Exhibit 10.20
Document # 3.5
EXHIBIT 1
ASSET PURCHASE AGREEMENT UPON EXERCISE OF OPTION
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AGREEMENT dated as of ________ herein, together with the Exhibits attached
hereto and the lists to be delivered pursuant hereto referred to as the
"Agreement") by and among Lakeland Industries, Inc, a Delaware corporation
("Parent"), RFB Lakeland Industries Private Limited, an Indian corporation
controlled by Parent ("Buyer"), RFB Latex Limited, an Indian corporation
("Seller") and each of the individual shareholders of Seller who have executed
this Agreement (the "Principal Shareholders").
In reliance upon the representations and warranties made herein and in
consideration of the mutual agreements herein contained, Buyer and Parent, on
the one hand, and Seller and the Principal Shareholders, on the other hand,
hereby agree as follows:
1. Transfer of Business, Properties and Assets of Seller and Certain
Related Matters.
(a) Sale and Transfer of Business, Properties and Assets. Subject to
the terms and conditions of this Agreement, and in reliance on the
representations, warranties, and agreements of Buyer and Parent made or
deemed to be made hereunder, and in consideration of the purchase by Buyer
described below, Seller hereby agrees to sell, transfer, convey, assign
and deliver to Buyer at the Closing all of its then existing Industrial
Glove business, properties and assets, as a going concern, including,
without limitation, the properties, assets and other rights referred to in
the ▇▇▇▇ of sale (the "▇▇▇▇ of Sale") in the form of Exhibit A hereto, but
excluding the Excluded Assets (such business, properties, assets and other
rights of Seller to be purchased and sold hereunder being hereinafter
referred to as the "Purchased Assets"). As used in this Agreement, the
term Excluded Assets shall mean those assets listed on Exhibit B hereto,
and the Purchased Assets means those assets listed on Exhibit C
(b) Purchase Price. Subject to the terms and conditions of this
Agreement, and in reliance on the representations, warranties,
undertakings and agreements of Seller made or deemed to be made hereunder,
and in consideration of such sale, conveyance, transfer, assignment and
delivery, Buyer agrees
(i) To pay to Seller's Bank's in accordance with the Option
Agreement which is made a part hereof an amount equal to, but
no greater than $2,650,000 being hereinafter referred to as
the ("Initial Purchase Price"),
(ii) Sellers Balance Sheet as of the Closing Date (the "Audited
Closing Balance Sheet") and the Profit & Loss Statement for
the period from March 31, 2006, to the Closing Date of the
Seller (the "2006 Interim P&L") are both to be prepared
pursuant to Generally Accepted Accounting Principles (GAAP) as
applied in the United States. The Audited Closing Balance
Sheet shall be audited by
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Buyer's independent accountants or a local CPA firm to be
mutually agreed upon.
(iii) An amount of $100,000 USD shall be reserved (the "Reserve") at
closing in an escrow account that shall be applied towards
indemnifying Buyer against any breach by Seller of its
representations and warranties set forth in this Agreement.
The escrow shall be set up by Buyer and Seller. The Reserve
shall be liquidated as follows: 50% six months after the date
of the closing and the balance one year following the closing.
In the case any item shall be charged to this reserve, Seller
shall be given notice and the opportunity to contest and
collect or resolve the item.
(c) Allocation of Purchase Price. The Purchase Price described in
Section 1(b) above will be initially allocated to the book or tangible
value of the buildings and equipment being purchased and $100,000 USD then
shall be allocated to Seller's and the Principal Shareholders' agreement
not to compete with the business transferred to Buyer as set forth in
Section 11 hereof. Buyer and Parent, on the one hand, and Seller, on the
other hand, represent, warrant, and agree that such allocation was
determined through arm's length negotiations. Buyer and Parent, on the one
hand, and Seller, on the other hand, each agrees that it will adopt and
utilize the amounts allocated to each asset or class of assets described
in the immediately preceding sentence for purposes of all federal, state
and other income tax returns filed by it and that it will not voluntarily
take any position inconsistent therewith upon examination of any such tax
return, in any claim, in any litigation or otherwise with respect to such
income tax returns. Notwithstanding any other provision of this Agreement,
the foregoing representation, warranty and agreement shall survive the
Closing Date without limitation.
(d) Payment of Purchase Price. At the Closing, Buyer will deliver to
Seller Banks a check drawn against immediately available funds in an
amount equal to $2,550,000, pursuant to the amount determined under
Section 1(b). The remainder of the Initial Purchase Price, $100,000, shall
be paid by Seller at Closing but held in escrow pursuant to Section
1(b)(v). Buyer, however, will pay the Principal Shareholders on their
designee separately on additional $100,000 USD for ▇▇▇▇ ▇▇ and the
building and improvements on.
(e) Instruments of Conveyance, Transfer, Assumption, Etc. Seller
shall properly execute and deliver to Buyer at the Closing: (i) the ▇▇▇▇
of Sale; (ii) assignments and consents to assignments, in form reasonably
satisfactory to Buyer with respect to each of the contracts and other
agreements and rights to be assigned to Buyer hereunder which require for
such assignment the consent or waiver of any third party [and as to which
Buyer shall have requested the obtaining of such consent or waiver]; and
(iii) Noida SEZ leases in proper form for recordation and otherwise
reasonably satisfactory in form and substance to counsel for Buyer and
Parent to the real property being leased hereunder in accordance with
Section 4(i). Simultaneously with
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the Closing, Seller shall take all steps requisite to put Buyer in actual
possession and operating control of the Purchased Assets, including,
without limitation, disclosure to such persons as Buyer and Parent may
designate of Seller's trade secrets, formulae and other proprietary
information pertaining to the business of Seller. Seller and Buyer shall
each properly execute and deliver to the other at the Closing the
following additional documents, each dated the Closing Date (all of which,
together with this Agreement, and the ▇▇▇▇ of Sale are hereinafter
sometimes referred to as the "Agreements"):
(f) Further Assurances. At the Closing and from time to time after
the Closing, (i) at the request of Buyer and without further
consideration, Seller shall promptly execute and deliver to Buyer such
certificates and other instruments of sale, conveyance, assignment and
transfer, and take such other action, to sell, convey, assign and transfer
to and vest in Buyer or to put Buyer in possession of the Purchased Assets
2. Closing. The Closing of the transactions provided for in Section 1
hereof will take place at the offices of Buyer's Indian
Counsel, at 10:00 A.M. or at such other place, time as may be
agreed upon by Buyer, Parent and Seller, but in any event, no
later than February 15, 2007 unless extended by mutual
agreement of both Buyer and Seller.
3. Termination. Anything contained in this Agreement other than in this
Section 3 to the contrary notwithstanding, this
Agreement may be terminated prior to the Closing Date
(a) by Buyer and/or Parent if, due to causes beyond the
control of any of the parties to this Agreement, the
Closing does not occur on or before such later date as
may be agreed upon in writing by the parties hereto).
Termination pursuant to this Section 3 shall be without
liability of any kind on the part of either party
hereto, and in such event each party shall bear and pay
all costs and expenses incurred by it in connection with
this Agreement and the transactions contemplated hereby.
4. Representations and Warranties by Seller and the Principal
Shareholders.
Seller and the Principal Shareholders represent and warrant jointly and
not severally that:
(a) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the
Republic of India and has all power and authority to
carry on its business as now being conducted and to own
its properties and is duly licensed or qualified and in
good standing as a foreign corporation in each
jurisdiction in which its failure to qualify would have
a materially
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adverse effect on the business, financial condition,
operations or prospects of Seller.
(b) Seller has full corporate power and authority to
enter into each of the Agreements to the extent it is a
party thereto and to consummate the transactions
contemplated hereby. The execution, delivery and
performance by Seller of each of the Agreements to which
Seller is a party have been duly authorized by all
requisite corporate action; each of the Agreements to
which Seller is a party has been duly executed and
delivered by Seller and (assuming due execution and
delivery by the other party thereto) constitutes a valid
and binding obligation of Seller, enforceable in
accordance with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium, and other laws affecting
creditors' rights generally from time to time in effect.
(c) The instruments of conveyance and transfer to be
executed by Seller and delivered to Buyer at the Closing
will be valid in accordance with their terms and
effective to assign, transfer and convey to Buyer at the
Closing all of the then existing business, buildings,
equipment, leases and other such properties, assets and
other rights of Seller used in its business, including
such title as is specified in Sections 4(h) and 4(i),
but excluding the Excluded Assets.
(d) Seller is not a party to, subject to or bound by any
agreement or any judgment, award, order, write,
injunction or decree of any court, governmental body or
arbitrator which would conflict with or be breached by
the execution, delivery or performance by Seller of this
Agreement or which could prevent the carrying out of
this Agreement.
(e) Except as disclosed on Lists 9 and 10, neither
Seller nor any of the properties, assets and other
rights referred to in the ▇▇▇▇ of Sale is a party to,
subject to or bound by any agreement or any judgment,
award, order, writ, injunction or decree of any court or
of any governmental body or of any arbitrator which
could prevent the use by Buyer of the properties, assets
and other rights referred to in the ▇▇▇▇ of Sale or
materially adversely affect the conduct by Buyer of the
business of Seller, in each case in accordance with
present practices, after the Closing Date or which, by
operation of law, or pursuant to its terms, would be
breached, terminate, lapse, or be subject to termination
upon the consummation of the transactions contemplated
herein absent the consent or other action of any third
person or agency.
(f) Except as disclosed on List 9, there is no action,
suit or governmental, administrative, arbitration or
regulatory proceeding or investigation pending or, to
the best of
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Seller's knowledge, threatened against or relating to
Seller which could have a materially adverse effect on
its business, financial condition, operations or
prospects, the Purchased Assets or the transactions
contemplated by this Agreement.
(g) Seller has delivered to Buyer (A) complete, correct
and detailed lists, in form and substance reasonably
acceptable to Buyer, as of the date of this Agreement,
specifying with respect to the business, properties,
assets and obligations of the Seller each and every item
in the following categories referred to below, and (B)
true and complete copies of the documents and other
materials that underlie such lists:
(i) List I - presently outstanding contracts,
agreements, commitments and bids (other than
those included in List 4); written and oral
leases (other than leases disclosed in List
7); security deposits under leases; licenses;
franchises; dealership, service, agency and
other agreements which, in each case, involve
the receipt or payment of more than
(pound)1,000 Rupees; and, with respect to
each item in each category referred to above,
a specification as to whether the consent of
any third person or agency is required for
the effective assignment thereof;
(ii) List 2 - machinery, equipment, tools, dies,
furniture, furnishings, leasehold
improvements, vehicles, buildings and other
tangible physical assets and fixtures and the
location of such (other than items in any of
the foregoing categories having a value of
not more than (pound)100 Rupees in the
aggregate);
(iii) List 3 - (A) the policies of insurance
presently in force (other than those required
to be set forth in List 4) and, without
restricting the generality of the foregoing,
those covering Seller's public and product
liability and its personnel, properties,
buildings, machinery, equipment, furniture,
fixtures and operations, specifying with
respect to each such policy, the name of the
insurer, type of coverage, term of policy,
limits of liability and annual premium, (B)
Seller's premiums and losses, by year, by
type of coverage, for the past five years
based on information received from Seller's
insurance carrier(s), (C) all outstanding
insurance claims by Seller for damage to or
loss of its property or income which have
been referred to insurers or which Seller
believes to be covered by commercial
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insurance, (D) general comprehensive
liability policies carried by Seller for the
past five years, including excess liability
policies, and (E) any agreements,
arrangements or commitments under which
Seller indemnifies any other person (with the
exception of any obligation arising in
connection with lease, purchase or sale
transactions arising in the ordinary course
of Seller's business) in which the maximum
exposure exceeds (pound)1,000 Rupees or is
required to carry insurance for the benefit
of any other person;
(iv) List 4 - names, current annual compensation
rates (including bonuses and commissions),
accrued bonus, accrued sick leave and accrued
severance pay of all present salaried
employees of Seller that Buyer may hire from
Seller now or in the future in accordance
with the Option Agreement, aggregate accrued
vacation pay; the current base salary rate of
each of such individuals; employment,
managerial, advisory or consulting agreements
and confidentiality or other agreements
protecting proprietary processes, formulae or
information; copies of all pension,
profit-sharing, thrift, or other retirement
or pension plans governmentally required or
private, individual or group bonus or other
deferred or incentive plans, severance plans,
hospitalization, insurance, vacation, death
benefit, collective bargaining, union or
other employee association agreements, or
other similar plans in each case covering
employees of Seller that may move to Buyer's
Company and as amended to date, and all
amendments thereto prior to the Closing Date,
agreements, arrangements, commitments or
understandings providing for any employee
benefit.
(v) List 5 - individual refundable deposits,
prepaid expenses, deferred charges and "other
assets" in excess of (pound)2000 Rupees;
(vi) List 6 - liens, encumbrances, charges,
restrictions, claims and security interests
with respect to the business, assets and
property to be transferred hereunder which do
not constitute real property;
(vii) List 7 - each and every parcel of real
property or interest therein, owned or leased
in whole or in part by Seller and complete
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and correct copies of each and every of the
following, if any, in the possession of
Seller will be made available for review by
Buyer: (A) title reports, title binders,
survey documents and data affording
information or opinions with respect to,
certifying to, or evidencing the extent,
current title, title history, title
marketability, use, possession, restriction
or regulation, if any (governmental or
otherwise), and compliance with applicable
laws, of (x) the real property or (y) any
City, State, County or Country interest in
(or in the nature of) real property or in a
land or building lease or chattel real; (B)
deed or title-holding or trust agreements, if
any, under which any of the parcels may have
been conveyed to Seller or under which the
same may be held for the benefit of Seller;
and (C) leases; except as noted in such list,
all such buildings, structures, leasehold
improvements and the equipment therein
currently are used by or useful to Seller in
the ordinary course of business and, except
as so noted and except for normal wear and
tear, there are no material defects with
respect thereto which would impair the
day-to-day use by Buyer of any such
buildings, structures, leasehold improvements
or equipment or which would subject Buyer to
material liability under applicable law;
(viii) List 8 - except for any Excluded Assets
listed on Exhibit B, trademark registrations
and applications and notices of infringement
therefore, service ▇▇▇▇ registrations (which
list shall include but not be limited to
indications of length of use of each trade
and service ▇▇▇▇ as well as identification of
product(s) on which each trade and service
▇▇▇▇ is used, and registration numbers,
registration and renewal dates, affidavit of
use filings), patents and patent
applications, copyrights, and applications
therefore (including information as to
expiration dates of all the foregoing where
applicable) presently owned, in whole or in
part, by Seller and used or useful in
Seller's Industrial Glove business; and all
trademark licenses, service ▇▇▇▇ licenses,
copyright licenses, royalty agreements,
patent licenses, assignments, grants and
contracts with employees or others relating
in whole or in
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part to disclosure, assignment, registering
or patenting of any trademarks, service
marks, copyrights, inventions, discoveries,
improvements, processes, formulae, trade
secrets or other know-how and used or useful
in Seller's business. To the best of Seller's
knowledge, except as noted in such list: (i)
the foregoing trademarks, service marks,
copyrights, licenses, assignments, grants,
agreements and contracts are valid; (ii) the
foregoing trademark registrations, service
▇▇▇▇ registrations, copyright registrations
and patents have been duly issued and have
not been cancelled, abandoned or otherwise
terminated; (iii) the foregoing trademark
applications, service ▇▇▇▇ applications,
copyright applications and patent
applications have been duly filed; (iv)
Seller is not in default under any of the
foregoing licenses or agreements other than
defaults, if any, which will not result in
any material loss or liability; and (v) all
such licenses and agreements are binding in
accordance with their terms;
(ix) List 9 - all litigation, governmental or
regulatory proceedings, investigations or
labor disputes pending or to the best of
Seller's knowledge, threatened against
Seller, the officers or directors of Seller
as such officers or directors, or any of the
business, assets or properties of Seller to
be transferred pursuant hereto or to which
Seller or its officers or directors as such
officers or directors, is a party, as
plaintiff, defendant or otherwise; and
(x) List 10 - all federal, state, local and
foreign governmental licenses and permits
necessary in the conduct of Seller's
business; each jurisdiction in which the
nature of the business of Seller requires
Seller to qualify to do business as a foreign
corporation; all federal, state, local and
foreign governmental or judicial consents,
orders, decrees and other compliance
agreements under which Seller is operating or
bound with regard to its Industrial Glove
Business; all reports of inspection of
Seller's businesses and properties from
January 1, 2005 to the date hereof under all
applicable Indian federal, state and local
health and safety laws and regulations; and
copies of all
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of the foregoing and correspondence relating
thereto.
(h) Except as disclosed on List 6, Seller has title to
the properties, assets and other rights referred to in
the ▇▇▇▇ of Sale that do not constitute real property,
free and clear of all liens and encumbrances.
(i) Except for, (A) such imperfections of title, which
do not materially affect the use or value thereof, (B)
liens of current taxes not yet delinquent or being
contested in good faith, and (C) except as may be
described in List 7 hereto, Seller has good and
marketable title to the properties constituting real
property to be transferred to Buyer hereunder. Except as
described in List 7 and except for normal wear and tear,
all of the buildings, improvements and fixtures, owned
or leased by Seller are in a good state of repair,
maintenance and operating condition in order to conduct
the business of the Seller as now conducted.
(j) Seller has filed (or has obtained extensions of the
time by which it is required to file) all Indian Union
income tax returns and all other federal, state and
local tax returns required to be filed by it and has
paid all taxes shown due on the returns so filed as well
as all other taxes, assessments and governmental charges
which have become due, except such taxes, if any, as are
being contested in good faith and as to which adequate
reserves have been provided.
(k) Seller has in all respects performed all obligations
required to be performed by it under, is not in default
under, is not in violation of, and has no knowledge of
any default or violations by any other party to, any of
the Pension Plans and Welfare Plans (hereinafter,
collectively, the "Seller's Employee Plans") which
obligations, defaults or violations are material to the
financial condition, results of operations, business or
prospects of Seller.
(i) There are no actions, suits or claims pending
(other than routine claims for benefits in
the ordinary course), or, to the knowledge of
Seller, threatened and Seller has no reason
to expect any such actions, suits or claims
(other than routine claims for benefits in
the ordinary course) to arise against any of
Seller's Employee Plans or against the assets
of any such Plan which actions, suits or
claims might, singly or in the aggregate,
materially and adversely affect the financial
condition, results of operations, business or
prospects of Seller or of the future
operations of Buyer.
(ii) There are not and will not after the Closing
be any liens encumbrances, charges, claims
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or security interests with respect to the
Purchased Assets, and any additions thereto
or improvements thereon, arising out of any
liabilities in connection with any of
Seller's governmental pension, social
security or Employee Plans.
(l) Except as disclosed on List 8, none of the
processes, chemical or production, currently used by
Seller with respect to the business, properties and
assets to be transferred hereunder or any of its
properties or products contracted or sold by Seller with
respect thereto, or trademarks, trade names, labels or
other marks or copyrights used by Seller with respect
thereto, infringe the patent, industrial property,
trademark, trade name, label, other ▇▇▇▇, right or
copyright of any other person or entity, and Seller has
not received any notice of adverse claim by any third
party with respect thereto. Seller has license
agreements in force to the extent necessary to permit
its full use of all of the processes used by it with
respect to the business, properties and assets to be
transferred hereunder and to permit such operations and
sales in accordance with its present and planned
practices.
(m) Except as specifically disclosed in writing by
Seller to Buyer or Buyer's independent certified public
accountants and reflected in the calculation of the book
value of Seller's equipment and lease hold improvements
being transferred hereunder shall conform in all
respects with Seller's applicable specifications and
warranties and are not obsolete, broken or about to
break; and all information furnished to the independent
certified public accountants and other representatives
of Buyer for the purpose of determining the equipment's
book value is complete and correct.
(n) The machinery, tools, equipment and other tangible
physical assets to be transferred by Seller hereunder
are in good working order, normal wear and tear
excepted, are being used or are useful in the business
of Seller at its present level of activity and are in an
operating condition sufficient to conduct the business
of Seller substantially as now being conducted.
(o) No representation or warranty by Seller or the
Principal Shareholders contained in this Agreement and
no statement contained in any certificate, list, exhibit
or other instrument specified in this Agreement or
otherwise furnished to Buyer in connection with the
transactions contemplated hereby, whether heretofore
furnished to Buyer or hereafter required to be furnished
to Buyer, is, or will be when furnished, inaccurate,
incomplete, misleading or untrue in any material
respect.
(p) Seller represents that Exhibit A herein is same as
Asset List presented to Buyer in August 2005.
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5. Representations and Warranties by Buyer and Parent. Buyer and
Parent each represent and warrant that:
(a) Buyer and Parent are duly organized and validly
existing corporations in good standing under the laws of
the Republic of India and State of Delaware,
respectively, and Buyer is qualified to do business as
an Indian corporation and is in good standing in the
State of Delhi
(b) Buyer and Parent each has full corporate power and
authority to enter into each of the Agreements to the
extent it is a party thereto and to consummate the
transactions contemplated hereby; the execution,
delivery and performance by each of Buyer and Parent of
each of the Agreements to which it is a party have been
duly authorized by all requisite corporate action on the
part of Buyer and Parent; each of the Agreements to
which it is a party has been duly executed and delivered
by Buyer or Parent, as the case may be, and (assuming
due execution and delivery by Seller of those Agreements
to which it is a party) constitutes a valid and binding
obligation of Buyer or Parent, as the case may be,
enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time
in effect.
(c) Neither Buyer nor Parent is a party to, subject to
or bound by any material agreement or any judgment,
award, order, writ, injunction, or decree of any court,
governmental body or arbitrator which would conflict
with or be breached by the execution, delivery or
performance by it of this Agreement or which could
prevent the carrying out of this Agreement.
(d) There is no action, suit or governmental,
administrative, arbitration or regulatory proceeding or
investigation pending or, to the best of Buyer's and
Parent's knowledge, threatened against or relating to
Buyer or Parent which could have a materially adverse
effect on the transactions contemplated by this
Agreement.
6. Conditions Precedent to Obligations of Buyer. Buyer need not
consummate the transactions contemplated by this Agreement
unless the following conditions shall be fulfilled:
(a) All proceedings taken in connection with the
transactions contemplated herein and all instruments and
documents required in connection therewith or incident
thereto shall be reasonably satisfactory in form and
substance to ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and/or Indian, counsels
for Buyer.
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(b) Except for changes in the ordinary course of
business or as otherwise contemplated or permitted by
this Agreement, the representations and warranties of
Seller and the Principal Shareholders contained herein
or in any certificate or document delivered to Buyer
and/or Parent pursuant hereto shall be deemed to have
been made again at and as of the Closing Date and shall
then be true in all material respects; Seller shall have
performed and complied in all material respects with all
agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the
Closing Date; and Buyer and Parent shall have been
furnished with certificates of appropriate officers of
Seller dated as of the Closing Date certifying to the
fulfillment of the foregoing conditions.
(c) Buyer and Parent shall have been furnished with an
opinion dated as of the Closing Date, counsel for
Seller, to the effect that:
(i) Seller is a corporation duly organized,
validly existing and in good standing under
the laws of the Republic of India has all
power and authority to carryon its business
as now being conducted and to own its
properties and is duly licensed or qualified
and in good standing as a Indian corporation
in State of Delhi
(ii) Seller has full corporate power and authority
to enter into each of the Agreements to the
extent it is a party thereto and to
consummate the transactions contemplated
hereby and thereby; the execution, delivery
and performance by Seller of the Agreements
to which it is a party have been duly
authorized by all requisite corporate action
on the part of Seller; each of the Agreements
to which it is a party has been duly executed
and delivered by Seller and (assuming due
execution and delivery by the other party
thereto) constitutes a valid and binding
obligation of Seller, enforceable in
accordance with its terms, subject, as to
enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency,
moratorium, and other laws affecting
creditors' rights generally from time to time
in effect and general principles of equity;
(iii) the instruments of conveyance and transfer
executed by Seller and delivered to Buyer at
the Closing have been duly authorized and
executed by Seller and are valid in
accordance with their terms and effective to
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assign, transfer and convey to Buyer at the
Closing all of the Purchased Assets;
(iv) to the best of such counsel's knowledge and
to the extent that any of the following would
materially and adversely affect the business
of Seller, neither Seller nor any of the
properties, assets and other rights referred
to in the ▇▇▇▇ of Sale is subject to or
"bound by any agreement or any judgment,
award, order, writ, injunction or decree of
any court or of any governmental body or of
any arbitrator to which Seller is a party or
which specifically refers to Seller and
notice of which has been delivered to Seller
which could prevent the use by Buyer of the
properties, assets and other rights referred
to in the ▇▇▇▇ of Sale or the conduct by
Buyer of the business of Seller, in each case
in accordance with present practices, after
the Closing Date or which, by operation of
law, or pursuant to its terms, would be
breached, terminate, lapse, or be subject to
termination upon the consummation of the
transactions contemplated herein absent the
consent or other action of any third person
or agency; and
(v) except as may be specified by said counsel,
they do not know of any action, suit or
governmental, administrative, arbitration or
regulatory proceeding or investigation
pending or threatened against or relating to
Seller. In rendering such opinion, counsel
for Seller may rely upon certificates of one
or more officers of Seller or of public
officials as to factual matters.
(d) No action, suit or proceeding before any court or
governmental or regulatory authority shall be pending,
no investigation by any governmental or regulatory
authority shall have been commenced, and no action, suit
or proceeding by any governmental or regulatory
authority shall have been threatened, against Buyer or
Seller or Parent or any of the principals, officers or
directors of any of them, seeking to restrain, prevent
or change the transactions contemplated hereby or
questioning the legality or validity of any such
transactions or seeking material damages in connection
with any such transactions.
(e) All consents of third parties including, without
limitation, governmental authorities and self-regulatory
agencies, and all filings with and notifications of
governmental authorities, regulatory agencies (including
13
non-governmental self-regulatory agencies) or other
entities which regulate the business of Seller or Buyer
or Parent, necessary on the part of Seller or Buyer or
Parent, or their respective subsidiaries or affiliates,
to the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and
to permit the continued operation of the respective
businesses of Seller and Buyer and their respective
subsidiaries in substantially the same manner after the
Closing Date as theretofore conducted, other than
routine post-closing notifications or filings, shall
have been obtained or effected.
(f) All consents required for the assignment of all
contracts, patents, trademarks, copyrights and other
intangibles and other agreements necessary for the
continued operation of the business of Seller after the
Closing Date on substantially the same basis as
presently operated shall have been obtained.
(g) The employment agreements executed and delivered by
▇▇▇▇▇ ▇▇▇▇▇ and ▇.▇. ▇▇▇▇▇, shall be in full force and
effect and there shall not have occurred any default or
repudiation thereof.
(h) Seller shall have obtained title insurance if
available covering any real property to be transferred
hereunder under title insurance policies at normal rates
and with no exceptions other than those disclosed in
Section 4(i) or in List 7.
(i) Individuals holding not less than one hundred
percent (100%) of the voting stock of Seller shall have
executed this Agreement.
7. Conditions Precedent to Obligations of Seller. Seller need not
consummate the transactions contemplated hereby unless the
following conditions shall be fulfilled:
(a) All proceedings taken in connection with the
transactions contemplated herein and all instruments and
documents required in connection therewith or incident
thereto shall be reasonably satisfactory in form and
substance to counsel for Seller.
(b) Except for changes in the ordinary course of
business or as otherwise contemplated or permitted by
this Agreement, the representations and warranties of
Buyer and Parent contained herein or in any certificate
or document delivered to Seller pursuant hereto shall be
deemed to have been made again at and as of the Closing
Date and shall then be true in all material respects;
Buyer and Parent shall have performed and complied in
all material respects with all agreements and,
conditions required by this Agreement to be performed or
complied with by them prior to or at the Closing Date;
and Seller shall have been furnished with certificates
of appropriate
14
officers of Buyer and Parent dated as of the Closing
Date certifying to the fulfillment of the foregoing
conditions.
(c) Seller shall have been furnished with an opinion
dated as of the Closing Date of counsel for Buyer and
Parent, to the effect that:
(i) Buyer and Parent are duly organized and
validly existing corporations in good
standing under the laws of the State of Delhi
and the State of Delaware, respectively, and
Buyer is qualified to do business as a Indian
corporation and is in good standing in the
State of Delhi.
(ii) Buyer and Parent each has full corporate
power and authority to enter into each of the
Agreements to the extent it is a party
thereto and to consummate the transactions
contemplated hereby and thereby; the
execution, delivery and performance by each
of Buyer and Parent of the Agreements to
which it is a party have been duly authorized
by all requisite corporate action on the part
of Buyer and Parent; each of the Agreements
to which it is a party has been duly executed
and delivered by Buyer and Parent, as the
case may be, and (assuming due execution and
delivery by Seller of those Agreements to
which it is a party) constitutes a valid and
binding obligation of Buyer and Parent,
enforceable in accordance with its terms,
subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization,
insolvency, moratorium and other laws
affecting creditors' rights generally from
time to time in effect and general principles
of equity;
(iii) the Undertaking executed and delivered to
Seller by Buyer at the Closing is valid in
accordance with its terms and is effective to
provide, as between Buyer and Seller, for the
assumption by Buyer of all of the obligations
and liabilities of Seller specified therein
which are valid and binding obligations and
liabilities of Seller; and
(iv) Except as may be specified by said counsel,
they do not know of any action, suit or
governmental, administrative, arbitration or
regulatory proceeding or investigation
pending or threatened against or relating to
Buyer or Parent which could have a materially
adverse impact on the transactions
contemplated by this Agreement. In rendering
such opinion,
15
counsel to Buyer and Parent may rely upon
certificates of one or more officers of Buyer
or of public officials as to factual matters.
(d) No action, suit, or proceeding before any court or
governmental or regulatory authority shall be pending,
no investigation by any governmental or regulatory
authority shall have been commenced, and no action, suit
or proceeding by any governmental or regulatory
authority shall have been threatened, against Buyer or
Parent or any of its officers or directors seeking to
restrain, prevent, or change the transactions
contemplated hereby or questioning the legality or
validity of any such transactions or seeking material
damages in connection with any such transactions.
(e) All consents of third parties including, without
limitation, governmental authorities and self-regulatory
agencies, and all filings with and notifications of
governmental authorities, regulatory agencies (including
non-governmental self-regulatory agencies) or other
entities which regulate the business of Buyer or Parent,
necessary on the part of Buyer or Parent, or their
respective subsidiaries or affiliates, to the execution
and delivery of this Agreement and the consummation of
the transactions contemplated hereby, other than routine
post-closing notifications or filings, shall have been
obtained or effected.
8. Indemnification by Seller and the Principal Shareholders.
Seller and the Principal Shareholders hereby agree both
jointly and severally to defend, indemnify and hold harmless
Buyer and Parent and each of their respective successors,
assigns and affiliates from and against any and all costs,
liabilities and damages resulting from:
(a) any and all losses, damages or deficiencies
resulting from any and all: (i) misrepresentations or
breaches of warranty, agreement or undertaking hereunder
on the part of Seller; and (ii) failures by Seller to
perform or otherwise fulfill any undertaking or other
agreement or obligation hereunder;
(b) all liabilities of Seller not specifically assumed
by Buyer, including, without limitation, (i) all
liabilities and expenses (including attorneys' fees and
disbursements) incurred by Buyer and/or Parent resulting
from the parties' failure to comply with the applicable
Indian law in order to consummate the transaction and
(ii) all expenses incurred by Buyer and/or Parent in
respect of taxes, telephone and similar items to the
extent used or consumed by Seller before the Closing or,
in the case of taxes, covering any period before the
Closing;
(c) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, costs and
16
expenses, including reasonable attorneys' fees, incident
to any of the foregoing or such indemnification;
provided, however, that if any claim, liability, demand,
assessments action, suit or proceeding shall be asserted
against Buyer and/or Parent or any of their respective
successors or assigns in respect of which Buyer and/or
Parent proposes to demand indemnification, Buyer and/or
Parent shall notify Seller thereof. Subject to rights of
or duties to any insurer or other third person having
liability therefore, Seller shall have the right
promptly upon receipt of such notice to assume the
control of the defense, compromise or settlement of any
such claim, demand, liability, assessment, action, suit
or proceeding, including, at its own expense, employment
of counsel reasonably satisfactory to Buyer and Parent;
provided, however, that if Seller shall have exercised
its right to assume such control, Buyer and/or Parent
may, in its sole discretion, employ counsel to represent
it (in addition to counsel employed by Seller, and in
the latter case, at its sole expense) in any such
matter, notify Buyer (with a copy to Parent) thereof.
Subject to rights of or duties to any insurer or other
third person having liability therefore, Buyer shall
have the right promptly upon receipt of such notice to
assume the control of the defense, compromise or
settlement of any such claim, demand, liability,
assessment, action, suit or proceeding, including, at
its own expense, employment or counsel reasonably
satisfactory to Seller; provided, however, that if Buyer
shall have exercised its right to assume such control,
Seller may, in its sole discretion, employ counsel to
represent it (in addition to counsel employed by Buyer,
and in the latter case, at its sole expense) in any such
matter, and in such event counsel selected by Buyer
shall be required to cooperate with such counsel of
Seller in such defense, compromise or settlement; and
provided further, however, that Buyer's obligation, and
Parent's obligation to cause Buyer, to indemnify under
this Section 9 shall accrue only if and to the extent
that the aggregate of all such losses, damages,
deficiencies, debts, liabilities, costs and expenses
arising under this Agreement exceeds (pound)2,000 Rupees
and, except as otherwise provided in Section II, occurs
within five years after the Closing.
9. Expenses and Finder's Fees. Seller will bear the expenses
incurred by Seller in connection with this Agreement and its
performance and Buyer and Parent will bear the expenses
incurred by them. Seller, on the one hand, and Buyer and
Parent, on the other hand, each represent and warrant to the
other that the negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by
Seller directly with Buyer and Parent and in such a manner as
not to give rise to any valid claims against Seller or Buyer
or Parent for
17
a brokerage commission, finder's fee or other like payment.
Seller represents and warrants to Buyer and Parent that
neither Seller nor any officer or director of Seller knows of
any broker or finder having any connection with this Agreement
or the transactions contemplated hereby; Buyer and Parent
represent and warrant to Seller that neither Buyer nor Parent
nor any officer or director of Buyer or Parent knows of any
broker or finder having any connection with this Agreement or
the transactions contemplated hereby.
10. Survival of Representations and Warranties. The respective
representations, warranties, covenants and agreements of
Seller and the Principal Shareholders and of Buyer and Parent
contained or deemed to be contained herein shall survive the
Closing Date, and any investigation made at any time with
respect thereto, for five years, except for:
(a) Any item as to which, within such period, Buyer
and/or Parent, under Section 8, or Seller and the
Principal Shareholders, under Section 9, shall have in
good faith asserted a bona fide claim in writing against
the other party or parties, which claim shall identify
with reasonable specificity the basis of the claim;
(b) Any such representation, warranty, covenant or
agreement on the part of Seller relating to taxes,
including liens attaching to any of the Purchased Assets
as a result of the failure to pay taxes, which shall
extend for a period of ten years;
(c) Any such representation, warranty, covenant or
agreement on the part of Seller and Buyer relating to
the liabilities and expenses referred to in Section 8(c)
and Section 9(c), respectively, which shall extend
forever; and
(d) The agreements relating to transfer taxes under
Section 16(1).
11. Covenant Against Competition.
(a) As a further inducement to Buyer to purchase the
assets of Seller hereunder, Seller and the Principal
Shareholders agree jointly and not severally that
(except to the extent otherwise provided in subsection
(b) hereof for the period from the Closing Date through
the tenth anniversary of the Closing Date:
(i) Seller and the Principal Shareholders will
not in any way, directly or indirectly, own,
manage, operate or control any enterprise
which engages in, or otherwise carries on,
any business activity in competition with the
business of Seller transferred to Buyer as of
the Closing Date in any geographic area
(including, without limitation, North,
Central and South America) in which products
of Seller are sold or are offered for sale by
Buyer; Seller and the Principal Shareholders
18
recognize that the offer and sale of the
products of Seller will be worldwide in scope
in that Buyer will directly advertise and
solicit business from customers wherever they
may be found;
(ii) Neither Seller nor the Principal Shareholders
will at any time disclose to other than Buyer
or any of Buyer's affiliates, or use, any
proprietary information relating to Seller,
whether or not such information is embodied
in writing or other physical form. For
purposes of this Agreement, the phrase
"proprietary information" means all
information which is known only to an
employee, former employee or consultant of or
other person in a confidential relationship
with Seller or any of its affiliates and
which relates to specific technical matters
concerning Seller, such as, without limiting
the generality of the foregoing, devices,
formulae, components, patterns or materials
or machines for manufacturing, testing,
building or product development, sales or
financing procedures or methods of Seller or
any of its affiliates or which relates to
specific business matters concerning Seller
such as, without limiting the generality of
the foregoing, the identity of suppliers,
customers or contractors of Seller or its
affiliates;
(iii) Seller and the Principal Shareholders
recognize that all documents and objects
containing or reflecting any proprietary
information relating to Seller, whether
developed by Seller or by someone else for
Seller or any of its affiliates, will be
after the Closing Date the respective
exclusive property of Buyer or of such of its
affiliates, as the case may be; and
(iv) Neither Seller nor the Principal Shareholders
will recruit any employees who accept
employment with Buyer who were formerly
employed by Seller, except with the consent
of Buyer, which shall not be unreasonably
withheld.
(b) Notwithstanding anything to the contrary contained
in subsection (a) above, Seller and the Principal
Shareholders may sell its old industrial glove inventory
of the business transferred to Buyer that is not
purchased by Buyer at the Closing for a period not
greater than ninety (90) days after the Closing to
anyone except for
19
purchasers who are in the Buyer's business or purchasers
who Seller or the Principal Shareholders have reason to
know may resell to such purchasers.
12. Press Releases. Any public announcements regarding the
transactions contemplated hereby shall be made only with the
mutual consent of Seller and Parent.
13. Miscellaneous.
(a) Cooperation. Each of the parties hereto shall use
its best efforts to take or cause to be taken, and to
cooperate with the other party hereto, to the extent
necessary with respect to all actions, and to do, or
cause to be done, consistent with applicable law, all
things' necessary, proper or advisable to consummate and
make effective the transactions contemplated by this
Agreement. From time to time prior to the Closing Date,
Seller will promptly supplement or amend any list
previously delivered to Buyer pursuant to Section 4(g)
with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement,
would have been required to be set forth or described in
such list. No supplement or amendment to any list shall
have any effect for the purpose of determining
satisfaction of the condition set forth in Section 6(b).
(b) Regulatory Filings. Access. Each of the parties
hereto will furnish to the other party hereto such
necessary information and reasonable assistance as such
other party may reasonably request in connection with
its preparation of necessary filings or submissions to
any governmental agency; provided, however, that any
regulatory filings required of Buyer shall be at Buyer's
expense. Seller agrees to give Buyer and advisors,
counsel and representatives of Buyer reasonable access
to its records and facilities for the purpose of
evaluating the basis for the transactions contemplated
hereby. Such access shall include, without limitation,
the review of the books, records and business affairs of
Seller.
(c) Waiver. Any failure of either of the parties hereto
to comply with any of its obligations or agreements or
to fulfill conditions herein contained may be waived in
writing by the other party.
(d) Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to
have been duly given if delivered or mailed, first class
postage prepaid:
(i) If to Seller or the Principal Shareholders,
to:
RFB Latex Limited
Through K. S. ▇▇▇▇▇ and
▇.▇. ▇▇▇▇▇
▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(ii) If to Buyer or Parent, to
Lakeland Industries, Inc.,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
(with a copy to) ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Such names and addresses may be changed by written
notice to each person listed above.
(e) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal
substantive laws of India.
(f) Arbitration. Any dispute or controversy between the
Parties arising out of or in relation to this Agreement
shall be settled through Arbitration in accordance with
the provisions of Indian Arbitration and Conciliation
▇▇▇ ▇▇▇▇ or any amendment thereof. The venue of
arbitration shall be Delhi, India and the language of
arbitration proceedings shall be English.
(f) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of
which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(g) Headings. The section headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(h) Entire Agreement. This Agreement, including the
Exhibits hereto and the documents referred to herein
embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to
herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties with
respect to such subject matter. .
(i) Amendment and Modification. This Agreement may be
amended or modified only by written agreement of the
parties hereto.
(j) Binding Effect; Benefits. This Agreement shall inure
to the benefit of and be binding upon the parties hereto
and their respective successors and assigns; nothing in
this Agreement, express or implied, is intended to
confer on any person other than the parties hereto or
their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason
of this Agreement.
(k) Assignability. This Agreement shall not be
assignable by any party hereto other than, in the case
of an
21
assignment by Buyer, to a direct or indirect subsidiary
of Parent, without the prior written consent of the
other party hereto.
(l) Transfer Taxes. All transfer taxes, stamp taxes,
realty documentary stamp taxes and sales and use taxes,
if any, payable by reason of this transaction or the
sale, transfer or delivery of any of the Purchased
Assets shall be paid and borne as follows:
(i) All such taxes with respect to any realty
included in the Purchased Assets shall be
paid and borne by Seller.
(ii) The parties believe that the tangible
personal property included in the Purchased
Assets (including, without limitation) is
exempt from sales and other transfer taxes in
Noida Special Economic Zone However, in the
event that any such taxes are ultimately
determined to be due with respect to any of
such Purchased Assets, they shall be paid and
borne by Buyer.
(m) Pro-rations. At the Closing, ad valorem property
taxes on the Purchased Assets and utility services with
respect thereto shall be prorated as of the Closing Date
between Seller and Buyer.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
LAKELAND INDUSTRIES, INC.
By___________________________
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President & General Counsel
RFB LAKELAND INDUSTRIES PRIVATE LIMITED
By___________________________
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
RFB LATEX LIMITED
By: _________________________
Name: ▇.▇. ▇▇▇▇▇
Title: Director
By:__________________________
Name: ▇. ▇. ▇▇▇▇▇
Title: Principal Shareholder
By:__________________________
Name: K. S. ▇▇▇▇▇
Title: Principal Shareholder
22
EXHIBIT A
▇▇▇▇ OF SALE
RFB Latex Limited, [Seller], an Indian corporation ("Assignor"), pursuant to the
Asset Purchase Agreement, dated as of October 17th 2005 (the "Agreement"),
between Assignor and the Principal Shareholder of Assignor and RFB Lakeland
Industries Private Limited, [Buyer], an Indian corporation controlled by
Lakeland Industries, Inc. [Parent] ("Assignee"), and for good and valuable
consideration to it in hand paid, receipt of which is hereby acknowledged, does
sell, assign, transfer and convey unto Assignee, its successors and assigns, as
at the opening of business on the date hereof, all of Assignor's business,
properties and assets constituting a going concern, and all of Assignor's
rights, whether at common law or otherwise (except rights of Assignor and
Excluded Assets under the Agreement), claims, including the proceeds of any
claims which may not be assignable, and causes of action arising out of any
transaction occurring on or prior to the date hereof, with respect to Assignor's
business, properties and assets transferred hereunder, irrespective of the time
or date on which any such right, claim or cause of action may arise or accrue.
Without limiting the generality of the foregoing, and subject to the exceptions
set forth above, the rights, claims, causes of action and property and assets
being sold, assigned, transferred and conveyed hereunder by Assignor include all
of its right, title and interest in, to and under the following:
Existing assets, properties and business;
Leases, security deposits and options under leases, licenses, franchises, sales
and other contracts;
Inventories, merchandise, machinery, equipment, furniture, tools, dies, jigs,
vehicles, instruments and fixtures;
▇▇▇▇▇ cash as of the date hereof;
Patents, copyrights, trademarks, formulae, trade secrets, trade names and other
intangibles;
Insurance policies
Accounts receivable;
Sundry asserts and supplies; and
Designs, drawings; research. engineering; marketing, and other data, and all
books and records, including those maintained on tapes, discs or other magnetic
or electronic storage media, except for corporate minute books, stock ledgers
and stock books, relating to its assets, business, and operations; and
Notwithstanding the foregoing; there: shall be excluded from the rights, claims,
causes of action and property and assets being sold, assigned, transferred and
conveyed hereunder all Excluded Assets, (as defined in Schedule I attached
hereto).
Assignor hereby authorizes Assignee to take any appropriate action in connection
with any of said rights, claims, causes of action and property and assets being
sold, assigned, transferred and conveyed hereunder, in the name of Assignor or
in its own or any other name but at its own expense.
TO HAVE AND TO HOLD said rights, claims, causes of action and property,
including without limitation the assets and business of Assignor, as a going
concern, unto Assignee and its successors and assigns., to and for its or their
use forever.
And Assignor does hereby warrant, covenant and agree that it:
23
(a) will warrant and defend the sale of said property, assets and business
against each and every person or persons whomsoever claiming: or who may claim
against any or all of the same; and
(b) will take all steps necessary to put Assignee, its successors or assigns in
actual possession and operating control of said property, assets and business.
IN WITNESS WHEREOF, Assignor has caused the same to be signed by its Director as
at the opening of business on this 17th day of October 2005.
RFB Latex Limited
[SELLER]
By: _______________________________
Name: K. S. ▇▇▇▇▇
Title: Director
By: _______________________________
Name: ▇.▇. ▇▇▇▇▇
Title: Director
24
Exhibit B
EXCLUDED ASSETS
25
Exhibit C
PURCHASED ASSETS
----------------
26