2001 and the corresponding period in 2000, in each case prepared
in accordance with GAAP consistently applied for the periods presented and with
the accounting requirements and the published rules and regulations of the SEC
applicable to a registration statement relating to an offering of debt
securities, and to comply with the requirements of Form 8-K under the Exchange
Act (the "WAD Financial Statements"); and (iii) shall, in connection therewith,
cause its independent accountants to deliver an unqualified audit report with
respect to the audited consolidated financial statements included in the WAD
Financial Statements prepared in accordance with the requirements and the
published rules and regulations of the SEC applicable to a registration
statement relating to an offering of debt securities.
5.18 EPCRKA. Products shall prepare and file such Form R Report as may be
required pursuant to Section 313 of the Emergency Planning and Community
Right-to-Know Act with respect to the Owned Real Property for the calendar year
ending December 31, 2001.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of Products, each Seller and WAD to consummate the
Transaction are subject to the satisfaction of the following conditions:
6.1 Actions or Proceedings. No action or proceeding by any Governmental
Authority or other Person shall have been instituted or threatened, and no event
or circumstance shall have occurred, (a) that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect (provided
that, for the purpose of this Section 6.1, $125,000 as an aggregate shall be
substi-
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tuted for $25,000 individually in the definition of Material Adverse Effect") on
the business, operations, assets, liabilities, results of operations, cash
flows, condition (financial or otherwise) of WAD or Products (together with
their consolidated Subsidiaries); or (b) that would reasonably be expected to
result in the enjoining, restraining or prohibition of, or result in substantial
damages in respect of, any provision of this Agreement or the consummation of
the Transaction or the effective operation of any material portion of the
Business or effect any material portion of the business of Products or any
integration of the Transferred Assets or the Assumed Liabilities with the
operations of Products and its Affiliates.
6.2 WAD Refinancing. WAD shall have entered into an amendment to that
certain Credit Agreement by and among Fleet, Tyng, The Xxxxxx Yarn Company,
L.P., Main Street Textiles, L.P., and WAD dated July 10, 1997, as amended
through the date hereof, in form and substance satisfactory to WAD and Products,
pursuant to which the holders of the Indebtedness thereunder (the "Lenders")
shall have agreed that, upon repayment of a stated amount of the Indebtedness
owed the Lenders, the Lenders will release any and all Liens held by the Lenders
against the Transferred Assets.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PRODUCTS
The obligations of Products to consummate the Transaction are subject to
the waiver or satisfaction of the following conditions:
7.1 Warranties True as of both Present Date and Closing Date. The
representations and warranties of WAD and each Seller contained herein shall
have been accurate and complete on and as of the date hereof, and shall also be
accurate and complete on and as of the Closing Date (as updated pursuant to
Section 5.5), except for representations and warranties that are made as of a
specific date, which shall be accurate and complete as of such date, and
provided that each of the representations and warranties contained in Article
III that are qualified or limited by the term "Material Adverse Effect" or
"material" or phrases of like import shall be read without giving effect to such
qualification or limitation, but provided, further, that this Section 7.1 will
be deemed to be satisfied unless any breaches of the representations and
warranties contained in Article III would reasonably be expected, individually
or in the aggregate, to result in a (i) Material Adverse Effect (provided that,
for purposes of this Section 7.1, $125,000 in the aggregate shall be substituted
for $25,000 individually in the definition of "Material Adverse Effect") or (ii)
default or event of default under any material debt instrument of Parent or its
Subsidiaries as a result thereof.
7.2 Compliance with Agreements and Covenants. WAD and each Seller shall
have performed and complied in all material respects with all of their
respective covenants, obligations and agreements contained in this Agreement to
be performed and complied with by them on or prior to the Closing Date.
7.3 Consents and Approvals. Other than the Non-Assigned Contracts for which
consent has not been obtained, WAD shall have furnished written evidence
satisfactory to Products that all consents, approvals and filings (a) required
for the consummation of the Transaction or the ownership and operation by
Products of the Transferred Assets and (b) set forth on Schedule 3.3(a) of the
WAD Disclosure Schedule under the heading "Condition Consents", have been
obtained, and all required filings have been made, as the case may be.
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7.4 Financial Statements. WAD shall have furnished to Products the WAD
Financial Statements no later than August 31, 2001.
7.5 Documents. Products shall have received each agreement, document and
item specified in Section 9.1.
7.6 Working Capital. WAD shall have Working Capital at Closing which,
taking into consideration current sales levels, is substantially consistent with
the amount of Working Capital that would have been maintained for such sales
levels under the historic methods of computation of appropriate Working Capital
of the Business.
7.7 Employee Matters. Sufficient Continuing Employees shall have agreed to
be employed by Products or one of its Subsidiaries after the Closing so that,
together with the management services being provided subsequent to the Closing
pursuant to the Transition Services Agreement, Products will be able to operate
the Business in the manner operated by WAD prior to Closing.
7.8 Transfer Documents. WAD shall have executed and delivered to Products
at the Closing all documents, certificates and agreements as may be reasonably
requested by Products and are necessary to transfer to Products good and
marketable title to the Transferred Assets, free and clear of any and all Liens
thereon (except for Permitted Liens), including without limitation:
(a) a xxxx of sale, assignment and general conveyance, in form and
substance reasonably satisfactory to Products, dated the Closing Date, with
respect to the Transferred Assets (other than any Transferred Asset to be
transferred pursuant to any of the instruments referred to in any other
clause of this Section 7.8);
(b) assignments, in form and substance reasonably satisfactory to
Products, of all Purchased Contracts, Intellectual Property and any other
agreements and instruments constituting Transferred Assets, dated the
Closing Date, assigning to Products all of WAD's right, title and interest
therein and thereto;
(c) a deed with customary terms, dated as of the Closing Date, with
respect to each parcel of Owned Property included in the Transferred Assets
in form and substance mutually satisfactory, together with any necessary
transfer declarations or other filings;
(d) an assignment of lease, dated as of the Closing Date, with respect
to each Leased Property together with any necessary transfer declarations
or other filing;
(e) certificates of title to all motor vehicles included in the
Transferred Assets, duly endorsed for transfer to Products as of the
Closing Date; and
(f) separate trademark assignments, each dated the Closing Date, with
respect to any United States trademark registrations included in the
Transferred Assets.
7.9 Consummation of Transactions Under Plan of Merger. The consummation of
the merger of JAII Acquisition with and into Xxxx Automotive, as contemplated by
the Plan of Merger shall have occurred or shall occur contemporaneously with the
Closing.
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7.10 No Material Adverse Change. No Material Adverse Change shall have
occurred since the Latest Financial Information Date, and no event shall have
occurred which, in the reasonable judgment of Products, would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
(provided, that for the purpose of this Section 7.10, $125,000 in the aggregate
shall be substituted for $25,000 individually in the definition of "Material
Adverse Effect").
7.11 Title Policies. Products shall have received from a nationally
recognized title insurance company (the "Title Company") satisfactory to
Products (a) a fee owner's title insurance policy issued to Products with
respect to each Owned Real Property, and (b) a leasehold title insurance policy
issued to Products with respect to Leased Real Property, in each case in form
and substance satisfactory to Products, together with endorsements reasonably
requested by Products, including, without limitation, access, zoning,
comprehensive, non-imputation and contiguity endorsements, in an amount
determined by Products, insuring Products and issued as of the Closing Date by
the Title Company, showing Products to have a fee simple title to each Owned
Real Property and a valid leasehold estate in each Leased Real Property. WAD
shall have delivered to the Title Company any affidavits or indemnities required
by the Title Company in connection with the delivery of the owner's title
policies and leasehold title policies.
7.12 Surveys. Products shall have received a survey of each Real Property,
dated within 30 days of the Closing Date, prepared by a certified or registered
surveyor reasonably acceptable to Products and the Title Company and certified
to Products and the Title Company, in form and substance satisfactory to
Products and the Title Company, complying with the current Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys and (a) setting forth an
accurate description of each parcel of Real Property, (b) locating all
improvements, Liens (setting forth the recording information of any recorded
instruments), setback lines, alleys, streets and roads, (c) showing any
encroachments upon or by any improvements on the Real Property, and (d) showing
all dedicated public streets providing access to the Real Property and the
municipal address of any improvements located on the Real Property.
7.13 Consents and Estoppels. Products shall have received consents from the
lessor of each lease of Leased Real Property which would, as a result of the
Transaction, otherwise be terminable, not assignable or assignable only with
consent to the assignment of such lease to Products. Products shall also have
received estoppel certificates addressed to Products from the lessor of each
lease, dated within 30 days of the Closing Date, identifying the lease documents
and any amendments thereto, stating that the lease is in full force and effect
and, to the best knowledge of the lessor, that the tenant is not in default
under the lease and no event has occurred that, with notice or lapse of time or
both, would constitute a default by the tenant under the lease and containing
any other information reasonably requested by Products.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF WAD AND EACH SELLER
The obligations of WAD and each Seller to consummate the Transaction are
subject to the waiver or satisfaction of the following conditions:
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8.1 Warranties True as of both Present Date and Closing Date. The
representations and warranties of Products contained herein shall have been
accurate and complete on and as of the date hereof, and shall also be accurate
and complete as of the Closing Date, except for representations and warranties
that are made as of a specific date, which shall be accurate and complete as of
such date, and provided that each of the representations and warranties
contained in Article IV that are qualified or limited by the term "Material
Adverse Effect" or "material" or phrases of like import shall be read without
giving effect to such qualification or limitation, but provided, further, that
this Section 8.1 will be deemed to be satisfied unless any breaches of the
representations and warranties contained in Article IV would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (provided that, for purposes of this Section 8.1, $125,000 as an
aggregate shall be substituted for $25,000 individually in the definition of
"Material Adverse Effect").
8.2 Compliance with Agreements and Covenants. Products shall have performed
and complied in all material respects with all of its covenants, obligations and
agreements contained in this Agreement to be performed and complied with by it
on or prior to the Closing Date.
8.3 Documents. WAD shall have received all of the agreements, documents and
items specified in Section 9.2.
8.4 Consents and Approvals. Products shall have furnished written evidence
satisfactory to WAD that all consents and approvals of its board of directors
and third parties required for the consummation of the Transaction have been
obtained.
8.5 Consummation of Transactions Under Plan of Merger. The consummation of
the merger of JAII Acquisition, with and into Xxxx Automotive, as contemplated
by the Plan of Merger, shall have occurred or shall occur contemporaneously with
the Closing.
ARTICLE IX
CLOSING
9.1 Deliveries by WAD. At the Closing, in addition to any other documents
or agreements required under this Agreement, WAD shall deliver to Products the
following:
(a) A written statement from each Person holding a Lien other than a
Permitted Lien upon any of the Transferred Assets, and each creditor of WAD
with respect to any Indebtedness that is not an Assumed Liability,
confirming the repayment of such Indebtedness and the release of WAD and
the Transferred Assets as of the Closing Date of (i) any such Lien; and
(ii) all obligations under any and all Contracts relating thereto;
(b) A certificate dated the Closing Date of an authorized officer of
WAD certifying as to the matters set forth in Section 7.1 and Section 7.2,
and attached to such certificate shall be a written statement of all
matters that shall have been disclosed pursuant to Section 5.5;
(c) A certificate of the Secretary of Tyng, the general partner of WAD
certifying resolutions of such general partner approving and authorizing
the execution, delivery and performance of this Agreement and the
Transaction (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of WAD);
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(d) The Agreement of Limited Partnership of WAD; and
(e) A Certificate of Good Standing for WAD from the State of Delaware
(dated as of a recent date).
9.2 Deliveries by Products. At the Closing, in addition to any other
documents, consideration and agreements required under this Agreement, Products
shall deliver to WAD:
(a) a certificate, dated the Closing Date, of an executive officer of
Products certifying as to the matters set forth in Section 8.1 and Section
8.2, and attached to such certificate shall be a written statement of all
matters that shall have been disclosed pursuant to Section 5.5;
(b) a certificate of the Secretary of Products certifying board of
directors resolutions of Products, approving and authorizing the execution,
delivery and performance of this Agreement and the consummation of the
Transaction (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Products);
(c) a Certificate of Good Standing from the State of Delaware (dated
as of a recent date);
(d) the Purchase Price; and
(e) an assumption agreement, in form and substance reasonably
satisfactory to WAD, evidencing Products' assumption of the Assumed
Liabilities on the terms set forth herein.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated at any time, on or prior
to the Closing Date:
(a) by mutual written consent of WAD, on the one hand, and Products,
on the other hand;
(b) by either WAD or Products, if:
(i) the Closing has not occurred on or before September 30, 2001
(the "End Date"), provided that the right to terminate this Agreement
pursuant to this Section 10.1(b)(i) shall not be available to any
party whose breach of any provision of this Agreement results in the
failure of the Closing to occur by that time;
(ii) there shall be any Law that makes consummation of the
Closing illegal or otherwise prohibited or any judgment, injunction,
order or decree of any Governmental Authority having competent
jurisdiction enjoining WAD or Products from consummating the Closing
is entered and such judgment, injunction, order or decree shall have
become final and nonappealable; or
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(iii) the Plan of Merger shall have been terminated in accordance
with its terms;
(c) by Products, if there shall have been a material breach of any
covenant, representation or warranty of any Seller or WAD hereunder, and
such breach is incapable of being remedied by the End Date or shall not
have been remedied within ten (10) Business Days after receipt by WAD of a
written notice from Products specifying the breach and requesting such be
remedied (but in any event prior to the End Date); or
(d) by WAD, if there shall have been a material breach of any
covenant, representation or warranty of Products hereunder, and such breach
is incapable of being remedied by the End Date or shall not have been
remedied within ten (10) Business Days after receipt by Products of written
notice from WAD specifying the breach and requesting such be remedied (but
in any event prior to the End Date).
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, all obligations of the parties hereunder shall terminate, except
for the obligations set forth in Sections 5.9, 5.10, 10.1 and this Section 10.2
and Articles I, XI and XII (other than Section 12.12), which shall survive the
termination of this Agreement, and except that no such termination shall relieve
any party from liability for any prior knowing or willful breach of this
Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 Survival. The representations and warranties of the parties hereto
contained herein shall not survive the Closing.
11.2 Indemnification by WAD. WAD and each Seller jointly and severally
agree to indemnify each of the Products Indemnified Parties against, and agree
to hold each of them harmless from, any and all Losses incurred or suffered by
them relating to, arising out of, or in connection with, any of the following:
(a) any fraud or willful breach on the part of WAD or any Seller with
respect to any provision of this Agreement or any other document delivered
at the Closing;
(b) any knowing or willful breach of, or failure by WAD or any Seller
to perform, any covenant or obligation of WAD or any Seller (x) set out or
contemplated in this Agreement or any document delivered at the Closing to
the extent it is to be performed following the Closing, or (y) described in
Sections 5.1, 5.5, 5.6, 5.9, 5.10, 5.11, 5.14 or 5.15;
(c) any of the Excluded Liabilities or the Excluded Assets;
(d) any failure of WAD to comply with applicable bulk sales laws;
(e) the Worker Adjustment and Retraining Notification Act of 1988 (the
"WARN Act"), arising out of, or relating to, any actions taken by WAD or
any Seller prior to the Closing;
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(f) alleged defects in design, manufacture, materials or workmanship,
or any alleged breach of express or implied specifications, warranties or
representations, (other than in the field defects or breaches covered by
the Transition Services Agreement) of any Product ("Product Warranty
Claims") sold prior to the Closing; and
(g) alleged injury to individuals or alleged damage to property
resulting from any Product ("Product Damage Claims") sold prior to the
Closing.
11.3 Indemnification by Products. Products agrees to indemnify each of the
WAD Indemnified Parties against, and agrees to hold each of them harmless from,
any and all Losses incurred or suffered by it relating to, or arising out of, or
in connection with, any of the following:
(a) any fraud or willful breach on the part of Products with respect
to any provision of this Agreement or of any other document delivered at
Closing;
(b) any knowing or willful breach of, or failure by Products to
perform, any covenant or obligation of Products (x) set out or contemplated
in this Agreement or any document delivered at the Closing to the extent it
is to be performed following the Closing, or (y) described in Sections 5.1,
5.5, 5.9 or 5.10;
(c) any liability, obligation, cost or expense reasonably incurred
after the Closing by WAD or an Affiliate of WAD, as a result of WAD or an
Affiliate of WAD (i) continuing to guarantee after the Closing any Contract
listed in Schedule 3.3(a) of the WAD Disclosure Schedule under the heading
"Non-Condition Consents" or (ii) continuing to be a party to a Contract by
operation of Section 5.3(b) hereof.
(d) any of the Assumed Liabilities;
(e) the WARN Act, arising out of, or relating to, any actions taken by
Products or its Affiliates on or after the Closing;
(f) (i) Product Warranty Claims and Product Damage Claims for any
Product sold after the Closing and (ii) Product Warranty Claims for any
Product sold prior to the Closing brought after the earlier of the third
anniversary of the shipment of the Product or the second anniversary of the
Closing and Product Damage Claims brought after the seventh anniversary of
the Closing.
11.4 Claims. (a) The provisions of this Section shall be subject to Section
11.5. As soon as is reasonably practicable after becoming aware of a claim for
indemnification under this Agreement, the Indemnified Person shall promptly give
notice to the Indemnifying Person of such claim and the maximum amount (if
ascertainable) the Indemnified Person will be entitled to receive hereunder from
the Indemnifying Person; provided that the failure of the Indemnified Person to
give notice shall not relieve the Indemnifying Person of its obligations under
this Article XI except to the extent (if any) that the Indemnifying Person shall
have been prejudiced thereby. If the Indemnifying Person does not object in
writing to such indemnification claim within 30 calendar days of receiving
notice thereof, the Indemnified Person shall be entitled to recover promptly
from the Indemnifying Person the amount of such claim (but such recovery shall
not limit the amount of any additional indemnification to which the Indemnified
Person may be entitled pursuant to Section 11.2 or Section 11.3), and no later
objection by
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the Indemnifying Person shall be permitted. If the Indemnifying Person agrees
that it has an indemnification obligation but objects that it is obligated to
pay only a lesser amount, the Indemnified Person shall nevertheless be entitled
to recover promptly from the Indemnifying Person the lesser amount, without
prejudice to the Indemnified Person's claim for the difference.
(b) The liability of the Indemnifying Person under this Article XI shall be
subject to reduction in an amount equal to the value of any: (i) net Tax benefit
realized by the Indemnified Person (by reason of a Tax deduction, basis
adjustment, shifting of income, credits and/or deductions, or otherwise from one
or more fiscal periods to another resulting, in each case, from any Loss
suffered by the Indemnified Person that forms the basis of the Indemnifying
Person's obligation hereunder), giving effect to any Tax liabilities of the
Indemnified Person arising as a result of any payments made by an Indemnifying
Person with respect to such claim for indemnification; and (ii) insurance
benefit realized by the Indemnified Person in connection with any Loss suffered
by such Person that forms the basis of the Indemnifying Person's obligation
hereunder.
11.5 Notice of Third Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto in respect of which
indemnity may be sought under this Agreement; provided that the failure of the
Indemnified Person to give notice shall not relieve the Indemnifying Person of
its obligations under this Article XI except to the extent (if any) that the
Indemnifying Person shall have been prejudiced thereby. The Indemnifying Person
may, at its own expense (a) participate in the defense of any claim, suit,
action or proceeding; and (b) subject to Section 11.6, upon notice to the
Indemnified Person and the Indemnifying Person's delivering to the Indemnified
Person a written agreement that the Indemnified Person is entitled to
indemnification pursuant to Section 11.2 or Section 11.3 for all Losses arising
out of such claim, suit, action or proceeding and that the Indemnifying Person
shall be liable for the entire amount of any Loss, at any time during the course
of any such claim, suit, action or proceeding, assume the defense thereof;
provided, however, that (i) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person, and (ii) the Indemnifying Person shall
thereafter consult with the Indemnified Person upon the Indemnified Person's
reasonable request for such consultation from time to time with respect to such
claim, suit, action or proceeding. If the Indemnifying Person assumes such
defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest or if
the Indemnifying Person's counsel is otherwise not reasonably satisfactory to
the Indemnified Person, then such Indemnified Person may employ separate counsel
to represent or defend it in any such claim, action, suit or proceeding and the
Indemnifying Person shall pay the reasonable fees and disbursements of such
separate counsel. Whether or not the Indemnifying Person chooses to defend or
prosecute any such claim, suit, action or proceeding, all of the parties hereto
shall cooperate in the defense or prosecution thereof at the Indemnifying
Person's expense (except as set forth in Section 11.5).
11.6 Settlement or Compromise. Any settlement or compromise made or caused
to be made by the Indemnified Person or the Indemnifying Person, as the case may
be, of any claim, suit, action or proceeding of the kind referred to in Section
11.5 shall also be binding upon the Indemnifying Person or the Indemnified
Person, as the case may be, in the same manner as if a final judgment or de-
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cree had been entered by a court of competent jurisdiction in the amount of such
settlement or compromise; provided, however, that no obligation, restriction or
Loss shall be imposed on the Indemnified Person as a result of such settlement
without its prior written consent. The Indemnified Person will give the
Indemnifying Person at least 30 days' notice of any proposed settlement or
compromise of any claim, suit, action or proceeding it is defending, during
which time the Indemnifying Person may reject such proposed settlement or
compromise; provided, however, that from and after such rejection, the
Indemnifying Person shall be obligated to assume the defense of and full and
complete liability and responsibility for such claim, suit, action or proceeding
and any and all Losses in connection therewith in excess of the amount of
unindemnifiable Losses which the Indemnified Person would have been obligated to
pay under the proposed settlement or compromise.
11.7 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Person of its
obligations hereunder.
11.8 Limitations on Indemnification. (a) No Indemnifying Person shall have
an obligation to indemnify any Indemnified Person from and against any Losses
until the aggregate Losses suffered by all Indemnified Persons exceed $100,000,
at which time the Indemnifying Person shall be liable to the Indemnified Persons
for the entire amount of all aggregate Losses suffered by all Indemnified
Persons. The foregoing limitation shall not apply to any Losses suffered by the
Indemnified Persons with respect to Taxes or the indemnifications pursuant to
Sections 11.2(c), 11.3(c) and (d).
(b) No claim for indemnification pursuant to Sections 11.2(a) or (b) (other
than with respect to Sections 5.9, 5.14 or 5.15) or 11.3(a) or (b) (other than
Section 5.9) shall be brought after the second anniversary of the Closing. No
claim for indemnification pursuant to Section 11.2(f) shall be brought after the
earlier of the third anniversary of the shipping of the Product or the second
anniversary of the Closing. No claim for indemnification pursuant to Section
11.2(g) shall be brought after the seventh anniversary of the Closing. Any claim
for indemnification with respect to Taxes may only be made prior to thirty (30)
Business Days following the expiration of the related statute of limitations.
(c) In no event shall the aggregate liability of the Indemnifying Person to
the Indemnified Persons arising under this Article XI exceed $25,000,000 (taking
into account the liability of the Indemnifying Person under the Plan of Merger).
11.9 Assignment of Claims. The parties agree that, upon assumption by the
Indemnifying Person of the obligation to indemnify, the Indemnified Person will
assign to the Indemnifying Person any and all claims, causes of action and
demands of whatever kind and nature which the Indemnified Person may have
against any person, firm or other entity giving rise to the indemnified Loss,
and will reasonably cooperate in any efforts to recover from such person or
entity.
11.10 Exclusive Remedies. This Article XI provides the exclusive remedy for
any misrepresentation, breach of warranty, covenant or other claim arising out
of this Agreement or the transaction contemplated by it. Each party shall use
reasonable efforts to mitigate any Losses.
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ARTICLE XII
MISCEllANEOUS
12.1 Expenses. Each party hereto shall bear its own costs and expenses
(including the fees and disbursements of legal counsel, investment bankers and
accountants) with respect to the Transaction and WAD shall pay the reasonable
costs of obtaining the title insurance polices and surveys required by Sections
7.11 and 7.12, respectively.
12.2 Amendment. This Agreement may be amended, modified or supplemented
only by a written instrument signed by Products, WAD and each Seller.
12.3 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given: (a) when received if given in person or by courier or a courier
service; (b) on the date of transmission if sent by telex, facsimile or other
wire transmission; or (c) three (3) Business Days after being deposited in the
U.S. mail, certified or registered mail, postage prepaid:
If to WAD or Sellers, addressed as follows:
c/o 100 Vesper Executive Park
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Tyng Textiles, LLC, General Partner
Xxxxx XxXxxxxx, Treasurer
Facsimile No.: (000) 000-0000
with a copy to:
Goulston & Storrs, A Professional Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to Products, addressed as follows:
Xxxxxxx & Xxxxxx Products Co.
0000 Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, CEO
Facsimile No.: (000) 000-0000
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and for notices pursuant to Section 5.4 hereof:
Xxxxxxx & Xxxxxx Corporation
0000 Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile No.: (000) 000-0000
and in each case
Attention: Xxxxxx X. Xxxxxxx, General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxx
Xxxxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
12.4 Waivers. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
12.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
12.6 Headings. The headings preceding the text of articles and sections
included in this Agreement and the headings to schedules attached to this
Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement.
12.7 Interpretation. Unless otherwise indicated, words describing the
singular number shall include the plural and vice versa, and words denoting each
gender shall include the other gender and words denoting natural persons shall
include corporations and partnerships and vice versa. The use of the terms
"including" or "includes" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Unless otherwise
indicated, references to articles, sections, subsections or schedules shall
refer to those portions of this Agreement. Consummation of the Transaction
contemplated herein shall not be deemed a waiver of a breach of or inaccuracy in
any representation,
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warranty or covenant or of any party's rights and remedies with regard thereto.
No specific representation, warranty or covenant contained herein shall limit
the generality or applicability of a more general representation, warranty or
covenant contained herein. A breach of or inaccuracy in any representation,
warranty or covenant shall not be affected by the fact that any more general or
less general representation, warranty or covenant was not also breached or
inaccurate.
12.8 Applicable Law. The validity, construction and effect of this
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law of such State.
12.9 Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement shall be brought in any United States federal or
state court sitting in the State of Delaware, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by Law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 12.3 shall be deemed effective service of process on such party. Each
party hereto hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or related to this Agreement.
12.10 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no assignment of any rights or obligations shall be made
by WAD or each Seller without the written consent of Products or by Products
without the written consent of WAD and Sellers, except that either Products or
WAD may assign its rights hereunder without such consent to any of its
Affiliates. Nothing in this Section 12.10 shall prohibit a transfer by WAD in
connection with the dissolution or liquidation of WAD, provided that the Sellers
assume the obligations of WAD hereunder.
12.11 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, stockholders, partners,
managers, agents and representatives, and no provision of this Agreement shall
be deemed to confer upon other third parties any remedy, claim, liability,
reimbursement, cause of action or other right.
12.12 Further Assurances. Upon the reasonable request of Products, each of
WAD and each Seller shall on and after the Closing Date execute and deliver to
Products such other documents, releases, assignments and other instruments as
may be required to effectuate completely this Transaction, and to otherwise
carry out the purposes of this Agreement. Upon the reasonable request of WAD,
Products shall on the Closing Date execute and deliver to WAD such other
documents, releases, assignments and other instruments as may be required to
effectuate completely the Transaction.
12.13 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions shall not be affected thereby,
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and there shall be deemed substituted for the provision at issue a valid, legal
and enforceable provision as similar as possible to the provision at issue.
12.14 Remedies Cumulative. The remedies provided in this Agreement shall be
cumulative and shall not preclude the assertion or exercise of any other rights
or remedies available by Law, in equity or otherwise.
12.15 Entire Understanding. This Agreement, together with the exhibits and
schedules hereto set forth the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings among the parties hereto.
12.16 WAD Disclosure Schedule. Sellers and Products agree that it shall be
a condition of Closing for them to agree on a mutually acceptable WAD Disclosure
Schedule prior to August 24, 2001.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
XXXXXXX & XXXXXX PRODUCTS CO.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title:
WESTERN AVENUE DYERS, L.P.
By: Tyng Textiles LLC, its General Partner
By: Xxxxx XxXxxxxx
-------------------------------------------
Name: Xxxxx XxXxxxxx
Title: Chief Executive Officer
XXXXX XxXXXXXX
/s/ Xxxxx XxXxxxxx
--------------------------------------------------
XXXXX XxXXXXXX
/s/ Xxxxx XxXxxxxx
--------------------------------------------------
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
--------------------------------------------------
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TYNG TEXTILES LLC
By: /s/ Xxxxx XxXxxxxx
-------------------------------------------
its Member
By: /s/ Xxxxx XxXxxxxx
-------------------------------------------
Name: Xxxxx XxXxxxxx
Title: Chief Executive Officer
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