EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
among
TROPICAL SPORTSWEAR INT'L CORPORATION
SAVANE INTERNATIONAL CORP.,
TSI BRANDS, INC.,
TSIL, INC.,
APPAREL NETWORK CORP.,
FARAH OFFSHORE SOURCING COMPANY,
FARAH MANUFACTURING (U.K.) LIMITED
and
XXXXX XXXXX INTERNATIONAL, INC.
Dated as of December 16, 2004
ii
TABLE OF CONTENTS
Page
Article I
DEFINITIONS
SECTION 1.01. Certain Defined Terms....................................................2
SECTION 1.02. Interpretation and Rules of Construction................................19
Article II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of Purchased Assets...................................20
SECTION 2.02. Assumption and Exclusion of Liabilities.................................25
SECTION 2.03. Purchase Price; Allocation of Purchase Price............................28
SECTION 2.04. Contract Assumption.....................................................29
SECTION 2.05. Cure Costs..............................................................29
SECTION 2.06. Amounts Due Under Designated Contracts..................................30
SECTION 2.07. Closing.................................................................30
SECTION 2.08. Closing Deliveries by the Sellers.......................................31
SECTION 2.09. Closing Deliveries by the Purchaser.....................................32
SECTION 2.10. Post-Closing Adjustment of Purchase Price...............................33
SECTION 2.11. Escrow..................................................................36
SECTION 2.12. Proration...............................................................36
Article III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
SECTION 3.01. Organization, Authority and Qualification of the TSIC
Entities.....................................................................37
SECTION 3.02. No Conflict.............................................................39
SECTION 3.03. Governmental Consents and Approvals.....................................40
SECTION 3.04. Financial Information...................................................40
SECTION 3.05. Litigation..............................................................42
SECTION 3.06. Compliance with Laws; Permits...........................................42
SECTION 3.07. Environmental Matters...................................................43
SECTION 3.08. Intellectual Property...................................................45
SECTION 3.09. Real Property...........................................................46
SECTION 3.10. Purchased Assets........................................................49
SECTION 3.11. Employee Benefits Matters...............................................50
SECTION 3.12. Taxes...................................................................52
SECTION 3.13. Contracts...............................................................60
SECTION 3.14. Absence of Certain Changes, Events and Conditions.......................62
SECTION 3.15. Labor Matters...........................................................62
SECTION 3.16. Sufficiency of Assets...................................................64
SECTION 3.17. Tangible Personal Property..............................................64
SECTION 3.18. Receivables.............................................................64
SECTION 3.19. Inventories.............................................................65
SECTION 3.20. Customers...............................................................65
SECTION 3.21. Suppliers...............................................................66
SECTION 3.22. Insurance...............................................................66
SECTION 3.23. Related Person Transactions.............................................66
SECTION 3.24. Public Filings..........................................................67
SECTION 3.25. Product Liability.......................................................68
SECTION 3.26. Brokers.................................................................68
SECTION 3.27. Employees; WARN Act Compliance..........................................68
SECTION 3.28. DIP Loan Facility.......................................................69
SECTION 3.29. First Day Relief........................................................69
SECTION 3.30. Purchased Subsidiary....................................................69
SECTION 3.31. Full Disclosure.........................................................69
Article IV
representations and warranties
of the purchaser
SECTION 4.01. Organization and Authority of the Purchaser.............................70
SECTION 4.02. No Conflict.............................................................71
SECTION 4.03. Governmental Consents and Approvals.....................................71
SECTION 4.04. Financing...............................................................72
SECTION 4.05. Investment and Purpose..................................................72
SECTION 4.06. Brokers.................................................................72
SECTION 4.07. Sales Tax...............................................................72
Article V
additional agreements
SECTION 5.01. Conduct of Business Prior to the Closing................................73
SECTION 5.02. Access to Information...................................................75
SECTION 5.03. Confidentiality.........................................................75
SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents...............76
SECTION 5.05. Notice of Developments..................................................77
SECTION 5.06. Excluded Liabilities....................................................78
SECTION 5.07. Risk of Loss............................................................78
SECTION 5.08. Bulk Transfer Laws......................................................78
SECTION 5.09. Cooperation.............................................................78
SECTION 5.10. Further Action..........................................................79
SECTION 5.11. Tax Indemnification, Tax Cooperation and Exchange of Information........79
SECTION 5.12. Cooperation Regarding Property and Transfer Taxes.......................86
SECTION 5.13. Conveyance and Sales Taxes..............................................87
SECTION 5.14. Bankruptcy Court Approvals..............................................88
SECTION 5.15. Bankruptcy Actions......................................................89
SECTION 5.16. Name Change.............................................................90
SECTION 5.17. No Shop.................................................................90
SECTION 5.18. Purchaser's Deposit.....................................................91
SECTION 5.19. Letter of Credit........................................................91
SECTION 5.20. Receipt of Property Relating to Purchased Assets and Excluded Assets....92
SECTION 5.21. Environmental Remediation...............................................92
SECTION 5.22. Transition Matters......................................................93
Article VI
BIDDING PROCEDURES
SECTION 6.01. Bidding Procedures......................................................93
SECTION 6.02. Determination of Qualified Overbid Status...............................95
SECTION 6.03. Auction.................................................................97
SECTION 6.04. Expense Reimbursement...................................................98
SECTION 6.05. Break-up Fee............................................................99
SECTION 6.06. Acceptance of Qualified Overbids........................................99
SECTION 6.07. Return of Purchaser's Deposit and Good Faith Deposit...................100
SECTION 6.08. Court-Imposed Qualified Overbid........................................101
SECTION 6.09. Modifications of Bidding Procedures....................................101
Article VII
employee matters
SECTION 7.01. Offer of Employment....................................................102
SECTION 7.02. Employee Benefits......................................................102
SECTION 7.03. 401(k) Plan............................................................102
SECTION 7.04. Flexible Spending Account..............................................103
SECTION 7.05. Cooperation............................................................103
Article VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Sellers...............................103
SECTION 8.02. Conditions to Obligations of the Purchaser.............................105
Article IX
indemnification
SECTION 9.01. Survival of Representations and Warranties.............................107
SECTION 9.02. Indemnification by the Sellers.........................................107
SECTION 9.03. Indemnification by the Purchaser.......................................108
SECTION 9.04. Notice of Loss; Third Party Claims.....................................109
SECTION 9.05. Distributions from Indemnity Escrow Fund...............................110
SECTION 9.06. Treatment of Payments..................................................111
SECTION 9.07. Limitations on Indemnification.........................................111
SECTION 9.08. Exclusive Remedy.......................................................111
Article X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination...........................................................111
SECTION 10.02. Effect of Termination.................................................113
Article XI
GENERAL PROVISIONS
SECTION 11.01. Expenses..............................................................113
SECTION 11.02. Notices...............................................................113
SECTION 11.03. Public Announcements..................................................115
SECTION 11.04. Severability..........................................................115
SECTION 11.05. Entire Agreement......................................................115
SECTION 11.06. Assignment............................................................115
SECTION 11.07. Amendment.............................................................116
SECTION 11.08. Waiver................................................................116
SECTION 11.09. No Third Party Beneficiaries..........................................116
SECTION 11.10. Currency..............................................................116
SECTION 11.11. Governing Law.........................................................116
SECTION 11.12. Waiver of Jury Trial..................................................117
SECTION 11.13. Counterparts..........................................................117
SECTION 11.14. Due Authorization of Signatories; Liability...........................117
SECTION 11.15. Specific Performance..................................................117
EXHIBITS
1.01(a) Form of Assignment of Lease
1.01(b) Form of Assignment of Transferred Intellectual Property
1.01(c) Form of Assumption Agreement
1.01(d) Form of Xxxx of Sale and Assignment
1.01(e) Form of Deed
1.01(f) Sellers' Knowledge
2.03(b) Allocation of Purchase Price
2.10(a)(ii) Calculation of Reference Receivables/Inventories Amount
2.11 Form of Escrow Agreement
ADDENDUMS
3.09(n) Representations and Warranties relating to the Purchased Subsidiary
3.30 Representations and Warranties relating to the Purchased Subsidiary
APPENDICES
A Form of Confidentiality Agreement
B Bidding Procedures Order
C Sale Approval Order
DISCLOSURE SCHEDULES
Section ......... Description
Section 2.01(a)(iii) Schedule of Transferred Real Property
Section 2.01(a)(xii) Schedule of Unfilled Purchase Orders
Section 2.01(b)(vi) Rights, Properties or Assets to be Excluded Assets
Section 2.02(a)(ii) Schedule of Assumed Liabilities for Unfilled Purchase Orders
Section 2.04...... Designated Contracts to be Assumed
Section 2.12...... Proration
Section 3.01(b)... Subsidiaries other than TSIC and Acquired Subsidiary
Section 3.02...... Filings and Notifications to be Made; No Conflict
Section 3.03...... Exceptions to Governmental Consents and Approvals
Representation
Section 3.04(a)... Financial Statements
Section 3.04(d)... Stand-Alone Financial Statements
Section 3.05...... Exceptions to Litigation Representation
Section 3.06...... Exceptions to Compliance with Laws Representation
Section 3.07...... Exceptions to Environmental Matters Representation
Section 3.08(a)(i) List of Transferred Intellectual Property
Section 3.08(ii).. List of Transferred IP Agreements
Section 3.08(a)(iii) Exceptions to Intellectual Property Representation
Section 3.08(f)... Other Licenses
Section 3.09(b)... List of Leased Real Property
Section 3.09(c)... Exceptions to Real Property Representation
Section 3.09(d)... List of Ancillary Lease Documents
Section 3.09(e) Exceptions to Real Property Representation Regarding
Sufficiency of Transferred and Leased Real Property for
Conduct of Business
Section 3.09(i)... Exceptions to Real Property Representation Regarding
Encroachments, Etc.
Section 3.09(k)... Exceptions to Real Property Representation Regarding
Absence of Improvements in Excess of $25,000
Section 3.11(a)... List of Employee Plans
Section 3.12(a)... Exceptions to Tax Representation
Section 3.12(b)... Exceptions to Tax Representation
Section 3.12(c)... Purchased Subsidiary
Section 3.12(d)... List of Income, Franchise and Tax Returns
Section 3.13(a) .. Material Contracts
Section 3.13(c)... Cure Costs
Section 3.14...... Exception to Absence of Certain Changes
Section 3.15...... Exceptions to Labor Matters Representation
Section 3.16...... Exceptions to Sufficiency of Assets
Section 3.17(a)... Tangible Personal Property
Section 3.19...... List Addresses of Warehouses Where Inventories Located
Section 3.20...... 20 Most Significant Customers
Section 3.21...... 20 Most Significant Suppliers
Section 3.22...... List of Insurance Policies and Exceptions to Insurance
Representation
Section 3.23...... Exceptions to Related Person Transactions Representation
Section 3.25...... Exceptions to Products Liability Representation
Section 3.27...... Exceptions to Employees; WARN Act Compliance
Representation
Section 3.28(a)... UCC Filings
Section 3.29...... List of All First Day Orders
Section 5.01(f)... Exception to Capital Expenditures
Section 5.19...... List of Outstanding Letters of Credit
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
December 16, 2004, by and among Tropical Sportswear Int'l Corporation, a
Florida corporation ("TSIC"), Savane International Corp., a Texas corporation
and a wholly owned subsidiary of TSIC ("Savane"), TSI Brands, Inc., a Delaware
corporation and an indirect wholly owned subsidiary of TSIC ("TSI"), Apparel
Network Corp., a Florida corporation and a wholly owned subsidiary of TSIC
("Apparel Network"), TSIL, Inc., a Delaware corporation and wholly owned
subsidiary of TSI ("TSIL"), Farah Offshore Sourcing Company, a Cayman Islands
corporation and an indirect wholly owned subsidiary of TSIC ("Farah") (each of
TSIC, TSI, Apparel Network, TSIL and Farah, individually, a "Seller", and
collectively, the "Sellers"), Farah Manufacturing (U.K.) Limited, a United
Kingdom private limited company (the "Purchased Subsidiary"), and Xxxxx Xxxxx
International, Inc., a Florida corporation (the "Purchaser").
RECITALS
WHEREAS, the Sellers and the Purchased Subsidiary are engaged in the
business of selling high-quality branded and retail private branded apparel
products to retailers in the United States and internationally (the
"Business"); and
WHEREAS, TSIC and certain of its direct and indirect Subsidiaries,
including each of the Sellers (except Farah), have agreed, upon the terms and
subject to the conditions of this Agreement, to commence voluntary cases (the
"Chapter 11 Cases") in the Bankruptcy Court pursuant to chapter 11 of title 11,
United States Code (together with the Federal Rules of Bankruptcy Procedure,
the "Bankruptcy Code"), promptly after the execution of this Agreement, but
not later than the second Business Day after the date hereof (the "Petition
Date");
WHEREAS, the Sellers wish to sell, assign and transfer to the
Purchaser, and the Purchaser wishes to purchase and acquire from the Sellers,
all of the Sellers' right, title and interest in and to the Purchased Assets,
including all of the outstanding capital stock of the Purchased Subsidiary,
and in connection therewith the Purchaser is willing to assume from the
Sellers the Assumed Liabilities, all pursuant to Sections 363 and 365 of the
Bankruptcy Code, free and clear of all Liens (other than Permitted Liens),
Actions or Claims against Indebtedness of the Sellers (other than such
Actions, Claims and Indebtedness related to the Assumed Liabilities) to the
maximum extent permissible under such Bankruptcy Code, as more specifically
set forth in this Agreement; and
WHEREAS, TSIC beneficially owns, indirectly through one or more of
its Subsidiaries, all the outstanding capital stock of Farah which, in turn,
beneficially owns all the outstanding capital stock of the Purchased
Subsidiary;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged hereby,
the Sellers and the Purchaser, intending to be legally bound, hereby agree as
follows:
Article I.........
DEFINITIONS
SECTION 1.01. ...Certain Defined Terms. For purposes of this Agreement:
"Accounting Date" shall mean October 2, 2004.
"Accounts" shall mean the audited accounts of the Purchased
Subsidiary for the financial year which ended on the Accounting Date,
comprising a balance sheet, a profit and loss account, notes, director's and
auditors report.
"Adjustment Escrow Amount" means $3,825,000.
"A&M" means Xxxxxxx & Marsal, LLC.
"Action" means any claim, action, suit, arbitration, adversary
proceeding, litigation, inquiry, proceeding or investigation, in each case by
or before any Governmental Authority or arbitrator.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with such specified
Person.
"Agreement" has the meaning set forth in the preamble of this
Agreement.
"Allocation" has the meaning set forth in Section 2.03(b) of this
Agreement.
"Alternative Transaction" means any single transaction or series of
related transactions pursuant to which any of the Sellers sells, transfers,
leases, exchanges or otherwise disposes of, directly or indirectly, including
through an asset sale, stock sale, merger, business combination, share
exchange, reorganization, plan of reorganization, liquidation, any form of
creditor composition, or other similar transaction, a material portion of the
Purchased Assets or any capital stock or voting debt securities of TSIC or any
of its Subsidiaries to any third party other than the Purchaser or any of its
Subsidiaries or Affiliates (or agrees to do any of the foregoing).
"Ancillary Agreements" means the Xxxx of Sale, the Deeds, the
Assignments of Leases, the Assignment of Transferred Intellectual Property,
the Assumption Agreement, the Escrow Agreement.
"Ancillary Lease Documents" has the meaning set forth in Section
3.09(d) of this Agreement.
"Assignment of Lease" means the Assignment of Lease to be executed by
the Sellers at the Closing with respect to each parcel of Leased Real Property
listed on Section 3.09(b) of the Disclosure Schedule, substantially in the
form of Exhibit 1.01(a).
"Assignment of Transferred Intellectual Property" means the
Assignment of Transferred Intellectual Property to be executed by the Sellers
at the Closing, substantially in the form of Exhibit 1.01(b).
"Assumed Liabilities" has the meaning set forth in Section 2.02(a) of
this Agreement.
"Assumption Agreement" means the Assumption Agreement to be executed
by the Purchaser and the Sellers at the Closing, substantially in the form of
Exhibit 1.01(c).
"Auction" has the meaning set forth in Section 6.03(a) of this
Agreement.
"Back-up Bid" has the meaning set forth in Section 6.03(e) of this
Agreement.
"Bankruptcy Code" has the meaning set forth in the second recital of
this Agreement.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Middle District of Florida or any other court having jurisdiction over the
Chapter 11 Cases from time to time.
"Bid Deadline" has the meaning set forth in Section 6.01(c) of this
Agreement.
"Bid Requirements" has the meaning set forth in Section 6.02(b) of
this Agreement.
"Bidding Procedures Order" has the meaning set forth in Section 5.14
of this Agreement.
"Bidding Procedures" has the meaning set forth in Section 6.01 of
this Agreement.
"Bidding Process" has the meaning set forth in Section 6.01(a) of
this Agreement.
"Xxxx of Sale" means the Xxxx of Sale and Assignment to be executed
jointly or severally by the Sellers at the Closing, substantially in the form
of Exhibit 1.01(d).
"Break-up Fee" has the meaning set forth in Section 6.05 of this
Agreement.
"Business" has the meaning set forth in the first recital of this
Agreement.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by Law to be closed in the
City of New York.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended through the Closing.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System, as updated through the Closing.
"Chapter 11 Cases" has the meaning set forth in the second recital of
this Agreement.
"Claims" means any and all administrative, regulatory or judicial
actions, suits, petitions, appeals, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations, proceedings, consent
orders, Taxes or consent agreements.
"Closing" has the meaning set forth in Section 2.07 of this
Agreement.
"Closing Date" has the meaning set forth in Section 2.07 of this
Agreement.
"Closing Receivables/Inventories Statement" has the meaning set forth
in Section 2.10(a)(i)(A) of this Agreement.
"Committee" has the meaning set forth in Section 6.01(a) of this
Agreement.
"Confidentiality Agreement" has the meaning set forth in Section
5.03(a) of this Agreement.
"Contest" has the meaning set forth in Section 5.11(h)(iii) of this
Agreement.
"Contract" means any oral or written contract, agreement,
understanding, license, lease, indenture, note, bond, commitment, obligation,
undertaking, instrument or other contractual or similar arrangement.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, and whether as trustee,
personal representative, conservator, estate administrator or executor, of the
power to direct or cause the direction of the policies, affairs or management
of a Person, whether through the ownership of voting securities, as trustee,
personal representative, conservator, estate administrator or executor, or by
contract, credit arrangement or otherwise.
"Conveyance Taxes" means all transfer, stamp, stock transfer, real
property transfer Taxes and other similar Taxes, but shall not include sales,
use, value added or other similar Taxes.
"Court-Imposed Qualified Overbid" has the meaning set forth in
Section 6.08 of this Agreement.
"Cure Costs" has the meaning set forth in Section 2.04 of this
Agreement.
"Deed" means, with respect to each parcel of Transferred Real
Property, the instrument of conveyance customary to the applicable
jurisdiction to be executed by the Sellers at the Closing in order to convey
to the Purchaser the Sellers' respective interests, if any, in such parcel of
Transferred Real Property, substantially in the form of Exhibit 1.01(e).
"Deferred Relief" means, for taxable periods prior to the Closing
Date, any Tax refund which (i) is taken into account in computing any
provision for deferred Tax which appears in the relevant Financial Statements
or (ii) is taken into account in the relevant Financial Statements as an
asset;
"Designated Contracts" has the meaning set forth in Section 2.04 of
this Agreement.
"DIP Loan Facility" has the meaning set forth in Section 3.28 of this
Agreement.
"Disclosure Schedule" means the Disclosure Schedule dated the date
hereof, which is attached hereto and incorporated by reference herein and made
an integral part hereof, as though fully set forth herein, which has been
delivered by the Sellers to the Purchaser in connection with this Agreement,
as the same may, from time to time, be updated by the Sellers in accordance
with Section 5.05 of this Agreement. Any disclosure made in the Disclosure
Schedule which is applicable to another Section shall be deemed to be made
with respect to such other Section provided a specific cross reference is made
to such other Section.
"dollar-for-dollar" means, for purposes of any calculation made in
accordance with the terms of this Agreement, a corresponding U.S. $1.00 for
U.S. $1.00 adjustment without any discount, proration or other similar
adjustment.
"Employee Plans" has the meaning set forth in Section 3.11(a) of this
Agreement.
"Employees" has the meaning set forth in Section 3.11(a) of this
Agreement.
"Employment Offer" has the meaning set forth in Section 7.01 of this
Agreement.
"Environment" means surface waters, ground-waters, soil, subsurface
strata and ambient air.
"Environmental Claims" means any Claims or Actions relating in any
way to any Environmental Law or any Environmental Permit, including (a) any
and all Claims or Actions by Governmental Authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law and (b) any and all Claims or Actions by any
Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
Environment arising prior to, at or after the Closing and relating to acts or
omissions of TSCI or any of its Subsidiaries or Affiliates (other than the
Purchased Subsidiary).
"Environmental Laws" means all local, state and federal Laws, now or
hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, including any judicial, municipal or administrative
order, rule, guidance, regulation, ordinance, consent decree or judgment,
relating to the Environment, health, safety, natural resources or Hazardous
Materials, including CERCLA; the Resource Conservation and Recovery Act, 42
U.S.C.ss.ss.6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
ss.ss.6901 et seq.; the Clean Water Act, 33 U.S.C.ss.ss.1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C.ss.ss.2601 et seq.; the Clean Air Act, 42
U.S.C.ss.ss.7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.ss.ss.300f et
seq.; the Atomic Energy Act, 42 U.S.C.ss.ss.2011 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss.136 et seq.; and the
Occupational Safety and Health Act, 29 U.S.C.ss.ss.651 et seq.
"Environmental Liability" means any claim, demand, order, suit,
obligation, liability, cost (including the cost of any investigation, testing,
compliance, ameliorative or remedial action), consequential damages, loss or
expense (including attorneys' and consultants' fees and expenses) arising out
of, relating to or resulting from any Environmental Laws or environmental,
health or safety matter or condition, including natural resources, and related
in any way to the Purchased Assets, the Business, this Agreement or its
subject matter, in each case whether arising or incurred before, at or after
the Closing and relating to acts or omissions of TSCI or any of its
Subsidiaries or Affiliates (other than the Purchased Subsidiary).
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under or issued pursuant to
any applicable Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rules issued thereunder.
"Escrow Agent" means the escrow agent under the Escrow Agreement.
"Escrow Agreement" means the escrow agreement entered into by the
Sellers and the Purchaser as of the date hereof, a form of which is attached
to this Agreement as Exhibit 2.11.
"Escrow Amount" means the Adjustment Escrow Amount and the Indemnity
Escrow Amount.
"Event" means any event, fact or circumstance whatsoever including
but not limited to: (a) any transaction, action or omission (whether or not
the Purchased Subsidiary is party to it); (b) the earning, receipt or accrual
for any Tax purpose of any income, profits or gains; (c) the incurring for any
Tax purpose of any loss or expenditure; (d) the declaration, payment or making
of any dividend or other distribution; (e) the sale and purchase of the shares
of the Purchased Subsidiary pursuant to this Agreement; and (f) Closing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.01(b) of
this Agreement.
"Excluded IP Agreements" has the meaning set forth in Section 3.08(a)
of this Agreement.
"Excluded Liabilities" has the meaning set forth in Section 2.02(b)
of this Agreement.
"Excluded Taxes" means (i) all Taxes relating to the Purchased Assets
or the Business which, under the Bankruptcy Code, would be deemed to be Taxes
that arose prior to the Closing Date, and (ii) all Taxes of the Sellers of
any kind or nature, regardless of when arising, including, without limitation,
sales and local Tax Claims, ad valorem Tax Claims (real property, tangible
personal property and intangible personal property), occupational license Tax
Claims, federal, state, local and foreign income Tax Claims.
"Expense Reimbursement" has the meaning set forth in Section 6.04 of
this Agreement.
"FA" means Finance Act.
"Final Sale Hearing" has the meaning set forth in section 5.14 of
this Agreement.
"Financial Statements" has the meaning set forth in Section 3.04(a)
of this Agreement.
"First Day Relief" has the meaning set forth in Section 3.29 of this
Agreement.
"GAAP" means United States generally accepted accounting principles
and practices in effect from time to time applied consistently throughout the
periods involved.
"Good Faith Deposit" has the meaning set forth in Section 6.01(c) of
this Agreement.
"Governmental Authority" means any foreign or United States federal,
national, supranational, state, provincial, local or other government,
governmental, regulatory, public or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, proclamation, stipulation, determination or award, issued, announced
or entered by or with any Governmental Authority.
"Governmental Permit" means any approvals, authorizations, consents,
licenses, permits or certificates of a Governmental Authority.
"Group Relief" means (a) any Relief surrendered or claimed pursuant
to Chapter IV of Part X ICTA; (b) any ACT surrendered or claimed pursuant to
section 240 ICTA; (c) any refund of Tax surrendered or claimed pursuant to
section 102 FA 1989; and (d) any Relief obtained as a result of an election
made jointly with another company pursuant to section 171A or 179A TCGA or
pursuant to paragraph 66 Schedule 29 FA 2002.
"Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos-containing materials, urea formaldehyde foam
insulation, transformers or other equipment that contain polychlorinated
biphenyls and radon gas, (b) any other chemicals, materials or substances
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants" or
"pollutants", or words of similar import, under any applicable Environmental
Laws, and (c) any other chemical, material or substance which is regulated by
any Environmental Laws.
"Hong Kong Note Payable" means that certain note payable owed by the
Purchased Subsidiary to Farah (Far East) Limited.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"ICTA" shall mean Income and Corporation Taxes Xxx 0000.
"Improvements" means the buildings, facilities, parking lots, other
improvements and structures, building systems and fixtures existing from time
to time on, in or under any Real Property.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money,
(b) all obligations of such Person for the deferred purchase price of property
or services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all obligations of
such Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases, (f) all obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (g) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of such Person or any
warrants, rights or options to acquire such capital stock, valued, in the case
of redeemable preferred stock, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends, (h) all Indebtedness
of others referred to in clauses (a) through (g) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property,
or to purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (i) all
Indebtedness referred to in clauses (a) through (g) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness.
"Indemnity Escrow Amount" means $3,900,000, as such amount may be
decreased as provided herein and in the Escrow Agreement.
"Indenture Trustee" has the meaning set forth in Section 6.01(a) of
this Agreement.
"Independent Accounting Firm" has the meaning set forth in Section
2.10(b)(i) of this Agreement.
"Intellectual Property" means (a) patents, patent applications,
inventions disclosed therein, reissues, reexaminations, continuations and
extensions, (b) trademarks, service marks, trade names, trade dress, domain
names and internet protocol addresses, together with the goodwill associated
exclusively therewith, (c) copyrights, including copyrights on computer
software, (d) confidential and proprietary information, including trade
secrets and know-how, (e) any other intellectual property rights of any kind
or nature, (f) rights to xxx and recover any damages and profits and other
remedies for past, present and future infringements or misappropriations of
the foregoing (a) through (e), and (g) registrations and applications for
registration of and goodwill associated with any of the foregoing (a) through
(e).
"Inventories" means all inventory, merchandise, goods in production
or in transit, finished goods, work-in-progress, samples, uncut or
demonstration materials and raw materials to the extent related to the
Business and produced, maintained, held or stored by or for the TSIC Entities,
including all stationery, forms, labels, office supplies, production supplies,
parts, advertising and promotional materials, packaging materials and other
supplies or accessories related thereto not sold to customers, including all
rights against suppliers of such inventories (including claims receivable for
rejected inventory) as of the Closing, and any prepayments or prepaid deposits
for any of the same (including any of the foregoing owned by the TSIC Entities
but in the possession of manufacturers, suppliers or dealers or in transit or
returned goods).
"IRS" means the Internal Revenue Service of the United States.
"Law" means any foreign or United States federal, national,
supranational, state, provincial, local or similar statute, law, ordinance,
regulation, rule, code, order, requirement or rule of law (including common
law).
"Leased Real Property" has the meaning set forth in Section 3.09(b)
of this Agreement.
"Liabilities" means any and all Indebtedness, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including those arising under any
Law, Action or Governmental Order and those arising under any Contract.
"Liens" means any mortgage, pledge, charge, security interest,
encumbrance, lien (statutory or other) or conditional sale agreement.
"Loss" has the meaning set forth in Section 9.02 of this Agreement.
"Material Adverse Effect" means any state of facts, circumstance,
change in or effect on the Business, the Purchased Assets or the Assumed
Liabilities (other than any such state of facts, change, circumstance or
effect relating (i) solely to the United States economy or United States
financial markets which do not have a disproportionate effect on the Business,
(ii) solely to changes in general political or regulatory conditions in the
United States which do not have a disproportionate effect on the Business,
(iii) generally to the apparel industry and not specifically relating to the
Sellers, (iv) solely to Excluded Liabilities or Excluded Assets, provided it
has no material effect or affect on the Business, and/or (v) solely to or
resulting from the commencement of the Chapter 11 Cases and the pendency
thereof and any proceedings with respect thereto) that individually, or in the
aggregate with all other circumstances, (a) would have or is reasonably likely
to have, an effect which is materially adverse to the business, operations,
assets or liabilities, results of operations or condition (financial or
otherwise) of the Business, the Purchased Assets or the Assumed Liabilities,
taken as a whole, (b) is reasonably likely to materially and adversely affect
the ability of the Purchaser to operate or conduct the Business in the manner
in which it is currently being operated or conducted, or (c) is reasonably
likely to materially delay or prevent performance by the Sellers of their
obligations under and as provided in this Agreement.
"Material Contracts" has the meaning set forth in Section 3.13(a) of
this Agreement.
"Multiemployer Plan" has the meaning set forth in Section 3.11(b) of
this Agreement.
"Multiple Employer Plan" has the meaning set forth in Section 3.11(b)
of this Agreement.
"Non-Assumed Liabilities Payments" means any payment, satisfaction or
other discharge by the Purchaser (i) of an Excluded Liability after the date
hereof, (ii) the net effective taxable amount attributable to or resulting
from any cancellation of Indebtedness and/or other Liability in respect of the
Hong Kong Note Payable plus any outstanding principal amount and accrued but
unpaid interest under the Hong Kong Note Payable at the Closing Date, and
(iii) the total future cost of Remedial Action, if any, that Sellers are
unable to complete as set forth in the last sentence of Section 5.21.
"Options" has the meaning set forth in Section 3.09(d) of this
Agreement.
"Ordinary Course of the Business" means the usual and ordinary
operation of the Business consistent with past practice.
"Overbid Increment" has the meaning set forth in Section 6.03(d) of
this Agreement.
"Permitted Liens" means (a) Liens for Taxes, assessments and
government or other similar charges that are not yet due and payable, (b)
easements, licenses, unrecorded real estate agreements, restrictions and other
matters of record which either (i) the title company has agreed to
affirmatively insure against loss caused thereby in the applicable title
policy, by way of ALTA coverage or other affirmative cover, reasonably
acceptable to the Purchaser, or (ii) do not materially and adversely affect
the value or operation of the Real Property in question as currently operated,
(c) any state of facts a survey or other visual inspection would show that do
not materially and adversely affect the value or operation of the Real
Property in question as currently operated and (d) Liens arising from the
Assumed Liabilities.
"Person" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under section 13(d)(3) of the Exchange Act.
"Petition Date" has the meaning set forth in the second recital of
this Agreement.
"Potential Bidder" has the meaning set forth in Section 6.01(b) of
this Agreement.
"Product Liabilities" means Liabilities with respect to any products
designed, manufactured, tested, marketed, distributed or sold by TSIC or any
of its Subsidiaries or Affiliates (other than the Purchased Subsidiary) and
related to the Business, whether arising prior to, at or after the Closing.
"Property Taxes" means real and personal ad valorem property Taxes
and any other Taxes imposed on a periodic basis and measured by the value of
any asset.
"Purchase Price" has the meaning set forth in Section 2.03(a) of this
Agreement.
"Purchase Price Bank Account" means a bank account in the United
States to be designated by the Sellers in a written notice to the Purchaser at
least two Business Days before the Closing.
"Purchase Price Reduction Payment" has the meaning set forth in
Section 2.10(c)(i) of this Agreement.
"Purchased Assets" has the meaning set forth in Section 2.01(a) of
this Agreement.
"Purchased Stock" has the meaning set forth in Section 2.01(a) of
this Agreement.
"Purchased Subsidiary" has the meaning set forth in the third recital
of this Agreement.
"Purchaser" has the meaning set forth in the preamble of this
Agreement.
"Purchaser Indemnified Party" has the meaning set forth in Section
9.02 of this Agreement.
"Purchaser's Deposit" means $2,800,000 paid by the Purchaser upon the
execution of this Agreement, pursuant to the terms of the Escrow Agreement and
as provided in Section 2.11 of this Agreement.
"Qualified Overbid" means a bid received from a Qualified Overbidder
including all of the Required Bid Documents and meeting all of the Bid
Requirements.
"Qualified Overbidder" has the meaning set forth in Section 6.01(b)
of this Agreement.
"Real Property" means the Transferred Real Property and the Leased
Real Property.
"reasonable best efforts" means best efforts; provided that in using
such efforts, the party using the same shall not be required to incur or
expend unreasonable amounts of financial resources.
"Receivables" means any and all accounts receivable (whether billed
or unbilled), notes and other evidences of indebtedness and other amounts
receivable from third parties, including but not limited to, credits or
similar benefits not attributable to Excluded Taxes nor Excluded Assets and
customers, to the extent arising from the conduct of the Business before the
Closing, whether or not in the ordinary course, together with any unpaid
financing charges accrued thereon as set forth on the Reference
Receivable/Inventories Statement or the Closing Receivables/Inventories
Statement.
"Receivables/Inventories Deficiency" has the meaning set forth in
Section 2.10(c)(i) of this Agreement.
"Receivables/Inventories Surplus" has the meaning set forth in
Section 2.10(c)(ii) of this Agreement.
"Reference Receivables/Inventories Statement" means a report setting
forth the calculation of the dollar amount of the Receivables and Inventories
as of the close of business on October 2, 2004, prepared in accordance with
GAAP, and calculated as set forth in Exhibit 2.10(a)(ii) of this Agreement.
"Regulations" means the Treasury Regulations (including Temporary
Regulations) promulgated by the United States Department of Treasury with
respect to the Tax Code or other federal Tax Laws.
"Related Person" has the meaning set forth in Section 3.23 of this
Agreement.
"Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing and the like
into or upon any land or water or air or otherwise entering into the
Environment.
"Relief" shall mean (a) any relief, allowance, exemption, set-off,
deduction or credit available from, against or in relation to Tax or in the
computation for any Tax purpose of income, profits or gains; and (b) any right
to a repayment of Tax.
"Remedial Action" means all action to (a) clean up, remove, treat or
handle in any other way Hazardous Materials in the Environment; (b) prevent
the Release of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or the Environment; or (c) perform remedial
investigations, feasibility studies, corrective actions, closures and
post-remedial or post-closure studies, investigations, operations, maintenance
and monitoring.
"Representative" has the meaning set forth in Section 5.17 of this
Agreement.
"Required Bid Documents" has the meaning set forth in Section 6.02(a)
of this Agreement.
"Sale" means the purchase of the Purchased Assets and the assumption
of the Assumed Liabilities.
"Sales Taxes" means sales, use, value added or similar Taxes.
"Sale Approval Order" has the meaning set forth in Section 5.14 of
this Agreement.
"Sale Motion" has the meaning set forth in Section 5.14 of this
Agreement.
"Saving" shall mean the reduction or elimination of any liability of
the Purchased Subsidiary to make an actual payment of corporation tax in
respect of which the Sellers would not have been liable under section 5.11(a),
by the use of any Relief arising wholly as a result of a liability to Tax in
respect of which the Sellers have made a payment under section 5.11(a).
"SEC" has the meaning set forth in Section 3.24 of this Agreement.
"SEC Reports" has the meaning set forth in Section 3.24 of this
Agreement.
"Seller Indemnified Party" has the meaning set forth in Section 9.03
of this Agreement.
"Sellers" has the meaning set forth in the preamble of this Agreement.
"Sellers' 401(k) Plan" has the meaning set forth in Section 7.04 of
this Agreement.
"Sellers' Knowledge," "Knowledge of the Sellers" or similar terms
used in this Agreement, means the actual knowledge of the Persons listed in
Exhibit 1.01(f) as of the date of this Agreement (or, with respect to a
certificate or any other writing delivered pursuant to this Agreement, as of
the date of delivery of such certificate) after reasonable inquiry and
investigation.
"Stand-Alone Financial Statements" has the meaning set forth in
Section 3.04(d) of this Agreement.
"Subsidiary" means with respect to any Person (the "Owner") (a) any
corporation or other Person of which the Owner (either alone or through or
together with one or more of its Subsidiaries) owns or holds, directly or
indirectly, through one or more intermediaries, more than 50% of the
outstanding capital stock of such other Person, (b) any corporation or other
Person of which capital stock having the power to elect a majority of that
corporation's or other Person's board of directors or similar governing body,
or otherwise having the power to direct the business and policies of such
Person (other than securities or other interests having such power only upon
the happening of a contingency that has not occurred), are held or owned,
directly or indirectly, through one or more intermediaries, by the Owner
(either alone or through or together with one or more of its Subsidiaries), or
(c) any Person, the operations of which are consolidated or combined with the
Owner, pursuant to GAAP, for financial reporting purposes.
"Successful Bid" has the meaning set forth in Section 6.03(e) of this
Agreement.
"Successful Bidder" has the meaning set forth in Section 6.06(a)(ii)
of this Agreement.
"Tangible Personal Property" has the meaning set forth in Section
2.01(a)(iv) of this Agreement.
"Tax" or "Taxes" means (a) any and all taxes of any kind imposed by
any Taxation Authority, including taxes or other charges on or with respect to
income, franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth; taxes or other charges
in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and
customs' duties, tariffs, and similar charges; and (b) any interest fine,
penalty, surcharge, additions to tax or other imposition relating to any tax,
duty or levy listed above.
"Taxation Authority" shall mean any authority, whether of the United
States of America, the United Kingdom or elsewhere, competent to impose,
assess or collect Tax.
"Taxation Statute" shall mean any statute (and all regulations and
other documents having the force of law under such statute) published,
enacted, issued or coming into force on or before the date of this Agreement
relating to Tax.
"Tax Code" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"Tax Returns" means any and all returns, reports and forms (including
elections, declarations, amendments, schedules, information returns or
attachments thereto) required to be filed with a Governmental Authority with
respect to Taxes.
"TCGA" shall mean Taxation of Chargeable Gains Xxx 0000.
"Transferred Employees" has the meaning set forth in Section 7.01 of
this Agreement.
"Transferred Intellectual Property" means all Intellectual Property
owned by the Sellers.
"Transferred IP Agreements" means all (i) licenses of Intellectual
Property to the Sellers and (ii) licenses of Intellectual Property by the
Sellers to third parties, in each case as set forth in Section 3.08(a)(ii) of
the Disclosure Schedule.
"Transferred Real Property" has the meaning set forth in Section
2.01(a)(iii) of this Agreement.
"TSIC" has the meaning set forth in the preamble of this Agreement.
"TSIC Balance Sheet" has the meaning set forth in Section 3.04 of
this Agreement.
"TSIC Entities" means each of the Sellers and the Purchased
Subsidiary.
"US TSIC Entity" has the meaning specified in Section 3.12(a).
"VAT" shall mean value added Tax.
"WARN Act" means the Workers Adjustment and Retraining Notification
Act of 1988, as amended.
SECTION 1.02. ...Interpretation and Rules of Construction. In this
Agreement, except to the extent otherwise provided or that the context
otherwise requires:
(a) when a reference is made in this Agreement to an Article, Section,
Exhibit, Appendix or Schedule, such reference is to an Article or
Section of, or an Exhibit, Appendix or Schedule to, this Agreement
unless otherwise indicated;
(b) the table of contents and headings for this Agreement are for
reference purposes only and do not affect in any way the meaning or
interpretation of this Agreement;
(c) whenever the words "include," "includes" and "including" are used in
this Agreement, they are deemed to be followed by the words "without
limitation";
(d) the words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, refer to this Agreement as a
whole and not to any particular provision of this Agreement;
(e) all terms defined in this Agreement have the defined meanings when
used in any certificate or other document made or delivered pursuant
hereto, unless otherwise defined therein;
(f) the definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms;
(g) any Law defined or referred to herein or in any agreement or
instrument that is referred to herein means such Law or statute as
from time to time amended, modified or supplemented, including by
succession of comparable successor Laws;
(h) references to a Person are also to its successors and permitted
assigns;
(i) the use of "or" is not intended to be exclusive unless expressly
indicated otherwise.
Article II........
PURCHASE AND SALE
SECTION 2.01. ...Purchase and Sale of Purchased Assets. (a) Upon the terms
and subject to the conditions of this Agreement, at the Closing, the Sellers
shall sell, assign, transfer, convey and deliver, or cause to be sold,
assigned, transferred, conveyed and delivered, to the Purchaser (or one or
more of its designated Affiliates), and the Purchaser shall purchase from the
Sellers free and clear of all Liens (other than Permitted Liens), Actions or
Claims against and Indebtedness of the Sellers (other than such Actions,
Claims and Indebtedness related to the Assumed Liabilities) to the maximum
extent permissible under Sections 363 and 365 of the Bankruptcy Code, and
otherwise as set forth in the Sale Approval Order (other than Assumed
Liabilities), (i) all of the Sellers' right, title and interest in and to all
of the outstanding capital stock of the Purchased Subsidiary (the "Purchased
Stock"), and (ii) all of the Sellers' right, title and interest in and to all
of the assets, rights, privileges, Claims, Contracts (to the extent
transferable) and properties of every kind, nature, character and description,
real, personal and mixed, tangible and intangible, absolute or contingent,
wherever located, used in or relating to the conduct of the Business, other
than the Excluded Assets (collectively, the "Purchased Assets"), including,
without limitation, the following:
(i) the Inventories;
(ii) the Receivables;
(iii) the real property specified in Section 2.01(a)(iii) of the Disclosure
Schedule and all of the rights of the Sellers arising out of the
ownership thereof or appurtenant thereto together with all
Improvements thereon (the "Transferred Real Property"), and all
rights of the Sellers in respect of the Leased Real Property,
including all leasehold interests, options to purchase underlying
property and leasehold improvements thereon and any other rights,
licenses, and profits appurtenant to or related to such leasehold
interests, but excluding any cash security or similar deposits or
rights thereto belonging to the Sellers to the extent set forth in
Section 2.12;
(iv) except as set forth in Section 2.01(b)(iv) of the Disclosure
Schedule, all tangible personal property used by the Sellers in the
conduct of the Business, including, without limitation, all
equipment, furniture, fixtures, furnishings, accessories, machinery,
manufacturing and other equipment, computer software and hardware,
tools, molds, parts, supplies, vehicles and other tangible personal
property owned or leased by the Sellers at any location and used by
the Sellers in the conduct of the Business (the "Tangible Personal
Property");
(v) the books of account, general, accounting, financial, tax and
personnel records, invoices, shipping records, customer lists,
supplier lists, all other information as to sources of supply and
relationships with suppliers and customers, business plans, studies,
projections, research and development reports, operating guides and
manuals, correspondence and other marketing and all other studies and
documents, records and files, in any form or medium, and any rights
thereto owned, solely associated with or solely employed by any
Seller in the conduct of the Business; provided, however, that from
and after the date hereof (including for a period of three years
after the Closing Date), the Sellers shall have the right to inspect
such materials during normal business hours as may reasonably be
necessary for Tax purposes or other legitimate business reasons of
the Sellers;
(vi) the Purchased Stock;
(vii) the Transferred Intellectual Property; provided, however, that
subject to Sections 5.15 and 5.16, each of the Sellers shall have the
right to use its respective name as its corporate name;
(viii) all Sellers' archives, artwork and development and design work;
(ix) the catalogs, sales and promotional literature, customer lists,
referral sources and other sales-and promotional materials of each of
the Sellers, including merchandise certificates and gift
certificates, solely to the extent related to the Business (including
all images owned by any of the Sellers and the Sellers' right and
interest in licensed images);
(x) the rights of each of the Sellers under the Designated Contracts,
including the Transferred IP Agreements (other than as excluded under
Section 2.01(b)(xi)), including, without limitation, any right to
receive payment for products sold or services rendered, and to
receive goods and services, pursuant to such Designated Contracts and
to assert Claims and take other rightful actions in response to
breaches, defaults and other violations of such Designated Contracts;
(xi) the equipment leases included in the Designated Contracts;
(xii) the purchase orders, invoices and commitments relating to the
Inventories set forth in Section 2.01(a)(xii) of the Disclosure
Schedule (as such Section 2.01(a)(xii) of the Disclosure Schedule may
be amended from time to time until the Closing Date);
(xiii) any municipal, state, federal and international franchises, permits,
licenses, agreements, waivers and authorizations solely to the extent
held or used by any of the Sellers in connection with the operation
of the Business or the ownership of the Purchased Assets, to the
extent transferable under applicable Law;
(xiv) the rights of the Sellers' to deposits, credits, prepaid expenses,
deferred charges, advanced payments, rights to refunds and prepaid
items related to the Purchased Assets, but excluding Sellers' ratable
portion of utilities, maintenance, rents and other similar pre-paid
items, which shall be treated in a manner as set forth in Section
2.12;
(xv) all Claims of Sellers against third parties relating to the Purchased
Assets, whether xxxxxx or inchoate, known or unknown, or contingent
or non-contingent;
(xvi) all insurance proceeds assigned to Purchaser pursuant to Section
5.07(iii); and
(xvii) all other assets, rights, privileges, Claims, Contracts (to the
extent transferable) and properties of every kind, nature, character
and description, real, personal and mixed, tangible and intangible,
absolute or contingent, wherever located, to the extent used in the
Business.
(b) Notwithstanding anything in Section 2.01(a) to the contrary, the
Sellers shall not sell, convey, assign, transfer or deliver, nor cause to be
sold, conveyed, assigned, transferred or delivered, to the Purchaser, and the
Purchaser shall not purchase, and the Purchased Assets shall not include, the
Sellers' right, title and interest to any of the following assets of the
Sellers (the "Excluded Assets"):
(i) the Purchase Price Bank Account and the assets contained therein or
the proceeds thereof;
(ii) except as set forth in Section 2.01(a)(xiv), all cash and cash
equivalents, securities and negotiable instruments of the Sellers on
hand, in lockboxes, in financial institutions or elsewhere;
(iii) any and all Receivables and Inventories of the Purchased Subsidiary;
(iv) any rights to Tax refunds, credits or similar benefits attributable
to Excluded Taxes;
(v) the Sellers' company seals, minute books, charter documents, stock or
equity record books and such other books and records as pertain to
the organization, existence or capitalization of the Sellers, as well
as any other records or materials relating to the Sellers generally
and not involving or related to the Purchased Assets or the operation
of the Business or that the Sellers are required by Law to retain in
their possession; provided, however, that from and after the date
hereof (including after the Closing Date) the Purchaser shall have
the right to inspect such materials during normal business hours upon
reasonable request to Seller's to the extent Purchaser requires
access to any information therein for purposes of conducting the
Business and owning and operating the Purchased Assets.
(vi) any right, property or asset that is listed or described in
Section 2.01(b)(vi) of the Disclosure Schedule, including all of the
outstanding shares of capital stock of each Subsidiary of TSIC other
than the Purchased Stock;
(vii) all rights of the Sellers under this Agreement and the Ancillary
Agreements;
(viii) all rights of the Sellers under the DIP Loan Facility;
(ix) Tax Returns of the Sellers, other than those relating solely to the
Purchased Assets or the Business; provided, that the Purchaser has or
shall be given copies of any such Tax Returns to the extent related
to the Purchased Assets or the Business (other than Tax Returns in
respect of income Taxes of any kind or nature); provided, however,
that from and after the date hereof (including after the Closing
Date) the Purchaser shall have the right to inspect such Tax Returns
during normal business hours upon reasonable request to Seller's to
the extent Purchaser requires access to such information for purposes
of conducting the Business and owning and operating the Purchased
Assets;
(x) all current and prior insurance policies of the Sellers and all
rights of any nature with respect thereto, including all insurance
recoveries thereunder and rights to assert Claims with respect to any
such insurance;
(xi) any Designated Contract and rights thereunder which, based upon the
objection of a party to a Designated Contract other than a Seller or
Sellers or any of their Affiliates, the Bankruptcy Court has
determined shall not be assigned to the Purchaser under applicable
provisions of the Bankruptcy Code without the consent or approval of
the other party thereto;
(xii) (a) all causes of action, judgments, Claims and Actions of any nature
available to or being pursued by the Sellers against third parties,
whether xxxxxx or inchoate, known or unknown, contingent or
otherwise, to the extent the foregoing relate to or arise out of the
Excluded Assets or the Excluded Liabilities and (b) all causes of
action, judgments, Claims and Actions of any nature available to or
being pursued by any Seller against (i) any Representative of any
Seller, or (ii) any supplier or vendor to any Seller, or (iii) any
third party insurance, reinsurance, bonding or other similar company
providing insurance to the Sellers other than with respect to causes
of action, judgments, Claims and Actions against Representatives,
suppliers or vendors described in clause (A), (B) or (C) below,
including such causes of action, chooses in action and rights of
recovery actions for preferences, fraudulent conveyances, and other
avoidance power claims and any recoveries under sections 506(c), 542,
544, 545, 546, 547, 548, 549, 550, 552(b) and 553 of the Bankruptcy
Code and the proceeds, products, rents and profits of all of the
foregoing, but only if such Representative, supplier or vendor is not
a director, officer, employee or agent of, or consultant, supplier,
vendor or contractor to, the Business (A) whose relationship with the
Business continues immediately following the Closing Date, (B) who
has been hired, retained or engaged by the Purchaser or any of its
Affiliates within 60 days after the Closing Date, or (C) who, at the
end of such 60-day period, is reasonably expected to have or resume
such a continuing relationship with the Business after such 60-day
period;
(xiii) except as provided in Article VII, all assets of any Employee Plan
(or of any related trust or other funding vehicle) maintained by the
Sellers;
(xiv) the Excluded IP Agreements;
(xv) any Contracts of the Sellers that are not Designated Contracts; and
(xvi) intercompany Receivables.
SECTION 2.02. Assumption and Exclusion of Liabilities. (a) Upon the
terms and subject to the conditions set forth in this Agreement, the Purchaser
or one or more of its Subsidiaries shall, by executing and delivering, at the
Closing, the Assumption Agreement, assume, and agree to pay, perform and
discharge when due, only the following enumerated Liabilities of the Sellers
to the extent relating to the Business or the Purchased Assets (the "Assumed
Liabilities") and shall not pay, perform, discharge or otherwise be
responsible for or obligated to any Person in any respect for any other
Liabilities of TSIC or any of its Subsidiaries or Affiliates, including any of
the Excluded Liabilities set forth in Section 2.02(b) below:
(i) all Liabilities of the Sellers, arising under, or relating to
performance under, the Designated Contracts not excluded under
Section 2.01(b)(xi), other than Cure Costs in respect thereof;
(ii) all Liabilities for the purchase orders, invoices and commitments
relating to the Inventories set forth in Section 2.02(a)(ii) of the
Disclosure Schedule (as the same may be amended from time to time
through and including the Closing Date) that have been entered into
by the Sellers; provided, that, the Liabilities relating to
Inventories shall not include purchase orders, invoices and
commitments where the cost for materials has increased by more than
2% above the cost which has been customarily charged by the vendor in
the three-month period prior to the date hereof;
(iii) all Liabilities for returns, credits, discounts, vendor margin
agreements, "high/low" holdbacks, contingencies, chargebacks,
write-offs, write-downs, and allowances relating to goods and
products sold or orders accepted as of the Closing Date to the extent
related exclusively to the Business and incurred by the Sellers in
the Ordinary Course of the Business; and
(iv) Liabilities secured by Seller's letters of credit with respect to
purchase orders for Inventories which are Purchased Assets.
(b) The Sellers shall retain, and shall be responsible for paying,
performing and discharging when due, and the Purchaser shall not assume or
have any responsibility for any Liabilities of any Seller or any of its
Affiliates of any kind or nature (other than the Assumed Liabilities),
including, without limitation, the following Liabilities (the "Excluded
Liabilities"):
(i) all Liabilities in respect of the Excluded Taxes;
(ii) all Liabilities relating to or arising out of the Excluded Assets;
(iii) all Cure Costs;
(iv) the Sellers' obligations under this Agreement and the Ancillary
Agreements;
(v) all obligations of the Sellers under the DIP Loan Facility;
(vi) all litigation Claims against TSIC or any of its Subsidiaries or
Affiliates;
(vii) all intercompany Liabilities owing from any Seller to any other
Seller or any of their respective Affiliates,
(viii) all Liabilities related to any Employee Plans or any employee benefit
plans, agreements or arrangements;
(ix) all Contract and other Liabilities related to any current or former
employees of the Sellers;
(x) any costs or expenses incurred in connection with or related to the
administration of the Chapter 11 Cases, including "allowed
administrative expenses" under section 503(b) of the Bankruptcy Code,
and professional fees or expenses of any of the Sellers, attorneys,
accountants or other professional advisors;
(xi) any Liabilities for borrowed money of any kind or nature;
(xii) except as set forth in Section 2.02(a), any pre-Closing litigation
claim or assessment, breach of Contract, tort, infringement,
violation of Law or environmental matters of any Seller or any of
their Affiliates arising from any facts, events or circumstances
arising on or prior to the Closing Date, in each case, of any kind or
nature whatsoever and whether related to the Purchased Assets or the
Business or otherwise and regardless of when commenced;
(xiii) all Environmental Liabilities;
(xiv) all Product Liabilities;
(xv) all Liabilities of the Sellers, arising under, or relating to
performance under, the Designated Contracts excluded under Section
2.01(b)(xi);
(xvi) all Liabilities of the Sellers to pay, reimburse or indemnify their
respective Representatives;
(xvii) any Liabilities associated with Sellers' obligation to pay stay
bonuses or key employee retention plans approved by the Bankruptcy
Court; and
(xviii) all Liabilities of the Sellers for all state and local ad valorem
Taxes, including real property Taxes, tangible personal property
Taxes and intangible personal property Taxes, occupational license
Tax Claims, and state and local income Tax Claims; and
(xix) the Hong Kong Note Payable.
SECTION 2.03. Purchase Price; Allocation of Purchase Price. (a) Subject
to the post-Closing adjustments set forth in Section 2.10, the purchase price
for the Purchased Assets shall be Eighty Five Million Dollars ($85,000,000) in
cash minus, dollar-for-dollar, the Non-Assumed Liabilities Payments (the
"Purchase Price"). After the Closing, the Non-Assumed Liabilities Payments, if
any, shall be made by the Purchaser out of the Indemnity Escrow Amount. The
Purchaser shall also deduct from the Purchase Price (including any amounts
payable under Section 2.10) any amounts required to be withheld and deducted
under the Tax Code or other applicable Tax Law. Any amounts so deducted shall
be remitted by the Purchaser to the appropriate Governmental Authority on a
timely basis. Except as otherwise set forth herein or in the Escrow
Agreement, the Purchaser's Deposit and all earnings thereon shall be paid to
the Sellers at Closing and deducted from the amount payable by Purchaser at
Closing.
(b) The sum of the Purchase Price and the Assumed Liabilities shall be
allocated among the Purchased Assets as of the Closing Date as mutually
determined by the Sellers and the Purchaser in accordance with the Tax Code
(the "Allocation"). Any subsequent adjustments to the sum of the Purchase
Price and Assumed Liabilities shall be reflected in the Allocation in a manner
consistent with section 1060 of the Tax Code and the Regulations thereunder.
For all Tax purposes, the Purchaser and the Sellers agree that the
transactions contemplated by this Agreement shall be reported in a manner
consistent with the terms of this Agreement, including the Allocation, and
that neither of them will take any position inconsistent therewith in any Tax
Return, refund claim, litigation, or otherwise. Each of the Sellers and the
Purchaser agrees to cooperate with the other in preparing IRS form 8594 and to
furnish the other with a copy of such form prepared in draft form within a
reasonable period before its filing due date.
SECTION 2.04. Contract Assumption. Section 2.04 of the Disclosure
Schedule sets forth a list of all executory Contracts and unexpired leases to
which one or more of the Sellers are party and which are to be included in the
Purchased Assets (the "Designated Contracts"). The Purchaser shall have the
right to make initial deletions to Section 2.04 of the Disclosure Schedule up
to and including the seventh Business Day after the date hereof, subject to
the procedures set forth in Section 5.15(a) of this Agreement. Sellers shall,
at the written direction of the Purchaser delivered no later than seven days
prior to the Final Sale Hearing, direct the Sellers to add Designated
Contracts to Section 2.04 to the Disclosure Schedule and provide notice of
same to the non-debtor party to the Designated Contract to be assigned to the
Purchaser. The Sellers and Purchaser acknowledge and agree that (i) the
Purchaser shall not assume any purchase commitment or purchase order of the
Sellers to the extent that the price per unit in such purchase commitment or
purchase order has increased by more than 2% above the price per unit for that
style item charged by the vendor in any purchase commitment or purchase order
that has been entered into by the Sellers in the Ordinary Course of the
Business during the three-month period immediately preceding the date hereof,
and (ii) the Purchaser shall not assume any sales commitment or sales order of
the Sellers to the extent that the price per unit in such sales commitment or
sales order has decreased by more than 2% of the price per unit for that that
style item charged to the customer in any such sale commitment or sales order
in the Ordinary Course of the Business during the three-month period
immediately preceding the date hereof. Such non-assumed Contract shall be
deemed to no longer be a Designated Contract. At Closing, subject to the
approval of the Bankruptcy Court and except to the extent any such Designated
Contracts are deemed Excluded Assets by virtue of Section 2.01(b)(xi) above,
the Sellers shall assume and then assign to the Purchaser, and the Purchaser
shall assume from the Sellers, the Designated Contracts. The Sellers shall be
exclusively responsible for and bear, any and all cure and reinstatement costs
and expenses for services rendered before the Closing Date (collectively, the
"Cure Costs") and relating to the assumption and assignment of the Designated
Contracts.
SECTION 2.05. Cure Costs. Until paid from the proceeds of the Purchase
Price or the DIP Loan Facility, the Cure Costs as are allowed by the
Bankruptcy Court shall be paid by the Sellers as an administrative claim
pursuant to Section 503(b)(1)(A) of the Bankruptcy Code with priority over any
or all other administrative expenses in the Chapter 11 Cases of the kind
specified in Sections 503(b) or 507(b) of the Bankruptcy Code or if the
Chapter 11 Cases are converted to Chapter 7 cases. This provision shall be
requirement of, approved by, and incorporated in the Sale Approval Order. The
Purchaser shall have no responsibility whatsoever therefor, whether to any
third party or otherwise with respect to such Cure Costs. Sellers are
responsible for the verification of all Cure Costs, including all
administrative responsibilities associated therewith, and shall use their
reasonable best efforts to establish the proper Cure Costs, if any, for each
Designated Contract, including the filing and prosecution of any and all
appropriate proceedings in the Bankruptcy Court. Notwithstanding any
provision in this Agreement to the contrary, from and after the date hereof
through the Closing Date: (i) the Sellers will not reject, without prior
consent of the Purchaser, any Designated Contract and (ii) the Sellers will
consult with the Purchaser and obtain the prior written consent of the
Purchaser with respect to the modification or restructuring of any Designated
Contract.
SECTION 2.06. Amounts Due Under Designated Contracts. From and after the
Closing, the Purchaser shall be obligated to pay all amounts for services
rendered and goods provided under the Designated Contracts in accordance with
the terms and conditions of all such Designated Contracts. Any amounts for
services rendered, and goods provided under the Designated Contracts during
the period until the Closing Date shall not be a Liability of Purchaser
(unless to the extent included in the Assumed Liabilities to be assumed by
Purchaser).
SECTION 2.07. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Purchased Assets and the assumption of
the Assumed Liabilities contemplated by this Agreement shall take place at a
closing (the "Closing") to be held at the offices of Xxxxxxxxx Xxxxxxx, LLP,
The MetLife Building, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
10:30 A.M., New York time on the fifth Business Day next following the
satisfaction or waiver of the conditions to the obligations of the parties
hereto set forth in Article VIII (other than conditions that are not capable
of being satisfied until the Closing, but subject to the satisfaction or
waiver of those conditions) or at such other place or at such other time or on
such other date as the Sellers and the Purchaser may mutually agree upon in
writing (the date of the Closing being herein referred to as the "Closing
Date"). The Closing shall be effective as of 12:01 a.m. on the Closing Date.
SECTION 2.08. Closing Deliveries by the Sellers. At the Closing, the
Sellers shall deliver or cause to be delivered to the Purchaser:
(a) each of the items set forth on Exhibit 2.08(a) hereof;
(b) the Xxxx of Sale, the Deeds, each Assignment of Lease, the Assignment
of Transferred Intellectual Property and such other instruments, in
form and substance reasonably satisfactory to the Purchaser, as may
be reasonably requested by the Purchaser to effect the transfer of
the Purchased Assets to the Purchaser or evidence such transfer on
the public records, in each case duly executed by Sellers;
(c) executed counterparts of the Assumption Agreement;
(d) executed counterparts of each other Ancillary Agreement to which any
of the Sellers is a party (other than the Ancillary Agreements
delivered pursuant to Section 2.08(a) and (d));
(e) a receipt for the Purchase Price less the Escrow Amount and the
Purchaser's Deposit;
(f) a certificate of the secretary or an assistant secretary of each of
the Sellers certifying the names and signatures of the officers of
each of the Sellers authorized to sign this Agreement, each of the
Ancillary Agreements and any other documents to be delivered
hereunder and thereunder;
(g) a certificate of non-foreign status (in a form reasonably acceptable
to the Purchaser) pursuant to section 1.1445-2(b)(2) of the
Regulations;
(h) a certificate of a duly authorized officer of each of the Sellers
certifying as to the matters set forth in Section 8.02(a);
(i) all such other instruments and documents as the Purchaser or the
Purchaser's counsel may reasonably request to evidence or consummate
the transactions contemplated by this Agreement;
(j) the Sellers' notification pursuant to Section 5.05; and
(k) a certificate from the Clerk of the Bankruptcy Court certifying that
no request for any stay pending appeal of the Sale Approval Order has
been filed or appears on the docket of the Bankruptcy Court for the
Chapter 11 Cases as of the Closing Date (together with telephonic
confirmation thereof as may be requested by the Purchaser).
SECTION 2.09. Closing Deliveries by the Purchaser(a) . (a) At the
Closing, the Purchaser shall deliver to the Sellers:
(i) the Purchase Price, less each of the Purchaser's Deposit paid upon
execution hereof and the Escrow Amount paid to the Escrow Agent as
contemplated by this Agreement, by wire transfer in immediately
available funds to the Purchase Price Bank Account;
(ii) executed counterparts of the Assumption Agreement, each Assignment of
Lease, the Assignment of Transferred Intellectual Property and such
other instruments, in form and substance reasonably satisfactory to
the Sellers, as may be requested by the Sellers to effect the
assumption by the Purchaser of the Assumed Liabilities and to
evidence such assumption on the public records;
(iii) executed counterparts of each of the Ancillary Agreements (other than
the Ancillary Agreements delivered pursuant to Section 2.08(b) and
(c)) to which the Purchaser is a party;
(iv) a true and complete copy, certified by the secretary or an assistant
secretary of the Purchaser, of the resolutions duly and validly
adopted by the board of directors of the Purchaser evidencing its
authorization of the execution and delivery of this Agreement and
each of the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby;
(v) a certificate of the secretary or an assistant secretary of the
Purchaser certifying the names and signatures of the officers of the
Purchaser authorized to sign this Agreement, each of the Ancillary
Agreements and any other documents to be delivered hereunder and
thereunder;
(vi) a certificate of a duly authorized officer of the Purchaser
certifying as to the matters set forth in Section 8.01(a); and
(vii) such resale or exemption certificates as are reasonably acceptable by
Sellers to exempt Sellers from the obligation to collect and remit
sales, use or similar Taxes from Purchaser as a result of the sale of
the Inventories to Purchaser.
(b) At the Closing, the Purchaser shall deliver to the Escrow Agent the
Escrow Amount by wire transfer in immediately available funds to the
account(s) designated therefore in the Escrow Agreement, in
accordance with the terms of Escrow Agreement and Section 2.11 hereof.
SECTION 2.10. Post-Closing Adjustment of Purchase Price. At the Closing,
the Purchaser shall deliver to the Escrow Agent by wire transfer of
immediately available funds to the account(s) designated therefor in the
Escrow Agreement, in accordance with the terms of the Escrow Agreement and
Section 2.11, the Escrow Amount. The Purchase Price shall be subject to
adjustment as specified in this Section 2.10 as follows:
(a) Closing Receivables/Inventories Statement. (i) As promptly as
practicable, but in any event within 30 days following the Closing
Date, the Purchaser shall prepare and deliver to Sellers a report
setting forth the Purchaser's calculation of the dollar amount of the
Receivables and Inventories as of the close of business on the
Closing Date (the "Closing Receivables/Inventories Statement"),
prepared in good faith in accordance with GAAP and, to the extent
consistent with GAAP, on a basis consistent with the preparation of
the Reference Receivables/Inventories Statement.
(ii) the Reference Receivables/Inventories Statement has been calculated,
and the Closing Receivables/Inventories Statement shall be calculated
as set forth on Exhibit 2.10(a)(ii) to this Agreement.
(iii) the Sellers shall cooperate with the Purchaser in the preparation of
the Closing Receivables/Inventories Statement, as more fully set
forth in Sections 5.9 and 5.10. The Sellers and their
Representatives shall be given timely access to Purchaser, and the
books, records, facilities and employees of the Business, including
all supporting documents and work papers used in the preparation of
the Closing Receivables/Inventories Statement, as may be reasonably
necessary for Sellers' review of such statement.
(b) Disputes. (i) The Sellers may dispute any amounts reflected on the
Closing Receivables/Inventories Statement, but only on the basis that
such amounts were not arrived at in accordance with Exhibit
2.10(a)(ii) or resulted from a mathematical or clerical error;
provided, however, that Sellers shall have notified Purchaser in
writing of each disputed item, specifying the amount thereof in
dispute and setting forth, in reasonable detail, the basis for such
dispute, within 10 Business Days of the Purchaser's delivery of the
Closing Receivables/Inventories Statement. In the event of such a
dispute, the Sellers and the Purchaser shall attempt to reconcile
their differences, and any resolution by them as to any disputed
amounts shall be final and binding on the parties hereto. If the
Sellers and the Purchaser are unable to reach a resolution with such
effect within 10 Business Days after receipt by the Purchaser of the
Sellers' written notice of dispute, the Sellers and the Purchaser
shall submit the items then remaining in dispute for resolution to a
mutually agreed upon accounting firm that is independent of the
Purchaser and the Sellers and is of national reputation (the
"Independent Accounting Firm"), which shall, as soon as practicable
but not later than 10 Business Days after such submission, determine
and report to the Sellers and the Purchaser upon such remaining
disputed items, and such report shall be final and binding on the
Sellers and the Purchaser. The fees and disbursements of the
Independent Accounting Firm shall be shared equally by the Sellers
and the Purchaser.
(ii) In acting under this Agreement, the Sellers' Accountants, the
Purchaser's Accountants and the Independent Accounting Firm shall be
entitled to the privileges and immunities of arbitrators.
(c) Purchase Price Adjustment. The Closing Receivables/Inventories
Statement shall be deemed conclusive and binding on the Sellers for
the purposes of this Section 2.10 upon the earliest to occur of (A)
the failure of the Sellers to notify the Purchaser of a dispute in
accordance with Section 2.10(b)(i), (B) the resolution of all
disputes by the Sellers and the Purchaser, and (C) the resolution of
all disputes by the Independent Accounting Firm. Within five
Business Days of the Closing Receivables/Inventories Statement being
deemed conclusive and binding:
(i) If the dollar amount reflected on the Reference
Receivables/Inventories Statement exceeds the dollar amount
reflected on the Closing Receivables/Inventories Statement
(the "Receivables/Inventories Deficiency"), then the
Purchase Price shall be reduced, dollar-for-dollar, in an
amount equal to the Receivables/Inventories Deficiency, the
Purchaser shall deliver written notice thereof to the Escrow
Agent and the Sellers specifying the amount of the
Receivables/Inventories Deficiency, and the Escrow Agent
shall, within two Business Days of its receipt of such
notice and in accordance with the terms hereof and the
Escrow Agreement, pay the amount of such deficiency to the
Purchaser, in cash, out of the Adjustment Escrow Amount (the
"Purchase Price Reduction Payment"). If the Adjustment
Escrow Amount is insufficient to pay therefrom to Purchaser
the Purchase Price Reduction Payment, in full, then the
Escrow Agent shall distribute the entire Adjustment Escrow
Amount to the Purchaser as provided in the preceding
sentence and the Sellers shall pay, on or prior to the date
on which the Escrow Agent pays to the Purchaser the entire
Adjustment Escrow Amount, an amount in cash equal to the
excess of (x) the amount of the Receivables/Inventories
Deficiency over (y) the Adjusted Escrow Amount paid to
Purchaser as provided above. If the Sellers fail to pay
such excess within the period specified in the immediately
preceding sentence, the Purchaser shall promptly deliver
written notice thereof to the Escrow Agent and the Sellers
specifying such failure and the amount of the Purchase Price
Reduction Payment remaining unpaid, and the Escrow Agent
shall, within two (2) Business Days of its receipt of such
notice and in accordance with the terms hereof and of the
Escrow Agreement, pay to the Purchaser out of the Indemnity
Escrow Amount the remaining unpaid amount of the Purchase
Price Reduction Payment. If the Adjustment Escrow Amount
exceeds the amount of the Receivables/Inventory Deficiency,
then the Escrow Agent shall, after paying in full to the
Purchaser the Purchase Price Reduction Payment, transfer all
remaining funds in the Adjustment Escrow Amount to the
Seller.
(ii) If the dollar amount reflected on the Closing Receivables/
Inventories Statement exceeds the dollar amount reflected on
the Reference Receivables/Inventories Statement (the
"Receivables/Inventories Surplus"), then the Purchase Price
shall be increased, dollar-for-dollar, in an amount equal to
the Receivables/Inventories Surplus and the Purchaser shall
pay, within two (2) Business Days after the date such
statement is deemed conclusive and binding hereunder, the
full amount of such surplus to the Sellers.
(iii) All payments required to be made by the Sellers, the Purchaser or the
Escrow Agent pursuant to this Section 2.10(c) shall be made
by wire transfer in immediately available funds to an
account designated by the receiving party.
SECTION 2.11. Escrow. On the date of this Agreement, the Purchaser shall
deposit the Purchaser's Deposit with the Escrow Agent in accordance with the
terms of this Agreement and the Escrow Agreement and shall enter into an
Escrow Agreement with the Escrow Agent substantially in the form of Exhibit
2.11 (the "Escrow Agreement"). At or prior to the Closing, the Purchaser
shall deposit the Adjustment Escrow Amount and the Indemnity Escrow Amount in
two separate accounts to be managed and paid out by the Escrow Agent in
accordance with the terms of this Agreement and the Escrow Agreement.
SECTION 2.12. Proration. (a) Purchaser and Sellers agree that, except as
otherwise specifically provided in this Agreement, all of the ordinary and
recurring prepaid items normally incurred by Sellers relating to the Purchased
Assets, the Business or any TSIC Entity shall be set forth on Section 2.12 of
the Disclosure Schedule and shall be prorated (with appropriate credit made
for any cash security and similar deposits or rights thereto) as of the
Closing Date, with Sellers liable to the extent such items relate to any time
periods (tax year periods for Property Tax) ending on or prior to the Closing
Date, and Purchaser liable to the extent such items relate to periods (tax
year periods for Property Tax) after the Closing (measured in the same units
used to compute the item in question and otherwise measured on the basis of
the actual number of days elapsed in the calendar year); provided that
notwithstanding anything to the contrary herein, Purchaser shall not pay any
amount under this Section 2.12 that constitutes an Excluded Liability.
(b) In connection with the prorations referred to in Section
2.12(a) above, in the event that actual figures are not available at the
Closing Date, the proration shall be based upon the applicable amounts accrued
through the Closing Date or paid for the most recent year or other appropriate
period for which such amounts paid are available. All prorated amounts shall
be recalculated and paid to the appropriate Person within 15 days of the
Closing Date. Sellers and Purchaser shall furnish each other with such
documents and other records as may be reasonably requested in order to confirm
all proration calculations made pursuant to this Section 2.12.
Article III
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS
Subject to the exceptions set forth in the Disclosure Schedule, each
Seller, jointly and severally, hereby represents and warrants to the
Purchaser, as of the date hereof or, if a representation or warranty is made
as of a specified date, as of such date, as follows:
SECTION 3.01. Organization, Authority and Qualification of the TSIC
Entities. (a) Except as a result of the commencement of the Chapter 11 Cases,
each TSIC Entity is duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its organization and has all necessary
corporate power and authority, subject to obtaining the approval of the
Bankruptcy Court, to enter into this Agreement and the Ancillary Agreements,
to carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each TSIC Entity is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary, except to the
extent that the failure to be so licensed, qualified or in good standing (a)
has resulted from the commencement or continuance of the Chapter 11 Cases, or
(b) would not (i) adversely affect the ability of each Seller to carry out its
obligations under, and to consummate the transactions contemplated by, this
Agreement and the Ancillary Agreements, or (ii) have a Material Adverse
Effect. Subject to obtaining the approval of the Bankruptcy Court, the
execution and delivery of this Agreement and the Ancillary Agreements by each
Seller, the performance by such Seller of its obligations hereunder and
thereunder and the consummation by such Seller of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of such Seller. This Agreement has been, and upon their
execution the Ancillary Agreements shall have been, duly executed and
delivered by each Seller, and (assuming due authorization, execution and
delivery by the Purchaser) following the approval by the Bankruptcy Court of
this Agreement and the Ancillary Agreements and the transactions contemplated
hereby and thereby, this Agreement and the Ancillary Agreements shall
constitute legal, valid and binding obligations of each Seller, enforceable
against such Seller in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar Laws now or
hereafter in effect relating to creditors' rights generally and subject to
general principles of equity.
(b) Except as set forth in Section 3.01(b) of the Disclosure
Schedule, there are no direct or indirect Subsidiaries of TSIC other than the
other Sellers and the Acquired Subsidiary. Except as set forth in Section
3.01(b) of the Disclosure Schedule, Farah owns all of the issued and
outstanding capital stock of the Purchased Subsidiary. There are no other
shares of capital stock of the Purchased Subsidiary issued or outstanding
other than the Purchased Stock and there are no declared and unpaid dividends
or distributions on any such capital stock. The Purchased Stock (i) has been
duly authorized, validly issued, and is fully paid and nonassessable (in those
jurisdictions in which such concepts are applicable), (ii) has not been issued
in violation of any preemptive rights of stockholders or of any terms of any
agreement or other understanding binding upon any TSIC Entity, and (iii) has
been offered and sold in compliance with any and all applicable securities
laws, rules and regulations. All of the Purchased Stock is owned beneficially
and of record directly by Farah free and clear of any and all Liens. Except
as set forth in Section 3.01(b) of the Disclosure Schedule, there is no
security, option, warrant, right, call, subscription agreement, commitment or
understanding of any nature whatsoever to which any TSIC Entity is a party or
by which it is bound, that (i) calls for the issuance, sale, pledge or other
disposition of any capital stock of the Purchased Subsidiary or any securities
convertible into or exchangeable for, or other rights to acquire, any capital
stock of the Purchased Subsidiary, (ii) obligates any TSIC Entity to grant,
offer or enter into any of the foregoing or to repurchase, redeem or otherwise
acquire any capital stock of the Purchased Subsidiary or (iii) relates to the
transfer, dividends rights, voting, control, or registration rights of any
capital stock of the Purchased Subsidiary. Upon the closing, Purchaser or its
designee will be the sole owner of all right, title and interest in the
Purchased Stock.
SECTION 3.02. No Conflict. (a) Subject to obtaining the approval of the
Bankruptcy Court and assuming that all consents, approvals, authorizations and
other actions described in Section 3.03 have been obtained, all filings and
notifications listed in Section 3.03 of the Disclosure Schedule have been made
and any applicable waiting period has expired or been terminated, and except
as may result from any facts or circumstances relating solely to the
Purchaser, the execution, delivery and performance by each Seller of this
Agreement and the Ancillary Agreements to which such Seller is a party does
not and will not (i) violate, conflict with or result in the breach of the
organizational documents or bylaws of any TSIC Entity, (ii) conflict with or
violate any Law or Governmental Order applicable to any TSIC Entity or
(iii) except as set forth in Section 3.02 of the Disclosure Schedule, conflict
with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
acceleration or cancellation of, any note, bond, mortgage or indenture,
Contract, lease, sublease, license, permit, franchise or other instrument or
arrangement to which any TSIC Entity is a party, except to the extent any of
the foregoing are not enforceable due to operation of applicable bankruptcy
Law or the Sale Approval Order, and in the case of clauses (i) and (ii), as
would not (A) materially and adversely affect the ability of each Seller to
carry out its obligations under, and to consummate the transactions
contemplated by, this Agreement and the Ancillary Agreements or (B) otherwise
have a Material Adverse Effect.
(b) The Purchased Subsidiary is not in violation,
breach of, or default under (and no event has occurred that with notice or the
lapse of time would constitute a violation, breach of, or default under) any
term, condition, or provision of (i) its articles of incorporation or bylaws
or other organizational documents, (ii) any note, bond, mortgage, deed of
trust, security interest, indenture, loan or credit agreement, license,
permit, Contract, lease, plan or other instrument, commitment or obligation to
which such Purchased Subsidiary is a party or by which such Purchased
Subsidiary's properties or assets may be bound or affected, or (iii) any Law
or Governmental Order applicable to such Purchased Subsidiary or to such
Purchased Subsidiary's properties or assets, except, in the case of clause
(ii) above, as would not have a Material Adverse Effect.
SECTION 3.03. Governmental Consents and Approvals. Subject to obtaining
the approval of the Bankruptcy Court, the execution, delivery and performance
by each Seller of this Agreement and each Ancillary Agreement to which such
Seller is a party does not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to,
any Governmental Authority, except (a) as described in Section 3.03 of the
Disclosure Schedule, (b) according to the pre-merger notification and waiting
period requirements of the HSR Act, (c) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification,
would not prevent or materially delay the consummation by such Seller of the
transactions contemplated by this Agreement and the Ancillary Agreements and
would not have a Material Adverse Effect, or (d) as may be necessary as a
result of any facts or circumstances relating solely to the Purchaser or any
of its Affiliates.
SECTION 3.04. Financial Information(a) . (a) Attached as Section
3.04(a) of the Disclosure Schedule are the following financial statements
(collectively, the "Financial Statements"): (i) the unaudited consolidated
balance sheet of TSIC as of October 2, 2004 (the "TSIC Balance Sheet"), and
(ii) the related unaudited statements of income and cash flows for the year
then ended. Except as set forth in Section 3.04(a) of the Disclosure
Schedule, the Financial Statements (a) were prepared in accordance with the
books of account and other financial records of TSIC in the ordinary course of
its business without audit, (b) were prepared in accordance with GAAP applied
on a basis consistent with the past practices of TSIC, (c) reflect all normal
and recurring adjustments which are necessary to present fairly, in all
material respects, the financial condition and results of operations and cash
flows of TSIC and its Subsidiaries as of such date and for the period covered
thereby in accordance with GAAP, as consistently applied by TSIC, provided
that (i) certain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been condensed or
omitted, and (ii) the Financial Statements include Excluded Assets and
Excluded Liabilities, and (d) present fairly, in all material respects, the
financial condition and results of operations and cash flows of TSIC and its
Subsidiaries as of such date and for the period covered thereby.
(b) There are no Liabilities of the TSIC Entities, other than Liabilities
(i) reflected or reserved against on the Financial Statements or (ii) incurred
since the date of the TSIC Balance Sheet in the Ordinary Course of the
Business, and which do not and would not have a Material Adverse Effect.
Reserves are reflected on the TSIC Balance Sheet against all Liabilities of
the TSIC Entities, in amounts that have been established on a basis consistent
with the past practices of the Business and in accordance with GAAP.
(c) The books of account and other financial records of the Sellers:
(i) reflect all items of income and expense and all assets and Liabilities
required to be reflected therein in accordance with GAAP applied on a basis
consistent with the past practices of the Business, (ii) are in all material
respects complete and correct, and do not contain or reflect any material
inaccuracies or discrepancies and (iii) have been maintained in accordance
with good business and accounting practices.
(d) Attached as Section 3.04(d) of the Disclosure Schedule are the
following stand-alone financial statements (collectively, the "Stand-Alone
Financial Statements"): (i) the stand-alone balance sheet of the Purchased
Subsidiary as of October 2, 2004 and (ii) the related statements of income and
cash flows for the years ended October 2, 2004 and September 27, 2003,
together with the notes to such Stand-Alone Financial Statements. Except as
set forth in Section 3.04(d) of the Disclosure Schedule, the Stand-Alone
Financial Statements (a) were prepared in accordance with the books of account
and other financial records of the Purchased Subsidiary in the ordinary course
of its business, (b) were prepared in accordance with generally accepted
accounting principles in the United Kingdom ("UK GAAP"), applied on a basis
consistent with the past practices of the Purchased Subsidiary, (c) reflect
all normal and recurring adjustments which are necessary to present fairly, in
all material respects, the financial condition and results of operations and
cash flows of the Purchased Subsidiary as of such date and for the period
covered thereby in accordance with UK GAAP, as consistently applied by the
Purchased Subsidiary and (d) present fairly, in all material respects, the
financial condition and results of operations and cash flows of the Purchased
Subsidiary as of such date and for the period covered thereby.
(e) All financial projections and forecasts heretofore furnished to the
Purchaser were prepared by TSIC's management in good faith on the basis of
reasonable assumptions and have been updated with actual results and
additional information since originally delivered by the Sellers to the
Purchaser. These financial projections and forecasts were based upon the best
information and estimates available when given to the Purchaser. These
financial projections and forecasts do not take into account the potential
impact on the Business of entering into this Agreement or the Sellers' filing
in Bankruptcy Court.
SECTION 3.05. Litigation. Except for the Chapter 11 Cases and any and all
Actions arising therefrom or related thereto, and except as set forth in
Section 3.05 of the Disclosure Schedule, as of the date hereof there is no
Action by or against any TSIC Entity and relating to the Business pending, or,
to such Seller's Knowledge, threatened against any TSIC Entity, before any
Governmental Authority except as would not (a) adversely affect the ability of
each Seller to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Agreements or
(b) otherwise have a Material Adverse Effect. To the Seller's Knowledge, no
event has occurred or circumstance exists that is reasonably likely to give
rise to or serve as a basis for the commencement of any material Action. Each
TSIC Entity is in compliance in all material respects with the provisions of
any and all settlement agreements, consent decrees, and all other similar
arrangements and understandings to which it is a party or to which any of its
properties or assets are subject.
SECTION 3.06. Compliance with Laws; Permits. (a) Except as set forth in
Section 3.06 of the Disclosure Schedule, and as would not (i) adversely affect
the ability of each Seller to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement and the Ancillary
Agreements or (ii) otherwise have a Material Adverse Effect, each TSIC Entity
has conducted and continues to conduct the Business in accordance with all
Laws and Governmental Orders applicable to the Business, and each TSIC Entity
(to the extent it relates to the Business) is not in violation of any such Law
or Governmental Order.
(b) All material approvals, Governmental Permits, qualifications,
franchises, and registrations, together with all modifications, amendments,
supplements and extensions thereof, that are necessary to own the Purchased
Assets, conduct the Business and use and occupy the Transferred Real Property
are valid and in full force and effect and are fully and freely transferable
by the Sellers to the Purchaser, and there are no proceedings pending or, to
the Sellers' Knowledge, threatened that seek the revocation, cancellation,
suspension or any adverse modification of any such material approvals,
Governmental Permits, qualifications, franchises, and registrations. None of
such material approvals, Governmental Permits, qualifications, franchises, and
registrations will be terminated or become terminable as a result of the
transactions contemplated by this Agreement or the Ancillary Agreements.
SECTION 3.07. Environmental Matters. (a) Except as disclosed in
Section 3.07 of the Disclosure Schedule or as would not have a Material Adverse
Effect:
(i) To each Seller's knowledge, each TSIC Entity (to the extent it
relates to the Business) is in compliance with, and for the past
three years has been in compliance with, all applicable Environmental
Laws and has obtained and is in compliance with all Environmental
Permits. All past non-compliance with Environmental Laws or
Environmental Permits has been resolved without any pending, ongoing
or future obligation, cost or Liability.
(ii) To each Seller's knowledge, there are no underground or aboveground
storage tanks or any surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been
treated, stored or disposed of on any of the Real Property or, during
the period of each TSIC Entity's ownership, lease, use or occupancy
thereof, on any property formerly owned, leased, used or occupied by
such TSIC Entity. Any underground storage tanks that are or were in
service or use on the Real Property are or have been operated and/or
closed in compliance in all material respects with applicable
Environmental Law.
(iii) To each Seller's Knowledge, there has been no Release of any
Hazardous Material in violation of any applicable Environmental Law
on any of the Real Property or on any property formerly owned,
leased, used or occupied by such TSIC Entity, during the period of
such TSIC Entity's ownership, lease, use or occupancy thereof.
(iv) No TSIC Entity (as it relates to the Business) has undertaken or
completed, any Remedial Action relating to any Release or threatened
Release of any Hazardous Material at the Real Property or at any
other site, location or operation, either voluntarily or pursuant to
the order of any Governmental Authority or the requirements of any
Environmental Law or Environmental Permit.
(v) To each Seller's Knowledge, there is no asbestos or
asbestos-containing material present at any of the Real Property.
(vi) None of the Real Property is listed or to each Seller's Knowledge
proposed for listing, or adjoins any other property that is listed or
proposed for listing, on the National Priorities List or CERCLIS or
on any analogous federal, state or local list.
(vii) There are no Environmental Claims pending or to Sellers' Knowledge
threatened against any TSIC Entity or the Real Property, and to such
Sellers' Knowledge, there are no circumstances that can reasonably be
expected to form the basis of any such Environmental Claim, including
with respect to any off-site disposal location currently or formerly
used by such TSIC Entity or any of its predecessors or with respect
to previously owned or operated facilities. To each Seller's
Knowledge, no TSIC Entity has any actual or alleged liability,
whether fixed or contingent, under any Environmental Law.
(viii) To each Seller's knowledge, there are no wetlands or any areas
subject to any legal requirement or restriction in any way related to
wetlands (including requirements or restrictions related to buffer or
transition areas or open waters) at or affecting the Real Property.
(ix) To each Seller's Knowledge, the TSIC Entities have used, stored,
transported, treated and disposed of (as appropriate) Hazardous
Materials in material compliance with Environmental Law.
(b) The Sellers have provided the Purchaser with copies of (i) any
environmental assessment or audit reports or other similar studies or analyses
relating to the Business, the Real Property or the TSIC Entities, and (ii) all
insurance policies issued at any time that may provide coverage to any TSIC
Entity or the Business for environmental matters.
(c) To each Sellers' Knowledge, neither the execution of this Agreement
or the Ancillary Agreements nor the consummation of the transactions
contemplated hereby or thereby will require any Remedial Action or notice to
or consent of Governmental Authorities or third parties pursuant to any
applicable Environmental Law or Environmental Permit.
SECTION 3.08. Intellectual Property. (a) Section 3.08(a)(i) of the
Disclosure Schedule sets forth a true and complete list of all patents and
patent applications, registered trademarks and trademark applications, and
registered copyrights and copyright applications and registered domain names
included in the Transferred Intellectual Property. Section 3.08(a)(ii) of the
Disclosure Schedule sets forth a list of the Transferred IP Agreements.
Except for the Intellectual Property subject to the Contracts disclosed in
Section 3.08(a)(iii) of the Disclosure Schedule (the "Excluded IP
Agreements"), the Transferred Intellectual Property and the Transferred IP
Agreements include all the Intellectual Property owned by or licensed to any
of the TSIC Entities and material to the operation of the Business.
(b) To the Sellers' knowledge, the operation of the Business,
the use of all the Transferred Intellectual Property and Intellectual Property
covered by the Transferred IP Agreements in connection therewith, and the TSIC
Entities' transmission, use, linking and other practices related to the
operation of their web sites in connection with the Business, the content
thereof and the advertisements contained therein, do not conflict with,
infringe, misappropriate or otherwise violate in any material respects the
Intellectual Property or other proprietary rights, including rights of
privacy, publicity and endorsement, of any third party, and no Actions or
Claims are pending or, to the Sellers' Knowledge, threatened against any TSIC
Entity alleging any of the foregoing.
(c) The TSIC Entities are the exclusive owners of the entire and
unencumbered right, title and interest in and to the Transferred Intellectual
Property and Transferred IP Agreements, and the TSIC Entities have a valid
right to use the Transferred Intellectual Property and the Intellectual
Property covered by the Transferred IP Agreements in the operation of the
Business.
(d) No Transferred Intellectual Property, or to the Sellers'
Knowledge, any Intellectual Property covered by the Transferred IP Agreements,
is subject to any outstanding decree, order, injunction, judgment or ruling
restricting the use of such Intellectual Property or that would impair the
validity or enforceability of such Intellectual Property.
(e) No Actions or Claims have been asserted or are pending or,
to the Sellers' Knowledge, threatened against any TSIC Entity (i) based upon
or challenging or seeking to deny or restrict the use by such TSIC Entity of
any of the Transferred Intellectual Property or the Intellectual Property
covered by the Transferred IP Agreements, (ii) alleging that any services
provided by, processes used by, or products manufactured or sold by such TSIC
Entity (in connection with the Business) infringe or misappropriate any
Intellectual Property right of any third party or (iii) alleging that the
Intellectual Property covered by the Transferred IP Agreements is being
licensed or sublicensed in conflict with the terms of any license or other
agreement.
(f) To the Sellers' Knowledge, no Person is engaging in any
activity that infringes the Transferred Intellectual Property or the
Intellectual Property covered by the Transferred IP Agreements. Except as set
forth in Section 3.08(f) of the Disclosure Schedule, none of the TSIC Entities
has granted any license or other right to any third party with respect to the
Transferred Intellectual Property or the Intellectual Property covered by the
Transferred IP Agreements. The consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements will not result in the
termination or impairment of any of the Transferred Intellectual Property.
(g) The TSIC Entities have taken reasonable steps in accordance
with normal industry practice to maintain the confidentiality of the trade
secrets and other confidential Intellectual Property used in connection with
the Business. To the Sellers' Knowledge, (i) there has been no
misappropriation of any material trade secrets or other material confidential
Intellectual Property used in connection with the Business by any Person; (ii)
no employee, independent contractor or agent of the TSIC Entities has
misappropriated any trade secrets of any other Person in the course of
performance as an employee, independent contractor or agent of the Business;
and (iii) no employee, independent contractor or agent of the TSIC Entities is
in default or breach of any term of any employment agreement, nondisclosure
agreement, assignment of invention agreement or similar agreement or contract
relating in any way to the protection, ownership, development, use or transfer
of such Intellectual Property.
SECTION 3.09. Real Property. (a) The Sellers have provided copies of the
title reports in respect of all Transferred Real Property. There are no Liens
on the Transferred Real Property other than the Liens described in such title
reports.
(b) Section 3.09(b) of the Disclosure Schedule lists all real
property leased by a TSIC Entity ("Leased Real Property"), the street address
of each parcel of Leased Real Property, the current occupant (if different
from the lessee) and the identity of the lessor, the lessee and the date of
the corresponding lease. Sellers have delivered to the Purchaser true and
complete copies of the leases in effect at the date hereof relating to the
Leased Real Property, and except as set forth on Section 3.09 of the
Disclosure Schedule there has not been any sublease or assignment entered into
by any of the TSIC Entities in respect of the leases relating to the Leased
Real Property.
(c) Except as described in Section 3.09(c) of the Disclosure
Schedule, there is no material violation of any Law (including any building,
planning or zoning law) relating to any of the Real Property. The Sellers
have made available to the Purchaser true, legible and complete copies of all
the title insurance policies, title reports, surveys, certificates of
occupancy, environmental reports and audits, appraisals, permits, other Liens,
title documents and other documents relating to or otherwise affecting the
Real Property, the operations of the TSIC Entities (as they relate to the
Business) thereon or any other uses thereof. At least one of the TSIC
Entities is in peaceful and undisturbed possession of each parcel of Real
Property, and there are no contractual or legal restrictions that preclude or
restrict the ability to use the Real Property for the purposes for which it is
currently being used. All existing water, sewer, steam, gas, electricity,
telephone, cable, fiber optic cable, Internet access and other utilities
required for the construction, use, occupancy, operation and maintenance of
the Real Property are adequate for the conduct of the Business as it has been
and currently is conducted. There are no latent defects or adverse physical
conditions affecting the Real Property or any of the facilities, buildings,
structures, erections, improvements, fixtures, fixed assets and personalty of
a permanent nature annexed, affixed or attached to, located on or forming part
of the Real Property, except as would not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Section 3.09(c) of the
Disclosure Schedule, none of the TSIC Entities has leased or subleased any
parcel or any portion of any parcel of Real Property to any other Person and
no other Person has any rights to the use, occupancy or enjoyment thereof
pursuant to any lease, sublease, license, occupancy or other agreement, nor
has any TSIC Entity assigned its interest under any lease or sublease listed
in Section 3.09(b) of the Disclosure Schedule to any third party.
(d) Section 3.09(d) of the Disclosure Schedule sets forth a true
and complete list of all leases and subleases relating to the Real Property
and any and all ancillary documents (the "Ancillary Lease Documents")
pertaining thereto (including all amendments, modifications, supplements,
exhibits, schedules, addenda and restatements thereto and thereof and all
consents, including consents for alterations, assignments and sublets,
documents recording variations, memoranda of lease, options, rights of
expansion, extension, first refusal and first offer and evidence of
commencement dates and expiration dates). With respect to each of such leases
and subleases, none of the TSIC Entities has exercised or given any notice of
exercise, nor has any lessor or landlord exercised or received any notice of
exercise by a lessor or landlord of, any option, right of first offer or right
of first refusal contained in any such lease or sublease, including any such
option or right pertaining to purchase, expansion, renewal, extension or
relocation (collectively, "Options").
(e) Except as set forth in Section 3.09(e) of the Disclosure
Schedule, the interests of such TSIC Entity in the Transferred Real Property
and the Leased Real Property to be transferred pursuant to this Agreement are
sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing.
(f) There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the Sellers' Knowledge, threatened
against the Real Property.
(g) All the Real Property is occupied under a valid and current
certificate of occupancy or similar permit, the transactions contemplated by
this Agreement and the Ancillary Agreements will not require the issuance of
any new or amended certificate of occupancy and, to the Sellers' Knowledge,
there are no facts that would prevent the Real Property from being occupied by
the Purchaser or any of its Subsidiaries, as the case may be, after the
Closing in the same manner as occupied by the TSIC Entities immediately prior
to the Closing.
(h) All improvements on the Real Property constructed by or on
behalf of the Sellers or, to the Knowledge of the Sellers, constructed by or
on behalf of any other Person, were constructed in compliance with all
applicable Laws (including any building, planning or zoning Laws) affecting
such Real Property.
(i) No improvements on the Real Property and none of the current
uses and conditions thereof violate any Lien, applicable deed restrictions or
other applicable covenants, restrictions, agreements, existing site plan
approvals, zoning or subdivision regulations or urban redevelopment plans as
modified by any duly issued variances, and no permits, licenses or
certificates pertaining to the ownership or operation of all improvements on
the Real Property, other than those which are transferable with the Real
Property, are required by any Governmental Authority having jurisdiction over
the Real Property.
(j) To the Sellers' knowledge, except as set forth in Section
3.09(j) of the Disclosure Schedule, all improvements on any Real Property are
wholly within the lot limits of such Real Property and do not encroach on any
adjoining premises or Lien benefiting such Real Property, and there are no
encroachments on any Real Property or any easement or property right or
benefit appurtenant thereto by any improvements located on any adjoining
premises.
(k) Except as otherwise set forth in Section 3.09(k) of the
Disclosure Schedule, there have been no improvements of a value in excess of
$25,000 in the aggregate made to or constructed on any Real Property within
the applicable period for the filing of mechanics' liens.
(l) The rental set forth in each lease or sublease of the Leased
Real Property is the actual rental being paid, and there are no separate
agreements or understandings with respect to the same.
(m) Each of the TSIC Entities, as the case may be, has the full
right to exercise any Options contained in the leases and subleases pertaining
to the Leased Real Property on the terms and conditions contained therein and
upon due exercise would be entitled to enjoy the full benefit of such Options
with respect thereto.
(n) The Sellers hereby make the additional representations and
warranties set forth in Addendum 3.09(n) hereto with respect to the Purchased
Subsidiary which are incorporated by reference herein and made an integral
part hereof as though fully set forth herein.
SECTION 3.10. Purchased Assets. The Sellers own, lease or have the legal
right to use all the Purchased Assets and, subject to any necessary approvals
of the Bankruptcy Court, by the execution and delivery at the Closing of the
instruments of transfer provided for herein, the Purchaser will be vested with
good and marketable title to each of the Purchased Assets or a valid and
enforceable leasehold interest in all Leased Real Property and leased personal
property, free and clear of all Liens, Actions or Claims against and
Indebtedness of the Sellers (other than such Actions, Claims and Indebtedness
related to the Assumed Liabilities), other than Permitted Liens.
SECTION 3.11. Employee Benefits Matters. (a) Section 3.11(a) of the
Disclosure Schedule lists each (i) employee benefit plan, program or
arrangement (including, without limitation, any "employee benefit plan," as
defined in section 3(3) of ERISA) maintained or contributed to by any of the
TSIC Entities, or with respect to which any TSIC Entity has any obligation,
for the benefit of any current employees of the Business (collectively, the
"Employees") and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements, whether legally enforceable or not, to which any TSIC Entity is a
party, with respect to which any TSIC Entity has any obligation or which are
maintained, contributed to or sponsored by any TSIC Entity for the benefit of
any current or former employee, officer or director of any TSIC Entity,
(ii) each employee benefit plan for which any TSIC Entity could incur liability
under Section 4069 of ERISA in the event such plan has been or were to be
terminated, (iii) any plan in respect of which any TSIC Entity could incur
liability under Section 4212(c) of ERISA, and (iv) any contracts, arrangements
or understandings between any TSIC Entity or any of its Affiliates and any
Employee, including any contracts, arrangements or understandings relating to
the sale of the Business (collectively, the "Employee Plans"). With respect
to the Sellers' 401(k) Plan, the Sellers have made available to the Purchaser
a true and correct copy of (i) the most recent annual report (Form 5500) filed
with the IRS, (ii) each such Employee Plan, (iii) the trust agreement relating
to the Sellers' 401(k) Plan, (iv) the most recent summary plan description for
the Sellers' 401(k) Plan or the most recent determination letter, if any,
issued by the IRS with respect to the Sellers' 401(k) Plan. The Sellers also
have made available to the Purchaser certain other documents relating to the
Employee Plans. There are no other employee benefit plans, programs,
arrangements or agreements, whether formal or informal, whether in writing or
not, to which any TSIC Entity is a party, with respect to which any TSIC
Entity has any obligation or which are maintained, contributed to or sponsored
by any TSIC Entity for the benefit of any current or former employee, officer
or director of any TSIC Entity. No TSIC Entity has any express or implied
commitment, whether legally enforceable or not, to (i) create, incur liability
with respect to or cause to exist any other employee benefit plan, program or
arrangement, or (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual, other than with respect to a
modification, change or termination required by ERISA or the Tax Code.
(b) Absence of Certain Types of Plans. None of the Employee
Plans is a multiemployer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA) (a "Multiemployer Plan") or a single employer pension
plan (within the meaning of Section 4001(a)(15) of ERISA) for which any TSIC
Entity could incur liability under Section 4063 or 4064 of ERISA (a "Multiple
Employer Plan"). Except as set forth in Section 3.11(b)(i) of the Disclosure
Schedule, none of the Employee Plans provides for the payment of separation,
severance, termination or similar-type benefits to any Person or obligates any
TSIC Entity to pay separation, severance, termination or similar-type benefits
solely as a result of any transaction contemplated by this Agreement or the
Ancillary Agreements or as a result of a "change in control", within the
meaning of such term under Section 280G of the Tax Code. Except as set forth
on Schedule 3.11(b)(ii) of the Disclosure Schedule, none of the Employee Plans
provides for or promises retiree medical, disability or life insurance
benefits to any current or former employee, officer or director of any TSIC
Entity, except as required by ERISA or the Tax Code. Each of the Employee
Plans is subject only to the Laws of the United States or a political
subdivision thereof.
(c) Compliance. The Sellers' 401(k) Plan has been operated in
all material respects in accordance with its terms and to Sellers' Knowledge,
the requirements of all applicable Laws, including ERISA and the Tax Code, and
all Persons who participate in the operation of such Employee Plans and all
Employee Plan "fiduciaries" (within the meaning of Section 3(21) of ERISA)
have always acted in accordance with the provisions of all applicable Laws of
the United States, including ERISA and the Tax Code. Each TSIC Entity has
performed all material obligations required to be performed by it under, is
not in any material respect in default under or in material violation of, and
the Sellers have no Knowledge of any material default or violation by any
party to, the Sellers' 401(k) Plan. No Action is pending or, to the Knowledge
of the Sellers, threatened with respect to the Sellers' 401(k) Plan (other
than Claims for benefits in the ordinary course), and, to the Knowledge of the
Sellers, no fact or event exists that could give rise to any such Action.
(d) Qualification of Certain Plans. Each Employee Plan that is
intended to be qualified under section 401(a) of the Tax Code has timely
received a favorable determination letter from the IRS covering all of the
provisions applicable to the Employee Plan for which determination letters are
currently available that the Employee Plan is so qualified, and no fact or
event has occurred either before or after the date of such determination
letter or letters from the IRS to adversely affect the qualified status of any
such Employee Plan or the exempt status of any such trust.
(e) Absence of Certain Liabilities and Events. There has been
no prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Tax Code) with respect to any Employee Plan to which such
statutes apply. The Purchased Subsidiary shall not have any Liability or
obligation after the Closing Date relating to any Employee Plan. As of the
Closing Date, none of such Purchased Assets will be subject to any Lien
arising within Section 302(f) of ERISA or Section 412(n) of the Tax Code, and
no fact or event will exist which could rise to any such Lien.
(f) Plan Contributions and Funding. All contributions, premiums
or payments required to be made with respect to any Employee Plan before the
Closing Date have been made on or before their due dates.
(g) Cobra. Following the Closing Date, if the "selling group"
of which Sellers are members ceases to provide any group health benefits to
any employee in connection with the transactions contemplated by this
Agreement, and the "buying group" of which the Purchaser is a member continues
the business operations associated with the Purchased Assets without
interruption or substantial change, then, if and only to the extent required
pursuant to Tax Code Section 4980B and Tax Code regulation 54.490B, Purchasers
shall be responsible for providing COBRA (Consolidated Omnibus Budget
Reconciliation Act of 1985) continuation coverage to all M&A qualified
beneficiaries, as that term is defined in Tax Code regulation 54.4980B, with
respect to the business operations associated with the Purchased Assets, in
accordance with, and for the period during which the Purchaser is required to
provide such coverage under, Tax Code regulations 54.4980B.
SECTION 3.12. Taxes. (a) Except as set forth in Section 3.12(a) of the
Disclosure Schedule, (i) all Tax Returns required to be filed by or with
respect to each TSIC Entity other than the Purchased Subsidiary (each, a "US
TSIC Entity") the Purchased Assets and the Business (including any
consolidated federal income Tax Return of the Sellers and any state, local or
other Tax Return that includes any US TSIC Entity on a consolidated, combined
or unitary basis) have been timely filed; (ii) all Taxes required to be shown
on such Tax Returns or otherwise due in respect of the Purchased Assets, the
Business or any US TSIC Entity have been timely paid; (iii) all such Tax
Returns are true, correct and complete in all material respects; (iv) no
adjustment relating to such Tax Returns has been proposed formally or
informally by any Taxation Authority (insofar as either relates to the
activities or income of any US TSIC Entity or could result in liability of any
US TSIC Entity on the basis of joint and/or several liability) and, to the
Knowledge of the Sellers, no basis exists for any such adjustment; (v) there
are no pending or, to the Knowledge of the Sellers, threatened Actions for the
assessment or collection of Taxes in respect of the Purchased Assets or the
Business or against any US TSIC Entity or (insofar as either relates to the
activities or income of any US TSIC Entity or could result in liability of any
US TSIC Entity on the basis of joint and/or several liability) any Person that
was included in the filing of a Tax Return with such US TSIC Entity on a
consolidated or combined basis; (vi) there are no Tax Liens on any Purchased
Assets or assets of US TSIC Entity; (vii) each US TSIC Entity has properly and
timely withheld, collected and deposited all Taxes that are required to be
withheld, collected and deposited under applicable Law; (viii) none of the US
TSIC Entities (in relation to the Purchased Assets and the Business) is doing
business in or engaged in a trade or business in any jurisdiction in which it
has not filed all required Tax Returns, and no notice or inquiry has been
received from any jurisdiction in which Tax Returns have not been filed by the
US TSIC Entities (in respect of the Purchased Assets and the Business) to the
effect that the filing of Tax Returns may be required; (ix) no US TSIC Entity
has been at any time a member of any partnership or joint venture or the
holder of a beneficial interest in any trust for any period for which the
statute of limitations for any Tax has not expired, except to the extent that
the Tax consequences thereof were reflected properly in the relevant US TSIC
Entity Tax Returns; and (x) for Tax purposes, all sales and license
transactions between any of the US TSIC Entities and the Purchased Subsidiary
have been concluded on an arm's length basis.
(b) Except as set forth with reasonable specificity in
Section 3.12(b) of the Disclosure Schedule: (i) there are no outstanding
waivers or agreements extending the statute of limitations for any period with
respect to any Tax relating to the Purchased Assets and the Business;
(ii) there are no requests for information currently outstanding that could
affect the Taxes relating to the Purchased Assets and the Business;
(iii) there are no proposed reassessments of any property owned by the US TSIC
Entities or other proposals that could increase the amount of any Tax relating
to the Purchased Assets and the Business; and (iv) no power of attorney that
is currently in force has been granted with respect to any matter relating to
Taxes that could affect the Purchased Subsidiary or relating to the Purchased
Assets and the Business; (v) the Purchased Subsidiary (A) has never been a
passive foreign investment company within the meaning of Section 1296 of the
Tax Code, (B) does not have and is not projected to have an amount that would
be includible in the income of a U.S. shareholder for the current year under
Section 951 of the Tax Code, (C) does not have an unrecaptured overall foreign
loss within the meaning of Section 904(f) of the Tax Code (D) has not
participated in or cooperated with an international boycott within the meaning
of section 999 of the Tax Code and (E) does not have any income reportable
for a period ending after the Closing but attributable to a transaction (e.g.,
an installment sale) occurring in, or a change in accounting method made for,
a period ending on or prior to the Closing that resulted in a deferred
reporting of income from such transaction or from such change in accounting
method (other than a deferred intercompany transaction).
(c) With respect to the Purchased Subsidiary:
(i) All notices, returns, computations, registrations and payments which
should have been made by the Purchased Subsidiary for any
Tax purpose have been made within the requisite periods and
are up-to-date, correct and on a proper basis and none of
them is, or is likely to be, the subject of any dispute with
any Taxation Authority.
(ii) The Purchased Subsidiary has duly and properly made all Tax claims,
disclaimers, elections and surrenders and given all notices
and consents and done all other things in respect of Tax the
making, giving or doing of which was assumed to have been
made for the purposes of the balance sheet comprised in the
Accounts.
(iii) The Purchased Subsidiary has deducted and properly accounted to the
appropriate Taxation Authority for all amounts which it has
been obliged to deduct or otherwise account in respect of
Tax (whether under the Pay as You Earn system or otherwise),
has complied fully with all reporting requirements relating
to all such amounts and has (where required by the
applicable Taxation Statute) duly provided certificates of
deduction of tax to the recipients of payments from which
deductions have been made.
(iv) The Purchased Subsidiary maintains complete, correct and up-to-date
records which are or may be necessary for all Tax purposes.
(v) The Purchased Subsidiary is not involved in any dispute with any
Taxation Authority concerning any matter likely to affect in
any way the liability of the Purchased Subsidiary to Tax and
there are no circumstances which are likely to give rise to
any such dispute.
(vi) The Purchased Subsidiary has not entered into or been a party to any
scheme, arrangement or transaction designed partly or wholly
or containing steps or stages designed partly or wholly for
the purpose of avoiding or deferring Tax or reducing a
liability to Tax.
(vii) If each of the capital assets of the Purchased Subsidiary owned at
the Accounting Date was disposed of for a consideration
equal to the book value of that asset in, or adopted for the
purpose of, the balance sheet comprised in the Accounts or,
in the case of assets acquired since the Accounting Date,
equal to the consideration given on acquisition, no
liability to corporation tax on chargeable gains or
balancing charge under the Capital Allowances Act 2001 would
arise (and for this purpose there will be disregarded any
relief available to the Purchased Subsidiary other than
amounts falling to be deducted from the consideration
receivable under Section 38 TCGA.
(viii) Since the Accounting Date no event has occurred outside the ordinary
course of business of the Purchased Subsidiary which has
given rise or will or may give rise to any liability to Tax
on the Purchased Subsidiary.
(ix) The Purchased Subsidiary has not, and has never been, a close
investment-holding Purchased Subsidiary within the meaning
of Section 13A ICTA.
(x) The Disclosure Schedule contains details of all claims and surrenders
of the Group Relief involving the Purchased Subsidiary for
all accounting periods after Closing. The Purchased
Subsidiary has no liability, contingent or otherwise, to pay
for group relief (as defined in Section 402 ICTA) or to
repay any amounts received by way of payment made to the
Purchased Subsidiary for a surrender of group relief made by
the Purchased Subsidiary.
(xi) The Purchased Subsidiary has not at any time:
(A) made any loan or advance or effected any
transaction falling within Section 419, 421 or 422
ICTA or released or written off or agreed to
release or write off the whole or any part of any
such loans or advances;
(B) made a transfer of value which is or may
be liable to Tax under the provisions of Section 94
Inheritance Tax Xxx 0000; or
(C) acquired any asset from any company which
at the time of the acquisition was a member of the
same group of companies as defined in Section 170
TCGA;
(D) been a party to any such reconstruction as
is described in Section 343 ICTA;
(E) been the subject of or otherwise involved
in any arrangements as are referred to in Section
410 ICTA (transfer of Purchased Subsidiary to
another group or consortium);
(F) been, and there are no circumstances by
virtue of which it could be, assessed or charged to
corporation tax by virtue of the provisions of
Section 178(9), 179(11), 190 or 191 TCGA or
paragraph 68 of Schedule 29 FA 2002 by reason of
another group Purchased Subsidiary having failed to
discharge its liability to corporation tax and is
not entitled to recover or liable to have recovered
from it any sums paid pursuant to any of those
sections;
(G) ceased to be a member of a group of
companies in such circumstances that a profit or
gain was deemed to accrue to it by virtue of
Section 178, 179 or paragraph 37 of Schedule 7AC
TCGA or by paragraph 58 of Schedule 29 FA 2002 and
neither the execution or this Agreement nor
Completion will result in any profit or gain being
deemed to accrue to it if for any Tax purpose
whether pursuant to Section 179 or Schedule 7AC
TCGA, Schedule 29 FA 2002 or otherwise;
(H) entered into an election pursuant to
Section 171 A TCGA whereby a disposal of an asset
by the Purchased Subsidiary was treated as having
been made by another member of the same group of
companies or a disposal of an asset by another
member of the same group of companies was treated
as having been made by the Purchased Subsidiary;
(I) entered into an election pursuant to
Section 179A TCGA or paragraph 66 of Schedule 29 FA
2002 whereby a deemed gain or loss or a deemed
debit or credit accruing to another member of the
same group of companies was treated as deeming to
accrue to the Purchased Subsidiary;
(J) entered into any group payment
arrangements under the provisions of Section 36 FA
1998; or
(K) been subject to Tax in any jurisdiction
outside the United Kingdom or had a branch outside
the United Kingdom or any permanent establishment
(as that expression is defined in the respective
double taxation relief orders current at the date
of this Agreement) outside the United Kingdom.
(xii) No events have occurred or provision been made such that the
Purchased Subsidiary may have an additional liability to Tax
by reason of the application of Sections 770 and 770A and
Schedule 28AA ICTA (transfer pricing).
(xiii) There is no outstanding Inland Revenue charge (as defined in Section
237 Inheritance Tax Act 1984) over any asset of the
Purchased Subsidiary or over any of the Purchased
Subsidiary's shares.
(xiv) The Purchased Subsidiary:
(A) is duly registered and is a taxable person
for the purposes of VAT and such registration is
not subject to any conditions imposed by or agreed
with the Commissioners of Customs and Excise;
(B) has complied in all aspects with all
statutory requirements, orders, provisions,
directions or conditions relating to VAT; and
(C) is not and has never been a member of a
group for the purposes of section 43 Value Added
Tax Xxx 0000.
(xv) The Purchased Subsidiary has no interest in any asset to which Part
XV Value Added Tax Regulations 1995 applies and has not made
any election under paragraph 2(1) Schedule 10 Value Added
Tax Xxx 0000.
(xvi) All documents which are liable to stamp duty and which confer any
right upon the Purchased Subsidiary have been duly stamped
and no document which confers any right upon the Purchased
Subsidiary and which is outside the United Kingdom would
attract stamp duty if it were brought into the United
Kingdom and there is no liability to any penalty in respect
of such duty or circumstances which may give rise to such a
penalty.
(xvii) The Balance Sheet fully provides for all Tax (on the basis of the
rates applicable to the financial year which ended on the
Accounting Date) liable to be assessed on or in respect of
or by reference to:
(A) the profits, gains, income and earnings
(whether actual or deemed) for any period ended on
or before the Accounting Date; or
(B) any distributions (within the meaning of
Part VI or Section 418 ICTA) made or deemed to be
made on or before the Accounting Date; or
(C) any other transaction entered into or
deemed to be entered into on or before the
Accounting Date.
(xviii) Stamp duty land tax has been paid in full in respect of all land
transactions to which stamp duty land tax applies and in
respect of which the Purchased Subsidiary is the purchaser
within the meaning of section 43(4) FA 2003 and the
Purchased Subsidiary has no liability or obligation
(contingent or otherwise) to submit a further land
transaction return.
(xix) The Purchased Subsidiary has not claimed relief from stamp duty land
tax under Part 1 (group relief) or Part 2 (reconstruction
and acquisition relief) of Schedule 7 FA 2003 where the
Purchased Subsidiary was a purchaser in respect of a land
transaction for the purposes of FA 2003.
(d) (i) Section 3.12 of the Disclosure Schedule lists
all income, franchise and similar Tax Returns (federal, state, local and
foreign) filed with respect to (A) the Purchased Subsidiary for taxable
periods ended on or after January 1, 2002, (B) Tropical Sportswear
International and Apparel Network Corporation for taxable periods ended on or
after September 29, 2001, (C) Savane International Corporation for taxable
periods ended on or after September 29, 2001, and (D) Delta Merchandising Inc.
and Duck Head Apparel Company for taxable periods ended on or after June 30,
2001, indicates the most recent income, franchise or similar Tax Return for
each relevant jurisdiction for which an audit has been completed or the
statute of limitations has lapsed and indicates all Tax Returns that currently
are the subject of audit; (ii) the Sellers have delivered to the Purchaser
correct and complete copies of all federal, state and foreign income,
franchise and similar Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Purchased Subsidiary since
January 1, 2002, and the consolidated federal income Tax return filed by
Tropical Sportswear International Corp and its Subsidiaries, Apparel Network
Corporation, Savane International Corporation, TSI Brands, Inc. TSIL, Inc.,
Tropical Sportswear Company, and Delta Merchandising, Inc., for taxable period
ended on September 29, 2001 other than immaterial items and (iii) the Sellers
have delivered to the Purchaser a true and complete copy of any tax-sharing or
allocation agreement or arrangement involving the Purchased Subsidiary and any
other TSIC Entities and a true and complete description of any such unwritten
or informal agreement or arrangement.
(e) Each Seller represents and warrants that it has paid
all applicable State of Florida sales and use Tax on its initial purchase of
the furniture, fixtures and equipment to be conveyed to the Purchaser
hereunder.
SECTION 3.13. Contracts. (a) Section 3.13(a) of the Disclosure Schedule
lists each Contract in excess of $25,000 in value or relating to the
performance or provision of any services by or for the benefit of any of the
Sellers for a term of more than six months from the date of inception relating
to the Business in effect as of the date hereof that falls within any of the
following categories (collectively, "Material Contracts"):
(i) all Contracts and agreements that limit or purport to limit the
ability of the Business to compete in any line of business or with
any Person or in any geographic area or during any period of time;
(ii) all leases in respect of Leased Real Property;
(iii) any executory contracts for the printing or publishing, posting or
mailing of advertising materials for the Business;
(iv) any executory contracts providing for any credit programs for
customers of the Business;
(v) all Transferred IP Agreements other than licenses of commercially
available computer software;
(vi) all Contracts and agreements between or among the TSIC Entities, to
the extent relating to the Business (other than employee-related
Contracts and Contracts for the types of services contemplated by the
Transition Services Agreement), and any Affiliate of the TSIC
Entities;
(vii) all Contracts pursuant to which a TSIC Entity made or expects to make
disbursements to vendors, or accruals in respect thereof, if any, in
excess of $100,000 in connection with the Business during the year
ended December 31, 2004; and
(viii) all employment Contracts with members of senior management of the
Business that are not terminable without Liability;
(ix) all Contracts with respect to the establishment or maintenance of any
customer lists or customer databases;
(x) all material Contracts with respect to the shipping of the Business'
goods and services;
(xi) all material buying Contracts;
(xii) the DIP Loan Facility; and
(xiii) all Designated Contracts.
(b) Except for such Material Contracts that have expired pursuant to
their terms and subject to the procedures set forth in Section 5.15(a) of this
Agreement and the entry of the Sale Approval Order by the Bankruptcy Court,
upon the Sellers' assumption of such Material Contracts that are Designated
Contracts and are not otherwise excluded under Section 2.02(b)(xi), and the
payment by Sellers of the applicable Cure Costs, each such Designated Contract
will be a valid and binding obligation of the applicable Seller and, to the
Knowledge of the Sellers, the other parties thereto. Upon entry of the Sale
Approval Order, none of such Material Contracts that are Designated Contracts
will require the consent of any party to its assignment, or the Sellers shall
have obtained such consent if required, in connection with the transactions
contemplated hereby.
(c) Section 3.13(c) of the Disclosure Schedule sets forth all of the Cure
Costs to be satisfied by the Sellers for purposes of the Sellers' assumption
and assignment to the Purchaser of the Designated Contracts under Section 365
of the Bankruptcy Code as to be provided in the Sale Approval Order.
SECTION 3.14. Absence of Certain Changes, Events and Conditions. Since
October 2, 2004, except as set forth in Section 3.14 of the Disclosure
Schedule, the TSIC Entities have not:
(a) made any redemption, repurchase or other acquisition of shares of
capital stock by a TSIC Entity, or any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to its capital stock;
(b) acquired, sold, transferred, leased, subleased, licensed or otherwise
disposed of any properties or assets, real, personal or mixed
(including leasehold interests and intangible property) of a TSIC
Entity (related to the Business), other than in the Ordinary Course
of the Business;
(c) made any material changes in the customary methods of operations of
the Business, including practices and policies relating to
manufacturing, purchasing, Inventories, marketing, selling and
pricing; or
(d) granted or announced any increase in the salaries, bonuses or other
benefits payable by such TSIC Entity to any of the Employees to be
offered employment by the Purchaser pursuant to Section 7.01, other
than as required by Law, pursuant to any plans, programs or Contracts
existing on the date hereof or other ordinary increases consistent
with the past practices of the TSIC Entity other than those bonuses
approved by the Bankruptcy Court, provided that Purchaser shall have
no liability with respect to such bonuses.
SECTION 3.15. Labor Matters. Except as set forth in Section 3.15 of the
Disclosure Schedule, (a) no TSIC Entity is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by any TSIC Entity, and currently there are no organizational
campaigns, petitions or other unionization activities seeking recognition of a
collective bargaining unit which could affect any TSIC Entity; (b) there are
no strikes, slowdowns or work stoppages pending or, to the Knowledge of the
Sellers, threatened between any TSIC Entity and any of their respective
employees, and no TSIC Entity has experienced any such strike, slowdown or
work stoppage within the past three years; (c) no TSIC Entity has breached or
otherwise failed to comply with the provisions of any collective bargaining or
union Contract, and there are no grievances outstanding against any TSIC
Entity under any such agreement or Contract which would have a Material
Adverse Effect; (d) there are no unfair labor practice complaints pending
against any TSIC Entity before the National Labor Relations Board or any other
Governmental Authority or any current union representation questions involving
employees of any TSIC Entity which would have a Material Adverse Effect;
(e) each TSIC Entity is currently in compliance with all applicable Laws
relating to the employment of labor, including those related to wages, hours,
collective bargaining and the payment and withholding of taxes and other sums
as required by the appropriate Governmental Authority, except to the extent
that non-compliance would not have a Material Adverse Effect, and has withheld
and paid to the appropriate Governmental Authority or is holding for payment
not yet due to such Governmental Authority all amounts required to be withheld
from employees of any TSIC Entity and is not liable for any arrears of wages,
Taxes, penalties or other sums for failure to comply with any of the
foregoing; (f) each TSIC Entity has paid in full to all its respective
employees or adequately accrued for in accordance with GAAP all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees; (g) there is no claim with respect to payment of
wages, salary or overtime pay that has been asserted or is now pending or
threatened before any Governmental Authority with respect to any Persons
currently or formerly employed by any TSIC Entity, except as would not have a
Material Adverse Effect; (h) no TSIC Entity is a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental Authority
relating to employees or employment practices, except as would not have a
Material Adverse Effect; (i) there is no charge or proceeding with respect to
a violation of any occupational safety or health standard that has been
asserted or is now pending or threatened with respect to any TSIC Entity,
except as would not have a Material Adverse Effect; and (j) there is no charge
of discrimination in employment or employment practices, for any reason,
including age, gender, race, religion or other legally protected category,
which has been asserted or is now pending or threatened before the United
States Equal Employment Opportunity Commission, or any other Governmental
Authority in any jurisdiction in which any TSIC Entity has employed or
currently employs any Person, except as would not have a Material Adverse
Effect.
SECTION 3.16. Sufficiency of Assets. Except as set forth in Section 3.16
of the Disclosure Schedule, the Purchased Assets, constitute all material
assets used in the operation of the Business.
SECTION 3.17. Tangible Personal Property. (a) Section 3.17(a) of the
Disclosure Schedule sets forth a true and complete list of all Tangible
Personal Property and any and all material ancillary documents pertaining
thereto (including all amendments, consents and evidence of commencement dates
and expiration dates).
(b) The TSIC Entities have the full right to exercise any
renewal options contained in the leases and subleases pertaining to the
Tangible Personal Property on the terms and conditions therein and upon due
exercise would be entitled to enjoy the use of each item of leased Tangible
Personal Property for the full term of such renewal options.
SECTION 3.18. Receivables. Except to the extent, if any, reserved for on
the TSIC Balance Sheet, all Receivables reflected on the TSIC Balance Sheet
arose from, and the Receivables existing as of the Closing will have arisen
from, the sale of Inventories or services to Persons not affiliated with TSIC
or any of its Subsidiaries and in the Ordinary Course of the Business and,
except as reserved against on the TSIC Balance Sheet, constitute or will
constitute, as the case may be, only valid, undisputed Claims of TSIC or one
of its Subsidiaries. To the Seller's knowledge, all Receivables reflected on
the TSIC Balance Sheet or arising from the date thereof until the Closing
(subject to the reserve for bad debts, if any, reflected on the TSIC Balance
Sheet) are or will be good and have been collected or are or will be
collectible, without resort to litigation or extraordinary collection
activity, in the Ordinary Course of the Business. The Receivables Reserve
attached to Exhibit 2.10(a)(ii) has been established in accordance with GAAP
and past custom and practice and is substantially adequate to provide for all
losses which may be sustained on realization of the Receivables shown on the
TSIC Balance Sheet. Except as expressly set forth in this Section 3.18, the
Sellers are not making any representations or warranties with respect to the
collection of any Receivables.
SECTION 3.19. Inventories. Subject to amounts reserved therefor on the
TSIC Balance Sheet, and as detailed on Exhibit 2.10(a)(ii), the values at
which all Inventories are carried on the TSIC Balance Sheet reflect the
historical inventory valuation policy of TSIC of stating such Inventories at
the lower of cost (determined on the "first-in, first-out" method) or market
value. The Sellers have good and marketable title to the Inventories free and
clear of all Liens other than Permitted Liens. The Inventories (net of GAAP
reserves) do not consist of, in any material amount, items that are obsolete,
damaged or slow-moving. The Inventories net of reserves do not consist of any
items held on consignment. None of the TSIC Entities is under any obligation
or liability with respect to accepting returns of items of Inventories or
merchandise in the possession of its customers other than in the Ordinary
Course of the Business consistent with past practice. No clearance or
extraordinary sale of the Inventories has been conducted since October 2,
2004, other than in the Ordinary Course of the Business. None of the TSIC
Entities has acquired or committed to acquire or manufacture Inventory for
sale which is not of a quality and quantity usable in the ordinary course of
business within a reasonable period of time and consistent with past practice,
nor has any TSIC Entity changed the price of any Inventories except for
(a) price reductions to reflect any reduction in the cost thereof to such TSIC
Entity, (b) reductions and increases responsive to normal competitive
conditions and consistent with such TSIC Entity's past sales practices,
(c) increases to reflect any increase in the cost thereof to such TSIC Entity
and (d) increases and reductions made with the written consent of the
Purchaser. Section 3.19 of the Disclosure Schedule is a complete list of the
addresses of all warehouses and other facilities in which the Inventories are
located. The Inventories are in good and merchantable condition in all
material respects, are suitable and usable for the purposes for which they are
intended and are in a condition such that they can be sold in the ordinary
course of the Business consistent with past practice. The Inventory Reserve
attached to Exhibit 2.10(a)(ii) has been established in accordance with GAAP
and past custom and practice and is substantially adequate to provide for all
losses which may be sustained with respect to the Inventories shown on the
TSIC Balance Sheet.
SECTION 3.20. Customers. Listed in Section 3.20(a) of the Disclosure
Schedule are the names and addresses of the 20 most significant customers (by
revenue) of the Business for the 12-month period ended October 2, 2004, and
the amount for which each such customer was invoiced during such period.
Except as set forth in section 3.20(b) of the disclosure Schedule, none of the
Sellers has received any notice or has any reason to believe that any
significant customer of the Business has ceased, or will cease, to purchase
materials, products or services of the Business or has substantially reduced,
or will substantially reduce, the purchase of products of the Business at any
time. The Sellers shall move for Bankruptcy Court authority to file Section
3.20 of the Disclosure Schedule under seal pursuant to Federal Rule of
Bankruptcy Procedure 9018; provided, however, that the Sellers shall be
permitted to provide Section 3.20 of the Disclosure Schedule to any Qualified
Overbidder.
SECTION 3.21. Suppliers. Listed in Section 3.21 of the Disclosure
Schedule are the names and addresses of each of the 20 most significant
suppliers of raw materials, supplies, merchandise and other goods for the
Business for the 12-month period ended October 2, 2004, and the amount for
which each such supplier invoiced the Business during such period. No Seller
has received any notice or has any reason to believe that any such supplier
will not sell raw materials, supplies, merchandise and other goods to the
Business at any time after the Closing on terms and conditions substantially
similar to those used in its current sales to the Business, subject only to
general and customary price increases.
SECTION 3.22. Insurance. Section 3.22 of the Disclosure Schedule lists
all policies of insurance owned or held by the TSIC Entities relating to the
Business, or insuring the Purchased Assets, including the type and amount of
coverage and the expiration dates of the policies. Except as set forth in
Section 3.22 of the Disclosure Schedule, (i) current premiums and any other
obligations under such insurance have been paid and all such policies are
valid and enforceable and in full force and effect on the date hereof, and
(ii) Sellers have not received any notice within the last ninety (90) days
threatening suspension, revocation, modification or cancellation of any
insurance policy or a material increase in any premium in connection therewith
or informing Sellers that any coverage listed in Section 3.22 of the
Disclosure Schedule will or may not be available in the future on
substantially the same terms as now in effect other than notices with respect
to items that have been cured.
SECTION 3.23. Related Person Transactions. No Affiliate, director,
officer, employee, agent, representative or other personnel of any TSIC
Entity, nor any spouse or child or other family member of any of them, or any
Person affiliated with any of them (each of the foregoing, a "Related
Person"), has any interest in any of the Purchased Assets or any other assets
or properties relating to the Business. No Related Person has owned, directly
or indirectly, and whether on an individual, joint or other basis, any equity
interest (other than ownership by a Person of less than 1% of the outstanding
capital stock of a company as long as the Person is not otherwise involved in
the management of such company) or any other financial or profit interest in a
Person that has (i) had business dealings with the Business or (ii) engaged in
competition with the Business. Except with respect to employment and
compensation arrangements with employees in the Ordinary Course of the
Business, described in Section 3.23 of the Disclosure Schedule, no Related
Person is a party to any contract, agreement or arrangement with, or has any
claim or right against, or owes any amounts to, the TSIC Entities in
connection with the Business. All loans, payables and other amounts due
between a Related Person and any TSIC Entity or any of their respective
affiliates in connection with the Business are listed in Section 3.23 of the
Disclosure Schedule.
SECTION 3.24. Public Filings. The SEC Reports, when filed with the
Securities and Exchange Commission ("SEC"), complied in all material respects
with the requirements of the Exchange Act, and the rules promulgated
thereunder. As of their respective dates, the SEC Reports did not contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein. The "SEC Reports" shall mean: (i) the Annual Report on Form
10-K for the fiscal year ended September 27, 2003, and any amendments thereto,
filed or to be filed by TSIC with the SEC; (ii) all Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, and any amendments thereto, filed after
January 1, 2004 (or to be filed after the date hereof) by TSIC with the SEC,
and (iv) the Schedule l4A filed by TSIC on January 13, 2004; in each case
(where applicable), together with all certifications required pursuant to the
Xxxxxxxx-Xxxxx Act of 2002. The financial statements of TSIC and its
Subsidiaries included in SEC Reports (including the related notes) complied or
comply as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto (including, without
limitation, Regulation S-X), were prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by Quarterly Report Form 10-Q
of the SEC) applied on a consistent basis during the periods and at the dates
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial condition of TSIC and its Subsidiaries at the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to notes and
normal year-end audit adjustments that were not, or with respect to any such
financial statements contained in any SEC Reports to be filed subsequent to
the date hereof are not reasonably expected to be, material in amount or
effect).
SECTION 3.25. Product Liability. Except as set forth in Section 3.25 of
the Disclosure Schedule and as would not have a Material Adverse Effect, none
of the TSIC Entities has any Liability that relates to, or that arises out of,
products manufactured, shipped or sold by or on behalf of any TSIC Entity on
or prior to the Closing date (including claims of negligence, personal injury,
product damage, product liability, product warranties, promotional
obligations, strict liability, product recall, safety or regulatory
compliance, infringement of intellectual property or any other similar or
related claims), whether such Liability relates to or arises out of accidents,
injuries or losses occurring on or prior to or after the date hereof. The
reserves on the TSIC Balance Sheet established with respect to certain product
liability indemnity claims represent management's best estimate of the
Sellers' contingent Liabilities with respect to such Liabilities.
SECTION 3.26. Brokers. Except for A&M, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement or the
Ancillary Agreements based upon arrangements made by or on behalf of each of
the Sellers. Each of the Sellers is solely responsible for the fees and
expenses of A&M, if any. Should any other broker make a claim for any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement, Sellers agree to indemnify and
hold Purchaser harmless from and against all costs relating to any claim by
third parties for such fees and commissions alleged to be due because of
authorization or other action by Sellers. Purchaser agrees to indemnify and
hold Sellers harmless from and against all costs relating to any claim by
third parties for such fees and commissions alleged to be due because of
authorization or other action by Purchaser.
SECTION 3.27. Employees; WARN Act Compliance. Except as listed on Section
3.27 of the Disclosure Schedule, at no time within one year prior to the
Closing Date, have or will have the TSIC Entities effectuated with respect to
any Employee or former employee: (a) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility; or (b) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility; nor
have any of the TSIC Entities been affected by any transaction or engaged in
layoffs or employment terminations sufficient in number to trigger application
of any similar Law. On the Closing Date, the Sellers shall provide the
Purchaser with an updated list of the Employees or former employees, if any,
who have experienced a layoff or "employment loss" (as defined in the WARN Act
or similar Law) from the date of this Agreement to the Closing Date.
SECTION 3.28. DIP Loan Facility. As of the date hereof and prior to the
commencement of the Chapter 11 Cases, the Sellers shall have obtained a
commitment from their existing secured lenders and/or such other financing
sources as may be acceptable to the Purchaser (in its sole discretion) to make
available debtor-in-possession financing to, and allow use of cash collateral
by, the Business in such amounts and on such terms and conditions as will
provide the Sellers with adequate financing to maintain the Business without
Material Adverse Effect through the Closing Date (the "DIP Loan Facility").
Any failure to (i) promptly obtain preliminary and final Bankruptcy Court
approval of the DIP Loan Facility in the Chapter 11 Cases in the manner
contemplated by the applicable sections of the Bankruptcy Code, or (ii)
maintain financing under the DIP Loan Facility through the Closing Date may be
deemed a Material Adverse Effect by the Purchaser. Set forth on Schedule
3.28(a) is a list of all UCC filings currently in effect covering the
Purchased Assets.
SECTION 3.29. First Day Relief. Section 3.29 of the Disclosure Schedule
lists all motions, applications, notices and proposed orders that the Sellers
reasonably anticipate as of the date hereof will be required to be filed with
the Bankruptcy Court immediately following the commencement of the Chapter 11
Cases (or within a reasonable time thereafter as indicated in Section 3.29 of
the Disclosure Schedule) in order to maintain the Business without
interruption or occurrence of other Material Adverse Effect pending the
Closing Date (the "First Day Relief").
SECTION 3.30. Purchased Subsidiary. The Sellers make the additional
representations and warranties set forth in Exhibit 3.30 hereto with respect
to the Purchased Subsidiary, which representations and warranties are
incorporated by reference herein and made an integral part of this Agreement
as if fully set forth herein.
SECTION 3.31. Full Disclosure. (a) Sellers are not aware of any
facts pertaining to the TSIC Entities, the Purchased Assets, the Assumed
Liabilities or the Business which would have a Material Adverse Effect and
which have not been disclosed in this Agreement, the Disclosure Schedule, the
Exhibits, the Financial Statements, any written statement, certificate or due
diligence response of the Sellers or any Representative, or otherwise
disclosed to the Purchaser by the Sellers in writing.
(b) No representation or warranty of the Sellers in this
Agreement, the Disclosure Schedule and the Exhibits, nor any written
statement, certificate or due diligence response of the Sellers or any
Representative furnished or to be furnished to the Purchaser pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement, knowingly contains or will contain any untrue statement of a
material fact, or knowingly omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
Article IV
representations and warranties
of the purchaser
The Purchaser hereby represents and warrants to each of the Sellers
as follows:
SECTION 4.01. Organization and Authority of the Purchaser. The Purchaser
is a corporation duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation and has all necessary
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby. The Purchaser is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the properties owned or leased by
it or the operation of its business makes such licensing or qualification
necessary, except to the extent that the failure to be so licensed, qualified
or in good standing would not materially adversely affect the ability of the
Purchaser to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Ancillary Agreements.
The execution and delivery by the Purchaser of this Agreement and the
Ancillary Agreements to which it is a party, the performance by the Purchaser
of its obligations hereunder and thereunder and the consummation by the
Purchaser of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on the part of the Purchaser.
This Agreement has been, and upon their execution the Ancillary Agreements to
which the Purchaser is a party shall have been, duly executed and delivered by
the Purchaser, and (assuming due authorization, execution and delivery by the
Sellers) this Agreement constitutes, and upon their execution the Ancillary
Agreements to which the Purchaser is a party shall constitute, legal, valid
and binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity.
SECTION 4.02. No Conflict. Subject to obtaining the approval of the
Bankruptcy Court and assuming that all consents, approvals, authorizations and
other actions referred to in Section 4.03 have been obtained, the execution,
delivery and performance by the Purchaser of this Agreement and the Ancillary
Agreements to which it is a party do not and will not (a) violate, conflict
with or result in the breach of any provision of the certificate of
incorporation or bylaws (or similar organizational documents) of the
Purchaser, (b) conflict with or violate any Law or Governmental Order
applicable to the Purchaser or its respective assets, properties or businesses
or (c) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation
of, any note, bond, mortgage or indenture, Contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement to
which the Purchaser is a party, except, in the case of clauses (b) and (c), as
would not materially adversely affect the ability of the Purchaser to carry
out its obligations under, and to consummate the transactions contemplated by,
this Agreement and the Ancillary Agreements.
SECTION 4.03. Governmental Consents and Approvals. Subject to obtaining
the approval of the Bankruptcy Court, the execution, delivery and performance
by the Purchaser of this Agreement and each Ancillary Agreement to which the
Purchaser is a party do not and will not require any consent, approval,
authorization or other order of, action by, filing with, or notification to,
any Governmental Authority, except (a) the pre-merger notification and waiting
period requirements of the HSR Act and the requirements of the antitrust Laws
of any other relevant jurisdiction, (b) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification,
would not prevent or materially delay the consummation by the Purchaser of the
transactions contemplated by this Agreement and the Ancillary Agreements, (c)
any filings or approvals as may be required under U.S. federal and state
securities laws, or (d) as may be necessary as a result of any facts or
circumstances relating solely to the Sellers or their Affiliates.
SECTION 4.04. Financing. The Purchaser has or will have not later than
the Business Day next preceding the Closing Date sufficient immediately
available funds to pay, in cash, the Purchase Price (less the Purchaser's
Deposit paid to the Escrow Agent on the date hereof as provided in Section
2.11 of this Agreement) and all other amounts payable pursuant to this
Agreement and the Ancillary Agreements necessary to consummate all the
transactions contemplated hereby and thereby.
SECTION 4.05. Investment and Purpose. The Purchaser is acquiring the
Purchased Stock solely for the purpose of investment and not with a view to,
or for offer or sale in connection with, any distribution thereof. The
Purchaser is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act of 1933, as amended.
SECTION 4.06. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser. The Purchaser shall be solely responsible for
payment of the fees and expenses of any broker or finder engaged by or on its
behalf in connection with the negotiation, execution, delivery or performance
of this Agreement.
SECTION 4.07. Sales Tax. (a) The Purchaser is properly registered with
all Governmental Authorities to collect and remit sales, use and other
applicable Taxes in each jurisdiction where Inventories are located on the
Closing Date; (b) the Purchaser has the right in each jurisdiction where
Inventories are located on the Closing Date to give Sellers a resale or other
exemption certificate relieving Sellers from any obligation to collect sales,
use or other Taxes otherwise applicable to the sale of the Inventories to
Purchaser and such resale or other exemption certificates shall have been
delivered to Sellers on or before the Closing Date; (c) the Purchaser shall at
all times subsequent to the Closing Date, hold all Inventories acquired by it
from Sellers exclusively for sale to customers in the regular course of
Purchaser's business; (d) the Purchaser has not engaged, and is not acquiring
any of the Purchased Assets by or through an auctioneer, agent, broker,
factor, or any other person required to be registered and to collect sales,
use or other Taxes.
Article V
additional agreements
SECTION 5.01. Conduct of Business Prior to the Closing. Each of the
Sellers covenants and agrees that, except as required by the Bankruptcy Court
or applicable Law, or as may otherwise be approved in advance in writing by
the Purchaser, between the date hereof and the Closing, each of the Sellers
shall use its commercially reasonable efforts in the context of its Chapter 11
Case (i) to conduct its businesses in the ordinary course in all material
respects and (ii) to preserve intact in all material respects the business
organization of the Business. Except as permitted or required by the DIP Loan
Facility, or required by the Bankruptcy Court or applicable Law, each Seller
covenants and agrees that, between the date hereof and the Closing, without
the prior written consent of the Purchaser, each TSIC Entity, will not:
(a) permit, other than in the Ordinary Course of the Business in
arm's-length third-party transactions or as may be required by Law or
a Governmental Authority, any of the Purchased Assets (real or
personal, tangible or intangible) to be sold, licensed, abandoned or
subjected to any Lien other than Permitted Liens;
(b) acquire, sell, lease, license, transfer or dispose of any Real
Property, Real Property interest or other asset that would otherwise
be a Purchased Asset except in the Ordinary Course of the Business in
arm's-length third-party transactions;
(c) enter, terminate or materially extend or materially modify any
Contract, except in the Ordinary Course of the Business consistent
with past practice in arm's-length third-party transactions (and such
TSIC Entity will continue performance in the ordinary course of its
obligations under any Contracts, and other obligations to be included
as part of the Purchased Assets);
(d) make or consent to any material changes to its existing policies of
insurance related to the Business or the Purchased Assets;
(e) enter into any lease of real or personal property or any renewals
thereof involving a term of more than one year or rental obligation
exceeding fifteen thousand dollars ($15,000) per annum in any single
case;
(f) make any single new commitment or increase any single previous
commitment for capital expenditures for the Business in an amount
exceeding ten thousand dollars ($25,000), except as listed on Section
5.01(f) of the Disclosure Schedule;
(g) accelerate or delay the sale of the products of the Business, except
as may be necessary in the Ordinary Course of the Business in
arm's-length third-party transactions;
(h) take any action that would cause the level, mix and quality of the
Inventories to be inconsistent with the Ordinary Course of the
Business;
(i) except in the Ordinary Course of the Business, enter into any
transaction, Contract or commitment or incur or permit the incurrence
of any obligation or Liability which would constitute an Assumed
Liability;
(j) waive any right of substantial value, cancel any Indebtedness or
Claim except in the Ordinary Course of the Business in arm's-length
third-party transactions or voluntarily suffer any extraordinary loss;
(k) sell, assign, transfer, license, abandon or convey any of its
Intellectual Property;
(l) make any change in accounting methods or principles or cost
allocation procedures that would affect the financial statements of
the Business;
(m) except as would not adversely affect Purchaser, change any method of
Tax accounting, make any material Tax election, file any Tax Return
other than in a manner consistent with past practice, or settle any
material Tax Claim;
(n) do or omit to do any other act which would cause (i) any
representation or warranty of the Sellers in this Agreement or any
Ancillary Agreement to be or become untrue in any material respect or
intentionally omit to take any action necessary to prevent any such
representation or warranty from being untrue in any material respect
at such time or (ii) any material non-compliance by any of the
Sellers with any Laws or Governmental Permits applicable to the
Business;
(o) cause or allow the Purchased Subsidiary to dividend or otherwise
distribute, whether to an Affiliate thereof or any other Person, any
of the Purchased Subsidiary's cash or cash equivalents, other than
repayment by the Purchased Subsidiary of the Hong Kong Note Payable
from the proceeds of a capital contribution to the Purchased
Subsidiary; or
(p) enter into any agreement or commitment with respect to any of the
foregoing.
SECTION 5.02. Access to Information. From the date hereof until the
Closing, upon reasonable notice, each Seller shall, and shall cause its
respective Representatives to, (i) afford the Purchaser and its financing
sources and their respective authorized Representatives reasonable access
during normal business hours to the offices, properties, plants, other
facilities, books and records and other information of the TSIC Entities
relating to the Business, as well as to those Representatives of such Seller
who have knowledge relating to the Business, and (ii) furnish to the
Representatives of the Purchaser such additional financial and operating data
and other information regarding the Business (or copies thereof), including
each report, schedule, and other document filed or received by them pursuant
to the requirements of United States federal or state securities laws, as the
Purchaser may from time to time reasonably request. No investigation or
receipt of information by the Purchaser pursuant to, or in connection with,
this Agreement, shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Sellers under this Agreement or the
conditions to the obligations of the Purchaser under this Agreement.
SECTION 5.03. Confidentiality. (a) The terms of the confidentiality
agreement dated as of November 9, 2004 (the "Confidentiality Agreement")
between TSIC and PEI are hereby incorporated herein by reference and shall
continue in full force and effect until the Closing, at which time such
Confidentiality Agreement and the obligations of the Purchaser under this
Section 5.03 shall terminate; provided, however, that the Confidentiality
Agreement shall terminate only in respect of that portion of the Confidential
Information (as defined in the Confidentiality Agreement) exclusively relating
to the transactions contemplated by this Agreement. If this Agreement is, for
any reason, terminated prior to the Closing, the Confidentiality Agreement
shall nonetheless continue in full force and effect.
(b) The Purchaser acknowledges and agrees that any
Confidential Information provided to the Purchaser pursuant to Section 5.02 or
otherwise by the Sellers or any officer, director, employee, agent,
representative, accountant or counsel thereof shall be subject to the terms
and conditions of the Confidentiality Agreement.
(c) Notwithstanding anything herein to the contrary, each
party hereto (and its representatives, agents and employees) may consult any
Tax advisor regarding the Tax treatment and Tax structure of the transactions
contemplated hereby, and may disclose to any Person, without limitation of any
kind, the Tax treatment and Tax structure of such transactions and all
materials (including opinions and other Tax analyses) that are provided
relating to such treatment or structure.
SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents.
(a) The Sellers shall use all reasonable best efforts to promptly obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for their execution and delivery
of, and the performance of their obligations pursuant to, this Agreement and
the Ancillary Agreements, and will cooperate fully with the Purchaser in
promptly seeking to obtain all such authorizations, consents, orders and
approvals. Each party hereto agrees to make promptly its respective filings,
if necessary, pursuant to the HSR Act with respect to the transactions
contemplated by this Agreement within ten Business Days of the entry of the
date of the Bidding Procedures Order, and to supply as promptly as practicable
to the appropriate Governmental Authorities any additional information and
documentary material that may be requested pursuant to the HSR Act; provided,
however, that the Purchaser and the Sellers agree that neither of them will
make any voluntary filing under applicable foreign antitrust laws or
regulations unless advised by legal counsel in such jurisdiction that the
failure to make a filing would result in a Material Adverse Effect or
otherwise be in violation of Applicable Law.
(b) The Sellers shall give promptly such notices to third parties
(and use their reasonable best efforts to obtain such third party consents and
estoppel certificates) as the Purchaser may in its sole discretion deem
necessary or desirable in connection with the transactions contemplated by
this Agreement and the Ancillary Agreements.
(c) The Purchaser shall cooperate and use all reasonable efforts to
assist the Sellers in giving such notices and obtaining such consents and
estoppel certificates; provided, however, that the Purchaser shall have no
obligation to give any guarantee or other consideration of any nature in
connection with any such notice, consent or estoppel certificate or to consent
to any change in the terms of any agreement or arrangement which the Purchaser
in its sole discretion may deem adverse to the interests of the Purchaser or
the Business.
(d) The Sellers and the Purchaser agree that, in the event that any
consent, approval or authorization necessary or desirable to preserve for the
Business any right or benefit under any lease, license, contract, commitment
or other agreement or arrangement to which any of the Sellers is a party is
not obtained prior to the Closing, the Sellers will, subsequent to the
Closing, cooperate with the Purchaser in attempting to obtain such consent,
approval or authorization as promptly thereafter as practicable. If such
consent, approval or authorization cannot be obtained, the Sellers shall use
their reasonable best efforts to provide the Purchaser with the rights and
benefits of the affected lease, license, contract, commitment or other
agreement or arrangement for the term of such lease, license, contract or
other agreement or arrangement, and, if the Sellers provides such rights and
benefits, the Purchaser shall assume the obligations and burdens thereunder.
SECTION 5.05. Notice of Developments. Prior to the Closing, Sellers shall
promptly notify the Purchaser in writing of (a) all state of fact, events,
circumstances, changes and occurrences arising subsequent to the date of this
Agreement which could result in the occurrence of a Material Adverse Effect or
any breach of a representation or warranty or covenant of the Sellers in this
Agreement known to the Sellers or which could have the effect of making any
representation or warranty of the Sellers in this Agreement untrue or
incorrect in any respect and shall promptly deliver to the Purchaser an
amended or supplemental Disclosure Schedule to such representation or
warranty, and (b) all other material developments affecting the assets,
Liabilities, business, financial condition, operations, results of operations,
customer or supplier relations or prospects of the Business; provided,
however, that delivery of any such notice shall not limit or otherwise affect
the remedies available to the Purchaser hereunder. No notification to the
Purchaser under this Section 5.05 shall be deemed to cure any breach or
default or event of default by the Sellers or render any representation or
warranty of the Sellers incomplete or inaccurate.
SECTION 5.06. Excluded Liabilities. The Sellers shall pay and fully
discharge (i) the Excluded Liabilities as and when the same become due and
payable and (ii) the Hong Kong Note Payable as soon as practicable but not
later than 20 Business Days after the date hereof.
SECTION 5.07. Risk of Loss. The risk of loss, damage or impairment by
fire or other casualty or for any other reason to any Purchased Asset before
the Closing is assumed by the Sellers. In the event that any Purchased Asset
shall suffer any fire or casualty or any injury, the Sellers agree to (i)
repair the damage at their sole cost and expense before the Closing Date, or
(ii) make an appropriate reduction in the Purchase Price based on a reasonable
approximation of the cost of such repair as agreed by the parties, or (iii)
assign to the Purchaser the proceeds of any insurances covering such fire,
casualty or injury.
SECTION 5.08. Bulk Transfer Laws. The Purchaser hereby waives compliance
by the Sellers with any applicable bulk sale or bulk transfer Laws of any
jurisdiction in connection with the sale of the Purchased Assets to the
Purchaser. Pursuant to Article IX, the Sellers have agreed to indemnify the
Purchaser against any and all liabilities which may be asserted by third
parties against the Purchaser as a result of the Sellers' noncompliance with
any such law.
SECTION 5.09. Cooperation. The Sellers shall cooperate with the
Purchaser, its auditors and other representatives (through and after the
Closing), including by making available in a timely manner their relevant
personnel and providing timely access to their books and records to the extent
related to the Business or the Purchased Subsidiary, in connection with the
Purchaser's preparation of the Closing Receivables/Inventories Statement as
may be required by the Purchaser. As soon as practicable after the date
hereof, but in no event later than the Closing Date, Sellers shall furnish to
the Purchaser financial information with respect to the Business and the
Purchased Subsidiary as of and for periods during which the Business and the
Purchased Subsidiary were owned and operated by the Sellers, in a form
reasonably satisfactory to the Purchaser, as shall be required to be included
in or is otherwise reasonably necessary in connection with the preparation of,
any and all filings, statements, reports or schedules under the Exchange Act
to be filed by the Purchaser in connection with, or with respect to, the
transactions contemplated by this Agreement (including such historical and pro
forma financial information as may be required by SEC Regulations S-X or S-K,
SEC Forms 10-K, 10-Q and 8-K under the Exchange Act). After the Closing, the
Purchaser shall reasonably cooperate with the Sellers, their auditors and
other representatives, including by making available during normal business
hours its relevant personnel and providing timely access to its books and
records when Sellers' have a legitimate purpose for such books and records
relating to the assets, liabilities and operations of the Business and the
Purchased Subsidiary prior to Closing. Sellers and their representatives
shall have the right to make copies of such books and records in connection
with such legitimate purpose. The Purchaser will not destroy the Sellers'
accounting records without at least 10 days' prior written notice to the
Sellers.
SECTION 5.10. Further Action. The parties hereto shall use all reasonable
best efforts to take, or cause to be taken, all appropriate action, to do or
cause to be done all things necessary, proper or advisable under applicable
Law, and to execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and the Ancillary
Agreements and to consummate and make effective the transactions contemplated
hereby and thereby, including the Sellers using all reasonable best efforts to
obtain consents to assignment to Purchaser of all license agreements which are
Designated Contracts to which Subsidiaries of TSIC which are not debtors in
the Chapter 11 Cases are a party.
SECTION 5.11. Tax Indemnification, Tax Cooperation and Exchange of
Information(a) . (a) Taxes Indemnified. Subject to the terms and
conditions of this Agreement, in addition to any indemnity obligations of the
Sellers contained in Article IX, Sellers shall indemnify and hold harmless the
Purchaser for:
(i) all Taxes imposed by any Taxation Authority payable
by the Purchased Subsidiary (except to the extent that adequate
provision has been made for that purpose in the Financial Statements
of the Purchased Subsidiary), which arise as a result of, in
connection with, or in relation to any Event which occurs or arises
on or prior to the Closing Date; and
(ii) all Taxes imposed on the Sellers resulting directly
or indirectly from the disposition of the Purchased Subsidiary.
(b) Straddle Period. In the case of Taxes payable by the Purchased
Subsidiary with respect to a taxable period that begins before the Closing
Date and ends after the Closing Date, the portion of any such Taxes that is
allocable to the period ending on the Closing Date shall be (except to the
extent that adequate provision has been made for that purpose in the
Stand-Alone Financial Statements of the Purchased Subsidiary):
(i) in the case of corporate income tax, deemed to be
the amount of such Tax for the aforementioned entire taxable period
multiplied by a fraction the numerator of which is the number of
calendar days in the portion of such period ending on the Closing
Date and the denominator of which is the number of calendar days in
the entire period, and
(ii) in the case of all other Taxes (including dividend
withholding tax and VAT), deemed equal to the amount which would be
payable if the taxable period ended on the Closing Date.
(c) Quantification.
For the purposes of Section 5.11(a) and (b) the amount of any
liability to Tax imposed on the Purchased Subsidiary will be determined as
follows:
(i) where the Purchased Subsidiary is liable to make an actual payment of
Tax the amount of the liability to Tax will be the amount of the
actual payment of Tax which the Purchased Subsidiary is liable to
make;
(ii) where the Purchased Subsidiary uses any Deferred Relief (in whole or
in part) to reduce or eliminate any liability of the Purchased
Subsidiary to make an actual payment of Tax in respect of which the
Sellers would otherwise have been liable under Section 5.11(a)
(whether or not the Purchased Subsidiary is primarily so liable and
whether or not the Purchased Subsidiary has any right of recovery
against any other person) the amount of the liability to Tax will be
the amount of Tax saved by the Purchased Subsidiary as a result of
the use of the Deferred Relief; and
(iii) where the Purchased Subsidiary loses any Deferred Relief (in whole or
in part) the amount of the liability to Tax will be: (A) the amount
of Tax which would have been saved by the Purchased Subsidiary but
for the loss of the Deferred Relief on the basis of the rates of Tax
effective at the date of the loss, assuming for this purpose that the
Purchased Subsidiary had sufficient profits or was otherwise in a
position actually to use the Deferred Relief; or (B) if the Deferred
Relief lost was a right to a repayment of Tax, the amount of the
repayment of Tax so lost.
(d) Deductions from payments.
(i) Except as required by law all payments by the Sellers under Section
5.11(a) will be made free and clear of all deductions and
withholdings in respect of Tax.
(ii) If any deduction or withholding is required by any applicable law to
be made from any payment by the Sellers under Section 5.11(a) or if
(ignoring any available Relief) the Purchaser is subject to Tax in
respect of any payment by the Sellers under Section 5.11(a) the
Sellers shall pay to the Purchaser such additional amount as is
necessary to ensure that the net amount received and retained by the
Purchaser (after taking account of such deduction or withholding or
Tax) is equal to the amount which it would have received and retained
had the payment in question not been subject to the deduction or
withholding or Tax.
(e) Due date for payment.
(i) The due date for the making of a payment by the Sellers under Section
5.11(a) will be: (A) the date falling 5 Business Days after the
Purchaser has served notice on the Sellers demanding such payment; or
(B) in any case involving a liability of the Purchased Subsidiary to
make an actual payment of Tax, the later of the date mentioned in
Section 5.11(e)(i)(A) and the date falling 5 Business Days before the
last date upon which the payment is required to be made to the person
entitled to the payment; or ( C) in any case involving the use of any
Deferred Relief as referred to in Section 5.11(c)(ii), the later of
the date mentioned in Section 5.11(e)(i)(A) and the date falling 5
Business Days before the last date upon which the payment of Tax
which has been reduced or eliminated by the use of a Deferred Relief
is or would have been required to be made to the relevant Taxation
Authority; or. (D) in any case involving the loss of a Deferred
Relief other than the right to repayment of Tax, the later of the
date mentioned in Section 5.11(e)(i)(A) and the date falling 5 clear
Business Days before the last date upon which the payment of Tax is
or would be required to be made in. respect of the accounting period
in which the Deferred Relief is lost; or (E) if the Deferred Relief
lost was a right to a repayment of Taxation, the later of the date
mentioned in Section 5.11(e)(i)(A) and the date upon which the
repayment was due from tile Taxation Authority.
(f) Returns and Payments.
(i) With respect to any Tax Return that has not yet been filed
but is required to be filed by the Purchased Subsidiary prior to the Closing
Date:
(A) The Purchased Subsidiary shall, and the Sellers shall cause the
Purchased Subsidiary to, prepare and file in a timely manner
all Tax Returns required to be filed by the Purchased
Subsidiary and pay all Taxes shown to be due thereon;
(B) Such Tax Returns shall be true, correct and complete in all material
respects and items thereon shall be treated in a manner
consistent with their treatment on prior Tax Returns in
accordance with the applicable law of the United Kingdom; and
(C) The Sellers and their authorized representatives shall have the right
to review such Tax Return and statement prior to the filing
of such Tax Return and the parties agree to consult and to
attempt in good faith to resolve any issues arising as a
result of such review.
(ii) With respect to any Tax Returns required to be filed with
respect to the Purchased Subsidiary after the Closing Date and as to which an
amount of Tax is allocable to the Sellers under Section 5.11(a):
(A) The Purchased Subsidiary shall, and the Purchaser shall cause the
Purchased Subsidiary to, prepare and file in a
timely manner all Tax Returns required to be filed
by the Purchased Subsidiary after the Closing Date
and pay all Taxes shown to be due thereon;
(B) Such Tax Returns shall be true, correct and complete in all material
respects and items thereon shall be treated in a
manner consistent with their treatment on prior Tax
Returns in accordance with the applicable law of
the United Kingdom; and
(C) The Purchaser and its authorized Representatives shall have the right
to review such Tax Return and statement prior to
the filing of such Tax Return, and the parties
agree to consult and to attempt in good faith to
resolve any issues arising as a result of such
review.
(g) Refunds. Any refunds of Taxes received by the Purchased Subsidiary
(and any equivalent benefit to any such company through a reduction in tax
liability for a post Closing Date period) relating to taxable periods ending
on or prior to the Closing Date (or the portion of the taxable period
including such date that precedes and includes the Closing Date in accordance
with Section 5.11(c), other than a Deferred Relief, shall be for the account
of the Sellers, and the Purchaser shall pay over to the Sellers any such
refund pursuant to this Section 5.11(e) within five (5) Business Days of
receipt thereof.
(h) Contests.
(i) After the Closing Date, the Purchaser shall, or
shall cause the Purchased Subsidiary to, notify the Sellers in
writing promptly upon the commencement of any Tax audit or
administrative or judicial proceeding or the receipt by the Purchaser
or the Purchased Subsidiary of any request issued by any Taxation
Authority for documents in connection with Taxes which are the
subject of the indemnities provided for in Section 5.11(a) (but in
any event within no later than ten (10) Business Days of such receipt
by the Purchaser or the Purchased Subsidiary) which, could give rise
to a Sellers' liability under Section 5.11, provided the giving of
such notice will not be a condition precedent to the liability of the
Sellers under this Section 5.11, and shall also separately notify the
Sellers in writing of any proposed or final demand or claim on the
Purchaser or the Purchased Subsidiary which, if determined adversely
to the taxpayer or after the lapse of time, would be grounds for
indemnification by the Tax Indemnifying Parties under Section
5.11(a). Each such notice shall contain factual information (to the
extent known to the Purchaser or the Purchased Subsidiary) describing
the asserted Tax liability in reasonable detail and shall include
copies of any notice or other document received from any Tax
Authority in respect of any such asserted Tax liability.
(ii) If the Purchaser or the Purchased Subsidiary fail
to give the Sellers prompt notice of an asserted Tax liability as
required by Section 5.11(h)(i) and if the Sellers are precluded by
such failure to give prompt notice from contesting the asserted Tax
liability in both the administrative and judicial forums, the Sellers
shall not have any obligation to indemnify for any loss or damage
arising out of such asserted Tax liability, and (ii) if the Sellers
are not so precluded from contesting but such failure to give prompt
notice results in additional liabilities, expenses or other detriment
to the Sellers, then any amount which the Sellers otherwise are
required to pay to the Purchaser or the Purchased Subsidiary pursuant
to this Section 5.11 with respect to such liability shall be reduced
by the amount of such detriment; provided however, that such
detriment is duly substantiated by the Sellers.
(iii) The Sellers may direct, through counsel of their
own choosing and at their own expense, any audit, claim for refund
and administrative or judicial proceeding to the extent it involves
any asserted liability with respect to which indemnity by the Sellers
may be sought under this Section 5.11 (any such audit, claim for
refund or proceeding relating to an asserted Tax liability are
referred to herein collectively as a "Contest"). If the Sellers
choose to direct the Contest, the Purchaser or the Purchased
Subsidiary, as applicable, shall promptly empower (by power of
attorney and such other documentation as may be appropriate) such of
Sellers' representatives as Sellers may designate to represent the
Purchaser or the Purchased Subsidiary insofar as the Contest involves
an asserted Tax liability for which the Sellers would be liable under
this Section 5.11.
(iv) The Sellers shall consult with respect to, and a
reasonable amount of time in advance of, the settlement of any
Contest controlled by the Sellers pursuant to this paragraph, and the
Sellers may not settle any such Contest or transmit any material
communication (whether oral, in writing or otherwise) to any Taxation
Authority in connection with such Contest, or transmit any material
communication (whether oral, in writing or otherwise) to any Taxation
Authority in connection with such Contest, without the prior written
consent of the Purchaser or the Purchased Subsidiary, as applicable
(which consent shall not be unreasonably withheld or delayed).
(v) If the Sellers elect not to direct the Contest, the
Purchaser or the Purchased Subsidiary, as the case may be, may pay,
compromise or contest such asserted liability as it sees fit, and
shall be reimbursed by the Sellers for reasonable costs of outside
tax advisors and related professionals and reasonable out of pocket
costs (for all of which appropriate supporting documentation shall be
provided) incurred in connection with a Tax liability ultimately
determined to be indemnifiable by the Sellers hereunder.
(vi) The Sellers and Purchaser shall cooperate in
respect of any Contest.
Such cooperation and information shall include providing copies of relevant
Tax Returns or portions thereof, together with accompanying schedules and
related work papers and documents relating to rulings or other determinations
by Taxation Authorities. The Sellers and the Purchaser will make themselves
(and their respective employees) available, on a mutually convenient basis, to
provide explanations of any documents or information provided under this
Section 5.11.
(c) Certain Audit Adjustments.
(i) If (at the Sellers' request and expense) the auditors of the
Purchased Subsidiary determine that the Purchased Subsidiary has
obtained a Saving, the Purchaser will offset such Saving against any
outstanding claim under section 5.11(a) of which it has given
notification to the Sellers.
(ii) To the extent that no claim is outstanding the Purchaser will as soon
as reasonably practicable thereafter repay to the Sellers the lesser
of: (A) the amount of the Saving (as determined by the auditors of
the Purchased Subsidiary); and (B) the amount paid by the Sellers
under section 5.11(a) in respect of the liability to Tax which gave
rise to the Saving less any part of that amount previously repaid to
the Sellers under any provision of this Agreement or otherwise.
(iii) The Purchased Subsidiary will not obtain a Saving until the last date
upon which it would have been obliged to make the actual payment of
corporation tax which has been reduced or eliminated in order to
avoid incurring interest thereon.
(iv) In determining whether the Purchased Subsidiary has obtained a
Saving, the auditors of the Purchased Subsidiary will act as experts
and not as arbitrators and their determination will (in the absence
of manifest error) be conclusive and binding on the parties.
SECTION 5.12. Cooperation Regarding Property and Transfer Taxes. (a)
With respect to Property Taxes to be prorated in accordance with Section 2.12
of this Agreement, Purchaser shall prepare and timely file all Tax Returns
required to be filed after the Closing with respect to the Purchased Assets,
if any, and shall duly and timely pay all such Property Taxes shown to be due
on such Tax Returns. Purchaser's preparation of any such Tax Returns shall be
subject to Sellers' approval, which approval shall not be unreasonably
withheld or delayed. Purchaser shall make such Tax Returns available for
Seller's review and approval no later than twenty (20) Business Days prior to
the due date for filing such Tax Returns, it being understood that Sellers'
failure to approve any such Tax Returns shall not limit Purchaser's obligation
to timely file such Tax Returns and duly and timely pay all Property Taxes
shown to be due thereon. Not less than five (5) Business Days prior to the
due date of any such Property Taxes, Sellers shall pay to Purchaser the amount
shown as due on such Tax Returns as determined in accordance with Section 2.12
of this Agreement to be the responsibility of Sellers and, to the extent
required by Law, Sellers shall join in the execution of any such Tax Returns.
(b) With respect to prorated Property Taxes to be paid by
Sellers, Sellers' preparation of any Tax Return relating to a lien for
Property Taxes on or related to the Purchased Assets that will arise after the
Closing Date shall be subject to Purchaser's approval, which approval shall
not be unreasonably withheld or delayed. Sellers shall make such Tax Returns
available for Purchaser's review and approval no later than twenty (20)
Business Days prior to the due date for filing such Tax Return, it being
understood that Purchaser's failure to approve any such Tax Return shall not
limit Seller's obligation to timely file such Tax Returns and duly and timely
pay all Property Taxes shown to be due thereon. Not less than five (5)
Business Days prior to the due date of any such Property Taxes, Purchaser
shall pay to Seller the amount shown as due on such Tax Returns as determined
in accordance with Section 2.12 of this Agreement to be the responsibility of
Purchaser and to the extent required by Law, Purchaser or any of its
Affiliates shall join in the execution of any such Tax Returns.
(c) In preparing and reviewing the Tax Returns referred to in
Sections 5.12(a) and (b), the parties shall cooperate and act in good faith to
resolve any disagreement related to such Tax Returns as between the parties or
as between either Party and any Governmental Authority.
(d) Purchaser and Seller shall provide the other party with such
assistance as may reasonably be requested by the other Party in connection
with the preparation of any Tax Return, or any audit or other examination by
any Tax authority, or any judicial or administrative proceedings relating to
liability for any Property Taxes or Transfer Taxes in connection with the
Purchased Assets, and each will retain and provide the requesting Party with
any records or information which may be relevant to such Tax Return, audit or
examination, proceedings or determination. Any information obtained pursuant
to this Section 5.12 or pursuant to any other Section hereof providing for the
sharing of information relating to or review of any Tax Return or other
schedule relating to Property Taxes or Transfer Taxes shall be kept
confidential by the parties hereto.
SECTION 5.13. Conveyance and Sales Taxes. Each of the Purchaser, on the
one hand, and the Sellers, on the other hand, shall assume 50% of any
liability for the payment of any Conveyance Taxes incurred as a result of the
transactions contemplated hereby, it being understood that the Sellers shall
use their commercially reasonable efforts to obtain a waiver of such
Conveyance Taxes to the extent permitted under the Bankruptcy Code. The
proposed transfer of the Transferred Real Estate and the assumption of the
Assumed Liabilities is necessary to confirm, consummate and implement a plan
of reorganization or liquidation, and therefore is exempt from state of
Florida documentary stamp Tax pursuant to Rules 12B-4.014 (15) and
Rule 12B-4.054 (3) of the Florida Administrative Code and Section 1146(c) of
the Bankruptcy Code, respectively. In the event a plan of reorganization or
liquidation is not confirmed by the Bankruptcy Court, then the parties shall
each be responsible for 50% of such stamp Tax. Each of the Purchaser, on the
one hand, and the Sellers, on the other hand, shall assume 50% of any
Liability for the payment of Sales Taxes incurred on the furniture, fixtures
and equipment as a result of the transactions contemplated hereby. In no
event shall the Sellers be responsible for Sales Taxes on the Inventory sold
by the Sellers to the Purchaser as a result of the transactions contemplated
hereby.
SECTION 5.14. Bankruptcy Court Approvals(a). No later than two
Business Days after the execution of this Agreement, the Sellers shall (i)
make all filings in the Bankruptcy Court necessary to initiate the Chapter 11
Cases in the manner contemplated by Sections 3.28 and 3.29, and (ii) file and
serve notice thereof on all interested parties as required by the Bankruptcy
Code, a motion, in form and substance reasonably satisfactory to the Purchaser
(together with supporting papers and exhibits, the "Sale Motion") seeking (x)
entry of an order substantially in the form of Appendix B hereto or otherwise
in form and substance reasonably satisfactory to the Purchaser (the "Bidding
Procedures Order") on the Bankruptcy Court's docket and setting a preliminary
hearing with respect to the Bidding Procedures contemplated by this Agreement
on shortened notice and in no event later than the 20th Business Day from the
date hereof to approve the Bidding Procedures (the "Preliminary Hearing"), and
(y) entry of an order substantially in the form of Appendix C hereto or
otherwise in form and substance reasonably satisfactory to the Purchaser (the
"Sale Approval Order"), at a final hearing (the "Final Sale Hearing") upon no
less than 45 days' notice (or such shorter time period as the Bankruptcy Court
may approve) after the Preliminary Hearing, authorizing each of the Sellers to
perform all of its respective obligations pursuant to this Agreement and the
transactions contemplated hereby, including, without limitation (a) the sale,
conveyance, assignment, transfer and delivery by the Sellers to the Purchaser
or a Qualified Overbidder of the Purchased Assets, free and clear of all
Liens, Actions or Claims against and Indebtedness of the Sellers (other than
such Actions, Claims and Indebtedness related to the Assumed Liabilities) as
set forth in the Sale Approval Order, other than the Permitted Liens, and (b)
the assumption and assignment of the Designated Contracts to be assumed and
assigned pursuant to the terms hereof without adequate assurance of future
performance liability pursuant to Section 365(f)(2) of the Bankruptcy Code,
except Purchaser's obligation to perform the Designated Contracts following
the Closing, and (c) which Sale Approval Order shall contain, inter alia, a
finding that the Purchaser has acted in "good faith" within the meaning of
section 363(m) of the Bankruptcy Code. The Sale Approval Order shall also
provide that it will become effective immediately and that any stay of such
order as provided by rules 6004(g) and 6006(d) under the Bankruptcy Code is
expressly waived and terminated. Sellers shall not modify, change, alter,
amend or supplement the proposed Sale Approval Order without the Purchaser's
prior written consent. The Sellers failure to timely obtain the Bidding
Procedures Order shall entitle Purchaser to terminate this Agreement without
further liability of either party as contemplated in Section 10.01(a), and
Sellers will have no obligation to pay the Expense Reimbursement and the
Break-Up Fee. The Sellers failure to timely obtain the Sale Approval Order
shall entitle Purchaser to both payment of the Expense Reimbursement and
Break-Up Fee in the manner contemplated by Sections 6.04 and 6.05 of this
Agreement and to terminate this Agreement as contemplated in Section 10.01(a).
In the event that Purchaser is paid the Expense Reimbursement and Break-up Fee
solely under the circumstances and in the manner contemplated by Sections 6.04
and 6.05 of this Agreement, such funds shall constitute Purchaser's sole and
exclusive remedy for any breach of this Agreement by Sellers or otherwise
under this Agreement, other than any fraud or knowing or willful breach by or
on the part of Sellers or collusion by Sellers with creditors or other
constituent parties-in-interest in the Chapter 11 Cases.
SECTION 5.15. Bankruptcy Actions (a) . (a) The Designated Contracts
(as set forth on Schedule 3.13(a) of the Disclosure Schedule attached hereto)
shall be identified (by the date of the Designated Contract (if available),
the other party to the contract or lease and the address of such party) on an
exhibit attached to the Sale Motion. Such exhibit shall set forth the amounts
necessary to cure defaults under each of such Designated Contracts as
determined by Sellers based on Sellers' books and records. Sellers shall, at
the written direction of the Purchaser delivered no later than seven days
prior to the Final Sale Hearing, direct the Sellers to add Designated
Contracts to Section 2.04 to the Disclosure Schedule and provide notice of
same to the non-debtor party to the Designated Contract to be assigned to the
Purchaser. Sellers shall, at the written direction of Purchaser delivered any
time prior to one day prior to the Closing Date, remove Designated Contracts
from the exhibit. In cases in which Sellers are unable to establish that a
default exists, the relevant cure amount shall be set at $0. The Sale Motion
shall reflect that Purchaser's promise to perform from and after the Closing
under the Designated Contracts and shall be the only adequate assurance of
future performance necessary to satisfy the requirements of section 365 of the
Bankruptcy Code in respect of the assignment to Purchaser of such Designated
Contracts.
(b) Sellers will provide Purchaser with a reasonable
opportunity to review and comment upon all motions, applications, notices and
supporting papers relating to the sale of the Purchased Assets or the Assumed
Liabilities, including those motions, applications, notices and supporting
papers listed in Section 3.29 on the Disclosure Schedule prepared by Sellers
relating to this Agreement (including forms of orders and notices to
interested parties) prior to the filing thereof in the Chapter 11 Cases. All
motions, applications and supporting papers prepared by Sellers and relating
to the approval of this Agreement (including forms of orders and notices to
interested parties) to be filed on behalf of Sellers after the date hereof
must be acceptable in form and substance to Purchaser, in its reasonable
discretion.
SECTION 5.16. Name Change. Promptly, but in no event later than 30 days
after the Closing, the Sellers agree (a) to change the name of Savane to some
other name not using the name "Savane", including, without limitation,
changing the names of the debtors and captions in the Chapter 11 Cases, and
(b) after the Closing, until papers are duly filed with the applicable
Governmental Authorities to effect such name change, not to use the name
"Savane" in any way for the purpose of selling or marketing any product or
service or otherwise in any manner which does or might compete with the
Purchaser or, in any other way which, in the Purchaser's reasonable judgment,
could be detrimental to Purchaser's enjoyment of the rights and goodwill it
sought when it paid for and acquired the Purchased Assets, except as expressly
agreed by the Purchaser in its sole discretion.
SECTION 5.17. No Shop. From and after the execution of this Agreement and
until the date the Bankruptcy Court enters the Bidding Procedures Order,
subject to the exceptions contained in this Section 5.17, and except for
actions expressly permitted by the Bidding Procedures required herein
following entry of the Bidding Procedures Order, the Sellers shall not cause,
authorize or permit any of their respective Subsidiaries or Affiliates, or any
of their respective officers, directors, employees, agents, advisors and other
representatives (including, each investment banker, finder, financial advisor,
attorney and accountant engaged by it (each, a "Representative")), to,
directly or indirectly, (a) except with respect to the Committee, solicit,
initiate, induce or encourage (including by means of furnishing any
information and/or entering into any confidentiality or similar agreement with
any Person), or take any other action to facilitate the making, submission or
receipt of any contact, inquiry, proposal or offer (including any contact,
inquiry, proposal or offer made directly to TSIC's shareholders or creditors)
that constitutes or which reasonably would be likely to lead to any
Alternative Transaction, (b) except with respect to the Committee, enter into
or continue any discussions or negotiations with any Person regarding or in
furtherance of an Alternative Transaction, or (c) agree to, approve, recommend
or endorse (whether by means of public announcement or filings with any
judicial, public or Governmental Authority) any contact, inquiry, proposal or
offer regarding or in furtherance of any Alternative Transaction or enter into
any memorandum of understanding, term sheet, letter of intent or definitive
agreement providing for or relating to an Alternative Transaction.
Notwithstanding the immediately preceding sentence, subsequent to the entry of
the Bidding Procedures Order by the Bankruptcy Court, the Sellers and their
respective Representatives may respond to wholly unsolicited inquiries and
requests (not in violation of this Section 5.17) for information from any
Person that submits a bona fide, written proposal or offer to acquire the
Business or the Purchased Assets, and may develop a list of Persons that may
qualify as Potential Bidders under the Bidding Procedures by providing general
information relating to the Chapter 11 Cases and the Bidding Procedures and
advising such Persons of their opportunity to pursue in good faith an
Alternative Transaction and to obtain further due diligence information and
materials relating to the Purchased Assets and the Business following the
formal commencement of the Bidding Process. If the Sellers or any of their
Representatives, Subsidiaries or Affiliates receive from any Person any
Acquisition Proposal, offer, inquiry or information request regarding the
Business or any of the Acquired Assets, Sellers will promptly advise such
Person, by written notice (with a copy to the Purchaser), of the terms of this
Section 5.17 and the Bidding Procedures and will promptly (and, in any event,
within 24 hours) advise Purchaser in writing of such Acquisition Proposal,
offer, inquiry or informational request, and deliver copies of any written
materials received by any Seller or their Representatives at any time in
connection therewith, and keep the Purchaser fully informed of the timing and
contents of, and provide the Purchaser with copies of, and further written or
oral communications related thereto. Nothing herein shall prohibit Sellers
from seeking to sell, pursuant to a Qualified Bid in connection with the
Auction established in the Bidding Procedures Order, the Purchased Assets to
any Person.
SECTION 5.18. Purchaser's Deposit. On the date hereof, the Purchaser
shall make a good faith, xxxxxxx deposit in the form of a certified check (or
other form acceptable to the Sellers in their sole discretion) payable to the
Escrow Agent to be held pursuant to the terms of this Agreement and the Escrow
Agreement in the amount equal to $2,800,000 (the "Purchaser's Deposit").
SECTION 5.19. Letter of Credit. The Sellers through their DIP Loan
Facility have caused to be provided to certain of their vendors letters of
credit as set forth in Section 5.19 of the Disclosure Schedule (the "Sellers'
Letters of Credit"). At the Closing, the Purchaser or one or more of its
Affiliates shall cause the Sellers' Letters of Credit to be replaced with
those naming the Purchaser as the account beneficiary.
SECTION 5.20. Receipt of Property Relating to Purchased Assets and
Excluded Assets. (a) If after the Closing Date Sellers or any of their
respective Affiliates, or any other Person acting for or in concert with any
of the foregoing Persons, shall receive any money, check, note, draft,
instrument, payment or other property relating to or as proceeds of the
Purchased Assets (including the Receivables constituting part of the Purchased
Assets) or the Assumed Liabilities or any part thereof, each such Person shall
receive all such items in trust for, and as the sole and exclusive property
of, Purchaser and, immediately upon receipt thereof, shall notify Purchaser in
writing of such receipt and shall remit the same (or cause the same to be
remitted) in kind to Purchaser in the manner specified by Purchaser.
(b) If after the Closing Date Purchaser or any of its Affiliates, or
any other Person acting for or in concert with any such Persons, shall receive
any money, check, note, draft, instrument, payment or other property relating
to or as proceeds of the Excluded Assets or the Excluded Liabilities, or any
part thereof, each such Person shall receive all such items in trust for, and
as the sole and exclusive property of, the Sellers and, immediately upon
receipt thereof, shall notify TSIC in writing of such receipt and shall remit
the same (or cause the same to be remitted) in kind to TSIC in the manner
specified by TSIC.
SECTION 5.21. Environmental Remediation. Concurrent with the execution of
this Agreement, and in addition to any other duty or obligation imposed by
Section 3.07, the Sellers shall, at their sole cost and expense:
(i) (A) undertake, using URS Corporation and a commercially reasonable scope of
work approved by the Purchaser, a baseline assessment of soil and groundwater
conditions at the Real Property known as 0000 Xxxx Xxxxxx Xxxxxx, (B) provide
all data, information, reports, and documents generated by this investigation
to the Purchaser, as the intended third party beneficiary of Sellers' contract
with the environmental consultant, all within 60 days after the date hereof,
(C) investigate and resolve all issues and/or concerns identified in the Phase
I Environmental Site Assessment prepared for CIT Group, Inc. by Xxxxxxx Group
Services, Inc. dated June 17, 2004, including those noted in Section 6.0
titled "Findings, Conclusions and Recommendations" and (D) provide
certification by URS Corporation that property soil and groundwater are in
material compliance with applicable Environmental Law; and (ii) use best
efforts to complete any Remedial Action recommended by URS Corporation to
comply with Environmental Law within 35 days prior to the Closing Date. If
the Sellers are unable to complete the Remedial Action within 35 days prior to
the Closing Date, URS Corporation shall estimate the future cost of such
Remedial Action and provide such estimate in writing promptly to the parties.
SECTION 5.22. Transition Matters. Sellers shall have the use of office
space and related services at the 0000 Xxxx Xxxxxx Xxxxxx facility for a
period of six months after the Closing Date without charge to the Sellers.
Article VI
BIDDING PROCEDURES
SECTION 6.01. Bidding Procedures. Unless otherwise agreed by the
Purchaser, Sellers shall obtain, no later than the 80th day after the Petition
Date, the Sale Approval Order authorizing and approving the sale of the
Purchased Assets to the Purchaser or a Qualified Overbidder which the Sellers
determine to have made the highest and best offer for the Purchased Assets and
the Assumed Liabilities in accordance with the procedures set forth in this
Article VI (collectively, the "Bidding Procedures"). Subject to Section 6.09
of this Agreement, the Bidding Procedures set forth herein shall be approved
by the Bankruptcy Court and set forth in the Bidding Procedures Order.
(a) The Sellers will (i) in consultation with A&M and counsel for any
official committee of unsecured creditors appointed in the Chapter 11
Cases (collectively, the "Committee") and counsel for the Indenture
Trustee (the "Indenture Trustee"), if any determine whether any
Person is a Qualified Overbidder, (ii) coordinate the efforts of
Qualified Overbidders in conducting their respective due diligence
investigations regarding the Business, the Purchased Assets and the
Assumed Liabilities generally, (iii) receive offers from Qualified
Overbidders, and (iv) in consultation with the Committee and A&M
negotiate any offer made to purchase the Purchased Assets and the
Assumed Liabilities (collectively, the "Bidding Process"). Any
Person who elects to participate in the Bidding Process must be a
Qualified Overbidder, and neither the Sellers nor their
representatives shall furnish any information of any kind whatsoever
relating to the Sellers or the Purchased Assets and the Assumed
Liabilities to any Person who is not a Qualified Overbidder. The
Sellers have the right to adopt such other rules for the Bidding
Process that the Sellers reasonably shall determine, after request by
the Committee, the Indenture Trustee or the Office of the U.S.
Trustee, will facilitate the goals and expeditious completion of the
Bidding Process and which are not inconsistent with any of the other
provisions hereof or of any order of the Bankruptcy Court.
(b) To participate in the Bidding Process, each Person (a "Potential
Bidder"), other than the Purchaser, must deliver (unless previously
delivered) to the Sellers an executed confidentiality agreement in
form and substance satisfactory to the Sellers and containing terms
no less restrictive to the Sellers than the Confidentiality Agreement.
A "Qualified Overbidder" is a Potential Bidder that the
Sellers in their reasonable, good faith business judgment, after
consultation with the Committee, each determines is financially able
to consummate the purchase of the Purchased Assets and the assumption
of the Assumed Liabilities; it being hereby acknowledged and agreed
that the Purchaser qualifies as a Qualified Overbidder. A&M and the
Committee's financial advisors shall be entitled to perform due
diligence on each Qualified Overbidder, upon execution of a
confidentiality agreement in form and substance reasonably
satisfactory to the Sellers and containing terms no less restrictive
to the Sellers than the Confidentiality Agreement. The Qualified
Overbidder shall comply with all reasonable requests for additional
information and due diligence access by A&M and the Committee's
financial advisors. Failure by the Qualified Overbidder to fully
comply with requests for additional information and due diligence
access will be a basis for the Sellers to irrevocably determine that
any bid made by the Qualified Overbidder is not a Qualified Overbid.
(c) A Qualified Overbidder who desires to make a bid must deliver a good
faith deposit via wire transfer (or other form acceptable to the
Sellers in their sole discretion) to Account No. ____________ at Bank
ABA No. _______________ in an amount not less than $3,900,000 (the
"Good Faith Deposit") and must deliver a copy of its Required Bid
Documents to each of (i) the Sellers and their Counsel, (ii) A&M,
(iii) the Purchaser and its counsel, at the notice addresses
specified in Section 12.02 hereof and (iv) counsel for the Committee
so as to be received not later than 9:00 a.m. (prevailing Eastern
time) on the seventh day prior to the date of the Final Sale Hearing
(the "Bid Deadline").
SECTION 6.02. Determination of Qualified Overbid Status. A bid received
from a Qualified Overbidder will constitute a "Qualified Overbid" only if it
includes all of the Required Bid Documents listed below and meets all of the
Bid Requirements set forth below. The transaction terms and conditions set
forth in this Agreement shall be deemed a Qualified Overbid for all purposes
in connection with the Bidding Process, the Auction and the Sale.
(a) Required Bid Documents. Except as expressly provided to the contrary
by this Agreement, to participate in the Bidding Process, each
Potential Bidder, other than the Purchaser, must deliver (unless
previously delivered) to the Sellers, at the Sellers' request, the
following documents (collectively, the "Required Bid Documents") by
the Bid Deadline:
(i) a bona fide written offer stating that: (A) the Qualified Overbidder
offers to purchase all or substantially all of the Purchased
Assets and to assume all or substantially all of the Assumed
Liabilities, (B) the Qualified Overbidder is prepared and
intends promptly to enter into a legally binding purchase
and sale agreement for the acquisition of the Business and
the Purchased Stock on terms and conditions no less
favorable to the Sellers than those contained in this
Agreement immediately following the conclusion of the
Auction (as defined in Section 6.03(a) below), and (C) the
Qualified Overbidder's offer is irrevocable until the
consummation of a Sale;
(ii) a copy of such purchase and sale agreement described above in Section
6.02(a)(i)(B) marked to show proposed amendments and
modifications to this Agreement and executed by the
Qualified Overbidder; and
(iii) current audited financial statements of the Potential Bidder or, if
the Potential Bidder is an entity formed for the purpose of
acquiring the Purchased Assets and the Assumed Liabilities,
current audited financial statements of the owner(s) of all
of the outstanding securities having voting power with
respect to the Potential Bidder or such other form of
financial disclosure acceptable to the Sellers and A&M,
after consultation with the Committee, demonstrating such
Potential Bidder's ability to close the proposed transaction
expeditiously (including, the Potential Bidder's ability to
finance a Sale without any material conditions or delay).
(b) Bid Requirements. Except as expressly provided to the contrary by
this Agreement, all bids must satisfy the following requirements
(collectively, the "Bid Requirements"):
(i) the Sellers must determine, after consultation with A&M and the
Committee, that the bid (A) is not materially more
burdensome or conditional than the transaction described in
this Agreement (including, for this purpose, a determination
that there is a high certainty of timely consummation) and
(B) has a value not less than the sum of (x) $88,900,000
(which amount represents the sum of (i) the Purchase Price
payable by the Purchaser under this Agreement, including the
Purchaser's Deposit, (ii) $2,800,000, the amount of the
Break-up Fee, (iii) $500,000, the amount of the Overbid
Increment, and (iv) $600,000, the maximum amount of the
Expense Reimbursement), plus (y) the consideration to the
Sellers arising from the assumption of the Assumed
Liabilities under this Agreement, plus (z) all other
consideration to the Sellers under this Agreement;
(ii) the bid is on substantially the same or better terms and conditions
than those set forth in this Agreement;
(iii) the bid is not conditioned upon the Bankruptcy Court's approval of
any bid protections, such as a break-up fee, termination
fee, expense reimbursement or similar type of payment;
(iv) the bid is not conditioned upon the Potential Bidder's financing
requirements and is accompanied by reasonable evidence (in
the form of ______________) of the Potential Bidder's
financial ability to promptly consummate its Qualified
Overbid;
(v) the bid acknowledges and represents that the bidder: (A) has had a
full opportunity to conduct all due diligence regarding the
Purchased Assets and the Assumed Liabilities prior to making
its bona fide, written offer; (B) has relied solely upon its
own independent review, investigation and/or inspection of
any documents and/or the Purchased Assets in making its bid;
(C) did not rely upon any written or oral statements,
representations, promises, warranties or guaranties
whatsoever, whether express, implied, by operation of law or
otherwise, regarding the Purchased Assets, or the
completeness of any information provided in connection
therewith or the Auction, except as expressly stated in
these Bidding Procedures and the Sellers' representations
and warranties in this Agreement; and (D) is not contingent
upon any additional due diligence or approvals of any
Governmental Authority; and
(vi) the bid is received by the Bid Deadline.
SECTION 6.03. Auction (a) If one or more Qualified Overbids is received,
the Sellers will conduct an auction (the "Auction") with respect to the
Purchased Assets and the Assumed Liabilities. If no Qualified Overbid (other
than that of the Purchaser) is received by the Bid Deadline, the Sellers shall
report the same to the Bankruptcy Court, the transactions contemplated by this
Agreement shall be deemed the Successful Bid and the Sellers shall proceed
immediately to consummate all of the transactions contemplated by this
Agreement.
(b) The Auction, if required, will commence at 10:00 A.M. (prevailing
Eastern time) on ___________, 2005, before the Honorable ___________, United
States Bankruptcy Judge for the Middle District of Florida, United States
Bankruptcy Court, Courtroom ___, [address], or at such other time or place
determined by the Bankruptcy Court.
(c) Only the Purchaser, the Sellers and their advisors, Qualified
Overbidders who have submitted Qualified Overbids, the United States trustee,
the Committee and representatives of the Sellers' post-petition secured (or
DIP) lenders will be entitled to attend, participate and be heard at the
Auction, and only the Purchaser and Qualified Overbidders will be entitled to
make any subsequent Qualified Overbids at the Auction.
(d) During the Auction, bidding will begin at the purchase price stated
in the highest and best Qualified Overbid (taking into account the Break-up
Fee and Expense Reimbursement), and will subsequently continue in minimum
increments of not less than $500,000 higher than the previous Qualified
Overbid (the "Overbid Increment"). Subsequent overbids, if any, submitted by
the Purchaser will be deemed to include a dollar-for-dollar credit equal to
the sum of the Break-up Fee and the Expense Reimbursement.
(e) Bidding at the Auction will continue until such time as the highest
and best Qualified Overbid is determined. Upon conclusion of the Auction, the
Sellers, in consultation with A&M and the Committee, will (i) review each
Qualified Overbid on the basis of financial and contractual terms and other
factors relevant to the sale process, including those factors affecting the
certainty and timeliness of consummating the Sale, and (ii) identify the
highest and best offer for the Purchased Assets (the "Successful Bid") and the
second highest and best offer for the purchase of the Purchased Assets (the
"Back-up Bid").
SECTION 6.04. Expense Reimbursement. If (a) the Bankruptcy Court does not
issue the Sale Approval Order within 45 days after the Preliminary Hearing or
approves a higher and better bid than that submitted by the Purchaser, (b) the
Sellers withdraw the motion for Bankruptcy Court approval of the Sale and the
Purchaser is not then in material breach of this Agreement (and has not
otherwise terminated this Agreement pursuant to the provisions of Section
10.01(a), (c), (e), (f), (g) or (h)), or (c) notwithstanding the fact that all
of the Sellers' conditions to Closing have been satisfied or waived by the
Sellers and the Purchaser is not then in material breach of this Agreement,
the Sellers do not consummate the Sale, or (d) in the event of an Alternative
Transaction, then the Purchaser shall be entitled to immediate payment and
reimbursement for its out-of-pocket expenses reasonably incurred in connection
with the transactions contemplated by this Agreement, not to exceed $600,000
(the "Expense Reimbursement"). Until paid, the Expense Reimbursement shall be
allowed by the Bankruptcy Court as an administrative claim pursuant to Section
503(b)(1)(A) of the Bankruptcy Code with priority over any or all other
administrative expenses in the Chapter 11 Cases of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code, or if the Chapter 11 Cases
are converted to Chapter 7 cases. This provision shall be a requirement of,
approved by, and incorporated in the Bidding Procedures Order.
SECTION 6.05. Break-up Fee. The Purchaser shall be entitled to immediate
payment of a compensatory termination fee (the "Break-up Fee") in cash in an
amount equal to $2,800,000, if: (a) (i) the Bankruptcy Court does not issue
the Sale Approval Order within 45 days after the date of the Preliminary
Hearing or approves a higher and better bid than that submitted by the
Purchaser, (ii) the Closing of a Sale to the Successful Bidder (but not the
Purchaser) has occurred and (iii) the Purchaser is not then in material breach
of this Agreement; (b) the Bankruptcy Court confirms a plan of reorganization
for the Sellers, which plan transfers any of the Purchased Assets to a person
other than the Purchaser and such plan of reorganization is consummated and
the Purchaser is not then in material breach of this Agreement; (c) the
Purchaser is not in material breach of this Agreement and the Sellers (i)
withdraw the motion for Bankruptcy Court approval of the Sale and (ii)
subsequently liquidate or otherwise dispose of the Purchased Assets, in one or
a series of transactions; or (d) the Sellers withdraw the motion for
Bankruptcy Approval of the Sale and an Alternative Transaction is pursued.
Until paid, the Break-up Fee shall be allowed by the Bankruptcy Court as an
administrative claim pursuant to Section 503(b)(1)(A) of the Bankruptcy Code
with priority over any or all other administrative expenses in the Chapter 11
Cases of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy
Code, or if the Chapter 11 Cases are converted to Chapter 7 cases. This
provision shall be a requirement of, approved by, and incorporated in the
Bidding Procedures Order.
SECTION 6.06. Acceptance of Qualified Overbids. (a) At the Final Sale
Hearing, the Sellers will seek entry of the Sale Approval Order authorizing
and approving the Sale (i) if no Qualified Overbid is received (other than
that of the Purchaser), to the Purchaser pursuant to the terms and conditions
set forth in this Agreement, (ii) if one or more Qualified Overbids are
received by the Sellers, to the Purchaser or such Qualified Overbidder as the
Sellers, in the exercise of their reasonable, good faith business judgment,
after consultation with A&M and the Committee, determine to have made the
highest and best offer to purchase the Purchased Assets (the "Successful
Bidder") or (iii) to the extent of any default by the Successful Bidder, to the
Qualified Overbidder who submitted the Back-up Bid (including, as applicable,
the Purchaser).
(b) The Sellers' presentation to the Bankruptcy Court for
approval of a particular Qualified Overbid does not constitute the Sellers'
acceptance of the bid, except with respect to the bid of the Purchaser as
reflected in this Agreement (subject to higher and better Qualified Overbids
and subject to Bankruptcy Court approval). The Sellers will be deemed to have
accepted any other bid only when the bid has been approved by the Bankruptcy
Court at the Final Sale Hearing. The Sellers shall not be deemed to have
rejected any bid unless or until either the sale of the Purchased Assets
closes and/or such bid is rejected in writing.
(c) Following the Final Sale Hearing approving the Sale
to the Successful Bidder, (i) if such Successful Bidder fails to consummate an
approved Sale because of a breach or failure to perform on the part of such
Successful Bidder, the Back-up Bid, as disclosed at the Final Sale Hearing,
will be deemed to be the Successful Bid and the Sellers will be authorized,
but not required, to consummate the Sale with the Back-up Bidder submitting
such bid without further order of the Bankruptcy Court or, (ii) if a Qualified
Overbidder other than the Purchaser fails to consummate the Sale for any
reason and the Purchaser has made the Back-up Bid, then the Purchaser shall
purchase the Purchased Assets on the same terms and conditions set forth in
this Agreement (except the Closing Date shall be extended for a reasonable
period of time, not to exceed thirty (30) days, to allow the Purchaser to
complete such purchase) and at the final purchase price bid by the Purchaser
at the Auction, without requiring further Bankruptcy Court Approval.
(d) At the Auction and Final Sale Hearing, the
Purchaser shall have standing to contest any Qualified Overbid or the
Successful Bidder that may be considered or selected by the Sellers. This
provision shall be a requirement of, approved by, and incorporated in the
Bidding Procedures Order.
SECTION 6.07. Return of Purchaser's Deposit and Good Faith Deposit.(a)
The Good Faith Deposits of all Qualified Overbidders and the Purchaser's
Deposit will be retained by the Sellers or the Escrow Agent, as the case may
be, and all Qualified Overbids will remain open until the closing of a Sale;
provided, however, that if no closing of a Sale occurs on or before 30 days
after the Final Sale Hearing, the Sellers shall, except as provided in
subsection (b) of this Section 6.07, within five (5) Business Days, return or
cause to be returned each of the Good Faith Deposits to the respective
Overbidder that made such Good Faith Deposit (including any earnings thereon),
and return or cause to be returned the Purchaser's Deposit to the Purchaser.
(b) If a Successful Bidder fails to consummate an approved Sale because
of a breach or failure to perform on the part of such Successful Bidder and
the Sellers are not then in material breach of this Agreement, or the
Purchaser otherwise is in material breach or material default under this
Agreement, the Sellers will not have any obligation to return the Good Faith
Deposit or the Purchaser's Deposit (including any earnings thereon), as the
case may be, deposited by such Successful Bidder, and such Good Faith Deposit
or the Purchaser's Deposit (including any earnings thereon), as the case may
be, irrevocably will become the property of the Sellers and shall not be
credited against the purchase price of the subsequent buyer and the Purchaser
shall cause the Escrow Agent to pay to the Sellers the Purchaser's Deposit or
the Good Faith Deposit, as the case may be (including any earnings thereon).
In the event of a material breach of this Agreement by the Purchaser, as a
result of which the Sellers retain the Purchaser's Deposit (including any
earnings thereon) in accordance with this Section 6.07(b), the Sellers'
receipt of such funds shall constitute the Seller's sole and exclusive remedy
for any breach of this Agreement by the Purchaser.
SECTION 6.08. Court-Imposed Qualified Overbid. For the Sellers to accept
any alternative offer, such alternative offer must be a Qualified Overbid or a
Court-Imposed Qualified Overbid. "Court-Imposed Qualified Overbid" means any
alternative offer that the Sellers are required to accept by the Bankruptcy
Court.
SECTION 6.09. Modifications of Bidding Procedures. Prior to the entry of
the Bidding Procedures Order, the Sellers may upon request of any Committee,
the Indenture Trustee or the Office of the U.S. Trustee and after consultation
with the Purchaser, establish reasonable Bidding Procedures other than, or in
addition to, those set forth herein. Such additional or other Bidding
Procedures shall be acceptable to the Purchaser and thereafter approved by the
Court. The Sellers, after consultation with the Committee, may (a) determine
in their good faith business judgment which Qualified Overbid, if any, is the
highest and best offer, and (b) reject at any time before entry of an order of
the Bankruptcy Court approving a Qualified Overbid, any bid (other than that
of the Purchaser) that the Sellers, in consultation with the Committee,
determine to be (i) inadequate or insufficient, (ii) not in conformity with
the requirements of the Bankruptcy Code, the Bidding Procedures or the terms
and conditions of this Agreement, or (iii) contrary to the best interests of
the Sellers, their estates and their creditors. At or before the Final Sale
Hearing, the Sellers may impose such other terms and conditions upon Qualified
Overbidders (other than the Purchaser) as they determine, in consultation with
the Committee, to be in the best interests of the Sellers' estates, their
creditors and other parties in interest in the Chapter 11 Cases.
Article VII
employee matters
SECTION 7.01. Offer of Employment. Prior to the Closing Date, the
Purchaser shall, or shall cause an Affiliate of the Purchaser to, make an
offer of employment (the "Employment Offer") to those Employees as were
mutually agreed upon between the Purchaser and the Sellers listed on Section
7.01 of the Disclosure Schedule (which schedule shall be provided by Purchaser
to Seller not less than five Business Days prior to the Closing Date),
including those on sick leave, vacation, other authorized leaves of absences
or short-term disability (but excluding those on long-term disability). Each
Employment Offer shall provide that such offer of employment shall take effect
on the Closing Date. Employees who accept such offer of employment by the
Closing Date shall be referred to herein as "Transferred Employees." Nothing
in this Agreement is intended to confer, nor shall confer, upon any employee
of the Sellers any rights, remedies, claims or recourse of any nature against
the Purchaser, including, without limitation, any rights of employment of any
nature or kind whatsoever or any entitlement to participate in any plans,
benefits or programs of the Purchaser, except to the extent if employed that
such employee meets the eligibility requirements for participation in such
plans, benefits or programs.
SECTION 7.02. Employee Benefits(a) . Effective as of the Closing
Date, the Transferred Employees shall cease participation in Employee Plans
and shall commence participation in employee benefit plans and arrangements of
the Purchaser or an Affiliate of the Purchaser, subject to their satisfaction
of the eligibility requirements for each such plan.
SECTION 7.03. 401(k) Plan. The Sellers shall take or cause to be taken
all such actions as may be required to ensure that, as of the Closing Date,
each Transferred Employee shall become 100% vested in his account balance
under TSIC's 401(k) profit sharing plan (collectively, the "Sellers' 401(k)
Plan"). The Purchaser shall permit the plan(s) maintained by the Purchaser or
one of its Affiliates that is an eligible retirement plan, pursuant to section
401(a)(31)(D) of the Tax Code, to accept an "eligible rollover contribution"
(within the meaning of section 401(a)(31) of the Tax Code) in cash of all or a
portion of the account balance distributed to a Transferred Employee under the
Sellers' 401(k) Plan. For purposes of this Section 7.03, "eligible rollover
contribution" shall include the amount of any unpaid balance of any loan of a
Transferred Employee under the Sellers' 401(k) Plan.
SECTION 7.04. Flexible Spending Account. Subject to the requirements of
section 125 of the Tax Code, any unused amounts credited to Transferred
Employees' accounts (after the satisfaction of claims for expenses incurred
prior to the Closing Date) under the Sellers' medical expense reimbursement or
dependent care reimbursement plan, a copy of which has been made available to
the Purchaser and any pre-existing elections of the Transferred Employees in
effect thereunder will be transferred to, and assumed by, the corresponding
plan of the Purchaser or one of its Affiliates in which the Transferred
Employees are eligible to participate for the balance of the calendar year
during which the Closing occurs; provided, however, that Purchaser's
obligation hereunder shall be conditioned upon and shall only be applicable if
upon the Closing Date Sellers transfer cash equal to the unused amounts so
credited to transferred employees accounts by Purchaser.
SECTION 7.05. Cooperation. The Sellers shall cooperate with the Purchaser
until the Closing Date in communicating to Employees any information
concerning employment offers and employment after the Closing Date, and during
normal business hours shall allow additional meetings by representatives of
the Purchaser with such Employees upon the reasonable request of the Purchaser.
Article VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Sellers. The obligations
of each of the Sellers to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or written waiver (to the extent
permitted by applicable Laws), at or prior to the Closing, of each of the
following conditions:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of the Purchaser contained in this Agreement (A) that
are not qualified as to "materiality" shall be true and correct in
all material respects as of the date hereof and as of the Closing
Date as though made on such date and (B) that are qualified as to
"materiality" shall be true and correct as of the date hereof and as
of the Closing Date as though made on such date, in each case except
for such representations and warranties that are made as of a
specific date, in which case such representations and warranties
shall be true and correct in all material respects or true and
correct, as the case may be, as of such date, and (ii) the covenants
and agreements contained in this Agreement to be complied with by the
Purchaser on or before the Closing shall have been complied with in
all material respects;
(b) Governmental Approvals. Any waiting period (and any extension
thereof) under the HSR Act and the antitrust legislation of any other
relevant jurisdiction applicable to the purchase of the Purchased
Assets contemplated by this Agreement shall have expired or shall
have been earlier terminated;
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Governmental Order
(whether temporary, preliminary or permanent) that has the effect of
making the transactions contemplated by this Agreement or the
Ancillary Agreements illegal or otherwise restraining, materially
delaying or prohibiting the consummation of such transactions;
(d) Sale Approval Order. The Bankruptcy Court shall have entered the
Sale Approval Order and such Sale Approval Order shall not be subject
to a stay by any court of competent jurisdiction; and shall have
become final and non-appealable; and
(e) Documents, Agreements and Certificates. All of the documents,
agreements, schedules and certificates described in Section 2.10 and
elsewhere in this Agreement shall have been delivered as described
herein.
SECTION 8.02. Conditions to Obligations of the Purchaser. The obligations
of the Purchaser to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or written waiver (to the extent permitted
by applicable Laws), at or prior to the Closing, of each of the following
conditions:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of the Sellers contained in this Agreement (A) that
are not qualified as to "materiality" or "Material Adverse Effect"
shall be true and correct in all material respects as of the date
hereof and as of the Closing Date as though made on such date and
(B) that are qualified as to "materiality" or "Material Adverse
Effect" shall be true and correct as of the date hereof and as of the
Closing Date as though made on such date, in each case except for
such representations and warranties that are made as of a specific
date, in which case such representations and warranties shall be true
and correct in all material respects or true and correct, as the case
may be, as of such other date, and (ii) the covenants and agreements
contained in this Agreement to be complied with by the Sellers at or
before the Closing shall have been complied with in all material
respects;
(b) Governmental Approvals; Third Party Consents. Any waiting period
(and any extension thereof) under the HSR Act and the antitrust
legislation of any other relevant jurisdiction applicable to the
purchase of the Purchased Assets contemplated by this Agreement shall
have expired or shall have been earlier terminated. All consents and
approvals of third parties and Governmental Authorities, including,
without limitation, any Governmental Permits or Environmental
Permits, necessary to allow the Purchaser to operate the Business
immediately after the Closing substantially in the same manner as the
Business is operated immediately prior to the Closing or to
consummate the transactions contemplated by this Agreement, other
than those consents and approvals, the absence of which Purchaser
reasonably determines would not have a Material Adverse Effect, shall
have been obtained in a form reasonably satisfactory to the
Purchaser, without any diminution in the value or limitation of value
of the Purchased Assets or the Purchased Subsidiary;
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Governmental Order
(whether temporary, preliminary or permanent) that has the effect of
making the transactions contemplated by this Agreement or the
Ancillary Agreements illegal or otherwise restraining, materially
delaying or prohibiting the consummation of such transactions;
(d) Sale Approval Order. The Bankruptcy Court shall have entered the
Sale Approval Order substantially in the form of Appendix C hereto or
otherwise in substance reasonably satisfactory to the Purchaser, and
such Sale Approval Order shall not be subject to a stay by any court
of competent jurisdiction and shall have become final and
non-appealable;
(e) No Material Adverse Effect. No Material Adverse Effect shall have
occurred after the date of this Agreement and none of the Sellers
shall have notified Purchaser, pursuant to Section 5.05, of the
occurrence of any state of facts, circumstance, change or effect
which would result in a Material Adverse Effect;
(f) Liens. CIT shall have consented in writing to the sale of, and
release of any and all Liens on, the Receivables covered by the
Factoring Agreement entered into with CIT;
(g) Certain Designated Contracts. Sellers shall have obtained all
approvals and consents necessary to effect the transfer and
assignment to the Purchaser of those Designated Contracts designated
with a double asterisk set forth in Section 3.13(a) of the Disclosure
Schedule;
(h) Documents, Agreement, and Certificates. All of the documents,
agreements and certificates as described in Section 2.09 shall have
been delivered as described herein; and
(i) DIP Loan Facility. The Sellers shall have continued to have access
to uninterrupted borrowings under the DIP Loan Facility after the
commencement of the Chapter 11 Cases through the Closing Date.
Article IX
indemnification
SECTION 9.01. Survival of Representations and Warranties. (i) The
representations and warranties of the parties contained in Sections 3.10 and
3.16 of this Agreement shall survive the Closing indefinitely, (ii) the
representations and warranties contained in Sections 3.07 and 3.12 shall
survive until the end of the applicable statute of limitations period, and
(iii) the other representations and warranties of the parties contained in
this Agreement and in the Ancillary Agreements shall survive the Closing until
the first anniversary of the Closing; provided, however, that if written
notice of a Claim has been given prior to the expiration as provided in this
Section 9.01 of the applicable representations and warranties by the Purchaser
to the Sellers, or by the Sellers to the Purchaser, as the case may be, then
the relevant representations and warranties shall survive indefinitely as to
such claim, until such Claim has been finally resolved. The parties agree
that the covenants contained in this Agreement and the Ancillary Agreements to
be performed on or after Closing, shall survive the Closing indefinitely, and
each party hereto shall be liable to the other after the Closing for any
breach thereof.
SECTION 9.02. Indemnification by the Sellers. Sellers agree, jointly and
severally, to indemnify and hold harmless the Purchaser and its Affiliates,
officers, directors, employees, agents, successors and assigns (each a
"Purchaser Indemnified Party") for and against any and all Liabilities, losses,
damages, Claims, costs and expenses, interest, awards, judgments and penalties
(including reasonable attorneys' and consultants' fees and expenses) suffered
or incurred by them (hereinafter a "Loss"), arising out of or resulting from:
(i) the breach of any representation or warranty made by the Sellers
contained in this Agreement or in any Ancillary Agreements;
(ii) the breach of any covenant or agreement by the Sellers contained in
this Agreement or in any Ancillary Agreements;
(iii) the Sellers' failure to comply with the terms and conditions of any
applicable bulk sales or bulk transfer or similar Laws of any
jurisdiction that may be applicable to the sale or transfer of any or
all of the Purchased Assets to Purchaser (or its Affiliates),
notwithstanding the waiver contained in Section 5.08;
(iv) Liabilities relating to the Excluded Assets;
(v) Liabilities relating to Non-Assumed Liability Payments that remain
outstanding after the Closing Date; and
(vi) the Excluded Liabilities (whether or not such Liabilities reflect a
breach referred to in clause (i) of this Section 9.02).
To the extent that the Sellers' undertakings set forth in this Section 9.02
may be unenforceable, each of the Sellers shall contribute the maximum amount
that it is permitted to contribute under applicable Law to the payment and
satisfaction of all Losses incurred by the Purchaser Indemnified Parties.
Other than a Claim for indemnification by a Purchaser Indemnified Party with
respect to Excluded Liabilities or otherwise in respect of a breach of the
Seller's representations and warranties set forth in Sections 3.07, 3.08,
3.11, 3.15, 3.25, 5.06 and in Article VII of this Agreement which shall not be
subject to any limitation on amount or method of recovery any Claim for
indemnification of a Purchaser Indemnified Party under this Agreement shall be
paid solely out of the Indemnity Escrow Amount and no Purchaser Indemnified
Party shall have any additional recourse against Sellers for such
indemnification claims.
SECTION 9.03. Indemnification by the Purchaser. The Sellers and their
respective Affiliates, officers, directors, employees, agents, successors and
assigns (each a "Seller Indemnified Party") shall be indemnified and held
harmless by the Purchaser for and against any and all Losses, arising out of
or resulting from:
(i) the breach of any representation or warranty made by the Purchaser
contained in this Agreement or in any Ancillary Agreement;
(ii) the breach of any covenant or agreement by the Purchaser contained in
this Agreement or any in Ancillary Agreements;
(iii) the Assumed Liabilities; and
(iv) Liabilities (including for Taxes) related to the ownership and
operation of the Purchased Assets after the Closing (other than the
Excluded Liabilities).
To the extent that the Purchaser's undertakings set forth in this Section 9.03
may be unenforceable, the Purchaser shall contribute the maximum amount that
it is permitted to contribute under applicable Law to the payment and
satisfaction of all Losses incurred by the Seller Indemnified Parties.
SECTION 9.04. Notice of Loss; Third Party Claims. (a) Without limitation
of Section 5.05 hereof, an Indemnified Party shall give the Indemnifying Party
notice of any matter which an Indemnified Party has determined has given or
could give rise to a right of or Claim for indemnification under this
Agreement, promptly after such determination, stating the amount of the Loss,
if known, and method of computation thereof, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises.
(b) If an Indemnified Party shall receive notice of any Action, Claim,
audit, demand or assessment (each, a "Third Party Claim") against it or which
may give rise to a Claim for Loss under this Article IX, promptly after the
receipt thereof, the Indemnified Party shall give the Indemnifying Party
notice of such Third Party Claim; provided, however, that the failure to
provide such notice shall not release the Indemnifying Party from any of its
obligations under this Article IX except to the extent that the Indemnifying
Party is actually and materially prejudiced by such failure and such failure
shall not relieve the Indemnifying Party from any other obligation or
Liability that it may have to any Indemnified Party otherwise than under this
Article IX. If the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnified Party hereunder against any Losses that may
result from such Third Party Claim, then the Indemnifying Party shall be
entitled to assume and control the defense of such Third Party Claim at its
expense and through counsel of its choice if it gives notice of its intention
to do so to the Indemnified Party within five days of the receipt of such
notice from the Indemnified Party; provided, however, that if there exists or
is reasonably likely to exist a conflict of interest that would make it
inappropriate (in the reasonable judgment of outside counsel for the
Indemnified Party) for the same counsel to represent both the Indemnified
Party and the Indemnifying Party, then the Indemnified Party shall be entitled
to retain its own counsel (plus local counsel if required), at the expense of
the Indemnifying Party. In the event that the Indemnifying Party exercises
the right to undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses, pertinent records, materials and
information in the Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required by the Indemnifying
Party. Similarly, in the event the Indemnified Party is, directly or
indirectly, conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party's
expense, all such witnesses, records, materials and information in the
Indemnifying Party's possession or under the Indemnifying Party's control
relating thereto as is reasonably required by the Indemnified Party. No such
Third Party Claim may be settled by the Indemnifying Party without the prior
written consent of the Indemnified Party (not to be unreasonably withheld),
unless such settlement contains a full release of such Indemnified Party
SECTION 9.05. Distributions from Indemnity Escrow Fund. In the event that
(a) the Sellers shall not have objected to the amount claimed by the Purchaser
for indemnification with respect to any Loss in accordance with the procedures
set forth in the Escrow Agreement or (b) the Sellers shall have delivered
notice of its disagreement as to the amount of any indemnification requested
by the Purchaser and either (i) the Sellers and the Purchaser shall have,
subsequent to the giving of such notice, mutually agreed that the Sellers is
obligated to indemnify the Purchaser for a specified amount and shall have so
jointly notified the Escrow Agent or (ii) a final non-appealable judgment
shall have been rendered by the court having jurisdiction over the matters
relating to such claim by the Purchaser for indemnification from the Sellers
and the Escrow Agent shall have received, in the case of clause (i) above,
written instructions from the Sellers and the Purchaser or, in the case of
clause (ii) above, a copy of the final judgment of the court, the Escrow
Agent shall deliver to the Purchaser from the Indemnity Escrow Amount any
amount determined to be owed to the Purchaser under this Article IX in
accordance with the Escrow Agreement. The Escrow Agreement shall provide that
on the six-month anniversary of the Closing, so long as no Claims for
indemnification pursuant to this Article IX are outstanding, the Escrow Agent
shall be authorized by the Purchaser to distribute one-half of the Indemnity
Escrow Amount to the Sellers (to the extent not utilized to pay the Purchaser
for any such indemnification Claims). So long as no Claims for
indemnification pursuant to this Article IX are outstanding on the first
anniversary of the Closing, the Escrow Agent shall be authorized by the
Purchaser to distribute the remaining Indemnity Escrow Amount to the Sellers.
SECTION 9.06. Treatment of Payments. To the extent permitted by law, the
parties agree to treat all payments made by any of them to or for the benefit
of any other Person under this Article IX or under Section 2.11 and for any
breach of covenants as adjustments to the Purchase Price for Tax purposes.
SECTION 9.07. Limitations on Indemnification. Solely for the purpose of
avoiding any recovery in excess of 100% of an out-of-pocket indeminable loss,
indemnification Losses shall be reduced dollar-for-dollar by any applicable
insurance recoveries and other reimbursements. The indemnification
obligations of the parties hereto pursuant to this Article IX shall be limited
to actual damages and shall not include incidental, consequential, punitive,
special, or exemplary damages, except that any incidental, consequential,
punitive, specific or exemplary damages recovered by any third party against
any Indemnified Party under this Article IX shall be included in Losses
recoverable under this indemnification.
SECTION 9.08. Exclusive Remedy. The parties agree that, except with
respect to any act of fraud, willful misconduct or bad faith, following the
Closing Date, Purchaser's sole and exclusive remedy for any Claim arising out
of or in connection with this Agreement shall be the indemnification rights
set forth in this Article IX.
Article X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by either the Sellers or the Purchaser if (i) the Sellers shall not
have commenced the Chapter 11 Cases within two Business Days after
the date hereof; (ii) the Bankruptcy Court shall not have entered the
Bidding Procedures Order within 20 Business Days after the date
hereof; (iii) the Bankruptcy Court shall not have entered the Sale
Approval Order within 45 days after the Preliminary Hearing; or (iv)
the Closing shall not have occurred within 75 days after the Petition
Date; provided, however, that the right to terminate this Agreement
under this Section 10.01(a) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have
been the cause of, or shall have resulted in, the failure of the
Closing to occur on or prior to such date;
(b) by either the Purchaser or the Sellers in the event that any
Governmental Order restraining, enjoining or otherwise prohibiting or
materially modifying the transactions contemplated by this Agreement
shall have become final and nonappealable;
(c) by either the Purchaser or the Sellers if the Bankruptcy Court
approves a higher and better bid than that submitted by the Purchaser
and the Closing of a Sale to the Successful Bidder has not occurred
on or before 30 days after the Final Sale Hearing;
(d) by the Sellers if the Purchaser shall have breached any of its
representations, warranties, covenants or other agreements contained
in this Agreement which would give rise to the failure of a condition
set forth in Article VIII, which breach cannot be or has not been
cured as of the Closing, as the same may be extended by mutual
written agreement of the parties;
(e) by the Purchaser if the Sellers shall have breached any of their
representations, warranties, covenants or other agreements contained
in this Agreement which would give rise to the failure of a condition
set forth in Article VIII, which breach cannot be or has not been
cured as of the Closing, as the same may be extended by mutual
written agreement of the parties;
(f) by the mutual written consent of the Sellers and the Purchaser;
(g) by the Purchaser if approvals to the transfer to the Purchaser of any
Designated Contracts the failure to secure which would result in the
closing condition set forth in Section 8.02(g) not being satisfied
have not been obtained; or
(h) by the Purchaser if (i) an order with respect to the Chapter 11 Cases
shall be entered by the Bankruptcy Court (x) converting the Chapter
11 Cases to a case under chapter 7 of the Bankruptcy Code or (y)
appointing a trustee (or examiner with enlarged powers substantially
similar to those of a trustee) or (ii) the Chapter 11 Cases are not
commenced on or prior to the Petition Date.
SECTION 10.02. Effect of Termination. In the event of termination of this
Agreement as provided in this Section 10.02, this Agreement shall forthwith
become void and there shall be no liability on the part of either party hereto
except (a) as set forth in Sections 5.03, 6.04, 6.05, 6.07 and Article XI and
(b) subject to Section 6.07, that nothing herein shall relieve either party
from liability for any breach of this Agreement occurring prior to such
termination.
Article XI
GENERAL PROVISIONS
SECTION 11.01. Expenses. Except as otherwise specified in this Section
11.01 and elsewhere in this Agreement, all costs and expenses, including fees
and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred; provided, however, that the parties shall share equally the filing
fee of the Purchaser's notification report under the HSR Act and the fees and
expenses of the Escrow Agent.
SECTION 11.02. Notices. All notices, requests, Claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by an internationally recognized overnight courier service, by
facsimile or registered or certified mail (postage prepaid, return receipt
requested) to the respective parties hereto at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 11.02):
(a) If to the Sellers, to:
Tropical Sportswear Int'l Corporation
0000 X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxx
with a copy (which shall not constitute notice pursuant
to this Section 11.02) to:
Akerman Xxxxxxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
(b) if to the Purchaser, to:
Xxxxx Xxxxx International, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx xx Xxxxxxxx, Esq., Senior Vice
President and General Counsel
with a copy (which shall not constitute notice pursuant
to this Section 11.02) to:
Xxxxxxxxx Traurig, LLP
The MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
and
with a copy of all Bankruptcy Court pleadings and
notices in the Chapter 11 Cases to:
Xxxxxxxxx Traurig, LLP
000 X. Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xx. Xxxxxxxxxx, Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
Email: XxxxX@XXXxx.xxx
SECTION 11.03. Public Announcements. No party to this Agreement shall
make, or cause to be made, any press release or public announcement in respect
of this Agreement or the transactions contemplated by this Agreement or
otherwise communicate with any news media without the prior written consent of
the other party unless otherwise required by Law or applicable stock exchange
regulation, and the parties to this Agreement shall cooperate as to the timing
and contents of any such press release, public announcement or communication.
SECTION 11.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated by this Agreement are consummated as originally contemplated to
the greatest extent possible.
SECTION 11.05. Entire Agreement. This Agreement (and the Disclosure
Schedule, the Exhibits, all statements, certificates and due diligence
responses of the Sellers or any Representative furnished or to be furnished to
the Purchaser pursuant to this Agreement, or in connection with the
transactions contemplated by this Agreement), the Ancillary Agreements and the
Confidentiality Agreement constitute the entire agreement of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the Sellers
and the Purchaser with respect to the subject matter hereof and thereof.
SECTION 11.06. Assignment. This Agreement may not be assigned by operation
of law or otherwise without the express written consent of the Sellers and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Sellers or the Purchaser), as the case may be; provided, that (i) the
Purchaser may assign any of its rights or obligations hereunder to any of its
Affiliates and (ii) the Purchaser may collaterally assign any of its rights or
obligations hereunder to any financing source of the Purchaser or its
Affiliates; provided, further that no assignment pursuant to clause (i) or
clause (ii) shall relieve the Purchaser of any of its obligations hereunder.
SECTION 11.07. Amendment. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Sellers
and the Purchaser or (b) by a waiver in accordance with Section 11.08.
SECTION 11.08. Waiver. Any party to this Agreement may (a) extend the time
for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements of the
other party or conditions to such party's obligations contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition of this Agreement. The failure of either party hereto to assert
any of its rights hereunder shall not constitute a waiver of any of such
rights.
SECTION 11.09. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective successors and permitted assigns, and nothing herein, express or
implied (excluding the provisions of Article IX relating to indemnified
parties), is intended to or shall confer upon any other Person, including any
union or any employee or former employee of any of the Sellers or any of their
Subsidiaries, any legal or equitable right, benefit or remedy of any nature
whatsoever, including any rights of employment for any specified period, under
or by reason of this Agreement.
SECTION 11.10. Currency. Unless otherwise specified in this Agreement, all
references to currency, monetary values and dollars set forth herein shall
mean United States (U.S.) dollars and all payments hereunder shall be made in
United States dollars.
SECTION 11.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Florida. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to
the personal jurisdiction of the Bankruptcy Court for any litigation arising
out of or relating to this Agreement and the transactions contemplated thereby
(and agrees not to commence any litigation relating thereto except in the
Bankruptcy Court).
SECTION 11.12. Waiver of Jury Trial. EACH OF the parties hereto hereby
waive to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. EACH OF the parties hereto HEREBY
(a) certifIES that no representative, agent or attorney of THE other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce thE foregoing waiver and (b) acknowledges
that it has been induced to enter into this Agreement and the transactions
contemplated by this Agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section 11.12.
SECTION 11.13. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
SECTION 11.14. Due Authorization of Signatories; Liability. The Persons
executing this Agreement acted solely in their representative and not their
individual capacities. Nothing herein shall be construed to impart any
personal obligation or liability on any of the individuals executing this
Agreement nor shall any of such signatories, or any other directors, officers,
employees, shareholders, representatives, or agents thereof be held personally
liable hereunder.
SECTION 11.15. Specific Performance. Each of TSIC and the Purchaser
acknowledge and agree that the other party would be irreparably damaged in the
event the provisions of this Agreement, including Sections 5.02, 5.06, 5.10,
5.11, 5.12, 5.16, and 5.20 were not fully performed in accordance with their
specific terms or otherwise were breached. Accordingly, each of TSIC and the
Purchaser shall be entitled, after the Closing, to an injunction (or
injunctions) to prevent breaches of such provisions and to enforce
specifically this Agreement and the terms and provisions hereof in any Action
instituted in the Bankruptcy Court, in addition to any other equitable remedy,
remedy at law for money damages to the extent provided elsewhere in and
contemplated by this Agreement.
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
Sellers TROPICAL SPORTSWEAR INT'L CORPORATION
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
SAVANE INTERNATIONAL CORP.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
TSI BRANDS, INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: President
TSIL, INC.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: President
APPAREL NETWORK CORP.
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
FARAH OFFSHORE SOURCING COMPANY
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: President
FARAH MANUFACTURING (U.K.) LIMITED
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
Purchaser
XXXXX XXXXX INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxxx
Title: Chairman and Chief Executive Officer
EXHIBIT 1.01(a)
FORM OF ASSIGNMENT OF LEASE
EXHIBIT 1.01(b)
FORM INTELLECTUAL PROPERTY AND DOMAIN NAME ASSIGNMENT
This INTELLECTUAL PROPERTY AND DOMAIN NAME ASSIGNMENT (this
"Assignment"), effective the ___ day of _______, 2005, is made and entered into
by and between _________________, a [] corporation having a place of business
at _________________ ("Assignor"), and ______________, a [] corporation having
a place of business at _________________ ("Assignee") (each a "Party," and
collectively, the "Parties"). Capitalized terms used herein but not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement
(defined below).
WHEREAS, Assignor is the owner of each of (i) the patents and patent
applications set forth on Schedule A hereto (the "Patents"); (ii) the
copyrights, copyright registrations and copyright applications set forth on
Schedule B hereto (the "Copyrights"); and (iii) the trademarks, trademark
registrations and trademark applications (including any and all goodwill
symbolized thereby) set forth on Schedule C hereto (the "Trademarks")
((i)-(iii), collectively, the "Purchased Intellectual Property");
WHEREAS, Assignor is the registrant of record and owner of each of
the Internet domain names (including any and all goodwill symbolized thereby)
set forth on Schedule D hereto and the domain name registrations therefor (the
"Domain Names");
WHEREAS, Assignor and Assignee entered into that certain Asset
Purchase Agreement dated as of December 16, 2004 (the "Purchase Agreement"),
pursuant to which Assignee agreed to purchase the Purchased Assets from
Assignor, including all of Assignor's right, title and interest in and to the
Purchased Intellectual Property and the Domain Names; and
WHEREAS, the execution and delivery of this Assignment is a condition
to Closing.
NOW THEREFORE, for the consideration set forth in the Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Assignment. Effective upon Closing, Assignor hereby assigns to
Assignee all of Assignor's right, title and interest in and to the Purchased
Intellectual Property and the Domain Names, including all rights therein
provided by international conventions and treaties, and the right to xxx for
past, present and future infringement thereof.
2. No Warranties. Except as expressly provided in the Purchase
Agreement, Assignor makes no warranties, express or implied, with respect to
the Purchased Intellectual Property and the Domain Names.
3. Registrant Name Change Agreement. Within five (5) days following
Closing, Assignor shall (i) execute or otherwise complete the applicable
registrant name change agreement or other forms required by the applicable
Internet domain name registrar for each Domain Name (the "Registering
Authority") to transfer such Domain Name to Assignee on an expedited basis,
(ii) submit or file such registrant name change agreements or other forms to
or with the Registering Authority in accordance with the policies and rules of
the Registering Authority, and (iii) take any further actions in accordance
with the policies and rules of the Registering Authority as required to
transfer such Domain Names to Assignee on an expedited basis.
4. Further Assurances. Assignor shall, at the cost and expense of
Assignee, timely execute and deliver any additional documents and perform such
additional acts necessary or desirable to record and perfect the interest of
Assignee in and to the Purchased Intellectual Property and the Domain Names,
and shall not enter into any agreement in conflict with this Assignment.
5. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of Florida, without regard to the
conflicts of law rules of such state.
6. Counterparts. This Assignment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each Party has caused this Assignment to be
executed by its duly authorized representative.
[ASSIGNOR]
By:
Name:
Title:
[ASSIGNEE]
By:
Name:
Title:
SCHEDULE A
Country Application No. Patent No. Filing Date Issue Date
SCHEDULE B
Country Title App. No. Reg. No. Filing Date Issue Date
SCHEDULE C
Country Xxxx App. No. Reg. No. Filing Date Issue Date
SCHEDULE D
Domain Name Registering Authority
EXHIBIT 1.01(c)
FORM OF ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated as of [_______, 2005] (this
"Agreement"), is between [INSERT NAME OF SELLER], a _____________ corporation
(the "Seller"), and [INSERT NAME OF PURCHASER], a __________________
corporation (the "Purchaser").
WHEREAS, the Seller and the Purchaser have entered into an Asset
Purchase Agreement, dated as of [_______, 200_] (the "Asset Purchase
Agreement"; unless otherwise defined herein, capitalized terms shall be used
herein as defined in the Asset Purchase Agreement);
WHEREAS, pursuant to the Asset Purchase Agreement, Purchaser has
agreed to assume, pay, perform and discharge when due, any and all of the
Assumed Liabilities; and
WHEREAS, the execution and delivery of this Agreement by Purchaser is
a condition to the obligations of the Seller to consummate the transactions
contemplated by the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants set forth in the Asset Purchase Agreement and
hereinafter set forth, the Purchaser and the Seller hereby agree as follows:
1. Assumption of Liabilities. (a) The Purchaser hereby
assumes, and agrees to pay, perform and discharge when due, all of the Assumed
Liabilities.
(b) Notwithstanding the foregoing provisions of paragraph (a),
the Purchaser does not assume, or agree to pay, perform or discharge when due,
any Liabilities of the Seller other than the Assumed Liabilities including,
without limitation, the Excluded Liabilities.
2. Assignment. This Agreement may not be assigned by operation
of law or otherwise without the express written consent of the Seller and the
Purchaser (which consent may be granted or withheld in the sole discretion of
the Seller or the Purchaser); provided, however, that the Purchaser may assign
this Agreement or any of its rights and obligations hereunder to one or more
Affiliates of the Purchaser without the consent of the Seller.
3. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person, including, without limitation, any union
or any employee or former employee of the Seller, any legal or equitable
right, benefit or remedy of any nature whatsoever, including, without
limitation, any rights or employment for any specified period, under or by
reason of this Agreement.
4. Amendment. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the Seller
and the Purchaser or (b) by a waiver pursuant to Section 5 below.
5. Waiver. Either party to this Agreement may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained herein or in any document delivered by the other party
pursuant hereto or (c) waive compliance with any of the agreements of the
other party or conditions to such party's obligations contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition of this Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any such rights.
6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated by this Agreement is not affected
in any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
by this Agreement are consummated as originally contemplated to the greatest
extent possible.
7. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.
8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Florida applicable to
contracts executed in and to be performed in that State (without regard to
conflicts of law provisions thereof).
9. Further Assurances. Both parties shall, at the cost and
expense of Purchaser, timely execute and deliver any additional documents and
perform such additional acts necessary or desirable to consummate the
transactions contemplated hereby, and shall not enter into any agreement in
conflict with this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
SELLER
By:
Name:
Title:
PURCHASER
By:
Name:
Title:
EXHIBIT 1.01(d)
FORM OF XXXX OF SALE AND ASSIGNMENT
XXXX OF SALE AND ASSIGNMENT, dated as of _______, 2005 (this "Xxxx of
Sale and Assignment"), from [INSERT NAME OF SELLER SUBSIDIARY], a ________
corporation (the "Seller"), to [INSERT NAME OF PURCHASER], a ________
corporation (the "Purchaser").
WHEREAS, the Seller and the Purchaser have entered into an Asset
Purchase Agreement, dated as of [_________, 2004] (the "Asset Purchase
Agreement"; unless otherwise defined herein, capitalized terms shall be used
herein as defined in the Asset Purchase Agreement); and
WHEREAS, the execution and delivery of this Xxxx of Sale and
Assignment by the Seller is a condition to the obligations of the Purchaser to
consummate the transactions contemplated by the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the promises and mutual
agreements set forth in the Asset Purchase Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller does hereby agree as follows:
1. Sale and Assignment of Assets and Properties. The Seller
hereby sells, assigns, transfers, conveys, grants, bargains, sets over,
releases, delivers, vests and confirms unto the Purchaser and its successors
and assigns, forever, the entire right, title and interest of the Seller free
and clear of all Liens (other than Permitted Liens) in and to any and all of
the Purchased Assets other than the Excluded Assets.
2. Obligations and Liabilities Not Assumed. Nothing expressed
or implied in this Xxxx of Sale and Assignment shall be deemed to be an
assumption by the Purchaser or its subsidiaries of any Liabilities of the
Seller. Neither the Purchaser nor its subsidiaries by this Xxxx of Sale and
Assignment, agree to assume or agree to pay, perform or discharge any
liabilities of the Seller of any nature, kind or description whatsoever.
3. Further Assurances. The Seller hereby covenants and agrees
that, at any time and from time to time after the date of this Xxxx of Sale
and Assignment, at the Purchaser's request, the Seller will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, any and all further acts, conveyances, transfers, assignments, and
assurances as necessary to grant, sell, convey, assign, transfer, set over to
or vest in the Purchaser any of the Purchased Assets.
4. Power of Attorney. The Seller hereby constitutes and
appoints the Purchaser, its successors and assigns, the true and lawful
attorney and attorneys of the Seller, with full power of substitution, in the
name of the Purchaser or in the name and stead of the Seller, but on behalf of
and for the benefit of the Purchaser, its successors and assigns:
(a) to collect, demand and receive any and all Purchased Assets
transferred hereunder and to give receipts and releases for and in respect of
the same;
(b) to institute and prosecute in the Seller's name, or
otherwise, at the expense and for the benefit of the Purchaser any and all
actions, suits or proceedings, at law, in equity or otherwise, which the
Purchaser may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Purchased Assets hereby sold and
assigned to the Purchaser or intended so to be, to defend or compromise any
and all such actions, suits or proceedings in respect of any of such Purchased
Assets, and to do all such acts and things in relation thereto as the
Purchaser shall deem advisable for the collection or reduction to possession
of any of such Purchased Assets;
(c) to take any and all other reasonable action designed to vest
more fully in the Purchaser the Purchased Assets hereby sold and assigned to
the Purchaser or intended so to be and in order to provide for the Purchaser
the benefit, use, enjoyment and possession of such Purchased Assets; and
(d) to do all reasonable acts and things in relation to the
Purchased Assets sold and assigned hereunder.
The Seller acknowledges that the foregoing powers are coupled with an
interest and shall be irrevocable by it or upon its subsequent dissolution or
in any manner or for any reason. The Purchaser shall be entitled to retain
for its own account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest with respect thereto. The Seller
shall from time to time pay to the Purchaser, when received, any amounts that
shall be received directly or indirectly by the Seller (including amounts
received as interest) in respect of any Purchased Assets sold, assigned or
transferred to the Purchaser pursuant hereto.
5. No Third Party Beneficiaries. This Xxxx of Sale and
Assignment shall be binding upon and inure solely to the benefit of the
Purchaser and its permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person, any legal or equitable
right, benefit or remedy of any nature whatsoever, under or by reason of this
Xxxx of Sale and Assignment.
6. Severability. If any term or other provision of this Xxxx
of Sale and Assignment is invalid, illegal or incapable of being enforced by
any Law or public policy, all other terms and provisions of this Xxxx of Sale
and Assignment shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to either the Seller or the
Purchaser. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Xxxx of Sale and Assignment so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated by this Xxxx of
Sale and Assignment are consummated as originally contemplated to the greatest
extent possible.
7. Governing Law. This Xxxx of Sale and Assignment shall be
governed by the laws of the State of Florida.
IN WITNESS WHEREOF, this Xxxx of Sale and Assignment has been
executed by the Seller as of the date first above written.
SELLER
By:
Name:
Title:
EXHIBIT 1.01(e)
FORM OF DEED
EXHIBIT 1.01(f)
SELLERS' KNOWLEDGE
Xxxx Xxxxx
Xxxx Xxxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxxx
Xxxxxx Xxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxx Abiss
Xx Xxxxxx Xxxxxxx - Finance Director of UK
Business Unit Head:
Xxxxx Xxxx - GM of Mass Merchant Strategic Business Unit
Plus all other managers or supervisors of business units and divisions of the
Sellers and the Purchased Subsidiary
EXHIBIT 2.08
(i) Executed transfers of the Purchased Stock evidencing the Purchased
Stock in favor of the Purchaser (or its nominee(s)) together
with the share certificates for the Purchased Stock (or in
the case of any lost certificate an indemnity satisfactory
to the Purchaser in relation to it).
(ii) Legal opinion in a form satisfactory to the Purchaser from Cayman
Islands counsel that Farah is the legal and beneficial owner
of the Purchased Stock, it is held free from all liens and
encumbrances, it has the necessary capacity, power and
authority to execute the stock transfer form in relation to
the transfer of the Purchased Stock.
(iii) Any waiver, consent or other document necessary to give the Purchaser
(or its nominee(s)) full legal and beneficial ownership of
the Purchased Stock.
(iv) A copy of a resolution of the board of directors (certified by a duly
appointed officer as true and correct) of the Purchased
Subsidiary authorizing the execution of and the performance
by the Purchased Subsidiary of its obligations under each of
the documents to be executed by it.
(v) A letter of resignation in the agreed terms from each director of the
Purchased Subsidiary.
(vi) The certificate of incorporation, any certificate(s) of incorporation
on change of name, the common seal and the statutory books
and registers (which will be written up to but not including
Closing) of the Purchased Subsidiary.
EXHIBIT 2.10(a)(ii)
Calculation of Reference Receivables/Inventories Amount
The Reference Receivables/Inventories Statement and Closing
Receivables/Inventories shall be calculated as set forth below.
Receivables
The Seller's Receivables balance as of October 2, 2004 (the "Year End
Receivables Balance") and as of the Closing Date (the "Closing Date
Receivables Balance") shall include a reserve for bad debt, the Sellers'
cooperative advertising reserves, returns, overbills, chargebacks, allowances,
margin support, and all similar reserves (all of which shall be separately
itemized, collectively, the "Receivables Reserve") and be computed in
accordance with GAAP and in a manner consistent with Seller's past practice.
Attached hereto is a schedule of the Receivables Reserve as of October 2,
2004.
Inventories
The Seller's Inventory balance as of October 2, 2004 (the "Year End
Inventory Balance") and as of the Closing Date (the "Closing Date Inventory
Balance") shall include reserves for allowances, markdowns, finished goods,
work-in-progress, raw material obsolescence, shrinkage, reserves for losses
for future inventory commitments, and all similar reserves (all of which shall
be separately itemized, collectively, the "Inventory Reserve") and be computed
in accordance with GAAP and in a manner consistent with Seller's past
practice. Attached hereto is a schedule of the Inventory Reserve as of October
2, 2004.
EXHIBIT 2.11
FORM OF ESCROW AGREEMENT
EXHIBIT 3.09(n)
The Purchased Subsidiary has a good and marketable title to the Leasehold
Property for the estate or interest stated in the Disclosure Schedule free
from any defects and, where appropriate, registered at the Land Registry.
There is not, and so far as the Sellers are aware has not been, in force any
policy relating to defective title or restrictive covenant indemnity.
The title deed to the Leasehold Property are in the Purchased Subsidiary's
possession free from any Lien.
The Purchased Subsidiary does not own, is not in occupation of and is not
entitled to any estate or interest in any freehold or leasehold property other
than the Leasehold Property. The Purchased Subsidiary is not party to any
uncompleted agreement to acquire or dispose of any free hold or leasehold
property.
Except in relation to the Leasehold Property, the Purchased Subsidiary has no
liability (whether actual or contingent) in relation to any freehold or
leasehold property and in particular the Purchased Subsidiary has never
assumed any liability under a lease (whether as landlord, tenant, guarantor or
otherwise) other than any leases disclosed in the Disclosure Schedule.
The Leasehold Property is in a good and substantial state of repair and
condition free from any material defects, whether or not inherent defects or
design defects, and fit for the purposes for which it is presently used.
There have not been used in the Leasehold Property any substance which are not
in conformity with the relevant British or European standards or codes of
practice or which are generally known to be deleterious to health and safety
or to the durability of buildings or other structures or finishes in the
particular circumstances in which they are used. There are no uncompleted
works of any description at the Leasehold Property.
EXHIBIT 3.30
2.1 Full particulars of the identities, dates of commencement of
employment (or appointment to office), dates of birth, terms and
conditions of employment and remuneration (including any bonus,
commission, profit sharing, share and other incentive schemes, and
collective or workforce agreements) of all the employees, workers and
officers of the Purchased Subsidiary are fully and accurately set out
in the Disclosure Schedule and copies of all their written service
agreements or contracts of employment or particulars of employment
statements are attached to the Disclosure Schedule.
2.2 There are no amounts owing to any present or former officers, workers
or employees of the Purchased Subsidiary and none of them is entitled
to accrued but unpaid holiday pay or accrued but untaken holiday
leave in respect of the Purchased Subsidiary's current or previous
holiday year.
2.3 There is no person previously employed or engaged by the Purchased
Subsidiary who now has or may have a statutory or contractual right
to return to work or to be re-instated or re-engaged by the Purchased
Subsidiary.
2.4 Full details of all employees who have been absent from work for more
than four weeks in the 12 month period ending on the date of this
Agreement are contained in the Disclosure Schedule.
2.5 The Purchased Subsidiary has not recognized, or done any act which
might be construed as recognition of, a trade union and the Purchased
Subsidiary is not party to any agreement with any trade union or
organization of employees or workers nor are any steps being taken by
employees, workers or other representatives to ensure trade union
recognition.
2.6 The Purchased Subsidiary is not involved, and has not during the 12
months prior to the date of this Agreement been involved, in any
strike, lock-out, industrial or trade dispute or any negotiations
with any trade union or body of employees or workers.
2.7 The Purchased Subsidiary does not operate or intend to operate and
has not operated any short time working scheme or arrangement or any
redundancy or redeployment scheme or arrangement, whether formal or
informal, contractual or non-contractual, which provides for early
retirement, payments greater than those required by statute or for
notice periods greater than those set out in contracts of employment
or engagement.
2.8 The Purchased Subsidiary does not use the services of outworkers,
agency or other self-employed persons, contracted labor or agents.
2.9 The Purchased Subsidiary has, in relation to all present and former
employees and workers, complied with all statutes, regulations,
orders and codes of conduct relating to employment and relations with
employees and trade unions and has maintained adequate and suitable
records, whether or not required to do so by law, regarding the
service of each of its employees and has complied with all agreements
for the time being having effect as regards such relations or the
conditions of service of its employees (whether collectively or
individually).
3.1 "Pension Schemes" mean (i) the Farah Manufacturing (U.K.) Limited
Retirement Benefits Scheme, (ii) the Farah Manufacturing (U.K.)
Limited Retirement Benefits Scheme (2003), and (iii) the Farah
Manufacturing (U.K.) Limited Executive Corporate Retirements Account.
3.2 The Pension Schemes are the only arrangements under which the
Purchased Subsidiary has or could have any liability for the purpose
of providing benefits on retirement or death.
3.3 The Sellers have supplied to the Purchaser documents containing full,
accurate and up to date details of the Pension Schemes and the
Purchased Subsidiary's obligations and liabilities under it including
governing documents, member communications, actuarial valuations and
membership data.
3.4 The Purchased Subsidiary and the Pension Schemes comply and have at
all times complied with all legal and regulatory requirements
relevant to the Pension Schemes, the Purchased Subsidiary's
participation in the Pension Schemes and the provision of retirement
or death benefits.
3.5 No claim, dispute, complaint or investigation has arisen which
relates to the Pension Schemes or to the provision of retirement or
death benefits in respect of the Purchased Subsidiary's current and
former employees, and there is no reason why any such claim, dispute,
complaint or investigation could arise.
3.6 All amounts payable by, to and in respect of the Pension Schemes have
been paid.
3.7 The Pension Schemes are contracted out and are approved schemes
(within the meaning of Chapter I or IV of Part XIV of the ICTA).
3.8 No liability has been or may be imposed on the Purchased Subsidiary
under section 75 of the Pensions Act 1995 as a debt due to any
occupational Pension Schemes.
3.9 All benefits under the Pension Schemes (other than those which are
fully insured) are calculated on a money purchase basis only and
there is no obligation on the Purchased Subsidiary or under the
Pension Schemes (other than in the case of those benefits which are
fully insured) to provide any specified level of benefits.
APPENDIX A
FORM OF CONFIDENTIALITY AGREEMENT
APPENDIX B
BIDDING PROCEDURES ORDER
APPENDIX C
SALE APPROVAL ORDER
