EXHIBIT 99.1
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ASSET PURCHASE AGREEMENT
by and between
FAB INDUSTRIES, INC.
and
SSJJJ MANUFACTURING CO., LLC
___________________________________
Dated as of May 26, 2005
___________________________________
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..........................................................2
1.1 Defined Terms..............................................2
1.2 Interpretation.............................................8
ARTICLE II PURCHASE AND SALE OF THE BUSINESS...................................9
2.1 Agreement to Sell and Buy..................................9
2.2 Excluded Assets...........................................10
2.3 Purchase Price............................................11
2.4 Payment of Cash Purchase Price............................11
2.5 Assumption of Liabilities and Obligations.................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER......................13
3.1 Organization, Standing and Authority......................13
3.2 Authorization and Binding Obligation......................13
3.3 Governmental Authorization................................13
3.4 Noncontravention..........................................13
3.5 Third-Party Claims........................................13
3.6 No Broker.................................................14
3.7 No Additional Representations.............................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER........................15
4.1 Organization, Standing and Authority......................15
4.2 Authorization and Binding Obligation......................15
4.3 Governmental Authorization................................15
4.4 Noncontravention..........................................15
4.5 Third-Party Claims........................................15
4.6 No Broker.................................................16
4.7 Capitalization............................................16
4.8 Sufficient Funds..........................................16
4.9 Buyer's Reliance..........................................16
ARTICLE V EMPLOYEE MATTERS....................................................16
5.1 Employees.................................................16
5.2 Benefit Plans.............................................17
5.3 Payroll Taxes.............................................19
ARTICLE VI TAX MATTERS........................................................19
6.1 Allocation of Purchase Price..............................19
6.2 Transfer Taxes............................................19
ARTICLE VII COVENANTS AND AGREEMENTS..........................................19
7.1 Conduct of the Business...................................19
7.2 No Solicitation...........................................20
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7.3 Directors' and Officers' Indemnification and Insurance....22
7.4 Publicity; Confidentiality................................22
7.5 Fees and Expenses.........................................23
7.6 Efforts...................................................23
7.7 Dissolution..............................................24
7.8 Bulk Sales Laws...........................................24
7.9 Buyer Restricted Payments.................................24
ARTICLE VIII CONDITIONS TO CLOSING............................................25
8.1 Conditions to the Obligation of the Seller to Close.......25
8.2 Conditions to Obligation of the Buyer to Close............26
ARTICLE IX CLOSING AND CLOSING DELIVERIES.....................................26
9.1 Closing...................................................26
9.2 Deliveries by the Seller..................................27
9.3 Deliveries by Buyer.......................................28
ARTICLE X TERMINATION OF AGREEMENT............................................28
10.1 Termination...............................................28
10.2 Notice of Termination.....................................29
10.3 Effect of Termination.....................................29
10.4 Expenses Following Termination............................29
ARTICLE XI MISCELLANEOUS......................................................30
11.1 Nonsurvival of Representations, Warranties, Covenants
and Agreements............................................30
11.2 Indemnification by Buyer..................................31
11.3 Procedures Relating to Indemnification....................31
11.4 Notices...................................................33
11.5 Successors and Assigns; Third Party Beneficiaries.........33
11.6 Amendment and Waiver......................................34
11.7 Counterparts..............................................34
11.8 Headings..................................................34
11.9 GOVERNING LAW.............................................34
11.10 Consent to Jurisdiction and Service of Process............34
11.11 WAIVER OF JURY TRIAL......................................35
11.12 Severability..............................................35
11.13 Entire Agreement..........................................35
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 26, 2005 (this "AGREEMENT"),
by and between FAB INDUSTRIES, INC., a Delaware corporation (the "SELLER"), and
SSJJJ MANUFACTURING CO., LLC, a Delaware limited liability company (the
"BUYER").
WHEREAS, the Seller and the Seller Subsidiaries (as defined herein) own
and operate a textile manufacturing business that produces warp and circular
knit fabrics, raschel laces and laminated fabrics and makes, among other
products, blankets, sheets and other bedding products (the "BUSINESS");
WHEREAS, on March 1, 2002, the Seller's board of directors (the "SELLER
BOARD") approved a Plan of Liquidation and Dissolution of the Seller (the
"DISSOLUTION PLAN");
WHEREAS, the Dissolution Plan was approved by the stockholders of the
Seller at the Company's annual meeting on May 30, 2002 and, pursuant to the
Dissolution Plan, if the Seller is not liquidated and dissolved by May 30, 2005
(the "LIQUIDATION DATE"), all the assets and liabilities of the Seller will be
transferred on the Liquidation Date to, and assumed by, one or more trustees
(the "TRUSTEES"), for the benefit of the stockholders of the Seller, under an
irrevocable liquidating trust formed under the laws of the State of Delaware
(the "TRUST");
WHEREAS, pursuant to certain Bidding Procedures of a special committee
of the Seller Board (the "SPECIAL COMMITTEE") distributed to the Buyer on or
about May 18, 2005 (the "BIDDING PROCEDURES"), on the date hereof, the Buyer
delivered to the Seller a good faith deposit in the amount of $500,000 (the
"GOOD FAITH DEPOSIT").
WHEREAS, the Seller wishes to sell, convey, assign and otherwise
transfer to the Buyer, and the Buyer wishes to purchase from the Seller, on a
going concern basis and on an "as is, where is" basis, all of the Seller's
assets (except the Excluded Assets (as defined herein)) and to assume all of the
Seller's obligations and liabilities on the terms and conditions set forth in
this Agreement;
WHEREAS, as soon as practicable following the consummation of the
transactions contemplated by this Agreement, the Seller or the Trust, as the
case may be, intends to distribute all or a portion of the Retained Purchase
Price Cash (as defined herein) to the Seller's stockholders in the form of a
liquidation distribution; and
WHEREAS, the Seller Board, based upon the unanimous favorable
recommendation of the Special Committee, has (i) determined that the
transactions contemplated herein are in the best interests of the Seller and
(ii) approved this Agreement and the transactions contemplated herein.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"ACCOUNTS" has the meaning set forth in Section 2.1(o) of this
Agreement.
"ACQUISITION PROPOSAL" has the meaning set forth in Section 7.2(b) of
this Agreement.
"AFFILIATE" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.
"AGREEMENT" has the meaning set forth in the preamble to this
Agreement.
"APPLICABLE LAW" means, as to any Person, any law, statute, ordinance,
treaty, rule, regulation, code, right, privilege, qualification, license or
franchise or determination enacted, adopted, promulgated or applied by an
arbitrator or a court or other Governmental Authority or stock exchange, in each
case applicable or binding upon such Person or any of its assets or properties
or to which such Person or any of its assets or properties is subject or
pertaining to any or all of the transactions contemplated herein.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an Assignment and
Assumption Agreement in a form reasonably satisfactory to the Buyer and Seller.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.5 of this
Agreement.
"BENEFIT PLAN" means any plan, program, arrangement or agreement that
is a pension, profit-sharing, savings, retirement, employment, consulting,
severance pay, termination, executive compensation, incentive compensation,
deferred compensation, bonus, stock purchase, stock option, phantom stock or
other equity-based compensation, change-in-control, retention, salary
continuation, vacation, sick leave, disability, death benefit, group insurance,
hospitalization, medical, dental, life (including all individual life insurance
policies as to which the Seller or the Seller Subsidiaries is the owner, the
beneficiary, or both), Code Section 125 "cafeteria" or "flexible" benefit,
employee loan, educational assistance or fringe benefit plan, program, policy or
agreement whether written or oral, including, without limitation, any (i)
"employee benefit plan" within the meaning of Section 3(3) of ERISA or (ii)
other employee benefit plan, agreement,
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program, policy, arrangement or payroll practice, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise) which the Seller or any Seller Subsidiary maintains or contributes to
or in respect of which the Seller or any Seller Subsidiary has any obligation to
maintain or contribute, or have any direct or indirect liability, whether
contingent or otherwise, with respect to which any Employee or Former Employee
has any present or future right to benefits.
"BIDDING PROCEDURES" has the meaning set forth in the recitals to this
Agreement.
"XXXX OF SALE" means a Xxxx of Sale in a form reasonably satisfactory
to the Buyer and Seller.
"BUSINESS" has the meaning set forth in the recitals to this Agreement.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York are
authorized or required by law or executive order to close.
"BUYER" has the meaning set forth in the preamble to this Agreement.
"BUYER EXPENSES" has the meaning set forth in Section 10.4(b) of this
Agreement.
"BUYER RESTRICTED PAYMENTS" means any (i) dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
capital stock of the Buyer (including any payment in connection with any
dissolution, liquidation, merger, consolidation or disposition involving the
Buyer), (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock or other securities of the Buyer, or any rights to
any class of capital stock or other securities of the Buyer or (iii) payment
made to retire, or to obtain the surrender of, any warrants, options or other
rights to acquire shares of any class of capital stock or other securities of
the Buyer.
"CASH PURCHASE PRICE" has the meaning set forth in Section 2.3 of this
Agreement.
"CLOSING" has the meaning set forth in Section 9.1 of this Agreement.
"CLOSING DATE" has the meaning set forth in Section 9.1 of this
Agreement.
"COBRA" has the meaning set forth in Section 5.3(f) of this Agreement.
"CODE" means the U.S. Internal Revenue Code of 1986, as amended.
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"CONTRACTS" means any written or oral agreement, arrangement,
understanding, undertaking, lease, sublease, purchase order, instrument,
indenture, or other Contractual Obligations or similar arrangement or
commitment.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision of any
Contract to which such Person is a party or by which it or any of its assets or
properties are contractually bound.
"COURT" has the meaning set forth in Section 8.1(e) of this Agreement.
"DISSOLUTION PLAN" has the meaning set forth in the recitals to this
Agreement.
"EMPLOYEE" has the meaning set forth in Section 5.1 of this Agreement.
"ENVIRONMENTAL LAWS" means federal, state, foreign or local laws,
regulations, codes, plans, orders, decrees, judgments, notices or demand letters
relating to pollution, protection of the environment, public or worker health
and safety, or emissions, discharges, releases or threatened releases of
pollutants, noise, contaminants or hazardous or toxic materials or wastes into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, presence, production, labeling,
testing, treatment, storage, disposal, transport or handling of pollutants,
contaminants or hazardous or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"FAIRNESS OPINION" means the opinion received by the Seller from the
Financial Advisor stating that the Buyer's offer is fair to the Seller's
stockholders from a financial point of view.
"FINANCIAL ADVISOR" means XxXxxxxxx Xxxxx & Co., LLC, a qualified
independent financial advisor retained by the Special Committee.
"FORMER EMPLOYEE" means any person who, at any time prior to the
Closing, was an employee of the Seller or any Seller Subsidiary, but who is not
an Employee.
"GOOD FAITH DEPOSIT" has the meaning set forth in the recitals to this
Agreement.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to
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government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"HIPAA" has the meaning set forth in Section 5.3(f) of this Agreement.
"INDEMNIFICATION NOTICE" has the meaning set forth in Section 11.3(a)
of this Agreement.
"INDEMNIFIED PERSON" has the meaning set forth in Section 7.3(a) of
this Agreement
"INDEMNITEE" has the meaning set forth in Section 11.3(a) of this
Agreement.
"LIQUIDATION DATE" has the meaning set forth in the recitals to this
Agreement.
"LOAN" means one or more loans to be made on or before the Closing Date
from Xxxxxx Xxxxxxxx, or an Affiliate of his, to the Buyer in the aggregate
principal amount of $4,000,000, which loan(s) (i) will be subordinate to the
Assumed Liabilities, (ii) shall not be repaid or repayable, with respect to
principal, under any circumstances prior to the third year anniversary of the
Closing Date, (iii) shall bear interest at a rate no higher than that charged by
commercial institutional lenders in New York, New York for loans to financially
viable operating businesses and (iv) may be secured, subject to the aforesaid
subordination, by certain assets of the Buyer and the outstanding shares of the
Buyer's stock.
"LOSING BIDDER" means any Person and that Person's Affiliates, other
than the Buyer and the Buyer's Affiliates, which submitted, or was furnished
with the Bidding Procedures by or on behalf of the Special Committee for the
purpose of submitting, an Acquisition Proposal pursuant to the Bidding
Procedures, which shall include for the avoidance of doubt Xxxx Cap Partners,
L.P., Xxxxxxxxx Xxxxx and their respective Affiliates.
"LOSSES" means any claim, loss, liability, damage, cost or expense
(including interest, penalties, reasonable attorneys' fees, disbursements,
including those incurred in connection with investigative, administrative or
judicial proceedings commenced or threatened, whether or not such person shall
be designated a party thereby and those incurred in connection with any claim
for indemnity under this Agreement).
"MEMORANDUM OF UNDERSTANDING" means that certain Memorandum of
Understanding, dated as of the date hereof, relating to the Shareholder
Litigation.
"NEWCO" has the meaning set forth in Section 11.5.
"NONTRANSFERABLE CONTRACTS" has the meaning set forth in Section 7.6
(b) of this Agreement.
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"PARTY" means each of the Seller and the Buyer
"PARTIES" means the Seller and the Buyer.
"PBGC" has the meaning set forth in Section 7.1(c) of this Agreement.
"PERSON" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, limited liability partnership, Governmental Authority
or other entity of any kind, and shall include any successor (by merger or
otherwise) of such entity.
"PURCHASED ASSETS" has the meaning as set forth in Section 2.1 of this
Agreement.
"REAL PROPERTY" has the meaning set forth in Section 2.1(d) of this
Agreement.
"RETAINED CASH" means an amount equal to the sum of the Retained
Purchase Price Cash and the Retained Wind-Down Cash.
"RETAINED PURCHASE PRICE CASH" has the meaning set forth in Section
2.2(a) of this Agreement.
"RETAINED WIND-DOWN CASH" has the meaning set forth in Section 2.2(b)
of this Agreement.
"SELLER" has the meaning set forth in the preamble to this Agreement.
"SELLER BOARD" has the meaning set forth in the recitals to this
Agreement.
"SELLER EXPENSES" means all out-of-pocket costs and expenses of the
Seller (including in respect of the actions of the Special Committee) or the
Trust incurred on or prior to the Closing in connection with the Dissolution
Plan, the Shareholder Litigation, general corporate matters (including with
respect to public filings and meetings of board of directors), this Agreement
and the transactions contemplated hereby, including (i) all fees and expenses of
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, LLP, (ii) all fees and expenses of
XxXxxxxxx Xxxxx & Co., LLC (iii) all fees and expenses of Fish & Xxxxxxxxxx
P.C., (iv) fees and expenses of BDO Xxxxxxx, (v) all fees and expenses of
Xxxxxxxx, Xxxxxx & Finger and (vi) all fees and expenses of Morris, Nichols,
Arsht & Xxxxxxx.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 11.2
of this Agreement.
"SELLER INDEMNIFIED PARTY" has the meaning set forth in Section 11.2 of
this Agreement.
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"SELLER RESTRICTED PAYMENTS" means any (i) dividend or other payment or
distribution, direct or indirect, on account of any shares of any class of
capital stock of the Seller (including any payment in connection with any
dissolution, liquidation, merger, consolidation or disposition involving the
Seller), (ii) issuance of any class of capital stock of the Seller or other
securities of the Seller or any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of capital stock or other securities of the Seller, or any
rights to any class of capital stock or other securities of the Seller or (iii)
payment made to retire, or to obtain the surrender of, any warrants, options or
other rights to acquire shares of any class of capital stock or other securities
of the Seller.
"SELLER SUBSIDIARY" means each of (i) Adirondack Knitting Xxxxx, Inc.,
a New York corporation, (ii) Fab-Lace, Inc., a New York corporation, (iii) GEM
Urethane Corp., a New York corporation, (iv) Lamatronics Industries, Inc., a New
York corporation, (v) Mohican Xxxxx, Inc., a New York corporation, (vi)
Salisbury Manufacturing Corp., a North Carolina corporation, (vii) Xxxxxx
International, Inc., a New York corporation, (viii) SMS Textiles, Inc., a
Delaware corporation and (ix) Xxxxxx Knits, Inc., a North Carolina corporation.
"SELLER SUBSIDIARY STOCK" means the capital stock of each Seller
Subsidiary.
"SHAREHOLDER LITIGATION" means those two putative class action lawsuits
styled XXXXXXXX V. FAB INDUSTRIES, INC., et al., C.A. No. 054-N and LEVY X.
XXXXXXXX, ET AL., filed by stockholders of the Seller.
"SPECIAL COMMITTEE" has the meaning set forth in the recitals to this
Agreement.
"SUBSIDIARY" means with respect to any Person, a corporation or other
Person of which such Person either (i) owns, directly or indirectly, 50% or more
of the outstanding voting equity securities or 50% or more of the outstanding
economic equity interest, (ii) in the case of a partnership, serves as a general
partner, (iii) in the case of a limited liability company, serves as a managing
member, or (iv) otherwise has the ability to elect a majority of the directors,
trustees or managing members thereof.
"SUPERIOR PROPOSAL" has the meaning set forth in Section 7.2(f) of this
Agreement.
"TAX OR TAXES" means (i) any and all federal, state, provincial, local,
foreign and other taxes, levies, fees, imposts, duties, and similar governmental
charges (including any interest, fines, assessments, penalties or additions to
tax imposed in connection therewith or with respect thereto) including (x) taxes
imposed on, or measured by, income, franchise, profits or gross receipts, and
(y) ad valorem, value added, capital gains, sales, goods and services, use, real
or personal property, capital stock, license, branch, payroll, estimated
withholding, employment, social security (or similar), unemployment,
compensation, utility, severance, production, excise, stamp,
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occupation, premium, windfall profits, transfer and gains taxes, and customs
duties, and (ii) any transferee liability in respect of any items described in
clause (i) above.
"TERMINATION FEE" has the meaning set forth in Section 10.4(b) of this
Agreement.
"THIRD PARTY CLAIM" has the meaning set forth in Section 11.3(a) of
this Agreement.
"TITLE IV PLAN" has the meaning set forth in Section 7.1(c) of this
Agreement.
"TRADEMARK ASSIGNMENT AGREEMENT" means a Trademark Assignment Agreement
in a form reasonably satisfactory to the Buyer and Seller.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Assignment and Assumption Agreement, the Xxxx of Sale, the Trademark Assignment
Agreement and any ancillary documents, schedules and agreements executed in
connection with, or required to be delivered by, this Agreement.
"TRANSFERRED EMPLOYEE" has the meaning set forth in Section 5.1 of this
Agreement.
"TRUST" has the meaning set forth in the recitals to this Agreement.
"TRUST ASSUMPTION AGREEMENT" has the meaning set forth in Section 7.7
of this Agreement.
"TRUSTEES" has the meaning set forth in the recitals to this Agreement.
"WARN" has the meaning set forth in Section 5.2(e) of this Agreement.
1.2 INTERPRETATION.
(a) Any capitalized terms used in any Schedule or Exhibit
but not otherwise defined therein shall have the meaning as defined in this
Agreement.
(b) When a reference is made in this Agreement to a Section,
Article, Exhibit or Schedule, such reference shall be to a Section or Article
of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
(c) "Hereof," "hereto," "hereunder," "herein," and similar
expressions mean and refer to this Agreement and not to any particular article
or Section or subsection, and "Article," "Section," "subsection," "paragraph,"
"Schedule," or "Exhibit," mean and refer to the specified Article, Section,
subsection, paragraph of, Schedule or Exhibit to this Agreement.
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(d) Unless the context otherwise requires, the words
"include," "includes," and "including" do not limit the preceding words or terms
and shall be deemed to be followed by the words "without limitation."
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS
2.1 AGREEMENT TO SELL AND BUY. Upon the terms and subject to the
conditions of this Agreement, at the Closing and with effect as of the Closing
Date, the Seller shall sell, assign, transfer, convey and deliver to the Buyer,
and the Buyer shall acquire from the Seller, on a going concern basis and on an
"as is, where is" basis, all of the right, title and interest of the Seller in
and to all of the assets, properties, rights and business of the Seller as of
the Closing Date of every kind, nature, type and description, real, personal and
mixed, tangible and intangible, wherever located, whether known or unknown,
fixed or unfixed, or otherwise, whether or not specifically referred to in this
Agreement and whether or not reflected on the books and records of the Seller,
other than the Excluded Assets (collectively, the "PURCHASED ASSETS"). Without
limiting the generality of the foregoing, the Purchased Assets shall include the
following:
(a) all accounts receivable of the Seller;
(b) all inventories, finished goods, trim, work-in-process,
components, raw materials and any other inventory;
(c) all rights under all Contracts to which the Seller is a
party or may be bound or receives benefits or by which the Purchased Assets may
be affected or receive benefits;
(d) all rights, title and interest in and to all the real
property owned and/or leased by the Seller (the "REAL PROPERTY");
(e) all assets, furniture, fixtures and property located on
the Real Property, of every kind and nature and description, whether tangible or
intangible, real, personal or mixed;
(f) all licenses, registrations, franchises, qualifications,
provider numbers, permits, approvals and authorizations issued by any
Governmental Authority;
(g) all lists, documents, records, written information,
computer files and other computer readable media concerning past, present and
potential customers and purchasers of goods or services from the Seller;
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(h) all lists, documents, records, written information,
computer files and other computer readable media concerning past, present and
potential suppliers and vendors of goods or services to the Seller;
(i) all product records, customer correspondence, production
records, contract files, technical, accounting, manufacturing and procedural
manuals, employment records, studies, reports or summaries relating to the
general condition of the Purchased Assets, and any confidential information
which has been reduced to writing or electronic form;
(j) all rights under express or implied warranties from the
suppliers and vendors relating to the Purchased Assets and all rights, demands,
claims, credit, insurance casualty proceeds, causes of action, relating to the
Purchased Assets;
(k) all unfilled orders or proposals received for inventory
or merchandise of the Seller;
(l) all intellectual property (including the goodwill
associated therewith) of the Seller and all trade secrets, designs, prototypes,
patterns and other design materials owned or used by the Seller;
(m) all ownership or other rights of the Seller with respect
to assets relating to any Benefit Plan (to the extent not prohibited by the
PBGC) and any other liability or obligation assumed by the Buyer pursuant to
Article V (Employee Matters);
(n) the Seller Subsidiary Stock;
(o) all rights of the Seller under the bank accounts and
investment accounts listed on SCHEDULE 2.1(O) (the "ACCOUNTS"), other than the
Retained Cash in the Accounts; and
(p) all rights, claims and causes of action of the Seller
relating to the assets referred to in any of the preceding clauses (a) through
(o) of this Section 2.1.
2.2 EXCLUDED ASSETS. The Seller shall retain its respective right,
title and interest in and to, and the Buyer shall have no rights with respect
to, the following assets (collectively, the "EXCLUDED ASSETS"):
(a) an amount of cash in the Accounts equal to $16,427,347,
which amount includes the Good Faith Deposit (collectively, the "RETAINED
PURCHASE PRICE CASH");
(b) an amount of cash in the Accounts equal to $200,000 to
be used by Seller or the Trust to pay the costs, expenses and other obligations
pursuant to the Dissolution Plan following the Closing of the transaction
contemplated by this Agreement (the "RETAINED WIND-DOWN CASH");
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(c) the articles of incorporation and by-laws of the Seller
and all corporate minute books, stock books, corporate seals, stock transfer
books, and other corporate records relating to the corporate organization and
capitalization of the Seller, as well as books and records required by any
Applicable Law in connection with the final liquidation of the Seller (provided
that Seller shall provide to the Buyer copies of all such documents that the
Buyer may reasonably request); and
(d) all rights of the Seller under the Transaction Documents
and the Dissolution Plan.
2.3 PURCHASE PRICE. The purchase price for the Purchased Assets
shall be an amount equal to $16,427,347 (the "CASH PURCHASE PRICE") plus the
assumption by the Buyer of the Assumed Liabilities.
2.4 PAYMENT OF CASH PURCHASE PRICE. The Cash Purchase Price shall
be paid by the Buyer to the Seller by having the Seller retain the Retained
Purchase Price Cash in an amount equal to the Cash Purchase Price (it being
understood and agreed that by the Seller retaining such amount, the Good Faith
Deposit will have been credited and applied to the Cash Purchase Price);
PROVIDED that if, at Closing, the actual amount of cash in the Accounts (after
deducting the Retained Wind-Down Cash and the Seller Expenses) is less than the
Cash Purchase Price, then the Buyer shall pay the shortfall to the Seller in
cash at Closing by wire transfer of immediately available funds to an account
designated by Seller.
2.5 ASSUMPTION OF LIABILITIES AND OBLIGATIONS. Upon the terms and
subject to the conditions of this Agreement, in partial consideration of the
transfer, conveyance and assignment to the Buyer of the Purchased Assets
pursuant to the Assignment and Assumption Agreement, at the Closing, the Buyer
shall assume, pay, perform and discharge all of the obligations and liabilities
of the Seller and each Seller Subsidiary, direct or indirect, known or unknown,
fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise, whether arising on or
prior to the Closing Date or on or after the Closing Date (collectively, the
"ASSUMED LIABILITIES") and the Buyer shall defend and hold the Seller harmless
with respect to the Assumed Liabilities. For the avoidance of doubt, the term
Assumed Liabilities includes all liabilities and obligations of the Seller and
each Seller Subsidiary (including liabilities and obligations imposed by
operation of law) other than to costs and expenses of liquidating the Seller
after the Closing pursuant to the Dissolution Plan (which are not being assumed
hereunder by the Buyer). Without limiting the generality of the foregoing, the
Assumed Liabilities shall include the following obligations and liabilities of
the Seller and each Seller Subsidiary:
(a) any liability or obligation of the Seller and each
Seller Subsidiary arising out of or in connection with the negotiation and
preparation of any of the Transaction Documents or the consummation and
performance of the transactions contemplated hereby, including any liability for
Taxes so arising;
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(b) any liability or obligation under the Contractual
Obligations of the Seller and each Seller Subsidiary;
(c) any liability or obligation of the Seller and each
Seller Subsidiary arising (i) from its failure to perform, or its negligent
performance of, its obligations under, or (ii) out of or relating to any breach
or claim of breach of a representation, warranty, covenant or agreement of the
Seller and each Seller Subsidiary contained in, any Contractual Obligation of
the Seller and each Seller Subsidiary, as the case may be;
(d) any liability, obligation or expense of any kind or
nature for or relating to any and all past, present or future Taxes owed by the
Seller and each Seller Subsidiary or otherwise (including any liabilities,
obligations and expenses pursuant to any tax sharing agreement, tax
indemnification or similar arrangement);
(e) any liability or obligation of the Seller and each
Seller Subsidiary to any of its present or former directors or officers;
(f) any liability, obligation, cost or expense of the
Seller, each Seller Subsidiary or any of their Affiliates arising out of or
relating to any claim, action, suit, complaint, dispute, demand, litigation or
judicial, administrative or arbitration proceeding (collectively, "LITIGATION")
to which the Seller or any Seller Subsidiary is or was a party (regardless of
whether the Litigation is commenced before or after the Closing and whether or
not it relates to or arises out of the Business), including the Shareholder
Litigation;
(g) any liability or obligation of the Seller and each
Seller Subsidiary with respect to any indebtedness or contingent obligations,
including any accrued interest, fees and any penalties thereon;
(h) any liability or obligation of the Seller and each
Seller Subsidiary to or with respect to Employees, Former Employees, consultants
and former consultants, Benefit Plans and other employee and employment-related
liabilities or obligations with respect to the Business, including, without
limitation, any liability or obligation under any employment agreement
(including the Employment Agreement dated March 1, 1993 by and between the
Seller and Xxxxxx Xxxxxxxx, as amended) or any other similar agreement, and any
liability or obligation assumed by the Buyer in accordance with Article V
(Employee Matters);
(i) any accounts payable of the Seller and each Seller
Subsidiary;
(j) any product liability or product warranty with respect
to any product manufactured, produced or sold by the Seller (or any successor
thereof) and each Seller Subsidiary (or any successor thereof); or
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(k) any liability or obligation of the Seller and each
Seller Subsidiary arising out of or relating to any Environmental Laws.
The Buyer's obligation to assume and discharge the Assumed Liabilities shall not
be subject to offset of any kind, including by reason of any actual or alleged
breach of any representation, warranty or covenant contained in any Transaction
Document.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer on the date hereof and
on the Closing Date as follows:
3.1 ORGANIZATION, STANDING AND AUTHORITY. The Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Seller has all requisite power, legal right
and corporate authority to execute and deliver each Transaction Document to
which it is a party, and to perform fully its obligations under the Transaction
Documents to which it is a party. The Seller (a) has all requisite corporate
power and lawful authority to own, lease and operate the Business and its assets
and (b) is qualified to transact business and is in good standing in each
jurisdiction in which the nature of the Business or location of its assets would
require such qualification, except where the failure to so qualify would not,
individually or in the aggregate, have a material adverse effect on the conduct
of the Business following the Closing.
3.2 AUTHORIZATION AND BINDING OBLIGATION. Each of the Transaction
Documents to which the Seller is a party has been duly authorized by all
necessary action on the part of the Seller. Each of the Transaction Documents to
which the Seller is a party has been duly executed and delivered by the Seller
and, assuming the due execution and delivery by the other parties hereto and
thereto, is the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms.
3.3 GOVERNMENTAL AUTHORIZATION. No approval or consent of any
Governmental Authority is required in connection with the execution and delivery
by the Seller of the Transaction Documents and the consummation and performance
by the Seller of the transactions contemplated by the Transaction Documents.
3.4 NONCONTRAVENTION. The execution and delivery of the Transaction
Documents by the Seller and the performance by the Seller of the transactions
contemplated by the Transaction Documents: (a) will not conflict with the
Seller's organizational documents; or (b) will not conflict with, result in a
breach of, or constitute a default under any Applicable Law.
3.5 THIRD-PARTY CLAIMS. As of the date hereof, other than the
Shareholder Litigation, there is no dispute, action, suit, proceeding or
investigation of any
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nature pending or, to the Seller's knowledge, threatened against or affecting
the Seller or any of its Affiliates that, in the aggregate, challenges the
validity, legality or enforceability of this Agreement or would be reasonably
likely to prevent, delay or impair the transactions contemplated hereby.
3.6 NO BROKER. Other than payments to the Financial Advisor,
neither the Seller nor any Person acting on behalf of the Seller has paid or
become obligated to pay any fee or commission to any broker, finder or agent
with respect to the transactions contemplated hereby.
3.7 NO ADDITIONAL REPRESENTATIONS. THE BUYER HEREBY ACKNOWLEDGES
THAT NEITHER THE SELLER, NOR ANY OTHER PERSON, HAS MADE OR IS MAKING, AND THE
BUYER HAS NOT RELIED ON, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY MATTERS, DIRECTLY OR INDIRECTLY CONCERNING THE PURCHASED
ASSETS, THE ASSUMED LIABILITIES OR THE BUSINESS, INCLUDING BUT NOT LIMITED TO,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALUE OR CONDITION AND THAT
ALL OF THE PURCHASED ASSETS (A) ARE SOLD TO THE BUYER ON AN "AS IS, WHERE IS"
CONDITION, WITHOUT RECOURSE AND (B) IN ALL CASES ARE SOLD WITHOUT ANY
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, INCLUDING ANY IMPLIED
REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSE OR COLLECTABILITY WITH RESPECT TO THE PURCHASED ASSETS, OTHER THAN THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 3.1, 3.2, 3.3, 3.4, 3.5 AND
3.6, WHICH REPRESENTATIONS SHALL NOT SURVIVE THE CLOSING.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller on the date hereof and
on the Closing Date as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. The Buyer has all requisite power, legal
right and authority to execute and deliver each Transaction Document to which it
is a party, and to perform fully its obligations under the Transaction Documents
to which it is a party. The Buyer (a) has all requisite power and lawful
authority to own, lease and operate the Business and Purchased Assets and to
satisfy the Assumed Liabilities and to carry on the Business and (b) is
qualified to transact business and is in good standing in each jurisdiction in
which the nature of the Business or location of the Purchased Assets requires
such qualification, except where the failure to so qualify would not,
individually or in the aggregate, have a material adverse effect on the conduct
of the Business following the Closing.
4.2 AUTHORIZATION AND BINDING OBLIGATION. Each of the Transaction
Documents to which the Buyer is a party has been duly authorized by all
necessary action on the part of the Buyer. Each of the Transaction Documents to
which the Buyer is a party has been duly executed and delivered by the Buyer
and, assuming the due execution and delivery by the other parties hereto and
thereto, is the legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms.
4.3 GOVERNMENTAL AUTHORIZATION. No approval or consent of any
Governmental Authority is required in connection with the execution and delivery
by the Buyer of the Transaction Documents and the consummation and performance
by the Buyer of the transactions contemplated by the Transaction Documents.
4.4 NONCONTRAVENTION. The execution and delivery of the Transaction
Documents by the Buyer and the performance by the Buyer of the transactions
contemplated by the Transaction Documents: (a) do not require the consent of any
other Person; (b) will not conflict with the Buyer's organizational documents;
or (c) will not conflict with, result in a breach of, or constitute a default
under, any Applicable Law.
4.5 THIRD-PARTY CLAIMS. Other than the Shareholder Litigation,
there is no dispute, action, suit, proceeding or investigation of any nature
pending or, to the Buyer's knowledge, threatened against or affecting the Buyer
or any of its Affiliates that, in the aggregate, challenges the validity,
legality or enforceability of this Agreement or would be reasonably likely to
prevent, delay or impair the transactions contemplated hereby.
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4.6 NO BROKER. Neither the Buyer nor any Person acting on behalf of
the Buyer has paid or become obligated to pay any fee or commission to any
broker, finder or agent with respect to the transactions contemplated hereby.
4.7 CAPITALIZATION. The sole members of the Buyer are Xxxxxx Xxxxx
and Xxxxxx Xxxxx. On or prior to the Closing Date, the proceeds of the Loan
shall be credited to a bank account of the Buyer.
4.8 SUFFICIENT FUNDS. On the Closing Date, the Buyer will have
sufficient cash, including the proceeds of the Loan, to enable it to satisfy the
Assumed Liabilities as the come due in accordance with their terms. The Buyer
will have sufficient liquidity following the Closing and for the duration of any
applicable statute of limitations governing each of the Assumed Liabilities to
discharge the Assumed Liabilities as they come due and in accordance with their
terms.
4.9 BUYER'S RELIANCE. The Buyer acknowledges that it and its
representatives have been permitted full and complete access to the books and
records, facilities, equipment, contracts, insurance policies (or summaries
thereof) and other properties and assets of the Seller or the Seller
Subsidiaries that their respective representatives have desired or requested to
see or review, and that it and its representatives have had a full opportunity
to meet with the officers and employees of the Seller to discuss the Business.
The Buyer acknowledges that the Seller has not made and the Buyer is not relying
on any representation or warranty, expressed or implied (except for those
representations and warranties set forth in the Trust Assumption Agreement and
in Sections 3.1 through 3.6), as to the accuracy or completeness of any
information regarding the Seller and the Seller Subsidiaries furnished or made
available to the Buyer and its representatives and neither the Seller, or any
other Person (including any officer or director of the Seller or any Seller
Subsidiary) shall have or be subject to any liability to the Buyer, or any other
Person, resulting from the sale of the Purchased Assets or the Business, or the
Buyer's use of any such information and any information, documents or material
made available to the Buyer in any "data rooms," due diligence or in any other
form in expectation of the transactions contemplated hereby.
ARTICLE V
EMPLOYEE MATTERS
5.1 EMPLOYEES. Effective as of the Closing, the Buyer shall offer
to employ all employees of the Seller and each Seller Subsidiary who, on the
Closing Date, are employed by the Seller or any Seller Subsidiary, including
those who are absent from employment as of the Closing Date due to illness,
injury, military service or mobilization, or other authorized absence (each an
"EMPLOYEE"). Such offer shall include wages and other compensation and benefits
of the types provided to such employee immediately prior to the Closing Date
that are no less favorable in the aggregate to each Employee than the wages,
other compensation and benefits provided to each such Employee as in
16
effect immediately prior to the Closing Date. Employees who do not specifically
reject such offers of employment from the Buyer shall be deemed to have accepted
such offers and shall commence employment with the Buyer immediately upon the
Closing and shall be deemed, for all purposes consistent with Applicable Law
and, except as otherwise expressly provided herein, such commencement of
employment with the Buyer shall be deemed to have occurred with no interruption
or break in service and no termination of employment. Employees whose employment
so commences with the Buyer upon the Closing are referred to herein as
"TRANSFERRED EMPLOYEES."
5.2 BENEFIT PLANS. (a) Unless otherwise prohibited by the PBGC, the
sponsorship of each Benefit Plan, and including any trust or other funding
mechanism in respect of each such Benefit Plan, shall be transferred to the
Buyer or, at the election of the Buyer, to a Subsidiary or Affiliate of the
Buyer on and effective as of the Closing Date. In connection with such transfer
and as of the Closing Date, the Buyer and its Subsidiaries and Affiliates shall
assume and indemnify and hold the Seller Indemnified Parties harmless from and
against, all liabilities and obligations of the Seller Indemnified Parties under
each Benefit Plan, and the Seller Indemnified Parties shall not have any further
liability or obligation to Employees, Former Employees or their respective
dependents or to the Buyer or any Subsidiary or Affiliate of the Buyer in
respect of (i) each such Benefit Plan, (ii) benefits under any Benefit Plan
accrued or payable prior to, on or after the Closing, and (iii) any other
liability or obligation with respect to claims or damages to which any of the
Seller Indemnified Parties may become obligated in respect of any Employee or
Former Employee (and the Buyer shall indemnify and hold the Seller Indemnified
Parties harmless from all such benefits, liabilities and obligations).
(b) Service by Transferred Employees with the Seller or any
Seller Subsidiary shall be recognized under the Benefit Plans transferred to the
Buyer, and all similar plans of the Buyer in which Transferred Employees may
participate following the Closing, and any benefit plans, programs, policies or
arrangements sponsored, maintained or contributed to the Buyer or any of its
Subsidiaries or Affiliates in which any Transferred Employees are eligible to
participate on or after the Closing Date (the "BUYER BENEFIT PLANS") for all
purposes, including but not limited to participation, coverage, vesting and
level of benefits, as applicable. The Buyer shall waive or cause its insurance
carriers to waive all limitations as to pre-existing conditions, if any, with
respect to participation and coverage requirements applicable to Transferred
Employees or their covered dependents under the Benefit Plans and the Buyer
Benefit Plans, as applicable.
(c) The Buyer shall cause each Transferred Employee to be
provided with credit for any co-payments and deductibles paid prior to the
Closing Date and during the calendar year in which the Closing Date occurs under
any Benefit Plan transferred to the Buyer, and in all similar plans of the Buyer
in which Transferred Employees may participate following the Closing, in
satisfying any applicable deductible or out-of-pocket requirements for such
calendar year.
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(d) The Buyer shall recognize all vacation, sick leave and
paid time off accrued by each Transferred Employee but unused as of the Closing
Date.
(e) From and after the Closing Date, the Buyer assumes
responsibility for compliance with, as well as any liability which may exist or
arise out of, the Workers Adjustment and Retraining Notification Act, P.L.
100-379 and any similar state or local law ("WARN") with respect to any Employee
or Former Employee whether terminated prior to, on or after the Closing.
(f) As of and following the Closing Date, the Buyer shall be
responsible for administering compliance with the continuation coverage
requirements for "group health plans" under Title X of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and as codified in Code Section
4980B and ERISA Sections 601 through 608 ("COBRA"), the certificate of credible
coverage requirements of the health insurance portability and accountability
requirements for "group health plans" under the Health Insurance Portability and
Accountability Act of 1996, as amended, and the regulations promulgated
thereunder ("HIPAA"), including privacy regulations and the corresponding
provisions of any applicable Benefit Plans that are health plans, all with
respect to Former Employees and their covered dependents, in each case who incur
a COBRA qualifying event or loss of coverage under any Benefit Plan at any time
on or before the Closing. In addition to the foregoing, as of the Closing, the
Buyer shall be solely responsible for compliance with COBRA and HIPAA with
respect to all Employees, and their respective spouses and dependents for whom a
qualifying event occurs on or after the Closing. The Buyer shall indemnify and
hold the Seller Indemnified Parties harmless for any loss as a result of any
liability incurred by the Seller and its Affiliates in respect of any of the
obligations of the Buyer described in this Section 5.2 (f) related to the
administration of and disbursement of COBRA benefits and HIPAA certificates.
(g) Nothing herein shall preclude the Buyer from amending or
terminating any specific plan, program or arrangements to the extent permitted
by Applicable Law.
(h) Without limiting the foregoing, the Buyer shall (i)
honor, pay, perform and satisfy any and all liabilities, obligations and
responsibilities to, or in respect of, each Employee arising under the terms of
any employment, consulting, retention, severance, change-of-control or similar
agreement, in accordance with the terms thereof in effect on the Closing Date;
(ii) assume, honor and be solely responsible for paying, providing or satisfying
when due all compensation (including salary, wages, commissions, bonuses,
incentive compensation, overtime, premium pay and shift differentials), benefits
and benefit claims, severance and termination pay, notice and benefits under all
Applicable Law and under any plan, policy practice or agreement and all other
liabilities, including any severance, change of control or retention liabilities
or obligations, in each case accruing, incurring, or arising as a result of
employment or separation from employment with the Seller or any Seller
Subsidiary at any time. The Buyer shall indemnify and hold the Seller
Indemnified Parties harmless from any losses arising out of or related to the
obligations of the Buyer under this Section 5.2(h).
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5.3 PAYROLL TAXES. For purposes of payroll taxes with respect to
Transferred Employees, the Buyer and the Seller shall treat the transaction
contemplated by this Agreement as a transaction described in Treas. Reg.
Sections 31.3121(a)(1)-1(b)(2) and 31.3306(b)(1)-1(b)(2).
ARTICLE VI
TAX MATTERS
6.1 ALLOCATION OF PURCHASE PRICE.
(a) The Cash Purchase Price (plus Assumed Liabilities to the
extent properly taken into account under Section 1060 of the Code and the
regulations thereunder) shall be allocated among the Purchased Assets in a
manner to be determined by the Seller. The Seller and the Buyer agree to use the
allocations determined pursuant to this Section 6.1(a) for all tax purposes,
including, without limitation, those matters subject to Section 1060 of the Code
and the regulations thereunder.
(b) Not later than 30 days prior to the filing of their
respective Forms 8594 relating to this transaction, each Party shall deliver to
the other Party a copy of its Form 8594.
6.2 TRANSFER TAXES. In addition to all other amounts payable by the Buyer under
this Agreement, all sales, use, transfer, excise, value-added, excise,
registration, documentary, stamp, or other similar Taxes (including all
applicable real estate transfer or gains Taxes), and all recording and filing
fees that may be imposed by reason of the transactions contemplated in this
Agreement shall be borne and paid by the Buyer, and the Buyer will, at its own
expense, file all necessary tax returns and other documentation with respect to
all such Taxes and fees.
ARTICLE VII
COVENANTS AND AGREEMENTS
7.1 CONDUCT OF THE BUSINESS.
(a) Except to the extent specifically required by this
Agreement or with the prior written consent of the Buyer, from the date hereof
until the Closing Date, the Seller shall conduct the Business in the ordinary
course consistent with past practice and shall use its reasonable efforts to,
and cause the Seller Subsidiaries to, preserve intact the business
organizational and relationships with third parties.
(b) From the date hereof until the Closing Date, without the
prior written consent of the Buyer, the Seller shall not make any Seller
Restricted Payments.
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(c) Notwithstanding clause (a) of this Section 7.1 and
without limiting the obligations of the Buyer set forth in Article V (Employee
Matters), at any time the Seller may discuss any Benefit Plan that is a single
employer plan subject to Title IV of ERISA (a "TITLE IV PLAN") with the Pension
Benefit Guaranty Corporation (the "PBGC") and take whatever action may be
required by the PBGC, including, without limitation, terminating and funding in
full with the Company's cash in the Accounts the Title IV Plan in order for the
PBGC to not object to the consummation of the transactions contemplated by the
Transaction Documents and/or the transfer of any Title IV Plan to the Buyer or
any Subsidiary or Affiliate of the Buyer described in Section 5.2 (a).
7.2 NO SOLICITATION.
(a) From the date of this Agreement until the Closing Date
or the termination of this Agreement in accordance with Article X, except as
specifically permitted in Section 7.2(c), 7.2(e) or 7.2(g), the Seller shall
not, nor shall it authorize or permit any Seller Subsidiary or any of their
respective officers, directors, representatives, advisors or agents to, directly
or indirectly: (i) solicit, initiate, knowingly facilitate or knowingly
encourage any inquiries, offers or proposals that constitute, or are reasonably
likely to lead to, any Acquisition Proposal; (ii) engage in discussions or
negotiations with, furnish or disclose any information relating to the Seller or
any Seller Subsidiary to, or in response to a request therefor, give access to
the Purchased Assets or the books and records of the Seller or any Seller
Subsidiary to, any Person that has made or, to the knowledge of the Seller, may
be considering making any Acquisition Proposal or otherwise in connection with
an Acquisition Proposal; (iii) approve any Acquisition Proposal; (iv) enter into
any agreement in principle, arrangement, understanding or contract relating to
any Acquisition Proposal; or (v) take any other action inconsistent with the
obligations of the Seller under this Section 7.2.
(b) For purposes of this Agreement, "ACQUISITION PROPOSAL"
means any contract, proposal, offer or other indication of interest (whether or
not in writing and whether or not delivered to the Seller) relating to (i) a
merger, consolidation, or other business combination involving the Seller or any
Seller Subsidiary engaged actively in the Business, (ii) a sale, lease,
exchange, mortgage, transfer or other disposition, in a single transaction or
series of related transactions, of all or substantially all of the Purchased
Assets (including the capital stock of (or other ownership interest in) any
Seller Subsidiary), or (iii) a purchase or sale of equity securities of the
Seller, in a single transaction or series of related transactions, representing
50% or more of the voting power of the capital stock of the Seller, including by
way of a tender offer or exchange offer in connection with any acquisition by
the Seller or any Seller Subsidiary in each case other than the transactions
contemplated by this Agreement.
(c) Except with respect to Persons (other than a Losing
Bidder) with respect to which Seller and Seller Board have heretofore taken the
actions required by Section 7.2(e)(i), the Seller shall, and shall cause each
Seller Subsidiary and instruct its advisors, agents and representatives to,
immediately cease any existing solicitations, discussions, negotiations or other
activity with any Person being conducted as of the date
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hereof with respect to any Acquisition Proposal. The Seller shall promptly
inform its advisors, agents and representatives of the Seller's obligations
under this Section 7.2.
(d) The Seller shall promptly (and not more than 24 hours
after receipt) notify the Buyer after receipt of (i) any Acquisition Proposal or
indication that any Person (other than a Losing Bidder) is considering making an
Acquisition Proposal, (ii) or any request for information relating to the Seller
or any Seller Subsidiary that the Seller reasonably believes could lead to an
Acquisition Proposal or (iii) any request for access to the Purchased Assets or
the books and records of the Seller or any Seller Subsidiary that the Seller
reasonably believes could lead to an Acquisition Proposal. The Seller shall
provide the Buyer promptly with the identity of such Person (which in no event
shall be a Losing Bidder), a detailed description of such Acquisition Proposal,
indication or request and, if in writing, a copy of such Acquisition Proposal.
The Seller shall keep the Buyer fully informed on a reasonably current basis of
the status and details of any such Acquisition Proposal, indication or request.
(e) Subject to the Seller's compliance with the provisions
of this Section 7.2, nothing in this Agreement shall prevent the Seller or the
Seller Board (or any committee thereof) from:
(i) engaging in discussions or negotiations with, or
furnishing or disclosing any information relating to the Seller or any Seller
Subsidiary or, in response to a request therefor, giving access to the Purchased
Assets or the books and records of the Seller or any Seller Subsidiary to, any
Person (other than a Losing Bidder) who has made a bona fide written and
unsolicited Acquisition Proposal if the Seller Board determines that such
Acquisition Proposal may result in a Superior Proposal, but only so long as (x)
the Seller Board has acted reasonably and by a majority of the independent
members of the Seller Board and (y) the Seller (A) enters into a confidentiality
agreement with such Person on customary terms and conditions and (B)
concurrently discloses or makes available the same information to the Buyer as
it makes available to such Person;
(ii) subject to compliance with Section 7.2(e)(i),
entering into a definitive agreement providing for the implementation of a
Superior Proposal, but only so long as (A) the Seller Board, acting in good
faith and by a majority of the independent members of the board of directors,
has approved such definitive agreement, (B) the Seller Board has determined,
after consultation with its financial advisor, that such Acquisition Proposal
constitutes a Superior Proposal and (C) the Seller terminates this Agreement
pursuant to, and after complying with all of the provisions of, Section 10.1(e);
or
(iii) taking and disclosing to the Seller's
stockholders a position contemplated by Rule 14d-9 or 14e-2 promulgated under
the Securities Exchange Act of 1934, as amended, or making any disclosure to the
Seller's stockholders if, in the good faith judgment of the Seller Board, the
failure so to disclose would be inconsistent with its obligations under any
Applicable Law.
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(f) For purposes of this Agreement, "SUPERIOR PROPOSAL"
means an Acquisition Proposal for all or substantially all of the Purchased
Assets, taken as a whole, which (i) is on terms and conditions more favorable
from a financial point of view to the unaffiliated stockholders of the Seller
than those contemplated by this Agreement and (ii) the conditions to the
consummation of which are all reasonably capable of being satisfied in a timely
manner.
(g) The Seller Board shall not (i) approve any Acquisition
Proposal (other than the Buyer's) or Superior Proposal or (ii) enter into a
contract relating to an Acquisition Proposal (other than the Buyer's) or
Superior Proposal, unless the Seller terminates this Agreement pursuant to, and
after complying with all of the provisions of, Section 10.1(e). For the
avoidance of doubt, in no event shall (x) the Seller or the Seller Board (or any
committee thereof) have the right under this Section 7.2 to discuss, negotiate,
entertain, accept or approve any Acquisition Proposal made by a Losing Bidder or
to enter into an agreement with a Losing Bidder in respect of an Acquisition
Proposal.
7.3 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) The Buyer agrees to indemnify the present and former
directors, officers, employees and agents of the Seller and each Seller
Subsidiary (each, an "INDEMNIFIED PERSON") to the fullest extent permitted by
Applicable Law and hold them harmless from any Losses suffered or incurred by
such Indemnified Persons with respect to all acts and omissions arising out of
such Indemnified Persons' services as officers, directors, employees or agents
of the Seller or any of the Seller Subsidiaries or as trustees or fiduciaries of
any Benefit Plan, or otherwise on behalf of, the Seller or any Seller
Subsidiary, occurring on or prior to the Closing Date, including the
transactions contemplated by this Agreement and the Shareholder Litigation, to
the same extent and in the same manner that any Indemnified Person has or would
have had the benefit of any right to indemnification pursuant to the Dissolution
Plan, the certificate of incorporation or by-laws or similar organizational
documents of the Seller and each Seller Subsidiary as in effect on or prior to
the Closing Date. The Buyer hereby covenants and agrees (i) not to amend, alter
or waive in any adverse respect such right to indemnification as set forth in
the certificate of incorporation or by-laws or similar organizational documents
of each Seller Subsidiary for a period of not less than six years following the
Closing Date and (ii) to notify the Trustees promptly of any claim, action, suit
or proceeding against any Indemnified Person of which the Buyer has knowledge
for which coverage may be available under any applicable policy of insurance.
(b) This Section 7.3 is intended for the benefit of, and to
grant, third-party rights to, Persons entitled to indemnification hereunder, and
each of such Persons shall be entitled to enforce the covenants contained in
this Section 7.3.
7.4 PUBLICITY; CONFIDENTIALITY(a) .
(a) Prior to Closing, except as may be required by
Applicable Law or the rules and regulations of the American Stock Exchange, no
publicity release or
22
announcement concerning this Agreement or the transactions contemplated hereby
shall be issued without advance approval of the form and substance thereof by
the Buyer and the Seller.
(b) The Buyer shall, and shall cause its directors,
officers, employees, agents and advisers to, maintain the confidentiality of all
confidential information furnished to it by the Seller concerning the Business
and shall not use such information for any purpose except in furtherance of the
transactions contemplated by this Agreement.
7.5 FEES AND EXPENSES. Each party shall be liable for the fees and
expenses incurred by such party in connection with the transactions contemplated
by this Agreement. On or immediately prior to the Closing, Seller shall pay the
Seller Expenses using the cash in the Accounts.
7.6 EFFORTS.
(a) The Buyer acknowledges that certain consents to the
transactions contemplated by this Agreement may be required from parties to the
Contracts and such consents have not been obtained. The Buyer agrees the Seller
shall not have any liability whatsoever to the Buyer arising out of or relating
to the failure to obtain any consents that may have been or may be required in
connection with the transactions contemplated by this Agreement or because of
the default, acceleration or termination of any Contract as a result thereof.
The Buyer further agrees that no representation, warranty or covenant of the
Seller contained herein shall be breached or deemed breached and no condition of
the Buyer shall be deemed not to be satisfied as a result of (i) the failure to
obtain any consent or as a result of any such default, acceleration or
termination or (ii) any litigation commenced or threatened by or on behalf of
any Persons arising out of or relating to the failure to obtain any consent or
any such default, acceleration or termination.
(b) With respect to any Contracts that may not be properly
assigned to the Buyer because of the failure to obtain a required consent
("NONTRANSFERABLE CONTRACTS"), the Buyer shall indemnify, defend and hold
harmless the Seller Indemnified Parties from and against any Losses that the
Seller may have in connection with such Nontransferable Contracts as a result of
the transactions contemplated by this Agreement.
(c) With respect to any Nontransferable Contract with
respect to which the Seller and the Buyer are unable to obtain a separate
agreement between the Buyer and the other party or parties, the Buyer shall have
the right to require that the Seller use reasonable efforts to perform any such
Nontransferable Contract, to the extent it relates to the Business, as agent for
and for the account of the Buyer, for a period up to one month following the
Closing Date; PROVIDED, that the Buyer shall reimburse, indemnify and hold the
Seller harmless for any and all costs, expenses, losses and liabilities incurred
by the Seller in connection with taking such action.
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7.7 DISSOLUTION. On the earlier of (a) the Liquidation Date or (b)
the day immediately prior to the Closing Date, the Seller shall file a
certificate of dissolution of the Seller with the Secretary of State of the
State of Delaware in accordance with Section 275 of the Delaware General
Corporation Law, and if the applicable date referenced above is the Liquidation
Date, the Seller shall, immediately following the filing of such certificate of
dissolution (i) transfer and assign to the Trustees all of the Purchased Assets,
the Excluded Assets and all of the Seller's rights and interests in and to this
Agreement, (ii) transfer and assign to the Trustees all of the Assumed
Liabilities and all of the Seller's covenants, agreements and other obligations
under this Agreement and (iii) cause the Trustees to execute and deliver to the
Buyer an instrument, in form and substance satisfactory to the Buyer (the "TRUST
ASSUMPTION AGREEMENT"), containing the following representations, warranties and
agreements of the Trustees and the Trust: (A) that the Trustees have fully and
lawfully succeeded to all right, title and interest of the Seller in and to the
Purchased Assets, the Excluded Assets and the Assumed Liabilities, (B) all
representations, warranties, covenants, agreements and other obligations of any
kind or nature of, and applicable references to, the Seller contained in, or
otherwise under, this Agreement and the other Transaction Documents (including,
without limitation, the agreements, representations and warranties of, and
applicable references to, the Seller set forth in Sections 2.1, 2.2, 2.5, 3.2
through 3.6, 7.13 and 8.2) are (x) the representations, warranties, covenants,
agreements and obligations of, and shall include references to, the Trustees and
the Trust to the full extent as if the Trustees and the Trust were the Seller
and a party hereto, and (y) repeated and made by the Trustees and the Trust as
of the Liquidation Date, (C) that the consummation by the Buyer and the Trustees
and the Trust of the transactions contemplated hereby will not conflict with the
trust agreement of the Trust or the Dissolution Plan, has been approved by the
Trustees and will have the same legal force and effect as if such transactions
were consummated by the Seller and the Buyer, and (D) that the Trust is a Trust
duly formed, validly existing and in good standing under the laws of the State
of Delaware; each of the Trustees and the Trust has all requisite power, legal
right and authority to execute and deliver each Transaction Document to which it
is a party, and to perform fully its obligations under the Transaction Documents
to which it is a party; and the Trustees and the Trust have all requisite trust
power and lawful authority to own, lease and operate the Business and its
assets.
7.8 BULK SALES LAWS. The Buyer hereby waives compliance by the
Seller with the provisions of "bulk sales" or similar laws of any state with
respect to the transactions contemplated hereby.
7.9 BUYER RESTRICTED PAYMENTS AND LOAN PAYMENTS. Without the
Seller's prior written consent, prior to the three year anniversary of the
Closing Date; the Buyer shall not make any (i) Buyer Restricted Payments or (ii)
payments of principal on the Loan; provided however that the Buyer shall not be
precluded from making any such payment during such three year period, if after
making any such payment, the Buyer has a net worth equal to at least $10
million.
7.10 MARKETABLE SECURITIES. At least three Business Days prior to
the
24
Closing, Seller shall sell and liquidate for cash all marketable securities
owned by it and the Seller Subsidiaries and shall deposit the net proceeds
therefrom into the Accounts.
7.11 CHANGE OF NAME. As soon as practicable after the Closing Date
but in any event prior to December 31, 2005, the Seller shall take all action
necessary to change its corporate name to a name that is not (and that is not
confusingly similar to) "FAB Industries, Inc.," and does not include the "FAB"
name in any form, it being the intent of the parties hereto that from and after
the Closing Date, the Buyer or any of its Affiliates will have the sole and
exclusive right as against the Seller and any of its Affiliates to conduct
business under the "FAB" name and that the Buyer or any of its Affiliates may
commence doing so at the time of the Closing.
7.12 WIND-DOWN CASH. Promptly following the final liquidation of the
Seller, the Seller shall refund to the Buyer any excess Wind-Down Cash not used
by Seller to pay its liquidation expenses following the Closing.
7.13. ADDITIONAL ASSURANCES. Following the Closing, the Seller shall
take all such actions as may be reasonably requested by the Buyer to further
effectuate the provisions of this Agreement and the other Transaction Documents
to fully vest in the Buyer all right, title and interest of the Seller in and to
the Purchased Assets.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 CONDITIONS TO THE OBLIGATION OF THE SELLER TO CLOSE. The
obligation of the Seller to complete the sale provided for in this Agreement or
otherwise consummate the Closing shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions, any and all of
which may be waived in whole or in part by the Seller pursuant to Section 11.6.
(a) REPRESENTATIONS AND WARRANTIES. (a) The representations
and warranties of the Buyer contained in Article IV shall be true and correct in
all material respects (except for any such representations and warranties which
are qualified by their terms by a reference to materiality or material adverse
effect, which representations and warranties as so qualified shall be true and
correct in all respects) at and on the Closing Date, as if made at and on such
date.
(b) COVENANTS. The Buyer shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by the Buyer on or prior to the
Closing Date.
(c) CLOSING DELIVERIES. The Buyer shall have made all the
deliveries to the Seller set forth in Section 9.3
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(d) SHAREHOLDER LITIGATION. The terms of the settlement for
the Shareholder Litigation as set forth in the Memorandum of Understanding shall
have been finally approved by the Court of Chancery of the State of Delaware
(the "COURT").
(e) SUFFICIENT FUNDS. The Buyer shall have provided evidence
to the Seller that the Loan has been made to the Buyer, so that following the
Closing, the Buyer will have sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to satisfy the Assumed
Liabilities in full and in accordance with their terms.
8.2 CONDITIONS TO OBLIGATION OF THE BUYER TO CLOSE. The obligation
of the Buyer to complete the purchase provided for in this Agreement or
otherwise consummate the Closing shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions, any and all of
which may be waived in whole or in part by the Buyer pursuant to Section 11.6.
(a) REPRESENTATION AND WARRANTIES. The representations and
warranties of the Seller contained in Article III shall be true and correct in
all material respects (except for any such representations and warranties which
are qualified by their terms by a reference to materiality or material adverse
effect, which representations and warranties as so qualified shall be true and
correct in all respects) at and on the Closing Date, as if made at and on such
date.
(b) COVENANT AND AGREEMENTS. The Seller shall have performed
and complied in all material respects with all of its covenants and agreements
set forth herein that are required to be performed by the Seller on or before
the Closing Date.
(c) CLOSING DELIVERIES. The Seller shall have made all the
deliveries to the Buyer set forth in Section 9.2.
(d) SHAREHOLDER LITIGATION.(e) The terms of the settlement
for the Shareholder Litigation as set forth in the Memorandum of Understanding
shall have been finally approved by the Court.
ARTICLE IX
CLOSING AND CLOSING DELIVERIES
9.1 CLOSING. The closing of the sale and purchase of the Purchased
Assets and other transactions contemplated hereby (the "CLOSING") shall be held
at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP, 1285 Avenue of
the Americas,
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in New York, New York on the second Business Day following the date on which all
of the conditions set forth in Articles VIII (other than those conditions that
can only be satisfied at the Closing) shall be satisfied or waived in accordance
with this Agreement, or at such other time, place and date as the Buyer and
Seller may mutually agree in writing. The date upon which the Closing occurs is
referred to as the "CLOSING DATE."
9.2 DELIVERIES BY THE SELLER(a) . On the Closing Date, the Seller
shall deliver to the Buyer the following, in form and substance reasonably
satisfactory to the Buyer and its counsel:
(a) a certificate of the Seller, executed by an authorized
representative of the Seller, dated as of the Closing Date, certifying that the
conditions to Closing set forth in Section 8.2(a) and Section 8.2(b) have been
satisfied;
(b) physical possession and control of the Purchased Assets;
(c) a wire transfer of all cash amounts in the Accounts at
Closing in excess of the Retained Cash in accordance with the wire transfer
instructions designated by the Buyer two Business Days prior to the Closing
Date;
(d) a certificate of the Seller, executed by an authorized
representative of the Seller, certifying (i) the Seller Board (after receiving
the unanimous favorable recommendation of the Special Committee) has unanimously
approved the execution, delivery and performance of the Transaction Documents
and the consummation of the transactions contemplated thereby (with copies of
the resolutions duly adopted by the Seller Board attached), and (ii) the
incumbency of the officer or officers of the Seller signing the Transaction
Documents;
(e) a copy of the Fairness Opinion;
(f) fully executed stock powers in a form reasonably
satisfactory to the Buyer and Seller with respect to the Seller Subsidiary
Stock;
(g) a duly executed Xxxx of Sale;
(h) a duly executed Assignment and Assumption Agreement;
(i) a duly executed Trademark Assignment Agreement;
(j) duly executed documents necessary to transfer the
Accounts to the Buyer; and
(k) such other documents and instruments as shall be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
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9.3 DELIVERIES BY THE BUYER. On the Closing Date, the Buyer shall
deliver to the Seller the following, in form and substance reasonably
satisfactory to the Seller and its counsel:
(a) a certificate of the Buyer, executed by an authorized
representative of the Buyer, dated as of the Closing Date, certifying that the
conditions to Closing set forth in Section 8.1(a) and Section 8.1(b) have been
satisfied;
(b) a duly executed Assignment and Assumption Agreement;
(c) a wire transfer of any cash amounts payable by the Buyer
pursuant to the proviso in Section 2.4; and
(d) such other documents and instruments as shall be
reasonably necessary to effect the intent of this Agreement and consummate the
transactions contemplated hereby.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 TERMINATION. This Agreement may be terminated prior to the
Closing as follows:
(a) at any time on or prior to the Closing Date, by mutual
written consent of the Seller and the Buyer;
(b) at the election of the Seller or the Buyer by written
notice to the other Party after 5:00 p.m., New York time, on December 31, 2005,
if the Closing shall not have occurred, unless such date is extended by the
mutual written consent of the Seller and the Buyer; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 10.1(b) shall not be
available to any Party whose breach of any representation, warranty, covenant or
agreement under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date;
(c) at the election of the Seller, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the Buyer contained in this Agreement, which breach has not been cured
within thirty (30) days of notice to the Buyer of such breach; or
(d) at the election of the Buyer, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the Seller contained in this Agreement, which breach has not been cured
within thirty (30) days notice to the Seller of such breach.
(e) at the election of the Seller, if a majority of the
independent members of the Seller Board approves, and authorizes the Seller to
enter into, and the
28
Seller concurrently with such termination enters into, a definitive agreement,
arrangement or contract providing for the implementation of a Superior Proposal,
but only so long as:
(i) the Seller not then and has not been in breach
of any of its obligations under Section 7.2;
(ii) the Seller Board shall have authorized the
Seller, subject to complying with the terms and conditions of this Agreement, to
enter into a binding written agreement concerning such Superior Proposal and the
Seller notifies Buyer in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement (including any
amendments, supplements or modifications) to such notice;
(iii) during the three Business Day period following
the Buyer's receipt of such notice, (A) the Seller shall have offered to
negotiate in good faith with (and, if accepted, negotiate in good faith with),
and shall have instructed its respective financial and legal advisors to have
offered to negotiate in good faith with (and, if accepted, negotiate in good
faith with), the Buyer to make adjustments in the terms and conditions of this
Agreement, and (B) the Seller Board shall have concluded, after considering the
results of such negotiations and the revised proposals made by the Buyer, if
any, that any Superior Proposal giving rise to such notice continues to be a
Superior Proposal; and
(iv) such termination occurs within seven Business
Days following the three Business Day period referred to in Section
10.1(e)(iii).
10.2 NOTICE OF TERMINATION. Any Party desiring to terminate this
Agreement pursuant to this Article X shall give notice of such termination to
the other Party.
10.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to this Article X, it shall become void and of no further force and effect, with
no liability on the part of any Party to this Agreement (other than Sections 7
and 10.3), PROVIDED, HOWEVER, that nothing herein shall relieve any Party from
liability for its willful breach of this Agreement prior to the termination of
this Agreement.
10.4 EXPENSES FOLLOWING TERMINATION(a) .
(a) Except as set forth in this Section 10.4, all expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid in accordance with the provisions of Section 7.5.
(b) If this Agreement is terminated by the Seller pursuant
to Section 10.1(e), promptly (and in any event no later than three Business
Days) following such termination, the Seller shall pay, or cause to be paid, to
the Buyer by wire transfer of immediately available funds the sum of (x) an
amount equal to 3% of the Assumed Liabilities (as determined in good faith on
the date of the termination of this Agreement
29
by the Board or any committee thereof) (the "TERMINATION FEE") PLUS (x) an
amount equal to the Buyer Expenses. For purposes of this Agreement, "BUYER
EXPENSES" means all documented out-of-pocket costs and expenses not to exceed
$150,000 in the aggregate incurred or paid by or on behalf of the Buyer in
connection with or related to authorization, preparation, negotiation,
investigation, execution and performance of this Agreement.
(c) If this Agreement is terminated by (i) the Seller
pursuant to Section 10.1(e) or (ii) the Buyer pursuant to Section 10.1(d),
promptly (and in any event no later than three Business Days) following such
termination, the Seller shall pay, or cause to be paid, to the Buyer by wire
transfer of immediately available funds an amount equal to the Good Faith
Deposit. If this Agreement is terminated by either the Seller or the Buyer for
any reason, other than pursuant to Section 10.1(e) or Section 10(d), the Seller
shall retain the Good Faith Deposit.
(d) The Seller acknowledges that (i) the agreements
contained in this Section 10.4 are an integral part of the transactions
contemplated by this Agreement and (ii) without these agreements, the Buyer
would not have entered into this Agreement.
(e) Any payment of the (i) Termination Fee, (ii) the Good
Faith Deposit and (iii) Buyer Expenses pursuant to this Section 10.4 shall serve
as full liquidated damages in respect of any breach of this Agreement by the
Seller and the Buyer hereby waives all claims against the Seller in respect of
the breach or breaches occasioning the payment pursuant to this Section 10.4.
ARTICLE XI
MISCELLANEOUS
11.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS.
(a) None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing, except that (i) the representations and
warranties in Section 4.8 and Section 4.9 shall survive indefinitely and (ii)
those covenants which by their terms apply in whole or in part after the Closing
(including the covenants of the Buyer set forth in Article V, Article VI and
Section 11.2) shall survive the Closing.
(b) Without limiting the foregoing, the Buyer agrees that
after the Closing Date, it shall not have any right to make any claim against
the Seller, the Trust, the Trustees or any other Person, whether based on the
provisions of this Agreement, the other Transaction Documents or otherwise,
arising out of the transactions contemplated by this Agreement, the Other
Transaction Documents or the Shareholder Litigation. In
30
furtherance of the foregoing, the Buyer hereby waives, from and after the
Closing, to the fullest extent permitted under Applicable Law, any and all
rights, claims and causes of action it may have against the Seller, the Trust
and the Trustees relating to the Shareholder Litigation, the subject matter of
this Agreement, the Trust Assumption Agreement and the other Transaction
Documents arising under or based upon any Applicable Law. The Buyer further
acknowledges and agrees that it shall have no claim with respect to any
information, documents or materials furnished by the Seller or its
representatives or any other Person or any of their officers, directors,
employees, agents or advisors, including any information, (or any reliance
thereon) documents or material made available to the Buyer in certain "data
rooms," management presentations or any other form in expectation of the
transactions contemplated by this Agreement or the other Transaction Documents.
(c) It is understood and agreed that notwithstanding
anything to the contrary contained in this Agreement, in any other Transaction
Document or in the Trust Assumption Agreement, it is the express intent of the
parties hereto that from and after the Closing (i) all Assumed Liabilities shall
be the sole and exclusive obligation and liability of the Buyer and not of the
Seller, the Trust or any Trustee, (ii) none of the Seller, the Trust or any
Trustee shall have any obligation or liability with respect to any Assumed
Liability and (iii) the Buyer shall have no recourse of any kind (whether at
law, in equity or otherwise) against the Seller, the Trust or any Trustee for
any matter relating to this Agreement, any other Transaction Document, the Trust
Assumption Agreement, the Purchased Assets, the Business or the Shareholder
Litigation. Every provision of this Agreement, each other Transaction Document
and the Trust Assumption Agreement shall be construed so as to carry out the
foregoing intent of the parties hereto.
11.2 INDEMNIFICATION.
The Buyer shall indemnify the Seller and its officers, directors,
employees and agents (each, a "SELLER INDEMNIFIED PARTY" and collectively, the
"SELLER INDEMNIFIED PARTIES") against and hold them harmless from any Losses
suffered or incurred by any such Seller Indemnified Party based upon or arising
out of (i) any breach of any covenant or agreement of the Buyer contained in
this Agreement or any other Transaction Documents, (ii) any failure of the Buyer
to pay, discharge or perform any of the Assumed Liabilities in full and in
accordance with their terms, (iii) any failure to comply with any "bulk sales
laws" applicable to the transactions contemplated hereby and (iv) the operation
of the Business or the use of the Purchased Assets whether prior to or after the
Closing Date.
11.3 PROCEDURES RELATING TO INDEMNIFICATION.
(a) In order for a Person (the "INDEMNITEE") to be entitled
to any indemnification provided for under this Agreement in respect of, arising
out of or involving a claim or demand made by any Person against the Indemnitee
(a "THIRD PARTY CLAIM"), such Indemnitee must notify the Buyer in writing (the
"INDEMNIFICATION NOTICE"), and in reasonable detail, of the Third Party Claim as
promptly as reasonably
31
possible after receipt by such Indemnitee of notice of the Third Party Claim;
PROVIDED, HOWEVER, that failure to give such notification on a timely basis
shall not affect the indemnification provided hereunder except to the extent the
Buyer shall have been actually prejudiced as a result of such failure.
Thereafter, the Indemnitee shall deliver to the Buyer, within five business days
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an Indemnitee,
the Buyer shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitee
therefor (at the time it elects to assume the defense of such Third Party Claim,
which shall be not later than 30 days after the date of the Indemnification
Notice), to assume the defense thereof with counsel selected by the Buyer and
reasonably satisfactory to the Indemnitee. Should the Buyer so elect to assume
the defense of a Third Party Claim, the Buyer shall (i) except as otherwise
provided in this Section 11.3, not be liable to the Indemnitee for legal
expenses subsequently incurred by the Indemnitee in connection with the defense
thereof and (ii) keep the Indemnitee fully and timely informed of all material
developments with respect to such Third Party Claim and shall deliver to the
Indemnitee, within ten days after the Buyer's receipt thereof, copies of all
notices and documents (including court papers) received by the Buyer with
respect to such Third Party Claim. If the Buyer assumes such defense, the
Indemnitee shall have the right to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by the
Buyer, it being understood, however, that the Buyer shall control such defense.
Notwithstanding the foregoing, the Indemnitee shall have the right to employ
separate counsel (reasonably acceptable to the Buyer) at the Buyer's expense and
to control its own defense of such Third Party Claim if in the reasonable
opinion of counsel to the Indemnitee a conflict or potential conflict exists
between the Buyer and the Indemnitee that would make such separate
representation advisable. The Buyer shall be liable for the fees and expenses of
counsel employed by the Indemnitee for any period during which the Buyer has not
assumed the defense thereof. If the Buyer chooses to defend any Third Party
Claim, all the parties hereto shall use commercially reasonable efforts to
cooperate in the defense or prosecution of such Third Party Claim. Such
cooperation shall include the retention and (upon the Buyer's request) the
provision to the Buyer of records and information which are reasonably relevant
to such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. If the Buyer shall have assumed the defense of a
Third Party Claim, the Indemnitee shall not admit any liability with respect to,
or settle, compromise or discharge, such Third Party Claim without the Buyer's
prior written consent (which consent shall not be unreasonably withheld). The
Buyer shall not admit any liability with respect to or settle any Third Party
Claim on behalf of Seller without the Seller's prior written consent (which
consent shall not be unreasonably withheld).
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11.4 NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be delivered by
facsimile transmission, by an internationally recognized courier service or by
personal delivery:
if to the Seller:
FAB Industries, Inc.
X.X. Xxx 000
Xxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
if to the Buyer:
SSJJJ Manufacturing Co., LLC
c/o Xxxxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
with a copy to:
Xxxxxxx Xxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
All such notices, demands and other communications shall be deemed to
have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by courier service; and when receipt is
mechanically acknowledged, if sent by facsimile transmission. Any Party may by
notice given in accordance with this Section 10.1 designate another address or
Person for receipt of notices hereunder.
11.5 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the Parties. The Buyer may not assign any of its rights
under this Agreement or the other Transaction Documents to any other Person
;provided that Buyer may assign its rights under this Agreement and the
Transaction Documents to a corporation wholly-owned by Xxxxxx Xxxxx and Xxxxxx
Xxxxx (and not any significant shareholder of the
33
Seller) ("Newco") upon receipt of a revenue ruling issued by the Internal
Revenue Service that the capitalization of Newco and the closing of the
transactions contemplated by this Agreement by Newco as the buyer will not
result in the recharacterization of the tax treatment of any liquidating
distributions made by the Seller under the Dissolution Plan. Except as provided
in Article V (Employee Matters), Section 7.3 (Directors' and Officers'
Indemnification and Insurance), Section 7.7 (Dissolution) and Section 11.2
(Indemnification), no Person other than the Parties and their successors and
permitted assigns is intended to be a beneficiary of this Agreement, provided
that the parties acknowledge and agree that that the Trust is a successor to the
Seller.
11.6 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of the Seller, or the
Buyer in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Parties at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any Party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by all the Parties and (ii) only in the specific instance and for the
specific purpose for which made or given.
11.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the Parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
11.8 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
ANY CONFLICT OF LAW PRINCIPLES THEREOF.
11.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each Party
hereby irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
shall only be instituted in the federal or state courts located in New York, New
York and hereby expressly submits to the personal jurisdiction and venue of such
courts for the purposes thereof and expressly waives any claim of improper venue
and any claim that such courts are an inconvenient forum. Each Party hereby
irrevocably consents to the service of process of any of the aforementioned
courts in any such suit, action or proceeding by the
34
mailing of copies thereof by registered or certified mail, postage prepaid, to
the address set forth or referred to in Section 11.5.
11.11 WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
11.12 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
11.13 ENTIRE AGREEMENT. This Agreement, together with the exhibits
and schedules hereto and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the Parties in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Agreement on the date first written above.
SSJJJ MANUFACTURING CO., LLC
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Managing Member
FAB INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chairman of the Board and CEO
36
