1
EXHIBIT 10.33
ASSET SALE AGREEMENT
BY AND BETWEEN
SPARTAN ▇▇▇▇▇
AND
SYNTHETIC INDUSTRIES, INC.
FEBRUARY, 1997
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. References to Exhibits, Schedules and Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
SALE, LEASE AND LICENSE OF ASSETS; TERMS OF PAYMENT;
ASSUMPTION OF LIABILITIES
II.1. The Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II.2. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II.3. Post Closing Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II.4. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II.5. Allocation of Purchase Price after the Post Closing
Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
II.6. Assumption of Certain Liabilities and Exclusion of
Certain Liabilities of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
II.7. New Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
THE CLOSING
III.1. Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
III.2. Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
III.3. Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
III.4. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
IV.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IV.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IV.3. Consent and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
IV.4. Title to Personal Property; Assigned Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
IV.5. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
IV.6. Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
IV.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
IV.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
IV.9. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
IV.10. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IV.11. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IV.12. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IV.13. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
i
3
Page
----
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
V.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
V.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
V.3. Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
V.4. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
V.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
V.6. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI
CLOSING CONDITIONS
VI.1. Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
VI.2. Conditions to the Obligations of Seller to Effect the
Transactions Contemplated Hereby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
VI.3. Conditions to the Obligations of Buyer to Effect the
Transactions Contemplated Hereby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
POST CLOSING MATTERS
VII.1. Employment of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
VII.2. Seller's Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
VII.3. Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VII.4. Continuance of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VII.5. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
VIII.1. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VIII.2. Seller's Agreement to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VIII.3. Limitation of Seller's Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
VIII.4. Seller's Payment of Its Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VIII.5. Buyer's Agreement to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VIII.6. Limitation of Buyer's Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
VIII.7. Buyer's Payment of Its Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IX
TERMINATION
IX.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
IX.2. Procedure and Effect of Termination or Failure to Close . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ii
4
Page
----
ARTICLE X
MISCELLANEOUS PROVISIONS
X.1. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
X.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
X.3. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
X.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
X.5. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
X.6. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
X.7. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
X.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
X.9. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
X.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
X.11. Bulk Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
X.12. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
iii
5
EXHIBITS
Exhibit A ▇▇▇▇ of Sale and Assignment and Assumption Agreement Form
Exhibit B Form of Lease Agreement
Exhibit C Valuation of New Accounts Receivable and Inventory
Exhibit D Allocation of Purchase Price after the Post Closing Adjustment
Exhibit E Form of Opinion of Seller's Counsel
Exhibit F Form of Opinion of Buyer's Counsel
Exhibit G June Balance Sheet
SCHEDULES
1.1(a) Assumed Liabilities
1.1(b) Excluded Assets
1.1(c) Purchased Assets; Tangible Assets; Title; Assigned
Contracts; Title to Personal Property; Assigned
Contracts
Schedule 1.3 June Balance Sheet Inconsistencies
Schedule 2.2 Purchase Price Determination
Schedule 4.1.1 Organization and Qualification
Schedule 4.1.2 Organization and Qualification
Schedule 4.3 Consent and Approvals; Violations
Schedule 4.4 Title to Personal Property; Assigned Contracts
Schedule 4.6.1 Equipment
Schedule 4.6.2 Equipment
Schedule 4.7 Litigation
Schedule 4.8 Taxes
Schedule 4.9 Intellectual Property
Schedule 4.11 Labor Matters
Schedule 4.13 Contracts
Schedule 7.1.1 Employment of Employees
Schedule 7.1.2 Employment of Employees: Different Terms
iv
6
ASSET SALE AGREEMENT
THIS AGREEMENT is made and entered as of the 27th day of February, 1997,
and is by and between SPARTAN ▇▇▇▇▇, a South Carolina corporation ("Seller"),
and SYNTHETIC INDUSTRIES, INC., a Delaware corporation ("Buyer").
BACKGROUND STATEMENT
Seller is engaged in the business of manufacturing and selling non-woven
fabric through its Spartan Technologies division operated from a facility
located at ▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Business"). Buyer
desires to buy, and Seller desires to sell, certain of the assets, as described
herein, that are used in the Business, on the terms and conditions set forth
herein.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual covenants herein
contained, the adequacy and sufficiency of which are hereby acknowledged, the
parties hereto, for themselves, their successors and assigns, agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINED TERMS. The following terms shall have the following
meanings:
"Assumed Liabilities" shall mean (i) Seller's liabilities under the
Contracts arising from and after the Effective Time and related to the
performance required under the Contracts from and after the Effective Time;
(ii) the liabilities shown on SCHEDULE 1.1(a); and (iii) except as specifically
set forth in SECTION 2.4 and ARTICLE VII, all liabilities and obligations
arising from the normal operation of the Business from and of the Effective
Time until the Closing and after the Closing all liabilities and obligations of
the Business, specifically including but not limited to:
(a) Any liability of Seller with respect to any claim or cause of
action, regardless of when made or asserted, which arises (i) on or after the
Effective Time as a result of the operation of the Business; (ii) with respect
to any product purchased manufactured or sold or any service provided in the
Business on or after the Effective Time, including without limitation, any
liability or obligation (A) pursuant to any express or implied representation,
warranty, agreement, or guarantee or (B) imposed or asserted to be imposed by
operation of law, in connection with any service performed or product designed,
manufactured, sold, or leased in the operation of the Business on or after the
Effective Time, including without limitation, any claim related to any product
delivered in connection with the performance of such service and any claims
seeking to recover for consequential damage, lost revenue, or income, including
pursuant to any doctrine of product liability, or (iii) out of or in connection
with the Business and operations of Buyer on or
7
after the Effective Time under any federal, state, or local law, rule, or
regulation relating to (A) environmental protection or clean-up, (B) taxation,
or (C) employment or termination of employment;
(b) Any liability or obligation for federal, state, county, local,
foreign and other taxes, assessments, charges, fees, and impositions, including
interest and penalties thereon or with respect thereto, whether disputed or
not, arising on or after the Effective Time and either (i) related to the
Purchased Assets or (ii) arising out of or resulting from operation of the
Business;
(c) All wages, bonus, fringe benefit, commissions, vacation, holiday,
workers' compensation, sick pay obligations, FICA and all other employment
taxes and charges with respect to the Employees (as defined in SECTION 7.1) the
basis for which arises on or after the Effective Time, all incurred but
unreported or unpaid medical claims and workers' compensation claims with
respect to the Employees occurring on or after the Effective Time, and for the
cost associated with any hospital confinement with respect to the Employees
which commences on or after the Effective Time; and
(d) Any accounts payable arising on or after the Effective Time in
the operation of the Business.
"▇▇▇▇ of Sale and Assignment and Assumption Agreement" shall mean the
▇▇▇▇ of sale and assignment and assumption agreement of the form attached
hereto as EXHIBIT A pursuant to which Seller shall assign to Buyer and Buyer
shall assume the Assumed Liabilities and a ▇▇▇▇ of sale pursuant to which
Seller will transfer title and assign to Buyer to the Purchased Assets.
"Business" shall have the meaning given to it in the Background
Statement.
"Business Day" shall mean any day other than a Saturday or Sunday, a
United States of America or South Carolina legal holiday, or a day on which
commercial banks in Spartanburg, South Carolina are required by law to be
closed.
"Buyer" shall mean Synthetic Industries, Inc., a Delaware corporation.
"Buyer's Damages" shall have the meaning given to it in SECTION 8.2.
"Cash" shall mean cash, any cash equivalent, or any other kind of same-
day available funds.
"Closing" shall have the meaning given to it in SECTION 3.1.
"Closing Date" shall mean the date referred to in SECTION 3.1.
"Effective Time" shall mean 5:00 p.m. eastern standard time on February
22, 1997.
2
8
"Excluded Assets" shall mean all of the assets not constituting the
Purchased Assets, specifically including, but not limited to, (i) any insurance
policies and claims receivable thereunder, or bonds, letters of credit or
similar items or any cash surrender value in regard thereto; (ii) any of
Seller's cash or cash equivalents other than cash or cash equivalents received
by Seller in payment for New Accounts Receivable after the Effective Time; (iii)
any claims or rights against third parties arising under the Contracts or
otherwise (other than express or implied warranties or other similar claims that
Seller may have with respect to the Purchased Assets) that Seller may have or
hereafter acquire arising out of any matters occurring prior to the Effective
Time (other than claims arising directly out of the New Accounts Receivable),
including without limitation claims for refunds of federal, state or local
franchise, income or other taxes; (iv) accounts receivable not generated in the
ordinary course of business; (v) accounts receivable which are 31 or more days
past due at the Effective Time; (vi) the assets of any employee benefit plan
maintained by or covering any employees of Seller or to which Seller has made
any contribution; (vii) the assets and properties of Seller that would otherwise
be included in the Purchased Assets but which have been disposed of since the
date of this Agreement, provided such disposition has been made in accordance
with the terms hereof; (viii) Seller's corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders, tax returns and records, books of account and ledgers, and such
other records having to do with Seller's organization or stock capitalization;
(ix) any rights which accrue or will accrue to Seller under this Agreement; (x)
any rights to any of Seller's insurance policies, premiums, or proceeds from
insurance coverages relating to the Purchased Assets for any period prior to the
Effective Time; (xi) any rights to any of Seller's claims for any federal state,
local, or foreign tax refund relating to any period ending prior to the Closing;
(xii) the real property, building, fixtures and improvements located at ▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("Real Property"); (xiii) motor vehicles and
rolling stock used on public highways; (xiv) the disputed accounts receivables
and accounts receivables credits described in SCHEDULE 1.1(b); and (xv) the
other properties and rights listed on SCHEDULE 1.1(b).
"Inventory" shall mean the raw materials, work-in-process, finished
goods inventories and other inventories, and supplies and spare parts used by
Seller exclusively in the Business.
"Inventory and New Accounts Receivable Report" shall have the meaning
given to it in SECTION 2.3(a).
"Inventory and New Accounts Receivable Value" shall have the meaning
given to it in SECTION 2.3(a).
"June Balance Sheet" shall mean the June 1997 balance sheet for the
Business delivered by Seller to Buyer prior to the date hereof and attached as
EXHIBIT G.
"Lease Agreement" shall mean a lease agreement of the form attached
hereto as EXHIBIT B pursuant to which Seller shall lease to Buyer Seller's
facility located at I Mill Road, Spartanburg, South Carolina.
3
9
"Net Amount" shall have the meaning given to it in SECTION 2.3(b).
"Person" shall mean a corporation, an association, a joint venture, an
organization, a business, an individual, a trust or a government or political
subdivision thereof, a government agency, or any other legal entity.
"Post-Closing Statement of Assets and Liabilities" shall have the
meaning given it in SECTION 2.3(b).
"Purchased Assets" shall mean the personal tangible and intangible
assets and properties of Seller, that are used exclusively in the Business
(specifically excepting the Excluded Assets), including all additions thereto
prior to the Effective Time, but less all dispositions of finished goods
inventory and scrap inventory in the ordinary course of business and other
assets consumed or disposed of in the ordinary course of business prior to the
Effective Time, including the following items used in the Business: (i) the
Inventory; (ii) the machinery, equipment, supplies, tools, parts, accessories,
computer and office equipment, furniture, telephone systems, and other tangible
assets owned by Seller and used exclusively in the Business, including without
limitation the tangible personal property listed in SCHEDULE 1.1(c); (iii) to
the extent permitted by applicable law, all of the contracts, agreements,
leases, license agreements, warranties, commitments, arrangements, credit
guaranties and purchase and sales orders, whether oral or written used
exclusively in the Business, pursuant to which Seller enjoys any right or
benefit, together with the rights of Seller arising on or after the Effective
Time to receive income in respect of such contracts, agreements, leases,
warranties, commitments, arrangements, and purchase and sales orders
(individually, a "Contract" and collectively, the "Contracts") as listed in
SCHEDULE 1.1(c); (iv) to the extent permitted by applicable law, Seller's
rights in and to the intellectual property used exclusively in connection with
the Business including, without limitation, Seller's rights in and to patents,
trademarks, trade names, service marks, inventions, formulations, computer
software trade secrets and copyrights used exclusively in the operation of the
Business, along with all registrations thereof and applications therefor
("Intellectual Property"); (v) Seller's rights under all licenses, permits,
certificates, and governmental authorizations related exclusively to the
Business, but only to the extent transfer of such licenses, permits,
certificates and governmental authorizations by Seller to Buyer pursuant to
this Agreement is permitted under applicable laws and regulations; (vi)
existing data, databases, books, records, correspondence, business plans and
projections, records of sales, customer and vendor lists, and, to the extent
transfer to Buyer by Seller pursuant to this Agreement is permitted under
applicable laws and regulations, copies of historical personnel, payroll, and
employee medical records of each of the Hired Employees (as defined in SECTION
7.1) in the possession of Seller, but in each case under this subsection (vi)
only to the extent that such books and records are related exclusively to the
Business, and provided further that Seller, as determined in its sole
direction, shall be entitled to keep copies of any and all such books and
records; (vil) accounts receivable of the Business generated during normal
course of business which are less than 31 days past due at the Effective Time
other than the accounts receivable and credits described in SCHEDULE 1.1(b)
(the "New Accounts Receivable"); (viii) Seller's rights in and to all samples
owned or held by Seller and used exclusively in the
4
10
Business, wherever located (the "Samples"); (ix) any and all express or implied
warranty claims that Seller may have with respect to any of the Purchased
Assets; (x) all cash and cash equivalents received after the Effective Time in
payment of New Accounts Receivable; and (xi) all accounts receivables
attributable to sales of the Inventory after the Effective Time.
"Purchase Price" shall have the meaning set forth in SECTION 2.2.
"Seller" shall mean Spartan ▇▇▇▇▇, a South Carolina corporation.
"Seller's Damages" shall have the meaning given to it in SECTION 8.5.
1.2. REFERENCES TO EXHIBITS. SCHEDULES, AND SECTIONS. References to
"Exhibits" and "Schedules" herein shall refer to those certain Exhibits and
Schedules, respectively, attached hereto. References to "Sections" herein shall
refer to the various sections of this Agreement.
1.3. ACCOUNTING TERMS. Any accounting terms used in this Agreement
that are not specifically defined herein shall have the meanings customarily
given to them in accordance with generally accepted accounting principals
("GAAP") consistent with past practices, and, in the case of the Post-Closing
Statement of Assets and Liabilities, materially consistent with the June
Balance Sheet except as set forth in SCHEDULE 1.3; provided, however, that in
the event that changes in GAAP shall be mandated by the Financial Accounting
Standards Board, or any similar accounting body of comparable standing, to the
extent that such changes would modify or could modify such accounting terms or
the interpretation or computation thereof, such changes shall not be followed
until and unless the parties hereto have agreed to amend this Agreement to
reflect any such change.
ARTICLE II
SALE, LEASE AND LICENSE OF ASSETS; TERMS OF PAYMENT;
ASSUMPTION OF LIABILITIES
II.1. THE SALE. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, Seller will sell and deliver to Buyer, and
Buyer will purchase and accept from Seller, the Purchased Assets.
II.2. PURCHASE PRICE. Upon the terms and subject to the conditions
contained in this Agreement and in consideration of the sale of the Purchased
Assets, Buyer will pay to Seller on the Closing Date, the sum of $9,354,563.00
(the "Purchase Price") in Cash which purchase price was calculated in
accordance with the principles set forth in SCHEDULE 2.2.
II.3. POST CLOSING ADJUSTMENT. (a) Buyer shall have the right to
conduct a New Accounts Receivable count and a physical count of the Inventory,
which count shall be observed, at Seller's discretion, by Seller and Seller's
accountants, and shall as promptly as practicable
5
11
thereafter, and in no event more than five (5) Business Days after the Closing
Date, prepare and deliver to Seller a schedule (the "Inventory and New Accounts
Receivable Report") setting forth the amount and value of the New Accounts
Receivable and the quantity and value of each particular type of Inventory as
of the Effective Time. The valuation of the Inventory and New Accounts
Receivable shall be determined in accordance with the principles set forth on
EXHIBIT C. Buyer shall deliver to Seller, simultaneously with delivery of the
Inventory and New Accounts Receivable Report, such work papers and other
supporting detail as Seller and Seller's accountants shall reasonably request.
The sum of the values of all Inventory and New Accounts Receivable reflected in
the Inventory and New Accounts Receivable Report, adjusted as provided in
paragraph (c) below, shall constitute the "Inventory and New Accounts
Receivable Value".
(b) Buyer shall have the right to prepare, or cause to be prepared,
an unaudited statement of assets and liabilities which shall set forth the
assets and liabilities of the Business as of the Effective Time (the "Post-
Closing Statement of Assets and Liabilities"), prepared on a basis materially
consistent with the June Balance Sheet except as set forth on SCHEDULE 1.3 and
reflecting the adjustments set forth in SCHEDULE 2.2, provided that the Post-
Closing Statement of Assets and Liabilities shall only reflect the Purchased
Assets and Assumed Liabilities, and the Post-Closing Statement of Assets and
Liabilities shall as promptly as practicable thereafter, and in no event more
than five (5) Business Days after the Closing Date, be delivered to Seller by
Buyer. Buyer shall deliver to Seller, simultaneously with delivery of the Post-
Closing Statement of Assets and Liabilities, such work papers and other
supporting detail as Seller and Seller's accountants shall reasonably request.
The (i) aggregate amount of all of the Purchased Assets, other than the
Inventory and New Accounts Receivable, shown on the Post-Closing Statement of
Assets and Liabilities, (ii) minus the amount of the Assumed Liabilities shown
on the Post-Closing Statement of Assets and Liabilities, (iii) plus the
Inventory and New Accounts Receivable Value; all adjusted as provided in
paragraphs (a), (b) and (c) below, shall be the "Net Amount." Buyer shall
deliver Buyer's determination of the Net Amount along with the Post-Closing
Statement of Assets and Liabilities.
(c) Following delivery of the Inventory and New Accounts Receivable
Report and Post-Closing Statement of Assets and Liabilities, Seller and
Seller's accountants shall have ten (10) Business Days in which to review and
examine the Inventory and New Accounts Receivable Report and Post-Closing
Statement of Assets and Liabilities. If Seller does not give Buyer notice of
any dispute with respect to the accuracy of the Inventory and New Accounts
Receivable Report, the Post-Closing Statement of Assets and Liabilities or the
determination of the Net Amount within such period, the Net Amount shall be the
amount as set forth in such Inventory and New Accounts Receivable Report and
Post-Closing Statement of Assets and Liabilities, as computed pursuant to
SECTION 2.3(b) above. If, following such review, Seller disputes the accuracy
of the Inventory and New Accounts Receivable Report or the Post-Closing
Statement of Assets and Liabilities or the determination of the Net Amount,
Buyer and Seller or each of their accountants, shall meet to reconcile any such
dispute. If such dispute has not been reconciled within ten (10) Business Days
following delivery of written notice of dispute from Seller to Buyer, Seller
and Buyer shall refer such dispute to an accountant or accounting firm on whom
Buyer's and Seller's
6
12
accountants shall mutually agree to resolve the dispute (the "Referee
Accountant"). Seller and Buyer shall furnish to the Referee Accountant copies
of the Inventory and New Accounts Receivable Report and Post-Closing Statement
of Assets and Liabilities and all such working papers and supporting detail as
the Referee Accountant shall reasonably request. Seller and Buyer each shall
use reasonable efforts to obtain a decision from the Referee Accountant, and
such decision of the Referee Accountant shall be final and binding upon all
parties, absent manifest error. Seller and Buyer each shall pay one-half of the
fees and expenses of the Referee Accountant.
(d) Immediately following the determination of the Net Amount
pursuant to SECTION 2.3, (i) if the Net Amount is greater than the Purchase
Price, Buyer shall make a payment to Seller in Cash in an amount equal to the
difference between the Net Amount and the Purchase Price plus interest on such
difference from the Closing Date until the date of payment at a rate of 8%, and
(ii) if the Net Amount is less than the Purchase Price, Seller shall make a
payment to Buyer in Cash in an amount equal to the difference between the Net
Amount and the Purchase Price to Seller plus interest on such difference from
the Closing Date until the date of payment at a rate of 8%.
II.4. PRORATIONS.
(a) Utility Charges, Personal Property Taxes, including, without
limitation, accruals or prepayments thereof (all as individually defined below
and collectively called the "Proration Items") shall be prorated directly
between Seller and Buyer as provided in this SECTION 2.4.
(b) For purposes of this SECTION 2.4, the capitalized terms set forth
below shall have the following meanings:
(i) "Utility Charges" shall mean water, sewer, electricity,
gas and other utility charges, if any, applicable to the Real Property; and
(ii) "Personal Property Taxes" shall mean ad valorem taxes
imposed upon the Purchased Assets.
(c) On or as soon as practicable after the Closing Date, all Utility
Charges and Personal Property Taxes (including amounts owed pursuant to
transferable state licenses applicable to the Purchased Assets and transferred
to Buyer hereunder) shall be apportioned as of the Effective Time, and
representatives of Seller and Buyer will examine all relevant books and records
as of the Effective Time in order to make the determination of the
apportionments. Payments in respect thereof shall be made to the appropriate
party by check within five (5) Business Days after Closing Date where
practicable, and where not practicable on the Closing Date no more than thirty
(30) days after such determination of apportionment, except that payments for
Personal Property Taxes shall initially be determined based on the previous
year's taxes and shall later be adjusted to reflect the current year's taxes
when the tax bills are finally
7
13
rendered. The parties shall fully cooperate to avoid, to the extent legally
possible, the payment of duplicate Personal Property Taxes, and each party
shall furnish, at the request of the other, proof of payment of any Personal
Property Taxes or other documentation which is a prerequisite to avoiding
payment of a duplicate tax.
(d) In the event that either party (the "Payor") pays a Proration
Item for which the other party (the "Payee") is obligated in whole or in part
under this SECTION 2.4, the Payor shall present to the Payee evidence of
payment and a statement setting forth the Payee's proportionate share of such
Proration Item, and the Payee shall promptly pay such share to the Payor. In
the event either party (the "Recipient") receives payments of a Proration Item
to which the other party (the "Beneficiary") is entitled in whole or in part
under this Agreement, the Recipient shall promptly pay such share to the
Beneficiary.
(e) In the event there exists as of the Closing Date any pending
appeals of ad valorem tax assessments with regard to any Purchased Assets, the
continued prosecution and/or settlement of such appeals shall be subject to the
reasonable direction and control of Buyer with respect to assessments for the
year within which the Closing occurs.
II.5. ALLOCATION OF PURCHASE PRICE AFTER THE POST CLOSING ADJUSTMENT.
The Purchase Price after the Post Closing Adjustment shall be allocated between
the different types of Purchased Assets as set forth in EXHIBIT D.
II.6. ASSUMPTION OF CERTAIN LIABILITIES AND EXCLUSION OF CERTAIN
LIABILITIES OF SELLER. Upon the terms and conditions of this Agreement, and in
consideration of the sale of the Purchased Assets, on the Effective Time, Buyer
will assume the Assumed Liabilities. Except for the Assumed Liabilities and the
obligations of Buyer pursuant to SECTION 2.4 and ARTICLE VII, Buyer shall not
assume or become liable for any obligations, commitments, or liabilities of
Seller, whether or not related to the Purchased Assets, without limitation, the
following:
(a) Any liability or obligation arising prior to the Effective Time
out of any employee benefit plan maintained by or covering employees of Seller
or to which Seller has made any contribution or to which Seller could be
subject to any liability;
(b) Any losses, costs, expenses, damages, claims, demands and
judgments of every kind and nature (including the defenses thereof and
reasonable attorneys' and other professional fees) related to, arising out of,
or in connection with Seller's failure to comply with the Bulk Transfer Act or
any similar statute as enacted in any jurisdiction, domestic or foreign;
(c) Any liability or obligation arising out of any breach by Seller
prior to the Effective Time of any provision of any contract to which Seller is
a party;
(d) Any liability of Seller with respect to any claim or cause of
action, regardless of when made or asserted, which arises (i) before the
Effective Time as a result of Seller's operation
8
14
of the Business; (ii) with respect to any product, specifically excluding any
of the Purchased Assets, purchased or manufactured or any service provided by
Seller prior to the Effective Time, including without limitation, any liability
or obligation (A) pursuant to any express or implied representation, warranty,
agreement, or guarantee made by Seller or (B) imposed or asserted to be imposed
by operation of law, in connection with any service performed or product
designed, manufactured, sold, or leased by or on behalf of Seller prior to the
Effective Time, including without limitation, any claim related to any product
delivered in connection with the performance of such service and any claims
seeking to recover for consequential damage, lost revenue, or income, including
pursuant to any doctrine of product liability, or (iii) except as otherwise
specifically provided for in SECTION 7.1, out of or in connection with the
Business and operations of Seller prior to the Effective Time under any
federal, state, or local law, rule, or regulation relating to (A) environmental
protection or clean-up, (B) taxation, or (C) employment or termination of
employment.
(e) Any liabilities or obligations of Seller relating directly to the
Excluded Assets; and
(f) Any liability or obligation for federal, state, county, local,
foreign and other taxes, assessments, charges, fees, and impositions, including
interest and penalties thereon or with respect thereto, whether disputed or not
("Taxes"), including any liabilities or obligations of Seller relating to sales
and use, transfer, documentary, income or other Taxes levied on the transfer of
the Purchased Assets.
(g) Specifically subject to the provisions of ARTICLE VII, all wages,
commissions, vacation, holiday, workers' compensation and sick pay obligations
of Seller with respect to its respective employees accrued through the
Effective Time and all bonuses and fringe benefits as to such employees accrued
through the Effective Time, and all severance pay obligations of Seller
resulting from Seller's consummation of the Transactions contemplated by this
Agreement to employees of the Business other than the Employees.
II.7. NEW ACCOUNTS RECEIVABLE. (a) Seller agrees to pay any funds
collected by Seller on New Accounts Receivable to Buyer within ten (10)
business days after date of receipt. Simultaneously with delivery of the
collected funds, Seller shall deliver to Buyer adequate supporting
documentation for the funds.
(b) Seller agrees to reimburse to Buyer the amount of such New
Accounts Receivable that Buyer is unable to collect through reasonable
collection efforts which inability to collect results directly and solely from
a claim by the debtor of such New Accounts Receivable of the defectiveness of
the product to which such uncollectible New Accounts Receivable relates,
provided that Buyer shall not affirmatively seek claims of product
defectiveness from debtors of New Accounts Receivable. Upon reimbursement by
Seller to Buyer of any such New Accounts Receivable, Seller will have purchased
such New Account Receivable from Buyer and Seller shall have the right to
pursue all collection and other remedies against the debtor of such New
Accounts Receivable. If a dispute arises with respect to Seller's obligations
under this SECTION 2.7, Buyer
9
15
and Seller shall meet to reconcile any such dispute. If such dispute has not
been reconciled within five (5) business days, Buyer and Seller shall refer
such dispute to an accountant or accounting firm on whom Buyer's and Seller's
accountants shall mutually agree to resolve the dispute (the "Referee
Accountant"). Seller and Buyer shall furnish to the Referee Accountant copies of
all relevant documentation including working papers and supporting detail as
the Referee Accountant shall reasonably request. Seller and Buyer shall use
reasonable efforts to obtain a decision from the referee Accountant, and such
decision of the Referee Accountant shall be final and binding upon the parties,
absent manifest error. Seller and Buyer shall each pay one-half of the fees and
expenses of the Referee Accountant.
ARTICLE III
THE CLOSING
III.1. TIME AND PLACE OF CLOSING. The closing (the "Closing") of the
transactions contemplated hereby shall take place as of the commencement of
business on February 27, 1997, at the offices of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
P.A. in Charlotte, North Carolina, or at such other time or place as shall be
mutually satisfactory to the parties hereto (the "Closing Date").
III.2. DELIVERIES BY SELLER. At the Closing, Seller will deliver to
Buyer the following:
(a) The Lease Agreement;
(b) The ▇▇▇▇ of Sale and Assignment and Assumption Agreement;
(c) A certificate of existence and a certificate of good standing of
Seller, as of a date within twenty (20) days prior to the Closing Date, from
the State of South Carolina;
(d) All other bills of sale, assignments of agreements, and other
instruments of transfer necessary to transfer title to the Purchased Assets, as
may be reasonably required by Buyer;
(e) the certificate of Seller delivered pursuant to SECTION 6.3(b);
(f) A certificate of the Secretary of Seller containing a true and
correct copy of the resolutions duly adopted by the Board of Directors of
Seller approving the Acquisition Documents (as defined in SECTION 4.2) and the
other documents and transactions contemplated hereby and certifying that such
resolutions have not been rescinded, reworked, modified, or otherwise affected
and remain in full force and effect;
(g) A certificate of incumbency of Seller executed by Secretary of
Seller thereof listing the officers authorized to execute the Acquisition
Documents and certifying the authority of each such officer to execute the
Acquisition Documents;
10
16
(h) the opinion of counsel to Seller in substantially the form as
EXHIBIT E attached hereto; and
(i) All other documents, certificates, instruments and writings
required hereunder to be delivered by Seller, or as may reasonably be requested
by Buyer at or prior to the Closing Date pursuant to this Agreement.
III.3. DELIVERIES BY BUYER. At the Closing, Buyer will deliver to Seller
the following:
(a) A wire transfer of Cash equal to the Purchase Price.
(b) The Lease Agreement;
(c) The ▇▇▇▇ of Sale and Assignment and Assumption Agreement;
(d) A certificate of existence and a certificate of good standing of
Buyer by Buyer, as of a date within twenty (20) days prior to the Closing Date,
from the State of Delaware;
(e) The certificate of Buyer delivered pursuant to SECTION 6.2(b).
(f) A certificate of the Secretary of Buyer containing a true and
correct copy of the resolutions duly adopted by the Board of Directors of Buyer
approving the Acquisition Documents and the other documents and transactions
contemplated hereby and certifying that such resolutions have not been
rescinded, reworked, modified, or otherwise affected and remain in full force
and effect;
(g) A certificate of incumbency of Buyer executed by Secretary of
Buyer thereof listing the officers authorized to execute the Acquisition
Documents and certifying the authority of each such officer to execute the
Acquisition Documents;
(h) the opinion of counsel to Buyer in substantially the form as
EXHIBIT F attached hereto; and
(i) All other documents, certificates, instruments and writings
required hereunder to be delivered by Buyer, or as may reasonably be requested
by Seller at or prior to Closing pursuant to this Agreement.
III.4. EFFECTIVE TIME. It is the intent of the parties that the
effective date of the transfer of the Purchased Assets and the assumption of
the Assumed Liabilities be the Effective Time without regard to the actual
Closing Date. All shipments of Inventory after the Effective Time shall be
deemed shipments made by Buyer and all accounts receivable relating to such
shipments shall be collected for the account of Buyer. All expenses and costs
of production relating to the operation of the Business after the Effective
Time shall be the responsibility of the Buyer, except
11
17
such costs specifically allocated to Seller pursuant to ARTICLE VII. Seller and
Buyer shall work together in good faith to determine the appropriate allocation
of revenues and expenses relating to the operation of the Business between the
Effective Time and the Closing Date. Buyer shall be responsible for all wages,
bonuses, fringe benefits, commissions, vacation, holiday, workers compensation,
sick pay, FICA and all other employment taxes and charges arising on or after
the Effective Time. Buyer shall either pay the amounts owed pursuant to this
SECTION 3.4 directly or shall reimburse Seller for such amounts charged against
Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise set forth in any Schedules hereto specifically
referencing applicable Sections of this Agreement, Seller represents and
warrants to Buyer as follows:
IV.1. ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of South Carolina. Seller is duly qualified and is in good standing as a
foreign corporation in each of the jurisdictions set forth on SCHEDULE 4.1.1
which constitute all of the jurisdictions where Seller conducts the Business,
or where the failure to be so qualified or in good standing would have a
material adverse effect on Seller. SCHEDULE 4.1.2 hereto contains the address
(including city, county, state, or other jurisdiction and zip code) of each
location of Seller where any of the Purchased Assets are located and each trade
name under which Seller operates at each such address and any additional
business and trade names under which Seller has operated at each such address
in the five (5) years preceding the date of this Agreement.
IV.2. AUTHORITY. Except as set forth in SCHEDULE 4.2, Seller has full
power and authority to enter into this Agreement and the agreements
contemplated hereby, or respectively executed by it in connection herewith
(collectively, this Agreement and such other agreements and the agreements
contemplated by this Agreement to be executed by the Seller shall be referred
to hereinafter as the "Acquisition Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Seller of each of the Acquisition Documents to which it is a
party have been duly and validly authorized and approved by all necessary
action on the part of Seller. Each of the Acquisition Documents to which Seller
is a party is the legal, valid, and binding obligation of Seller enforceable
against it in accordance with its terms, except as enforceability may be
limited by applicable equitable principles (whether applied in a proceeding at
law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally, to the exercise of judicial
discretion in accordance with general equitable principles, and to equitable
defenses that may be applied to the remedy of specific performance. Except as
set forth in SCHEDULE 4.2, the execution and delivery by Seller of any of the
Acquisition Documents to which it is a party and the consummation by Seller of
the transactions contemplated thereby will not (i) violate the Articles of
Incorporation or Bylaws of Seller, (ii) violate any provisions of law or any
order of any court
12
18
or any governmental entity to which Seller is subject, or by which the
Purchased Assets may be bound, (iii) conflict with, result in a breach of, or
constitute a default under any indenture, mortgage, lease, agreement, or other
instrument to which Seller is a party or by which it or any of the Purchased
Assets may be bound or affected, or (iv) result in the creation of any lien,
charge, or encumbrance upon any of the Purchased Assets.
IV.3. CONSENT AND APPROVALS; NO VIOLATION. Except as described on
SCHEDULE 4.3, Seller has obtained all governmental approvals, authorizations,
permits, licenses, and orders required for the lawful operation of the Business
and the Purchased Assets as presently conducted. No permit, consent, approval
or authorization of, or declaration to or filing with, any governmental or
regulatory authority is required in connection with any respect of the
execution, delivery and performance of this Agreement. Except as set forth in
SCHEDULE 4.3, there is no requirement applicable to Seller to make any filing
with, or to obtain any permit, authorization, consent or approval of, any
governmental authority as a condition to the lawful consummation by Seller of
the transactions contemplated hereby, and the execution and delivery of this
Agreement by Seller and the performance of this Agreement by Seller will not
(a) conflict with any provision of the articles of incorporation or bylaws of
Seller, (b) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, agreement, lease or other instrument or
obligation relating to the Business and to which Seller is a party or to which
any of the Purchased Assets may be subject, except for defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been or will be obtained prior to the Closing Date, or (c)
violate any law, statute, rule, regulation, order, writ, injunction or decree
of any federal, state or local governmental authority (a "Governmental
Authority") that is applicable to Seller or any of the Purchased Assets.
IV.4. TITLE TO PERSONAL PROPERTY; ASSIGNED CONTRACTS. Except with
respect to any leased property or as set forth in SCHEDULE 1.1(c), Seller owns
and has good and valid title to all tangible personal property that is included
in the Purchased Assets, free and clear of all liens and encumbrances except
for liens and encumbrances not exceeding $5,000 in the aggregate and except for
liens for taxes not yet due and payable and liens to be released at or prior to
the Closing. Seller has delivered or made available to Buyer true and complete
copies of all Contracts, all of which Contracts are valid and binding on Seller
and, to the best of Seller's knowledge, valid and binding on each other parties
to such Contract named therein. Except as set forth in SCHEDULE 4.4, the
Contracts are fully assignable without the consent of a third party. Except as
specifically set forth herein, the Purchased Assets are to be conveyed to Buyer
on an AS IS, WHERE IS BASIS, WITH NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
IV.5. INVENTORY. All Inventory has been or will be acquired by Seller
only in bona fide transactions entered into in the ordinary course of business.
13
19
IV.6. EQUIPMENT. (a) SCHEDULE 4.6.1 contains a true and complete list
and a description of all Equipment and all other items of personal property
owned by Seller and included in the Purchased Assets.
(b) SCHEDULE 4.6.2 contains a list of all leases for Equipment or
other items of personal property leased by Seller and included in the Purchased
Assets. True and complete copies of each lease listed on SCHEDULE 4.6.2 and any
amendments, extensions, and renewals have been delivered by Seller to Buyer. To
the best of Seller's knowledge, each of the leases described on SCHEDULE 4.6.2
is in full force and effect and there are no existing defaults or events of
default, the consequences of which, severally or in the aggregate, would have a
material adverse effect on the Business of Seller, taken as a whole. No Rights
of Seller under such leases have been assigned or otherwise transferred as
security for any obligation of Seller. Except as described on SCHEDULE 4.6.2,
all such leases are fully assignable without the consent of any third party.
IV.7. LITIGATION. There is no suit, action, proceeding, claim or
investigation pending, or, to Seller's knowledge, threatened, against Seller
which would materially adversely affect the consummation of the transactions
contemplated by this Agreement. Except as listed and briefly described on
SCHEDULE 4.7, there are no arbitrations, grievances, actions, suits, or other
proceedings pending or, to Seller's knowledge, threatened against, or adversely
affecting any of the Purchased Assets at law or in equity, nor is there any
investigation pending or, to Sellers knowledge, threatened, before or by any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign related to the
Purchased Assets. Seller is not in default under or in violation of any order,
writ, injunction, or decree of any federal, state, municipal court, or other
governmental department commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting the Purchased Assets.
IV.8. TAXES. Seller has paid, or by the Closing Date will have paid,
all personal property, ad valorem and property taxes, sales taxes and payroll
taxes and assessments on the Purchased Assets (including penalties and interest
in respect thereof, if any) that have become or are due with respect to any
period ended prior to the Effective Time, or is contesting in good faith such
taxes and assessments, in which event Seller has disclosed the details of such
contests on SCHEDULE 4.8. No assessments which are unpaid or which will not be
paid in full at or prior to the Effective Time have been made against any
Purchased Assets (except those ad valorem taxes, if any, for the current year
which are not delinquent), whether or not they have become liens.
IV.9. INTELLECTUAL PROPERTY. SCHEDULE 4.9 contains a correct and
complete list of all Intellectual Property owned or used by Seller exclusively
in the Business, containing a brief description of each item of Intellectual
Property and the nature of Seller's interest therein. No claim is pending
against Seller or, to the knowledge of Seller threatened, and Seller has not
yet received notice that the use of the Intellectual Property in the conduct of
the Business infringes upon or conflicts with any rights claimed therein by any
third party, nor is Seller aware of any
14
20
unasserted claim the assertion of which is probable. To the best of Seller's
knowledge, no use by Seller of the Intellectual Property licensed to it
violates the terms of any agreement pursuant to which it is licensed. No claim
is pending against Seller, or to the knowledge of Seller threatened against
Seller, which alleges that any Intellectual Property is invalid or
unenforceable by Seller, nor is Seller aware of any such claim that is
unasserted, but the assertion of which is probable. Except as set forth on
SCHEDULE 4.9, to Seller's knowledge Seller does not manufacture products in the
Business which are the subject of patents, patent applications, copyrights,
copyright applications, trademarks, trademark applications, trade styles,
service marks, or trade secrets owned by or licensed from third parties. Except
as shown on SCHEDULE 4.9, to Seller's knowledge no royalties or fees are
payable by Seller related to the Business to anyone for use of the Intellectual
Property. Seller has not received any notice that the Intellectual Property
violates or infringes upon any claims of any United States or foreign patent or
patent application owned or held by any third party, nor is Seller aware of any
asserted claim the assertion of which is probable. All Intellectual Property
and registrations, applications, and agreements related thereto are fully
assignable to Buyer without the consent of any third party, except as shown on
SCHEDULE 4.9.
IV.10. COMPLIANCE WITH LAWS. To Seller's knowledge, Seller is not
engaging in any activity or omitting to take any action with respect to the
Business or the Purchased Assets that is or creates a material violation of any
law, statute, ordinance, or regulation (a "Law") applicable to the Business, or
to the Purchased Assets. Neither Seller nor any of the Purchased Assets are
subject to any judgment, order, writ, injunction, or decree issued by any court
or any governmental or administrative body or agency. To Seller's knowledge,
Seller possesses all permits and licenses necessary for the operation of the
Business as presently conducted and is in material compliance with all
applicable Laws and orders issued by any court or governmental or
administrative body or agency.
IV.11. LABOR MATTERS. SCHEDULE 4.11 contains a correct and complete list
of all present employees employed or engaged by Seller in the Business, their
total remuneration for the year ended December 31, 1996, their current
remuneration, and a description of all perquisites and fringe benefit they
receive or are eligible to receive. Except as set forth on SCHEDULE 4.11,
Seller has not, within the last three (3) years, experienced in the Business
any organized slowdown, work interruption, strike, or work stoppage by its
employees. Seller is not a party to any collective bargaining agreements
related directly to the Business. Neither Seller nor any of its officers,
directors, or employees has been charged or threatened with the charge of any
unfair labor practice within the last two (2) years with respect to the
Business. With respect to the Business, Seller is in material compliance with
all applicable federal and state laws and regulations concerning the employer -
employee relationship and with all agreements relating to the employment of
Seller's employees, including without limitation applicable wage and hour laws,
fair employment laws, safety laws, worker compensation statutes, unemployment
laws, immigration laws, and social security laws. Except as described on
SCHEDULE 4.11, with respect to the Business, there are no pending or, to
Seller's knowledge, threatened claims, investigations, charges, citations,
hearings, consent decrees, or litigation concerning wages, compensation,
15
21
bonuses, commissions, awards, or payroll deductions; equal employment or human
rights violations regarding race, color, religion, sex, national origin, age,
handicap, veteran's status, marital status, disability, or any other recognized
class, status, or attribute under any federal, state, local or foreign equal
employment law prohibiting discrimination; representation petitions or unfair
labor practices; grievances or arbitrations pursuant to current or expired
collective bargaining agreements; occupational safety, and health; workers'
compensation; wrongful termination, negligent hiring, invasion of privacy or
defamation; immigration or any other claim based on the employment relationship
or termination of the employment relationship (collectively, "Labor Claims").
Seller is not liable for any unpaid wages, bonuses, or commissions (other than
those not yet due) or any tax, penalty, assessment, or forfeiture for failure
to comply with any of the foregoing.
IV.12. BROKERS AND FINDERS. Except for Seller's engagement of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Seller has not incurred any obligation or liability to
any party for any brokerage fees, agent's commissions, or finders' fees in
connection with the transactions contemplated by this Agreement.
IV.13. CONTRACTS.
(a) Except as set forth on SCHEDULE 4.13, each of the Contracts is
in full force and effect and there exists no breach or violation of or default
under such agreements by Seller or, to Seller's knowledge, any other party to
such agreement. Except as set forth in SCHEDULE 4.13, the Contracts are fully
assignable without the consent of any third party.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
V.1. ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has all corporate power and authority to conduct its business,
to own, lease, or operate its properties in the places where such business is
conducted and such properties are owned, leased, or operated.
V.2. AUTHORITY. Buyer has full power and authority to enter into this
Agreement, and each of the other Acquisition Documents to which it is a party
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Buyer of this Agreement and each of the
other Acquisition Documents to which Buyer is a party have been duly and
validly authorized and approved by all necessary action on the part of Buyer.
This Agreement and each of the other Acquisition Documents to which Buyer is a
party are the legal, valid, and binding obligations of Buyer enforceable
against Buyer in accordance with their terms, except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
16
22
reorganization, moratorium, or similar laws affecting creditors' rights
generally, and by the exercise of judicial discretion in accordance with
equitable principles. Neither the execution and delivery by Buyer of this
Agreement or any of the other Acquisition Documents to which the Buyer is a
party nor the consummation by Buyer of the transactions contemplated hereby or
thereby will (i) violate Buyer's Certificate of Incorporation or Bylaws, (ii)
violate any provisions of laws or any order of any court or any governmental
unit to which Buyer is subject, or by which its assets are bound, or (iii)
conflict with, result in a breach of or constitute a default under any
indenture, lease, agreement, or other instrument to which Buyer is a party or
by which its assets or properties are bound.
V.3. CONSENTS AND APPROVALS; NO VIOLATION. There is no requirement
applicable to Buyer to make any filing with, or to obtain any permit,
authorization, consent or approval of, any Governmental Authority as a
condition to the lawful consummation by Buyer of the transactions contemplated
hereby, and the execution, delivery and performance of this Agreement by Buyer
nor the operation of the Business by Buyer will not: (a) conflict with or
result in any breach of any provision of the certificate of incorporation or
bylaws of Buyer; (b) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, agreement lease or other
instrument or obligation to which Buyer is a party or by which any of its
assets may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained or will be obtained prior to the Closing Date; or (c) violate any
law, statute, rule, regulation, order, writ, injunction or decree of any
federal, state or local governmental authority or agency that is applicable to
Buyer.
V.4. FINANCING. Buyer has all funds necessary to enable Buyer to
perform this Agreement in accordance with its terms. Buyer agrees that at all
times between the date hereof and the Closing Date it will take all necessary
or advisable actions to assure that funds sufficient to permit Buyer to pay the
Purchase Price and any post closing adjustment payable pursuant to SECTION
2(d). Buyer has taken all actions required to comply with all applicable
federal and state securities laws in connection with obtaining funds necessary
to pay the such amounts, and Buyer agrees that, between the date hereof and the
Closing Date, it will take all actions required to comply with such laws.
V.5. LITIGATION. There is no suit, action, proceeding, claim or
investigation pending, or to Buyer's knowledge, threatened against Buyer that
would affect consummation of the transactions.
V.6. BROKERS AND FINDERS. Neither Buyer nor any affiliate of Buyer has
incurred any obligation or liability to any party for any brokerage fees,
agent's commissions, or finders fees in connection with the Transactions
contemplated by this Agreement
17
23
ARTICLE VI
CLOSING CONDITIONS
VI.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The respective obligations of each party to effect the
transactions contemplated hereby shall be subject to the fulfillment at or
prior to the Closing Date of the following condition:
(a) Neither Seller nor Buyer shall be subject on the Closing Date to
any order, decree or injunction of a court of competent jurisdiction that
enjoins or prohibits the consummation of this Agreement or the transactions
contemplated hereby, nor shall there be pending a suit or proceeding by any
governmental authority that seeks injunctive or other relief in connection with
this Agreement or the transactions contemplated hereby.
(b) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated.
VI.2. CONDITIONS TO THE OBLIGATIONS OF SELLER TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of Seller to effect the
transactions contemplated hereby shall be further subject to the fulfillment at
or prior to the Closing Date of the following conditions, any one or more of
which may be waived by Seller:
(a) Buyer shall have executed and delivered to Seller the documents
required to be delivered pursuant to SECTION 3.2;
(b) All information required to be furnished or delivered by Buyer
pursuant to this Agreement shall have been furnished or delivered as of the
date hereof and the Closing Date as required hereunder; the representations and
warranties made by Buyer in ARTICLE V hereof shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date; and Seller shall have received a certificate dated the Closing
Date, executed by an authorized officer of Buyer to such effect;
(c) Buyer shall have duly performed in all material respects all of
the covenants, agreements, and conditions contained in this Agreement to be
performed by Buyer on or before the Closing Date, and Seller shall have
received a certificate dated the Closing Date, executed by an authorized
officer of Buyer, to such effect; and
(d) All documents required to have been delivered by Buyer to Seller,
and all actions required to have been taken by Buyer, at or prior to the
Closing Date, shall have been delivered or taken.
18
24
VI.3. CONDITIONS TO THE OBLIGATIONS OF BUYER TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The obligations of Buyer to effect any transaction
contemplated hereby shall be further subject to the fulfillment at or prior to
the Closing Date of the following conditions, any one or more of which may be
waived by Buyer:
(a) Seller shall have executed and delivered the documents required
to be delivered pursuant to SECTION 3.2;
All information required to be furnished or delivered by Seller pursuant
to this Agreement shall have been furnished or delivered as of the date hereof
and as of the Closing Date, as required hereunder; the representations and
warranties made by Seller in ARTICLE IV shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date (except that such representations and warranties may be untrue or
incorrect as a result of actions or transactions expressly permitted by this
Agreement or actions or transactions of Seller made with the prior written
consent of Buyer); and Buyer shall have received a certificate dated as of the
Closing Date executed by an authorized officer of Seller to such effect;
(c) Seller shall have duly performed in all material respects all of
the covenants, agreements, and conditions contained in this Agreement
respectively to be performed by them on or prior to the Closing Date, and Buyer
shall have received a certificate, dated as of the Closing Date, executed by an
authorized officer of Seller to such effect; and
(d) All documents required to have been delivered by Seller to Buyer,
and all actions required to have been taken by Seller, at or prior to the
Closing Date, shall have been delivered or taken.
ARTICLE VII
POST CLOSING MATTERS
VII.1. EMPLOYMENT OF EMPLOYEES. Buyer shall offer employment on an "at
will basis" effective as of the Effective Time to all persons, other than those
listed on SCHEDULE 7.1.1, who are employees of the Business immediately prior
to the Effective Time (the "Employees"). All employees of Seller who accept an
offer by Buyer for employment are hereafter referred to as the "Hired
Employees." Based on the information provided by Seller to Buyer, each offer
of employment shall be at a base salary or commission rate equal to or greater
than the salary or commission rate (excluding the attendance bonus) held by
such employee at the Effective Time with fringe benefits substantially the same
as currently provided by Seller, except as specifically listed on SCHEDULE
7.1.2 where salaries, commissions, or benefits are substantially out of line
with those provided by Buyer to its employees. Except for vesting of the
Employees' rights to contributions by Buyer under Buyer's 401(k) retirement
plan, Buyer shall grant all Hired Employees credit for purposes of vesting,
eligibility and benefit accrual under the Buyer's
19
25
employee benefit plans (including vacation, retirement and severance) for their
service with Seller prior to the Effective Time. Buyer will provide a medical
plan as of the Effective Time so as to insure uninterrupted coverage for Hired
Employees. Buyer's medical plan shall grant credit for deductibles and co-pays
paid and any other payments paid by Hired Employees during the applicable year
(including for purposes of compensating any out-of-pocket maximums), including
the Closing Date. Pre-existing conditions for Hired Employees or their covered
dependents will not be excluded provided that any such pre-existing condition
is covered by Seller's medical plan and further provided that such pre-existing
condition is covered by Buyer's medical plan. Any post retirement insurance
plans provided by Seller shall remain Seller's responsibility.
Buyer acknowledges that Seller does not intend to continue to employ the
Employees after the Effective Time. Seller shall be responsible for any claim
or cause of action of any Employee, regardless of when made or asserted, which
both (i) the basis for which arises prior to the Effective Time under any
federal, state or local law or regulation relating to employment and (ii) does
not result or arise from the termination of the employment of such Employee
pursuant to the transactions contemplated hereunder. Buyer shall be responsible
for, and shall indemnify and hold Seller harmless against, any of Seller's
Damages (as defined in SECTION 8.5) incurred by a Seller Entity (as defined in
SECTION 8.5) as a result any claim whatsoever arising from or related to
termination of any Employee's employment after such Employee has accepted and
begun employment with the Buyer. Buyer also shall be responsible for, and shall
indemnify and hold Seller harmless against, all of Seller's Damages incurred by
a Seller Entity as a result any claim whatsoever arising from or related to (i)
the termination of the employment of an Employee by Seller on or after the
Effective Time, (ii) an Employee's failure to accept the offer of employment
made to such Employee by Buyer in accordance with this SECTION 7.1, in either
case specifically including but not limited to any claim for severance or
separation pay pursuant to any plan or policy maintained by Seller (such
Seller's Damages set forth in this sentence being referred to herein as
"Severance Damages"); provided that upon Buyer's payment of Severance Damages
to Seller in the aggregate amount of $50,000, Buyer's obligation as to the
payment of any remaining Severance Damages shall be limited to fifty percent
(50%) of such remaining Severance Damages and Seller shall be responsible for
the other fifty percent (50%) of such remaining Severance Damages; provided
further that upon Buyer's payment of Severance Damages in the aggregate amount
of $150,000, Buyer shall have no further obligation with respect to payment of
Severance Damages; provided further that Buyer shall have no obligation for
payment of Severance Damages covered by COBRA insurance, specifically excluding
any amounts actually paid by Seller other than premiums.
Except for Buyer's obligations pursuant to this SECTION 7.1 and any
Assumed Liability, Buyer shall not assume any liability or obligation of Seller
arising prior to the Effective Time, to any employee, agent or independent
contractor of Seller, whether or not employed by Buyer after the Effective
Time, or arising under any Company Benefit Plan. Seller shall be responsible
for the payment of all wages, commissions, accrued but unpaid wages, vacation
pay, sick pay, and holiday pay to the Employees accrued prior to the Effective
Time. Seller shall also be responsible for the payment to all Employees of all
bonuses which become payable after the Effective Time
20
26
with respect to any fiscal period ended prior to the Effective Time. Except for
Buyer's obligations pursuant to this SECTION 7.1 and any Assumed Liability,
Seller shall be responsible for the payment of any amounts due to the Employees
pursuant to the Company Benefit Plans (as defined herein), provided that in
determining bonuses and other similar payments due to Hired Employees for any
period ended on or prior to the Effective Time, Seller shall, if payment
thereof will occur after the Effective Time, waive any requirement that any
Employee be an employees of Seller on the date such bonuses or other similar
payments are paid. Except for the Buyer's obligations pursuant to this SECTION
7.1 and any Assumed Liability, Seller shall be responsible for reporting all
employee-related costs and liabilities of Hired Employees accruing prior to the
Effective Time, whether payable on or after the Effective Time. Seller is
responsible for all incurred but unreported or unpaid medical claims and
workers' compensation claims occurring prior to the Effective Time and for the
cost associated with any hospital confinement which commences prior to the
Effective Time. Seller is responsible for all workers' compensation claims
occurring prior to the Effective Time which are re-opened for any change in
condition occurring after the Effective Time.
The following plans, programs, policies, or arrangements described in
subparagraph (i) or (ii) are hereinafter collectively referred to as the
"Company Benefit Plans":
(i) any employee benefit plan as defined in SECTION 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA") or under which either
Seller, with respect to employees, has any outstanding, present, or future
obligation or liability, or under which any employee has any present or future
right to benefits which are covered by ERISA; or
(ii) any other pension, profit sharing, retirement deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance, or other
employee benefit plan program, policy, or arrangement, which Seller maintains
or to which Seller has any outstanding, present, or future obligations to
contribute or make payments under, whether voluntary, contingent or otherwise.
The Buyer will timely give all notices required to be given under Worker
Adjustment and Retraining Notification Act, as amended or other similar
statutes or regulations of any jurisdiction relating to any plant closing or
mass layoff, or as otherwise required by any such statutes. For this purpose,
the Buyer shall be deemed to have caused a mass layoff if the mass layoff would
not have occurred but for the Buyer's failure to employ the Employees in
accordance with the terms of this Agreement.
VII.2. SELLER'S BENEFIT PLANS. To the extent necessary, Seller may
continue to communicate with the Hired Employees regarding their rights and
entitlement to any benefits under the Company Benefit Plans, subject to Buyer's
prior approval, which shall not be unreasonably withheld; and the parties shall
cooperate with each other in the administration of all applicable employee
benefit plans and programs.
21
27
VII.3. NON-SOLICITATION. Seller shall terminate effective as of the
Closing Date all employment, non-competition, non-solicitation and/or
confidentiality agreements it has with any of the Employees. Until the
expiration of twelve (12) months after the month in which the Closing Date
occurs, Seller and any affiliate of Seller shall not directly or indirectly
solicit or attempt to solicit to seek employment other than with Buyer, any
Hired Employee who is then an employee of Buyer, or who has terminated such
employment without the consent of Buyer within 180 days of such solicitation or
offer, provided that if such Hired Employees, without solicitation by Seller,
seek employment by Seller, Seller shall be free to hire such Hired Employees.
VII.4. CONTINUANCE OF BUSINESS. Buyer shall continue to operate the
Business so that Buyer shall have "continued operation of the business" of the
Business for purposes of the Code of Laws of South Carolina Section 12-36-2120
(42).
VII.5. FURTHER ASSURANCES. Seller and Buyer shall cooperate and take
such actions and execute all such further instruments as either may reasonably
request to transfer Seller's title to the Purchased Assets to Buyer, for Buyer
to assume the Assumed Liabilities, and otherwise affect the terms and purposes
of this Agreement.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
VIII.1. SURVIVAL OF REPRESENTATIONS. All representations, warranties
and agreements made by the parties to this Agreement or pursuant hereto shall
survive the Closing, subject to the limitations set forth in this ARTICLE VIII.
All claims of any kind against Seller or Buyer that relate in any way to the
representations, warranties, this Agreement or any document, specifically
excluding claims made under the Lease Agreement, delivered hereunder shall be
made under, and subject to the limitations set forth in, this ARTICLE VIII.
VIII.2. SELLER'S AGREEMENT TO INDEMNIFY. Subject to the limitations,
conditions and provisions set forth herein, Seller agrees to indemnify, defend
and hold harmless Buyer, its affiliates, their respective officers, directors,
employees, agents, representatives, successors and assigns (each, a "Buyer
Entity") from and against all demands, claims, actions, losses, damages,
liabilities, fines, penalties, governmental requirements, administrative
proceedings, personal injury claims, property damage claims, liens, costs and
expenses, including, without limitation, attorney's fees and consultant and
expert witness fees (collectively, "Buyer's Damages") incurred by a Buyer
Entity, resulting from a breach of any covenant, agreement, representation or
warranty of Seller, individually or in the aggregate, contained in this
Agreement or any document delivered hereunder.
VIII.3. LIMITATION OF SELLER'S INDEMNIFICATION OBLIGATIONS. Seller's
obligation to indemnify Buyer against any Buyer's Damages is subject to all of
the following limitations:
22
28
(a) Seller shall have no obligation to indemnify Buyer against any
Buyer's Damages unless a claim or notice of a claim for Buyer's Damages in
writing is delivered to Seller within one (1) year after the Closing Date,
provided that such limitation shall not apply to any of Buyer's damages
resulting from the breach of Seller's covenants contained in ARTICLE VII, nor
shall such limitation apply to SECTIONS 10.1 or 10.11.
(b) Seller's obligation to indemnify Buyer hereunder shall cease upon
payment in the aggregate by Seller to Buyer of Buyer's Damages in an aggregate
amount of $1,000,000, provided that such limitation shall not apply to any of
Buyer's Damages resulting from the breach of Seller's covenants contained in
ARTICLE VII, nor shall such limitation apply to SECTIONS 10.1 or 10.11.
(c) Any claim for Buyer's Damages hereunder shall be reduced by the
amount of any insurance proceeds actually received by Buyer in respect of the
same matter underlying such claim for Buyer's Damages.
(d) Buyer's exclusive remedies following the Closing Date for any
breach by Seller of a representation, warranty, covenant, agreement or
provision set forth in this Agreement shall be the indemnification set forth
herein; provided, however, that Buyer may set-off against any Buyer's Damages,
any amounts payable to Seller pursuant to this Agreement or any agreement
delivered upon consummation of the transactions contemplated hereby.
VIII.4. SELLER'S PAYMENT OF ITS INDEMNIFICATION OBLIGATIONS. Within a
reasonable time after delivery by a Buyer to Seller of a claim for Buyer's
Damages, Seller shall pay Buyer in cash, subject to prior arbitration as may be
required in accordance with SECTION 10.7 and subject to the other provisions of
this ARTICLE VIII, the amount set forth in such claim for Buyer's Damages.
VIII.5. BUYER'S AGREEMENT TO INDEMNIFY. Subject to the limitations,
conditions and provisions set forth herein, Buyer agrees to indemnify, defend
and hold harmless Seller, its affiliates, their respective officers, directors,
employees, agents, representatives, successors and assigns (each, a "Seller
Entity") from and against all demands, claims, actions, losses, damages,
liabilities, fines, penalties, governmental requirements, administrative
proceedings, personal injury claims, property damage claims, liens, costs and
expenses, including, without limitation, attorney's fees and consultant and
expert witness fees (collectively, "Seller's Damages"), incurred by a Seller
Entity: (i) resulting from a breach of any covenant, agreement, representation
or warranty of Buyer, individually or in the aggregate, contained in this
Agreement or any document delivered hereunder, including but not limited to
those resulting from or by reason of failure to comply with the Worker
Adjustment and Retraining Notification Act, as amended, and (ii) resulting
from, arising out of, or in connection with the Assumed Liabilities.
VIII.6. LIMITATION OF BUYER'S INDEMNIFICATION OBLIGATIONS. Buyer's
obligation to indemnify Seller against any Seller's Damages is subject to all
of the following limitations:
23
29
(a) Buyer shall have no obligation to indemnify Seller against any
Seller's Damages unless a claim or notice of a claim for Seller's Damages in
writing is delivered to Seller within one (1) year after the Closing Date;
provided however that such limitation shall not apply to any of Seller's
Damages (i) resulting from breach of Buyer's covenants contained in ARTICLE
VII, (ii) arising out of or resulting from or by reason of failure to comply
with the Worker Adjustment and Retraining Notification Act, as amended, or
(iii) resulting from or arising out of the Assumed Liabilities; provided
further that such limitation shall not apply to SECTION 10.1.
(b) Buyer's obligation to indemnify Seller hereunder shall cease upon
payment in the aggregate by Buyer to Seller of Buyer's Damages in an aggregate
amount of $1,000,000; provided however that such limitation shall not apply to
any of Seller's Damages (i) resulting from breach of Buyer's covenants
contained in ARTICLE VII, (ii) arising out of or resulting from or by reason of
failure to comply with the Worker Adjustment and Retraining Notification Act,
as amended, or (iii) arising out of or resulting from the Assumed Liabilities;
provided further that such limitation shall not apply to SECTION 10.1.
(c) Any claim for Seller's Damages hereunder shall be reduced by the
amount of any insurance proceeds actually received by Seller in respect of the
same matter underlying such claim for Seller's Damages.
(d) Seller's exclusive remedies following the Closing Date for any
breach by Buyer of a representation, warranty, covenant, agreement or provision
set forth in this Agreement shall be the indemnification set forth herein;
provided, however, that Seller may set-off against any Seller's Damages, any
amounts payable to Buyer pursuant to this Agreement or any agreement delivered
upon consummation of the transactions contemplated hereby.
VIII.7. BUYER'S PAYMENT OF ITS INDEMNIFICATION OBLIGATIONS. Within a
reasonable time after delivery by a Seller to Buyer of a claim for Seller's
Damages, Buyer shall pay Seller in Cash, subject to prior arbitration as may be
required in accordance with SECTION 10.7 and subject to the other provisions of
this ARTICLE VIII, the amount set forth in such claim for Seller's Damages.
ARTICLE IX
TERMINATION
IX.1. TERMINATION. This Agreement may be terminated:
(a) At any time by mutual consent of Seller and Buyer;
(b) By either party, if the Closing hereunder has not taken place on
or before February 28, 1997;
24
30
(c) By Seller if all the conditions in SECTIONS 6.1 and 6.2 have not
been satisfied or waived by the Closing Date;
(d) By Buyer if all the conditions set forth in SECTIONS 6.1 and 6.3
have not been satisfied or waived by the Closing Date;
IX.2. PROCEDURE AND EFFECT OF TERMINATION OR FAILURE TO CLOSE.
(a) Subject to the provisions of SECTION 9.2, in the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by any or all of the parties pursuant to SECTION 9.1, prompt written
notice thereof shall be given to the other party and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned, without
further action by any of the parties hereto. Subject to the provisions of
SECTION 9.2, if this Agreement is terminated as provided herein:
(i) None of the parties hereto nor any of their partners,
directors, officers, shareholders, employees, agents, or
affiliates shall have any liability or further obligation
to the other party or any of its partners, directors,
officers, shareholders, employees, agents, or affiliates
pursuant to this Agreement with respect to which
termination has occurred, except as stated in SECTION
9.2(b) and in SECTIONS 10.1 and 10.2 hereof; and
(ii) All filings, applications and other submissions relating
to the transfer of the Assets shall, to the extent
practicable, be withdrawn from the agency or other person
to which made.
(b) Notwithstanding anything to the contrary contained in this
Agreement, if pursuant to the terms of this Agreement, (i) Buyer or Seller, as
the case may be, shall have duly satisfied each of the conditions set forth in
ARTICLE VI hereof to be satisfied by it (or in the case of any condition that
is to be satisfied at the Closing, shall have demonstrated a willingness and
ability to satisfy such condition if the Closing were to take place), and the
conditions set forth in SECTION 6.1 have been satisfied, and (ii) the other
party shall nevertheless fail to sell or purchase the Purchased Assets and
assume the Assumed Liabilities required to be assumed by such party hereunder,
then and in that event, Buyer or Seller, as the case may be, shall be entitled
to seek any remedy to which it may be entitled at law or in equity in the event
of a material violation or breach of any agreement, representation or warranty
contained in this Agreement (which remedies shall include, without limitation,
with respect to both Buyer and Seller, an injunction or injunctions to prevent
breaches of, or to obtain specific performance of any obligation hereunder,
without limiting any monetary damages to which Buyer or Seller, as the case may
be, shall be entitled).
25
31
ARTICLE X
MISCELLANEOUS PROVISIONS
X.1. COMMISSIONS. Seller and Buyer represent and warrant to each
other that, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., no broker, finder or
other Person is entitled to any brokerage fees, commissions or finder's fees in
connection with the transactions contemplated hereby by reason of any action
taken by the party making such representation. Seller and Buyer will pay or
otherwise discharge, and will indemnify and hold each other harmless from and
against, any and all claims or liabilities for all brokerage fees, commissions
and finder's fees incurred by reason of any action taken by such party.
X.2. EXPENSES. Whether or not the transactions contemplated hereby
are consummated, except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby will be paid by the party incurring such costs and expenses.
X.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended,
modified or supplemented except by written agreement executed by Seller and
Buyer.
X.4. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice; provided
that notices of a change of address shall be effective only upon receipt
thereof):
(a) If to Seller, to:
Spartan ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇▇▇▇▇
26
32
(b) If to Buyer, to:
Synthetic Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
X.5. ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder, shall be assigned by any
party hereto without the prior written consent of the other party, which shall
not be unreasonably withheld, nor is this Agreement intended to confer upon any
other Person except the parties hereto any rights or remedies hereunder.
X.6. GOVERNING LAW; JURISDICTION. The execution, interpretation and
performance of this Agreement shall be governed by the internal laws and
judicial decisions of the State of South Carolina, without regard to its
conflicts-of-laws principles. Buyer and Seller hereby irrevocably consent, to
the maximum extent permitted by law, that any legal action or proceeding
against them under, arising out of or in any manner relating to, this Agreement
may be brought in any court of general jurisdiction of Spartanburg County,
South Carolina, or in the United States District Court for South Carolina. By
its execution and delivery of this Agreement, each such party expressly and
irrevocably assents and submits to the personal jurisdiction of either of such
courts in any such action or proceeding. Each such party further irrevocably
consents to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to it by hand or
by mail in the manner provided for in SECTION 10.4, and expressly and
irrevocably waives its respective claims and defenses in any such action or
proceeding in either such court based on any alleged lack of personal
jurisdiction, improper venue or form non conveniens, or any similar basis to
the maximum extent permitted by law.
X.7. ARBITRATION. Except as otherwise provided herein or if any other
agreement contemplated hereby between Seller and Buyer (including without
limitation the exceptions set forth in SECTION 2.3 hereof) and notwithstanding
SECTION 10.6, upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement, or any other
agreement entered into pursuant to this Agreement (collectively, "Disputes"),
between Seller and Buyer shall
27
33
be resolved by binding arbitration as provided in this SECTION 10.7.
Institution of a judicial proceeding by a party does not waive the right of
that party to demand arbitration. Disputes may include, without limitation,
tort claims, counterclaims, claims arising from modifications, amendments or
supplements to this Agreement or any other agreement provided for herein
executed in the future, or claims concerning any aspect of the past present or
future relationships arising out of or connected with this Agreement.
Arbitration shall be conducted under and governed by the Commercial
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in Spartanburg County, South Carolina. The expedited procedures set
forth in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims
of less than $500,000. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court of competent
jurisdiction. The arbitrators shall be appointed as provided in the Arbitration
Rules.
Notwithstanding anything to the contrary contained in this SECTION 10.7,
Seller and Buyer preserve, without diminution, certain remedies that either of
them may employ or exercise freely, either alone, in conjunction with, or
during a Dispute. Seller and Buyer both have the right to proceed in any court
of proper jurisdiction or by self help to exercise or prosecute the following
remedies, as applicable: (i) all rights of self help including peaceful
occupation of real property and collection of rents, set off and peaceful
possession of personal property; (ii) obtaining provisional or ancillary
remedies including injunctive relief, requestration, garnishment, attachment,
appointment of a receiver and filing an involuntary bankruptcy proceeding; and
(iii) when applicable, a judgment by confession of judgment. Preservation of
these remedies does not limit the power of an arbitrator to grant similar
remedies that may be requested by a party in a Dispute.
X.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
X.9. PUBLIC ANNOUNCEMENTS. Any public announcement or press release
by either party describing the transactions provided for herein must be
approved in advance by the other party, subject, however, to any securities law
disclosure requirements, provided that such approval will not be unreasonably
withheld, provided further that no disclosure of the purchase price payable
hereunder will be disclosed unless required by applicable law.
X.10. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto and the documents delivered pursuant to this Agreement, embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof. The Exhibits and Schedules hereto are an integral part
of this Agreement and are incorporated by reference herein. Each party hereto
acknowledges to the other that it has not made any, and makes no, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth herein.
28
34
X.11. BULK SALES. Buyer waives compliance by Seller with respect to
any bulk sales or other transfer laws applicable to the transactions
contemplated hereunder. Seller hereby agrees to indemnify and hold Buyer
harmless from and against any and all losses, claims, costs, charges, and
expenses arising out of or resulting from noncompliance by Seller or Buyer with
respect to any bulk sales laws or transfer laws applicable to the transactions
contemplated hereunder.
X.12. PARTIAL INVALIDITY. Whenever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision of provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.
SPARTAN ▇▇▇▇▇
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
SYNTHETIC INDUSTRIES, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
29