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Exhibit 10.7
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STOCK PURCHASE AGREEMENT
for the purchase of the
outstanding capital stock of
AUBURN HOSIERY ▇▇▇▇▇, INC.,
by and among
GCIH, INC.,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
CERTAIN CHARITABLE REMAINDER TRUSTS
November 12, 1997
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TABLE OF CONTENTS
Page
Section 1. Purchase and Sale................................................2
1A. Purchase and Sale of the Shares..................................2
1B. Purchase Price...................................................2
1C. The Closing......................................................2
Section 2. Representations and Warranties of the Sellers With Respect
to the Companies.................................................3
2A. Organization, Corporate Power and Licenses.......................3
2B. Capital Stock and Related Matters................................3
2C. Subsidiaries; Investments........................................4
2D. Authorization; No Breach.........................................4
2E. Financial Statements.............................................4
2F. Absence of Undisclosed Liabilities...............................4
2G. Accounts Receivable..............................................5
2H. ▇▇▇▇▇▇▇▇▇........................................................▇
▇▇. Product Warranty.................................................5
2J. No Material Adverse Effect.......................................5
2K. Absence of Certain Developments..................................5
2L. Assets...........................................................7
2M. Tax Matters......................................................7
2N. Contracts and Commitments........................................8
2O. Intellectual Property Rights....................................10
2P. Litigation, etc. ...............................................11
2Q. Brokerage.......................................................12
2R. Insurance.......................................................12
2S. Employees.......................................................12
2T. Employee Benefits...............................................13
2U. Compliance with Laws; Permits...................................16
2V. Environmental and Safety Matters................................16
2W. Affiliate Transactions..........................................17
2X. Suppliers and Customers.........................................17
2Y. Real Property...................................................18
2Z. Fees and Expenses...............................................19
2AA. Sufficiency of Assets...........................................19
2BB. Exclusivity.....................................................19
Section 3. Representations and Warranties of the Sellers...................19
3A. Power and Authority.............................................19
3B. Authorization; No Breach........................................19
3C. Title to Shares.................................................20
3D. Brokerage.......................................................20
3E. Litigation, etc. ...............................................20
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Section 4. Representations and Warranties of the Purchaser.................20
4A. Organization. ..................................................20
4B. Authorization; No Breach. ......................................20
4C. Brokerage.......................................................21
4D. Investment. ....................................................21
Section 5. Confidentiality, Noncompetition and Nonsolicitation for
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ...............................................21
5A. Confidential Information........................................21
5B. Work Product....................................................22
5C. Noncompete, Nonsolicitation.....................................22
Section 6. Indemnification..................................................23
6A. Survival of Representations and Warranties......................23
6B. General Indemnification. .......................................23
Section 7. Conditions to Closing...........................................27
7A. Conditions of the Purchaser's Obligations at the Closing........27
7B. Waiver..........................................................30
7C. Conditions of the Sellers' Obligations at the Closing...........30
(i) Representations and Warranties; Covenants.................30
(ii) Litigation................................................30
(iii) Consents and Approvals....................................30
(iv) Escrow Agreement..........................................30
(v) Sport Socks Ireland Agreement.............................30
(vi) Indemnification Agreement.................................31
(vii) Closing Documents.........................................31
7D. Waiver..........................................................31
Section 8. Pre-Closing Covenants and Agreements............................31
8A. General.........................................................31
8B. Third Party Notices and Consents................................31
8C. Operation of Business...........................................31
8D. Full Access.....................................................31
8E. Notice of Material Developments.................................32
8F. Exclusivity.....................................................32
8G. Tax Matters.....................................................32
8H. Intercompany Obligations/Affiliate Transactions.................32
8I. Termination.....................................................33
8J. Effect of Termination...........................................33
8K. Certain Releases................................................33
8L. Existing Liens..................................................34
Section 9. Post-Closing Covenants and Agreements...........................34
9A. Certain Tax Matters.............................................34
9B. Press Release and Announcements.................................35
9C. Litigation Support..............................................35
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9D. Transition......................................................36
9E. General.........................................................36
Section 10. Definitions....................................................36
Section 11. Miscellaneous..................................................43
11A. Fees and Expenses...............................................43
11B. Remedies........................................................44
11C. Consent to Amendments; Waivers..................................44
11D. Successors and Assigns..........................................44
11E. Severability....................................................44
11F. Counterparts....................................................44
11G. Descriptive Headings; Interpretation............................45
11H. Entire Agreement................................................45
11I. No Third-Party Beneficiaries....................................45
11J. Schedules and Exhibits..........................................45
11K. GOVERNING LAW; WAIVER OF JURY TRIAL.............................45
11L. Notices.........................................................46
11M. Jurisdiction and Venue..........................................47
11N. No Strict Construction..........................................48
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EXHIBITS AND SCHEDULES
Exhibits:
Exhibit A - Share Ownership
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Opinion of Sellers' Counsel
Schedules:
Schedule 1C - ▇▇▇▇▇▇▇ Debt as of September 30, 1997
Schedule 2A - Foreign Qualifications Schedule
Schedule 2B - Capital Stock of Each Company
Schedule 2C - Subsidiaries
Schedule 2D - Consents
Schedule 2E - Financial Statements
Schedule 2F - Disclosed Liabilities
Schedule 2G - Accounts Receivable
Schedule 2H - Inventory
Schedule 2I - Product Warranty
Schedule 2K - Absence of Certain Developments
Schedule 2L - Liens
Schedule 2M - Taxes
Schedule 2N - Contracts and Commitments
Schedule 2O - Intellectual Property Rights
Schedule 2P - Litigation
Schedule 2R - Insurance
Schedule 2S - Employees; JPM Employees
Schedule 2T - Employees Benefit
Schedule 2U - Compliance
Schedule 2V - Environmental and Safety Matters
Schedule 2W - Affiliate Transactions
Schedule 2X - Supplies and Customers
Schedule 2Y(i) - Owned Property
Schedule 2Y(ii) - Leased Property
Schedule 2Y(iii) - Real Property
Schedule 7A(iii) - Directors
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
November 12, 1997 by and among GCIH, Inc., a Delaware corporation ("GCIH"),
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable
Remainder Trust, The ▇▇▇▇▇ ▇▇▇▇▇▇ Charitable Remainder Trust, The ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Charitable Remainder Trust, The ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Charitable
Remainder Trust, The ▇▇▇▇ ▇▇▇▇▇▇▇▇ Charitable Remainder Trust and The ▇▇▇▇
▇▇▇▇▇▇▇ Charitable Remainder Trust (each such charitable remainder trust, a
trust formed under the laws of the state of State of New York) (each of the
eight immediately preceding parties, a "Seller" and collectively, the
"Sellers"). The Purchaser and the Sellers are sometimes collectively referred to
herein as the "Parties" and individually as a "Party". Capitalized terms used
herein and not otherwise defined herein have the meanings given to such terms in
Section 10.
WHEREAS, as of the date hereof, (a) the Sellers collectively own
100% of the outstanding capital stock (the "Auburn Shares") of Auburn Hosiery
▇▇▇▇▇, Inc., a Kentucky corporation, ("Auburn") and (b) Auburn owns 99.99% and
▇▇▇▇▇▇▇ owns .01% (the "▇▇▇▇▇▇▇ UK Share") of the outstanding capital stock of
Sport Socks Company Limited, a company registered under the laws of the England
and Wales ("Sport Socks UK"). Auburn and Sport Socks UK are referred to
collectively herein as the "Companies". The Auburn Shares and the ▇▇▇▇▇▇▇ UK
Share are referred to collectively as the "Shares";
WHEREAS, prior to the Closing Date, the Sellers will have
transferred or caused to be transferred (a) to Sport Socks (Ireland) Ltd., a
company organized under the laws of Ireland, 100% of the capital stock of which
is owned collectively by ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Sports Socks Ireland")
certain of the assets of Euro Sport Socks Company, Ltd., a company organized
under the laws of the United Kingdom, and (b) to Auburn, certain of the assets
of Converse Accessories, Inc. (such companies (a)-(b), the "Ancillary Companies"
and such transfers, the "Ancillary Company Transfers");
WHEREAS, prior to the Ancillary Company Transfers, the Companies,
Sport Socks Ireland, and the Ancillary Companies engaged, collectively, in the
manufacture and distribution of licensed athletic socks for men and boys in the
United States and Western Europe under the brand names ▇▇▇▇▇▇(R), Coca-Cola(R),
Converse(R) and Dunlop(R) (such business, as conducted by the Companies, Sport
Socks Ireland and the Ancillary Companies, collectively, the "Auburn Business")
and as of the date hereof, the Auburn Business is conducted by the Companies;
WHEREAS, subject to the terms and conditions set forth herein, the
Purchaser desires to purchase all of the Shares from the Sellers and the Sellers
desire to sell the Shares to the Purchaser; and
WHEREAS, simultaneously with the execution hereof, the Purchaser and
▇▇▇▇▇▇▇ shall enter into a Purchase Agreement (the "Sport Socks Ireland
Agreement"), pursuant to which the
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Purchaser shall purchase all of the shares of outstanding capital stock of Sport
Socks Ireland (the "Irish Shares") from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall sell the Irish
Shares to Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and understandings herein contained, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree as follows:
Section 1. Purchase and Sale
1A. Purchase and Sale of the Shares. At the Closing, subject to the
terms set forth herein, the Purchaser shall purchase from each Seller, and each
Seller shall sell, convey, assign, transfer and deliver to the Purchaser, that
number of Shares set forth opposite such Seller's name on Exhibit A hereto, free
and clear of any mortgage, pledge, security interest, encumbrance, charge or
other Lien.
1B. Purchase Price. The consideration to be paid by Purchaser for
the Shares (the "Purchase Price") shall be $28,000,000.
1C. The Closing. The closing of the purchase and sale of the Shares
(the "Sale") and the transactions relating thereto (collectively, the "Closing")
will take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, commencing at 9:00 a.m. local time, as soon as practicable
following the satisfaction or waiver of all the conditions set forth in Section
7 hereof (the "Closing Date") or at such other place and time as may be agreed
upon by the Sellers and the Purchaser. The date and time of the Closing are
referred to as the "Closing Date". At the Closing, subject to the satisfaction
or waiver of each of the conditions set forth in Section 7:
(i) the Purchaser shall deliver to each Seller, by wire
transfer of immediately available funds to the account or accounts specified in
writing by such Seller, the amount set forth opposite such Seller's name on
Exhibit A hereto;
(ii) the Purchaser shall deliver on behalf of ▇▇▇▇▇▇▇,
$700,000 by wire transfer of immediately available funds to an escrow account
(the "Escrow Account") pursuant to an escrow agreement dated as of the Closing
Date by and among the Purchaser, ▇▇▇▇▇▇▇ and SunTrust Bank, Atlanta, as Escrow
Agent (the "Escrow Agent"), in the form of Exhibit B hereto (the "Escrow
Agreement");
(iii) ▇▇▇▇▇▇▇ shall repay or cause to be repaid to any member
of the Company Group, in full, any Indebtedness owed by ▇▇▇▇▇▇▇ or any Person
controlled by or related to ▇▇▇▇▇▇▇ (other than Sport Socks UK or Sport Socks
Ireland) to any member of the Company Group (such Indebtedness, the "▇▇▇▇▇▇▇
Debt"), the amount of which as of September 30, 1997 is set forth on Schedule 1C
hereto; and
(iv) each of the Sellers will deliver to the Purchaser stock
certificates representing all of his, hers or its Shares, endorsed in blank or
accompanied by duly executed and witnessed assignment documents.
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Section 2. Representations and Warranties of the Sellers With
Respect to the Companies. As a material inducement to the Purchaser to enter
into this Agreement and purchase the Shares hereunder, each of the Sellers,
jointly and severally, represents and warrants to the Purchaser as follows:
2A. Organization, Corporate Power and Licenses. Each of the
Companies is a corporation duly organized, validly existing and in good standing
under the Laws of its jurisdiction of incorporation and is qualified to do
business in every jurisdiction in which the failure to be so qualified would
reasonably be expected to have a Material Adverse Effect, which such
jurisdictions are set forth on Schedule 2A attached hereto. Each of the
Companies possesses all requisite corporate power and authority necessary to own
and operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement. The copies of the charter documents,
organizational documents, and bylaws of the Companies which have been furnished
to the Purchaser reflect all amendments made thereto at any time prior to the
date of this Agreement and are correct and complete. The minute books
(containing the records of meetings of the stockholders, the board of directors
and any committees of the board of directors), the stock certificate books and
the stock record books of each of the Companies are correct and complete in all
material respects.
2B. Capital Stock and Related Matters.
(i) As of immediately prior to the Closing, the authorized capital
stock of each of the Companies is as set forth on Schedule 2B(i) attached
hereto. The Shares constitute all of the outstanding capital stock of Auburn and
as of immediately prior to the Closing will be held beneficially and of record
by each Seller (free and clear of all Encumbrances) as set forth on Schedule
2B(i) attached hereto. Schedule 2B(i) sets forth the capitalization of each of
the Companies and the name of each Person holding any equity securities of such
Company, any securities convertible or exchangeable for any equity securities of
such Company and any options or other rights to purchase equity securities of
such Company and the amount and type of such securities, options or rights held
by such Persons as of the Closing Date and immediately thereafter. Neither of
the Companies has outstanding (1) any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, (2) any rights or options to subscribe for or to
purchase its capital stock or (3) any stock appreciation rights or phantom stock
or similar plans or rights. Neither of the Companies is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock. As of the Closing and immediately thereafter, all
of the outstanding shares of the Companies' capital stock shall be validly
issued, fully paid and nonassessable.
(ii) Neither of the Companies has received written notice of any
violation and is not otherwise aware of any violation of any applicable federal
or state securities laws, whether of the United States or otherwise, in
connection with the offer, sale or issuance of any of its capital stock or the
offer, sale or issuance of any of its debt securities. There are no agreements
between any of the Companies' shareholders or with any other Person with respect
to the voting, transfer or registration of any of the Companies' capital stock
or with respect to any other aspect of any of the
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Companies' affairs that will survive the Closing Date (other than this Agreement
and except as provided in Schedule 2B(ii) attached hereto).
2C. Subsidiaries; Investments. Except as set forth on Schedule 2C
attached hereto, neither of the Companies owns nor holds the right to acquire
any shares of stock or any other security or interest in any other Person. Other
than Auburn, the sole subsidiary of which is Sport Socks UK, neither of the
Companies has ever had any Subsidiaries.
2D. Authorization; No Breach. The execution, delivery and
performance of the agreements or instruments contemplated hereby to which either
of the Companies is a party or by which either of the Companies is bound have
been duly authorized by such Company. All agreements contemplated hereby to
which either of the Companies is a party, when executed and delivered by such
Company in accordance with the terms hereof, shall each constitute a valid and
binding obligation of such Company enforceable in accordance with their terms,
except as such enforceability may be limited by (x) applicable insolvency,
bankruptcy, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (y) applicable equitable principles (whether
considered in a proceeding at law or in equity). Except as set forth on Schedule
2D attached hereto, the execution, delivery and performance by the Sellers of
this Agreement and the agreements to be executed in connection herewith, and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Sellers, do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under (whether
with or without the passage of time, the giving of notice or both), (iii) give
any third party the right to modify, terminate or accelerate any obligation
under, (iv) result in a violation of, or (v) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any Government Entity or third party pursuant to, (A) the organizational
documents of either of the Companies, (B) any Law to which either of the
Companies is subject, or (C) any agreement, instrument, order, judgment or
decree to which either of the Companies is subject.
2E. Financial Statements. (i) Attached hereto as Schedule 2E are:
(a) the audited consolidated balance sheets of each of the Companies as of
December 31, 1995 and December 31, 1996 (collectively, the "1996 Balance Sheet")
and the related statements of income, stockholders' equity and cash flows for
the respective twelve-month periods then ended and (b) the unaudited balance
sheet of Auburn as of September 30, 1997 (the "Interim Balance Sheet"), and the
related statements of income for the nine-month period then ended.
(ii) Except as set forth on Schedule 2E, each of the foregoing
financial statements (including in all cases the notes thereto, if any) fairly
presents the financial condition, operating results and cash flows of the
Companies, if applicable, and has been prepared in accordance with (a) GAAP in
the case of Auburn and (b) in the case of the 1996 Balance Sheet and related
financial statements, Auditing Standards issued by the Auditing Practices Board
of the United Kingdom in the case of Sport Socks UK, in each case consistently
applied throughout such financial statements and the periods covered thereby,
subject in the case of the unaudited financial statements to the absence of
footnote disclosure and year end adjustment.
2F. Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2F attached hereto, to the Knowledge of ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
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▇▇▇▇▇ ▇▇▇▇▇▇▇ or (for purposes of Sport Socks UK only) ▇▇▇▇▇▇ ▇▇▇▇▇▇
(collectively, the "▇▇▇▇▇▇▇ Parties") neither of the Companies has any
obligation or liability (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when asserted)
required to be set forth on a balance sheet in accordance with GAAP arising out
of transactions entered into at or prior to the date hereof, or any action or
inaction at or prior to the date hereof, or any state of facts existing at or
prior to the date hereof, other than: (i) liabilities set forth on the
liabilities side of the 1996 Balance Sheet (rather than any notes thereto), (ii)
liabilities and obligations which have arisen after the date of the 1996 Balance
Sheet in the ordinary course of business (none of which is a liability resulting
from breach of contract, breach of warranty, tort, infringement, claim or
lawsuit) and (iii) other liabilities and obligations expressly disclosed on any
Schedule to this Agreement, or any liabilities and obligations which would be
reasonably likely to be caused by, and are caused by, facts expressly disclosed
on any Schedule to this Agreement.
2G. Accounts Receivable. Except as set forth on Schedule 2G attached
hereto, all notes and accounts receivables of the Companies are reflected
properly on their books and records, are valid receivables subject to no setoffs
or counterclaims other than setoffs or counterclaims in the ordinary course of
business and are current and collectible in accordance with their terms at
levels consistent with the past custom and practice of the Companies.
2H. Inventory. Except as set forth on Schedule 2H attached hereto,
the inventory shown on the 1996 Balance Sheet and the inventory on hand as of
the Closing Date consists or shall consist of a quantity and quality usable and
saleable in the ordinary course of business consistent with past custom and
practice.
2I. Product Warranty. All products manufactured, sold, leased or
delivered by either of the Companies have been in conformity in all material
respects with all applicable contractual commitments and all express and implied
warranties, and neither of the Companies has any liability (and there is no
reasonable basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against it giving rise to any
such liability) for replacement or repair thereof or other damages in connection
therewith in excess of past custom and practice and experience. No products
manufactured, sold, leased or delivered by either of the Companies and no
services rendered by either of the Companies are subject to any Guarantee,
warranty or other indemnity beyond the applicable standard terms and conditions
of such sale, lease or service. Schedule 2I attached hereto includes copies of
such standard terms and conditions of sale, lease and service for the Companies
(containing applicable guaranty, warranty and indemnity provisions).
2J. No Material Adverse Effect. Since December 31, 1996, there has
occurred no fact, event or circumstance which has had or would reasonably be
expected to have a Material Adverse Effect.
2K. Absence of Certain Developments. Except as expressly
contemplated by this Agreement, since December 31, 1996 each of the Companies
has conducted its business only in the ordinary course of business consistent
with past custom and practice. In addition, except as expressly contemplated by
this Agreement, or as set forth on Schedule 2K, since September 30, 1997,
neither of the Companies has:
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(i) issued any notes, bonds or other debt securities or any capital
stock or other equity securities or any securities or rights convertible,
exchangeable or exercisable into any capital stock or other equity securities;
(ii) incurred any Indebtedness, other than Indebtedness to
unaffiliated third parties in the ordinary course of business;
(iii) discharged or satisfied any material Lien or paid any material
obligation or liability, other than current liabilities paid in the ordinary
course of business consistent with past custom and practice;
(iv) declared, set aside or made any payment or distribution of cash
or other property to the Sellers with respect to their capital stock or other
equity securities, or purchased, redeemed or otherwise acquired any shares of
its capital stock or other equity securities (including any warrants, options or
other rights to acquire its capital stock or other equity securities);
(v) mortgaged or pledged any of its properties or assets or
subjected them to any Lien, except Permitted Liens;
(vi) sold, assigned, transferred, leased, licensed or abandoned any
of its assets, tangible or intangible (including, without limitation, any
Intellectual Property rights), except in the ordinary course of business
consistent with past custom and practice;
(vii) made or granted any bonus or any wage or salary increase to
any employee or group of employees except in the ordinary course of business in
accordance with past custom and practice, or made or granted any increase in any
employee benefit plan or arrangement, or amended or terminated any existing
employee benefit plan or arrangement or adopted any new employee benefit plan or
arrangement;
(viii) made capital expenditures or commitments therefor in excess
of $200,000 in the aggregate;
(ix) except in the ordinary course of business in accordance with
past custom and practice and pursuant to the Companies' existing credit
facilities, delayed, postponed or canceled the payment of any accounts payable
or any other liability or obligation or agreed or negotiated with any party to
extend the payment date of any accounts payable or accelerated the collection of
any accounts or notes receivable;
(x) except for travel advances made in the ordinary course, made any
loans or advances to, Guarantees for the benefit of, or any Investments in, any
Persons or formed any Subsidiary;
(xi) suffered any damage, destruction or casualty loss exceeding in
the aggregate $25,000, whether or not covered by insurance, or experienced any
material changes in the amount and scope of insurance coverage;
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(xii) made any change in any method of accounting or accounting
policies, or made any write-down or write-up in the value of its inventory;
(xiii) directly or indirectly engaged in any transaction or entered
into any arrangement with any officer, director, partner, shareholder or
Affiliate of either of the Companies;
(xiv) amended its articles of incorporation, bylaws or other
organizational documents;
(xv) made any payment to any Party with respect to any Seller
Expenses;
(xvi) increased the amount of ▇▇▇▇▇▇▇ Debt, other than Indebtedness
of JPM incurred in the ordinary course of business in accordance with past
practices, assuming that sales commissions payable by Auburn to JPM are accrued
at a rate of 5.5% for such period;
(xvii) (A) hired or fired any employee of either Company having an
annual base salary in calendar year 1997 of $50,000 or more (or the equivalent
in any other currency assuming conversion into U.S. dollars at the Prevailing
Exchange Rate) or (B) hired any individual who, if employed on September 30,
1997, would be a JPM Employee (as hereinafter defined) or fired any JPM
Employee;
(xviii) taken any action or omit to take any action which act or
omission would reasonably be expected to have a Material Adverse Effect; or
(xix) agreed, whether orally or in writing, to do any of the
foregoing.
2L. Assets. Except as set forth on Schedule 2L attached hereto, each
of the Companies has good, marketable and valid title to, a valid, marketable
leasehold interest in, or a valid license or right to use, the assets, tangible
or intangible, used by it, located on its premises or shown on the 1996 Balance
Sheet or the Interim Balance Sheet or acquired thereafter free and clear of all
Liens other than Permitted Liens, except for assets disposed of in the ordinary
course of business since the date of the 1996 Balance Sheet or Interim Balance
Sheet, as the case may be.
2M. Tax Matters. Except as set forth on Schedule 2M attached hereto:
(i) each of the Companies has filed or caused to be filed all
material Tax Returns which it is required to file under applicable laws
and regulations, and all such Tax Returns are complete and correct in all
material respects;
(ii) each of the Companies has paid all material Taxes due and
owing by it (whether or not such Taxes are shown or required to be shown
on a Tax Return) or has accrued a liability with respect thereto on the
books and records of the Companies in accordance with GAAP and the prior
accounting practices of the Companies and has withheld and paid over to
the appropriate taxing authority all material Taxes which it is required
to withhold from amounts paid or owing to any employee, shareholder,
creditor or other third party;
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(iii) neither of the Companies has waived any statute of
limitations with respect to any material Taxes or agreed to any extension
of time for filing any material Tax Return which has not been filed; and
neither of the Companies has consented to extend to a date later than the
date hereof the period in which any material Tax may be assessed or
collected by any Taxing Authority;
(iv) the accruals for Taxes on the books and records of the
Companies are adequate in accordance with GAAP and the prior accounting
practices of the Companies to pay all Tax liabilities of each of the
Companies not yet paid for all periods through the Closing Date;
(v) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted with
respect to the Companies;
(vi) no claim has ever been made by a taxing authority in a
jurisdiction where either of the Companies does not file Tax Returns that
the Company so not filing may be subject to Taxes assessed by such
jurisdiction;
(vii) neither of the Companies has ever been a member of an
Affiliated Group or filed or been included in a combined, consolidated or
unitary income Tax Return, other than for an Affiliated Group of which
Auburn is the common parent corporation;
(viii) neither of the Companies is a party to or bound by any
Tax allocation or Tax sharing agreement;
(ix) there are no Liens for Taxes (other than for current
Taxes not yet due and payable) upon the assets of either of the Companies;
(x) neither of the Companies has entered into an agreement
that would require that either of the Companies make an excess parachute
payment within the meaning of Section 280G of the Code;
(xi) neither of the Companies has filed a consent under Code
ss.341(f) concerning collapsible corporations; and
(xii) neither of the Companies will be required to make an
adjustment to taxable income under Code ss.481 for any period ending on or
after the Closing Date by reason of a voluntary change in accounting
method initiated by any of the Companies on or prior to the Closing Date
and the Internal Revenue Service has not initiated or proposed any such
change in accounting method.
2N. Contracts and Commitments.
(i) Except as expressly contemplated by this Agreement or as set
forth on Schedule 2N attached hereto, neither of (a) the Companies nor (b) any
of the Sellers or their
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14
Affiliates (as such contract or commitment relates to either of the Companies)
is a party to or bound by any written or oral:
(a) pension, profit sharing, stock option, employee stock
purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan, arrangement
or practice, whether formal or informal;
(b) collective bargaining agreement or any other contract with
any labor union, or severance agreements, programs, policies or
arrangements;
(c) management agreement or contract for the employment of any
officer, individual employee or other Person on a full-time, part-time,
consulting or other basis which (i) provides annual cash or other
compensation in excess of $50,000, (ii) provides for the payment of any
cash or other compensation or benefits upon the consummation of the
transactions contemplated hereby or (iii) otherwise restricts his, her, or
its ability to terminate the employment of any employee at any time for
any lawful reason or for no reason without penalty or liability;
(d) contract or agreement involving any Governmental Entity;
(e) agreement or indenture relating to borrowed money or other
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on
any material asset or material group of assets of either of the Companies
or any letter of credit arrangements;
(f) Guarantee, other than endorsements made for collection in
the ordinary course of business;
(g) lease or agreement under which either of the Companies is
(i) lessee of or holds or operates any personal property, owned by any
other party, except for any lease of personal property under which the
aggregate annual rental payments do not exceed $25,000 or (ii) lessor of
or permits any third party to hold, occupy, or operate any property, real
or personal, owned or controlled by either of the Companies;
(h) contract or group of related contracts with the same party
or group of affiliated parties for the purchase or sale of raw materials,
commodities, supplies, products, equipment or other personal property or
services under which the undelivered balance since December 31, 1996 of
such products and services has a selling price in excess of $25,000;
(i) other contract or group of related contracts with the same
party or group of affiliated parties continuing over a period of more than
six months from the date or dates thereof, not terminable by either of the
Companies upon 30 days or less notice without penalty or involving more
than $25,000;
(j) contract relating to the marketing, sale, advertising or
promotion of its products;
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15
(k) agreements relating to the ownership of, investments in or
loans and advances to any Person, including investments in joint ventures
and minority equity investments;
(l) license, royalty, indemnification or other agreement with
respect to any intangible property (including any Intellectual Property
rights);
(m) agent, sales representative, sales or distribution
agreement;
(n) power of attorney or other similar agreement or grant of
agency;
(o) contract or agreement prohibiting it from freely engaging
in any business or competing anywhere in the world, including, without
limitation, any nondisclosure or confidentiality agreements; or
(p) other agreement which is material to its operations and
business prospects or involves a consideration in excess of $25,000
annually, whether or not in the ordinary course of business.
(ii) All of the contracts, agreements and instruments set forth or
required to be set forth on Schedule 2N (the "Material Contracts") are valid,
binding and enforceable in accordance with their respective terms, except as
such enforceability may be limited by (x) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (y) applicable equitable principles (whether considered in a
proceeding at law or in equity). Each of the Material Contracts shall be in full
force and effect in all material respects without penalty in accordance with
their terms upon consummation of the transactions contemplated hereby. Each of
the Companies has performed all material obligations required to be performed by
it and is not in default under or in material breach of nor in receipt of any
claim of default or breach under any Material Contract; no event has occurred
which with the passage of time or the giving of notice or both would result in a
material default, material breach or material event of noncompliance by either
of the Companies under any Material Contract; and none of the ▇▇▇▇▇▇▇ Parties
has any Knowledge of any breach or cancellation or anticipated breach or
cancellation by the other parties to any Material Contract.
(iii) The Purchaser has been supplied with a true and correct copy
of each written Material Contract, together with all material amendments,
waivers or other changes thereto (all of which amendments, waivers or other
changes thereto are described on Schedule 2N).
2O. Intellectual Property Rights.
(i) Schedule 2O attached hereto contains a complete and accurate
list of all (a) patented and registered Company Intellectual Property, (b)
pending patent applications and other applications for registrations of Company
Intellectual Property, and (c) all material computer software owned or used by
any of the Companies. Schedule 2O also contains a complete and accurate list of
all licenses or similar agreements covering Intellectual Property rights to
which any
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16
of the Companies is or as of the Closing Date is required to be a party, either
as licensee or licensor, in each case identifying the subject Intellectual
Property rights.
(ii) Except as set forth on Schedule 2O, each of the Companies owns
all right, title and interest to, or has, or as of the Closing Date will have
the right to use pursuant to a valid and effective written license, free and
clear of all Liens other than Permitted Liens, all Company Intellectual
Property. The Company Intellectual Property comprises all of the Intellectual
Property rights necessary for the operation of the business of the Companies as
presently conducted and as presently proposed to be conducted. No loss or
expiration of any of the Company Intellectual Property is threatened or pending.
Each of the Companies has taken all commercially reasonable action to maintain
and protect the Company Intellectual Property. To any of the ▇▇▇▇▇▇▇ Parties'
Knowledge, the owners of any Company Intellectual Property licensed to either of
the Companies have taken all commercially reasonable action to maintain and
protect the Company Intellectual Property subject to such licenses.
(iii) Except as set forth on Schedule 2O, (a) no claims by any other
Person asserting the invalidity, misuse or unenforceability of any of the
Company Intellectual Property have been made in writing within the past five (5)
years or are currently outstanding or threatened, and, to the Knowledge of any
of the ▇▇▇▇▇▇▇ Parties, there is no basis for any such claim, (b) the operation
of the business of the Companies as currently conducted and as proposed to be
conducted has not infringed, misappropriated or conflicted with and will not
infringe, misappropriate or conflict with any Intellectual Property rights of
other Persons and neither of the Companies has received any written notice
regarding any of the foregoing (including, without limitation, any demands or
offers to license any Intellectual Property rights from any other Person) and
(c) no third party has infringed, misappropriated or otherwise acted in conflict
with any of the Company Intellectual Property. The transactions contemplated by
this Agreement shall have no Material Adverse Effect on the right, title or
interest of either of the Companies in and to the Company Intellectual Property
and all of such Company Intellectual Property shall be owned or available for
use by the applicable Company on substantially identical terms and conditions
immediately after the Closing.
2P. Litigation, etc. Except as set forth on Schedule 2P attached
hereto, there are no (and, during the five years preceding the date hereof,
there have not been any) actions, suits, proceedings (including any arbitration
proceedings), orders, investigations or claims pending or, to the Knowledge of
the ▇▇▇▇▇▇▇ Parties, threatened against either of the Companies (or to the
Knowledge of any of the ▇▇▇▇▇▇▇ Parties, pending or threatened against any of
the officers, directors or employees of either of the Companies with respect to
their businesses or proposed business activities), or pending or threatened by
either of the Companies against any third party, at law or in equity, or before
or by any Government Entity (including any actions, suits, proceedings or
investigations with respect to the transactions contemplated by this Agreement);
neither of the Companies is subject to any arbitration proceedings under
collective bargaining agreements or otherwise or any governmental investigations
or inquiries; and, to the Knowledge of the ▇▇▇▇▇▇▇ Parties, there is no basis
for any of the foregoing. The Companies are fully insured (subject to applicable
policy deductibles) with respect to each of the matters set forth on Schedule
2P. Neither of the Companies is subject to any judgment, order or decree of any
Government Entity, and neither of the Companies has received any opinion or
memorandum or legal advice from legal counsel to
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17
the effect that it is exposed, from a legal standpoint, to any liability which
would reasonably be expected to have a Material Adverse Effect.
2Q. Brokerage. There are and shall be no claims for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement to which either of the Companies is a party or to which either of the
Companies is subject.
2R. Insurance. Schedule 2R attached hereto contains a brief
description of each insurance policy maintained by each of the Companies with
respect to its properties, assets and business, and each such policy shall be in
full force and effect as of the Closing or a substituted policy shall have been
obtained therefor. Neither of the Companies is in default with respect to any of
its material obligations under any insurance policy maintained by it, and
neither of the Companies has ever been denied insurance coverage. The insurance
coverage of the Companies is customary for corporations of similar size engaged
in similar lines of business. Except as set forth on Schedule 2R, neither of the
Companies has any self-insurance or co-insurance programs, and the reserves set
forth on the 1996 Balance Sheet are adequate to cover all anticipated
liabilities with respect to any such self-insurance or co-insurance programs.
2S. Employees. The Companies have previously delivered to the
Purchaser a true and complete list, as of September 30, 1997, of (i) the
employees employed by (A) either Company having an annual base salary in
calendar year 1997 of $50,000 or more (or the equivalent in any other currency
assuming conversion into U.S. dollars at the Prevailing Exchange Rate) or, (B)
▇. ▇. ▇▇▇▇▇▇▇, Inc., a New York corporation, ("JPM") which employees are listed
on Schedule 2S hereto (the "JPM Employees"), (ii) the rate of all current
compensation payable to each such employee, including, without limitation, any
bonus, contingent or deferred compensation and fringe benefits, and (iii) the
directors of each of the Companies. Except as set forth on Schedule 2S attached
hereto, to the Knowledge of any of the ▇▇▇▇▇▇▇ Parties, no executive or key
employee of either of the Companies nor any of the JPM Employees and no group of
employees of either of the Companies nor any of the JPM Employees has any plans
to terminate employment with any of the Companies or JPM, as the case may be. To
the Knowledge of any of the ▇▇▇▇▇▇▇ Parties, neither of the Companies nor JPM,
has (a) any material labor relations problems (including any additional union
organization activities, threatened or actual strikes or work stoppages or
material grievances), (b) engaged in any unfair labor practices, (c) during the
past five years, suffered any labor strike, lockout, work stoppage or other
material labor dispute or, (d) any union organization campaign is in progress
with respect to any of the employees, nor any question concerning representation
exists respecting such employees. Except as disclosed on Schedule 2S, neither of
the Companies nor JPM is party to or bound by any collective bargaining
agreement or relationship with any labor organization. Neither of the Companies
nor JPM has engaged in any plant closing or employee layoff activities within
the last two (2) years that would violate or in any way implicate the Worker
Adjustment Retraining and Notification Act of 1988, as amended, or any similar
state or local plant closing or mass layoff statute, rule or regulation. During
the past five years, any notice from any Company required under any law or
collective bargaining agreement has been given, and all bargaining obligations
of any Company with any employee representative have been satisfied, including,
but not limited to, obligations relating to the effects on bargaining unit
employees of the transactions contemplated by this Agreement.
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18
2T. Employee Benefits.
(i) Schedule 2T attached hereto lists each Employee Benefit Plan
that either of the Companies maintains or to which either of the Companies
contributes or has any actual liability, or to the Knowledge of any ▇▇▇▇▇▇▇
Party, any potential liability.
(ii) With respect to each Employee Benefit Plan which provides
benefits to or with respect to current or former employees of either Company:
(a) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
material respects with the applicable requirements of ERISA, the Code,
other applicable laws, and its terms.
(b) Except as set forth on Schedule 2M(i)(a)(1), all required
reports and descriptions (including Internal Revenue Service Form 5500
annual reports, summary annual reports, PBGC-1's, and summary plan
descriptions) have been correctly and timely filed or distributed
appropriately with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
ss.4980B ("COBRA") have been met in all material respects with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(c) All contributions (including all employer contributions
and employee salary reduction contributions) which are due to each such
Employee Benefit Plan which is an Employee Pension Benefit Plan have been
paid and all contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each Employee Pension Benefit
Plan or accrued. All premiums or other payments which are due with respect
to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan, have been paid, and there are sufficient reserves to cover claims
which have occurred but have not been reported.
(d) Each Employee Benefit Plan which is an Employee Pension
Benefit Plan designed to meet the requirements of a "qualified plan" under
Code ss.401(a) has received, within the last two years, a favorable
determination letter from the Internal Revenue Service, and since each
such determination letter was issued, no facts or other circumstances have
arisen or become known to either the Company or any of the Sellers which
could result in any of such Employee Benefit Plans no longer being a
"qualified plan".
(e) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and
nonvested liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the Closing Date, and there has been no
application for or waiver of the minimum funding standards imposed by
Section 412 of the Code.
(f) The Sellers have delivered to the Purchaser, to the extent
applicable, correct and complete copies of the plan documents and summary
plan descriptions, the most
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19
recent determination letter received from the Internal Revenue Service,
the most recent Internal Revenue Service Form 5500 annual report, and all
related trust agreements, insurance contracts, and other funding
agreements which implement each Employee Benefit Plan.
(g) With respect to each Employee Benefit Plan that either of
the Companies and the Controlled Group of Corporations which includes the
Companies maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to
contribute:
(1) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan subject to Title IV of ERISA (other than any
Multiemployer Plan) has been completely or partially terminated or
been the subject of a Reportable Event as to which notices would be
required to be filed with the PBGC. No proceeding by the PBGC to
terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or threatened.
(2) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan subject to Title I of
ERISA or Section 4975 of the Code (i) which have not been corrected,
(ii) for which any liability or penalty has not been paid in full
and (iii) which could result in liability to the Companies. To the
Knowledge of any ▇▇▇▇▇▇▇ Party, no Fiduciary of any Employee Benefit
Plan subject to Title I of ERISA has any Liability for breach of
fiduciary duty or any other failure to act under Title I of ERISA or
comply with Title I of ERISA in connection with the administration
or investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to
the administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits) is
pending or, to the Knowledge of any ▇▇▇▇▇▇▇ Party, threatened. None
of the ▇▇▇▇▇▇▇ Parties has any Knowledge of any reasonable basis for
any such action, suit, proceeding, hearing, or investigation.
(3) Neither of the Companies has incurred, and neither
of the Companies has a reason to expect that it will incur, any
Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA or under Chapter 43 of the Code
with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan subject to the provisions of ERISA and the
Code.
(h) Neither of the Companies, and the other members of the
Controlled Group of Corporations that includes the Companies contributes
to, ever has contributed to, or ever has been required to contribute to
any Multiemployer Plan or has any actual or potential Liability (including
any withdrawal liability resulting from its withdrawal from any such plan
in a complete or partial withdrawal as such terms are used in Part I of
Subtitle E of Title IV of ERISA) under any Multiemployer Plan.
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20
(iii) Neither of the Companies maintains or ever has maintained or
contributes, ever has contributed, or ever has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
COBRA or other government mandated benefit laws.
(iv) With respect to each Employee Benefit Plan which provides
benefits to or with respect to current or former employees outside the United
States:
(a) Each such Employee Benefit Plan complies in form and in
operation with the applicable requirements of law and in accordance with
its terms.
(b) All contributions or premium payments which are due on or
before the Closing Date with respect to each such Employee Benefit Plan
will be timely paid in full and all contributions and premium payments
which are not due for all periods ending on the Closing Date will be
adequately accrued.
(c) (1) Neither of the Companies, or, to the ▇▇▇▇▇▇▇ Parties'
Knowledge, any other Person has engaged in any transactions that could
reasonably be expected to result in the imposition of a material penalty
under law or a material tax; (2) neither of the Companies nor any of their
officers or employees have any liability for breach of fiduciary duty or
any other failure to act or comply with the requirements of law in
connection with the administration of such Employee Benefit Plan or the
investment of the assets thereunder; and (3) no actions, investigations,
suits or claims are pending or, to the Knowledge of the Sellers,
threatened, and the Sellers have no Knowledge of any facts or
circumstances which could give rise to or could reasonably be expected to
give rise to any such actions, suits or claims (other than for benefits
payable in the ordinary course of business).
(d) With respect to each pension plan, as of the Closing Date,
the market value of the assets equals or exceeds the present value of
benefit liabilities thereunder.
(e) Neither of the Companies has any liability with respect to
the termination of a benefit plan that has not been satisfied in full.
(f) No power to increase benefits or provide different
benefits under any Plan has been exercised in respect of any current or
former employees of the Companies, and there are no circumstances in which
there is a practice of exercising such power. Each Employee Benefit Plan
which is a pension scheme is an exempt approved scheme within the meaning
of Chapter 1 of Part XIV of the Income and Corporation Taxes Act of 1988
and all of the participants of any Employee Benefit Plan which is a
pension scheme are contracted out of the United Kingdom State Earnings
Related Pension Scheme by virtue of their participation. No assets of any
Employee Benefit Plan for current or former employees have been assigned
by the trustees as security for a loan or otherwise, nor is there any
agreement to assign those assets.
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21
(g) The Sellers have delivered or made available to Purchaser
true and complete copies of the following documents in connection with
each such Employee Benefit Plan (where applicable): (A) all plan documents
as in effect on the date hereof, together with all amendments thereto; (B)
all current plan descriptions and summaries of material modifications; (C)
the most recently prepared actuarial valuation report for each Employee
Benefit Plan; and (D) the most recently prepared financial statements.
(v) None of the Employee Benefit Plans of the Companies obligates
the Sellers to pay any separation, severance, termination or similar benefit
solely as a result of any transaction contemplated by this Agreement or solely
as a result of a change in control or ownership within the meaning of Section
280G of the Code.
2U. Compliance with Laws; Permits. Except as set forth on Schedule
2U attached hereto:
(i) Each of the Companies has complied with all applicable Laws
relating to the operation of its business. No notices have been received by and
no claims have been filed against either of the Companies alleging a violation
of any such Laws.
(ii) Except for any qualifications to do business as a foreign
corporation in any state, each of the Companies holds all permits, licenses,
certificates, accreditations and other authorizations of all Government Entities
required for the conduct of its business and the ownership of its properties,
and Schedule 2U sets forth a list of all of such permits, licenses,
certificates, accreditations and other authorizations. No notices have been
received by either of the Companies alleging the failure to hold any permit,
license, certificate, accreditation or other authorization of any Government
Entity. Each of the Companies is in compliance with all terms and conditions of
all permits, licenses, accreditations and authorizations which it holds. Except
as disclosed on Schedule 2U all of such permits, licenses, accreditations and
authorizations will be available for use by the Companies immediately after the
Closing.
2V. Environmental and Safety Matters. Except as set forth on
Schedule 2V attached hereto:
(i) Each of the Companies and their respective predecessors has
complied with and is in compliance with all Environmental and Safety
Requirements.
(ii) Without limiting the generality of the foregoing, each of the
Companies has obtained and complied with, and is in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental and Safety Requirements for the occupation of its facilities and
the operation of its business.
(iii) Neither the Companies nor their respective predecessors or
Affiliates has received any written or, to the Knowledge of any ▇▇▇▇▇▇▇ Party,
oral notice, report or other information regarding any actual or alleged
violation of Environmental and Safety Requirements, or any liabilities or
potential liabilities (whether accrued, absolute, contingent, unliquidated or
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22
otherwise), including any investigatory, remedial or corrective obligations,
relating to either of them or their facilities arising under Environmental and
Safety Requirements.
(iv) None of the following exists at any property or facility owned
or operated by either of the Companies in a condition that has given or would
give rise to liability under any Environmental and Safety Requirements: (1)
underground storage tanks, (2) asbestos-containing material in any form or
condition, (3) materials or equipment containing polychlorinated biphenyls, or
(4) landfills, surface impoundments, or disposal areas.
(v) Neither of the Companies or their respective predecessors has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or Released any substance, including without limitation
any hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that would give rise to liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damages or attorney fees, pursuant to CERCLA or any other Environmental and
Safety Requirements.
(vi) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental and Safety Requirements.
(vii) Neither of the Companies nor any of their respective
predecessors has, either expressly or by operation of law, assumed, undertaken
or otherwise become subject to any liability, including without limitation any
obligation for corrective or remedial action, of any other Person relating to
Environmental and Safety Requirements.
(viii) No facts, events or conditions relating to the past or
present facilities, properties or operations of the Companies or any of their
respective predecessors will prevent, hinder or limit continued compliance with
Environmental and Safety Requirements, give rise to any investigatory, remedial
or corrective obligations pursuant to Environmental and Safety Requirements, or
give rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental and Safety Requirements,
including without limitation any relating to onsite or offsite Releases or
threatened Releases of hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage.
2W. Affiliate Transactions. Except as set forth on Schedule 2W
attached hereto, as of immediately following the Closing, no officer, director,
shareholder or Affiliate of either of the Companies or any individual related by
blood, marriage or adoption to any such individual or any entity in which any
such Person or individual owns any beneficial interest, is a party to any
agreement, contract, commitment or transaction with either of the Companies or
either of the Companies' executive officers or has any material interest in any
material property used by either of the Companies.
2X. Suppliers and Customers. Schedule 2X attached hereto accurately
sets forth a list of the top ten customers and suppliers of each of the
Companies by dollar volume of sales and
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23
purchases, respectively, for the fiscal year ended December 31, 1996. Since
December 31, 1996, neither of the Companies has received any written notice from
any material supplier to the effect that, and none of the ▇▇▇▇▇▇▇ Parties has
any Knowledge that, any such supplier will stop, materially decrease the rate
of, or materially change the terms (whether related to payment, price or
otherwise) with respect to, supplying materials, products or services to either
of the Companies (whether as a result of the consummation of the transactions
contemplated hereby or otherwise). Neither of the Companies has received any
written notice from any material customer of either of the Companies to the
effect that, and to the Knowledge of the ▇▇▇▇▇▇▇ Parties, there is no reason to
believe that, such customer will stop, or materially decrease the rate of,
buying products of either of the Companies (whether as a result of the
consummation of the transactions contemplated hereby or otherwise).
2Y. Real Property.
(i) Attached as Schedule 2Y(i) is a complete and accurate list
setting forth the name, address and a legal description of each parcel of real
property owned in fee by the Companies (the "Owned Property"). The Companies
have good and marketable title in and to all of the Owned Property subject to no
Liens other than the Liens set forth on Schedule 2Y(i) and Permitted Liens.
(ii) Schedule 2Y(ii) attached hereto sets forth a list of all
leases, subleases and other occupancy agreements, including all amendments,
extensions and other modifications (the "Leases") for real property (the "Leased
Property", and together with the "Owned Property," the "Real Property") under
which either of the Companies is the "tenant", "subtenant" or other lessee party
or for which, in the case of the third item in subsection (ii) thereon, a third
party is the "tenant," "subtenant" or other lessee party for the benefit of a
Company. Auburn or Sport Socks UK, as the case may be, has a good and valid
leasehold interest in and to all of the Leased Property, subject to no Liens
except for Liens set forth on Schedule 2Y(ii) and Permitted Liens. Each Lease is
in full force and effect and is enforceable in accordance with its terms. There
exists no default or condition which, with the giving of notice, the passage of
time or both, could become a default under any Lease. The Companies have
previously delivered to the Purchaser true and complete copies of all the
Leases.
(iii) Except as set forth in Schedule 2Y(iii) attached hereto, the
Real Property constitutes all of the real property owned, leased, occupied or
otherwise utilized in connection with the business of the Companies. Other than
the Companies, there are no parties in possession or parties having any current
or future right to occupy any of the Real Property. The Real Property is in good
condition and repair, subject to ordinary wear and tear, and is sufficient and
appropriate for the conduct of the Companies' business. The Real Property and
all plants, buildings and improvements located thereon conform in all material
respects to all applicable building, zoning and other laws, ordinances, rules
and regulations. All material permits, licenses and other approvals necessary to
the current occupancy and use of the Owned Property have been obtained, are in
full force and effect and have not been violated. There exists no material
violation of any covenant, condition, restriction, easement, agreement or order
affecting any portion of the Owned Property. All improvements located on the
Real Property have direct access to a public road adjoining such Real Property.
No such improvements or accessways encroach on land not included in the Real
Property and no such improvement is dependent for its access, operation or
utility on any land,
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building or other improvement not included in the Real Property. There is no
pending or, to the Knowledge of the ▇▇▇▇▇▇▇ Parties, any threatened condemnation
proceeding affecting any portion of the Real Property.
(iv) There are no outstanding options or rights of first refusal
with respect to the purchase or use of any of the Owned Property, any portion
thereof or interest therein, except as set forth on Schedule 2Y(iv) attached
hereto. Neither of the Companies is obligated to purchase or lease any real
property, except as set forth on Schedule 2Y(iv).
2Z. Fees and Expenses. Neither of the Companies (i) has any
liability or obligation to pay any fees, expenses, commissions or costs
(including, without limitation, any and all real property transfer, transfer
gains, stamp, and other similar Taxes, if any) incurred by the Sellers or the
Companies in connection with the transactions contemplated by this Agreement
(such fees, expenses, commissions, and costs the "Seller Expenses"), or (ii) has
made any payments to any Person with respect to any Seller Expenses. The Seller
Expenses shall be paid by the Sellers.
2AA. Sufficiency of Assets. The Companies and Sport Socks Ireland
have, or will have as of the Closing, good, marketable and valid title to, a
valid leasehold interest in, or valid license or right to use, all of the
assets, tangible or intangible, necessary to conduct the Auburn Business as
conducted by the Companies, Sport Socks Ireland and the Ancillary Companies
prior to the Ancillary Company Transfers.
2BB. Exclusivity. Neither of the Companies, the Sellers, or any of
their respective representatives, officers, directors, agents, stockholders or
Affiliates is party to or bound by any agreement which shall directly or
indirectly initiate, solicit, entertain, negotiate, accept or discuss any
proposal or offer to acquire all or any significant part of either of the
Companies (an "Acquisition Proposal"), whether by merger, purchase of stock,
purchase of assets, tender offer or otherwise (a "Third Party Acquisition")
other than under this Agreement, and all such Persons have terminated all
discussions with third parties (other than the Purchaser) regarding Acquisition
Proposals or Third Party Acquisitions.
Section 3. Representations and Warranties of the Sellers. As a
material inducement to the Purchaser to enter into this Agreement and purchase
the Shares hereunder, each Seller, severally and individually for himself,
herself or itself only, hereby represents and warrants to the Purchaser as
follows:
3A. Power and Authority. Each Seller who is a natural person has the
legal right, capacity and power to execute, deliver and perform this Agreement
and the agreements, certificates and instruments to be executed and delivered by
such Seller pursuant hereto. Each Seller which is a trust has the full power and
authority to execute, deliver and perform this Agreement and the agreements,
certificates and instruments to be executed and delivered by such Seller
pursuant hereto.
3B. Authorization; No Breach. The execution, delivery and
performance of this Agreement and all other agreements or instruments
contemplated hereby to which the Sellers are parties or by which the Sellers are
bound have been duly authorized by the Sellers. This Agreement and all other
agreements contemplated hereby to which the Sellers are parties, when executed
and
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25
delivered by the Sellers in accordance with the terms hereof, shall each
constitute a valid and binding obligation of the Sellers, enforceable in
accordance with its terms, except as such enforceability may be limited by (x)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
laws affecting creditors' rights generally and (y) applicable equitable
principles (whether considered in a proceeding at law or in equity). The
execution, delivery and performance by the Sellers of this Agreement and all
other agreements contemplated hereby to which the Sellers are parties, and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Sellers, do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under (whether
with or without the passage of time, the giving of notice or both), (iii) give
any third party the right to modify, terminate or accelerate any obligation
under, (iv) result in a violation of, or (v) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any Government Entity pursuant to, (A) the organizational documents, if
any, of the Sellers, (B) any Law to which the Sellers are subject, or (C) any
agreement, instrument, order, judgment or decree to which the Sellers are
subject.
3C. Title to Shares. On the Closing Date, all of the Shares set
forth opposite each Seller's name on Exhibit A will be owned of record and
beneficially by such Seller, and such Seller will have good and marketable title
to such Shares, free and clear of all Liens, agreements, voting trusts, proxies
and other arrangements or restrictions of any kind whatsoever (collectively,
"Encumbrances"). Each Seller shall sell to the Purchaser good and marketable
title to the Shares free and clear of all Encumbrances.
3D. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement to which
the Seller is a party or to which the Seller is subject.
3E. Litigation, etc. There are no actions, suits, proceedings
(including any arbitration proceedings), orders, investigations or claims
pending or, to the Seller's Knowledge, threatened against or affecting the
Seller in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the transactions contemplated hereby.
Section 4. Representations and Warranties of the Purchaser. As a
material inducement to the Sellers to enter into this Agreement and take the
actions set forth in Section 1, the Purchaser represents and warrants to the
Sellers as follows:
4A. Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation. The Purchaser possesses all requisite power and authority
necessary to carry out the transactions contemplated by this Agreement.
4B. Authorization; No Breach. The execution, delivery and
performance of this Agreement and all other agreements or instruments
contemplated hereby to which the Purchaser is a party or by which the Purchaser
is bound have been duly authorized by the Purchaser. This Agreement and all
other agreements contemplated hereby to which the Purchaser is a party, when
executed and delivered by the Purchaser in accordance with the terms hereof,
shall each constitute
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26
a valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, except as such enforceability may be limited by (x) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors' rights generally and (y) applicable equitable principles
(whether considered in a proceeding at law or in equity). The execution,
delivery and performance by the Purchaser of this Agreement and all other
agreements contemplated hereby to which the Purchaser is a party, and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Purchaser, do not and shall not (i) conflict with or result in a breach of
the terms, conditions or provisions of, (ii) constitute a default under (whether
with or without the passage of time, the giving of notice or both), (iii) give
any third party the right to modify, terminate or accelerate any obligation
under, (iv) result in a violation of, or (v) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any Government Entity or third party pursuant to, (A) the organizational
documents of the Purchaser, (B) any Law to which the Purchaser is subject, or
(C) any agreement, instrument, order, judgment or decree to which the Purchaser
is subject.
4C. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement to which
the Purchaser is a party or to which the Purchaser is subject.
4D. Investment. The Purchaser is not acquiring the Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
Section 5. Confidentiality, Noncompetition and Nonsolicitation for
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
5A. Confidential Information. ▇▇▇▇▇▇▇ acknowledges that the
information, observations and data disclosed to, developed by or obtained by him
while employed by either of the Companies concerning the business or affairs of
the Companies (including without limitation the Companies' technology, methods
of doing business and supplier and customer information) (collectively, the
"Confidential Information") are the property of the Companies and that the
continued success of the Companies depends in large part on keeping this
information from becoming known to competitors of the Companies. Therefore, in
consideration of the payments being made to ▇▇▇▇▇▇▇ pursuant to the terms of
this Agreement, ▇▇▇▇▇▇▇ agrees that, for all times after the Closing Date,
except as required by law or court order, he shall not, directly or indirectly,
disclose to any unauthorized person or use for his own account any Confidential
Information without the prior written consent of the Board as it exists after
the Closing Date, unless and to the extent that the aforementioned matters
become generally known to and available for use by the public other than as a
result of his acts or omissions to act. ▇▇▇▇▇▇▇ further agrees to use his
commercially reasonable best efforts and diligence to safeguard the Confidential
Information and to protect it against disclosure, misuse, espionage, loss or
theft. ▇▇▇▇▇▇▇ shall deliver to the Companies at any time either of the
Companies may reasonably request, all memoranda, correspondence, notes, plans,
records, reports, manuals, photographs, computer tapes and software and other
documents and data (and copies thereof) relating to the Confidential
Information, the Work Product or the business of the Companies which he may then
possess or have under his control. If either Company requests, ▇▇▇▇▇▇▇ agrees to
provide written confirmation that ▇▇▇▇▇▇▇ has returned all such materials to
such Company.
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27
5B. Work Product. ▇▇▇▇▇▇▇ agrees that all inventions, innovations,
improvements, developments, methods, processes, programs, designs, analyses,
drawings, reports, and all similar or related information which relates to the
Companies' actual or anticipated business or research and development or
existing or future products or services and which are conceived, developed,
contributed to or made by ▇▇▇▇▇▇▇ (either solely or jointly with others) prior
to the Closing (the "Work Product") shall be the sole and exclusive property of
such Company. ▇▇▇▇▇▇▇ will promptly disclose such Work Product to the Board and
perform all actions reasonably requested by the Board (whether before or after
his employment with any Company terminates) to establish and confirm such
ownership (including, without limitation, the execution of assignments,
consents, powers of attorney and other instruments).
5C. Noncompete, Nonsolicitation.
(i) ▇▇▇▇▇▇▇ acknowledges that in the course of his relationship with
the Companies, he has become familiar with such Companies' trade secrets and
with other Confidential Information and that his services have been and will be
of special, unique and extraordinary value to the Companies. Therefore, in
consideration of the payments being made to ▇▇▇▇▇▇▇ pursuant to the terms of
this Agreement and the Sport Socks Ireland Agreement, ▇▇▇▇▇▇▇ agrees that,
during the five-year period following the Closing Date (the "Noncompete
Period"), he shall not directly or indirectly own, operate, lease, manage,
control, participate in, consult with, advise, permit his name to be used by,
provide services for, or in any manner engage in any business (including by
himself or in association with any person, firm, corporation or other business
organization or through any other entity) in which either of the Companies
engages, as such business exists or is in process on the date hereof, within any
geographical area in which any Company engages in such business as of the date
hereof. Nothing herein shall prohibit ▇▇▇▇▇▇▇ from being a passive owner of not
more than 5% of the outstanding stock of any corporation which is publicly
traded, and which is a direct competitor of either of the Companies, so long as
▇▇▇▇▇▇▇ has no active participation in the business of such corporation.
(ii) During the Noncompete Period, ▇▇▇▇▇▇▇ shall not directly or
indirectly through another entity (x) induce or attempt to induce any employee
of either of the Companies to leave the employ of such Company, or in any way
interfere with the relationship between such Company and any employee thereof,
including without limitation, inducing or attempting to induce any union,
employee or group of employees to interfere with the business or operations of
either Company, (y) hire any person who was an employee of either Company at any
time during ▇▇▇▇▇▇▇'▇ employment period or (z) induce or attempt to induce any
customer, supplier, distributor, franchisee, licensee or other business relation
of either Company or the Purchaser to cease doing business with such Company or
the Purchaser, or in any way interfere with the relationship between any such
customer, supplier, distributor, franchisee, licensee or business relation and
such Company or the Purchaser.
(iii) ▇▇▇▇▇▇▇ agrees and acknowledges that (x) the covenants set
forth in this Section 5C are reasonable in geographical and temporal scope and
in all other respects, (y) the Purchaser would not have entered into this
Agreement but for the covenants of ▇▇▇▇▇▇▇ contained herein, and (z) the
covenants contained herein have been made in order to induce the Purchaser to
enter into this Agreement.
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(iv) If, at the time of enforcement of this Section 5C, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
(v) ▇▇▇▇▇▇▇ recognizes and affirms that in the event of his breach
of any provision of this Section 5C, money damages would be inadequate and the
Purchaser and the Companies would have no adequate remedy at law. Accordingly,
▇▇▇▇▇▇▇ agrees that in the event of a breach or a threatened breach by ▇▇▇▇▇▇▇
of any of the provisions of this Section 5C, the Purchaser and the Company
against which such breach is made or such threatened breach exists, in addition
and supplementary to other rights and remedies existing in their favor, may
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent any
violations of the provisions hereof (without posting a bond or other security).
Section 6. Indemnification.
6A. Survival of Representations and Warranties. The representations
and warranties in Sections 2, 3 and 4 of this Agreement shall survive the
Closing for a period of one year following the Closing Date except that (i) the
representations and warranties in Section 2M (Tax Matters) shall survive until
the end of the applicable statute of limitations, and (ii) the representations
and warranties contained in Sections 2A (Organization) (other than the last
sentence thereof), 2B (Capital Stock and Related Matters), 2D (Authorization; No
Breach (other than the second sentence thereof)), 3A (Power and Authority), 3B
(Authorization; No Breach (other than the second sentence thereof)), 3C (Title
to Shares), 4A (Organization) and 4B (Authorization; No Breach (other than the
second sentence thereof)) shall survive forever; provided, that any
representation or warranty in respect of which indemnity may be sought under
Section 6B, and the indemnity with respect thereto, shall survive the time at
which it would otherwise terminate pursuant to this Section 6A if written notice
of the inaccuracy or breach or potential inaccuracy or breach thereof giving
rise to such right or potential right of indemnity shall have been given to the
Party against whom such indemnity may be sought prior to such time. The
representations and warranties in Section 2, 3 and 4 of this Agreement shall
survive for the periods set forth in this Section 6A and shall in no event be
affected by any investigation, inquiry or examination made for or on behalf of
any Party, or the Knowledge of any Party's officers, directors, shareholders,
employees or agents or the acceptance by any Party of any certificate or opinion
hereunder.
6B. General Indemnification.
(i) Indemnification for the Benefit of the Purchaser by the
Sellers. The Sellers shall indemnify the Purchaser and its Affiliates,
shareholders, partners, officers, directors, employees, agents, representatives,
successors and permitted assigns and the Companies (collectively, the "Seller
Indemnified Parties") and save and hold each of them harmless against and pay on
behalf of or reimburse such Seller Indemnified Parties as and when incurred for
any direct or indirect loss, liability, demand, claim, action, cause of action,
cost, damage, deficiency, Tax, penalty, fine or expense, whether or not arising
out of third party claims (including interest,
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penalties, reasonable attorneys', consultants' and experts' fees and expenses
and all amounts paid in investigation, defense or settlement of any of the
foregoing), but expressly excluding consequential damages and lost profits
(collectively, "Losses"), which any such Seller Indemnified Party may suffer,
sustain or become subject to, as a result of, in connection with, relating or
incidental to or by virtue of: (a) any facts or circumstances which constitute a
breach of any representation or warranty of the Sellers under Sections 2 or 3 of
this Agreement (it being understood and agreed that for purposes of this Section
6 and the Indemnification Agreement, Section 2M(i) shall be deemed not to
include any qualification for materiality); or (b) any nonfulfillment or breach
of any covenant, agreement or other provision by the Sellers under this
Agreement or any of the Schedules attached hereto required to be performed or
complied with by the Sellers before or after the Closing; or (c) any claim by
any Person (other than the Purchaser) with respect to, or arising as a result
of, any Acquisition Proposal or Third Party Acquisition proposed prior to the
Closing Date; or (d) any Employee Benefit Plan of JPM which provides or has at
any time provided benefits to any JPM Employee (each, a "JPM Benefit Plan"); or
(e) provided the relevant indemnification claim is made within one year of the
Closing Date, any Existing Lien. If and to the extent any provision of this
Section 6B is unenforceable for any reason, each Seller hereby agrees to make
the maximum contribution to the payment and satisfaction of any Loss for which
indemnification is provided for in this Section 6B which is permissible under
applicable Laws. Notwithstanding anything contained herein, in no event shall
either Company be required to provide indemnification or contribution for any
obligation of the Seller under this Section 6B.
(ii) Indemnification for the Benefit of the Sellers by the
Purchaser. The Purchaser shall indemnify the Sellers and their Affiliates,
shareholders, officers, directors, employees, agents, representatives,
successors and permitted assigns (collectively, the "Purchaser Indemnified
Parties") and hold them harmless against any Losses which the Purchaser
Indemnified Parties may suffer, sustain or become subject to, as a result of, in
connection with, relating or incidental to or by virtue of: (a) any facts or
circumstances which constitute a breach of any representation or warranty of the
Purchaser under Section 4 of this Agreement; or (b) any nonfulfillment or breach
of any covenant, agreement or other provision by the Purchaser under this
Agreement required to be performed or complied with by the Purchaser before or
after the Closing.
(iii) Manner of Payment. Any indemnification of the Seller
Indemnified Parties or the Purchaser Indemnified Parties pursuant to this
Section 6B shall be effected by wire transfer of immediately available funds
from the Sellers or the Purchaser, as the case may be, to an account designated
in writing by any Seller Indemnified Party or Purchaser Indemnified Party, as
the case may be, within 15 days after the determination thereof. The amount of
any Loss for which indemnification is provided pursuant to this Section 6B shall
be net of any amounts actually recovered by the indemnified party under
insurance policies with respect to such Loss. Any such indemnification payments
to be made to a Seller Indemnified Party shall be made (a) first from the Escrow
Account, and (b) to the extent the amount in the Escrow Account is insufficient
for purposes of making such payment, from the Sellers. Further, the Parties
agree to treat the amount of any indemnification payment made as a purchase
price adjustment, and shall prepare all Tax Returns consistent with that
position. The amount of any Loss for which indemnification is provided pursuant
to this Section 6B shall take into account any reductions in or refunds of Taxes
realized by the Purchaser or the Companies with respect to subsequent taxable
years as a result of the incurrence of such Losses ("Tax Benefits"). At the
option of the Purchaser, such Tax Benefits shall be taken
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into account either (i) by reducing the amount of the required indemnification
by the present value of the future Tax Benefits or (ii) through a reimbursement
of such Tax Benefits to the Sellers as and when such Tax Benefits are actually
realized. In the event that any taxing authority successfully asserts that the
receipt by the Purchaser of an indemnification payment is taxable income, the
Sellers agree to indemnify the Purchasers for the Tax cost of that
indemnification payment.
(iv) General Indemnification Procedures. Any Person making a
claim for indemnification under this Section 6B (an "Indemnitee") shall notify
the indemnifying party (an "Indemnitor") of the claim in writing promptly after
receiving written notice of any action, lawsuit, proceeding, investigation or
other claim against it (if by a third party), describing the claim, the amount
thereof (if known and quantifiable) and the basis thereof; provided that the
failure to so notify an Indemnitor shall not relieve the Indemnitor of its
obligations hereunder unless the Indemnitor shall be actually prejudiced by such
failure to so notify. In addition, to the extent an Indemnitee shall seek
payment from the Escrow Account, such Indemnitee shall also give notice of the
relevant claim to the Escrow Agent.
(v) Defense of Third Party Claims. Any Indemnitor shall be
entitled to participate in the defense of such action, lawsuit, proceeding,
investigation or other claim giving rise to an Indemnitee's claim for
indemnification at such Indemnitor's expense, and at its option (subject to the
limitations set forth below) shall be entitled to assume the defense thereof by
appointing a reputable counsel reasonably acceptable to the Indemnitee to be the
lead counsel in connection with such defense; provided that prior to the
Indemnitor assuming control of such defense it shall first demonstrate to the
Indemnitee in writing such Indemnitor's financial ability to provide full
indemnification to the Indemnitee with respect to such action, lawsuit,
proceeding, investigation or other claim giving rise to such claim for
indemnification hereunder; and, provided further, that:
(a) the Indemnitee shall be entitled to participate in the
defense of such claim and to employ counsel of its choice for such
purpose; provided that the fees and expenses of such separate counsel
shall be borne by the Indemnitee (other than any fees and expenses of such
separate counsel that are incurred prior to the date the Indemnitor
effectively assumes control of such defense which, notwithstanding the
foregoing, shall be borne by the Indemnitor if Indemnitee is otherwise
entitled to indemnity pursuant to this Section 6B);
(b) the Indemnitor shall not be entitled to assume control of
such defense and shall pay the fees and expenses of counsel retained by
the Indemnitee if (1) the claim for indemnification relates to or arises
in connection with any criminal proceeding, action, indictment, allegation
or investigation (provided that in such event (x) the Indemnitee shall not
enter into any settlement of a claim without the prior written consent of
the Indemnitor (which shall not be unreasonably withheld), (y) the
Indemnitor shall be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose (provided that the
fees and expenses of such separate counsel shall be borne by the
Indemnitor), and (z) the Indemnitor shall be entitled to review the files
and record relating to such defense upon request of the Indemnitor); (2)
the claim seeks an injunction or equitable relief against the Indemnitee;
(3) a conflict of interest exists between the
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Indemnitor and the Indemnitee; or (4) the Indemnitor failed or is failing
to vigorously prosecute or defend such claim; and
(c) if the Indemnitor shall control the defense of any such
claim, the Indemnitor shall obtain the prior written consent of the
Indemnitee before entering into any settlement of a claim or ceasing to
defend such claim if, pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief will be imposed against
the Indemnitee or if such settlement does not expressly and
unconditionally release the Indemnitee from all liabilities and
obligations with respect to such claim, without prejudice.
(vi) Defense of Tax Matters.
(a) The Purchaser shall promptly notify the Sellers in writing
upon receipt by the Purchaser or any Affiliate of the Purchaser (including the
Companies after the Closing Date) of written notice of any inquiries, claims,
assessments, audits or similar events with respect to Taxes relating to a
taxable period or portion thereof ending on or prior to the Closing Date for
which the Sellers may be liable under this Agreement (any such inquiry, claim,
assessment, audit or similar event, a "Tax Matter"). The Sellers, at their sole
expense, shall have the option of assuming the exclusive representation of the
interests of the Companies with respect to any Tax Matter before the Internal
Revenue Service, any other taxing authority, any other governmental agency or
authority or any court and, if such right is exercised, shall have the sole
right to extend or waive the statute of limitations with respect to a Tax Matter
and to control the defense, compromise or other resolution of any Tax Matter,
including responding to inquiries, filing Tax Returns and settling audits;
provided, however, that the Sellers shall not enter into any settlement of or
otherwise compromise any Tax Matter that adversely affects the Tax liability of
the Purchaser or the Companies for any period following the Closing Date,
including the portion of a period beginning before the Closing Date and ending
after the Closing Date (the "Overlap Period") that is after the Closing Date,
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld and provided further, that unless the Sellers agree in
writing to assume the defense of any Tax Matters within 20 days of receiving
notice thereof from the Purchaser, the Purchaser shall have the right (but not
the obligation) to defend such Tax Matters and to be indemnified by the Sellers
for the reasonable cost thereof. If Sellers shall assume the representation of
the interests of the Companies with respect to a Tax Matter, the Sellers shall
keep the Purchaser fully informed with respect to the commencement, status and
nature of such Tax Matter, and shall in good faith allow the Purchaser's
representatives to attend any proceedings relating to a Tax Matter and to make
comments to the Sellers regarding the conduct of or positions taken in any such
proceeding.
(b) Except as otherwise provided in Section 6 of this
Agreement, the Purchaser shall at its sole expense have the right to control any
audit or examination by any taxing authority, initiate any claim for refund or
amend any Tax Return, and contest, resolve and defend against any assessment for
additional Taxes, notice of Tax deficiency or other adjustment of Taxes of, or
relating to, the income, assets or operations of the Companies for all taxable
periods; provided, however, that the Purchaser shall not, and shall cause its
Affiliates (including the Companies) not to, enter into any settlement of any
contest or otherwise compromise any issue that may adversely affect the Tax
liability of the Sellers or the Companies for any period prior to the
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Closing Date (including the pre-Closing portion of the Overlap Period if a claim
for indemnification would arise (directly or indirectly) from such action
without the prior written consent of the Sellers, which consent shall not be
unreasonably withheld. If the Purchaser shall assume the representation of the
interests of the Companies with respect to a Tax Matter, the Purchaser shall
keep the Sellers fully informed with respect to the commencement, status and
nature of such Tax Matter, and shall in good faith allow the Sellers'
representatives to attend any proceedings relating to a Tax Matter and to make
comments to the Purchaser regarding the conduct of or positions taken in any
such proceeding.
(vii) Limitations on Indemnification. Notwithstanding anything
in this Agreement to the contrary, the indemnification rights granted pursuant
to this Section 6B shall be subject to the terms, conditions and limitations set
forth in the Indemnification Agreement.
(viii) Other Indemnification Provisions; Certain Waivers; etc.
With the exception of any claims of common law fraud which are proven and upon
which a judgment entered in the involved proceeding shall be expressly based,
the Parties agree that the provisions of this Section 6B shall be the exclusive
remedy for all claims of breach or indemnification pursuant to this Agreement
and the parties expressly waive the remedy of rescission of contract. Each
Seller hereby agrees not to make any claim for indemnification hereunder against
either of the Companies by reason of the fact that such Seller was a
shareholder, director, officer, employee or agent of either of the Companies or
was serving at the request of either of the Companies as a partner, trustee,
director, officer, employee or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses or otherwise) with respect to any action, suit, proceeding,
complaint, claim or demand brought by any of the Seller Indemnified Parties
against any Seller pursuant to this Agreement, and each Seller hereby
acknowledges and agrees that he, she or it shall have no claims or right to
contribution or indemnity from either of the Companies with respect to any
amounts paid by any Seller pursuant to this Section 6B.
Section 7. Conditions to Closing.
7A. Conditions of the Purchaser's Obligations at the Closing. The
obligation of the Purchaser to take the actions set forth in Section 1 hereof is
subject to satisfaction of the following conditions:
(i) Representations and Warranties; Covenants. The
representations and warranties contained in Sections 2 and 3 hereof shall be
true and correct in all material respects at and as of the Closing as though
then made and as though the Closing Date was substituted for the date of this
Agreement throughout such representations and warranties, and the Companies and
the Sellers shall have performed in all material respects all of the covenants
required to be performed by the Companies and the Sellers hereunder prior to the
Closing.
(ii) Opinion of the Sellers' Counsel. The Purchaser shall have
received the opinion of local counsel to the Sellers in the form of Exhibit C
hereto, together with a reliance letter with respect thereto addressed to the
Lender.
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(iii) Resignation of Directors. The Purchaser shall have
received the written resignations of all officers and members of the board of
directors of each of the Companies, each of which is set forth on Schedule
7A(iii) hereto, each such resignation to be effective as of the Closing;
(iv) Repayment of the ▇▇▇▇▇▇▇ Debt. The ▇▇▇▇▇▇▇ Debt shall
have been repaid in full and the Purchaser shall have received evidence of such
repayment.
(v) Existing Agreements. The Purchaser shall have received
evidence of termination and cancellation without recourse of any existing
agreements between either of the Companies and/or key executive officers on the
one hand and one or more of the Sellers, officers, directors or Affiliates of
either of the Companies on the other hand, regarding ownership or control of
either of the Companies or otherwise (other than any such agreements between or
among any of Auburn, Sport Socks UK and Sport Socks Ireland).
(vi) Litigation. No suit, action or other proceeding, or
injunction, order, decree or judgment relating thereto, shall be threatened or
shall be pending in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the transactions contemplated hereby
or that would reasonably be expected to have a Material Adverse Effect, and no
injunction, judgment, order, decree or ruling with respect thereto shall be in
effect.
(vii) Consents and Approvals. All applicable waiting periods
(and any extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired
or otherwise been terminated, and the Companies shall have made all filings and
shall have obtained all third party and governmental permits, authorizations,
consents and approvals required to be obtained by the Companies or the Sellers
to consummate the transactions contemplated by this Agreement including, but not
limited to, consents for those Material Contracts listed on Schedule 2D and
marked with an asterisk (*).
(viii) Material Adverse Change. Since the date hereof, there
shall have been no fact, event or circumstance which could have a Material
Adverse Effect.
(ix) Escrow Agreement. ▇▇▇▇▇▇▇ shall have executed and
delivered the Escrow Agreement to the Purchaser.
(x) Sport Socks Ireland Agreement. All of Purchaser's
conditions precedent to the consummation of the transactions contemplated by the
Sport Socks Ireland Agreement shall have been satisfied or waived.
(xi) Indemnification Agreement. The Sellers shall have
executed and delivered the Indemnification Agreement to the Purchaser.
(xii) Financing. The Purchaser shall have received, on terms
and conditions reasonably satisfactory to it, the cash proceeds of all of the
financing it needs in order to consummate the transactions contemplated hereby
and by the Sport Socks Ireland Agreement and fund the working capital
requirements of the Companies after the Closing.
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(xiii) Stockholder's Equity. The consolidated stockholders'
equity of the Company Group as of the last day of the month ended immediately
prior to the Closing Date calculated in accordance with GAAP (assuming
conversion into U.S. dollars of amounts denoted in a currency other than U.S.
dollars at the Prevailing Exchange Rate), shall not be less than $21,800,000.
(xiv) Real Property.
(a) A title insurance company licensed to do business in
Kentucky (the "Title Company") shall be willing to insure, at standard
rates, the Companies' marketable title in and to the Owned Property in fee
simple and Purchaser's lender's mortgage lien on the Owned Property free
and clear of all Liens, defects, claims, leases, rights of possession or
other encumbrances (other than items disclosed on Schedules 2Y(i) and (ii)
and Permitted Liens) including such endorsements and affirmative coverages
as Purchaser and the Lender shall reasonably require (including without
limitation non-imputation endorsements) ("Title Insurance"). Sellers and
the Companies shall provide all such affidavits and indemnities as the
Title Company reasonably shall require in order to afford such coverages.
(b) Purchaser shall have received a survey of each Owned
Property conforming to the Minimum Standard Detail Requirements jointly
established and approved in 1992 by ALTA and ACSM certified to the
applicable Company, the Purchaser, the Lender and the Title Company and
showing no defects, encroachments or encumbrances other than the items
disclosed in Schedule 2Y(i) or items that would not adversely affect the
value of the Owned Property or the marketability of title thereto
(collectively, "Surveys").
(c) All Real Property shall be in substantially the same
condition and repair as that on the date of this Agreement, reasonable
wear and tear excepted.
(d) Sellers shall have timely paid any and all real
property transfer, transfer gains, stamp and other similar taxes, if any,
assessed in connection with the transactions contemplated by this
Agreement, and shall have delivered evidence satisfactory to Purchaser and
the Title Company of the payment thereof.
(xv) Closing Documents. At Closing, the Companies and the
Sellers shall have delivered to the Purchaser the following documents:
(a) a certificate of ▇▇▇▇▇▇▇, dated as of the Closing
Date, stating that the conditions specified in clauses 7(A)(i) through
7(A)(viii) have been fully satisfied;
(b) all existing minute books, stock certificates, stock
transfer records, corporate seals and other materials relating to each
Company's respective corporate administration which are in the possession
of either Company, Seller or Affiliate thereof;
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(c) good standing certificates of Auburn from its
jurisdiction of incorporation and each jurisdiction where it is qualified
to do business, in each case, dated within 10 days prior to the Closing
Date; and
(d) such other documents relating to the transactions
contemplated by this Agreement as the Purchaser or its counsel may
reasonably request.
(e) evidence of termination of all powers of attorney,
grants of agency and other agreements listed on Schedule 2N(i)(n) hereto.
(xvi) Good Standing of Sport Socks UK. The Purchaser shall be
reasonably satisfied with the results of its search in the public register of
the United Kingdom with respect to the good standing of Sport Socks UK.
7B. Waiver. Any condition specified in Section 7A may be waived if
consented to in writing by the Purchaser.
7C. Conditions of the Sellers' Obligations at the Closing. The
obligation of the Sellers to take the actions set forth in Section 1 hereof is
subject to satisfaction of the following conditions:
(i) Representations and Warranties; Covenants. The
representations and warranties contained in Section 4 hereof shall be true and
correct in all material respects at and as of the Closing as though then made
and as though the Closing Date was substituted for the date of this Agreement
throughout such representations and warranties, and the Purchaser shall have
performed in all material respects all of the covenants required to be performed
by the Purchaser prior to the Closing.
(ii) Litigation. No suit, action or other proceeding, or
injunction, order, decree or judgment relating thereto, shall be threatened or
shall be pending in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with the transactions contemplated hereby
and no injunction, judgment, order, decree or ruling with respect thereto shall
be in effect.
(iii) Consents and Approvals. (a) All applicable waiting
periods (and any extensions thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have
expired or otherwise been terminated, and (b) the Purchaser shall have made all
filings and shall have obtained all third party and governmental permits,
authorizations, consents and approvals required to be obtained by the Purchaser
to consummate the transactions contemplated by this Agreement.
(iv) Escrow Agreement. The Purchaser shall have executed and
delivered the Escrow Agreement to the Sellers.
(v) Sport Socks Ireland Agreement. All of Sellers' conditions
precedent to the consummation of the transactions contemplated by the Sport
Socks Ireland Agreement shall have been satisfied or waived.
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(vi) Indemnification Agreement. The Purchaser shall have
executed and delivered the Indemnification Agreement.
(vii) Closing Documents. At the Closing, the Purchaser shall
have delivered the following documents to the Sellers:
(a) a certificate of an officer of the Purchaser, dated
the Closing Date, stating that the conditions specified in Section 7C(i)
through (iii) shall have been fully satisfied; and
(b) such other documents relating to the transactions
contemplated by this Agreement as the Sellers or Sellers' counsel may
reasonably request.
7D. Waiver. Any condition specified in Section 7C may be waived if
consented to in writing by ▇▇▇▇▇▇▇.
Section 8. Pre-Closing Covenants and Agreements. Each of the Parties
agrees as follows with respect to the period between the date of this Agreement
and the Closing:
8A. General. Each of the Parties shall use its commercially
reasonable best efforts to take all action and to do all things necessary,
proper or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
conditions set forth in Sections 7A and 7C and execution and delivery of the
agreements and instruments contemplated hereby to be executed and delivered at
the Closing).
8B. Third Party Notices and Consents. The Companies and the Sellers
shall use their respective commercially reasonable best efforts to (i) give
required notices to third parties, (ii) obtain any required consents (including
consents for those Material Contracts on Schedule 2D and marked with an asterisk
(*))and (iii) take any actions reasonably required by any third party, in each
case in connection with the matters contemplated by this Agreement.
8C. Operation of Business. Each of the Companies shall, and the
Sellers shall cause the Companies to, operate its business only in the usual and
ordinary course of business consistent with past custom and practice and in
accordance with all Laws and will exert its best efforts to preserve the
goodwill and organization of its business and the relationships with its
customers, suppliers, employees and other Persons having business relations with
the Companies. Without limiting the generality of the foregoing, prior to the
Closing, without the prior written consent of the Purchaser, each Seller
covenants that such Seller will cause the Companies to not, directly or
indirectly, except as expressly contemplated by this Agreement, take or omit to
take any action that would require disclosure under Section 2K or that would
otherwise result in a breach of any of the representations, warranties or
covenants made by the Companies or the Sellers in this Agreement.
8D. Full Access. Each Seller shall cause the Companies to afford,
and cause its officers, directors, employees, attorneys, accountants, advisors
and other agents to afford, to the Purchaser and its accounting, legal,
financing and other representatives, as well as their respective
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officers, employees, affiliates and other agents, upon request of the Purchaser,
full and complete access during reasonable business hours to all premises,
properties and personnel of the Companies and to all business, financial, legal,
tax, compensation and other data and information (including, but not limited to
all books, records (including tax records), contracts, customer lists and other
documents and records (including any working papers of the Companies'
personnel)) concerning the Companies and their affairs and operations; provided,
that such access shall not unreasonably interfere with the business operations
of the Companies. Furthermore, each Seller shall, and shall cause the Companies
to, cooperate with and facilitate interviews by the Purchaser or its
representatives with the Companies' employees and customers; provided, that the
Purchaser shall provide the Companies with prior notice before the Purchaser
conducts any interviews with customers or employees of the Companies.
8E. Notice of Material Developments. Each Party shall give prompt
written notice to the other Parties of (i) any variances in any of its
representations or warranties contained in this Agreement, (ii) any breach of
any covenant hereunder by such Party and (iii) any other material development
affecting the ability of such Party to consummate the transactions contemplated
by this Agreement.
8F. Exclusivity. Neither of the Companies, Sellers or any of their
respective representatives, officers, directors, agents, stockholders or
Affiliates shall directly or indirectly initiate, solicit, entertain, negotiate,
accept or discuss any proposal or offer to acquire all or any significant part
of the Companies, whether by merger, purchase of stock, purchase of assets,
tender offer or otherwise, or provide any nonpublic information to any third
party in connection with an Acquisition Proposal or a Third Party Acquisition,
or enter into any agreement, arrangement or understanding requiring the
Companies or the Sellers to abandon, terminate or fail to consummate the Sale.
8G. Tax Matters. Except as expressly contemplated by this Agreement,
the Sellers and the Companies agree to provide the Purchaser with prior written
notice before the Sellers and/or the Companies make or change any election,
change an annual accounting period, adopt or change any accounting method, file
any amended Tax Return, enter into any closing agreement, settle any Tax claim
or assessment relating to the Companies, surrender any right to claim a refund
of Taxes, consent to any extension or waiver of the limitation period applicable
to any Tax claim or assessment relating to the Companies, or take any other
similar action, or omit to take any action relating to the filing of any Tax
Return or the payment of any Tax, if such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action or omission could have
the effect of increasing the present or future Tax liability or decreasing any
present or future Tax asset of the Companies or the Purchaser.
8H. Intercompany Obligations/Affiliate Transactions. At the Closing,
the Companies shall eliminate, cancel and forgive, without recourse, all
obligations or liabilities owed to them by or from them to any Company Affiliate
other than (i) the ▇▇▇▇▇▇▇ Note Payable which shall be repaid by the Purchaser
to ▇▇▇▇▇▇▇ pursuant to the Irish Stock Purchase Agreement; (ii) the ▇▇▇▇▇▇▇
Debt, which shall be repaid by the holders thereof to Auburn pursuant to Section
1C(iii) hereof; (iii) any such obligations or liabilities between either of the
Companies and any of the
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38
Companies or Sport Socks Ireland; and (iv) other obligations or liabilities
incurred in the ordinary course of business consistent with past custom and
practice of the type described on Schedule 8H.
8I. Termination. This Agreement may be terminated at any time prior
to the Closing:
(i) by the written consent of the Parties;
(ii) by the Purchaser, if there has been a material violation
or breach by any Seller of any covenant, representation or warranty contained in
this Agreement which has prevented the satisfaction of any condition to the
obligations of the Purchaser to close the transactions contemplated by this
Agreement and such violation or breach has not been waived by the Purchaser or,
in the case of a covenant breach, cured by the Sellers within the earlier of ten
days after written notice thereof from the Purchaser and the Closing Date;
(iii) by the Sellers, if there has been a material violation
or breach by the Purchaser of any covenant, representation or warranty contained
in this Agreement which has prevented the satisfaction or any condition of the
obligation of the Sellers to close the transactions contemplated by this
Agreement and such violation or breach has not been waived by the Sellers or,
with respect to a covenant breach, cured by the Purchaser within the earlier of
10 days after written notice thereof by any Seller and the Closing Date;
(iv) by ▇▇▇▇▇▇▇ or the Purchaser if the transactions
contemplated hereby have not been consummated by December 31, 1997; provided,
however, that neither ▇▇▇▇▇▇▇ nor the Purchaser shall be entitled to terminate
this Agreement pursuant to this Section 8I(iv) if such Person's (or, in the case
of ▇▇▇▇▇▇▇, any Seller's) breach of this Agreement has prevented the
consummation of the transactions contemplated hereby; or
(v) by ▇▇▇▇▇▇▇ or the Purchaser in the event that the Sport
Socks Ireland Agreement is terminated in accordance with the terms thereof.
8J. Effect of Termination. In the event that this Agreement shall
have been terminated pursuant to Section 8I, all further obligations of the
Parties under this Agreement (other than pursuant to Section 9B and 11A, which
shall continue in full force and effect) shall terminate without further
liability or obligation of any Party; provided, however, that no Party shall be
released from liability hereunder if this Agreement is terminated and the
transactions abandoned by reason of (a) willful failure of such party to have
performed its obligations hereunder or (b) any knowing misrepresentation made by
such Party of any matter set forth herein.
8K. Certain Releases. The Purchaser and the Sellers shall take all
commercially reasonable actions necessary to obtain a complete release,
effective on or prior to the Closing Date, of ▇▇▇▇▇▇▇, JPM or any Affiliate of
▇▇▇▇▇▇▇ (other than a member of the Company Group) from any and all obligations
(A) to Matec S.R.L. or any of its Affiliates arising from those notes of Matec
S.R.L. listed as item 1 on Schedule 2D hereof or (B) with respect to those
automobile leases listed on Schedule 8K attached hereto (the "JPM Auto Leases").
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8L. Existing Liens. With respect to the liens described in items (b)
and (c) on Schedule 2Y(i) (collectively, the "Existing Liens"), the Companies
and the Sellers covenant and agree, at their own expense, to use their
reasonable best efforts prior to the Closing Date (such efforts not to include
the initiation of any proceeding or legal action) to pursue diligently and
obtain recordable evidence of the repayment and discharge of the Existing Liens
(including but not limited to releases and/or satisfactions with respect
thereto), such evidence to be sufficient for the Existing Liens to be removed
from all applicable public records. The Companies and the Sellers shall also
cause any such releases and satisfactions to be recorded of record in all
relevant local records.
Section 9. Post-Closing Covenants and Agreements. The Parties agree
as follows with respect to the period following the Closing.
9A. Certain Tax Matters.
(i) Each of the Companies shall prepare, or cause to be prepared,
and file, or cause to be filed, any Tax Returns of such Company for Tax periods
which end on or before the Closing Date and which have not been filed as of the
Closing Date. Each of the Companies shall prepare, or cause to be prepared, and
file, or cause to be filed, any Tax Returns of either of the Companies for Tax
periods which begin before the Closing Date and end after the Closing Date. Any
Tax Return filed by either of the Companies after the Closing Date that includes
a period prior to the day after the Closing Date shall be prepared on a basis
consistent with past practice and shall be forwarded to ▇▇▇▇▇▇▇ no less than 60
days prior to the due date for that Tax Return for ▇▇▇▇▇▇▇'▇ review. ▇▇▇▇▇▇▇
shall have 30 days from the date of receipt of such Tax Returns in which to
object to any portion of a Tax Return (if no such objection is received by the
Companies within 30 days of ▇▇▇▇▇▇▇'▇ receipt of the Tax Returns. ▇▇▇▇▇▇▇ shall
be deemed to have approved the Tax Returns). If ▇▇▇▇▇▇▇ objects to any portion
of a Tax Return forwarded to him, ▇▇▇▇▇▇▇ and the Companies shall negotiate in
good faith to achieve a mutually acceptable reporting position for the Tax
Return. If ▇▇▇▇▇▇▇ and the Companies are not able to reach agreement on a
reporting position by the date 15 days prior to the due date for the Tax Return,
▇▇▇▇▇▇▇ and the Companies shall present their respective positions to an
accounting firm of national reputation that has no ties to either ▇▇▇▇▇▇▇ or the
Companies, which shall decide between the two positions, consistent with past
practice. The decision of the accounting firm so chosen shall be binding on the
parties and the Tax Return shall be so filed.
(ii) With respect to any Tax periods ending after the Closing Date,
each of the Companies may make or change any election, file any amended Tax
Return, enter into any closing agreement, settle any Tax claim or assessment
relating to such Company, surrender any right to claim a refund of Taxes, or
take any other similar action, or omit to take any action relating to the filing
of any Tax Return or the payment of any Tax; provided that neither of the
Companies shall take such action without the prior written consent of ▇▇▇▇▇▇▇ if
such action would have the effect of increasing the present or future Tax
liability or decreasing any present or future Tax asset of the Companies or the
Sellers with respect to any Tax periods or portion thereof ending on or prior to
the Closing Date.
(iii) Cooperation on Tax Matters. The Parties shall cooperate fully,
as and to the extent reasonably requested by each Party and at the requesting
Party's expense, in connection with
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the preparation of the Tax Returns and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention and (upon
any Party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
(iv) Post-Closing Access to Business Records and Accounting
Cooperation. The Purchaser agrees that, following the Closing, the Sellers and
the Sellers' attorneys, accountants, officers and other representatives, shall
have reasonable access, during normal business hours, to the books and records
of the Companies to the extent they relate to a period prior to the Closing Date
(and shall permit such persons to examine and copy at such person's sole expense
such books and records to the extent requested by such party), and shall cause
the directors, officers and employees of the Companies to furnish all
information reasonably requested by the Sellers in connection with financial
reporting and Tax matters (including financial and Tax audits, preparation of
Tax Returns and Tax contests) and other similar business purposes. The Purchaser
shall not permit the Companies to destroy or dispose of any such books and
records without the prior written consent of the Sellers prior to the sixth
anniversary of the Closing Date. On and after the sixth anniversary of the
Closing Date, neither the Purchaser nor the Companies shall destroy or dispose
or allow the destruction or disposition of such books and records without first
having offered in writing to deliver such books and records to the Sellers at
the Sellers' sole expense. The Purchaser may permit the Companies to dispose of
the books and records described in such notice if the Sellers shall fail to
request copies of such books and records within 90 days after receipt of the
notice described in the preceding sentence.
9B. Press Release and Announcements. None of the Parties nor any of
their respective representatives shall make any public announcement with respect
to this Agreement or the transactions contemplated hereby without the prior
written consent of ▇▇▇▇▇▇▇ and the Purchaser. The foregoing notwithstanding, any
such public announcement may be made if required by applicable law or a
securities exchange rule, provided that the Party required to make such public
announcement shall confer with (i) ▇▇▇▇▇▇▇ if such Party is the Purchaser or
(ii) the Purchaser if such Party is any Seller concerning the timing and content
of such public announcement before the same is made. For the avoidance of doubt,
nothing contained in this Section 9B shall prevent the Purchaser from making any
disclosure with respect to this Agreement or the transactions contemplated
hereby without the written consent of ▇▇▇▇▇▇▇ in connection with (a) any filings
made by Purchaser on behalf of itself or either of the Companies with the SBA or
the SEC or (b) the financing by the Purchaser of the transactions contemplated
hereby.
9C. Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving either of the Companies, each of the other Parties
will cooperate with him, her or its and his, her or its counsel in the contest
or defense, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with the
contest
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or defense, all at the sole cost and expenses of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification
therefor under Section 6).
9D. Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier or other business associate of either of the Companies from
maintaining the same business relationships with the Companies after the Closing
as it maintained with the Companies prior to the Closing. Each of the Sellers
will refer all customer inquiries relating to the business of the Companies to
the Purchaser from and after the Closing.
9E. General. (i) In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 6. The
Sellers acknowledge and agree that from and after the Closing the Purchaser,
subject to the provisions of Section 9A, will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to the Companies.
(ii) For one year after the Closing Date, the Sellers agree to
provide to Purchaser and cause Sellers' accountants to provide to Purchaser (a)
any and all financial information related to any member of the Company Group or
JPM which is reasonably requested by Purchaser in connection with a filing by
Buyer for registration of securities with the Securities and Exchange Commission
(an "SEC Filing") and (b) any financial information of Sellers related to the
Auburn Business which is required to be furnished by Purchaser under Regulation
S-X of the Securities Act of 1933, as amended, in connection with an SEC Filing.
After such one-year period, Sellers agree to provide any such information, as is
reasonably practicable. Purchaser agrees (1) to reimburse Sellers, forthwith
upon presentation of invoices in reasonable detail to identify the nature and
amount of the expenditure, for any and all reasonable out-of-pocket costs and
out-of-pocket expenses incurred by Sellers in connection with providing such
information, (2) not to bring any claim against any member of the Company Group
or JPM with respect to the accuracy or completeness of any such information
delivered for such purpose and (3) not to disclose the source of such
information to any third party without the prior consent of ▇▇▇▇▇▇▇, except as
required by law or court order or unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of Purchaser's acts or omissions to act.
Section 10. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Acquisition Proposal" has the meaning set forth in Section 2BB.
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"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Affiliated Group" means any affiliated group as defined in Code
ss.1504 that has filed a consolidated return for federal income tax purposes (or
any similar group under state, local or foreign law) for a period during which
any of the Companies was a member.
"Agreement" has the meaning set forth in the recitals.
"Ancillary Companies" has the meaning set forth in the recitals.
"Ancillary Company Transfers" has the meaning set forth in the
recitals.
"Auburn" has the meaning set forth in the recitals.
"Auburn Business" has the meaning set forth in the recitals.
"Auburn Shares" has the meaning set forth in the recitals.
"Board" means the board of directors of Auburn.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
"Closing" has the meaning set forth in Section 1C.
"Closing Date" has the meaning set forth in Section 1C.
"COBRA" has the meaning set forth in Section 2T(ii)(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" has the meaning set forth in the recitals.
"Company Affiliates" means any member of the Company Group and any
other affiliates of any member of the Company Group or ▇▇▇▇▇▇▇.
"Company Group" means collectively, Auburn, Sport Socks UK, and
Sport Socks Ireland.
"Company Intellectual Property" means all of the Intellectual
Property rights owned or used by either of the Companies.
"Confidential Information" has the meaning set forth in Section 5A.
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"Controlled Group of Corporations" has the meaning set forth in Code
ss.1563.
"Employee Benefit Plan" means any oral or written benefit plan,
program, agreement or arrangement for the benefit of current or former employees
or their respective dependents or beneficiaries, including, without limitation,
any bonus, deferred compensation, incentive compensation, severance, share
purchase, stock option, stock appreciation, phantom stock, savings, profit
sharing, health or other medical, life, disability, travel, accident or other
welfare benefit plan or other insurance, supplementary unemployment, pension,
retirement or other supplementary retirement program, agreement or arrangement.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Encumbrances" has the meaning set forth in Section 3C.
"Environmental and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, Release,
threatened Release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Account" has the meaning set forth in Section 1C(ii).
"Escrow Agent" has the meaning set forth in Section 1C(ii).
"Escrow Agreement" has the meaning set forth in Section 1C(ii).
"Existing Liens" has the meaning set forth in Section 8L.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"GAAP" means United States generally accepted accounting principles
consistently applied, as in effect from time to time.
"Government Entity" means individually, and "Government Entities"
means collectively, the United States of America or any other nation, including,
for the avoidance of doubt, the United Kingdom, any state or other political
subdivision thereof, or any entity exercising
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44
executive, legislative, judicial, regulatory or administrative functions of
government, including any court, in each case having jurisdiction over either
Company or any of their assets.
"Guarantee" means any guarantee of the payment or performance of any
Indebtedness or other obligation and any other arrangement whereby credit is
extended to one obligor on the basis of any promise of such Person, whether that
promise is expressed in terms of an obligation to pay the Indebtedness of such
obligor, to provide reimbursement, or to purchase an obligation owed by such
obligor, or to purchase goods and services from such obligor pursuant to a
take-or-pay contract, or to maintain the capital, working capital, solvency or
general financial condition of such obligor, whether or not any such arrangement
is listed in the balance sheet of such Person, or referred to in a footnote
thereto, but shall not include endorsements of items for collection in the
ordinary course of business.
"Indebtedness" means at a particular time, without duplication, (i)
any obligations under any indebtedness for borrowed money, (ii) any indebtedness
evidenced by any note, bond, debenture or other debt security, (iii) any
commitment by which a Person assures a creditor against loss (including
contingent reimbursement obligations with respect to letters of credit), (iv)
any indebtedness pursuant to a Guarantee, (v) any obligations under capitalized
leases or with respect to which a Person is liable, contingently or otherwise,
as obligor, guarantor or otherwise, or with respect to which obligations a
Person assures a creditor against loss, and (vi) any indebtedness secured by a
Lien on a Person's assets, including, without limitation, in each case, all
principal, interest premiums, penalties, fees, expenses and brokerage costs. Any
Indebtedness denoted in a currency other than U.S. dollars shall be converted
into U.S. dollars for purposes of calculating Indebtedness, assuming conversion
at the Prevailing Exchange Rate.
"Indemnification Agreement" shall mean the Indemnification Agreement
dated as of the date hereof among the Purchaser and each of the Sellers.
"Indemnitee" has the meaning set forth in Section 6B(iv).
"Indemnitor" has the meaning set forth in Section 6B(iv).
"Intellectual Property" means all (i) patents, patent applications,
patent disclosures and inventions, as well as any reissues, continuations,
continuations-in-part, divisions, revisions, extensions or reexaminations
thereof, (ii) trademarks, service marks, trade dress, trade names, logos,
slogans, corporate names and Internet domain names, and registrations and
applications for registration thereof, together with all of the goodwill
associated therewith, (iii) copyrights and copyrightable works, and
registrations and applications for registration thereof, (iv) computer software,
data, data bases and documentation, and (v) trade secrets and other confidential
information (including, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial, business, and marketing plans and customer and supplier lists
and information).
"Interim Balance Sheet" has the meaning set forth in Section
2E(i)(b).
- 39 -
45
"Investment" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Irish Shares" has the meaning set forth in the recitals.
"JPM" has the meaning set forth in Section 2S.
"JPM Auto Leases" has the meaning set forth in Section 8K.
"JPM Benefit Plan" has the meaning set forth in Section 6B(i)(e).
"JPM Employees" has the meaning set forth in Section 2S.
"Knowledge" means actual knowledge after reasonable investigation.
"Laws" means all statutes, laws, codes, ordinances, regulations,
rules, orders, judgments, writs, injunctions, acts or decrees of any Government
Entity.
"Lease" has the meaning set forth in Section 2Y(ii).
"Leased Property" has the meaning set forth in Section 2Y(ii).
"Lender" means NationsBank, N.A.
"Liabilities" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Lien" or "Liens" means any mortgage, pledge, security interest,
encumbrance, encroachment, lien or other defect in title or charge of any kind
(including any conditional sale or other title retention agreement or lease in
the nature thereof), any sale of receivables with recourse against either of the
Companies, any filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code or any similar statute (other than to reflect
ownership by a third party of property leased to either of the Companies under a
lease which is not in the nature of a conditional sale or title retention
agreement), or any subordination arrangement in favor of another Person.
"Losses" has the meaning set forth in Section 6B(i).
"▇▇▇▇▇▇▇" has the meaning set forth in the recitals.
"▇▇▇▇▇▇▇ Debt" has the meaning set forth in Section 1C(iii).
"▇▇▇▇▇▇▇ Note Payable" has the meaning given to such term in the
Irish Stock Purchase Agreement.
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46
"▇▇▇▇▇▇▇ Parties" has the meaning set forth in Section 2F.
"▇▇▇▇▇▇▇ UK Share" has the meaning set forth in the recitals.
"Material Adverse Effect" means a material and adverse effect upon
the business, operations, assets, liabilities, financial condition, operating
results, prospects, cash flow, net worth or employee, customer or supplier
relations of the Companies taken as a whole.
"Material Contracts" has the meaning set forth in Section 2N(ii).
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Overlap Period" has the meaning set forth in Section 6B(vi).
"1996 Balance Sheet" has the meaning set forth in Section 2E.
"Noncompete Period" has the meaning set forth in Section 5C.
"Owned Property" has the meaning set forth in Section 2Y(ii).
"Party" has the meaning set forth in the recitals.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (i) Liens for Taxes or assessments and
similar charges, which either are (a) not delinquent or (b) being contested in
good faith and by appropriate proceedings, and adequate reserves (as determined
in accordance with GAAP, consistently applied) have been established on either
of the Companies' books with respect thereto, (ii) mechanics', materialmen's or
contractors' Liens or encumbrances or any similar statutory Lien or restriction
for amounts not yet due and payable and for which the Title Company has
affirmatively insured against collection, (iii) zoning, entitlement, building
and other land use regulations imposed by governmental agencies having
jurisdiction over the Real Property which are not violated by the current use
and operation of the Real Property, and (iv) covenants, conditions,
restrictions, easements and other similar matters of record affecting title to
the Real Property which do not materially impair the occupancy or use of the
Real Property for the purposes for which it is currently used in connection with
either of the Companies' businesses.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Prevailing Exchange Rate" means (a) in the case of any amount
denoted in Irish pounds, an exchange rate of U.S.$1.40 to one Irish pound, and
(b) in the case of any amount denoted in a currency other than U.S. dollars or
Irish pounds, an amount to be agreed upon by the parties hereto at the date of
such determination.
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47
"Prohibited Transactions" has the meaning set forth in ERISA ss.406
and Code ss.4975.
"Purchase Price" has the meaning set forth in Section 1B(i).
"Purchaser" has the meaning set forth in the recitals.
"Purchaser Transaction Costs" has the meaning set forth in Section
11A.
"Real Property" has the meaning set forth in Section 2Y(ii).
"Release" shall have the meaning set forth in CERCLA.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Sale" has the meaning set forth in Section 1D.
"SBA" means the United States Small Business Administration and any
successor agency performing the functions thereof.
"SEC" means the Securities and Exchange Commission and any successor
agency performing the functions thereof.
"SEC Filing" has the meaning set forth in Section 9E(ii).
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"Seller Expenses" has the meaning set forth in Section 2BB.
"Seller Transaction Costs" has the meaning set forth in Section 11A.
"Sellers" has the meaning set forth in the recitals.
"Shares" has the meaning set forth in the recitals.
"Sport Socks Ireland" has the meaning set forth in the recitals.
"Sport Socks Ireland Agreement" has the meaning set forth in the
recitals.
"Sport Socks UK" has the meaning set forth in the recitals.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that
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48
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control any
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Surveys" have the meaning set forth in Section 7A(xv).
"Tax" or "Taxes" means federal, state, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including
deficiencies, penalties, additions to tax, and interest attributable thereto)
whether disputed or not.
"Tax Benefits" has the meaning set forth in Section 6B(iii).
"Tax Matter" has the meaning set forth in Section 6B(vi).
"Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including any
amendment thereof.
"Third Party Acquisition" has the meaning set forth in Section 2BB.
"Title Company" has the meaning set forth in Section 7A(xvi).
"Title Insurance" has the meaning set forth in Section 7A(xv).
"Treasury Regulation" means the United States Treasury Regulations
promulgated under the Code, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
"Work Product" has the meaning set forth in Section 5B.
Section 11. Miscellaneous.
11A. Fees and Expenses. Subject to the immediately following
sentence and Section 8J hereof, the Purchaser will be responsible for all costs
and expenses incurred by the Purchaser in connection with the negotiation,
preparation and entry into this Agreement and the consummation of the
transactions contemplated hereby ("Purchaser Transaction Costs"), and the
Sellers (and not the Companies) will pay all costs and expenses incurred by the
Sellers or either of
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49
the Companies in connection with the negotiation, preparation and entry into
this Agreement and the consummation of the transactions contemplated hereby (the
"Seller Transaction Costs"). The Parties hereby covenant and agree that the
Purchaser shall bear the cost of Title Insurance and Surveys incurred pursuant
to Section 7A(xiv) hereof.
11B. Remedies. The Parties agree and acknowledge that money damages
may not be an adequate remedy for any breach of the provisions of this
Agreement. Except as expressly provided in this Agreement, and except as such
enforceability may be limited by (x) applicable solvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (y) applicable equitable principles (whether considered in a
proceeding at law or in equity), any Party may, in its sole discretion, ask for
specific performance (without posting a bond or other security) and/or
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement. All such rights and remedies shall be cumulative
and non-exclusive, and may be exercised singularly or concurrently. One or more
successive actions may be brought against the Sellers, either in the same action
or in separate actions, as often as the Purchaser deems advisable, until all of
the obligations to the Purchaser are paid and performed in full.
11C. Consent to Amendments; Waivers. This Agreement may be amended,
or any provision of this Agreement may be waived upon the approval, in a
writing, executed by all of the Parties. No course of dealing between or among
the Parties shall be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any such Party or such holder
under or by reason of this Agreement.
11D. Successors and Assigns. This Agreement and all covenants and
agreements contained herein and rights, interests or obligations hereunder, by
or on behalf of any of the Parties hereto, shall bind and inure to the benefit
of the respective successors and permitted assigns of the Parties hereto whether
so expressed or not, except that neither this Agreement nor any of the covenants
and agreements herein or rights, interests or obligations hereunder may be
assigned by the Purchaser without the prior written consent of ▇▇▇▇▇▇▇ or by any
Seller without the prior written consent of Purchaser; provided, however, that
the Purchaser may assign this Agreement and its rights and obligations hereunder
(i) to any of its Affiliates or (ii) following the Closing, in connection with
any sale of all or substantially all of the assets, capital stock or business of
Purchaser or either of the Companies, provided, however, that the Purchaser
shall not be released from any of its obligations hereunder.
11E. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held to be prohibited by,
illegal or unenforceable under applicable law or rule in any respect by a court
of competent jurisdiction, such provision shall be ineffective only to the
extent of such prohibition, illegality or unenforceability, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.
11F. Counterparts. This Agreement may be executed in counterparts
(including by means of telecopied signature pages), any one of which need not
contain the signatures of more than one Party, but all such counterparts taken
together shall constitute one and the same agreement.
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50
11G. Descriptive Headings; Interpretation. The headings and captions
used in this Agreement and the table of contents to this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized terms used in any Schedule or
Exhibit attached hereto and not otherwise defined therein shall have the
meanings set forth in this Agreement. The use of the word "including" herein
shall mean "including without limitation".
11H. Entire Agreement. This Agreement and the agreements and
documents referred to herein contain the entire agreement and understanding
among the Parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, whether written or oral, relating to such
subject matter in any way.
11I. No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the Parties and their successors and permitted assigns and nothing
herein expressed or implied shall give or be construed to give any Person, other
than the Parties and such successors and permitted assigns, any legal or
equitable rights hereunder.
11J. Schedules and Exhibits. All Schedules and Exhibits attached
hereto or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein.
11K. GOVERNING LAW; WAIVER OF JURY TRIAL.
(i) ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES AND EXHIBITS
HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
RULES OR PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT (AND ALL SCHEDULES AND EXHIBITS HERETO), EVEN THOUGH UNDER THAT
JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF
SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(ii) THE PARTIES HERETO AGREE AND ACKNOWLEDGE THAT THE SELECTION OF
NEW YORK LAW PURSUANT TO THIS SECTION 11K IS A MATERIAL INDUCEMENT TO THE
PURCHASER TO ENTER INTO THIS AGREEMENT AND CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY.
(iii) IF APPLICABLE TO ANY DISPUTE ARISING HEREUNDER, EACH PARTY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
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51
BY LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE ARISING
OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP AMONG
THEM ESTABLISHED BY THIS AGREEMENT OR ANY OTHER DOCUMENT, AGREEMENT OR
INSTRUMENT ENTERED INTO IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11L. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient or when sent by facsimile followed by delivery by reputable
overnight courier service, one day after being sent to the recipient by
reputable overnight courier service (charges prepaid) or five days after being
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
shall be sent to the Purchaser and the Sellers at the addresses indicated below
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. All
notices, demands and other communications hereunder may be given by any other
means (including telecopy or electronic mail), but shall not be deemed to have
been duly given unless and until it is actually received by the intended
recipient.
The Sellers:
c/o ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
(the delivery of which shall not constitute
the delivery of a notice to any Seller)
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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52
To the Purchaser :
GCIH, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ Solar
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Gerber Childrenswear, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and a copy to:
(the delivery of which shall not constitute
the delivery of a notice to the Purchaser)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: 212-446-4900
11M. Jurisdiction and Venue. SUBJECT TO SECTION 11K, ALL JUDICIAL
PROCEEDINGS BROUGHT BY OR AGAINST EITHER OF THE COMPANIES, THE PURCHASER OR THE
SELLERS WITH RESPECT TO THIS AGREEMENT, ANY OTHER AGREEMENT CONTEMPLATED HEREBY
OR ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY SHALL BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE CITY OF NEW YORK IN THE STATE
OF NEW YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH OF THE PURCHASER
AND THE SELLERS ACCEPTS FOR ITSELF, HIMSELF OR HERSELF AND IN CONNECTION WITH
ITS, HIS OR HER RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE
PURCHASER AND THE SELLERS HEREBY WAIVE ANY CLAIM THAT SUCH JURISDICTION IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. THE PURCHASER
AND THE SELLERS DESIGNATE AND APPOINT CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY
SUCH PERSON WITH THE CONSENT OF THE PURCHASER) TO RECEIVE ON ITS BEHALF SERVICE
OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED BY THE PURCHASER AND THE SELLERS TO BE EFFECTIVE AND
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53
BINDING SERVICE IN EVERY RESPECT. A COPY OF SUCH PROCESS SO SERVED SHALL BE
MAILED BY REGISTERED MAIL TO THE PURCHASER OR THE SELLERS AT SUCH PERSON'S
RESPECTIVE ADDRESSES PROVIDED HEREIN. TO THE EXTENT PERMITTED BY LAW, IF ANY
AGENT APPOINTED BY THE PURCHASER OR THE SELLERS REFUSES TO ACCEPT SERVICE, SUCH
PERSON HEREBY AGREES THAT SERVICE UPON SUCH PERSON BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE.
11N. No Strict Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
* * * * *
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54
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on the date first written above.
GCIH, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman and CEO
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
THE ▇▇▇▇▇ ▇▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
THE ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
THE ▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
CHARITABLE REMAINDER TRUST
THE ▇▇▇▇ ▇▇▇▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
THE ▇▇▇▇ ▇▇▇▇▇▇▇ CHARITABLE
REMAINDER TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, as co-trustee and not
individually
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇▇, as co-trustee and not individually
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