EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of November 1, 2001
by and among
FRUIT OF THE LOOM, LTD.,
FRUIT OF THE LOOM, INC.,
UNION UNDERWEAR COMPANY, INC.,
FTL CARIBE, LTD.,
NEW FOL INC.
and
BERKSHIRE HATHAWAY INC.
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
Page
No.
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ARTICLE I SALE OF ASSETS; CLOSING.................................................................................2
1.01 Sellers' Assets..............................................................................2
1.02 No Assumption of Sellers' Liabilities........................................................6
1.03 Transferred Subsidiaries' Assets and Liabilities.............................................7
1.04 Purchase Price; Allocation; Adjustment......................................................11
1.05 The Closing; Escrow.........................................................................12
1.06 Further Assurances; Post-Closing Cooperation................................................14
1.07 Insurance Proceeds..........................................................................15
1.08 Post-Closing Working Capital Adjustment.....................................................15
1.09 Assumption of Contracts Between Execution and Closing.......................................17
1.10 Section 338(h)(10) Election.................................................................17
1.11 Guaranty by Berkshire.......................................................................18
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS.............................................................18
2.01 Corporate Existence.........................................................................18
2.02 Authority...................................................................................19
2.03 Capital Stock...............................................................................19
2.04 No Conflicts................................................................................19
2.05 Governmental Approvals and Filings..........................................................20
2.06 Legal Proceedings...........................................................................21
2.07 Compliance With Laws and Orders.............................................................21
2.08 Benefit Plans; ERISA........................................................................21
2.09 Environmental Matters.......................................................................22
2.10 Entire Business.............................................................................22
2.11 Financial Statements........................................................................23
2.12 Taxes.......................................................................................23
2.13 Title to FTL Assets.........................................................................24
2.14 Intellectual Property.......................................................................24
2.15 Insurance...................................................................................24
2.16 Labor Relations.............................................................................24
2.17 No Undisclosed Liabilities..................................................................25
2.18 Breaches of Representations and Warranties..................................................25
2.19 Absence of Changes..........................................................................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................25
3.01 Corporate Existence.........................................................................25
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3.02 Authority...................................................................................26
3.03 No Conflicts................................................................................26
3.04 Governmental Approvals and Filings..........................................................26
3.05 Legal Proceedings...........................................................................27
3.06 Financing...................................................................................27
ARTICLE IV COVENANTS OF SELLERS..................................................................................27
4.01 Regulatory and Other Approvals..............................................................27
4.02 HSR Filings.................................................................................28
4.03 Bidding Procedures..........................................................................28
4.04 Conduct of Business.........................................................................29
4.05 Certain Restrictions........................................................................29
4.06 Affiliate Transactions......................................................................31
4.07 Bankruptcy Court Approvals..................................................................31
4.08 Tax Matters.................................................................................33
4.09 No Solicitations............................................................................34
4.10 Fulfillment of Conditions...................................................................35
4.11 Access to Information.......................................................................35
ARTICLE V COVENANTS OF PURCHASER.................................................................................35
5.01 Regulatory and Other Approvals..............................................................35
5.02 Bankruptcy Court Approvals..................................................................36
5.03 Letters of Credit/ Surety Bonds.............................................................37
5.04 Employees...................................................................................37
5.05 Agreements Relating to the Auction..........................................................38
5.06 Fulfillment of Conditions...................................................................39
5.07 Confidentiality.............................................................................39
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER................................................................39
6.01 Representations and Warranties..............................................................39
6.02 Performance.................................................................................39
6.03 Officer's Certificates......................................................................39
6.04 Orders and Laws.............................................................................40
6.05 Regulatory Consents and Approvals...........................................................40
6.06 Confirmation Order and Sanction Order.......................................................40
6.07 [Intentionally omitted.]....................................................................40
6.08 Deliveries..................................................................................40
6.09 Material Adverse Effect.....................................................................40
6.10 Bankruptcy Proceedings......................................................................40
6.11 Other Specified Events......................................................................40
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLERS.................................................................41
7.01 Representations and Warranties..............................................................41
7.02 Performance.................................................................................41
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7.03 Officer's Certificates......................................................................41
7.04 Orders and Laws.............................................................................41
7.05 Regulatory Consents and Approvals...........................................................41
7.06 Confirmation Order and Sanction Order.......................................................42
7.07 [Intentionally omitted.]....................................................................42
7.08 Letters of Credit/Surety Bonds..............................................................42
7.09 Deliveries..................................................................................42
ARTICLE VIII TERMINATION.........................................................................................42
8.01 Termination.................................................................................42
8.02 Effect of Termination.......................................................................44
8.03 Guarantee of Payment of Termination Fee.....................................................44
ARTICLE IX DEFINITIONS...........................................................................................45
9.01 Definitions.................................................................................45
ARTICLE X MISCELLANEOUS..........................................................................................56
10.01 Non-Survival of Representations and Warranties..............................................56
10.02 Notices.....................................................................................56
10.03 Bulk Sales Act..............................................................................57
10.04 Entire Agreement............................................................................58
10.05 Expenses....................................................................................58
10.06 Public Announcements........................................................................58
10.07 Confidentiality.............................................................................58
10.08 Solicitation Materials......................................................................58
10.09 Waiver......................................................................................58
10.10 Amendment...................................................................................59
10.11 No Third Party Beneficiary..................................................................59
10.12 No Assignment; Binding Effect...............................................................59
10.13 Headings....................................................................................59
10.14 Retention of Bankruptcy Court Jurisdiction..................................................59
10.15 Governing Law...............................................................................59
10.16 Invalid Provisions..........................................................................59
10.17 Counterparts................................................................................59
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EXHIBITS
EXHIBIT A General Assignment and Xxxx of Sale
EXHIBIT B Assumption Agreement
EXHIBIT C Officer's Certificate of each Seller
EXHIBIT D Secretary's Certificate of each Seller
EXHIBIT E Officer's Certificate of Purchaser
EXHIBIT F Secretary's Certificate of Purchaser
EXHIBIT G Escrow Agreement
EXHIBIT H Bidding Procedures
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 1, 2001 (this
"Agreement"), by and among Fruit of the Loom, Ltd., a Cayman Islands company
("FTL Ltd."), Fruit of the Loom, Inc., a Delaware corporation ("FTL Inc."),
Union Underwear Company, Inc., a New York corporation ("Union", and together
with FTL Ltd. and FTL Inc., the "Sellers"), FTL Caribe, Ltd., a Cayman Islands
company (as to Section 8.03 hereof only) ("FTL Caribe"), New FOL Inc., a
Delaware corporation ("Purchaser") and Berkshire Hathaway Inc., a Delaware
corporation (as to Sections 1.11 and 5.01(b) hereof only) ("Berkshire").
RECITALS
1. Sellers and their Subsidiaries are engaged in the business
of the manufacture, distribution and wholesale and retail sale of basic apparel
products, with spinning, knitting, cloth finishing and cutting operations
located in the United States, Ireland and Northern Ireland, sewing and packaging
operations located in Central America, Mexico, the Caribbean and Morocco and
distribution and other facilities in the United States, Canada, United Kingdom
and Europe (the "Business");
2. Sellers and certain of their Subsidiaries (the "Debtors")
are debtors and debtors-in-possession under chapter 11 of title 11 of the United
States Code, 11 U.S.C. xx.xx. 101-1330 (as amended, the "Bankruptcy Code"),
having commenced voluntary cases (No. 99-04497 (PJW) (Jointly Administered))
(the "Reorganization Cases") on December 29, 0000 (xxx "Xxxxxxxx Xxxx") xx xxx
Xxxxxx Xxxxxx Bankruptcy Court for the District of Delaware (the "U.S.
Bankruptcy Court"), and on December 30, 1999, FTL Ltd. commenced provisional
liquidation proceedings (the "C.I. Proceedings") under the Companies Law of the
Cayman Islands (the "Companies Law") in the Grand Court of the Cayman Islands
(the "C.I. Grand Court") with respect to FTL Ltd. only;
3. Pursuant to Sections 1107(a) and 1108 of the Bankruptcy
Code, the Debtors continue to operate their respective businesses and manage
their respective properties, and are administering their respective estates
created by Section 541 of the Bankruptcy Code on the Petition Date (the
"Estates");
4. The Boards of Directors of Sellers have each determined
that it is advisable and in the best interests of the Estates and the
beneficiaries of such Estates to consummate, subject to confirmation of the Plan
by the U.S. Bankruptcy Court and sanctioning of the Scheme of Arrangement by the
C.I. Grand Court (as detailed in Section 4.07), and have approved, the
transactions contemplated by this Agreement, upon the terms and conditions
provided for herein;
5. The Board of Directors of Purchaser has determined that it
is advisable and in the best interests of its stockholders to consummate, and
has approved, the transactions contemplated by this Agreement, upon the terms
and conditions provided for herein;
6. In furtherance thereof, Sellers have agreed to file an
amended plan of reorganization (the "Plan") with the U.S. Bankruptcy Court and
an amended scheme of
arrangement (the "Scheme of Arrangement") with the C.I. Grand Court, to effect
the transactions contemplated by this Agreement upon the terms and subject to
the conditions set forth herein;
7. Also in furtherance thereof, pursuant to Section 4.07,
Sellers have agreed to, and to cause the other Debtors to: (i) transmit an
amended disclosure statement, once approved by the U.S. Bankruptcy Court, with
respect to the Plan (the "Disclosure Statement") to holders of claims and equity
interests in the Reorganization Cases, soliciting acceptance of the Plan, (ii)
transmit an amended explanatory statement, once approved by the C.I. Grand
Court, with respect to the Scheme of Arrangement (the "Explanatory Statement"),
to holders of secured claims in the C.I. Proceedings (and, if any, all other
parties in interest whose acceptance of the Scheme of Arrangement is required to
effect the transactions contemplated by this Agreement), soliciting acceptance
of the Scheme of Arrangement, (iii) seek entry of an order of the U.S.
Bankruptcy Court (the "Confirmation Order") confirming the Plan pursuant to
Section 1129 of the Bankruptcy Code (the date on which the Confirmation Order is
entered is hereinafter referred to as the "Confirmation Date") and (iv) seek
entry of an order of the C.I. Grand Court (the "Sanction Order") sanctioning the
Scheme of Arrangement pursuant to the Companies Law; and
8. Confirmation of the Plan and sanction of the Scheme of
Arrangement would, pursuant to Section 1141 of the Bankruptcy Code and Sections
86 and 87 of the Companies Law, require the effectuation of the transactions
contemplated by, and the provisions of, this Agreement, upon the terms and
subject to the conditions stated herein.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants, agreements and conditions herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
SALE OF ASSETS; CLOSING
1.01 Sellers' Assets. (a) Assets Transferred. On the terms and
subject to the conditions set forth in this Agreement, each Seller will sell,
transfer, convey, assign and deliver to Purchaser, free and clear of all Liens
other than Permitted Liens, and Purchaser will purchase and pay for, at the
Closing, all of each Seller's right, title and interest in, to and under all
Assets and Properties used in, of, or related to the Business, except as
otherwise provided in Section 1.01(b), as such Assets and Properties shall exist
on the Closing Date, including the following:
(i) Equity in Subsidiaries. All equity interests held
by each Seller in their respective direct Subsidiaries listed
in Section 1.01(a)(i) of Sellers' Disclosure Schedule and all
membership interest held by Union in Newco LLC (collectively,
the "Directly Transferred Subsidiaries");
(ii) Real Property. All real property and all of the
rights arising out of the ownership thereof or appurtenant
thereto other than the real property listed in Section
1.01(b)(iv) of Sellers' Disclosure Schedule (the "Real
Property"), together
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with all buildings, structures, facilities, fixtures and other
improvements thereto (the "Improvements");
(iii) Real Property Leases. All leases and subleases
of real property, including capital leases, but only to the
extent that such leases and subleases (x) have been entered
into after the Petition Date, or (y) have been assumed prior
to the date of this Agreement pursuant to an Order of the U.S.
Bankruptcy Court or C.I. Grand Court as listed on the Schedule
of Already Assumed Obligations or (z) are assumed by Sellers
by agreement of the parties hereto pursuant to Section 1.09,
in each case together with any options to purchase the
underlying property and leasehold improvements thereon and any
other rights, subleases, licenses, permits, deposits and
profits appurtenant to or related to such leases and subleases
(the "Real Property Leases");
(iv) Inventory. All inventories of raw materials,
work-in-process, finished goods, products under research and
development, demonstration equipment, office and other
supplies, parts, packaging materials and other accessories
related thereto whether held at, or in transit from or to, the
locations at which the Business is conducted, or located at
customers' premises (on consignment or otherwise), including
any of the foregoing purchased subject to any conditional
sales or title retention agreement in favor of any other
Person, together with all rights against suppliers of such
inventories (the "Inventory");
(v) Accounts Receivable. All trade accounts
receivable and all notes, bonds and other evidences of
Indebtedness and rights to receive payments arising out of
sales, and the Security Agreements related thereto, including
any rights with respect to any third party collection
procedures or any other Actions or Proceedings which have been
commenced in connection therewith (the "Accounts Receivable");
(vi) Tangible Personal Property. All furniture,
fixtures, equipment, machinery and other tangible personal
property (other than Inventory and Vehicles), whether at, or
in transit to or from, the locations at which the Business is
conducted or located at any customer's premises (on
consignment or otherwise), including any of the foregoing
purchased subject to any conditional sales or title retention
agreement in favor of any other Person, other than the
tangible personal property listed in Section 1.01(b)(v) of
Sellers' Disclosure Schedule and the tangible personal
property that is subject to a lease or sublease not being
transferred to Purchaser pursuant to Section 1.01(a)(vii) (the
"Tangible Personal Property");
(vii) Personal Property Leases. All leases and
subleases of Tangible Personal Property, but only to the
extent that such leases and subleases (x) have been entered
into after the Petition Date, or (y) have been assumed prior
to the date of this Agreement pursuant to an Order of the U.S.
Bankruptcy Court or C.I. Grand Court as listed on the Schedule
of Already Assumed Obligations or (z) are assumed by Sellers
by agreement of the parties hereto pursuant to Section 1.09,
in
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each case together with any options to purchase the underlying
property (the "Personal Property Leases");
(viii) Business Contracts. All Contracts (other than
the Real Property Leases, the Personal Property Leases and the
Accounts Receivable), but only to the extent that such
Contracts (x) have been entered into after the Petition Date,
or (y) have been assumed prior to the date of this Agreement
pursuant to an Order of the U.S. Bankruptcy Court or C.I.
Grand Court as listed on the Schedule of Already Assumed
Obligations or (z) are assumed by Sellers by agreement of the
parties hereto pursuant to Section 1.09, in each case
including Contracts relating to suppliers, sales
representatives, distributors, purchase orders, marketing
arrangements and manufacturing arrangements (the "Business
Contracts");
(ix) Prepaid Expenses. All prepayments and prepaid
expenses (the "Prepaid Expenses");
(x) Intangible Personal Property. All Intellectual
Property (including goodwill therein) and all rights,
privileges, claims, causes of action and options of or
relating or pertaining to the Business or the FTL Assets,
other than the items listed in Section 1.01(b)(vi) of Sellers'
Disclosure Schedule (collectively, the "Intangible Personal
Property");
(xi) Licenses. To the extent their transfer is
permitted under applicable Laws, all Licenses (including
applications therefor), but only to the extent that such
License (x) has been entered into after the Petition Date, or
(y) has been assumed prior to the date of this Agreement
pursuant to an Order of the U.S. Bankruptcy Court or C.I.
Grand Court as listed on the Schedule of Already Assumed
Obligations or (z) are assumed by Sellers by agreement of the
parties hereto pursuant to Section 1.09 (the "Business
Licenses");
(xii) Vehicles. All motor vehicles, other than the
vehicles listed in Section 1.01(b)(vii) of Sellers' Disclosure
Schedule and the motor vehicles that are subject to a lease or
sublease not being transferred to Purchaser under Section
1.01(a)(vii) or otherwise under Section 1.01(a) (the
"Vehicles");
(xiii) Security Deposits. All security deposits,
whether made by or on behalf of a Seller as lessee or held by
or on behalf of a Seller as lessor, under the Real Property
Leases (the "Security Deposits");
(xiv) Employee Benefit Plans. All assets and other
interests in and with respect to the Benefit Plans;
(xv) Claims. All rights (including indemnification)
and claims and recoveries under litigation against third
parties arising out of or relating to events prior to the
Closing Date, and all unexpired express or implied
representations, warranties, covenants, guaranties, and
indemnifications made to or in favor of a Seller, and the
rights to enforce the same and to recover therefrom, and all
other claims, causes of actions, rights of recovery or set-off
of every kind, other than
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those claims listed in Section 1.01(b)(x) of Sellers'
Disclosure Schedule ("Litigation Claims");
(xvi) Books and Records. All Books and Records, other
than the Books and Records described in Section 1.01(b)(viii)
(the "Business Books and Records");
(xvii) Insurance. Subject to Section 1.07, to the
extent the transfer of such policies is permitted by the terms
thereof and applicable Law, all life insurance policies
covering officers and other employees and all other insurance
policies, provided, however, that the benefits of such
policies to the extent any claims are made with respect to any
Excluded Liability that would otherwise be covered by such
policies shall not be sold, transferred, conveyed or assigned
to Purchaser (and if received by Purchaser shall be delivered
to the Estate of Sellers);
(xviii) Cash. All cash (including checks received
prior to the close of business on the Closing Date, whether or
not deposited or cleared prior to the close of business on the
Closing Date), commercial paper, certificates of deposit and
other bank deposits, treasury bills and other cash
equivalents, but excluding the restricted cash as specified in
Section 1.01(b)(i); and
(xix) Other Assets and Properties. All other Assets
and Properties used in, of, or related to the Business,
including goodwill related to the Business, except as
otherwise provided in Section 1.01(b) (the "Other Assets").
To the extent any of the Business Books and Records are items
susceptible to duplication and (x) are used in connection with any of the
Excluded Assets or Excluded Liabilities, (y) are required by Law to be retained
by Sellers or any Excluded Subsidiary, or (z) may be required or necessary in
connection with settlement of the Reorganization Cases, Sellers may deliver
photostatic copies or other reproductions from which, in the case of Business
Books and Records referred to in clause (x), information solely concerning the
Excluded Assets and the Excluded Liabilities has been deleted.
(b) Excluded Assets. Notwithstanding anything in this
Agreement to the contrary, the following Assets and Properties of Sellers shall
be excluded from the transfer to Purchaser under Section 1.01(a) and shall not
constitute FTL Assets:
(i) Restricted Cash. All cash listed as "restricted
cash" on Section 1.01(b)(i) of Sellers' Disclosure Schedule
("Restricted Cash");
(ii) Tax Refunds. All refunds or credits, if any, of
Taxes due to any Seller with respect to any period prior to
Closing;
(iii) Excluded Subsidiaries. All equity interests
held by each Seller in their respective direct Subsidiaries
listed in Section 1.01(b)(iii) of Sellers' Disclosure Schedule
(the "Excluded Direct Subsidiaries") and all Assets and
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Properties of the Excluded Direct Subsidiaries (unless such
Assets and Properties are specifically included by Section
1.01(a) as FTL Assets);
(iv) Real and Personal Property. The real and
personal property described in Section 1.01(b)(iv) of Sellers'
Disclosure Schedule;
(v) Tangible Personal Property. The furniture,
fixtures, equipment, machinery and other tangible personal
property described in Section 1.01(b)(v) of Sellers'
Disclosure Schedule;
(vi) Intangible Personal Property. The Intellectual
Property, rights, privileges, claims, causes of action and
options described in Section 1.01(b)(vi) of Sellers'
Disclosure Schedule;
(vii) Vehicles. The motor vehicles described in
Section 1.01(b)(vii) of Sellers' Disclosure Schedule;
(viii) Excluded Books and Records. The minute books,
stock transfer books and corporate seals of Sellers and any
other Books and Records relating primarily to the Excluded
Assets or the Excluded Liabilities;
(ix) Excluded Contracts. The rights of Sellers in, to
and under all Contracts of any nature where the obligations of
any Seller under such Contracts are not assumed by Purchaser
pursuant to this Agreement;
(x) Litigation Claims. Any potential rights
(including indemnification), claims and recoveries of Sellers
directly or indirectly relating to litigation against third
parties as listed in Section 1.01(b)(x) of Sellers' Disclosure
Schedule;
(xi) Investments. All investments listed in Section
1.01(b)(xi) of Sellers' Disclosure Schedule;
(xii) Other Assets and Properties. All other assets
listed in Section 1.01(b)(xii) of Sellers' Disclosure
Schedule; and
(xiii) Sellers' rights under this Agreement and the
Operative Agreements.
To the extent that Books and Records included in the Excluded
Assets relate to FTL Assets, Sellers shall deliver photostatic or other
reproductions thereof, from which Sellers may delete information solely
concerning the Excluded Assets and the Excluded Liabilities.
1.02 No Assumption of Sellers' Liabilities. Notwithstanding
anything in this Agreement to the contrary, no Liabilities of Sellers, including
any Liability of Sellers for Taxes, whether arising before, after, or in
connection with the Closing, shall be assumed by Purchaser (or any Subsidiary of
Purchaser) nor shall any such Liabilities constitute FTL Liabilities; provided
however, that Purchaser shall assume the Liabilities arising out of or relating
to the
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FTL Assets transferred to Purchaser pursuant to Section 1.01(a)(ii), (iii),
(vii), (viii), (xi), (xiv) and (xvii) and all Liabilities of Sellers incurred
after the Petition Date in the ordinary course in the ongoing operation of the
Business; provided further, that notwithstanding the assumption of liabilities
arising out of or relating to the Benefit Plans described in Section
1.01(a)(xiv), Purchaser shall not assume any Liability with respect to
retention, emergence, severance, reorganization bonuses or other payments due to
Employees as a result of the consummation of the Plan and Scheme of Arrangement
or the transactions contemplated by this Agreement.
1.03 Transferred Subsidiaries' Assets and Liabilities. (a)
Assets Included in FTL Assets. Sellers shall make provision in the Plan and to
the extent applicable in the Scheme of Arrangement, and shall make all necessary
transfers and assumptions and take all other necessary actions, and as
applicable shall cause their Subsidiaries to make such provisions, transfers and
assumptions and to take such actions, such that, at or upon the Closing:
(i) Equity in Indirectly Transferred Subsidiaries.
The Directly Transferred Subsidiaries shall own (directly or
indirectly) all of the equity interests in all of their
respective direct or indirect Subsidiaries (the "Indirectly
Transferred Subsidiaries" and together with the Directly
Transferred Subsidiaries, the "Transferred Subsidiaries"),
other than their respective direct or indirect Subsidiaries
listed in Section 1.03(a)(i) of Sellers' Disclosure Schedule
(the "Excluded Indirect Subsidiaries" and together with the
Excluded Direct Subsidiaries, the "Excluded Subsidiaries"),
and, with respect to each Indirectly Transferred Subsidiary
that is a Debtor, such equity interests shall, pursuant to the
Plan, be newly issued shares of common stock constituting all
of the issued and outstanding equity interests in such
Indirectly Transferred Subsidiary upon the Closing (together
with the equity interests of the Directly Transferred
Subsidiaries, the "Transferred Subsidiary Interests");
(ii) Assumed Contracts. The only Real Property
Leases, Personal Property Leases, Business Contracts, and
Business Licenses under which a Transferred Debtor Subsidiary
shall have any Liability shall be those Real Property Leases,
Personal Property Leases, Business Contracts, and Business
Licenses that (x) have been entered into by such Transferred
Debtor Subsidiary after the Petition Date, or (y) have been
assumed by such Transferred Debtor Subsidiary prior to the
date of this Agreement pursuant to an Order of the U.S.
Bankruptcy Court or C.I. Grand Court as listed on the Schedule
of Already Assumed Obligations, or (z) are assumed by such
Transferred Debtor Subsidiary by agreement of the parties
hereto pursuant to Section 1.09 (collectively, the "Assumed
Subsidiary Contracts");
(iii) Business Assets and Properties Held by Union.
All Assets and Properties used in, of, or relating to the
Business (other than any equity interests in the Directly
Transferred Subsidiaries), as such Assets and Properties shall
exist on the Closing Date, that are owned, leased, or held by
Union, shall be transferred from Union to Newco LLC on the
Closing Date prior to the consummation of the transactions
contemplated by this Agreement. The Plan shall provide that
Newco LLC will be a Delaware limited liability company wholly
owned by Union and
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formed prior to Closing ("Newco LLC"). Newco LLC shall be a
Directly Transferred Subsidiary and 100% of its membership
interests shall be transferred to Purchaser pursuant to
Section 1.01(a)(i).
(iv) Business Assets and Properties Held by
Transferred Subsidiaries. All Assets and Properties used in,
of, or relating to the Business, as such Assets and Properties
shall exist on the Closing Date, if owned, leased, or held by
a Transferred Subsidiary (giving effect to clause (iii)
above), shall be owned, leased, or held by such Transferred
Subsidiary, free and clear of all Liens other than Permitted
Liens; and
(v) Business Assets and Properties Held by Excluded
Subsidiaries. All Assets and Properties used in, of, or
related to the Business, as such Assets and Properties shall
exist on the Closing Date, if owned, leased, or held by an
Excluded Subsidiary immediately before the Closing, shall
become owned, leased, or held by Purchaser or the Transferred
Subsidiaries, as Purchaser directs, free and clear of all
Liens other than Permitted Liens.
The Transferred Subsidiary Interests, the Assumed Subsidiary
Contracts, and all other Assets and Properties used in, of, or related to the
Business owned, leased, or held, or upon the Closing to be owned, leased, or
held, by the Transferred Subsidiaries (giving effect to clause (iii) above),
together with the Assets and Properties to be transferred to Purchaser under
Section 1.01(a), constitute and are referred to herein collectively as the "FTL
Assets."
(b) Assets Excluded from FTL Assets. Notwithstanding anything
in this Agreement to the contrary, Sellers shall make provision in the Plan and
to the extent applicable in the Scheme of Arrangement, and shall make all
necessary transfers and assumptions and take all necessary other actions, and as
applicable shall cause their Subsidiaries to make such provisions, transfers and
assumptions and to take such actions, such that, at or upon the Closing:
(i) Assets of Excluded Indirect Subsidiaries. All
Assets and Properties of the Excluded Indirect Subsidiaries
(unless such Assets or Properties are specifically to be
transferred to Purchaser or the Transferred Subsidiaries
pursuant to Section 1.03(a)(v)) shall be excluded from and
shall not constitute FTL Assets;
(ii) Non-Business Assets of Transferred Subsidiaries.
The following Assets and Properties of the Transferred
Subsidiaries shall be excluded from and shall not constitute
FTL Assets:
(A) Restricted Cash. All Restricted Cash;
(B) Real and Personal Property. The real
and personal property described in
Section 1.03(b)(ii)(B) of Sellers'
Disclosure Schedule;
(C) Tangible Personal Property. The
furniture, fixtures, equipment,
machinery and other tangible personal
property
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described in Section 1.03(b)(ii)(C)
of Sellers' Disclosure Schedule;
(D) Excluded Contracts. The rights of the
Transferred Debtor Subsidiaries in,
to and under all Contracts of any
nature where the obligations of any
Transferred Debtor Subsidiary under
such Contracts are not expressly
assumed or to be assumed pursuant to
Sections 1.03(a) and 1.09, and the
rights of the Transferred
Subsidiaries that are not Debtors in,
to, and under the Contracts listed in
Section 1.03(b)(ii)(D) of Sellers'
Disclosure Schedule;
(E) Litigation Claims. Any potential
rights (including indemnification),
claims and recoveries of the
Transferred Subsidiaries directly or
indirectly relating to litigation
against third parties as listed in
Section 1.03(b)(ii)(E) of Sellers'
Disclosure Schedule; and
(F) Assets and other interests in and
with respect to non-qualified plans
(as "plan" is defined within the
definition of "Benefit Plans" in
Section 9.01).
The Assets and Properties excluded from the FTL Assets by this
Section 1.03(b) (and all proceeds received from the realization, settlement,
sale, transfer or other disposition, whether partial or full, of such Assets and
Properties), together with the Assets and Properties excluded from the FTL
Assets by Section 1.01(b) (and all proceeds received from the realization,
settlement, sale, transfer or other disposition, whether partial or full, of
such Assets and Properties), constitute and are referred to herein collectively
as the "Excluded Assets."
(c) Discharged Liabilities. Sellers shall make provision in
the Plan and to the extent applicable in the Scheme of Arrangement, and shall
make all necessary transfers and assumptions and take all other necessary
actions, and as applicable shall cause their Subsidiaries to make such
provisions, transfers and assumptions and to take such actions, such that:
(i) On the Closing Date, Newco LLC shall assume (1)
all Liabilities of Union incurred after the Petition Date in
the ordinary course in the ongoing operation of the Business,
(2) all Liabilities of Union incurred prior to the Petition
Date in the ongoing operation of the Business that (x) have
been assumed by Union prior to the date of this Agreement
pursuant to an Order of the U.S. Bankruptcy Court or C.I.
Grand Court as listed on the Schedule of Already Assumed
Obligations, or (y) the parties hereto have agreed will be
assumed by Newco LLC pursuant to Section 1.09, and (3) all
Liabilities of Union that would not be subject to discharge by
a non-individual operating chapter 11 debtor with the maximum
right to discharge under Section 1141 of the Bankruptcy Code
or any other provision of the Bankruptcy Code;
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(ii) At or upon the Closing, all Liabilities of each
of the Transferred Debtor Subsidiaries (including Liabilities
related to Laws involving the protection of human health and
the environment) shall be discharged by the Plan or the Scheme
of Arrangement to the full extent a discharge could be granted
to a non-individual operating chapter 11 debtor with the
maximum right to discharge under Section 1141 of the
Bankruptcy Code or any other provision of the Bankruptcy Code,
without any payment or consideration from the Transferred
Debtor Subsidiaries, other than (1) Liabilities of a
Transferred Debtor Subsidiary incurred after the Petition Date
in the ordinary course in the ongoing operation of the
Business and (2) Liabilities of a Transferred Debtor
Subsidiary incurred prior to the Petition Date in the ongoing
operation of the Business that (x) have been assumed by such
Transferred Debtor Subsidiary prior to the date of this
Agreement pursuant to an Order of the U.S. Bankruptcy Court or
C.I. Grand Court as listed on the Schedule of Already Assumed
Obligations, or (y) the parties hereto have agreed will be
assumed by such Transferred Debtor Subsidiary pursuant to
Section 1.09;
(iii) From and after the Closing, all parties in
interest whose claims against a Transferred Debtor Subsidiary
are discharged by the Plan or the Scheme of Arrangement shall
have recourse only against, and shall be entitled to look only
to, Sellers, the Excluded Subsidiaries, and the Estates of
Sellers and the Excluded Subsidiaries for any consideration of
any nature whatsoever for such discharged claim, or for any
resolution of any disputes relating to or arising from such
discharged claim;
(iv) From and after the Closing, (x) any Liability of
a Transferred Debtor Subsidiary for the Taxes of any other
Person under Code Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law, as transferee or
successor, by contract, or otherwise, and (y) the Liabilities
of the Transferred Debtor Subsidiaries listed in Section
1.03(c)(iv) of Sellers' Disclosure Schedule, shall be
discharged by the Plan and Scheme of Arrangement, without
payment or consideration from the Transferred Debtor
Subsidiaries, and shall be paid in a timely manner or adequate
provision shall be made for them in the Plan or the Scheme of
Arrangement, by Sellers or the Excluded Subsidiaries; provided
that Sellers and the Excluded Subsidiaries shall have the
ability to contest, in good faith, any such Liability or claim
of Liability asserted by any Person other than Purchaser and
its Affiliates (including, after the Closing, the Transferred
Subsidiaries); and
(v) Immediately following the Closing, there shall be
no non-current Liabilities of the Transferred Subsidiaries
relating to the Business of a nature required by GAAP to be
accrued, disclosed or reserved against in the Quarterly
Financial Statements other than (A) the capital leases
associated with the Xxxxxx County, KY and Kaiserslautern,
Germany facilities, (B) accrued benefit Liabilities under the
Pension Plan and (C) deferred income tax Liabilities (Section
1.03(c)(v) of Sellers' Disclosure Schedule sets forth the
amount of the liabilities listed in clauses (A) - (C) above as
of the Quarterly Financial Statements Date).
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(d) Assumed Liabilities Related to Assets of Excluded
Subsidiaries. Sellers shall make provision in the Plan and to the extent
applicable in the Scheme of Arrangement, and shall make all necessary transfers
and assumptions and take all other necessary actions, and as applicable shall
cause their Subsidiaries to make such provisions, transfers, and assumptions and
to take such actions, such that, at or upon the Closing, in connection with any
transfer and delivery of FTL Assets from an Excluded Debtor Subsidiary to a
Transferred Subsidiary under Section 1.03(a), a Transferred Subsidiary assumes
and agrees to pay, perform, and discharge when due all Liabilities of the
Excluded Debtor Subsidiary related to such FTL Asset, but only to the extent
that (1) such Excluded Debtor Subsidiary incurred such Liability after the
Petition Date in the ordinary course in the ongoing operation of the Business or
(2) such Excluded Debtor Subsidiary incurred such Liability prior to the
Petition Date in the ongoing operation of the Business and such Liability (x)
has been assumed prior to the date of this Agreement pursuant to an Order of the
U.S. Bankruptcy Court or C.I. Grand Court as listed on the Schedule of Already
Assumed Obligations, or (y) is assumed by the Excluded Debtor Subsidiary or
Transferred Subsidiary by agreement of the parties hereto pursuant to Section
1.09, except to the extent that any such Liability is discharged in the
Reorganization Cases.
(e) Certain Excluded Liabilities. Sellers shall make all
necessary transfers and assumptions and take all other necessary actions, and as
applicable shall cause their Subsidiaries to make such provisions, transfers,
and assumptions and to take such actions, such that, from and after the Closing,
the Transferred Subsidiaries that are not Transferred Debtor Subsidiaries have
no Liability for any of the Liabilities listed on Section 1.03(e) of Sellers'
Disclosure Schedule.
(f) FTL Liabilities. The Liabilities of Sellers assumed under
Section 1.02, the Liabilities of the Transferred Debtor Subsidiaries not
discharged under Section 1.03(c)(i), (ii) or (iv), the Liabilities of the
Transferred Subsidiaries that are not Transferred Debtor Subsidiaries (other
than those Liabilities listed on Section 1.03(e) of Sellers' Disclosure
Schedule), the Liabilities of the Transferred Subsidiaries and Union under the
Benefit Plans, and the Liabilities of the Excluded Debtor Subsidiaries assumed
under Section 1.03(d) constitute and are referred to herein collectively as the
"FTL Liabilities." The Liabilities excluded from the FTL Liabilities under
Section 1.02, together with the Liabilities to be discharged under Section
1.03(c)(i), (ii) or (iv) and the Liabilities excluded under Section 1.03(e),
constitute and are referred to herein collectively as the "Excluded
Liabilities." The Liabilities of the Transferred Subsidiaries immediately
following the Closing shall only include the FTL Liabilities.
1.04 Purchase Price; Allocation; Adjustment. (a) The aggregate
purchase price for the FTL Assets is $835,000,000, as adjusted pursuant to
Section 1.04(c), (d) and (e) (the "Purchase Price"). The Purchase Price shall be
payable in cash at the Closing in the manner provided in Section 1.05.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated in accordance with the methodology set forth in Section 1.04(b) of
Sellers' Disclosure Schedule (the "Allocation"). Each party hereto agrees that
no party will take a position on any income, transfer or gains Tax Return,
before any Governmental or Regulatory Authority charged with the collection of
any such Tax or in any judicial proceeding, that is in any manner inconsistent
with the terms of any such allocation without the consent of the other party. If
the Purchase Price, as
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ultimately determined after the application of Sections 1.04 and 1.08 is
increased or decreased, then the parties shall within ten Business Days after
such determination agree (pursuant to the methodology set forth in Section
1.04(b) of Sellers' Disclosure Schedule) upon the necessary modifications to the
Allocations made pursuant to this Section 1.04(b).
(c) Estimated Net Working Capital Adjustment. On the second
Business Day prior to the scheduled Closing Date, Sellers will deliver to
Purchaser a balance sheet for the Business (that is, reflecting only assets that
would be FTL Assets and liabilities that would be FTL Liabilities if the Closing
occurred on the balance sheet date and applying the definitions of Working
Capital Assets and Working Capital Liabilities) (the "FTL Reference Balance
Sheet") prepared in accordance with GAAP applied consistently with Sellers' past
practices and showing Net Working Capital, as of the last Saturday of the most
recent fiscal month preceding the scheduled Closing Date for which such a
balance sheet is available (the date of such balance sheet, the "FTL Reference
Balance Sheet Date"). In no event shall the FTL Reference Balance Sheet Date be
more than 50 days prior to the scheduled Closing Date. Sellers covenant to
prepare the FTL Reference Balance Sheet as promptly as practicable consistent
with good business practices. If the Net Working Capital as reflected on the FTL
Reference Balance Sheet is less than $540,000,000, then the Purchase Price to be
paid at Closing shall be reduced by the amount of such shortfall.
(d) Adjustment for Certain Payments. Not less than five
Business Days prior to the scheduled Closing Date, Sellers will deliver to
Purchaser a schedule showing all transactions after the FTL Reference Balance
Sheet Date in which any Working Capital Assets were used to pay, satisfy, or
discharge any Liability that was not a Working Capital Liability when so paid,
satisfied or discharged. On the Closing Date, Sellers will deliver to Purchaser
such schedule updated to the Closing Date. If the Net Working Capital as
reflected on the FTL Reference Balance Sheet is equal to or greater than
$540,000,000 but would be less than $540,000,000 if adjusted to reflect such
transactions, then the Purchase Price to be paid at Closing shall be reduced by
the amount that such Net Working Capital (as adjusted to reflect such
transactions) is less than $540,000,000. If the Net Working Capital as reflected
on the FTL Reference Balance Sheet is less than $540,000,000, then the Purchase
Price to be paid at Closing shall be reduced by the amount of such Working
Capital Assets used in such transactions.
(e) Funding Deficit. Not later than the last Business Day
before the scheduled Closing Date, Sellers will deliver to Purchaser the
calculation of the Funding Deficit, together with schedules showing how the
calculation was performed, including a schedule or schedules showing the
valuation of each investment in the Pension Plan. The Purchase Price to be paid
at Closing shall be further reduced by the amount of any Funding Deficit.
1.05 The Closing; Escrow. (a) Unless this Agreement shall have
been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 8.01, and subject to (i) the satisfaction or
waiver (where applicable) of the conditions set forth in Articles VI and VII and
(ii) the delivery of the items required by Section 1.04(c), (d) and (e), the
closing of the transactions contemplated by this Agreement (the "Closing") will
take place at the offices of Milbank, Tweed, Xxxxxx & XxXxxx LLP, Xxx Xxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m., local time, on the fifth
Business Day following satisfaction
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of the conditions set forth in Sections 6.05, 6.06, 7.05, and 7.06, unless
another date, time or place is mutually agreed to in writing by the parties
hereto (the "Closing Date").
(b) At the direction of and on behalf of Sellers, at the
Closing, (i) Purchaser will pay the Purchase Price less the amounts specified
under clauses (ii) and (iii) below by wire transfer of immediately available
United States funds to the Estates for distribution pursuant to the Plan, such
account information to be provided to Purchaser at least two Business Days
before the Closing Date, (ii) Purchaser will deliver, by wire transfer of
immediately available United States funds, the Escrow Amount to a commercial
bank reasonably acceptable to Purchaser and Sellers (the "Escrow Agent") under
an escrow agreement to be entered into on the Closing Date by and among Sellers,
Purchaser and the Escrow Agent substantially in the form of Exhibit G hereto
(the "Escrow Agreement") and (iii) Purchaser will deliver, by wire transfer of
immediately available United States funds, an amount equal to the amount
specified in Section 5.04(e) to the individuals specified in Section 5.04(e),
such account information to be provided to Purchaser at least two (2) Business
Days before the Closing Date.
(c) Simultaneously with Purchaser's delivery under
Section 1.05(b):
(i) each Seller will assign and transfer to Purchaser
all of its right, title and interest in, to, and under the FTL
Assets (except for the Transferred Subsidiary Interests of the
Directly Transferred Subsidiaries, which shall be assigned and
transferred to Purchaser in the manner provided in clause (ii)
of this Section 1.05(c)), free and clear of all Liens other
than Permitted Liens, by delivery to Purchaser of (I) a
General Assignment and Xxxx of Sale substantially in the form
of Exhibit A hereto (the "General Assignment"), duly executed
by each Seller, (II) an assignment of the Intellectual
Property in form and substance reasonably satisfactory to
Purchaser, (III) general warranty deeds in proper statutory
form for recording and otherwise in form and substance
reasonably satisfactory to Purchaser conveying title to the
Real Property, and (IV) such other good and sufficient
instruments of conveyance, assignment and transfer, in form
and substance reasonably acceptable to Purchaser's counsel, as
shall be effective to vest in Purchaser good title to the FTL
Assets transferred under Section 1.01;
(ii) Sellers will assign and transfer to Purchaser
good and valid title in and to the Transferred Subsidiary
Interests, free and clear of all Liens other than Permitted
Liens, by (I) delivering to Purchaser stock certificates
representing the Transferred Subsidiary Interests in FTL
Caribe, Ltd., Fruit of the Loom Canada, Inc. and FOL
International, duly endorsed in blank or accompanied by duly
executed stock powers endorsed in blank, (II) delivering to
Purchaser an executed assignment form transferring all
membership interests of Newco LLC to Purchaser, (III) causing
each of the Directly Transferred Subsidiaries that is a Debtor
to deliver to Union, pursuant to the Plan, certificates
evidencing newly issued shares of its common stock as the
Transferred Subsidiary Interests in such Directly Transferred
Subsidiary, (IV) Union delivering the certificates referred to
in subclause (III) above to Purchaser, duly endorsed in blank
or accompanied by duly executed stock powers endorsed in
blank, and (V) causing each of the
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Indirectly Transferred Subsidiaries that is a Debtor to
deliver to its immediate parent corporation, pursuant to the
Plan, a certificate evidencing newly issued shares of its
common stock as the Transferred Subsidiary Interests in such
Indirectly Transferred Subsidiary, in each case such
certificate to be in genuine and unaltered form, with
requisite stock transfer tax stamps, if any, attached, and
with such other good and sufficient instruments and
documentation required in the applicable jurisdiction in a
form and manner which is fully effective in the relevant
jurisdiction to transfer to Purchaser and vest in the
Transferred Subsidiaries all of the Transferred Subsidiary
Interests as contemplated herein (the General Assignment and
the other instruments referred to in clauses (i)(II) through
(IV) and this clause (ii) being collectively referred to
herein as the "Assignment Instruments"); and
(iii) Purchaser (or its wholly owned Subsidiary) and
the Transferred Subsidiaries, if applicable, will assume from
each Seller and Excluded Subsidiary the due payment,
performance and discharge of the FTL Liabilities by delivery
of (I) one or more Assumption Agreements substantially in the
form of Exhibit B hereto (the "Assumption Agreement"), duly
executed by the assuming party, and (II) such other good and
sufficient instruments of assumption, in form and substance
reasonably acceptable to Sellers' counsel, as shall be
effective to cause Purchaser (or its wholly owned Subsidiary)
and the Transferred Subsidiaries to assume the FTL Liabilities
as and to the extent provided in Section 1.02 and Section
1.03(d) (the Assumption Agreement and such other instruments
referred to in clause (II) being collectively referred to
herein as the "Assumption Instruments").
(d) At the Closing, there shall also be delivered to Sellers
and Purchaser the certificates and other documents to be delivered under
Articles VI and VII.
1.06 Further Assurances; Post-Closing Cooperation. (a) Subject
to the terms and conditions of this Agreement, at any time or from time to time
after the Closing, each of the parties hereto (or, with respect to each Seller,
its successors pursuant to the Plan and the Scheme of Arrangement) shall execute
and deliver such other documents and instruments of sale, transfer, conveyance,
assignment and confirmation, provide such materials and information and take
such other actions as may reasonably be necessary, proper or advisable, to more
effectively transfer, convey and assign to Purchaser or a Transferred
Subsidiary, to confirm Purchaser's and the Transferred Subsidiaries' right,
title, and interest in, all of the FTL Assets, to put Purchaser or a Transferred
Subsidiary in actual possession and operating control of the Business and the
FTL Assets, to assist Purchaser and the Transferred Subsidiaries in exercising
all rights with respect thereto, and otherwise to cause Sellers to fulfill their
obligations under this Agreement and the Operative Agreements.
(b) Following the Closing, each party (or, with respect to
each Seller, its successors pursuant to the Plan and the Scheme of Arrangement)
will afford the other party, its counsel and its accountants, during normal
business hours, reasonable access to the Books and Records and other data
relating to the Business in its possession with respect to periods prior to the
Closing and the right to make copies and extracts therefrom, to the extent that
such access
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may be reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) compliance with the requirements of any
Governmental or Regulatory Authority, (iii) the determination or enforcement of
the rights and obligations of any party to this Agreement or any of the
Operative Agreements, (iv) the settlement of the Reorganization Cases, or (v)
any actual or threatened Action or Proceeding. Upon request and in connection
with the settlement of the Reorganization Cases, Purchaser will provide to the
successors of each Seller pursuant to the Plan and the Scheme of Arrangement (at
the requesting party's expense) (x) copies of the above referenced information
and (y) reasonable access to the Employees to discuss matters relating to the
Business with respect to periods prior to the Closing.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business not referred to in paragraph (b) above, and
such information, documents or records are in the possession or control of the
other party, such other party shall use its best efforts to furnish or make
available such information, documents or records (or copies thereof) at the
recipient's request, in each case at the requesting party's cost and expense.
Any information obtained by such party in accordance with this paragraph shall
be held confidential by such party in accordance with Section 10.07.
(d) Notwithstanding anything to the contrary contained in this
Section 1.06, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records relevant to
such litigation or arbitration in accordance with paragraphs (b) and (c) of this
Section 1.06 shall be subject to applicable rules relating to discovery.
1.07 Insurance Proceeds. If any of the FTL Assets which
otherwise would have been transferred to Purchaser pursuant to this Agreement is
destroyed or damaged or taken in condemnation after the date hereof and prior to
the Closing, Sellers shall promptly give notice of the same to Purchaser, and
shall cause all necessary repairs or restoration to such properties to be made
promptly to the full extent of all available insurance proceeds. If any such
insurance proceeds or condemnation award are received by such Seller or
Transferred Subsidiary after the Closing, such Seller or Transferred Subsidiary
shall forthwith pay to Purchaser the insurance proceeds or condemnation award so
received less, in the case of insurance proceeds, the amount actually expended
by Sellers and the Transferred Subsidiaries to perform any repair or restoration
in connection with any such destruction, damage or taking prior to the Closing
Date. As and to the extent that there is available insurance under policies
maintained by Sellers or the Transferred Subsidiaries, their predecessors and
successors in respect of any FTL Liability, except for any such insurance
proceeds with respect to which the insured is directly or indirectly
self-insured or has agreed to indemnify the insurer, Sellers shall cause such
insurance to be applied toward the payment of such FTL Liability. For the
avoidance of doubt, the provisions of this Section 1.07 shall not affect the
right of Purchaser not to consummate the transactions contemplated by this
Agreement if the conditions to its obligations hereunder contained in Sections
6.01 or 6.09 have not been fulfilled.
1.08 Post-Closing Working Capital Adjustment. (a) Within
thirty (30) Business Days following the Closing Date, Purchaser shall deliver to
Sellers (i) a balance sheet
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for the Business as of the Closing Date (the "FTL Final Balance Sheet") and (ii)
a schedule (the "Working Capital Schedule") setting forth (X) Purchaser's
calculation of the Net Working Capital of the Business as of the Closing Date
("Closing Date Net Working Capital") and (Y) Purchaser's calculation of the
amount by which the Purchase Price should be adjusted, either upward or
downward, to the extent the Closing Date Net Working Capital is greater than or
less than the Adjusted Net Working Capital (such difference being the "Working
Capital Amount Due"). The FTL Final Balance Sheet shall be prepared by Purchaser
in good faith in accordance with GAAP applied consistently with Sellers' past
practices and with the practices applied in preparation of the FTL Reference
Balance Sheet, provided, however, that the FTL Final Balance Sheet, from which
the Working Capital Schedule is prepared, shall reflect as assets only FTL
Assets and shall reflect as liabilities only FTL Liabilities. Purchaser shall
apply the definitions of Working Capital Assets and Working Capital Liabilities
in the preparation of the Working Capital Schedule.
(b) Sellers may notify Purchaser in writing within twenty (20)
Business Days following delivery of the Working Capital Schedule (the "Dispute
Period"), that (i) Sellers agree with the Working Capital Schedule (an "Approval
Notice") or (ii) Sellers disagree with such calculations, identifying with
specificity the items with which Sellers disagree (a "Dispute Notice"). Upon
receipt by Purchaser of a Dispute Notice, Purchaser and Sellers will use good
faith efforts during the five (5) Business Day period following the date of
receipt of a Dispute Notice (the "Resolution Period") to resolve any differences
they may have as to the calculations of the Working Capital Schedule. Sellers
may request, and Purchaser shall provide, reasonable access during normal
business hours to the information and data used to calculate the Closing Date
Net Working Capital. If Purchaser and Sellers cannot reach written agreement
during the Resolution Period, within three (3) Business Days thereafter, their
disagreements, limited to only those issues still in dispute, shall be promptly
submitted for arbitration before an independent Big Five Accounting Firm jointly
selected by Purchaser and Sellers (the "Independent Accountant"), which firm
shall conduct such additional review as is necessary to resolve the specific
disagreements referred to it. Based upon such review, the Independent Accountant
shall determine the Working Capital Schedule (the "Independent Accountant
Determination of the Working Capital"). Such determination shall be completed as
promptly as practicable but in no event later than twenty (20) days following
the selection of the Independent Accountant and shall be confirmed by the
Independent Accountant in writing to, and shall be final and binding on,
Purchaser and Sellers for purposes of this Section 1.08.
(c) The fees and expenses of the Independent Accountant shall
be paid equally by Purchaser and Sellers.
(d) If the Working Capital Amount Due is owed to Purchaser
pursuant to this Section 1.08, then no later than the second Business Day after
the earlier of (i) the receipt by Purchaser of an Approval Notice, (ii) the
expiration of the Dispute Period if Purchaser has not received an Approval
Notice or a Dispute Notice within such period, (iii) the expiration of the
Resolution Period if Purchaser and Sellers have resolved any differences
regarding the Working Capital Schedule within such period and (iv) the receipt
of the Independent Accountant Determination of the Working Capital, Purchaser
and Sellers shall deliver a written notice to the Escrow Agent pursuant to the
Escrow Agreement instructing the Escrow Agent to pay (A) the Working Capital
Amount Due from the Escrow Amount to Purchaser and (B) the remainder of
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the Escrow Amount, if any, to the Estates on behalf of Sellers, in each case by
wire transfer of immediately available funds, without setoff or deduction of any
kind, within five (5) Business Days of receipt of such letter of instruction.
(e) If the Working Capital Amount Due is owed to Sellers
pursuant to this Section 1.08, then (A) no later than the fifth Business Day
after the earlier of (i) the receipt by Purchaser of an Approval Notice, (ii)
the expiration of the Dispute Period if Purchaser has not received an Approval
Notice or a Dispute Notice within such period, (iii) the expiration of the
Resolution Period if Purchaser and Sellers have resolved any differences
regarding the Working Capital Schedule within such period and (iv) the receipt
of the Independent Accountant Determination of the Working Capital, Purchaser
shall pay the Working Capital Amount Due to the Estates on behalf of Sellers by
wire transfer of immediately available funds without set-off or deduction of any
kind, and (B) no later than the second Business Day after the earlier of the
dates listed in clauses (i)-(iv) above, Purchaser and Sellers shall deliver a
written notice to the Escrow Agent pursuant to the Escrow Agreement instructing
the Escrow Agent to pay the Escrow Amount to the Estates on behalf of Sellers by
wire transfer of immediately available funds, without setoff or deduction of any
kind, within five (5) Business Days of receipt of such letter of instruction.
(f) If the Purchase Price is increased or decreased pursuant
to Section 1.08(a) and (b), the parties shall within ten Business Days after
such determination agree upon the necessary modifications to the Purchase Price
allocations made pursuant to Section 1.04(b).
(g) Interest on and other income from the Escrow Amount shall
be payable in accordance with the Escrow Agreement.
1.09 Assumption of Contracts Between Execution and Closing.
With respect to all Business Contracts, Real Property Leases, Personal Property
Leases and Licenses entered into prior to the Petition Date (i) (A) as to which
any Seller or Transferred Subsidiary that is a Debtor is a party or (B) which
relates to the FTL Assets or the Business but as to which an Excluded Subsidiary
that is a Debtor is a party and (ii) that has not been assumed or rejected prior
to the date of this Agreement pursuant to an Order of the U.S. Bankruptcy Court
or C.I. Grand Court, Purchaser agrees that such Seller, a Transferred Subsidiary
or, with respect to those items as to which Union is a party, Newco LLC shall
assume, and Sellers covenant to seek to have such Seller, Transferred Subsidiary
or Newco LLC, as the case may be, assume, those items listed on Section 1.09 of
Sellers' Disclosure Schedule to the extent Xxxx Xxxxxxx, in his reasonable
business judgment, determines such assumption is in the best interests of the
ongoing Business. With respect to those items so assumed, such Seller,
Transferred Subsidiary or Newco LLC, as the case may be, shall be responsible
for paying on or prior to Closing any cure costs associated with such
assumption.
1.10 Section 338(h)(10) Election. Purchaser and Sellers shall
(i) cooperate in the preparation of elections under Section 338(h)(10) of the
Code and any similar elections under state law ("Elections") with respect to the
purchase from Union of the stock of the Transferred Subsidiaries (except for the
stock of FOL International, Fruit of the Loom Canada, Inc., and Controladora
Fruit of the Loom, S.A. de C.V., and the membership interests in Newco LLC) and
(ii) jointly file such Elections on a timely basis and comply with the rules and
regulations
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applicable to such Elections. Purchaser's "adjusted grossed-up basis" (within
the meaning of the Treasury Regulations under Section 338 of the Code) in the
assets of each Transferred Subsidiary shall be allocated in accordance with the
Allocation. Purchaser and Sellers shall, at or prior to Closing, execute all
forms of any nature necessary to effectuate the Elections (including without
limitation IRS Form 8023 and Form 8594). Sellers will pay any Taxes attributable
to the making of the Elections.
1.11 Guaranty by Berkshire. Berkshire hereby guarantees the
performance by Purchaser or its assignee(s) of all of its obligations under this
Agreement, including Purchaser's obligation to provide funds as and when
required to pay (i) the Purchase Price in accordance with Section 1.05 and (ii)
to the extent required, the Working Capital Amount Due, provided, however, that
Berkshire does not guarantee the assumption, payment, performance, or discharge
of any FTL Liabilities.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in the corresponding section of Sellers'
Disclosure Schedule delivered by Sellers to Purchaser prior to the execution and
delivery of this Agreement ("Sellers' Disclosure Schedule"), each Seller
represents and warrants to Purchaser that as of the date hereof:
2.01 Corporate Existence. (a) Each Seller is a corporation or
company duly incorporated or organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation or organization, and has all
requisite corporate power and authority to conduct the Business as and to the
extent now conducted by it and to own, use and lease its Assets and Properties.
(b) Each Transferred Subsidiary is a corporation, company or
limited liability company duly incorporated, organized or formed, validly
existing and in good standing under the Laws of its jurisdiction of
incorporation, organization or formation and has all requisite corporate or
limited liability company power and authority to conduct the Business as and to
the extent now conducted by it and to own, use and lease its Assets and
Properties, except for such failures to be so formed, existing and in good
standing or to have such power and authority which, individually or in the
aggregate, are not having, and would not reasonably be expected to have, a
Material Adverse Effect on the Condition of the Business. Each Transferred
Subsidiary is qualified, or licensed or admitted to do business and is in good
standing in each jurisdiction in which the ownership, use or leasing of its
Assets and Properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures to be
so qualified, licensed or admitted and in good standing (i) resulting from the
commencement or continuance of the Reorganization Cases or (ii) which are not
having, and would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect on the Condition of the Business. Section
2.01(b) of Sellers' Disclosure Schedule sets forth, in the case of a corporation
or company, (w) the name and jurisdiction of incorporation of each Transferred
Subsidiary that is a corporation or company, (x) its authorized capital stock,
(y) the number of issued and outstanding shares of capital stock of such
Transferred Subsidiary and (z) the owners of such shares, and, in the case of a
limited liability company (excluding Newco
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LLC), (A) the name and jurisdiction of formation of each Transferred Subsidiary
that is a limited liability company, (B) the name of each Person who owns any
membership, ownership or other equity interests in such Transferred Subsidiary
and (C) the class and amount of the membership, ownership or other equity
interests in such Transferred Subsidiary owned by such Person.
2.02 Authority. Each Seller has the requisite corporate power
and authority to execute and deliver this Agreement and each of the Operative
Agreements to which it shall be a party, to perform its obligations hereunder
and thereunder and, upon entry of the Confirmation Order and the Sanction Order,
to consummate the transactions contemplated hereby and thereby. The execution
and delivery by each Seller of this Agreement and the Operative Agreements and
the performance by each Seller of its obligations hereunder and thereunder, have
been duly and validly authorized by the Board of Directors of such Seller, and,
upon entry of the Confirmation Order and the Sanction Order, no other corporate
action on the part of such Seller or its stockholders is necessary. Subject to
the entry of an Order of the U.S. Bankruptcy Court approving the Bidding
Procedures Motion (as to the provisions of this Agreement covered thereby) or
the entry of the Confirmation Order and the Sanction Order (as to the other
provisions of this Agreement), this Agreement has been duly and validly executed
and delivered by each Seller and constitutes, and upon the execution and
delivery by each Seller of the Operative Agreements, such Operative Agreements
will constitute, the legal, valid and binding obligations of such Seller,
enforceable against such Seller in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting the enforcement of creditors rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
2.03 Capital Stock. The outstanding shares of capital stock or
share capital of, or membership interests, ownership interests or other equity
interests in, as the case may be, each Transferred Subsidiary that comprise the
Transferred Subsidiary Interests are duly authorized, validly issued, fully paid
and nonassessable and are owned, beneficially and of record, by Sellers or by
other Transferred Subsidiaries, free and clear of any Liens other than Liens
that will be released or discharged pursuant to the Confirmation Order or the
Sanction Order at or prior to Closing. There are no (i) outstanding Options
obligating any Seller or any Transferred Subsidiary to issue or sell any shares
of capital stock or share capital of, or any membership interests, ownership
interests or other equity interests in, any Transferred Subsidiary or to grant,
extend or enter into any such Option, or (ii) voting trusts, proxies or other
commitments, understandings, restrictions or other arrangements in favor of any
person with respect to the voting of or the right to participate in dividends or
other earnings on any capital stock or share capital of, or any membership
interest, ownership interest or other equity interest in, any Transferred
Subsidiary (other than any such arrangement in favor of a Seller or Transferred
Subsidiary, which arrangement will be terminated on or prior to Closing), or
(iii) commitments, understandings, obligations, or arrangements of a Seller or
any Subsidiary to repurchase, redeem, or otherwise acquire or make any payment
in respect of or measured or determined based on the value of capital stock or
share capital of, or any membership interest, ownership interest or other equity
interest in, any Transferred Subsidiary.
2.04 No Conflicts. The execution and delivery by each Seller
of this Agreement does not, and the execution and delivery by each Seller of
each of the Operative Agreements to which such Seller shall be a party, the
performance by each Seller of its
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obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby, including the
performance by any Transferred Subsidiary or Excluded Subsidiary of transfers,
assumptions or other actions required of it by this Agreement or the Operative
Agreements to effect such consummation, will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Charter Documents of any Seller, or
Transferred Subsidiary or Excluded Subsidiary;
(b) result in a violation or breach of any term or provision
of any Law or Order applicable to any Seller, Transferred Subsidiary or Excluded
Subsidiary, or any of the FTL Assets, or any of the Assets and Properties of
such Transferred Subsidiary or Excluded Subsidiary, other than such violations
or breaches (i) which would not, individually or in the aggregate, reasonably be
expected to adversely affect the validity or enforceability of this Agreement or
any of such Operative Agreements or to have a Material Adverse Effect on the
Condition of the Business or (ii) as would occur solely as a result of the
identity or the legal or regulatory status of Purchaser or any of its
Affiliates; or
(c) except as would not, individually or in the aggregate,
reasonably be expected to adversely affect the ability of Sellers to consummate
the transactions contemplated hereby or by any Operative Agreement, or to
perform its obligations hereunder or thereunder, and would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Condition of the Business, (i) result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require any Seller, Transferred Subsidiary or Excluded Subsidiary to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, or (v) result in the creation or imposition
of any Lien upon any FTL Asset or the Assets and Properties of (or to be
transferred to) any Transferred Subsidiary under, any Contract or License to
which any Seller, Transferred Subsidiary or Excluded Subsidiary, or by which any
FTL Asset or Asset and Property of (or to be transferred to) any Transferred
Subsidiary, is bound.
2.05 Governmental Approvals and Filings. No consent, approval
or action of, filing with or notice to any Governmental or Regulatory Authority
is required to be obtained by any Seller or any of its Subsidiaries in
connection with the execution, delivery and performance of this Agreement or any
of the Operative Agreements, or the consummation of the transactions
contemplated hereby or thereby, except (i) for consents, approvals or actions
of, and filings with or notice to the U.S. Bankruptcy Court and the C.I. Grand
Court, (ii) for the necessary filings by Sellers under the HSR Act or any
antitrust or competition Law of any foreign jurisdiction applicable to the
transactions contemplated by this Agreement and the expiration or earlier
termination of the applicable waiting period(s) thereunder, (iii) those
consents, approvals, actions or filings as would be required solely as a result
of the identity or the legal or regulatory status of Purchaser or any of its
Affiliates, and (iv) where the failure to obtain any such consent, approval or
action, to make any such filing or to give any such notice, individually or in
the aggregate, would not reasonably be expected to adversely affect the ability
of Sellers and their Subsidiaries to consummate the transactions contemplated by
this Agreement or any of such Operative
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Agreements or to perform their obligations hereunder or thereunder or to have a
Material Adverse Effect on the Condition of the Business or on a Transferred
Subsidiary.
2.06 Legal Proceedings. Except for Claims that will be
discharged pursuant to the Confirmation Order or the Sanction Order:
(a) other than the Reorganization Cases, there are no Actions
or Proceedings pending or, to the Knowledge of Sellers, threatened against,
relating to or affecting, any Seller or any of its Subsidiaries with respect to
the Business or any of the FTL Assets which would reasonably be expected (i) to
result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements, or (ii)
individually or in the aggregate with other such Actions or Proceedings, to have
a Material Adverse Effect on the Condition of the Business or on the Transferred
Subsidiaries taken as a whole; and
(b) except for Orders of the U.S. Bankruptcy Court or the C.I.
Grand Court, there are no Orders outstanding against any Seller or any of its
Subsidiaries which, individually or in the aggregate with other such Orders,
would reasonably be expected to have a Material Adverse Effect on the Condition
of the Business or on the Transferred Subsidiaries taken as a whole.
2.07 Compliance With Laws and Orders. No Seller or any of its
Subsidiaries is in violation of or in default under any Law or Order applicable
to the Business or the FTL Assets the effect of which, individually or in the
aggregate with other such violations and defaults, would reasonably be expected
to have a Material Adverse Effect on the Condition of the Business or on the
Transferred Subsidiaries taken as a whole. Each Seller and each Transferred
Subsidiary that is a Debtor has complied in all material respects with all
applicable Laws and Orders applicable to the Reorganization Cases.
2.08 Benefit Plans; ERISA. (a) Except as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Condition of the Business, each Benefit Plan has been
administered and is in compliance with the terms of such Benefit Plan and all
applicable Laws.
(b) Each Benefit Plan intended to be qualified has received a
favorable determination from the IRS and, except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Condition of the Business, to the Knowledge of Sellers, nothing has occurred
since that would adversely affect such qualification.
(c) Except as would not, individually or in the aggregate with
all other such "reportable events" and "accumulated funding deficiencies,"
reasonably be expected to have a Material Adverse Effect on the Condition of the
Business: (i) no "reportable event" (as such term is used in section 4043 of
ERISA) (other than those events for which the 30 day notice has been waived
pursuant to the regulations) is pending with respect to any Benefit Plan, and
(ii) no "accumulated funding deficiency" (as such term is used in section 412 or
4971 of the Code) has occurred during the last 5 years with respect to any
Benefit Plan.
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(d) No Benefit Plan has been terminated, where such
termination has resulted in liability under Title IV of ERISA that, individually
or in the aggregate with all other such terminations, would reasonably be
expected to have a Material Adverse Effect on the Condition of the Business.
(e) Except as otherwise provided in this Agreement, the
consummation of the transactions contemplated by this Agreement and by the
Operative Agreements will not (i) entitle any current or former employee of any
Seller or Subsidiary of a Seller to severance pay, unemployment compensation or
any other payment or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee.
(f) There are no pending claims by or on behalf of any Benefit
Plan or by any employee or beneficiary covered under such Benefit Plan or
otherwise involving any such Benefit Plan (other than routine claims for
benefits).
2.09 Environmental Matters. (a) Each Seller and Transferred
Subsidiary is in compliance with all Laws (but with respect to Sellers, only
insofar as such Laws relate to the FTL Assets), involving the protection of
human health and the environment, except where the failure to be in compliance
would not reasonably be expected, individually or in the aggregate with other
such failures, to have a Material Adverse Effect on the Condition of the
Business.
(b) Except with respect to Claims that have been or will be
discharged pursuant to the Confirmation Order and/or the Sanction Order, no
written or, to the Knowledge of Sellers, oral notification of a release of a
hazardous substance (as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA")) has been filed by or on
behalf of any Seller with respect to any FTL Asset or by any Transferred
Subsidiary since CERCLA became effective, and no notice has been received by a
Seller or Transferred Subsidiary informing such Seller or Transferred Subsidiary
of potential liability for a release of a hazardous substance under CERCLA or
any similar state or foreign Law. No site or facility owned or operated, or that
has been owned or operated, by a Seller or any Transferred Subsidiary is or has
been listed on the CERCLIS published by the U.S. Environmental Protection Agency
or on any similar list maintained by any state in which any FTL Asset is
located.
(c) None of the FTL Assets or any other Assets and Properties
of any Transferred Subsidiary contains or is affected by the presence of any
Hazardous Substance in a manner that would reasonably be expected to have a
Material Adverse Effect on the Condition of the Business.
(d) No Transferred Subsidiary is liable with respect to any
matter or Claim under or in connection with any applicable Laws or governmental
approvals involving the protection of human health or the environment that
arises from or relates to any Excluded Asset or Excluded Subsidiary.
2.10 Entire Business. The sale of FTL Assets by Sellers to
Purchaser and the provisions, transfers, assumptions, and other actions caused
by Sellers of their Subsidiaries pursuant to this Agreement will effectively
convey to Purchaser all of the FTL Assets and the entire Business and all of the
tangible and intangible property used by Sellers and the
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Transferred Subsidiaries (whether owned, leased or held under license by Sellers
and the Transferred Subsidiaries, by any of their Affiliates or by others) in
connection with the conduct of the Business as heretofore conducted by Sellers
and the Transferred Subsidiaries (except for the Excluded Assets) including,
without limitation, all tangible Assets and Properties of Sellers and the
Transferred Subsidiaries reflected in the consolidated balance sheet included in
the Quarterly Financial Statements and Assets and Properties acquired since the
Quarterly Financial Statement Date in the conduct of the Business, other than
the Excluded Assets and Assets and Properties disposed of in the ordinary course
of business since such date. There are no shared facilities or services which
are used in connection with any business or other operations of either Sellers
or any of their respective Affiliates other than the Business, and, as of the
Closing, neither Sellers nor any Excluded Subsidiary shall hold any License that
is material to the Business.
2.11 Financial Statements. Subject to the qualifications
expressed in the opinion of Sellers' auditors dated February 13, 2001, in
connection with Sellers' December 30, 2000 financial statements, each Seller's
audited financial statements for the year ended December 30, 2000 and unaudited
financial statements for the nine-month period ended September 30, 2001
(collectively, the "FTL Financial Statements"), as of their respective dates,
fairly present in all material respects in accordance with GAAP the consolidated
financial position of each Seller and their respective consolidated Subsidiaries
as at the respective dates thereof and the consolidated results of their
operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Sellers have not,
since December 31, 2000, made any material change in the accounting practices or
policies applied in the preparation of the FTL Financial Statements. The Books
and Records of Sellers and their Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP.
2.12 Taxes.
(a) Each of the Transferred Subsidiaries has filed all
material Tax Returns that it was required to file. All such Tax Returns were
correct and complete in all material respects. All material Taxes owed by any of
the Transferred Subsidiaries (whether or not shown on any Tax Return) have been
paid. None of the Transferred Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return.
(b) There is no material dispute or claim concerning any Tax
liability of any of the Transferred Subsidiaries either (i) claimed or raised by
any authority in writing or (ii) as to which any Seller has Knowledge.
(c) None of the Transferred Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(d) None of the Transferred Subsidiaries is a party to any tax
allocation or sharing agreement. None of the Transferred Subsidiaries (i) has
been a member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of
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which was FTL, Inc.) or (ii) has any liability for the Taxes of any person
(other than any member of the group the common parent of which is FTL, Inc.)
under Reg. ss. 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(e) The unpaid Taxes of the Transferred Subsidiaries, whether
or not then due and payable, (1) did not, as of the Quarterly Financial
Statements Date, exceed the reserve for Tax liability (other than any reserve
for deferred taxes established to reflect timing differences between book and
tax income) set forth on the face of the Quarterly Financial Statements, and (2)
will not exceed that reserve as adjusted for operations and transactions through
the Closing Date in accordance with the past custom and practice of the
Transferred Subsidiaries in filing their Tax Returns.
2.13 Title to FTL Assets. Each Seller has good and marketable
title to, or in the case of leaseholds, valid leasehold interests in, its Assets
and Properties that comprise part of the FTL Assets, free and clear of any Liens
other than Permitted Liens or Liens that will be released or discharged pursuant
to the Confirmation Order or the Sanction Order at or prior to the Closing. Each
Transferred Subsidiary has good and marketable title to, or in the case of
leaseholds, valid leasehold interests in, its Assets and Properties that
comprise part of the FTL Assets, free and clear of any Liens other than
Permitted Liens or Liens that will be released or discharged pursuant to the
Confirmation Order or the Sanction Order at or prior to the Closing.
2.14 Intellectual Property. (a) All Intellectual Property
owned by a Seller or Transferred Subsidiary that is material to the conduct of
the Business is owned free and clear of any Liens or other restrictions upon use
or enjoyment and other than Permitted Liens or Liens that will be released or
discharged pursuant to the Confirmation Order or the Sanction Order at or prior
to the Closing. The trademarks that are included in the Intellectual Property
have either been duly registered with, or are covered by pending applications
filed with, the United States Patent and Trademark Office or such other
applicable offices, foreign or domestic. Sellers have taken such other
commercially reasonable actions to ensure the full protection of their and the
Transferred Subsidiaries' respective rights to, and title and interest in, such
Intellectual Property under applicable Law. Such registrations and filings
remain in full force and effect, in each case to the extent material to the
Business.
(b) To the Knowledge of Sellers, no Seller or Transferred
Subsidiary is infringing upon the Intellectual Property rights of any other
Person.
2.15 Insurance. All insurance policies of any kind or nature
owned by or issued to any Seller or Transferred Subsidiary, including, without
limitation, policies for fire, life, theft, product liability, public liability,
property damage, other casualty, workers' compensation, employee health and
welfare, title, property and liability, with respect to the Business and/or the
FTL Assets are in full force and effect and are of a nature and provide such
coverage as is sufficient and as is reasonably appropriate or is customarily
carried by companies engaged in business similar to the Business.
2.16 Labor Relations. No Seller or Transferred Subsidiary is a
party to or bound by any collective bargaining agreement, and there are no labor
unions or other organizations representing, purporting to represent or
attempting to represent any employees employed in the operation of the Business.
There has not occurred or, to the Knowledge of Sellers, been threatened any
material strike, slowdown, picketing, work stoppage, concerted
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refusal to work overtime or other similar labor activity with respect to any
employees employed in the operation of the Business. There are no labor disputes
currently subject to any grievance procedure, arbitration or litigation, or any
Action or Proceeding, and there is no representation petition pending or, to the
Knowledge of Sellers, threatened with respect to any employee employed in the
operation of the Business. No Seller or Transferred Subsidiary has received any
notice of the intent of any Governmental or Regulatory Authority responsible for
the enforcement of labor or employment laws to conduct an investigation relating
to the Business, and no such investigation is in progress.
2.17 No Undisclosed Liabilities. No Seller or Transferred
Subsidiary has any Liabilities of any nature arising out of or relating to the
Business, except (i) to the extent disclosed or reserved against in the
Quarterly Financial Statements, (ii) for Liabilities not required by GAAP to be
accrued, disclosed or reserved against in the Quarterly Financial Statements
(other than Liabilities that are known to Sellers or the Transferred Subsidiary,
reasonably estimable, material to the Business, and not required by GAAP to be
accrued, disclosed or reserved against solely because they are judged not to be
probable or reasonably possible to occur), and (iii) for Liabilities that (x)
were incurred after the Quarterly Financial Statement Date in the ordinary
course of business consistent with past practice and (y) individually and in the
aggregate have not had and would not reasonably be expected to have a Material
Adverse Effect on the Condition of the Business.
2.18 Breaches of Representations and Warranties. The officers
and directors and the Joint Provisional Liquidators of FTL, Ltd. shall not be
liable for any breach by Sellers of any representation or warranty given in the
Agreement.
2.19 Absence of Changes. From the Quarterly Financial
Statement Date to the date of this Agreement, there has not occurred a Material
Adverse Effect on the Condition of the Business or any change, event or
development that individually or in the aggregate would reasonably be expected
to have a Material Adverse Effect on the Condition of the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the corresponding section of the
Disclosure Schedule delivered by Purchaser to Sellers prior to the execution and
delivery of this Agreement (the "Purchaser's Disclosure Schedule"), Purchaser
represents and warrants to Sellers that as of the date hereof:
3.01 Corporate Existence. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Delaware and has all requisite corporate power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its Assets
and Properties and to carry on its business as now conducted, except for such
failures to be formed, existing and in good standing or to have such power and
authority which, individually or in the aggregate, are not having, and would not
be reasonably expected to have, a Material Adverse Effect on the business,
financial condition or results of operations of Purchaser and its Subsidiaries,
taken as a whole. Section 3.01 of Purchaser's Disclosure Schedule lists as of
the date of this Agreement all holdings of Berkshire, whether
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direct or indirect, of the beneficial ownership of the outstanding voting
securities (or similar ownership interests), and any directors or officers of
Berkshire that are also directors or officers, of any company that engages in
the manufacture, distribution or sale of apparel (other than the sale of apparel
in retail establishments), to the extent that such ownership or director or
officer position must be disclosed in a filing under the HSR Act or antitrust or
competition law of any foreign jurisdiction with respect to this Agreement.
3.02 Authority. Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and each of the Operative
Agreements to which it shall be a party and to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by Purchaser of this Agreement and such
Operative Agreements, and the performance by Purchaser of its obligations
hereunder and thereunder, have been duly and validly authorized by the Board of
Directors of Purchaser, and no other corporate action on the part of Purchaser
is necessary. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes, and upon the execution and delivery by Purchaser of
the Operative Agreements, such Operative Agreements will constitute, legal,
valid and binding obligations of Purchaser, enforceable against Purchaser in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at Law).
3.03 No Conflicts. The execution and delivery by Purchaser of
this Agreement does not, and the execution and delivery by Purchaser of the
Operative Agreements, the performance by Purchaser of its obligations under this
Agreement and such Operative Agreements and the consummation of the transactions
contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Charter Documents of Purchaser;
(b) result in a violation or breach of any term or provision
of any Law or Order applicable to Purchaser or any of its Assets and Properties,
other than such violations or breaches as would occur solely as a result of the
identity or the legal or regulatory status of Sellers or any of their respective
Affiliates; or
(c) except as would not, individually or in the aggregate,
reasonably be expected to adversely affect the ability of Purchaser to
consummate the transactions contemplated hereby or by any of such Operative
Agreements or to perform its obligations hereunder or thereunder, (i) result in
a violation or breach of, (ii) constitute (with or without notice or lapse of
time or both) a default under, (iii) require Purchaser or any of its
Subsidiaries to obtain any consent, approval or action of, make any filing with
or give any notice to any Person as a result or under the terms of, or (iv)
result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, or (v) result in the
creation or imposition of any Lien upon Purchaser or any of its Assets and
Properties under, any Contract or License to which Purchaser or any of its
Assets and Properties is bound.
3.04 Governmental Approvals and Filings. No consent, approval
or action of, filing with or notice to any Governmental or Regulatory Authority
is required to be obtained by
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Purchaser or any of its Subsidiaries in connection with the execution, delivery
and performance of this Agreement, or any of the Operative Agreements or the
consummation of the transactions contemplated hereby or thereby, except (i) for
consents, approvals or actions of, and filings with or notices to the U.S.
Bankruptcy Court, (ii) for necessary filings by Purchaser or its Affiliates
under the HSR Act or any antitrust or competition Law of any foreign
jurisdiction applicable to the transactions contemplated by this Agreement and
the expiration or earlier termination of the applicable waiting period(s)
thereunder, (iii) those consents, approvals, actions or filings as would be
required solely as a result of the identity or the legal or regulatory status of
Sellers or any of their respective Affiliates, and (iv) where the failure to
obtain any such consent, approval or action, to make any such filing or to give
any such notice would not reasonably be expected to adversely affect Purchaser
in any material respect or the ability of Purchaser to consummate the
transactions contemplated by this Agreement or any of such Operative Agreements
or to perform its obligations hereunder or thereunder.
3.05 Legal Proceedings. Except for the Reorganization Cases,
there are no Actions or Proceedings pending or, to the Knowledge of Purchaser,
threatened against, relating to or affecting, Purchaser or any of its Assets and
Properties which would reasonably be expected to result in the issuance of an
Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
3.06 Financing. Berkshire has sufficient cash and/or available
credit facilities to provide Purchaser and/or its assignees with the funds to
pay the Purchase Price, to make any Working Capital adjustment payment required
under Section 1.08 and to make all other necessary payments of fees and expenses
of Purchaser in connection with the transactions contemplated by this Agreement
and the Operative Agreements.
ARTICLE IV
COVENANTS OF SELLERS
Each Seller covenants and agrees with Purchaser that, at all
times from and after the date hereof until the Closing (and after the Closing to
the extent expressly contemplated herein), each Seller will, and will cause each
of its Subsidiaries to, comply with all covenants and provisions of this Article
IV, except to the extent Purchaser may otherwise consent in writing.
4.01 Regulatory and Other Approvals. (a) Sellers will, and
will cause their respective Subsidiaries to, as promptly as practicable, (i) use
all reasonable efforts to obtain all consents, approvals or actions of, make all
filings with and give all notices to Governmental or Regulatory Authorities or
any other Person required of Sellers for Sellers and Purchaser to consummate the
transactions contemplated hereby and by the Operative Agreements, including
without limitation those described in Sections 2.04(c) and 2.05 of Sellers'
Disclosure Schedule, (ii) provide such other information and communications to
such Governmental or Regulatory Authorities or other Persons as such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (iii) provide reasonable cooperation to Purchaser in
connection with the performance of its obligations under Section 5.01. Sellers
will, and will cause their respective Subsidiaries to, provide prompt
notification to Purchaser when
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any such consent, approval, action, filing or notice referred to in clause (i)
above is obtained, taken, made or given, as applicable, and will advise
Purchaser of any communications (and, unless precluded by applicable Law,
provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
(b) In furtherance and not in limitation of the covenants of
Sellers in Sections 4.01(a) and 4.02, Sellers shall, and shall cause their
Subsidiaries to, use all reasonable efforts to resolve such objections, if any,
as may be asserted with respect to the transactions contemplated hereby made by
any Governmental or Regulatory Authority. If any action or proceeding in any
domestic or foreign court or other tribunal is instituted or threatened to be
instituted by any Governmental or Regulatory Authority challenging any of the
transactions contemplated hereby as violative of any Law, Sellers shall, and
shall cause their Subsidiaries to, use all reasonable efforts to take such
action (but not including holding separate or divesting or agreeing to hold
separate or to divest any of the businesses, product lines or assets of Sellers
or any of its Affiliates) as will (i) resolve any objections which any such
Governmental or Regulatory Authority may have to such transactions, (ii) avoid
the entry of, or effect the dissolution of, any injunction, temporary
restraining order or other order which has, or will have, the effect of
preventing or interfering with the consummation of any of the transactions
contemplated hereby and (iii) obtain approval of the transactions contemplated
hereby by any Governmental or Regulatory Authority.
4.02 HSR Filings. In addition to and without limiting the
covenants contained in Section 4.01, Sellers will, and will cause their
respective Subsidiaries to, (a) take promptly all actions necessary to make the
filings required of Sellers or their respective Affiliates under the HSR Act,
(b) comply at the earliest practicable date with any request for additional
information received by Sellers or their respective Affiliates from the Federal
Trade Commission ("FTC") or the Antitrust Division of the Department of Justice
("DOJ") pursuant to the HSR Act, and (c) cooperate with Purchaser in connection
with Purchaser's filing under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the FTC or the DOJ or state attorneys general.
4.03 Bidding Procedures. Each Seller acknowledges that this
Agreement is the culmination of an extensive process undertaken by Sellers to
identify and negotiate a transaction with a bidder who was prepared to pay the
highest and best purchase price for the FTL Assets while assuming or otherwise
satisfying the FTL Liabilities. Set forth on Exhibit H hereto are the bidding
procedures (the "Bidding Procedures") to be employed, subject only to U.S.
Bankruptcy Court approval (the form of which is also set forth on Exhibit H),
with respect to the sale of the Business. Within two (2) Business Days of the
date of this Agreement, Sellers will apply to the U.S. Bankruptcy Court for the
approval of the Bidding Procedures and of the provisions of this Agreement to be
performed by Sellers before the Closing (including Sections 1.09, 4.03, 4.04,
4.05, 4.06, 4.07 and 4.09), and Sections 8.01, 8.02 and 8.03 of this Agreement
(including the Termination Fee) ("Bidding Procedures Motion"). The hearing on
the Bidding Procedures Motion shall be held after the date of this Agreement and
the parties shall work in good faith to obtain a hearing date as early as
possible. The sale of the Business is subject to competitive bidding as set
forth in the Bidding Procedures, and approval of the Bidding Procedures Motion
by the U.S. Bankruptcy Court. The overbid provisions and related bid protections
in the Bidding
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Procedures are designed to compensate Purchaser for its efforts and agreements
to date and to facilitate a full and fair process designed to maximize the value
of the FTL Assets for the benefit of each Seller's stakeholders. Sellers will
not change or attempt to change the Bidding Procedures without approval of
Purchaser.
4.04 Conduct of Business. Except as contemplated by this
Agreement, Sellers shall, and shall cause their respective Subsidiaries to,
operate the Business in the ordinary course consistent with past practice.
Without limiting the generality of the foregoing, except as contemplated by this
Agreement, Sellers shall, and shall cause their respective Subsidiaries to:
(a) preserve intact the present business organization and
reputation of the Business in all material respects, keep available (subject to
dismissals and retirements in the ordinary course of business) the services of
the key Employees and maintain the good will of key customers, suppliers and
lenders and other Persons with whom Sellers or any of their Subsidiaries
otherwise have significant relationships in connection with the Business;
(b) maintain the FTL Assets in good working order and
condition, ordinary wear and tear excepted;
(c) maintain in effect their existing (or comparable
replacement) property damage, liability and other insurance;
(d) maintain in effect the existing permits material to the
operation of and used in the Business;
(e) use commercially reasonable efforts to make expenditures
for advertising and capital expenditures in amounts that are not materially
greater or less than the amounts reflected in the budget for the Business set
forth in Section 4.04(e) of Sellers' Disclosure Schedule; and
(f) prevent any Transferred Subsidiary from taking any action
that Sellers are prohibited from taking pursuant to Section 4.05 of this
Agreement.
4.05 Certain Restrictions. Except as expressly provided for in
this Agreement, or the Operative Agreements, Sellers will, and will cause their
respective Transferred Subsidiaries to, refrain from:
(a) other than in the ordinary course of business, acquiring
or disposing of, or incurring any Lien (other than a Permitted Lien) on, any
Assets and Properties used in, of, or related to the Business, other than any
disposals pursuant to the Order of the U.S. Bankruptcy Court, dated April 19,
2000 entitled "Order Pursuant to 11 U.S.C. xx.xx. 105 and 363, Approving
Procedures to Sell Certain Assets Free and Clear of Liens, Claims and
Encumbrances Without Further Court Approval" allowing disposal, on negative
notice as provided therein, of certain de minimis asset as provided therein, and
the Order of the U.S. Bankruptcy Court, dated April 25, 2001, entitled
"Stipulation and Order, Pursuant to 11 U.S.C. xx.xx. 105 and 363, Authorizing
and Approving Limited Amendment to Prior Order, to Establish Procedures to Sell
Certain Obsolete or Surplus Equipment Free and Clear of Liens, Claims and
Encumbrances, Without Further Court Approval", on the terms and subject to the
limitations provided in each such Order, in a manner consistent with terms and
procedures set forth in each such Order;
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(b) authorizing, issuing, selling or otherwise disposing of
any shares of, or securities convertible into or exchangeable or exercisable for
or any Option with respect to any shares of, capital stock or share capital of
the Transferred Subsidiaries, or modifying or amending any right of any holder
of outstanding shares of capital stock or share capital of or Option with
respect to the Transferred Subsidiaries (other than as contemplated by Section
4.05(e) of Sellers' Disclosure Schedule);
(c) amending any Charter Documents of any Transferred
Subsidiary or taking any action with respect to any such amendment or any
merger, consolidation, recapitalization, reorganization, liquidation or
dissolution of any Transferred Subsidiary (other than as contemplated by Section
4.05(e) of Sellers' Disclosure Schedule);
(d) except as disclosed in Section 4.05(d) of Sellers'
Disclosure Schedule, other than in the ordinary course of business, entering
into, amending, modifying, terminating (partially or completely), granting any
waiver under or giving any consent with respect to any Business Contract, Real
Property Lease, Personal Property Lease, or Business License included in the FTL
Assets, whether the contracting party thereto is a Seller or Transferred
Subsidiary, if material to the Condition of the Business (other than as
contemplated by Section 4.05(e) of Sellers' Disclosure Schedule);
(e) other than in the ordinary course of business, purchasing,
canceling, prepaying or otherwise providing for a complete or partial discharge
in advance of a scheduled payment date with respect to, or waiving any right
under, any Liability of or owing to any Seller or Transferred Subsidiary in
connection with the Business, or settling or compromising any litigation (other
than pre-petition claims against Debtors and such litigation that comprises part
of the Excluded Assets), in an aggregate principal amount for all such actions
exceeding $1,000,000 (other than any contribution or discharge of intercompany
indebtedness as contemplated by Section 4.05(e) of Sellers' Disclosure
Schedule);
(f) declaring, setting aside or paying any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock or redeeming, repurchasing or otherwise acquiring any shares of its
capital stock (other than as contemplated by Section 4.05(e) of Sellers'
Disclosure Schedule);
(g) incurring any indebtedness for money borrowed or issuing
or selling any debt securities or warrants or rights to acquire any debt
securities of Sellers or any of the Transferred Subsidiaries other than under
Sellers' DIP Facility (other than as contemplated by Section 4.05(e) of Sellers'
Disclosure Schedule);
(h) except for normal increases in the ordinary course of
business consistent with past practice or to reflect promotions or new hires,
granting any material increase in the fringe benefits or compensation payable or
to become payable by Sellers or any Transferred Subsidiary to any Executive
Employee or director thereof;
(i) except as disclosed in Schedule 4.05(i) of Sellers'
Disclosure Schedule, adopting, amending or otherwise materially increasing, or
accelerating the payment or vesting of
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the amounts payable or to become payable to any Executive Employee or director
of any Seller or any Transferred Subsidiary under any existing Benefit Plan,
bonus, incentive compensation, deferred compensation, severance, profit sharing,
stock option, stock appreciation right, restricted stock purchase, insurance,
pension, retirement, or other employee benefit plan, agreement or arrangement;
(j) entering into or amending in any material respect any
existing employment or severance agreement with, or, except in accordance with
the existing written policies of Sellers or existing contracts or agreements,
granting any severance or termination pay to any Executive Employee or director
of any Seller or any Transferred Subsidiary;
(k) changing the accounting principles used by it in effect as
of the date hereof unless required by GAAP;
(l) except for the agreements listed in Section 4.05(l) of
Sellers' Disclosure Schedule, entering into or modifying any collective
bargaining agreement or any successor collective bargaining agreement to any
collective bargaining agreement;
(m) other than in the ordinary course of business consistent
with past practice or as required by law and except as disclosed in Sections
4.05(e) and (m) of Sellers' Disclosure Schedule, making any Tax election,
amending any Tax Return or settling any Tax Liability (other than the settlement
of any Tax Liability relating to any claim, dispute or other matter set forth in
Section 2.12(b) of Sellers' Disclosure Schedule) or making any Tax payments; or
(n) entering into any Contract to do any of the foregoing.
4.06 Affiliate Transactions. Prior to the Closing and except
as provided in the Plan or the Scheme of Arrangement, Sellers will not engage in
any transaction with any officer, director or Affiliate of any Seller or of any
Transferred Subsidiary outside the ordinary course of business, nor will Sellers
fail to prevent any such action by any of the Transferred Subsidiaries, other
than as mandated by an Order of the U.S. Bankruptcy Court or the C.I. Grand
Court.
4.07 Bankruptcy Court Approvals. The provisions in this
Section 4.07 shall terminate in the event that Purchaser is not the Successful
Bidder pursuant to the Bidding Procedures.
(a) Upon the issuance by the U.S. Bankruptcy Court of an Order
approving the Bidding Procedures Motion, each Seller shall, and shall cause each
of the other Debtors to, amend the Plan, the Scheme of Arrangement, the
Disclosure Statement and the Explanatory Statement to effect the transactions
contemplated by this Agreement upon the terms and subject to the conditions set
forth herein and without terms or conditions inconsistent with those set forth
herein, and thereafter Sellers shall, and shall cause each of the other Debtors
to, use their reasonable best efforts to obtain the entry of the Confirmation
Order and the Sanction Order as soon as practicable. Prior to the filing by any
Debtor of the Plan, the Scheme of Arrangement, the Disclosure Statement, the
Explanatory Statement, any amendment to the foregoing, or any motion or other
pleading describing or affecting the transactions contemplated by this Agreement
or the Operative Agreements, with the U.S. Bankruptcy Court or the C.I. Grand
Court, Sellers shall provide a copy thereof to Purchaser and its counsel, and
Purchaser and its counsel shall be
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given a reasonable opportunity to review and comment on such document,
amendment, motion or pleading, which comments, if substantive, shall not without
substantial reason be excluded from the document, amendment, pleading or motion
filed with the U.S. Bankruptcy Court or the C.I. Grand Court. The Debtors shall
not file any pleading or take other action in the U.S. Bankruptcy Court or the
C.I. Grand Court in a manner that has or would reasonably be likely to have a
Material Adverse Effect on the Condition of the Business, or on the transactions
contemplated hereby, or on the ability of Sellers or any of its Subsidiaries to
consummate the transactions contemplated by this Agreement or the Operative
Agreements, or that is inconsistent with fully performing and carrying out the
provisions of this Agreement, without first obtaining the written consent of
Purchaser. Sellers shall send by facsimile, to Purchaser and to counsel for
Purchaser, on the same day as filing, copies of any and all pleadings filed by
the Debtors with respect to the Reorganization Cases or C.I. Proceedings.
(b) Sellers agree to, and shall cause each of the other
Debtors to, ensure that the amended Disclosure Statement and the amended
Explanatory Statement, as filed with the U.S. Bankruptcy Court and the C.I.
Grand Court, contain adequate information and otherwise comply with the
Bankruptcy Code or other applicable Law. The amended Disclosure Statement and
the amended Explanatory Statement shall contain a recommendation of the Boards
of Directors of each of Sellers and other Debtors that holders of claims against
or interests in the Debtors entitled to vote on the Plan and/or the Scheme of
Arrangement vote to accept the Plan and the Scheme of Arrangement. Sellers shall
promptly notify Purchaser if at any time before the Effective Date they become
aware that the Disclosure Statement and/or the Explanatory Statement contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. In such event, Sellers shall make the appropriate filings with the
U.S. Bankruptcy Court and the C.I. Grand Court regarding such misstatement or
omission and take such other actions to address such misstatement or omission as
required by the U.S. Bankruptcy Court and the C.I. Grand Court.
(c) If the Confirmation Order, the Sanction Order or any other
Orders of the U.S. Bankruptcy Court or the C.I. Grand Court relating to this
Agreement, the Disclosure Statement, the Explanatory Statement, the solicitation
of acceptance of the Plan or Scheme of Arrangement or confirmation of the Plan
or sanction of the Scheme of Arrangement shall be appealed by any party (or a
petition for certiorari or motion for rehearing or reargument shall be filed
with respect thereto), Sellers agree to take such steps, if any, as may be
reasonable and appropriate to prosecute such appeal, petition or motion or
defend against such appeal, petition or motion and to use reasonable efforts to
obtain an expedited resolution of any such appeal, petition or motion, all with
the objective of effecting the transactions contemplated by this Agreement.
(d) Sellers will request that the U.S. Bankruptcy Court enter
an Order, not later than the date of the first hearing before the U.S.
Bankruptcy Court for approval of the amended Disclosure Statement, finding that
Sellers conducted the Auction and selected Purchaser as the Successful Bidder in
accordance with the Bidding Procedures, that the Auction was fair in substance
and procedure, and that this Agreement constitutes the highest and best offer
for the Business.
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(e) The Plan and Scheme of Arrangement shall provide that each
Seller and, to the extent applicable, each Excluded Subsidiary shall promptly
change its corporate name to a name not including "Fruit of the Loom" or any
derivative or similar name and shall promptly cease using such name and any
derivative or similar name, provided that the use of "FOL" shall be permitted.
In addition, the Plan shall provide that any liquidation of Union or FTL Inc.
shall occur no earlier than the day after the Closing Date.
4.08 Tax Matters. (a) Conveyance Taxes. Subject to Section
1146 of the Bankruptcy Code, Sellers shall cooperate with Purchaser in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, share transfer and stamp duty or taxes, any transfer,
recording, registration and other fees, and any similar Taxes (together, the
"Conveyance Taxes") which become payable in connection with the transactions
contemplated by this Agreement. To the extent any of the transactions
contemplated by this Agreement are not exempted from any such Conveyance Tax
under Section 1146 of the Bankruptcy Code, Sellers shall be liable for and shall
hold Purchaser harmless against such Conveyance Taxes and adequate provision
shall be made in the Plan and the Scheme of Arrangement, for payment of all
amounts that may be owed in connection with such Conveyance Taxes.
(b) Tax Sharing Agreements. Any tax sharing agreement between
a Transferred Subsidiary and any other Person will be terminated prior to the
Closing and will have no further effect for any taxable year.
(c) Tax Returns. Sellers will include the income of the
Transferred Subsidiaries (including any deferred income triggered into income by
Reg. ss. 1.1502-13 or Reg. ss. 1.1502-14 and any excess loss accounts taken into
income under Reg. ss. 1.1502-19) on their consolidated federal income Tax
Returns for all periods through the Closing Date and pay any federal income
Taxes attributable to such income. Similar principles will apply to cause
Sellers to include the income of the Transferred Subsidiaries with respect to
any comparable provisions of state, local or foreign law. Sellers will prepare
and file all Tax Returns for the Transferred Subsidiaries for taxable periods
ending on or before the Closing Date, and shall pay (and adequate provision
shall be made in the Plan for the payment by Sellers of) any income or franchise
Taxes due to any state or local taxing authority with respect thereto, including
any Taxes attributable to the transactions and elections undertaken to
effectuate this Agreement; provided that Purchaser shall prepare and file all
non-U.S. foreign Tax Returns for the Transferred Subsidiaries that are due
after the Closing Date. Sellers will (and will cause the Transferred
Subsidiaries to) allow Purchaser an opportunity solely to review and comment on
any Tax Return (including any amended return or claim for refund) filed by
Sellers or the Transferred Subsidiaries and, solely as to non-U.S. foreign Tax
Returns shall not file, or permit the Transferred Subsidiaries to file, any such
non-U.S. foreign Tax Return (including any amended return or claim for refund)
without the consent of Purchaser, which consent shall not be unreasonably
withheld. Purchaser will prepare all Tax Returns for the Transferred
Subsidiaries for taxable periods beginning before and ending after the Closing
Date ("Straddle Period Returns"), provided that, to the extent permitted by Law,
such Straddle Period Returns will be prepared in a manner consistent with past
practice and consistent with the consolidated federal income Tax Return filed by
Sellers pursuant to this Section 4.08(c). Purchaser shall allow Sellers an
opportunity solely to review and comment on any Straddle Period Return and shall
not
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file any such Straddle Period Return without the consent of Sellers, which
consent shall not be unreasonably withheld. If Sellers and Purchaser cannot
agree on any position to be taken on any Tax Return that is subject to the
consent of the other party, an independent "Big 5" accounting firm reasonably
acceptable to Sellers and Purchaser shall be retained to determine the position
to be taken on such Tax Return, and the decision of such independent accounting
firm shall be final, non-appealable and binding on Sellers and Purchaser. The
cost attributable to retaining such accounting firm shall be the responsibility
of the party whose position, as measured by reference to the tax liability of
the entity whose Tax Return is at issue, is at the largest dollar variance from
the position that the accounting firm determines to be correct.
(d) Audits. Sellers will (and will cause the Transferred
Subsidiaries to) keep Purchaser timely informed of, and allow Purchaser and its
counsel to participate in, any audits of, or discussions or proceedings with
respect to, the Transferred Subsidiaries' non-U.S. foreign Tax Returns and will
not settle (or permit a Transferred Subsidiary to settle) any audit of the
Transferred Subsidiaries' non-U.S. foreign Tax Returns without the consent of
Purchaser, which consent shall not be unreasonably withheld.
(e) Newco LLC. Union will own, from the date of the formation
of Newco LLC until its sale as contemplated by this Agreement, 100 percent of
the membership interests in, and be the sole owner of, Newco LLC. No election
has or will be made to treat Newco LLC as a corporation for Tax purposes. Newco
LLC will at all times be treated as a disregarded entity for Tax purposes to the
extent permitted by Law. Sellers will treat Union's sale of Newco LLC membership
interests to Purchaser as the sale by Union of the assets of Newco LLC for Tax
purposes to the extent permitted by Law.
4.09 No Solicitations. From the date hereof, subject to the
exceptions stated in this Section 4.09 and except for actions expressly
permitted by the Bidding Procedures, Sellers will not take, nor will they permit
any of their respective Affiliates (or authorize or permit any of the
Representatives acting for or on behalf of Sellers or any of their respective
Affiliates) to take, directly or indirectly, any action to solicit, negotiate,
assist or otherwise facilitate (including by furnishing confidential information
with respect to the Business or permitting access to the Assets and Properties
and Books and Records of Sellers or their Subsidiaries) any offer or inquiry
from any Person concerning an Alternative Transaction. If Sellers or any of
their respective Affiliates (or any Representative acting for or on their
behalf) receives from any Person any offer, inquiry or informational request
referred to above, Sellers will promptly advise such Person, by written notice,
of the terms of this Section 4.09 and the Bidding Procedures and will promptly,
orally and in writing, advise Purchaser of such offer, inquiry or request and
deliver a copy of such notice to Purchaser. Notwithstanding the foregoing,
subsequent to the selection of Purchaser as the Successful Bidder in accordance
with the Bidding Procedures, the Boards of Directors of Sellers shall be
entitled to furnish information to or enter into discussions or negotiations
with any Person that makes, after the date hereof, a bona fide unsolicited
written proposal for an Alternative Transaction, if and only to the extent that
(A) the U.S. Bankruptcy Court issues an Order that the Boards of Directors of
Sellers do so, (B) Sellers shall have entered into a confidentiality agreement
with such Person in customary form and having terms and conditions no less
favorable to Sellers than the Confidentiality Agreement, (C) Sellers shall have
promptly provided Purchaser with a copy of such Order and, prior to furnishing
such information to, or entering into discussions or negotiations with, such
Person, Sellers shall have provided
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written notice to Purchaser to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such Person, which notice
shall identify such Person and the proposed terms of such Alternative
Transaction in reasonable detail, and (D) Sellers keep Purchaser reasonably
informed of the status and all material information with respect to any such
discussions or negotiations. Nothing in this Section 4.09 shall (x) permit
Sellers to terminate this Agreement (except as specifically provided in Article
VIII), (y) permit Sellers to enter into any agreement with respect to an
Alternative Transaction for so long as this Agreement remains in effect (it
being agreed that for so long as this Agreement remains in effect, Sellers shall
not enter into any agreement with any Person that provides for, or in any way
facilitates, an Alternative Transaction (other than a confidentiality agreement
under the circumstances described above)), or (z) affect any other obligation of
Sellers under this Agreement.
4.10 Fulfillment of Conditions. Sellers will, and will cause
their Subsidiaries to, execute and deliver at or prior to the Closing each
Operative Agreement that they are required hereby to execute and deliver as a
condition to the Closing and will take all commercially reasonable steps
necessary and proceed diligently and in good faith to satisfy each condition to
the obligations of Purchaser contained in this Agreement.
4.11 Access to Information. Each Seller shall, and shall cause
each Transferred Subsidiary, and their respective officers, employees, and other
representatives to, afford to Purchaser and its representatives reasonable
access to its properties, books, contracts, commitments, personnel and records
and shall, and shall cause each Transferred Subsidiary, and their respective
officers, employees and representatives to, furnish promptly to Purchaser any
and all information concerning its business, properties, financial condition,
operations and personnel as Purchaser may from time to time reasonably request.
No investigation pursuant to this Section 4.11 shall affect any representations
or warranties of Sellers herein or the conditions to the obligations of the
parties hereto.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, at all times
from and after the date hereof until the Closing (and after the Closing to the
extent expressly contemplated herein), Purchaser will comply with all covenants
and provisions of this Article V, except to the extent Sellers may otherwise
consent in writing.
5.01 Regulatory and Other Approvals. (a) Purchaser will, as
promptly as practicable, (i) use all reasonable efforts to obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other Person required of Purchaser
to consummate the transactions contemplated hereby and by the Operative
Agreements, (ii) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as such Governmental or
Regulatory Authorities or other Persons may reasonably request in connection
therewith, and (iii) provide reasonable cooperation to Sellers in connection
with the performance of their obligations under Sections 4.01 and 4.02.
Purchaser will provide prompt notification to Sellers when any such consent,
approval, action, filing or notice referred to in clause (i) above is obtained,
taken, made or given, as applicable, and will advise Sellers of any
communications (and, unless precluded by applicable Law,
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provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
(b) In addition to and without limiting Purchaser's covenants
contained in paragraph (a) above, Berkshire shall, and shall cause Purchaser and
its other Affiliates to, (i) take promptly all actions necessary to make the
filings required of Purchaser or its Affiliates under the HSR Act, (ii) comply
at the earliest practicable date with any request for additional information
received by Purchaser or its Affiliates from the FTC or the DOJ pursuant to the
HSR Act, (iii) cooperate with Sellers in connection with their filing under the
HSR Act and in connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement commenced by either
the FTC or the DOJ or state attorneys general, and (iv) not knowingly take or
cause to be taken any action, including the acquisition of any business, voting
securities (or other ownership interests) or assets, which would reasonably be
expected to materially delay or prevent any consents, approvals and actions of
any Governmental or Regulatory Authority (including under the HSR Act and any
antitrust or competition Law of any foreign jurisdiction) with respect to the
transactions contemplated by this Agreement.
(c) In furtherance and not in limitation of the covenants of
Purchaser as set forth in paragraphs (a) and (b) above, Purchaser shall use all
reasonable efforts to resolve such objections, if any, as may be asserted with
respect to the transactions contemplated hereby made by any Governmental or
Regulatory Authority. If any action or proceeding in any domestic or foreign
court or other tribunal is instituted or threatened to be instituted by any
Governmental or Regulatory Authority challenging any of the transactions
contemplated hereby as violative of any law, Purchaser shall use all reasonable
efforts to take such action (but not including holding separate or divesting or
agreeing to hold separate or to divest any of the businesses, product lines or
assets of Purchaser or any of its Affiliates or any Seller or Transferred
Subsidiaries or any part of the Business) as will (i) resolve any objections
which any such Governmental or Regulatory Authority may have to such
transactions, (ii) avoid the entry of, or effect the dissolution of, any
injunction, temporary restraining order or other order which has, or will have,
the effect of preventing or interfering with the consummation of any of the
transactions contemplated hereby and (iii) obtain approval of the transactions
contemplated hereby by any Governmental or Regulatory Authority.
5.02 Bankruptcy Court Approvals. (a) Purchaser shall assist
and cooperate with the Debtors in their efforts to amend the Plan, the Scheme of
Arrangement, Disclosure Statement, and the Explanatory Statement to effect the
transactions contemplated by this Agreement upon the terms and subject to the
conditions set forth herein and to obtain the entry of the Confirmation Order
and the Sanction Order. Purchaser shall cooperate with Sellers and each of the
Debtors with respect to any description of Purchaser and Berkshire in any of the
Plan, the Scheme of Arrangement, the Disclosure Statement or the Explanatory
Statement. Purchaser shall not file any pleading or take other action in the
U.S. Bankruptcy Court or the C.I. Grand Court with respect to this Agreement,
the Plan, the Scheme of Arrangement or the consummation of the transactions
contemplated hereby or thereby that is inconsistent with fully performing and
carrying out the provisions of this Agreement, without first obtaining the
written consent of Sellers, which consent shall not be unreasonably withheld;
provided, however, that nothing
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contained in the foregoing shall be construed to limit in any way Purchaser's
rights under this Agreement, including Purchaser's rights under Article VIII
hereof, or to limit Purchaser's or its Affiliates' rights to advocate for the
approval of this Agreement and against any Alternative Transaction or Plan that
does not effectuate this Agreement.
(b) Purchaser agrees to assist and cooperate with the Debtors
to ensure that the Plan, the Scheme of Arrangement, the amended Disclosure
Statement and the amended Explanatory Statement, as filed with the U.S.
Bankruptcy Court and the C.I. Grand Court, contain adequate information.
Purchaser shall from time to time furnish to the Debtors all such information
about Purchaser and Berkshire required to be disclosed in the Disclosure
Statement and the Explanatory Statement. Purchaser shall promptly notify the
Debtors if at any time before the Effective Date it becomes aware that the
Disclosure Statement contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(c) If the Confirmation Order, the Sanction Order or any other
Orders of the U.S. Bankruptcy Court or the C.I. Grand Court relating to this
Agreement, the Disclosure Statement, the Explanatory Statement, the solicitation
of acceptance of the Plan or Scheme of Arrangement or confirmation of the Plan
or sanction of the Scheme of Arrangement shall be appealed by any party (or a
petition for certiorari or motion for rehearing or reargument shall be filed
with respect thereto), Purchaser agrees to take such steps, if any, as may be
reasonable and appropriate to prosecute such appeal, petition or motion or
defend against such appeal, petition or motion and to use reasonable efforts to
obtain an expedited resolution of any such appeal, petition or motion, with the
objective of effecting the transactions contemplated by this Agreement.
5.03 Letters of Credit/ Surety Bonds. Purchaser shall obtain
substitutions or, at Purchaser's election if allowed by the lender(s) under
Sellers' DIP Facility, secure back-to-back arrangements with respect to the
outstanding letters of credit issued under Sellers' DIP Facility and the
outstanding surety bonds, each as listed on Section 5.03 of Sellers' Disclosure
Schedule, and any replacements thereof, and any other letters of credit issued
under Sellers' DIP Facility and surety bonds arising in the ordinary course of
business subsequent to the date of this Agreement.
5.04 Employees. (a) Effective as of the Closing, Purchaser
shall cause the Transferred Subsidiaries to continue the employment of or to
offer employment to each Employee of Sellers and the Transferred Subsidiaries
other than the Specified Executive Employees and the Employees based in Chicago,
Illinois, at a rate of base salary which is, as of the Closing, no less than the
rate of base salary paid to such employee by such Seller or Transferred
Subsidiary immediately prior to the Closing. Nothing in this Agreement shall
require Purchaser to cause the Transferred Subsidiaries to employ any such
Employee other than on an exclusively "at will" basis. Purchaser may, but shall
not be obligated to, cause the Transferred Subsidiaries to continue or offer
employment to each of the Specified Executive Employees on terms and at a salary
to be negotiated by such Specified Executive Employee and Purchaser. Each of the
Employees who continues or commences employment with a Transferred
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Subsidiary as set forth herein is, for the period during which such employee
remains employed by such Transferred Subsidiary, hereinafter referred to as an
"Affected Employee."
(b) Subject to paragraph (f) below, for a period of one year
immediately following the Closing, Purchaser shall cause the Transferred
Subsidiaries to provide Affected Employees with benefits under the Benefit Plans
(or successor or replacement plans thereto), which benefits, in the aggregate,
are not less favorable than those provided to Affected Employees immediately
prior to the Closing Date.
(c) Purchaser shall cause to be offered severance benefits to
Affected Employees terminated by Purchaser or a Transferred Subsidiary without
cause within one year of Closing, which benefits, in the aggregate, are not less
favorable than those provided to Affected Employees immediately prior to the
Closing Date.
(d) Purchaser shall cause the Transferred Subsidiaries to (i)
waive all limitations as to preexisting conditions exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plans that such employees may
be eligible to participate in after the Closing other than limitations or
waiting periods that are already in effect with respect to such Affected
Employees and that have not been satisfied as of the Closing Date under any
welfare plan maintained for the Affected Employees immediately prior to the
Closing Date and (ii) provide each Affected Employee with credit for any
co-payments and deductibles paid during the year in which the Closing occurs in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans in which the Affected Employees are eligible to participate after
the Closing.
(e) Purchaser understands that the Specified Executive
Employees are entitled to certain benefits including, but not limited to,
emergence, severance, bonus and other similar payments pursuant to court Order
or binding Contract. Purchaser agrees to pay a portion of the Purchase Price (to
be calculated as described below) directly to such Specified Executive Employees
at Closing as settlement of such emergence, severance, bonus and other similar
amounts. At least five Business Days prior to Closing, Sellers shall provide
Purchaser with a schedule listing the (i) names of the Specified Executive
Employees that are to receive such payments, (ii) amount of the Purchase Price
to be paid to each such Specified Executive Employee and (iii) bank account and
any other necessary wire transfer information for each such Specified Executive
Employee (the "Executive Payment Schedule"). The amounts listed on the Executive
Payment Schedule shall be the total amounts to be paid by Purchaser or any
Transferred Subsidiary pursuant to this Section 5.04(e) and Purchaser shall be
entitled to rely solely on the Executive Payment Schedule in fulfilling its
obligations hereunder.
(f) Notwithstanding the provisions of this Section 5.04, this
Agreement shall not diminish or detrimentally affect the rights and benefits of
the Executive Employees under the March 27, 2000 Order of the U.S. Bankruptcy
Court or the Plan, including but not limited to qualified retirement benefits,
healthcare continuation coverage and other extended benefits provided therein.
5.05 Agreements Relating to the Auction. From the date on
which the U.S. Bankruptcy Court approves the Bidding Procedures Motion until the
date on which the Auction (as defined in the Bidding Procedures) is concluded,
Purchaser shall not, and shall cause its
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Affiliates not to, have any discussions or communication regarding the Auction
with the bidders participating in the Auction and shall not disclose any
information to any bidder regarding Sellers or their Subsidiaries, the Business
or the transactions contemplated by this Agreement.
5.06 Fulfillment of Conditions. Purchaser will execute and
deliver at or prior to the Closing each Operative Agreement that Purchaser is
hereby required to execute and deliver as a condition to the Closing, will take
all commercially reasonable steps necessary and proceed diligently and in good
faith to satisfy each condition to the obligations of Sellers contained in this
Agreement.
5.07 Confidentiality. Unless and until the transactions
contemplated herein have been consummated, Purchaser shall hold in confidence
and shall cause all of its attorneys, accountants, agents, advisors and
representatives involved in this transaction (the "Purchaser Representatives")
to hold in confidence all information regarding Sellers and the Transferred
Subsidiaries furnished or made available by Sellers and the Transferred
Subsidiaries (other than information in the public domain not as a result of a
breach of this Section 5.07, and other than information required to be disclosed
by law or stock exchange rule in connection with the transactions contemplated
hereby). Purchaser shall be responsible for any breach of this Section 5.07 by
any Purchaser Representative. If such transactions are not consummated,
Purchaser shall return to Sellers all such documents received and shall destroy
all documents or materials containing information derived from such documents,
and shall continue to hold all such information in confidence.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser hereunder to consummate the
transactions contemplated hereby is subject to the fulfillment, at or before the
Closing, of each of the following conditions (all or any of which may be waived
in whole or in part by Purchaser in its sole discretion):
6.01 Representations and Warranties. The representations and
warranties made by Sellers in this Agreement shall be true and correct in all
material respects (except for such representations and warranties that are
qualified by their terms by reference to materiality or Material Adverse Effect,
which representations and warranties as so qualified shall be true and correct
in all respects) on and as of the Closing Date as though made on and as of the
Closing Date or, in the case of the representations and warranties made in
Section 2.12(e) as of the respective dates specified therein.
6.02 Performance. Sellers shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Sellers at or
before the Closing.
6.03 Officer's Certificates. Each Seller shall have delivered
to Purchaser a certificate, dated the Closing Date and executed in the name and
on behalf of such Seller by the Chairman of the Board, the President or any
Executive or Senior Vice President of such Seller, substantially in the form and
to the effect of Exhibit C hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of such Seller,
substantially in the form and to the effect of Exhibit D hereto.
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6.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by the
Plan, the Scheme of Arrangement, this Agreement or any of the Operative
Agreements.
6.05 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Purchaser, Berkshire, and Sellers to
perform their obligations under this Agreement and the Operative Agreements and
to consummate the transactions contemplated hereby and thereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions
contemplated by this Agreement and the Operative Agreements, including under the
HSR Act and any antitrust or competition Law of any foreign jurisdiction
applicable to the transactions contemplated by this Agreement, shall have
occurred, in each case without limitation, condition, or restriction that would
materially adversely affect the ability of Purchaser and the Transferred
Subsidiaries to own, control, or operate the Business and the FTL Assets as
owned, controlled, and operated by Sellers and their Subsidiaries prior to the
Closing or that would require Berkshire or any of its Subsidiaries to dispose of
or hold separate any business, product lines, or assets.
6.06 Confirmation Order and Sanction Order. Each of the
Confirmation Order and the Sanction Order (in a form providing for the
effectuation of all the transactions contemplated by this Agreement and the
Operative Agreements in accordance with the terms and provisions hereof and
thereof) shall have been entered, at least 10 days shall have passed since the
entry of each such order and each such order shall not be subject to any stay,
appeal or motion for rehearing, reconsideration or revocation and all conditions
to the Effective Date shall have been satisfied or duly waived in accordance
with the applicable provisions of the Plan and the Scheme of Arrangement.
6.07 [Intentionally omitted.]
6.08 Deliveries. Sellers shall have delivered to Purchaser the
General Assignment and the other Assignment Instruments.
6.09 Material Adverse Effect. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect on the
Condition of the Business.
6.10 Bankruptcy Proceedings. The Plan, the Scheme of
Arrangement, the Confirmation Order and the Sanction Order shall each contain
provisions that are satisfactory to Purchaser in its reasonable judgment for the
effectuation of the transactions contemplated by this Agreement and the
Operative Agreements in accordance with the terms hereof and thereof.
6.11 Other Specified Events. (a) All Liabilities of the
Transferred Subsidiaries with respect to Sellers' DIP Facility, as guarantor,
pledgor, or otherwise, shall be extinguished except for Liabilities with respect
to back-to-back arrangements related to the
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hereof.
Notwithstanding the foregoing, Purchaser's obligations to
consummate the transactions contemplated hereby shall not be relieved by the
failure of any of the foregoing conditions if such failure is the result, direct
or indirect, of any breach by Purchaser of its material obligations under this
Agreement with respect to the transactions contemplated hereby.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligation of Sellers hereunder to consummate the transactions
contemplated hereby is subject to the fulfillment, at or before the Closing, of
each of the following conditions (all or any of which may be waived in whole or
in part by Sellers in their sole discretion):
7.01 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement shall be true and correct, in all
material respects (except for such representations and warranties that are
qualified by their terms by reference to materiality or Material Adverse Effect,
which representations and warranties as so qualified shall be true and correct
in all respects) on and as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made in the last
sentence of Section 3.01 as of the date specified therein.
7.02 Performance. Purchaser shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Purchaser at
or before the Closing.
7.03 Officer's Certificates. Purchaser shall have delivered to
Sellers a certificate, dated the Closing Date and executed in the name and on
behalf of Purchaser by the Chairman of the Board, the President or any Executive
or Senior Vice President of Purchaser, substantially in the form and to the
effect of Exhibit E hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of Purchaser, substantially
in the form and to the effect of Exhibit F hereto.
7.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by the
Plan, the Scheme of Arrangement, this Agreement or any of the Operative
Agreements.
7.05 Regulatory Consents and Approvals. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority necessary to permit Purchaser, Berkshire, and Sellers to
perform their obligations under this Agreement and the Operative Agreements and
to consummate the transactions contemplated hereby and thereby shall have been
duly obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory
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Authority necessary to permit Purchaser, Berkshire, and Sellers to perform their
obligations under this Agreement and the Operative Agreements and to consummate
the transactions contemplated hereby and thereby, including under the HSR Act
and any antitrust or competition Law of any foreign jurisdiction applicable to
the transactions contemplated by this Agreement, shall have occurred.
7.06 Confirmation Order and Sanction Order. Each of the
Confirmation Order and the Sanction Order (in a form providing for effectuation
of all the transactions contemplated by this Agreement and the Operative
Agreements in accordance with the terms and provisions hereof and thereof) shall
have been entered, at least 10 days shall have passed since the entry of each
such order and each such order shall not be subject to any stay, and all
conditions to the Effective Date shall have been satisfied or duly waived in
accordance with the applicable provisions of the Plan and the Scheme of
Arrangement.
7.07 [Intentionally omitted.]
7.08 Letters of Credit/Surety Bonds. Purchaser shall have
obtained substitutions or secured back-to-back arrangements with respect to the
outstanding letters of credit issued under Sellers' DIP Facility and the
outstanding surety bonds, and any replacements thereof, and other letters of
credit issued under Sellers' DIP Facility and surety bonds arising in the
ordinary course of business subsequent to the date of this Agreement, all in
accordance with Section 5.03.
7.09 Deliveries. Purchaser shall have delivered to Sellers the
Assumption Agreement and the other Assumption Instruments.
Notwithstanding the foregoing, Sellers' obligations to
consummate the transactions contemplated hereby shall not be relieved by the
failure of any of the foregoing conditions if such failure is the result, direct
or indirect, of any breach by any Seller of its respective material obligations
under this Agreement, the Plan, the Scheme of Arrangement, the Confirmation
Order or the Sanction Order with respect to the transactions contemplated
hereby.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(a) By mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) By Sellers or Purchaser upon notification to the
non-terminating party by the terminating party:
(i) at any time after April 30, 2002 ("Termination
Date"), if the Closing shall not have been consummated on or
prior to such date and such failure is not caused by a breach
of this Agreement by the terminating party, provided, however,
that in the circumstances described in Section 8.01(d) such
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Termination Date shall be extended the same number of days as
the extension pursuant to Section 8.01(d);
(ii) if there has been a material breach of any
representation, warranty, covenant, agreement or obligation
(or any breach of any representation or warranty that is
qualified by its terms by reference to materiality or Material
Adverse Effect) on the part of the non-terminating party set
forth in this Agreement, which breach is not curable or, if
curable, has not been cured within thirty (30) days following
receipt by the non-terminating party of notice of such breach
from the terminating party;
(iii) if (A) any court of competent jurisdiction
(other than the U.S. Bankruptcy Court or the C.I. Grand Court)
or other competent Governmental or Regulatory Authority (other
than the U.S. Bankruptcy Court or the C.I. Grand Court) shall
have issued an Order which has become final and nonappealable
or (B) any Law (other than the Bankruptcy Code or the
Companies Law) shall be in effect, in either case making
illegal or otherwise restricting, preventing or prohibiting
the effectuation of any of the transactions contemplated by
this Agreement;
(iv) if the U.S. Bankruptcy Court or the C.I. Grand
Court shall have issued an Order which has become final and
nonappealable restricting or restraining in a material manner
or enjoining or otherwise prohibiting or making illegal the
effectuation of the transactions contemplated by this
Agreement (including an Order denying confirmation of the Plan
or denying sanctioning of the Scheme of Arrangement); or
(c) By Purchaser at any time during the period commencing
November 23, 2001 and ending November 30, 2001 in the event the U.S. Bankruptcy
Court has not issued an Order approving the Bidding Procedures (in form and
substance as attached as an exhibit to this Agreement);
(d) By Purchaser if the U.S. Bankruptcy Court and the C.I.
Grand Court have not entered the Confirmation Order and the Sanction Order,
respectively (approving the Plan and the Scheme of Arrangement in a form
providing, to Purchaser's satisfaction in its reasonable judgment, for the
effectuation of all the transactions contemplated by this Agreement in
accordance with the terms and provisions hereof), on or before March 29, 2002,
provided, however, that if on such date Sellers are using their commercially
reasonable efforts to obtain entry of the Confirmation Order and the Sanction
Order in such form, then such date shall be extended for so long as Sellers are
using their commercially reasonable efforts to obtain entry of the Confirmation
Order and Sanction Order in such form, but in no event shall such date be
extended past May 31, 2002;
(e) By any party hereto by written notice to the other party,
in the event that the Plan and the Scheme of Arrangement shall have been voted
upon and the requisite number and amount of holders of claims in each class of
claims provided for in the Plan and the Scheme of Arrangement entitled to vote
shall have failed to accept the Plan or the Scheme of
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Arrangement unless, as to those classes that have failed to accept the Plan or
the Scheme of Arrangement, a cramdown of the Plan pursuant to Section 1129(b) of
the Bankruptcy Code is sought by the Debtors at the hearing to consider
confirmation of the Plan;
(f) By any party hereto in the event that the U.S. Bankruptcy
Court approves an Alternative Transaction;
(g) By any party hereto in the event that the U.S. Bankruptcy
Court confirms a plan of reorganization for the Debtors that does not
contemplate the transactions contemplated by this Agreement;
(h) By any party hereto in the event that Sellers consummate
an Alternative Transaction; or
(i) By any party hereto in the event that Sellers select a
Person other than Purchaser as the Successful Bidder.
8.02 Effect of Termination. (a) If this Agreement is validly
terminated pursuant to Section 8.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of any party
hereto (or any of their respective Representatives or Affiliates) except (i) the
provisions with respect to expenses in Section 10.05, confidentiality in Section
10.07, and the provisions of this Article VIII will continue to apply following
any such termination, (ii) nothing contained in this Agreement will relieve any
party from any Liability for any material breach prior to such termination of
such party's representations, warranties, covenants or agreements set forth in
this Agreement, except to the extent a fee has been paid pursuant to Section
8.02(b) below, in which case such fee shall constitute liquidated damages and
shall be Purchaser's sole remedy for any such breach by Sellers, and (iii) as
provided in paragraph (b) below.
(b) If at the time of termination of this Agreement, Purchaser
is not in material breach of this Agreement and (i) Purchaser shall have
terminated this Agreement pursuant to Section 8.01(b)(ii) or Section 8.01(d);
(ii) either party hereto shall have terminated this Agreement pursuant to
Section 8.01(b)(i), Section 8.01(b)(iv), or Section 8.01(e), (f), (h) or (i)
(but with respect to Section 8.01(b)(iv), only if the Bankruptcy Court has
previously issued an Order approving the Bidding Procedures Motion; and with
respect to Section 8.01(b)(i), no Termination Fee shall be payable if the
failure to close by the Termination Date is a result of the failure of any of
the conditions set forth in Sections 6.04, 6.05, 6.06 (unless the reason for the
failure of such condition is a stay of an Order referred to in Section 6.06 then
in effect), 6.09 or 6.11(b)); (iii) either party shall have terminated this
Agreement pursuant to Section 8.01(g); or (iv) Sellers shall have terminated
this Agreement in violation of the terms of this Agreement, then Sellers shall
pay to Purchaser a termination fee of $30,000,000 (the "Termination Fee"),
inclusive of any and all costs and expenses incurred by Purchaser in connection
with this Agreement and the transactions contemplated hereby. Any fee payable
under this Section 8.02(b) shall be paid immediately upon termination by wire
transfer of immediately available funds of Sellers.
8.03 Guarantee of Payment of Termination Fee. FTL Caribe
hereby guarantees the payment of the Termination Fee by Sellers if and when due
under Section 8.02.
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ARTICLE IX
DEFINITIONS
9.01 Definitions. (a) Defined Terms. As used in this
Agreement, the following defined terms have the meanings indicated below:
"Accounts Receivable" has the meaning ascribed to it in
Section 1.01(a)(v).
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Adjusted Net Working Capital" shall mean the lesser of (x)
$540,000,000 or (y) the Net Working Capital as determined pursuant to Section
1.04(c) minus the amount of Purchase Price reduction pursuant to Section
1.04(d).
"Affected Employee" has the meaning ascribed to it in Section
5.04.
"Affiliate" means any Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise.
"Agreement" means this Asset Purchase Agreement and the
Exhibits, Sellers' Disclosure Schedule, Purchaser's Disclosure Schedule and the
certificates delivered in accordance with Sections 6.03 and 7.03, as the same
shall be amended from time to time.
"Allocation" has the meaning ascribed to it in Section
1.04(b).
"Alternative Transaction" means any proposal or offer
(including, without limitation, any proposal or offer to the Debtors' creditors)
with respect to a merger, consolidation or other business combination including
any Seller or any of the Transferred Subsidiaries, or any acquisition or similar
transaction (including, without limitation, a tender or exchange offer)
involving the purchase of (i) all or a substantial part of the FTL Assets, (ii)
50.1% or more of the outstanding capital stock of Sellers or (iii) 50.1% or more
of the outstanding shares of the capital stock of the Transferred Subsidiaries,
other than the transactions contemplated by this Agreement.
"Approval Notice" has the meaning ascribed to it in Section
1.08(b).
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, wherever situated and by
whomever possessed), including the goodwill related thereto, operated, owned or
leased by such Person.
"Assignment Instruments" has the meaning ascribed to it in
Section 1.05(c)(ii).
"Assumption Agreement" has the meaning ascribed to it in
Section 1.05(c)(iii).
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"Assumption Instruments" has the meaning ascribed to it in
Section 1.05(c)(iii).
"Auction" has the meaning ascribed to it in the Bidding
Procedures.
"Bankruptcy Code" has the meaning ascribed to it in the
forepart of this Agreement.
"Benefit Plans" means any plan (as defined below) established
by any Seller or any Transferred Subsidiary, or any predecessor or Affiliate
thereof, existing at the Closing Date or at any time within the five (5) year
period prior thereto (giving effect to the Plan and Scheme of Arrangement), to
which any Seller or any Transferred Subsidiary contributes or has contributed on
behalf of any Employee, former Employee or director, or under which any
Employee, former Employee or director of any Seller or any Transferred
Subsidiary or any beneficiary thereof is covered, is eligible for coverage or
has benefit rights, including the Pension Plan but excluding any non-qualified
plans of Sellers or the Transferred Subsidiaries (for purposes of this
definition, the term "plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, dental, tuition reimbursement, accident, disability, workmen's
compensation or other insurance, severance, separation or other employee benefit
plan, practice, policy or arrangement of any kind, whether written or oral,
including, but not limited to, any "employee benefit plan" within the meaning of
Section 3(3) of ERISA).
"Berkshire" has the meaning ascribed to it in the forepart of
this Agreement.
"Bidding Procedures" has the meaning ascribed to it in Section
4.03.
"Bidding Procedures Motion" has the meaning ascribed to it in
Section 4.03.
"Big Five Accounting Firm" shall mean (a) Xxxxxx Xxxxxxxx, (b)
Deloitte & Touche LLP, (c) Ernst & Young, (d) KPMG or (e)
PriceWaterhouseCoopers.
"Books and Records" means books of account, minute books,
stock record books, and other similar business records.
"Business" has the meaning ascribed to it in the forepart of
this Agreement.
"Business Books and Records" has the meaning ascribed to it in
Section 1.01(a)(xvi).
"Business Contracts" has the meaning ascribed to it in Section
1.01(a)(viii).
"Business Day" means a day other than Saturday, Sunday or any
other day on which banking institutions in New York, New York are required or
authorized to close by law or executive order.
"Business Licenses" has the meaning ascribed to it in Section
1.01(a)(xi).
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"CERCLA" has the meaning ascribed to it in Section 2.09(b).
"Charter Documents" means such Person's certificate or
articles of incorporation, memorandum and articles of association, by-laws,
limited liability company operating agreement, and other comparable constituent,
charter or organizational documents, as applicable in such Person's jurisdiction
of formation.
"C.I. Grand Court" has the meaning ascribed to it in the
forepart of this Agreement.
"C.I. Proceedings" has the meaning ascribed to it in the
forepart of this Agreement.
"Claims" has the meaning ascribed to it in the Plan.
"Closing" has the meaning ascribed to it in Section 1.05(a).
"Closing Date" has the meaning ascribed to it in Section
1.05(a).
"Closing Date Net Working Capital" has the meaning ascribed to
it in Section 1.08(a).
"Code" means the Internal Revenue Code of 1986.
"Companies Law" has the meaning ascribed to it in the forepart
of this Agreement.
"Condition of the Business" means the business, financial
condition, results of operations and Assets and Properties of the Business,
taken as a whole.
"Confidentiality Agreement" means the agreement entered into
between Sellers and Berkshire, dated August 31, 2001, regarding certain
confidential information to be provided to Purchaser by or on behalf of Sellers.
"Confirmation Date" has the meaning ascribed to it in the
forepart of this Agreement.
"Confirmation Order" has the meaning ascribed to it in the
forepart of this Agreement.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract.
"Conveyance Taxes" has the meaning ascribed to it Section
4.08.
"Debtors" has the meaning ascribed to it in the forepart of
this Agreement.
"Disclosure Statement" has the meaning ascribed to it in the
forepart of this Agreement.
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"Directly Transferred Subsidiaries" has the meaning ascribed
to it in Section 1.01(a)(i).
"Dispute Notice" has the meaning ascribed to it in Section
1.08(b).
"Dispute Period" has the meaning ascribed to it in Section
1.08(b).
"DOJ" has the meaning ascribed to it in Section 4.02.
"Effective Date" means the date the Plan and Scheme of
Arrangement become effective.
"Election" has the meaning ascribed to it in Section 1.10.
"Employee" means each employee, officer or consultant of any
Seller or any of the Transferred Subsidiaries engaged in the conduct of the
Business.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" has the meaning ascribed to it in Section
1.05(b).
"Escrow Agreement" has the meaning ascribed to it in Section
1.05(b).
"Escrow Amount" means (a) if the Net Working Capital estimated
pursuant to Section 1.04(c) minus the amount of Purchase Price reduction
pursuant to Section 1.04(d) is greater than or equal to $540,000,000, an amount
equal to 12% of $540,000,000 or (b) if the Net Working Capital estimated
pursuant to Section 1.04(c) minus the amount of Purchase Price reduction
pursuant to Section 1.04(d) is less than $540,000,000, an amount equal to 12% of
such estimated Net Working Capital.
"Estates" has the meaning ascribed to it in the forepart of
this Agreement.
"Excluded Assets" has the meaning ascribed to it in Section
1.03(b).
"Excluded Debtor Subsidiary" shall mean an Excluded Subsidiary
that is a Debtor.
"Excluded Direct Subsidiaries" has the meaning ascribed to it
in Section 1.01(b)(iii).
"Excluded Indirect Subsidiaries" has the meaning ascribed to
it in Section 1.03(a)(i).
"Excluded Liabilities" has the meaning ascribed to it in
Section 1.03(f).
"Excluded Subsidiaries" has the meaning ascribed to it in
Section 1.03(a)(i).
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"Executive Employees" shall mean the top 25 senior management
Employees of Sellers and the Transferred Subsidiaries.
"Executive Payment Schedule" shall have the meaning ascribed
to it in Section 5.04(e).
"Explanatory Statement" has the meaning ascribed to it in the
forepart of this Agreement.
"FTC" has the meaning ascribed to it in Section 4.02.
"FTL Assets" has the meaning ascribed to it in Section
1.03(a).
"FTL Caribe" has the meaning ascribed to it in the forepart of
this Agreement.
"FTL Final Balance Sheet" has the meaning ascribed to it in
Section 1.08(a).
"FTL Financial Statements" has the meaning ascribed to it in
Section 2.11.
"FTL Inc." has the meaning ascribed to it in the forepart of
this Agreement.
"FTL Liabilities" has the meaning ascribed to it in Section
1.03(f).
"FTL Ltd." has the meaning ascribed to it in the forepart of
this Agreement.
"FTL Reference Balance Sheet" has the meaning ascribed to it
in Section 1.04(c).
"FTL Reference Balance Sheet Date" has the meaning ascribed to
it in Section 1.04(c).
"Funding Deficit" has the meaning ascribed to it in Section
1.04(e) of Sellers' Disclosure Schedule.
"GAAP" means United States generally accepted accounting
principles, consistently applied throughout the specified period and in the
immediately prior comparable period.
"General Assignment" has the meaning ascribed to it in Section
1.05(c)(i).
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"HSR Act" means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"Improvements" has the meaning ascribed to it in Section
1.01(a)(ii).
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"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Independent Accountant" has the meaning ascribed to it in
Section 1.08(b).
"Independent Accountant Determination of the Working Capital"
has the meaning ascribed to it in Section 1.08(b).
"Indirectly Transferred Subsidiaries" has the meaning ascribed
to it in Section 1.03(a)(i).
"Intangible Personal Property" has the meaning ascribed to it
in Section 1.01(a)(x).
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service xxxx rights, service names and service name rights, brand
names, inventions, copyrights and copyright rights, processes, formulae, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"Inventory" has the meaning ascribed to it in Section
1.01(a)(iv).
"IRS" means the United States Internal Revenue Service.
"Joint Provisional Liquidators" means Xxxxx Xxxxxxx and Xxxx
Xxxxxxxx of KPMG, Cayman Islands.
"Knowledge of Purchaser" means the actual knowledge of the
executive officers of Purchaser and Berkshire.
"Knowledge of Sellers" means the actual knowledge of the
executive officers of FTL Ltd., FTL Inc and Union.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
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"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Litigation Claims" has the meaning ascribed to it in Section
1.01(a)(xv).
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the financial condition, business, liabilities,
properties, assets or results of operations of such Person and its Subsidiaries,
taken as a whole, except to the extent resulting from (i) any changes in general
United States or global economic conditions, (ii) any changes in general
economic conditions in industries in which the Person operates which changes do
not affect Purchaser or Sellers, as the case may be, disproportionately relative
to other entities operating in such industries, or (iii) any decline in the
market price of the common stock of such Person.
"Net Working Capital" means Working Capital Assets less
Working Capital Liabilities.
"Newco LLC" has the meaning ascribed to it in Section
1.03(a)(iii).
"Operative Agreements" means, collectively, the Escrow
Agreement, the General Assignment and the other Assignment Instruments, the
Assumption Agreement and the other Assumption Instruments and any support or
other agreements to be entered into in connection with the transaction.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right, swap, hedge, derivative or
other Contract that gives the right to (i) purchase or otherwise receive or be
issued any shares of capital stock of, or any membership interest, ownership
interest or other equity interest in, such Person or any security of any kind
convertible into or exchangeable or exercisable for any shares of capital stock
of, or any membership interest, ownership interest or other equity interest in,
such Person or (ii) receive or exercise any benefits or rights similar to any
rights enjoyed by or accruing to the holder of shares of capital stock of, or
any membership interest, ownership interest or other equity interest in, such
Person, including any rights to participate in the equity or income of such
Person or to participate in or direct the election of any directors, managers or
officers of such Person or the manner in which any shares of capital stock of
such Person are voted or that reduces the risk of ownership of any security of
any such Person or, in the case such Person is a limited liability company, to
act as, or enjoy the rights of, a member of such Person.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"Other Assets" has the meaning ascribed to it in Section
1.01(a)(xix).
"Pension Plan" means the Union Underwear Company, Inc.
Retirement Plan.
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"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business or by operation of Law
with respect to a Liability that is not yet due or delinquent, (iii) any Liens
arising under capital leases and operating leases for the purchase of plant or
equipment that (y) have been assumed prior to the date of this Agreement
pursuant to an Order of the U.S. Bankruptcy Court or C.I. Grand Court as listed
on the Schedule of Already Assumed Obligations or (z) are assumed by Sellers by
agreement of the parties hereto pursuant to Section 1.09, and (iv) any minor
imperfection of title or similar Lien which individually or in the aggregate
with other such Liens would not reasonably be expected to have a Material
Adverse Effect on the Condition of the Business.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Personal Property Leases" has the meaning ascribed to it in
Section 1.01(a)(vii).
"Petition Date" has the meaning ascribed to it in the forepart
of this Agreement.
"Plan" has the meaning ascribed to it in the forepart of this
Agreement.
"Prepaid Expenses" has the meaning ascribed to it in Section
1.01(a)(ix).
"Purchase Price" has the meaning ascribed to it in Section
1.04(a).
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Purchaser Representative" has the meaning ascribed to it in
Section 5.07.
"Purchaser's Disclosure Schedule" has the meaning ascribed to
it in the preamble to Article III.
"Quarterly Financial Statement Date" means the date of the
Quarterly Financial Statements.
"Quarterly Financial Statements" means the quarterly financial
statements included in Section 9.01 of Sellers' Disclosure Schedule.
"Real Property" has the meaning ascribed to it in Section
1.01(a)(ii).
"Real Property Leases" has the meaning ascribed to it in
Section 1.01(a)(iii).
"Regulation" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations are
amended from time to time.
"Reorganization Cases" has the meaning ascribed to it in the
forepart of this Agreement.
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"Representatives" with respect to any Person means such Person
and its officers, employees, counsel, accountants, financial advisors,
consultants and other representatives.
"Resolution Period" has the meaning ascribed to it in Section
1.08(b).
"Restricted Cash" has the meaning ascribed to it in Section
1.01(b)(i).
"Sanction Order" has the meaning ascribed to it in the
forepart of this Agreement.
"Schedule of Already Assumed Obligations" means the schedule
included as Section 1.03(a)(ii) of Sellers' Disclosure Schedule listing all
leases, subleases, licenses and other contracts that have been assumed prior to
the date of this Agreement by an Order of the U.S. Bankruptcy Court or C.I.
Grand Court.
"Scheme of Arrangement" has the meaning ascribed to it in the
forepart of this Agreement.
"Security Agreements" means any security arrangements and
collateral securing the repayment or other satisfaction of the Accounts
Receivable.
"Security Deposits" has the meaning ascribed to it in Section
1.01(a)(xiii).
"Sellers" has the meaning ascribed to it in the forepart of
this Agreement.
"Sellers' DIP Facility" means that certain Post-Petition Loan
and Security Agreement dated as of December 29, 1999 among Sellers and the
various financial institutions named as lenders therein, as amended from time to
time.
"Sellers' Disclosure Schedule" has the meaning ascribed to it
in the preamble to Article II.
"Specified Executive Employees" shall mean those Executive
Employees designated to be terminated as of the Closing pursuant to a schedule
to be provided by Purchaser to Sellers at least fifteen (15) Business Days prior
to Closing.
"Straddle Period Returns" has the meaning ascribed to it in
Section 4.08(c).
"Subsidiary" with respect to an entity means any Person in
which such entity, directly or indirectly through Subsidiaries or otherwise,
beneficially owns more than fifty percent (50%) of either the equity interests
in, or the voting control of, such Person.
"Successful Bidder" has the meaning ascribed to it in the
Bidding Procedures.
"Tangible Personal Property" has the meaning ascribed to it in
Section 1.01(a)(vi).
"Tax Returns" means all returns, reports and forms required to
be filed with a Governmental or Regulatory Authority with respect to Taxes.
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"Taxes" means any and all taxes, fees, levies, duties,
tariffs, import and other similar charges, imposed by any taxing authority,
together with any related interest, penalties, or other additions to tax, or
additional amounts imposed by any taxing authority, and without limiting the
generality of the foregoing, shall include net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, value added,
franchise, profits, license, transfer, recording, escheat, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profit, environmental, custom duty, or other tax, governmental fee or other like
assessment or charge of any kind whatsoever.
"Termination Date" has the meaning ascribed to it in Section
8.01(b)(i).
"Transferred Debtor Subsidiary" means a Transferred Subsidiary
that is a Debtor.
"Termination Fee" has the meaning ascribed to it in Section
8.02(b).
"Transferred Subsidiaries" has the meaning ascribed to it in
Section 1.03(a)(i).
"Transferred Subsidiary Interests" has the meaning ascribed to
it in Section 1.03(a)(i).
"Union" has the meaning ascribed to it in the forepart of this
Agreement.
"U.S. Bankruptcy Court" has the meaning ascribed to it in the
forepart of this Agreement.
"Vehicles" has the meaning ascribed to it in Section
1.01(a)(xii).
"Working Capital Amount Due" has the meaning ascribed to it in
Section 1.08(a).
"Working Capital Assets" means the following items (but, to
the extent that any such assets would otherwise be covered by the categories
below, shall exclude (x) all of the Excluded Assets, (y) proceeds from sale,
condemnation or other disposition of any assets that would have been FTL Assets
if the Closing had occurred on the Quarterly Financial Statement Date but were
not current assets at the time of such sale, condemnation or disposition, and
(z) the assets associated with or financed by any liabilities that are FTL
Liabilities but are not Working Capital Liabilities and that were incurred after
the Quarterly Financial Statement Date):
(i) cash and cash equivalents, other than Restricted
Cash (the liabilities associated with Restricted Cash are not
Working Capital Liabilities);
(ii) all trade Accounts Receivables (net of reserves
on the FTL Reference Balance Sheet or the FTL Final Balance
Sheet, as applicable); other miscellaneous receivables,
excluding (1) those items included under the category of
domestic miscellaneous receivables as contained in Sellers'
monthly balance sheet referred to as IRS tax refunds (due to
Sellers not any Transferred Subsidiary), property insurance
receivables and receivables associated with the sale of closed
plants, (2) the Xxxxxx interest receivable and (3) the
employee
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receivable, as to clauses (1)-(3), as more fully described in
Section 1.01(b)(xii) of Sellers' Disclosure Schedule;
(iii) inventory, including finished goods, work in
process and raw materials inventories (in each case net of
reserves on the FTL Reference Balance Sheet or the FTL Final
Balance Sheet, as applicable); and
(iv) all other current assets (including, without
limitation, all prepaid inventory, services and vendor
deposits).
"Working Capital Liabilities" means the following items (but
shall exclude all Excluded Liabilities to the extent such liabilities would
otherwise be covered by the categories below):
(i) trade payables (including, without
limitation, cash overdraft);
(ii) accrued state, local and foreign income
taxes that are not required to be paid by
Sellers;
(iii) all accrued employee liabilities other than
amounts scheduled on the Executive Payment
Schedule and the retention, emergence,
severance, reorganization bonus, and other
payments that are excluded from FTL
Liabilities by Sections 1.02 and
1.03(c)(iv);
(iv) all other current liabilities not
extinguished pursuant to the Plan and Scheme
of Arrangement, excluding (1) non-operating
liabilities comprised of, but not limited
to, SG&A General Accruals, Chicago Office
Shutdown Reserve, Cotton Contract
Cancellation Liability, Interest,
Restructuring, Debt Guarantee and Synthetic
Lease Liabilities and (2) any accrual for
legal and professional fees incurred
specifically and exclusively in connection
with the Reorganization Cases recorded in
the financial statements and schedules
thereto used to determine the FTL Reference
Balance Sheet and the FTL Final Balance
Sheet;
(v) all current liabilities that since the
Quarterly Financial Statement Date have been
satisfied from any sale, condemnation or
other disposition of any assets that would
be FTL Assets if the Closing occurred on the
Quarterly Financial Statement Date but were
not current assets at the time of such sale,
condemnation or disposition;
(vi) all non-current liabilities resulting from
refinancing or extending the term of any of
the foregoing Working Capital Liabilities
after the Quarterly Financial Statement
Date; and
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(vii) all unpaid cure costs associated with the
assumption of those items specified in
Section 1.09.
"Working Capital Schedule" has the meaning ascribed to it in
Section 1.08(a).
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; (v) the phrase "ordinary course of business" refers to the
business of Sellers and their Subsidiaries in connection with the Business, and
(vi) the terms "include," "includes," and "including" shall be deemed to be
followed by the words "without limitation." Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
ARTICLE X
MISCELLANEOUS
10.01 Non-Survival of Representations and Warranties.
The representations and warranties contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Closing
and thereafter there shall be no liability in respect thereof, whether such
liability has accrued prior to the Closing Date or after the Closing Date, on
the part of any party hereto or its officers, directors, employees, agents and
Affiliates. The covenants and agreements of the parties hereto contained in this
Agreement shall only survive the Closing as and to the extent that such
covenants and agreements are expressly to be performed, in whole or in part,
following the Closing. Whenever "Seller" or "Sellers" is used in this Agreement
with reference to a period after the Closing, the term means those Sellers that
are in existence and the successor or successors to Sellers designated under the
Plan or Scheme of Arrangement, if any (but in any event shall not include any of
the Transferred Subsidiaries).
10.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally, by facsimile transmission, mailed (first class postage
prepaid) or sent by internationally recognized courier, to the parties at the
following addresses or facsimile numbers:
If to any Seller or to FTL Caribe, to:
Fruit of the Loom
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxx, III, Esq.
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and
Fruit of the Loom
One Fruit of the Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Legal Department
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. X'Xxxxxx, Esq.
If to Purchaser or Berkshire, to:
New FOL Inc. or Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Hamburg
with a copy to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon electronic confirmation of
receipt, (iii) if delivered by mail in the manner described above to the address
as provided in this Section, be deemed given upon receipt and (iv) if delivered
by internationally recognized courier to the address as provided in this
Section, be deemed given upon delivery as indicated in the records of such
courier (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.
10.03 Bulk Sales Act. To the extent applicable, the parties
hereby waive compliance with the bulk sales act or comparable statutory
provisions of each applicable jurisdiction.
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10.04 Entire Agreement. This Agreement, the Operative
Agreements and the Confidentiality Agreement supersede all prior discussions and
agreements prior to the date hereof between the parties with respect to the
subject matter hereof and thereof, and contain the sole and entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof.
10.05 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated hereby are consummated,
each party will pay its own costs and expenses, incurred in connection with the
negotiation, execution and closing of this Agreement and the Operative
Agreements and the transactions contemplated hereby and thereby.
10.06 Public Announcements. At all times at or before the
Closing, the parties hereto will not issue or make any reports, statements or
releases to the public with respect to this Agreement or the transactions
contemplated hereby without the consent of the other, which consent shall not be
unreasonably withheld, except to the extent that such disclosure is, in the
opinion of counsel, required by Law or by stock exchange regulation, provided
that any such required disclosure shall only be made, to the extent consistent
with Law, after consultation with the other parties hereto; provided, further,
that this Section 10.06 shall not apply to any reports, statements or releases
by Sellers to the public as required under the Bankruptcy Code or the Companies
Law or by the U.S. Bankruptcy Court or the C.I. Grand Court in connection with
the Reorganization Cases.
10.07 Confidentiality. Any information or material obtained by
Purchaser or any of its Representatives (as defined in the Confidentiality
Agreement) pursuant to this Agreement (including, without limitation, Sellers'
Disclosure Schedule and information pursuant to Section 4.03) that constitutes
"Evaluation Material" (as defined in the Confidentiality Agreement) shall be
governed by the terms of the Confidentiality Agreement. Any information or
material obtained by Sellers or their Representatives pursuant to this Agreement
regarding Purchaser or Berkshire (including, without limitation, Purchaser's
Disclosure Schedule and information pursuant to Section 3.01) shall be treated
as confidential by Sellers and their Representatives in the same manner as
Evaluation Material under the Confidentiality Agreement, provided, however, that
the Debtors shall have the right to file Purchaser's Disclosure Schedule and
Sellers' Disclosure Schedule with the U.S. Bankruptcy Court and the C.I. Grand
Court under seal. In the event of any conflict between the provisions of this
Agreement and the Confidentiality Agreement, the provisions of this Agreement
shall prevail.
10.08 Solicitation Materials. Notwithstanding anything to the
contrary in this Agreement, following the entry of the Orders approving the
Disclosure Statement and the Explanatory Statement, if the U.S. Bankruptcy Court
and the C.I. Grand Court so authorize Purchaser in such Orders, Purchaser may
send with the Plan and the Scheme of Arrangement materials a solicitation letter
seeking acceptance of the Plan and the Scheme of Arrangement by the creditors
and other parties in interest, subject to the approval of the Debtors, which
approval may not be unreasonably withheld.
10.09 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any
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one or more instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any future occasion.
All remedies, either under this Agreement or by Law or otherwise afforded, will
be cumulative and not alternative.
10.10 Amendment. This Agreement may be amended, supplemented
or modified only by a written instrument duly executed by or on behalf of each
party hereto.
10.11 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.
10.12 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto and any
attempt to do so will be void, except that Purchaser may assign any or all of
its rights, interests and obligations hereunder to one or more direct or
indirect wholly-owned Subsidiaries of Berkshire. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
10.13 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
10.14 Retention of Bankruptcy Court Jurisdiction. Subject to
the proviso of the immediately succeeding sentence, and except as otherwise
provided herein, the U.S. Bankruptcy Court shall retain jurisdiction of the
proceedings referred to in the Plan, including but not limited for purposes of
determining any and all controversies and disputes arising under or in
connection with, or for purposes of interpreting the provisions of, this
Agreement. Without limiting the generality of the foregoing, such jurisdiction
shall include any determination as to the fulfillment or non-fulfillment of any
condition to consummation of the transactions contemplated hereby set forth in
Articles VI and VII and any such determination shall be final and binding on the
parties and not subject to any appeal, the right to which is hereby waived by
the parties; provided, however, that nothing contained herein shall limit the
rights of the parties to appeal any determination of the U.S. Bankruptcy Court
relating to the amount of any monetary damages, fees, costs and expenses awarded
with respect to any such determination as aforesaid.
10.15 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware applicable to a
Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
10.16 Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
10.17 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
SELLERS
FRUIT OF THE LOOM, LTD.
By:______________________________
Name:
Title:
FRUIT OF THE LOOM, INC.
By:______________________________
Name:
Title:
UNION UNDERWEAR COMPANY, INC.
By:______________________________
Name:
Title:
FOR PURPOSES OF SECTION 8.03 ONLY
FTL CARIBE, LTD.
By:______________________________
Name:
Title:
PURCHASER
NEW FOL INC.
By:______________________________
Name:
Title:
FOR PURPOSES OF SECTIONS 1.11
AND 5.01(B) ONLY
BERKSHIRE HATHAWAY INC.
By:______________________________
Name:
Title:
-2-
EXHIBIT A
GENERAL ASSIGNMENT AND XXXX OF SALE
THIS GENERAL ASSIGNMENT AND XXXX OF SALE is entered into this
____ day of _________, 2002, by and among Fruit of the Loom, Ltd., a Cayman
Islands company, Fruit of the Loom, Inc., a Delaware corporation, Union
Underwear Company, Inc., a New York corporation (collectively, "Sellers"), and
New FOL Inc., a Delaware corporation ("Purchaser").
WHEREAS, Purchaser, Sellers, FTL Caribe, Ltd. a Cayman Islands
company, and Berkshire Hathaway Inc., a Delaware corporation, have entered into
an Asset Purchase Agreement, dated as of November 1, 2001 (the "Asset Purchase
Agreement"; capitalized terms not defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement), pursuant to which Sellers
have agreed to sell, transfer, convey, assign and deliver to Purchaser and
Purchaser has agreed to purchase from Sellers all of the assets used or held for
use by Sellers in connection with the conduct of the Business, and Purchaser has
agreed, in partial consideration therefor, to assume certain obligations in
connection therewith by executing an Assumption Agreement of even date herewith;
and
WHEREAS, Sellers desire to transfer and assign to Purchaser
the assets described below pursuant to Section 1.01 of the Asset Purchase
Agreement, and Purchaser desires to accept the sale, transfer, conveyance,
assignment and delivery thereof;
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, Sellers hereby irrevocably
sell, transfer, convey, assign and deliver to Purchaser all of Sellers' right,
title and interest in, to and under all of the Assets and Properties of Sellers
used in, of, or related to the Business, other than the Excluded Assets, as the
same shall exist on the date hereof, including, without limitation: (i) all
equity interests in the Directly Transferred Subsidiaries and the membership
interests in Newco LLC, (ii) the Real Property and the Improvements, (iii) the
Real Property Leases, (iv) the Inventory, (v) the Accounts Receivable, (vi) the
Tangible Personal Property, (vii) the Personal Property Leases, (viii) the
Business Contracts, (ix) the Prepaid Expenses, (x) the Intangible Personal
Property, (xi) the Business Licenses, (xii) the Vehicles, (xiii) the Security
Deposits, (xiv) all assets and other interests in and with respect to the
Benefit Plans, (xv) the Litigation Claims, (xvi) the Business Books and Records,
(xvii) the insurance policies specified in Section 1.01(a)(xvii) of the Asset
Purchase Agreement, (xviii) all cash (including checks received prior to the
close of business on the Closing Date, whether or not deposited or cleared prior
to the close of business on the Closing Date), commercial paper, certificates of
deposit and other bank deposits, treasury bills and other cash equivalents, but
excluding the restricted cash as specified in Section 1.01(b)(i) of the Asset
Purchase Agreement, and (xix) the Other Assets (collectively, the "Assigned
Assets"), TO HAVE AND TO HOLD the same unto Purchaser, its successors and
assigns, forever.
2
Purchaser hereby accepts the sale, transfer, conveyance,
assignment and delivery of the Assigned Assets.
At any time or from time to time after the date hereof, at
Purchaser's request and without further consideration, Sellers shall execute and
deliver to Purchaser such other instruments of sale, transfer, conveyance,
assignment and confirmation, provide such materials and information and take
such other actions as Purchaser may reasonably deem necessary or desirable in
order more effectively to transfer, convey and assign to Purchaser, and to
confirm Purchaser's title to, all of the Assigned Assets, and, to the full
extent permitted by Law, to put Purchaser in actual possession and operating
control of the Assigned Assets and to assist Purchaser in exercising all rights
with respect thereto.
Sellers hereby constitute and appoint Purchaser the true and
lawful attorney of Sellers, with full power of substitution, in the name of each
of Sellers or Purchaser, but on behalf of and for the benefit of Purchaser: (i)
to demand and receive from time to time any and all of the Assigned Assets and
to make endorsements and give receipts and releases for and in respect of the
same and any part thereof; (ii) to institute, prosecute, compromise and settle
any and all Actions or Proceedings that Purchaser may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Assigned Assets; (iii) to defend or compromise any or all Actions or Proceedings
in respect of any of the Assigned Assets; and (iv) to do all such acts and
things in relation to the matters set forth in the preceding clauses (i) through
(iii) as Purchaser shall deem desirable. Sellers hereby acknowledge that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are not and shall not be revocable by it in any manner or for any
reason. Purchaser shall indemnify and hold harmless Sellers and their officers,
directors, employees, agents and Affiliates from any and all Losses caused by or
arising out of any breach of Law by Purchaser in its exercise of the aforesaid
powers.
This General Assignment and Xxxx of Sale may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
This General Assignment and Xxxx of Sale shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
a contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof, except that if it is necessary in any
other jurisdiction to have the law of such other jurisdiction govern this
General Assignment and Xxxx of Sale in order for this General Assignment and
Xxxx of Sale to be effective in any respect, then the laws of such other
jurisdiction shall govern this General Assignment and Xxxx of Sale to such
extent.
IN WITNESS WHEREOF, the undersigned have caused their duly
authorized officers to execute this General Assignment and Xxxx of Sale on the
day and year first above written.
3
FRUIT OF THE LOOM, LTD.
By:______________________________
Name:
Title:
FRUIT OF THE LOOM, INC.
By:______________________________
Name:
Title:
UNION UNDERWEAR COMPANY, INC.
By:______________________________
Name:
Title:
NEW FOL INC.
By:______________________________
Name:
Title:
EXHIBIT B
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is entered into this ____ day of
_________, 2002 by and among Fruit of the Loom, Ltd., a Cayman Islands company,
Fruit of the Loom, Inc., a Delaware corporation, Union Underwear Company, Inc.,
a New York corporation (collectively, "Sellers"), and New FOL Inc., a Delaware
corporation ("Purchaser").
WHEREAS, Purchaser, Sellers, FTL Caribe, Ltd. a Cayman Islands
company, and Berkshire Hathaway Inc., a Delaware corporation, have entered into
an Asset Purchase Agreement, dated as of November 1, 2001 (the "Asset Purchase
Agreement"; capitalized terms not defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement), pursuant to which Sellers
have agreed to sell, transfer, convey, assign and deliver to Purchaser and
Purchaser has agreed to purchase from Sellers all of the Assets and Properties
of Sellers used in, of, or related to the Business, and Purchaser has agreed, in
partial consideration therefor, to assume certain obligations in connection
therewith pursuant to Section 1.02 of the Asset Purchase Agreement, by executing
this Assumption Agreement; and
WHEREAS, pursuant to Section 1.05(c)(iii) of the Asset
Purchase Agreement, Purchaser is required to execute and deliver to Sellers this
Assumption Agreement whereby Purchaser assumes such obligations.
NOW, THEREFORE, for and in consideration of the mutual
covenants contained herein and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, Purchaser hereby undertakes
and agrees from and after the date hereof, subject to the limitations contained
herein, to assume and to pay, perform and discharge when due the Liabilities
specified to be assumed by Purchaser under Section 1.02 of the Asset Purchase
Agreement.
Nothing contained herein shall require Purchaser to pay or
discharge any debts or obligations expressly assumed hereby so long as Purchaser
shall in good faith contest or cause to be contested the amount or validity
thereof.
Purchaser shall not assume the Excluded Liabilities, which
shall remain the sole obligation of Sellers, the Excluded Subsidiaries, their
successors and assigns.
No Person other than Sellers, their successors and assigns
shall have any rights under this Assumption Agreement or the provisions
contained herein.
This Assumption Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
2
This Assumption Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to a contract
executed and performed in such State without giving effect to the conflicts of
laws principles thereof, except that if it is necessary in any other
jurisdiction to have the law of such other jurisdiction govern this Assumption
Agreement in order for this Assumption Agreement to be effective in any respect,
then the laws of such other jurisdiction shall govern this Assumption Agreement
to such extent.
IN WITNESS WHEREOF, the undersigned have caused their duly
authorized officers to execute this Assumption Agreement on the day and year
first above written.
FRUIT OF THE LOOM, LTD.
By:______________________________
Name:
Title:
FRUIT OF THE LOOM, INC.
By:______________________________
Name:
Title:
UNION UNDERWEAR COMPANY, INC.
By:______________________________
Name:
Title:
NEW FOL INC.
By:______________________________
Name:
Title:
EXHIBIT C
Officer's Certificate
__________, a __________ ("___________"), pursuant to Section
6.03 of the Asset Purchase Agreement dated as of November 1, 2001 (the "Asset
Purchase Agreement"; capitalized terms not defined herein shall have the
meanings ascribed to them in the Asset Purchase Agreement) by and among Fruit of
the Loom, Ltd., a Cayman Islands company, Fruit of the Loom, Inc., a Delaware
corporation, Union Underwear Company, Inc., a New York corporation, FTL Caribe,
Ltd., a Cayman Islands company, New FOL Inc., a Delaware corporation
("Purchaser"), and Berkshire Hathaway Inc., a Delaware corporation, HEREBY
CERTIFIES that:
(1) The representations and warranties made by __________ in
the Asset Purchase Agreement are true and correct in all material respects
(except for such representations and warranties that are qualified by their
terms by reference to materiality or Material Adverse Effect, which
representations and warranties as so qualified shall be true and correct in all
respects) on and as of the date hereof as though made on and as of the date
hereof or, in the case of representations and warranties made in Section 2.12(e)
of the Asset Purchase Agreement, as of the respective dates specified therein.
(2) The agreements, covenants and obligations required by the
Asset Purchase Agreement to be performed or complied with by __________ at or
before the Closing have been duly performed or complied with in all material
respects.
IN WITNESS WHEREOF, __________ has caused this Certificate to
be executed on its behalf by the undersigned on and as of the ____ day of
____________, 2002.
________________________________
By:_____________________________
Name:
Title:
EXHIBIT D-1
FRUIT OF THE LOOM, LTD.
[Assistant] Secretary's Certificate
I, __________, [Assistant] Secretary of Fruit of the Loom,
Ltd., a Cayman Islands company ("FTL Ltd."), pursuant to Section 6.03 of the
Asset Purchase Agreement dated as of November 1, 2001 (the "Asset Purchase
Agreement") by and among FTL Ltd., Fruit of the Loom, Inc., a Delaware
corporation, Union Underwear Company, Inc., a New York corporation, FTL Caribe,
Ltd., a Cayman Islands company, New FOL Inc., a Delaware corporation
("Purchaser"), and Berkshire Hathaway Inc., a Delaware corporation, DO HEREBY
CERTIFY on behalf of FTL Ltd. as follows:
(1) Attached hereto as Exhibit A is a true, complete and
correct copy of the Articles of Incorporation of FTL Ltd. and all amendments
thereto (as so amended, the "Articles of Incorporation"), and no amendment to
the Articles of Incorporation has been authorized or become effective since the
date of the last of such amendments, and no amendment or other document relating
to or affecting the Articles of Incorporation has been filed in the appropriate
office in __________ since such date.
(2) Attached hereto as Exhibit B is a true, complete and
correct copy of the Articles and Memorandum of Association of FTL Ltd. as in
full force and effect on the date hereof and at all times since [date of last
amendment].
(3) Attached hereto as Exhibit C is a true, complete and
correct copy of the Sanction Order of the C.I. Grand Court, dated __________.
(4) Attached hereto as Exhibit D is a true, complete and
correct copy of resolutions adopted by the Board of Directors of FTL Ltd. with
respect to the Asset Purchase
2
Agreement and the Operative Agreements to which it is a party and the
transactions contemplated thereby, which resolutions were duly and validly
adopted at a meeting of the Board of Directors of FTL Ltd. on __________, 2001,
at which a quorum was present and acting throughout. All such resolutions are in
full force and effect on the date hereof in the form in which adopted and no
other resolutions have been adopted by the Board of Directors of FTL Ltd. or any
committee thereof relating to the Asset Purchase Agreement or the Operative
Agreements to which it is a party or the transactions contemplated thereby.
(5) Each of the following named individuals is a duly elected
or appointed, qualified and acting officer of FTL Ltd. who holds, and at all
times since [date of execution of Asset Purchase Agreement] has held, the
offices set forth opposite such individual's name, and the signature written
opposite the name and title of such officer is such officer's genuine signature:
[Name] [Title] ______________________________
[Name] [Title] ______________________________
[Name] [Title] ______________________________
[Name] [Title] ______________________________
IN WITNESS WHEREOF, FTL Ltd. has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of
______________, 2002.
FRUIT OF THE LOOM, LTD.
By:___________________________
Name:
Title:
3
I, __________, [title of officer] of FTL Ltd., DO HEREBY
CERTIFY on behalf of FTL Ltd. that __________ is the duly elected or appointed,
qualified and acting [Assistant] Secretary of FTL Ltd., and the signature set
forth above is the genuine signature of such officer.
_________________________
Name:
Title:
____________, 2002
EXHIBIT D-2
FRUIT OF THE LOOM, INC.
[Assistant] Secretary's Certificate
I, __________, [Assistant] Secretary of Fruit of the Loom,
Inc., a Delaware corporation ("FTL Inc."), pursuant to Section 6.03 of the Asset
Purchase Agreement dated as of November 1, 2001 (the "Asset Purchase Agreement")
by and among FTL Inc., Fruit of the Loom, Ltd., a Cayman Islands company, Union
Underwear Company, Inc., a New York corporation, FTL Caribe, Ltd., a Cayman
Islands company, New FOL Inc., a Delaware corporation ("Purchaser"), and
Berkshire Hathaway Inc., a Delaware corporation, DO HEREBY CERTIFY on behalf of
FTL Inc. as follows:
(1) Attached hereto as Exhibit A is a true, complete and
correct copy of the Certificate of Incorporation of FTL Inc. and all amendments
thereto (as so amended, the "Certificate of Incorporation"), and no amendment to
the Certificate of Incorporation has been authorized or become effective since
the date of the last of such amendments, and no amendment or other document
relating to or affecting the Certificate of Incorporation has been filed in the
office of the Secretary of State of the State of Delaware since such date.
(2) Attached hereto as Exhibit B is a true, complete and
correct copy of the By-Laws of FTL Inc. as in full force and effect on the date
hereof and at all times since [date of last amendment].
(3) Attached hereto as Exhibit C is a true, complete and
correct copy of the Confirmation Order of the U.S. Bankruptcy Court, dated
__________.
(4) Attached hereto as Exhibit D is a true, complete and
correct copy of resolutions adopted by the Board of Directors of FTL Inc. with
respect to the Asset Purchase
2
Agreement and the Operative Agreements to which it is a party and the
transactions contemplated thereby, which resolutions were duly and validly
adopted at a meeting of the Board of Directors of FTL Inc. on __________, 2001,
at which a quorum was present and acting throughout. All such resolutions are in
full force and effect on the date hereof in the form in which adopted, and no
other resolutions have been adopted by the Board of Directors of FTL Inc. or any
committee thereof relating to the Asset Purchase Agreement or the Operative
Agreements to which it is a party or the transactions contemplated thereby.
(5) Each of the following named individuals is a duly elected
or appointed, qualified and acting officer of FTL Inc. who holds, and at all
times since [date of execution of Asset Purchase Agreement] has held, the
offices set forth opposite such individual's name, and the signature written
opposite the name and title of such officer is such officer's genuine signature:
[Name] [Title] ______________________________
[Name] [Title] ______________________________
[Name] [Title] ______________________________
[Name] [Title] ______________________________
IN WITNESS WHEREOF, FTL Inc. has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of
______________, 2002.
FRUIT OF THE LOOM, INC.
By:______________________
Name:
Title:
3
I, __________, [title of officer] of FTL Inc., DO HEREBY
CERTIFY on behalf of FTL Inc. that __________ is the duly elected or appointed,
qualified and acting [Assistant] Secretary of FTL Inc., and the signature set
forth above is the genuine signature of such officer.
_________________________
Name:
Title:
____________, 2002
EXHIBIT D-3
UNION UNDERWEAR COMPANY, INC.
[Assistant] Secretary's Certificate
I, __________, [Assistant] Secretary of Union Underwear
Company, Inc., a New York corporation ("Union"), pursuant to Section 6.03 of the
Asset Purchase Agreement dated as of November 1, 2001 (the "Asset Purchase
Agreement") by and among Union, Fruit of the Loom Inc., a Delaware corporation,
Fruit of the Loom, Ltd., a Cayman Islands company, FTL Caribe, Ltd., a Cayman
Islands company, New FOL Inc., a Delaware corporation ("Purchaser"), and
Berkshire Hathaway Inc., a Delaware corporation, DO HEREBY CERTIFY on behalf of
FTL Inc. as follows:
(1) Attached hereto as Exhibit A is a true, complete and
correct copy of the Certificate of Incorporation of Union and all amendments
thereto (as so amended, the "Certificate of Incorporation"), and no amendment to
the Certificate of Incorporation has been authorized or become effective since
the date of the last of such amendments, and no amendment or other document
relating to or affecting the Certificate of Incorporation has been filed in the
office of the Secretary of State of the State of New York since such date.
(2) Attached hereto as Exhibit B is a true, complete and
correct copy of the By-Laws of Union as in full force and effect on the date
hereof and at all times since [date of last amendment].
(3) Attached hereto as Exhibit C is a true, complete and
correct copy of the Confirmation Order of the U.S. Bankruptcy Court, dated
__________.
(4) Attached hereto as Exhibit D is a true, complete and
correct copy of resolutions adopted by the Board of Directors of Union with
respect to the Asset Purchase
Agreement and the Operative Agreements to which it is a party and the
transactions contemplated thereby, which resolutions were duly and validly
adopted at a meeting of the Board of Directors of Union on __________, 2001, at
which a quorum was present and acting throughout. All such resolutions are in
full force and effect on the date hereof in the form in which adopted, and no
other resolutions have been adopted by the Board of Directors of Union or any
committee thereof relating to the Asset Purchase Agreement or the Operative
Agreements to which it is a party or the transactions contemplated thereby.
(5) Each of the following named individuals is a duly elected
or appointed, qualified and acting officer of Union who holds, and at all times
since [date of execution of Asset Purchase Agreement] has held, the offices set
forth opposite such individual's name, and the signature written opposite the
name and title of such officer is such officer's genuine signature:
[Name] [Title] __________________________
[Name] [Title] __________________________
[Name] [Title] __________________________
[Name] [Title] __________________________
IN WITNESS WHEREOF, Union has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of
______________, 2002.
UNION UNDERWEAR COMPANY, INC.
By:_______________________
Name:
Title:
I, __________, [title of officer] of Union, DO HEREBY CERTIFY
on behalf of Union that __________ is the duly elected or appointed, qualified
and acting [Assistant] Secretary of Union, and the signature set forth above is
the genuine signature of such officer.
_______________________
Name:
Title:
____________, 2002
EXHIBIT E
[PURCHASER]
Officer's Certificate
New FOL Inc., a Delaware corporation ("Purchaser"), pursuant
to Section 7.03 of the Asset Purchase Agreement dated as of November 1, 2001
(the "Asset Purchase Agreement"; capitalized terms not defined herein shall have
the meanings ascribed to them in the Asset Purchase Agreement) by and among
Purchaser, Berkshire Hathaway Inc., a Delaware corporation, Fruit of the Loom,
Ltd., a Cayman Islands company, Fruit of the Loom, Inc., a Delaware corporation,
Union Underwear Company, Inc., a New York corporation, and FTL Caribe, Ltd., a
Cayman Islands company, HEREBY CERTIFIES that:
(1) The representations and warranties made by Purchaser in
the Asset Purchase Agreement are true and correct in all material respects
(except for such representations and warranties that are qualified by their
terms by reference to materiality or Material Adverse Effect, which
representations and warranties as so qualified shall be true and correct in all
respects) on and as of the date hereof as though made on and as of the date
hereof or, in the case of representations and warranties made in the last
sentence of Section 3.01 of the Asset Purchase Agreement, as of the date
specified therein.
(2) The agreements, covenants and obligations required by the
Asset Purchase Agreement to be performed or complied with by Purchaser at or
before the Closing have been duly performed or complied with in all material
respects.
IN WITNESS WHEREOF, Purchaser has caused this Certificate to
be executed on its behalf by the undersigned on and as of the ____ day of
_____________, 2002.
NEW FOL INC.
By:______________________
Name:
Title:
EXHIBIT F
[PURCHASER]
[Assistant] Secretary's Certificate
I, __________, [Assistant] Secretary of New FOL Inc., a
Delaware corporation ("Purchaser"), pursuant to Section 7.03 of the Asset
Purchase Agreement dated as of November 1, 2001 (the "Asset Purchase Agreement")
by and among Purchaser, Berkshire Hathaway Inc., a Delaware corporation, Fruit
of the Loom, Ltd., a Cayman Islands company, Fruit of the Loom, Inc., a Delaware
corporation, Union Underwear Company, Inc., a New York corporation, and FTL
Caribe, Ltd., a Cayman Islands company, DO HEREBY CERTIFY on behalf of Purchaser
as follows:
(1) Attached hereto as Exhibit A is a true, complete and
correct copy of the Certificate of Incorporation of Purchaser and all amendments
thereto (as so amended, the "Certificate of Incorporation"), and no amendment to
the Certificate of Incorporation has been authorized or become effective since
the date of the last of such amendments, and no amendment or other document
relating to or affecting the Certificate of Incorporation has been filed in the
office of the Secretary of State of the State of Delaware since such date and no
action has been taken by Purchaser, its stockholders, directors or officers in
contemplation of the filing of any such amendment or other document or in
contemplation of the liquidation or dissolution of Purchaser.
(2) Attached hereto as Exhibit B is a true, complete and
correct copy of the By-Laws of Purchaser as in full force and effect on the date
hereof and at all times since [date of last amendment].
(3) Attached hereto as Exhibit C is a true, complete and
correct copy of resolutions adopted by the Board of Directors of Purchaser with
respect to the Asset Purchase Agreement and the Operative Agreements to which it
is a party and the transactions contemplated thereby, which resolutions were
duly and validly adopted at a meeting of the Board of Directors of Purchaser on
__________, 2001, at which a quorum was present and acting throughout. All such
resolutions are in full force and effect on the date hereof in the form in which
adopted and no other resolutions have been adopted by the Board of Directors of
Purchaser or any committee thereof relating to the Asset Purchase Agreement or
the Operative Agreements to which it is a party or the transactions contemplated
thereby.
(4) Each of the following named individuals is a duly elected
or appointed, qualified and acting officer of Purchaser who holds, and at all
times since [date of execution of Asset Purchase Agreement] has held, the office
set forth opposite such individual's name, and the signature written opposite
the name and title of such officer is such officer's genuine signature:
[Name] [Title] __________________________
[Name] [Title] __________________________
[Name] [Title] __________________________
[Name] [Title] __________________________
IN WITNESS WHEREOF, Purchaser has caused this Certificate to
be executed on its behalf by the undersigned on and as of the ____ day of
_______________, 2002.
NEW FOL INC.
By:________________________
Name:
Title:
I, __________, [title of officer] of Purchaser, DO HEREBY
CERTIFY on behalf of Purchaser that __________ is the duly elected or appointed,
qualified and acting [Assistant] Secretary of Purchaser, and the signature set
forth above is the genuine signature of such officer.
_______________________
Name:
Title:
____________, 2002
EXHIBIT G
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of _____ __, 2002 (this
"Agreement") among New FOL Inc., a Delaware corporation ("Purchaser"), Fruit of
the Loom, Ltd., a Cayman Islands company ("FTL Ltd."), Fruit of the Loom, Inc.,
a Delaware corporation ("FTL Inc."), Union Underwear Company, Inc., a New York
corporation ("Union", and together with FTL Ltd. and FTL Inc., "Sellers"), and
_____________________________, a __________________________, as escrow agent
(the "Escrow Agent").
WHEREAS, Sellers and Purchaser are parties to an Asset
Purchase Agreement dated as of November 1, 2001, among Sellers, FTL Caribe,
Ltd., Purchaser, and Berkshire Hathaway Inc. (the "Asset Purchase Agreement")
relating to Purchaser's acquisition of certain assets and liabilities of Sellers
constituting the Business (capitalized terms not defined herein shall have the
meanings ascribed to them in the Asset Purchase Agreement); and
WHEREAS, the Asset Purchase Agreement requires as a condition
to the sale of the Business that Purchaser, Sellers and the Escrow Agent enter
into this Agreement and that Purchaser deposit a portion of the Purchase Price
with the Escrow Agent in order to provide a fund for any amounts that may be due
to Purchaser as a result of the post-closing working capital adjustment (such
amounts, the "Working Capital Amounts Due") pursuant to Section 1.08 of the
Asset Purchase Agreement.
NOW, THEREFORE, Purchaser, Sellers and the Escrow Agent hereby
agree as follows:
1. Appointment of the Escrow Agent; Deposit of Escrow Amount.
Sellers and Purchaser hereby constitute and appoint the Escrow Agent as, and the
Escrow Agent hereby agrees to assume and perform the duties of, the escrow agent
under and pursuant to this Agreement. The Escrow Agent acknowledges receipt of
an executed copy of the Asset Purchase Agreement and of the amount of
(_____________) dollars ($___________)(1) (such amount, (x) less distributions
therefrom and (y) excluding all earnings thereon, being referred to herein as
the "Escrow Fund") from Purchaser as provided in Section 1.05(b)(ii) of the
Asset Purchase Agreement.
2. The Escrow Fund. The Escrow Fund and the Interest Account
(as defined below) each shall be held by the Escrow Agent as a trust fund in a
separate account maintained for that purpose, on the terms and subject to the
conditions of this Agreement. The Escrow Fund and the Interest Account shall not
be subject to lien or attachment by any creditor of any party hereto and shall
be used solely for the purpose set forth in this Agreement. Amounts held in the
Escrow Fund and the Interest Account shall not be available to, and shall not be
used by, the Escrow Agent to set off any obligations of either Purchaser or
Sellers owing to the Escrow Agent in any capacity.
----------
(1) Amount shall be the Escrow Amount as defined in the Asset Purchase
Agreement.
3. Investment of the Escrow Fund and Interest Account; Taxes.
(a) The Escrow Agent shall invest and reinvest all cash funds
held from time to time as part of the Escrow Fund, in its discretion, in any of
the following kinds of investments, or in any combination thereof: (i) money
market investment funds having maturities of not greater than thirty (30) days;
(ii) bonds or other obligations of, or guaranteed by, the government of the
United States of America or agencies thereof, having maturities of not greater
than thirty (30) days; (iii) commercial paper rated, at the time of the Escrow
Agent's investment therein or contractual commitment providing for such
investment, at least P-1 by Xxxxx'x Investors Service, Inc. ("Moody's") and A-1
by Standard & Poor's Corporation ("S&P") and having maturities of not greater
than thirty (30) days; (iv) demand or time deposits in, certificates of deposit
of or bankers' acceptances issued by (A) a depository institution or trust
company incorporated under the laws of the United States of America, any State
thereof or the District of Columbia or (B) a United States branch office or
agency of a foreign depository institution or trust company if, in any such
case, the depository institution, trust company or office or agency has combined
capital and surplus of not less than one billion dollars ($1,000,000,000) (any
such institution being herein called a "Permitted Bank") having maturities of
not greater than thirty (30) days; (v) repurchase obligations of a Permitted
Bank or securities dealer (acting as principal) meeting the capital and surplus
requirements specified for a Permitted Bank with respect to any bond or other
obligation referred to in clause (i) above; or (vi) such other investments as
Purchaser and Sellers shall approve in writing. Notwithstanding the foregoing,
upon receipt of written notice from Sellers and Purchaser instructing it to do
so, the Escrow Agent shall invest all or any part of the Escrow Fund (such
amount to be specified in such written notice) in [A DEMAND DEPOSIT ACCOUNT
MAINTAINED BY THE ESCROW AGENT OR A PERMITTED BANK TO BE DESIGNATED] so that the
Escrow Fund will be available in immediately available funds for payment in
accordance with Section 4 below.
(b) The Escrow Agent shall receive and collect any and all
interest, income and other earnings of a similar nature arising with respect to
the Escrow Fund, and shall set aside such interest, income and other earnings in
[A DEMAND DEPOSIT ACCOUNT MAINTAINED BY THE ESCROW AGENT OR A PERMITTED BANK TO
BE DESIGNATED] (the "Interest Account") to be paid in accordance with Section 4
below.
(c) The Escrow Agent shall invest and reinvest all cash funds
held from time to time as part of the Interest Account in the same manner as the
Escrow Fund as set forth in paragraph (a) above.
(d) All taxes in respect of earnings on the Escrow Fund and
the Interest Account shall be the obligation of and shall be paid when due by
the party receiving such amounts. Sellers on the one hand and Purchaser on the
other hand shall each indemnify and hold the Escrow Agent harmless from and
against one-half (1/2) of all such taxes.
4. Distributions of The Escrow Fund and Interest Account.
(a) No later than the second Business Day after the earlier of
(i) the receipt by Purchaser of an Approval Notice, (ii) the expiration of the
Dispute Period if Purchaser has not received an Approval Notice or a Dispute
Notice within such period, (iii) the expiration of the Resolution Period if
Purchaser and Sellers have resolved any differences regarding the Working
2
Capital Schedule within such period and (iv) the receipt of the Independent
Accountant Determination of the Working Capital, Purchaser and Sellers shall
deliver a written notice to the Escrow Agent in substantially the form of Annex
A attached hereto (the "Certificate of Instruction") instructing the Escrow
Agent as to the amount (if any) of the Escrow Fund to be paid to Purchaser.
Sellers shall be entitled to receive the amount (if any) of the Escrow Fund in
excess of the amount (if any) to be so paid to Purchaser, and Sellers hereby
direct the Escrow Agent to pay any such amount (if any), as specified in the
Certificate of Instruction, to the Estates on behalf of Sellers for distribution
pursuant to the Plan. Within five (5) Business Days of receipt of the
Certificate of Instruction, the Escrow Agent shall pay over to Purchaser and/or
the Estates (on behalf of Sellers), as the case may be, by wire transfer of
immediately available funds to the bank accounts designated by Purchaser and
Sellers, the amount (if any) of the Escrow Fund so specified in the Certificate
of Instruction to be paid to such Purchaser and/or such Estates (on behalf of
Sellers).
(b) Concurrently with its distribution of the Escrow Fund
pursuant to paragraph (a) above, the Escrow Agent shall pay over to Purchaser
and/or the Estates (on behalf of Sellers), as the case may be, by wire transfer
of immediately available funds to the bank accounts designated by Purchaser and
Sellers under paragraph (a) above, the amount of the Interest Account as
follows:
(i) Purchaser shall be entitled to receive an amount equal
to the amount of the Interest Account multiplied by a fraction, the
numerator of which is the amount of the Escrow Fund that Purchaser is
to receive pursuant to paragraph (a) above and the denominator of which
is the total amount of the Escrow Fund; and
(ii) Sellers shall be entitled to receive the amount of
the Interest Account in excess of the amount of the Interest Account to
be so paid to Purchaser pursuant to paragraph (b)(i) above and Sellers
hereby direct the Escrow Agent to pay any such excess amount to the
Estates on behalf of Sellers for distribution pursuant to the Plan.
5. Termination of Agreement. Upon payment in full of the
Escrow Fund pursuant to the Certificate of Instruction and the amounts held in
the Interest Account, in each case in accordance with Section 4, this Agreement
(other than Sections 6, 7 and 8) shall automatically terminate.
6. Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent shall be limited to and determined solely by the
provisions of this Agreement and the certificates delivered in accordance
herewith, and the Escrow Agent is not charged with knowledge of or any duties or
responsibilities in respect of any other agreement or document. In furtherance
and not in limitation of the foregoing:
(i) the Escrow Agent shall not be liable for any loss of
interest sustained as a result of investments made hereunder in
accordance with the terms hereof, including any liquidation of any
investment of the Escrow Fund prior to its maturity effected in order
to make a payment required by the terms of this Agreement;
(ii) the Escrow Agent shall be fully protected in relying in
good faith upon any written certification, notice, direction, request,
waiver, consent, receipt or other
3
document that the Escrow Agent reasonably believes to be genuine and
duly authorized, executed and delivered;
(iii) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in
fact or law, or for anything that it may do or refrain from doing in
connection herewith; provided, however, that notwithstanding any other
provision in this Agreement, the Escrow Agent shall be liable for its
willful misconduct or gross negligence or breach of this Agreement;
(iv) the Escrow Agent may seek the advice of legal counsel
selected with reasonable care in the event of any dispute or question
as to the construction of any of the provisions of this Agreement or
its duties hereunder, and it shall incur no liability and shall be
fully protected in respect of any action taken, omitted or suffered by
it in good faith in accordance with the opinion of such counsel;
(v) in the event that the Escrow Agent shall in any instance,
after seeking the advice of legal counsel pursuant to the immediately
preceding clause, in good faith be uncertain as to its duties or rights
hereunder, it shall be entitled to refrain from taking any action in
that instance and its sole obligation, in addition to those of its
duties hereunder as to which there is no such uncertainty, shall be to
keep safely all property held in the Escrow Fund until it shall be
directed otherwise in writing by each of the parties hereto or by a
final, nonappealable order of a court of competent jurisdiction;
provided, however, in the event that the Escrow Agent has not received
such written direction or court order within one hundred eighty (180)
calendar days after requesting the same, it shall have the right to
interplead Purchaser and Sellers in any court of competent jurisdiction
and request that such court determine its rights and duties hereunder;
and
(vi) the Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either
directly or by or through agents or attorneys selected with reasonable
care, nothing in this Agreement shall be deemed to impose upon the
Escrow Agent any duty to qualify to do business or to act as fiduciary
or otherwise in any jurisdiction other than the State of New York and
the Escrow Agent shall not be responsible for and shall not be under a
duty to examine into or pass upon the validity, binding effect,
execution or sufficiency of this Agreement or of any agreement
amendatory or supplemental hereto.
7. Cooperation. Purchaser on the one hand and Sellers on the
other hand shall provide to the Escrow Agent all instruments and documents
within their respective powers to provide that are reasonably necessary for the
Escrow Agent to perform its duties and responsibilities hereunder.
8. Fees and Expenses; Indemnity. Purchaser on the one hand and
Sellers on the other hand shall each pay one-half (1/2) of the fees of the
Escrow Agent for its services hereunder as and when billed by the Escrow Agent,
and each shall reimburse and indemnify the Escrow Agent for, and hold it
harmless against, one-half (1/2) of any loss, damages, cost or expense,
including but not limited to reasonable attorneys' fees, reasonably incurred by
the Escrow Agent in connection with the Escrow Agent's performance of its duties
and obligations under this Agreement, as well as the reasonable costs and
expenses of defending against any
4
claim or liability relating to this Agreement; provided that notwithstanding the
foregoing, neither Purchaser nor Sellers shall be required to indemnify the
Escrow Agent for any such loss, liability, cost or expense arising as a result
of the Escrow Agent's willful misconduct or gross negligence or breach of this
Agreement.
9. Resignation and Removal of the Escrow Agent.
(a) The Escrow Agent may resign as such thirty (30) calendar
days following the giving of written notice thereof to Sellers and Purchaser. In
addition, the Escrow Agent may be removed and replaced on a date designated in a
written instrument signed by Sellers and Purchaser and delivered to the Escrow
Agent. Notwithstanding the foregoing, no such resignation or removal shall be
effective until a successor escrow agent has acknowledged its appointment as
such as provided in paragraph (c) below. In either event, upon the effective
date of such resignation or removal, the Escrow Agent shall deliver the property
comprising the Escrow Fund and the Interest Account to such successor escrow
agent, together with such records maintained by the Escrow Agent in connection
with its duties hereunder and other information with respect to the Escrow Fund
and the Interest Account as such successor may reasonably request.
(b) If a successor escrow agent shall not have acknowledged
its appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following the
date of a notice of resignation or, in the case of a removal, on the date
designated for the Escrow Agent's removal, as the case may be, because Sellers
and Purchaser are unable to agree on a successor escrow agent, or for any other
reason, the Escrow Agent may select a successor escrow agent and any such
resulting appointment shall be binding upon all of the parties to this
Agreement, provided that any such successor selected by the Escrow Agent shall
be a Permitted Bank referred to in Section 3(a)(iv)(B).
(c) Upon written acknowledgment by a successor escrow agent
appointed in accordance with the foregoing provisions of this Section 9 of its
agreement to serve as escrow agent hereunder and the receipt of the property
then comprising the Escrow Fund and the Interest Account, the Escrow Agent shall
be fully released and relieved of all duties, responsibilities and obligations
under this Agreement, subject to the proviso contained in Section 6(iii), and
such successor escrow agent shall for all purposes hereof be the Escrow Agent.
10. Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given if
delivered personally or by facsimile transmission, mailed (first class postage
prepaid) or sent by internationally recognized courier to the parties at the
following addresses or facsimile numbers:
If to Purchaser, to:
New FOL Inc. or Berkshire Hathaway Inc.
0000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Hamburg
with a copy to:
5
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
If to Sellers, to:
Fruit of the Loom
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxx, III, Esq.
and
Fruit of the Loom
One Fruit of the Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Legal Department
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. X'Xxxxxx, Esq.
If to the Escrow Agent, to:
[Name]
[Address]
Facsimile No.:
Attn:
with a copy to:
[Name]
[Address]
Facsimile No.:
Attn:
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon electronic confirmation of
receipt, (iii) if delivered by mail in the manner described above to the
6
address as provided in this Section, be deemed given upon receipt and (iv) if
delivered by internationally recognized courier to the address as provided in
this Section, be deemed given upon delivery as indicated in the records of such
courier (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice is
to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
11. Amendments, etc. This Agreement may be amended or
modified, and any of the terms hereof may be waived, only by a written
instrument duly executed by or on behalf of Purchaser and Sellers and, with
respect to any amendment that would adversely affect the Escrow Agent, the
Escrow Agent. No waiver by any party of any term or condition contained of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
13. Business Day. For all purposes of this Agreement, the term
"business day" shall mean a day other than Saturday, Sunday or any other day on
which banking institutions in New York, New York are required or authorized to
close by law or executive order.
14. Miscellaneous. This Agreement is binding upon and will
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Whenever "Seller" or "Sellers" is used in this Agreement with
reference to a period after the Closing, the term means those Sellers that are
then in existence and the successor or successors to Sellers designated under
the Plan or Scheme of Arrangement, if any (but in any event shall not include
any of the Transferred Subsidiaries). The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
SELLERS
FRUIT OF THE LOOM, LTD.
By:__________________________________
Name:
Title:
FRUIT OF THE LOOM, INC.
By:__________________________________
Name:
Title:
UNION UNDERWEAR COMPANY, INC.
By:__________________________________
Name:
Title:
8
PURCHASER
NEW FOL, INC.
By:__________________________________
Name:
Title:
9
ESCROW AGENT
[INSERT NAME]
By:
-------------------------------------------
Name:
Title:
10
ANNEX A
CERTIFICATE OF INSTRUCTION
to
------------------------------,
as Escrow Agent
The undersigned, New FOL Inc., a Delaware corporation ("Purchaser"),
Fruit of the Loom, Ltd., a Cayman Islands company ("FTL Ltd."), Fruit of the
Loom, Inc., a Delaware corporation ("FTL Inc."), Union Underwear Company, Inc.,
a New York corporation ("Union", and together with FTL Ltd. and FTL Inc.,
"Sellers"), pursuant to Section 4(a) of the Escrow Agreement dated as of ____
__, 2002 among Purchaser, Sellers and you (terms defined in said Escrow
Agreement have the same meanings when used herein), hereby instruct you to:
(A) pay from the Escrow Fund the amount of $_______________ by wire transfer of
immediately available funds to Purchaser's account at _________________,
__________________, _________, _________ (Account No.:_________); and
(B) after giving effect to the payment to Purchaser specified in (A) above, pay
all remaining amounts in the Escrow Fund to the Estates' account at
_________________, __________________, _________, _________ (Account
No.:_________).
[signatures on following page]
A-1
PURCHASER SELLERS
NEW FOL INC. FRUIT OF THE LOOM, LTD.
By:______________________________
Name:
Title: By:_____________________________
Name:
Date: Titlel:
Date:
FRUIT OF THE LOOM, INC.
By:_____________________________
Name:
Title:
Date:
UNION UNDERWEAR COMPANY, INC.
By:_____________________________
Name:
Title:
Date:
A-2
EXHIBIT H
EXHIBIT "A" TO MOTION
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
-----------------------------------X
In re: :
: Chapter 11 Cases
:
FRUIT OF THE LOOM, INC., et al., : No. 99-04497 (PJW)
-- --- :
:
: Jointly Administered
Debtors. :
-----------------------------------X
ORDER UNDER 11 U.S.C. XX.XX. 105(A) AND 363 AND
FED. R. BANKR. P. 2002 AND 6004 APPROVING
BIDDING PROCEDURES AND TERMINATION FEE, PERFORMANCE
OF PRE-CLOSING OBLIGATIONS, AND FORM
AND MANNER OF NOTICE THEREOF WITH RESPECT TO
PROPOSED SALE PURSUANT TO PLAN OF REORGANIZATION
Upon the motion dated November __, 2001 (the "Motion")(1) of
Fruit of the Loom, Inc., and its affiliated debtors and debtors-in-possession
("Fruit of the Loom"), for, inter alia, entry of an order pursuant to 11
U.S.C. xx.xx. 105(a) and 363 and Fed. R. Bankr. P. 2002 and 6004 approving Fruit
of the Loom's proposed bidding procedures annexed hereto as Exhibit "1" (the
"Bidding Procedures") and the Termination Fee and Fruit of the Loom's
performance of pre-closing obligations with respect to the proposed transaction
providing for a sale pursuant to Fruit of the Loom's Joint Plan of
Reorganization of the basic apparel business of the Reorganized Debtors (the
"Transaction"),
----------
(1) Unless otherwise defined, capitalized terms used herein shall have the
meanings ascribed to them in the Motion.
pursuant to the Purchase Agreement by and between Fruit of the
Loom, Ltd., Fruit of the Loom, Inc., and Union Underwear Company, Inc., three of
the above-captioned debtors (collectively, the "Sellers"), and New FOL, Inc.
(the "Purchaser") and Berkshire Hathaway, Inc. ("BHI"), as guarantor, dated
November 1, 2001 (together with all exhibits and agreements attached thereto,
the "Agreement"), a copy of which is attached to the Motion, to the Purchaser or
the bidder making the highest or otherwise best offer pursuant to the Bidding
Procedures (the "Successful Bidder"); and the Court having reviewed the Motion;
and it appearing that notice of the Motion was good and sufficient under the
circumstances and that no other or further notice need be given; and the Court
having considered the arguments of counsel at the hearing held on November __,
2001 (the "Bidding Procedures Hearing"), and it appearing that the relief
requested in the Motion with respect to the Bidding Procedures, the Termination
Fee, and Fruit of the Loom's pre-closing performance of obligations under the
Agreement is in the best interests of Fruit of the Loom, its estate, and parties
in interest; and upon the record of the Bidding Procedures Hearing; and after
due deliberation thereon; and good cause appearing therefor, it is hereby
2
FOUND AND DETERMINED THAT:(2)
A. Fruit of the Loom has articulated good and sufficient
reasons for approving the Bidding Procedures.
B. Fruit of the Loom's obligation to the Purchaser (under the
conditions and as set forth in the Agreement) to pay the Termination Fee is (a)
an actual and necessary cost and expense of preserving Fruit of the Loom's
estate, within the meaning of section 503(b) of the Bankruptcy Code, (b) of
substantial and commensurate benefit to Fruit of the Loom's estate, (c)
reasonable and appropriate, in light of the size and nature of the transaction
and the efforts that have been and will be expended by the Purchaser, and (d)
necessary to ensure that the Purchaser will continue to pursue its proposed
acquisition of the Company. The Termination Fee was a material inducement for,
and condition of, the Purchaser's entry into the Agreement. The Purchaser is
unwilling to continue its obligation to purchase the Company under the terms of
the Agreement (including subjecting the Agreement to higher or otherwise better
offers as contemplated by the Bidding Procedures), unless it is assured payment
of the Termination Fee in each of the circumstances in which the Termination Fee
may
----------
(2) Findings of fact shall be construed as conclusions of law and conclusions
of law shall be construed as findings of fact when appropriate.
See Fed. R. Bankr. P.7052.
3
become payable under the Agreement. Further, because the Termination Fee
induced the Purchaser to research the value of the Company and submit a bid that
will serve as a minimum or floor bid on which other bidders can rely, the
Purchaser has provided a benefit to Fruit of the Loom's estates by increasing
the likelihood that the Seller will receive the best possible price for the
Company. Finally, absent authorization of the Termination Fee, Purchaser's
obligations under the Agreement will terminate and Fruit of the Loom may lose
the opportunity to obtain the highest or otherwise best available offer for the
Company.
C. The Bidding Procedures are reasonable and appropriate and
represent the best method for maximizing the value of the Business for the
benefit of Fruit of the Loom estates.
D. The provisions of the Agreement, including Sections 1.09,
4.03, 4.04, 4.05, 4.06, 4.07, 4.09, 8.01, 8.02 and 8.03 of the Agreement,
providing for the conduct of Fruit of the Loom's business and related matters
during the period prior to the Closing under the Agreement and requiring
performance prior to the closing, are reasonable and appropriate for the period
between the date hereof and the earlier of termination of the Agreement and the
effective date of a plan of reorganization for Seller.
4
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED
THAT:
Notice
1. Notice of the Motion, the Bidding Procedures, the
Termination Fee, the Bidding Procedures Hearing, the Auction that has been
scheduled for [November 30], 2001, at 10:00 a.m., and the Approval Hearing to
approve and confirm the conduct and results of the Auction that has been
scheduled for [December 5], 2001, at [2:00 p].m, in each case as the same may be
adjourned from time to time in accordance with the Bidding Procedures, all as
set forth in the Motion, was good and sufficient, and no other or further notice
shall be required.
Termination Fee and Effectiveness of Agreement
2. The Termination Fee of $30,000,000.00, including the
circumstances under which the Termination Fee is payable, as more fully
described in the Agreement and in the Motion, is approved in all respects and
shall be payable as provided therein. In the event that Purchaser becomes
entitled to a Termination Fee under the Agreement, such fee shall be paid by
Fruit of the Loom to Purchaser in accordance with the terms of the Agreement.
The Termination Fee shall be deemed liquidated damages under the Agreement and
Purchaser shall not be entitled to other damages. The Termination Fee obligation
shall survive termination of the Agreement and shall constitute an
5
administrative expense of Fruit of the Loom's estates under sections 503(b) and
507(a)(i) of the Bankruptcy Code.
3. The provisions, terms and conditions set forth in the
Agreement which are to be performed by Fruit of the Loom, Purchaser, or BHI
before the closing date under the Agreement, including Sections 1.09, 4.03,
4.04, 4.05, 4.06, 4.07, 4.09, 8.01, 8.02, and 8.03 of the Agreement, are hereby
approved and are immediately effective and binding on each of Fruit of the Loom,
Purchaser, and BHI.
Bidding Procedures
4. The Bidding Procedures, which are incorporated herein by
reference, are hereby approved and shall govern all proceedings relating to the
Agreement and any subsequent bids for the Company in these cases.
5. Fruit of the Loom may, after consultation with the
Committees: (a) adopt additional rules for the Bidding Process at the Auction
that, in its judgment, after consultation with the Committees, will better
promote the goals of the Bidding Process and in the best interests of its
estates, creditors and other parties in interest, provided that such additional
rules are not inconsistent with any of the provisions of the Bidding Procedures,
(b) determine which Qualified Bid (as defined in the Bidding Procedures) is the
highest or otherwise best offer, in Fruit of the Loom's business judgment, after
6
consultation with the Committees, and (c) reject, at any time before entry of an
order of the Bankruptcy Court approving a Qualified Bid, any bid that, in Fruit
of the Loom's judgment, after consultation with the Committees, is (i)
inadequate or insufficient, (ii) not in conformity with the requirements of the
Bankruptcy Code, the Bidding Procedures or the terms and conditions of Sale, or
(iii) contrary to the best interests of Fruit of the Loom and its estates and
creditors.
6. On [December 5], 2001, or such other date as it may be
adjourned, the Court will hold the Approval Hearing, at which hearing Fruit of
the Loom will present the results of the Auction to the Court and request that
the Court enter the Approval Order. All objections to entry of the Approval
Order shall be in writing, state with specificity the basis of the objection, be
filed with the Bankruptcy Court, and served (with service by facsimile
permitted) so as to be actually received not later than 4:00 p.m. on [December
3], 2001, on counsel for Sellers, counsel for Purchaser, and counsel for the
Committees, with a copy to Xxxxxxxx.
7. No person or entity who is a rejected bidder pursuant to
the Bidding Procedures shall have standing in its capacity as a rejected bidder
to be heard at any hearing or with respect to any other matter in these Chapter
11 cases.
7
8. The Court shall retain jurisdiction over any matter or
dispute arising from or relating to the implementation of this Order or the
Bidding Procedures.
Dated: Wilmington, Delaware
November __, 2001
___________________________________
Chief United States Bankruptcy
Judge
8
EXHIBIT "1" TO BIDDING
PROCEDURES ORDER
FRUIT OF THE LOOM SALE BIDDING PROCEDURES
Set forth below are the bidding procedures (the "Bidding
Procedures") to be employed with respect to the Asset Purchase Agreement by and
between Fruit of the Loom, Ltd. and Fruit of the Loom, Inc. collectively the
"Seller"),New FOL, Inc.(the "Purchaser"), and Berkshire Hathaway Inc., November
1, 2001 (including all exhibits and agreements attached thereto, the
"Agreement") (*), with respect to the sale (the "Sale"), pursuant to Seller's
Joint Plan of Reorganization and Fruit of the Loom, Ltd.'s Scheme of Arrangement
(collectively, as each may be amended, the "Plan") of substantially all of the
assets used in the basic apparel business (the "Transaction") of the Reorganized
Debtors (collectively, the "Company"), which is subject to competitive bidding
as set forth herein.
Notwithstanding the selection of the Successful Bidder (as
hereinafter defined), and the execution of the Agreement (or the Marked
Agreement (as hereinafter defined), as the case may be, the consummation of the
Transaction provided for therein shall be contingent upon, and made pursuant to,
confirmation of, the Plan. The Transaction shall be made, (i) if no other
Qualified Bid (as defined below) is received, with the Purchaser pursuant to the
terms and conditions set forth in the Agreement or (ii) if another Qualified Bid
is received by the Seller, with the Purchaser or such other Qualified Bidder (as
defined below) as the Seller, in the exercise of its business judgment, after
consultation with (x) the Unofficial Secured Bank Steering Committee, (y) the Ad
Hoc Committee of Secured Noteholders, and (z) the Official Committee of
Unsecured Creditors of Fruit of the Loom, Inc. (collectively, the "Committees"),
may determine to have made the highest or otherwise best offer in the Auction
(as such term is defined below), consistent with these Bidding Procedures (the
"Successful Bidder").
DETERMINATION BY THE SELLER
The Seller, after consultation with the Committees, shall (i)
determine whether any person is a Qualified Bidder, (ii) coordinate the efforts
of Qualified Bidders in conducting
----------
(*) Unless otherwise defined herein, all capitalized terms shall have the
meanings set forth in the Agreement.
their respective due diligence investigations regarding the Company, (iii)
receive bids from Qualified Bidders, and (iv) negotiate any bid made to purchase
the Company (collectively, the "Bidding Process"). Any person who wishes to
participate in the Bidding Process must be a Qualified Bidder. Neither the
Seller nor its representatives shall be obligated to furnish any information of
any kind whatsoever relating to the Company to any person who is not a Qualified
Bidder.
PARTICIPATION REQUIREMENTS
To participate in the Bidding Process, each interested person
(a "Potential Bidder") must deliver the following (unless previously delivered)
to Seller's Investment Banker (as defined below), with a copy to the Committees'
Financial Advisors (as defined below), no later than 12:00 noon (New York time)
on the third business day after entry of the order approving these Bidding
Procedures:
(i) An executed confidentiality agreement in form and
substance satisfactory to the Seller, which is no less
favorable to the Seller than the confidentiality
agreement executed by the Purchaser; and
(ii) The most current audited and latest unaudited
financial statements (collectively, "Financials") of
the Potential Bidder, or, if the Potential
Bidder is an entity formed for the purpose of the
Transaction, (x) Financials of the equity holder(s) of
the Potential Bidder or such other form of financial
disclosure acceptable to the Seller and its advisors,
following consultation with the Committees and (y) the
written commitment of the equity holder(s) of the
Potential Bidder to be responsible for the Potential
Bidder's obligations in connection with the
Transaction.
A "Qualified Bidder" is a Potential Bidder that delivers the
documents described in subparagraphs (i) and (ii) above, whose Financials
demonstrate the financial capability to consummate the Sale in the opinion of
the Seller after consultation with the Committees, and that the Seller
determines, after consultation with the Committees, is able to
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consummate the Sale, if selected as the Successful Bidder. The Purchaser is a
Qualified Bidder.
Within two (2) business days after Seller's Investment Banker
receives from a Potential Bidder all of the materials required by subparagraphs
(i) and (ii) above, and after consultation with the Committees, the Seller shall
determine, and shall notify the Potential Bidder in writing (with a copy to
Purchaser), whether the Potential Bidder is a Qualified Bidder. At the same time
that the Seller notifies the Potential Bidder that it is a Qualified Bidder, the
Seller shall deliver (unless previously delivered) to the Qualified Bidder (i) a
confidential memorandum containing information and financial data relating to
the Company (the "Confidential Memorandum") and (ii) a copy of the Agreement.
OBTAINING DUE DILIGENCE ACCESS
To obtain due diligence access or additional information from
the Seller, a Qualified Bidder (other than Purchaser) must first provide the
Seller's Investment Banker (with a copy to the Committees' Financial Advisors)
with a written non-binding expression of interest ("Expression of Interest")
regarding (i) the Transaction, (ii) the purchase price range, (iii) the
structure and financing of the transaction (including the amount of equity to be
committed and sources of financing), (iv) any conditions to closing that it may
wish to impose, and (v) the nature and extent of additional due diligence it may
wish to conduct. If, based on the Expression of Interest and such additional
factors as the Seller determines (after consultation with the Committees) are
relevant, the Seller, in its business judgment, determines that the Qualified
Bidder is reasonably likely to make a bona fide higher or otherwise better offer
for the Company than offered by the Purchaser, the Seller shall afford such
Qualified Bidder reasonable due diligence.
Neither the Seller nor any of its affiliates (or any of their
respective representatives) are obligated to furnish any information relating to
the Company to any person except to Purchaser and a Qualified Bidder who makes
an acceptable Expression of Interest. Seller shall give Purchaser access to all
due diligence information provided to any other Qualified Bidder.
The Seller shall coordinate all reasonable requests for
additional information and due diligence access from Qualified Bidders. No
conditions relating to the completion of
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due diligence shall be permitted to exist after the Bid Deadline (as defined
below).
BID DEADLINE
THE DEADLINE FOR SUBMITTING BIDS BY A QUALIFIED BIDDER SHALL
BE 12:00 NOON (NEW YORK TIME) ON [NOVEMBER 27], 2001 (THE "BID DEADLINE"). The
Seller, after consultation with the Committees, may extend the Bid Deadline once
or successively, but is not obligated to do so. If the Seller extends the Bid
Deadline, it shall promptly notify all Qualified Bidders of the extension.
Nothing in these Bidding Procedures will be deemed to amend Purchaser's rights
under the Agreement.
A Qualified Bidder that desires to make a bid shall deliver
written copies of its bid to (A) Lazard Freres & Co., LLC, 00 Xxxxxxxxxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxx X'Xxxx, fax number (000) 000-0000
("Sellers' Financial Advisors") and Milbank, Tweed, Xxxxxx & XxXxxx LLP, 0 Xxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx X. Xxxxxxx, Esq., fax
number (000) 000-0000, and (B)(i) Houlihan, Lokey, Xxxxxx & Zukin, 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax No. (000) 000-0000, Attention:
Xxxxx Xxxxx; (ii) Chilmark Partners, Xxxx Xxxxxxx Building, 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, 00000, Attention: Xxxxx Xxxxxxx, fax
number (000) 000-0000; and (iii) Xxxxxx Capital Partners, 00 Xxxx 00xx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxx, fax number (212)
000-0000 (collectively the "Committees' Financial Advisors"), not later than the
Bid Deadline, who shall then distribute a copy of the bid to (i) the Sellers and
their other legal and financial advisors, (ii) counsel for the Committees, and
(iii) Purchaser and counsel for the Purchaser.
DUE DILIGENCE FROM BIDDERS
Sellers' Financial Advisors and the Committees' Financial Advisors
shall be entitled to due diligence from the Qualified Bidder, upon execution of
a confidentiality agreement in form and substance reasonably equivalent to the
confidentiality agreement executed by the Purchaser. The Qualified Bidder shall
comply with all reasonable requests for additional information and due diligence
access by the Sellers' Financial Advisors and the Committees' Financial
Advisors. Failure by the Qualified Bidder to fully comply with requests for
additional information and due diligence access will be a basis for Seller to
determine
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that a subsequent bid made by the Qualified Bidder is not a Qualified Bid.
BID REQUIREMENTS
A bid must be a written irrevocable offer from a Qualified
Bidder (i) stating that the Qualified Bidder offers to consummate the
Transaction as contemplated by the Agreement, upon the terms and conditions
(other than the Termination Fee) set forth in a copy of the Agreement, marked to
show those amendments and modifications to the Agreement, including price and
terms, that the Qualified Bidder proposes (in form and substance acceptable to
Seller after consultation with the Committees, the "Marked Agreement"); (ii)
confirming that the offer shall remain open until the end of the first business
day following the earlier to occur of the closing under a Plan incorporating the
bid of a Successful Bidder (other than the Purchaser) and May 2, 2002; (iii)
enclosing a copy of the proposed Marked Agreement; and (iv) accompanied with (a)
a certified or bank check, or wire transfer, in the amount of Twenty Million
Dollars ($20,000,000.00) payable to the order of the Sellers as a good-faith
deposit (the "Good Faith Deposit"), and (b) written evidence of a commitment for
financing or other evidence of ability to consummate the transaction, subject to
no conditions other than those set forth in the Marked Agreement, in either
event satisfactory to Sellers in consultation with the Committees.
In addition to the foregoing requirements, the Sellers, after
consultation with the Committees, will consider a bid only if the bid:
a. provides for an aggregate purchase price for the
Company of at least Ten Million Dollars
($10,000,000.00) over the sum of (x) the aggregate
purchase price offered by Purchaser in the Agreement
(which shall be evaluated based, among other things,
on the cash purchase price, and working capital
adjustment and the assumption of liabilities set forth
in the Marked Agreement), and (y) the Termination Fee;
b. provides that all cash and securities (other than
equity securities) which are components of the
purchase price are denominated in U.S. dollars only;
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c. is on terms that are not materially more burdensome
than the terms of the Agreement;
d. is not conditioned on the outcome of unperformed due
diligence by the bidder with respect to the Company,
but may be subject to the accuracy in all material
respects at the Closing of specified representations
and warranties or the satisfaction in all material
respects at the Closing of that transaction of
specified conditions, none of which shall survive
Closing and none of which shall be materially more
burdensome than those set forth in the Agreement;
e. does not request or entitle the bidder to any
Termination Fee, expense reimbursement or similar type
of payment; and
f. fully discloses the identity of each entity that will
be bidding for the Company or otherwise participating
in connection with such bid, and the complete terms of
any such participation.
A bid received from a Qualified Bidder that meets the
requirements set forth in the preceding two paragraphs will be considered a
"Qualified Bid." For purposes hereof, the Agreement executed by the Purchaser
shall constitute a Qualified Bid, but under no circumstances will Purchaser be
required to make a Good Faith Deposit, nor will Purchaser be required to have
its offer, bid(s) or obligations under the Agreement remain open or otherwise
binding except as expressly set forth in the Agreement, notwithstanding any
provisions hereof, including provisions regarding the Next Highest Bid. Upon
receipt of a Qualified Bid, the Sellers shall provide the Purchaser with a copy
of the Qualified Bid and any Marked Agreement.
INCORPORATION OF SUCCESSFUL BID INTO PLAN
The terms of the Successful Bid shall be incorporated into the
Plan, which, together with the Disclosure Statement and the Explanatory
Statement, shall be amended to the extent required to give effect thereto. The
closing of the Sale shall be contingent upon confirmation of the Plan and the
occurrence of the effective date of the Plan. The Plan may provide that if the
Sale to the Successful Bidder does not close on or before April 30, 2002 (or, if
Purchaser is the Successful Bidder, such
6
other date as provided in the Agreement), the Seller may enter into a
Transaction with the bidder making the Next Highest Bid (as defined below),
without further notice or solicitation, provided that all conditions to the
closing of the Next Highest Bid in the Marked Agreement in connection therewith
are satisfied.
"AS IS, WHERE IS"
The Sale shall be on an "as is, where is" basis and without
representations or warranties of any kind, nature or description by the Sellers,
their agents or their estates, except to the extent expressly set forth in the
Agreement or the Marked Agreement, as the case may be.
AUCTION
If Qualified Bids are received by the Bid Deadline, the Seller
will conduct an auction (the "Auction") with respect to the Transaction. THE
AUCTION SHALL TAKE PLACE AT 10:00 A.M. (NEW YORK TIME) ON [NOVEMBER 30], 2001 AT
THE OFFICES OF MILBANK, TWEED, XXXXXX & XXXXXX LLP, 0 XXXXX XXXXXXXXX XXXXX, XXX
XXXX, XXX XXXX 00000 or such later time or other place as the Sellers shall
notify all Qualified Bidders who have submitted Qualified Bids. Only a Qualified
Bidder who has submitted a Qualified Bid will be eligible to participate at the
Auction. Only the authorized representatives of each of the Qualified Bidders,
the Committees, Purchaser and Sellers shall be permitted to attend the Auction.
At the Auction, Qualified Bidders will be permitted to increase their bids. The
bidding at the Auction shall start at the purchase price stated in the highest
or otherwise best Qualified Bid, as determined in the Sellers' sole discretion,
after consultation with the Committees, and as disclosed to all Qualified
Bidders prior to commencement of the Auction, and continue in increments of at
least Five Million Dollars ($5,000,000.00).
Immediately prior to the conclusion of the Auction, the
Sellers, in consultation with their financial and legal advisors and the
Committees, shall (i) review each Qualified Bid on the basis of its financial
and contractual terms and the factors relevant to the sale process and the best
interests of the Sellers' estates, including, without limitation, those factors
affecting the speed and certainty of consummating the Sale, financing
contingencies, and antitrust and competition law considerations, (ii) identify
the highest or otherwise best offer for the Transaction (the "Successful Bid"),
and (iii)
7
identify the next highest or otherwise best offer after the Successful Bid (the
"Next Highest Bid").
ACCEPTANCE OF QUALIFIED BIDS
The Sellers presently intend to enter into a Transaction with
the Successful Bidder, whether such entity is the Purchaser or another Qualified
Bidder. Pursuant to the order of the Bankruptcy Court approving the Bidding
Procedures (the "Bidding Procedures Order"), the Agreement shall constitute a
binding contract of Sellers only to the extent that performance is called for
before the closing under such agreement. The Sellers intend to present the
results of the Auction and the Agreement or the Marked Agreement, as the case
may be, to the Bankruptcy Court at a hearing (the "Approval Hearing"), at which
the Sellers will request that the Bankruptcy Court (i) confirm the results of
the Auction, including that the Auction complied with the Bidding Procedures and
the Bidding Procedures Order, and (ii) approve the selection of the Successful
Bid and the Successful Bidder, as the highest and best offer for the Business.
However, neither (a) the Sellers' inclusion of the
Successful Bid in the Plan, Disclosure Statement or Explanatory Statement, or
presentation of the Successful Bid and the Agreement or Marked Agreement, as
applicable, at an Approval Hearing, nor (b) the entry of an order approving the
Disclosure Statement or the Explanatory Statement (or any other order approving
the Agreement or the Marked Agreement before confirmation of the Plan) by the
applicable Court, shall obligate Seller to consummate the Transaction. The
Sellers will be obligated to consummate the Transaction and the Bankruptcy Court
and the Grand Court of the Cayman Islands each will have approved the
Transaction only when the Plan, as amended to give effect to the Successful Bid,
has been confirmed and the effective date thereof occurs. In the event that the
Successful Bidder fails to close the Agreement or the Marked Agreement, as the
case may be, with the Sellers for any reason, then the Sellers shall be
authorized, but not required, to close with the Qualified Bidder that submitted
the Next Highest Bid, following consultation with the Committees, without notice
to any other party or further court order; provided that Purchaser, if it
submitted the Next Highest Bid, shall have no obligation to close except as
expressly provided in the Agreement.
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RETURN OF GOOD FAITH DEPOSIT; QUALIFIED BIDS STAY OPEN
Pending the Closing, all Good Faith Deposits shall be
maintained by the Sellers in one or more interest-bearing escrow accounts. All
Qualified Bids (except any bids made by Purchaser) must remain open, until the
earlier to occur of (x) the Closing and (y) May 2, 2002. Pending such date, all
Good Faith Deposits shall be maintained by the Sellers in one or more
interest-bearing escrow accounts.
MODIFICATIONS
The Sellers may, after consultation with the Committees, (a)
determine, in their business judgment, which Qualified Bid, if any, is the
Successful Bid and the Next Highest Bid; and (b) reject at any time before entry
of the Approval Order, any bid that, in the Sellers' sole discretion, is (i)
inadequate or insufficient, (ii) not in conformity with the requirements of the
Bankruptcy Code, the Bidding Procedures, or the terms and conditions of Sale, or
(iii) contrary to the best interests of the Sellers and their estates. The
Sellers, after consultation with the Committees, shall have the right to adopt
such other rules for the Bidding Process which, in their sole judgment, will
better promote the goals of the Bidding Process and which are not inconsistent
with any of the provisions of these Bidding Procedures. At the Auction, after
consultation with the Committees, the Sellers may announce any such additional
procedural rules for conducting the Auction.
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