FORM 10-K Page 49
Exhibit 2.4
OLYMPIC DIVISION ACQUISITION AGREEMENT
by and among
VITAFOAM INCORPORATED,
BRITISH VITA PLC,
and
CONE ▇▇▇▇▇ CORPORATION
January 19, 1996
FORM 10-K Page 50
Exhibit 2.4 (continued)
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . .
1.2. References to Exhibits, Schedules, and
Sections. . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . .
1.4. Seller's Knowledge. . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
SALE, LEASE AND LICENSE OF ASSETS; TERMS OF PAYMENT; AND
NONCOMPETE
2.1. The Sale. . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2. Consideration . . . . . . . . . . . . . . . . . . . . . . . .
2.3. Final Fixed Assets Payment. . . . . . . . . . . . . . . . . .
2.4. Inventory Payment . . . . . . . . . . . . . . . . . . . . . .
2.5. Offer of Receivables. . . . . . . . . . . . . . . . . . . . .
2.6. License of Hydrophilic Foam Technology. . . . . . . . . . . .
2.7. Real Property and Other Expenses; Proration . . . . . . . . .
2.8. Assumption of Obligations and Liabilities . . . . . . . . . .
2.9. Seller's Assignments of Warranty Claims . . . . . . . . . . .
2.10. Allocation of Purchase Price. . . . . . . . . . . . . . . . .
2.11. Leaseback Realty. . . . . . . . . . . . . . . . . . . . . . .
2.12. Leased Realty . . . . . . . . . . . . . . . . . . . . . . . .
2.13. Noncompete. . . . . . . . . . . . . . . . . . . . . . . . . .
2.14. Services Agreement. . . . . . . . . . . . . . . . . . . . . .
2.15. Credit to Buyer . . . . . . . . . . . . . . . . . . . . . . .
2.16. No Amendment to ▇▇▇▇▇▇▇▇▇ Agreement; Polymer
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE III
THE CLOSING
3.1. Time and Place of Closing . . . . . . . . . . . . . . . . . .
3.2. Deliveries by Seller. . . . . . . . . . . . . . . . . . . . .
3.3. Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1. Organization; Qualification . . . . . . . . . . . . . . . . .
4.2. Authority Relative to this Agreement. . . . . . . . . . . . .
4.3. Consent and Approvals; No Violation . . . . . . . . . . . . .
FORM 10-K Page 51
Exhibit 2.4 (continued)
4.4. Purchased Assets Conveyed . . . . . . . . . . . . . . . . . .
4.5. Business and Trading Relations. . . . . . . . . . . . . . . .
4.6. Joint Ventures and Partnerships . . . . . . . . . . . . . . .
4.7. Certain Contracts and Arrangements. . . . . . . . . . . . . .
4.8. Assigned Contracts. . . . . . . . . . . . . . . . . . . . . .
4.9. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .
4.10. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . .
4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.12. Licenses and Authorizations . . . . . . . . . . . . . . . . .
4.13. Title to Real Property. . . . . . . . . . . . . . . . . . . .
4.14. Title to Personal Property. . . . . . . . . . . . . . . . . .
4.15. Corporate and Personnel Data; Labor
Relations . . . . . . . . . . . . . . . . . . . . . . . .
4.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .
4.17. Intellectual Property Rights. . . . . . . . . . . . . . . . .
4.18. Infringements . . . . . . . . . . . . . . . . . . . . . . . .
4.19. Purchases and Sales from or to One Party. . . . . . . . . . .
4.20. Financial Statements. . . . . . . . . . . . . . . . . . . . .
4.21. Books and Records . . . . . . . . . . . . . . . . . . . . . .
4.22. Condition of Real Property. . . . . . . . . . . . . . . . . .
4.23. Business Names. . . . . . . . . . . . . . . . . . . . . . . .
4.24. Environmental Matters . . . . . . . . . . . . . . . . . . . .
4.25. Compliance With Laws. . . . . . . . . . . . . . . . . . . . .
4.26. Minimum Purchases . . . . . . . . . . . . . . . . . . . . . .
4.27. Periphlex Agreement . . . . . . . . . . . . . . . . . . . . .
4.28. Accuracy of Information . . . . . . . . . . . . . . . . . . .
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1. Organization. . . . . . . . . . . . . . . . . . . . . . . . .
5.2. Authority Relative to this Agreement. . . . . . . . . . . . .
5.3. Consents and Approvals; No Violation. . . . . . . . . . . . .
5.4. Qualification . . . . . . . . . . . . . . . . . . . . . . . .
5.5. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BRITISH VITA
6.1. Organization and Authority. . . . . . . . . . . . . . . . . .
6.2. Consents and Approvals; No Violation. . . . . . . . . . . . .
6.3. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .
FORM 10-K Page 52
Exhibit 2.4 (continued)
ARTICLE VII
COVENANTS OF SELLER AND BUYER
7.1. Conduct of Business . . . . . . . . . . . . . . . . . . . . .
7.2. Access to Information . . . . . . . . . . . . . . . . . . . .
7.3. Employees and Employee Benefits . . . . . . . . . . . . . . .
7.4. Consummation of Agreement . . . . . . . . . . . . . . . . . .
7.5. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.6. Further Assurances. . . . . . . . . . . . . . . . . . . . . .
7.7. Actions by British Vita . . . . . . . . . . . . . . . . . . .
7.8. Assistance in Pending Litigation. . . . . . . . . . . . . . .
7.9. Other Covenants . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
CLOSING CONDITIONS
8.1. Conditions to Each Party's Obligations to
Effect the Transactions Contemplated Hereby . . . . . . . . .
8.2. Conditions to the Obligations of Seller to
Effect the Transactions Contemplated Hereby . . . . . . . . .
8.3. Conditions to the Obligations of Buyer to
Effect the Transactions Contemplated Hereby . . . . . . . . .
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1. Survival of Representations . . . . . . . . . . . . . . . . .
9.2. Seller's Agreement to Indemnify . . . . . . . . . . . . . . .
9.3. Limitation of Seller's Indemnification
Obligations . . . . . . . . . . . . . . . . . . . . . . . . .
9.4. Third Party Actions or Claims; Remediation
Procedures. . . . . . . . . . . . . . . . . . . . . . . . . .
9.5. Seller's Payment of Its Indemnification
Obligations . . . . . . . . . . . . . . . . . . . . . . . . .
9.6. Conflict with the Escrow Agreement. . . . . . . . . . . . . .
9.7. Indemnification by Buyer. . . . . . . . . . . . . . . . . . .
ARTICLE X
TERMINATION
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . .
10.2. Procedure and Effect of Termination or
Failure to Close. . . . . . . . . . . . . . . . . . . . .
FORM 10-K Page 53
Exhibit 2.4 (continued)
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Commissions . . . . . . . . . . . . . . . . . . . . . . . . .
11.2. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .
11.3. Further Assurances. . . . . . . . . . . . . . . . . . . . . .
11.4. Amendment and Modification. . . . . . . . . . . . . . . . . .
11.5. Waiver of Compliance; Consents. . . . . . . . . . . . . . . .
11.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.7. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . .
11.8. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . .
11.9. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . .
11.10. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .
11.11. Interpretation. . . . . . . . . . . . . . . . . . . . . . . .
11.12. Public Announcements. . . . . . . . . . . . . . . . . . . . .
11.13. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .
11.14. Bulk Sales. . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
Exhibit A1 Form of Buyer Lease
Exhibit A2 Form of Buyer Lease
Exhibit B Form of Holdback Escrow Agreement
Exhibit C1 Facility 1
Exhibit C2 Facility 2
Exhibit C3 Facility 3
Exhibit C4 Facility 4
Exhibit C5 Facility 5
Exhibit C6 Facility 6
Exhibit D Form of Sublease Agreement
Exhibit E Form of Opinion of Buyer's Counsel
Exhibit F Form of Opinion of Seller's Counsel
Exhibit G Form of Assumption Agreement
Exhibit H Form of Services Agreement
Exhibit I Inventory Valuation Principles
Exhibit J Form of License Agreement
SCHEDULES
Schedule 1.1(a) Excluded Assets
Schedule 1.1(b) Tangible Fixed Assets
Schedule 2.8 Assigned Contracts
Schedule 2.10 Allocation of Purchase Price
Schedule 4.3 Consents and Authorizations
Schedule 4.7 Contracts by Category
Schedule 4.9 Litigation
Schedule 4.11 Tax Matters
Schedule 4.12 Licenses and Permits
Schedule 4.14 Tangible Personal Property
FORM 10-K Page 54
Exhibit 2.4 (continued)
Schedule 4.15 Employees and Wage Rates
Schedule 4.16 Insurance Policies
Schedule 4.17 Intellectual Property
Schedule 4.18 Licenses to Intellectual Property;
Third-party Patents
Schedule 4.19 Purchases from One Party
Schedule 4.22 Real Property
Schedule 4.23 Business Names
Schedule 4.24 Environmental Matters
Schedule 9.4 Facility 5 Remediation Plan
FORM 10-K Page 55
Exhibit 2.4 (continued)
OLYMPIC DIVISION ACQUISITION AGREEMENT
THIS AGREEMENT is made and entered as of the 19th day of
January, 1996, and is by and among CONE ▇▇▇▇▇ CORPORATION, a
North Carolina corporation ("Seller"), BRITISH VITA PLC, a
United Kingdom company ("British Vita"), and VITAFOAM
INCORPORATED, a North Carolina corporation and an indirect
wholly owned subsidiary of British Vita ("Buyer").
Background Statement
Seller is engaged in the business of manufacturing,
converting and selling polyurethane foam, polyester fiber and
related products at six facilities located in Tupelo,
Mississippi (one facility), Greensboro, North Carolina (two
facilities), Trinity, North Carolina (one facility) and High
Point, North Carolina (one facility), Thomasville, North
Carolina (one facility), all of which together are organized
as and constitute the "Olympic Products Company" or "Olympic
Division" of Seller (the "Business"). Buyer desires to buy,
and Seller desires to sell, certain of the assets, as
described herein, that are used in, or in connection with, 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:
"Arbitration Rules" shall have the meaning given to it in
Section 11.9.
"Assigned Contracts" shall have the meaning given to it
in Section 4.8.
"Assumption Agreement" shall mean an assignment and
assumption agreement of the form attached hereto as Exhibit G
pursuant to which Seller shall assign to Buyer and Buyer shall
FORM 10-K Page 56
Exhibit 2.4 (continued)
assume certain of Seller's contracts and liabilities and
obligations to the extent, but only to the extent, provided in
Section 2.8.
"British Vita" shall mean British Vita PLC, a United
Kingdom company.
"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 North Carolina legal
holiday, or a day on which commercial banks in Greensboro,
North Carolina are required by law to be closed.
"Business Employees" shall have the meaning given to it
in Section 7.3(a).
"Buyer" shall mean Vitafoam Incorporated, a North
Carolina corporation.
"Buyer Entity" shall have the meaning given to it in
Section 9.2.
"Buyer Leases" shall mean the lease agreements, to be
executed at closing in substantially the forms attached hereto
as Exhibits A-1 and A-2, between Buyer, as tenant, and Seller,
as landlord, pursuant to which Seller will lease the Leaseback
Realty to Buyer.
"Buyer's Accountants" shall have the meaning given to it
in Section 2.3.
"Buyer's Damages" shall have the meaning given to it in
Section 9.2.
"▇▇▇▇▇▇▇▇▇ Agreement" shall have the meaning given to it
in Section 4.26.
"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.
FORM 10-K Page 57
Exhibit 2.4 (continued)
"Decision" shall have the meaning given to it in Section
9.4(b).
"Disputes" shall have the meaning given to it in Section
11.9.
"Environmental Law" shall mean any presently existing
federal, state or local law (including common law), statute,
ordinance, rule, regulation, permit, directive, license,
approval, guidance, interpretation, order, or other legal
requirement relating to the protection of human health or the
environment, including, but not limited to, any requirement
pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation
of materials that are or may constitute a threat to human
health or the environment. Without limiting the foregoing,
each of the following is an Environmental Law: the
Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801
et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.) ("RCRA"), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Safe Drinking Water Act (42 U.S.C. Section 300 et seq.) and
the Occupational Safety and Health Act (29 U.S.C. Section 651
et seq.) ("OSHA"), as such laws and regulations have been
amended or supplemented, and each similar federal, state or
local statute, and each rule and regulation promulgated under
such federal, state and local laws.
"Escrow Agent" shall mean the Person named as escrow
agent under the Escrow Agreement.
"Escrow Agreement" shall mean the Holdback Escrow
Agreement of the form attached hereto as Exhibit B to be
entered into on the Closing Date by Buyer, Seller and the
Escrow Agent to be named therein.
"Estimated Fixed Assets Payment" shall have the meaning
given to it in Section 2.2(a).
FORM 10-K Page 58
Exhibit 2.4 (continued)
"Excluded Assets" shall mean the Leaseback Realty; the
Licensed Technology; any insurance policies and claims
receivable thereunder, or bonds, letters of credit or similar
items or any cash surrender value in regard thereto; any of
Seller's cash or cash equivalents; the books, records and
documents relating to the Business (except that Seller shall
provide Buyer, on the Closing Date and from time to time
thereafter, with access to and/or copies of such books,
records and documents, provided that Buyer will reimburse
Seller for the reasonable cost of such copies); any claims or
rights against third parties (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 close of business on the Closing Date, including
without limitation claims for refunds of federal, state or
local franchise, income or other taxes; Receivables, provided
that Seller shall offer to sell Receivables to Buyer at the
times and in the manner set forth in Section 2.5; and the
properties and rights listed on Schedule 1.1(a).
"Existing Lease" shall mean the Lease Agreement dated
July 18, 1977, between High Point Industrial Leasing, a North
Carolina limited partnership, as landlord, and Seller, as
tenant, pursuant to which Seller leases Facility 3 (High
Point).
"Facility" or "Facilities" shall mean one or more of the
following six (6) manufacturing facilities owned or leased by
Seller in connection with its operation of the Business:
(1) "Facility 1" is located on a 81.73 acre tract of
land located on Pleasant Garden Road in ▇▇▇▇▇▇▇▇
Township, Guilford County, North Carolina, which
is described more specifically in Exhibit C-1.
(2) "Facility 2" is located on a 15.14 acre tract of
land located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the
City of Greensboro, Guilford County, North
Carolina, which is described more specifically in
Exhibit C-2.
(3) "Facility 3" is located on a 6.32 acre tract of
land located on Shore Drive in the City of High
Point, Guilford County, North Carolina, which is
described more specifically in Exhibit C-3.
FORM 10-K Page 59
Exhibit 2.4 (continued)
(4) "Facility 4" is located on a 21.79 acre tract of
land located on Trinity Street Extension in
Thomasville Township, Davidson County, North
Carolina, which is described more specifically in
Exhibit C-4.
(5) "Facility 5" is located on a 54.8 acre tract of
land located on ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ in New Market Township, ▇▇▇▇▇▇▇▇ County,
North Carolina, which is described more
specifically in Exhibit C-5.
(6) "Facility 6" is located on a 23.76 acre tract of
land located on South Veterans Boulevard in the
City of Tupelo, ▇▇▇ County, Mississippi, which is
described more specifically in Exhibit C-6.
"Final Fixed Assets Value" shall have the meaning given
to it in Section 2.3(a).
"Financial Statements" shall have the meaning given to it
in Section 4.20.
"Fixed Assets Report" shall have the meaning given to it
in Section 2.3(a).
"GAAP" shall mean generally accepted accounting
principles, as recognized by the American Institute of
Certified Public Accountants and Financial Accounting
Standards Board, consistently applied.
"Governmental Authority" shall mean any nation, province,
state or other political subdivision thereof, and any agency,
natural person or other entity exercising executive,
legislative, regulatory or administrative functions of or
pertaining to government.
"Hazardous Material" shall mean any substance or material
meeting any one or more of the following criteria: (i) it is
or contains a substance designated as a hazardous waste,
hazardous substance, hazardous material, pollutant,
contaminant or toxic substance under any Environmental Law;
(ii) it is toxic, explosive, corrosive, reactive, ignitable,
infectious, radioactive, mutagenic, dangerous or otherwise
hazardous; (iii) its presence at some quantity requires
investigation, notification or remediation under any
Environmental Law or common law; (iv) it constitutes a
FORM 10-K Page 60
Exhibit 2.4 (continued)
nuisance or a health or safety hazard to persons or property;
or (v) it is or contains, without limiting the foregoing,
asbestos, polychlorinated biphenyls, petroleum hydrocarbons,
petroleum derived substances or waste, crude oil or any
fraction thereof, nuclear fuel, natural gas or synthetic gas.
"HSR Act" shall have the meaning set forth in
Section 7.5.
"Hydrophilic Foam Business" shall mean that portion of
the Business comprising the manufacture and sale of
reticulated absorbent foam products based on the proprietary
technology currently employed at Facility 1.
"Information" shall have the meaning given to it in
Section 7.2(b).
"Inspection Date" shall have the meaning given to in
Section 4.13(c).
"Intangibles Payment" shall have the meaning given to it
in Section 2.2(a).
"Intellectual Property Rights" shall mean all copyrights,
patents, trademarks, trade names, processes, computer programs
and program rights, trade secrets, customer lists, goodwill
and other similar intangible rights and interests owned or
used by Seller in connection with the Business, including
licenses thereof, except as set forth on Schedule 1.1(a).
"Inventory" shall mean the raw materials, work-in-
process, finished goods inventories and other inventories, and
supplies and spare parts, owned or used by Seller to be used
in, or in connection with, or relating to, the Business, which
are to be transferred to Buyer from Seller pursuant to this
Agreement.
"Inventory Payment" shall have the meaning given to it in
Section 2.2(a).
"Inventory Report" shall have the meaning given to it in
Section 2.3(a).
"Inventory Value" shall have the meaning given to it in
Section 2.3(a).
FORM 10-K Page 61
Exhibit 2.4 (continued)
"Leaseback Realty" shall mean the real property on which
Facility 2 (Greensboro-Rebond) and Facility 5 (Trinity-Comfort
Sleep) are located, and all improvements located thereon and
all easements appurtenant thereto, all of which will be leased
by Seller to Buyer pursuant to the Buyer Leases.
"Leased Realty" shall mean the real property on which
Facility 3 (High Point) is located, and all improvements
located thereon and all easements appurtenant thereto, all of
which is leased by Seller pursuant to the Existing Lease.
"Leased Vehicles" shall mean the vehicles used by Seller
primarily in the Business that are leased from Third Parties
and are more particularly described in Schedule 1 to the
Services Agreement.
"License Agreement" shall mean a license agreement of the
form attached hereto as Exhibit J pursuant to which Seller
shall license to Buyer the Licensed Technology and Seller
shall grant to Buyer an option to purchase the Licensed
Technology.
"Licensed Technology" shall mean any and all copyrights,
patents, patent applications, processes, computer programs and
program rights, know-how, trade secrets, goodwill and other
similar intangible rights and interests owned or used by
Licensor in connection with the Hydrophilic Foam Business,
including licenses and all written specifications, manuals,
drawings, diagrams, flow charts and other documents which
relate to the Licensed Technology and which are necessary or
helpful with respect to the operations of the Hydrophilic Foam
Business and Seller's rights and interests under the
Settlement Agreement dated July 11, 1995 among Seller, Time
Release Sciences, Inc. and the shareholders of Time Release
Sciences, Inc.
"Material Adverse Effect on the Business" shall mean any
effect that could be materially adverse to the Business, its
assets, financial condition, results of operations or
prospects in an amount in excess of $75,000.
"Periphlex" shall have the meaning given to it in Section
4.27.
"Periphlex Contract" shall have the meaning given to it
in Section 4.27.
FORM 10-K Page 62
Exhibit 2.4 (continued)
"Permitted Encumbrances" shall have the meaning given to
it in Section 4.13(a).
"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.
"Purchased Assets" shall mean the collective assets and
properties of Seller, whether real, personal, tangible or
intangible, that are used in connection with the Business
(specifically excepting the Excluded Assets), including all
additions thereto prior to the Closing Date, 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
Closing Date, including the following items used in connection
with the Business: the Purchased Realty and Seller's rights
with respect to the Leased Realty, to the extent transferred
in the Sublease Agreement; the Inventory; Seller's other
tangible personal property including all machinery, equipment,
vehicles, rolling stock, furniture and furnishings, and
fixtures, including without limitation the tangible personal
property listed in Schedule 4.14; a. all of Seller's right,
title and interest in and to, or under, all contracts,
agreements, options, leases and other similar arrangements
related to the Business, including without limitation the
Assigned Contracts, as listed in Schedule 4.8; b. the
Intellectual Property Rights as listed in Schedule 4.17; all
licenses, permits (including environmental permits) and
authorizations issued by or obtained from any Governmental
Authority or other Person required for the conduct of the
Business as presently conducted to the extent the transfer of
which is permitted by law; and any and all express or implied
warranties or other similar claims that Seller may have with
respect to any of the Purchased Assets.
"Purchase Price" shall mean the aggregate of all amounts
paid or to be paid to Seller by Buyer pursuant to Article II
hereof.
"Purchased Realty" shall mean the real property on which
Facility 1 (Greensboro-Pleasant Garden), Facility 4
(Thomasville) and Facility 6 (Tupelo) are located, and all
improvements located thereon and all easements appurtenant
thereto, all of which will be conveyed in fee simple by
Seller to Buyer.
FORM 10-K Page 63
Exhibit 2.4 (continued)
"Realty" shall mean, collectively, the Leaseback Realty,
the Leased Realty, and the Purchased Realty.
"Referee Accountant" shall have the meaning given to it
in Section 2.3(b).
"Receivables" shall mean all "accounts," within the
meaning of the Uniform Commercial Code, of Seller arising out
of the operation of the Business.
"Seller" shall mean Cone ▇▇▇▇▇ Corporation, a North
Carolina corporation.
"Seller's Accountants" shall mean McGladrey & ▇▇▇▇▇▇,
LLP, Seller's independent accountants.
"Services Agreement" shall have the meaning given to it
in Section 2.14.
"Sublease Agreement" shall mean the Sublease Agreement,
to be executed at Closing in substantially the form attached
hereto as Exhibit D, pursuant to which Seller will sublease to
Buyer Facility 3 after Closing for a period of approximately
two years.
"Tangible Fixed Assets" shall mean the fixed assets, as
defined in accordance with GAAP, of Seller used in the
Business, to be transferred to Buyer from Seller pursuant to
this Agreement all of which are listed in Schedule 1.1(b).
"Taxes" shall mean all taxes, charges, fees, levies or
other assessments (whether federal, state, local or foreign),
including, without limitation, income, gross receipts, excise,
property, estate, sales, use, transfer, license, payroll,
franchise, ad valorem, withholding, Social Security and
unemployment taxes; and such term shall include any interest,
penalties and additions to such taxes, charges, fees, levies
or other assessments.
"Tax Returns" shall mean any report, return, or statement
required to be supplied to a taxing authority in connection
with Taxes.
"Third Party" shall mean any Person other than Buyer or
Seller.
"Third-Party Claim" shall have the meaning given to it in
Section 9.4.
FORM 10-K Page 64
Exhibit 2.4 (continued)
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
GAAP; 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.
1.4. Seller's Knowledge. As used herein, the phrase
"to the best of Seller's knowledge" and phrases of similar
construction shall be deemed to mean the actual knowledge of
the officers of Seller and Seller's Corporate Environmental
Manager (▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) upon each such Person's due
inquiry of the management of the Business (including the
President of the Olympic Division and the plant manager of
each of the six facilities operated by the Business) as a
prudent seller of a business would make in similar
circumstances.
ARTICLE II
SALE, LEASE AND LICENSE OF ASSETS; TERMS OF PAYMENT; AND
NONCOMPETE
2.1. 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.
2.2. Consideration. a. Upon the terms and subject to
the conditions contained in this Agreement, and in
consideration of the sale of the Purchased Assets, at the
following times, Buyer will pay to Seller the following
amounts in the following manner:
FORM 10-K Page 65
Exhibit 2.4 (continued)
(i) On the Closing Date, the sum of Nineteen Million
Six Hundred Fifty Thousand Dollars ($19,650,000) and, on
January 26, 1996, the sum of Four Hundred Seventy-two Thousand
One Hundred Sixty-two Dollars ($472,162) (such aggregate sum,
the "Estimated Fixed Assets Payment") in Cash, subject,
however, to the adjustment set forth in Section 2.3;
(ii) On the Closing Date, the sum of Ten Million
Dollars ($10,000,000) in Cash (the "Intangibles Payment"); and
(iii)As provided in Section 2.4, the payment in cash for
all of the Inventory (the "Inventory Payment").
(b) Notwithstanding any other provision set forth
herein, Four Million Dollars ($4,000,000) of the Inventory
Payment otherwise payable to Seller shall be paid into escrow
pursuant to the Escrow Agreement at the time the Inventory
Payment is to be paid to Seller as provided in Section 2.4.
2.3. Final Fixed Assets Payment. (a) Within thirty
(30) days after the Closing Date, Seller shall prepare and
deliver to Buyer a schedule (the "Fixed Assets Report"),
setting forth all of the Tangible Fixed Assets and their
respective depreciated book values as of the Closing Date
determined in accordance with GAAP, and such work papers and
other supporting detail as Buyer and its independent public
accounts ("Buyer's Accountants") shall reasonably request.
Depreciation shall be calculated consistent with Seller's past
practice and shall be based on the actual number of days
elapsed for any portion of a year. Seller shall deliver to
Buyer, simultaneously with delivery of the Fixed Assets
Report, a certificate of Seller's chief financial officer that
the valuation set forth on the Fixed Assets Report sets forth
the book value of the Tangible Fixed Assets in accordance with
this Agreement. The sum of the values of all Tangible Fixed
Assets reflected in the Fixed Assets Report, less $1,500,000
and adjusted as provided in paragraph (b) below, shall
constitute the final Fixed Assets Value (the "Final Fixed
Assets Value").
(b) Following delivery of the Fixed Assets Report,
Buyer and Buyer's Accountants shall have twenty (20) days in
which to review and examine the Fixed Assets Report. If
following such review, Buyer disputes the accuracy of the
Fixed Assets Report or the determination of the Final Fixed
Assets Value, Buyer and Seller, or each of their accountants,
shall meet to reconcile any such dispute. If such dispute has
FORM 10-K Page 66
Exhibit 2.4 (continued)
not been reconciled within ten (10) days of Buyer's
notification to Seller of the existence of such dispute, or
such longer period upon which Buyer and Seller shall agree,
they 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 ("Referee Accountant"). Seller
and Buyer shall furnish to the Referee Accountant copies of
the Fixed Assets Report and all such working papers and
supporting detail as the Referee Accountant shall reasonably
request. The 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.
(c) Following determination of the Final Fixed Assets
Value as set forth in subparagraphs (a) and (b), Seller and
Buyer shall adjust the Estimated Fixed Assets Payment in
accordance with this subparagraph (c). If the Final Fixed
Assets Value exceeds the Estimated Fixed Assets Payment, Buyer
shall promptly pay in Cash to Seller the amount of such
difference. If the Final Fixed Assets Value is less than the
Estimated Fixed Assets Payment, Seller shall promptly pay to
Buyer in Cash, the amount of such difference.
2.4. Inventory Payment. (a) On the Closing Date (or
such earlier date as agreed by Seller and Buyer), Seller shall
conduct a physical count of the Inventory, which count shall
be observed by Buyer and Buyer's Accountants, and shall as
promptly as practicable thereafter, and in no event more than
thirty (30) days thereafter, prepare and deliver to Buyer a
schedule (the "Inventory Report") setting forth the quantity
and value of each particular type of Inventory as of the
Closing Date. The valuation of the Inventory shall be
determined in accordance with the principles set forth in
Exhibit I. Seller shall deliver to Buyer, simultaneously with
delivery of the Inventory Report, a certificate of Seller's
chief financial officer that the valuation set forth on the
Inventory Report has been prepared in accordance with this
Agreement and such work papers and other supporting detail as
Buyer and Buyer's Accountants shall reasonably request. The
sum of the values of all Inventory reflected in the Inventory
Report, adjusted as provided in paragraph (b) below, shall
constitute the inventory value (the "Inventory Value").
(b) Following delivery of the Inventory Report, Buyer
and Buyer's Accountants shall have twenty (20) days in which
to review and examine the Inventory Report. If Buyer does not
FORM 10-K Page 67
Exhibit 2.4 (continued)
give Seller notice of any dispute with respect to the accuracy
of the Inventory Report or the determination of the Inventory
Value within such period, the Inventory Value shall be the
amount set forth in such Inventory Report. If, following such
review, Buyer disputes the accuracy of the Inventory Report or
the determination of the Inventory Value, Buyer and Seller or
each of their accountants, shall meet to reconcile any such
dispute. If such dispute has not been reconciled within
twenty (20) days following delivery of the Inventory Report,
Seller and Buyer shall refer such dispute to the Referee
Accountant for resolution. Seller and Buyer shall furnish to
the Referee Accountant copies of the Inventory Report 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.
(c) Immediately following the determination of the
Inventory Value, Buyer shall make the Inventory Payment in
Cash in an amount equal to the Inventory Value to Seller in
the manner provided in Section 2.2. In the event of any
dispute in the amount of the Inventory Value, Buyer shall
promptly pay to Seller in the manner provided in Section 2.2
an amount equal to the portion of the Inventory Value not in
dispute (the first $4,000,000 of which shall be paid into
escrow as provided in Section 2.2(b)) and shall pay an amount
equal to the remainder of the Inventory Value immediately upon
the determination thereof in the manner set forth in
Section 2.4(b).
2.5. Offer of Receivables. Seller agrees that prior
to commencing any legal proceedings for the collection of any
Receivable, Seller shall notify Buyer in writing of its intent
to do so and shall enter into good faith negotiations to sell
such Receivable to Buyer. In the event that Buyer and Seller
have not agreed to the terms of sale of such Receivable within
ten (10) Business Days following Buyer's receipt of such
notice, Seller may commence such legal proceedings. Upon
Seller's request, Buyer shall provide to Seller reasonable
assistance (including access to applicable records transferred
to Buyer) in connection with the collection of such
Receivables.
FORM 10-K Page 68
Exhibit 2.4 (continued)
2.6. License of Hydrophilic Foam Technology. At the
Closing, Buyer and Seller shall enter into the License
Agreement in substantially the form of the License Agreement
attached hereto as Exhibit J.
2.7. Real Property and Other Expenses; Proration. (a)
Seller shall pay all applicable real property transfer taxes
on the deeds conveying the Purchased Realty. Buyer shall pay
any recording fees for recording all deeds, the assignment of
the Existing Lease and memoranda of the Buyer Leases, any
sales or use taxes, and the cost of any title insurance and
surveys obtained by Buyer.
(b) All ad valorem taxes on real and personal property
for the year in which the Closing occurs shall be prorated per
diem on a calendar-year basis up to the Closing Date. If any
such taxes are not due until after the Closing Date, Buyer
shall assume the responsibility of paying the taxes when the
tax ▇▇▇▇ is submitted, and at such time upon Buyer's request,
Seller will remit its pro rata share of such taxes to Buyer.
(c) All other expenses of the Business shall be
prorated on a daily basis between Seller and Buyer as of the
Closing Date. Seller agrees to pay in full its pro rata share
of all expenses of the Business as of the Closing Date.
Seller agrees that all expenses, charges, bills, or trade
accounts maintained or incurred by Seller or its agents in
connection with the management or operation of the Business or
otherwise accrued for the period prior to the Closing Date
will be paid in full on or before the date past due; provided,
however, that all such expenses, charges, bills, or trade
accounts that have accrued but have not been billed as of the
Closing Date will be paid in full by Seller after the ▇▇▇▇
▇▇▇▇▇▇ receives the bills and before the date such bills
become past due. Without limiting the generality of the
foregoing, the following items will be adjusted as of the
Closing Date:
(i) rent and other charges payable under the
Existing Lease for the calendar month in which the Closing
Date occurs;
(ii) water and utility charges and sanitary sewer
taxes, if any;
(iii) charges under service, management or other
agreements, if any, that remain in effect after the Closing
Date; and
FORM 10-K Page 69
Exhibit 2.4 (continued)
(iv) other operating expenses not covered by any
of the above subparagraphs.
2.8. Assumption of Obligations and Liabilities. In
addition to Buyer's obligations to make payments pursuant to
Section 2.2, Buyer shall: (i) assume and pay, discharge and
perform the obligations and liabilities of Seller under the
contracts, leases and other agreements listed in Schedule 2.8;
and (ii) enter into the Sublease Agreement. Except as
specifically set forth in the immediately preceding clauses
(i) and (ii), Buyer shall assume no other obligations or
liabilities of Seller in connection with the Business or the
Purchased Assets, including without limitation products
liability claims for goods sold by Seller, liabilities under
any employee benefit plans adopted by Seller, and liabilities
under any contracts or agreements regarding the Business not
specifically set forth in Schedule 2.8.
2.9. Seller's Assignments of Warranty Claims. Upon
Buyer's request, Seller shall assign and confirm in writing
such assignment to Buyer of any warranty or any warranty
claim, express or implied, that Seller has or may have against
another Person with respect to any of the Purchased Assets.
2.10. Allocation of Purchase Price. The Purchase Price
shall be allocated between the different types of Purchased
Assets as set forth in Schedule 2.10. The parties hereto
shall report on applicable tax returns the allocation of
Purchase Price among the Purchased Assets to which they have
mutually agreed.
2.11 Leaseback Realty. On the Closing Date, Buyer
and Seller shall enter into the Buyer Leases pursuant to which
Buyer will lease the Leaseback Realty from Seller in
accordance with the terms and conditions thereof, in addition
to the memoranda of the Buyer Leases in recordable form.
2.12. Leased Realty. On the Closing Date, Buyer and
Seller shall enter into the Sublease Agreement.
2.13. Noncompete. For a period of three (3) years from
the Closing Date, Seller will not directly or indirectly,
either as principal, agent, manager, member, partner,
shareholder, consultant or otherwise:
FORM 10-K Page 70
Exhibit 2.4 (continued)
(a) Conduct, become associated with, or otherwise
interested in any business operation, whether financially or
in any other capacity, if such business competes in any way
whatsoever with the Business in the sale of polyurethane foam
products within the following geographical areas: (i) North
Carolina; (ii) the Southeastern states; (iii) all states east
of the Mississippi; (iv) each state in which customers of the
Business are located as of the Closing Date; (v) each state in
which customers of the Business are located at any time after
the Closing Date; (vi) each state in which potential customers
of the Business are located as of the Closing Date; (vii) each
state in which potential customers of the Business are located
after the Closing Date; and (viii) the United States of
America;
(b) In any way solicit or attempt to solicit for the
sale of polyurethane foam products any customer to which the
Business has provided goods or services during the three (3)-
year period immediately preceding the Closing Date; or
(c) In any way, induce or attempt to induce any
employee of the Business as of the Closing Date or as of any
future date to leave his or her position with Buyer to become
associated in any way with a competing business.
Seller and Buyer agree that the geographical areas in
subparagraph (a) and the other restrictions set forth in this
Section 2.13 are completely severable and independent, and any
invalidity or unenforceability of this Agreement with respect
to any one area or any one restriction in this Section 2.13
shall not render this Agreement unenforceable as applied to
any one or more of the other areas or other restrictions
herein.
Seller acknowledges both (i) that Buyer will need
injunctive relief in order to adequately enforce its rights
under this Section 2.13, and (ii) that Buyer's recovery of any
monetary damages for Seller's breach of this Section 2.13 will
not by itself be an adequate means with which to redress such
breach. Accordingly, Seller agrees that Buyer will be
entitled to enforce this Agreement by obtaining a preliminary
and permanent injunction and any other appropriate equitable
relief in any court of competent jurisdiction. Nothing in
this Section 2.13 shall be construed to prohibit Buyer from
pursuing any and all of its legal remedies for a breach of
this Section 2.13, including the recovery of monetary damages.
This Section 2.13 is expressly excepted from the arbitration
provision set forth in Section 11.9.
FORM 10-K Page 71
Exhibit 2.4 (continued)
2.14. Services Agreement. On the Closing Date, Buyer
and Seller shall enter into a Services Agreement in
substantially the form of the Services Agreement attached
hereto as Exhibit H (the "Services Agreement").
2.15. Credit to Buyer. Seller hereby grants to Buyer,
effective upon the Closing, a $300,000 credit against amounts
payable by Buyer to Seller under the Lease Agreements, the
Sublease Agreement, the License Agreement and the Services
Agreement and, other than payments due under Sections 3.3(a)
and (b), amounts due under this Agreement or any other
agreement between Buyer and Seller. In the event that the
amount of such credit has not been fully applied upon the last
to expire of the Lease Agreements, the Sublease Agreement and
the Services Agreement, Seller shall promptly pay the
remaining portion of such credit to Buyer in cash.
2.16. No Amendment to ▇▇▇▇▇▇▇▇▇ Agreement; Polymer
Inventory. Seller shall not amend the ▇▇▇▇▇▇▇▇▇ Agreement
without Buyer's prior written consent, which consent shall not
be unreasonably withheld. Buyer shall not amend the ▇▇▇▇▇▇▇▇▇
Agreement to affect the minimum purchase requirements of
Polymer A thereunder without the prior written consent of
Seller, which consent shall not be unreasonably withheld. By
no later than November 15 of each of 1996 and 1997, Buyer
shall provide written notice to Seller of its purchases of
Polymer A under the ▇▇▇▇▇▇▇▇▇ Agreement (as well as purchases
of Polymer A by Time Release Sciences, Inc., to the extent
known by Buyer and to the extent such purchases apply to the
minimum purchase requirement) to date for such year and its
good faith estimate of anticipated purchases of Polymer A
under the ▇▇▇▇▇▇▇▇▇ Agreement for the remaining portion of the
year (the sum of such actual and estimated purchases is
referred to as the "Purchase Amount"), along with its good
faith estimate of the supply of Polymer A then held in
inventory. On each of December 31, 1996 and December 31,
1997, Buyer shall maintain levels of inventory of Polymer A
(as defined in the ▇▇▇▇▇▇▇▇▇ Agreement) reasonable for its use
of such Polymer A in the ordinary course of business. From
the Closing Date until December 31, 1997, Buyer shall purchase
all Polymer A needed by it in the operation of the Hydrophilic
Foam Business from ▇▇▇▇▇▇▇▇▇ Co. and its affiliates.
FORM 10-K Page 72
Exhibit 2.4 (continued)
ARTICLE III
THE CLOSING
3.1. Time and Place of Closing. The closing (the
"Closing") of the transactions contemplated hereby shall take
place as of the commencement of business on January 22, 1996,
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").
3.2. Deliveries by Seller. At the Closing, Seller will
deliver to Buyer the following:
(a) General warranty deeds to the Purchased Realty;
(b) The Buyer Leases and memoranda thereof (in
recordable form);
(c) The Escrow Agreement;
(d) The Sublease Agreement;
(e) The Assumption Agreement;
(f) The Services Agreement;
(g) The License Agreement;
(h) All bills of sale, certificates of title,
assignments of leases and agreements, and other instruments of
transfer necessary to transfer title to the Purchased Assets,
as may be reasonably required by Buyer;
(i) The opinions, certificates, consents and other
documents contemplated by Section 8.3; and
(j) 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.
3.3. Deliveries by Buyer. At the Closing, Buyer will
deliver to Seller the following:
(a) A wire transfer of Cash equal to $29,650,000 (the
first installment of the Estimated Fixed Assets Payment and
the Intangibles Payment);
FORM 10-K Page 73
Exhibit 2.4 (continued)
(b) A wire transfer of any other amounts required to
be paid at the Closing by Buyer pursuant to this Agreement;
(c) The Buyer Leases and memoranda thereof (in
recordable form);
(d) The Escrow Agreement;
(e) The Sublease Agreement;
(f) The Services Agreement;
(g) The License Agreement;
(h) The opinions, certificates and other documents
contemplated by Section 8.2 hereof;
(i) The Assumption Agreement; and
(j) 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.
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 and British
Vita as follows:
4.1. Organization; Qualification. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and is duly qualified and in good standing to do business as
a foreign corporation in each jurisdiction in which the
operation of the Business makes such qualification necessary,
except in those jurisdictions where the failure to be so
qualified and in good standing would not have a material
adverse effect on the Business. Seller has the full power and
authority to own, lease and operate the Purchased Assets and
carry on the Business as such operations are now being
conducted.
FORM 10-K Page 74
Exhibit 2.4 (continued)
4.2. Authority Relative to this Agreement. Seller has
the full corporate power, authority and legal right to execute
and deliver this Agreement and to carry out its transactions
and perform its obligations contemplated hereby. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action, and this
Agreement has been duly and validly executed and delivered by
Seller, and constitutes a legal, valid and binding obligation
of Seller enforceable against Seller in accordance with its
terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting the rights of creditors generally or the fact
that specific performance is a remedy within the discretion of
any court.
4.3. Consent and Approvals; No Violation. 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, other than the
filings, if any, required under the HSR Act and the expiration
of the waiting period thereunder. Except as set forth in
Schedule 4.3, 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 that individually
or in the aggregate would not have a Material Adverse Effect
on the Business and except for such 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
Governmental Authority that is applicable to Seller or any of
the Purchased Assets.
4.4. Purchased Assets Conveyed. (a) The Purchased
Assets, the Licensed Technology, the Leased Vehicles, the
Leased Realty and the Leaseback Realty comprise all of the
FORM 10-K Page 75
Exhibit 2.4 (continued)
assets (including all governmental authorizations and permits,
the transfer of which is permitted by law) currently used in
the Business.
(b) The Inventory as of the Closing Date is consistent
with operation of the Business in the ordinary course and past
practice.
4.5. Business and Trading Relations. To the best of
Seller's knowledge, (i) no material supplier will cease
supplying goods or services to the Business or substantially
reduce its supplies to the Business as a result of the
acquisition of the Business by Buyer, and (ii) no material
customer of the Business will, as a result of the acquisition
of the Business by Buyer, terminate or materially reduce its
relationship with the Business.
4.6. Joint Ventures and Partnerships. Seller has not
conducted any part of the Business through a joint venture
with any Person through a branch, agency or permanent
establishment outside the United States.
4.7. Certain Contracts and Arrangements. Schedule 4.7
lists all contracts, agreements and other legally binding
commitments of Seller in existence on the date hereof
affecting the Business, separated into the following
categories:
(a) union contracts;
(b) employment contracts and other employee benefit
and/or employee remuneration plans, arrangements, contracts or
agreements, including pension and stock option plans;
(c) contracts relating to Intellectual Property
Rights;
(d) sales agency, sales representation and
distributorship contracts; and
(e) all other contracts not of the types covered by
(a) through (d) inclusive except contracts involving payment
by or to Seller of less than $25,000 during any twelve-month
period and purchase orders received or issued in the ordinary
course of business and not requiring performance over a period
in excess of ninety (90) days. Except as set forth in
Schedule 4.7, there is not, under any of the agreements
designated in Schedule 4.7, any existing default, event of
FORM 10-K Page 76
Exhibit 2.4 (continued)
default or other event, that with or without due notice or
lapse of time or both, would constitute a default or event of
default on the part of Seller.
4.8. Assigned Contracts. (a) Schedule 2.8 lists the
contracts, agreements, options, leases and similar
arrangements that are related to the Business to be assigned
by Seller to Buyer pursuant to this Agreement (the "Assigned
Contracts").
(b) To the best of Seller's knowledge, the execution
and delivery of this Agreement by Seller and the performance
of this Agreement by Seller will not relieve any other party
to any Assigned Contract from its obligations or enable it to
terminate any of them.
(c) Seller is not and will not, as a result of the
sale of the Business contemplated hereby, be in default under
any of the Assigned Contracts that are material to the
operation of the Business.
(d) Except as set forth in Schedule 2.8, no threat or
claim of default under any of the Assigned Contracts has been
made and Seller has no knowledge of anything that could
reasonably be expected to result in a claim of default.
(e) To the best of Seller's knowledge, no other party
to any of the Assigned Contracts is in breach, violation or
default thereof, and each Assigned Contract is in full force
and effect.
4.9. Litigation. Except as set forth in Schedule
4.9, there are no legal, administrative, arbitration or other
proceedings pending or, to the best of Seller's knowledge,
threatened against Seller or any governmental investigation
pending, in connection with the operation of the Business
that, if decided adversely to Seller, would have a Material
Adverse Effect on the Business or seeking to enjoin the
transactions contemplated herein or recover damages in
connection therewith.
4.10. Labor Matters. Seller has not recognized, nor has
Seller received, a demand for recognition of, any collective
bargaining representative in connection with the Business.
There are no strikes, labor disputes or work stoppages in
effect or threatened against Seller that may have a material
adverse effect on the Business.
FORM 10-K Page 77
Exhibit 2.4 (continued)
4.11. Taxes. Seller has filed, or caused to be filed,
all federal, state and local Tax Returns required to be filed
by Seller. Except as set forth in Schedule 4.11, Seller has
paid, or made provisions for the payment of, its respective
allocable share of (i) all Taxes due for the periods covered
by such Tax Returns, except such accrued and unpaid Taxes for
which appropriate accruals have been made in accordance with
GAAP, and (ii) all deficiencies assessed as a result of any
examination of such Tax Returns.
4.12. Licenses and Authorizations. All licenses,
permits (including environmental permits) and authorizations
issued by or obtained from any Governmental Authority or any
other Person that are held by Seller as of the date hereof and
required for the conduct of the Business as presently
conducted: (a) are in full force and effect, with no
violations of any of them having occurred or, to the best of
Seller's knowledge, alleged to have occurred; (b) have no
proceedings pending or, to the best of Seller's knowledge,
threatened against them that would have the effect of revoking
or materially limiting or affecting the transfer or renewal of
any such licenses, permits or authorizations; (c) to the
extent permitted by law, shall be transferred to Buyer; and
(d) other than as required by law, shall not be lost or
materially modified as a result of the transactions
contemplated hereby. All such licenses, permits, and
authorizations are listed on Schedule 4.12, which also lists
those licenses, permits and authorizations the transfer of
which is not permitted by law or which shall be lost or
materially modified as a result of the transactions
contemplated hereby. Except as set forth in Schedule 4.12 or
as otherwise disclosed in this Agreement or in any document
delivered pursuant to this Agreement: (x) such scheduled
items are not subject to any restrictions or conditions that
could or would limit operation of the Business as presently
conducted; and (y) there are no applications by Seller in
connection with the Business or complaints by others pending
or, to the best of Seller's knowledge, threatened as of the
date hereof before any Governmental Authority relating to the
Business.
4.13. Title to Real Property. (a) The Realty comprises
all real property currently owned or leased by Seller and used
in, or in connection with, the operation of the Business.
Except with respect to the Leased Realty, Seller has good and
marketable fee simple title to all of the Realty, free and
clear of all material liens, mortgages, pledges and
FORM 10-K Page 78
Exhibit 2.4 (continued)
encumbrances whatsoever other than the following permitted
encumbrances (collectively, the "Permitted Encumbrances"):
(i) real estate taxes not yet due and payable; and
(ii) easements, rights of way, mineral rights or other similar
reservations and restrictions that are set forth in the deeds
to such real property and that in the aggregate do not
materially and adversely affect or interfere with the use of
such property in the Business.
(b) With respect to the Leased Realty: (i) the
Existing Lease is in full force and effect; (ii) Seller has
the right to sublease the Leased Realty on the terms set forth
in the Sublease Agreement; and (iii) neither Seller nor, to
the best of Seller's knowledge, the landlord thereunder is in
default under the terms of the Existing Lease, nor has an
event occurred that, but for the giving of notice or the
passage of time, would constitute such a default by Seller or,
to the best of Seller's knowledge, such landlord.
(c) On or before January 22, 1996 (the "Inspection
Date"), Buyer shall deliver to Seller a statement of any
objections to Seller's title, excluding the Permitted
Encumbrances, and shall notify Seller in writing of the nature
of such objections. If objections to title are made as
provided above, Seller shall use reasonable efforts to cure
the objections prior to the Closing Date, but shall not be
required to expend in excess of $10,000. If Seller fails to
cure the objections within such period, Buyer may, by delivery
of written notice to Seller, either (i) terminate this
Agreement; (ii) elect to consummate the purchase of the
Business in the same manner as if there had been no title
objections (in which event Buyer shall be deemed to have
waived such objections); or (iii) cure the title objections at
Seller's reasonable expense, not to exceed $25,000, and treat
that expense as a credit against the Purchase Price. On or
before the Inspection Date, Buyer shall cause to be prepared,
at its expense, a survey of each parcel of Realty certified by
a registered land surveyor, showing the boundaries and the
acreage of each parcel of Realty, and the location of all
easements, buildings, improvements and encroachments, if any,
located thereon. Buyer's objections to title may be based
solely on such surveys.
4.14. Title to Personal Property. Schedule 4.14 lists,
as of a recent date, all material tangible personal property
(exclusive of Inventory) owned or leased by Seller and used in
connection with the Business. Except with respect to any
FORM 10-K Page 79
Exhibit 2.4 (continued)
leased property or as set forth in Schedule 4.14, 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 material liens and encumbrances, except for liens for
taxes not yet due and payable. Seller has delivered or made
available to Buyer true and complete copies of all leases and
other agreements affecting the properties listed in
Schedule 4.14, all of which leases are, to the best of
Seller's knowledge, valid and binding on the lessor
thereunder, and with respect to which Seller is not in
material default.
4.15. Corporate and Personnel Data; Labor Relations.
Schedule 4.15 lists the names and current salary or hourly
rates of all the employees of Seller who are employed in
connection with the Business. Except as set forth in Schedule
4.15, the operation of the Business has complied in all
material respects with all applicable laws and regulations
relating to the employment of labor, including those related
to wages, hours, collective bargaining, the payment of Social
Security or similar taxes, and discrimination laws. There are
no unfair labor practice claims or charges pending involving
Seller relating to the Business.
4.16. Insurance. Schedule 4.16 lists all of Seller's
outstanding insurance policies relating to the Purchased
Assets or the Business, and indicates the insurer's name,
policy number, expiration date and amount and type of
coverage. Seller maintains product liability insurance with
respect to the Business in the amounts and coverages set forth
on Schedule 4.16.
4.17. Intellectual Property Rights. Schedule 4.17
lists the Intellectual Property Rights, together with any
applicable registrations. Except as shown in Schedule 4.17,
all trademarks, trade names, copyrights and patents, and any
applicable registrations, are owned by Seller and are not the
subject of any proceeding challenging their use, or seeking to
deny, modify or revoke any registration or application
therefor or renewal thereof. Except as shown in Schedule
4.17, Seller is entitled to use all of its respective
Intellectual Property Rights, and Seller has not granted any
right, title or interest in or to any such Intellectual
Property Rights to any other Person.
FORM 10-K Page 80
Exhibit 2.4 (continued)
4.18. Infringements. Seller has not received any
written notice of any claim of infringement with respect to
the Business, and the Business does not infringe any patent,
registered design, trademark, copyright or other intellectual
property right of any other person. Except as listed on
Schedule 4.18, Seller does not require nor has it been granted
any license (other than a shrink-wrap license for computer
software) relating to any intellectual property right of any
kind whatsoever.
4.19. Purchases and Sales from or to One Party. Except
as set forth in Schedule 4.19, neither more than ten percent
(10%) of the aggregate amount of all the purchases nor more
than ten percent (10%) of the aggregate amount of all the
sales of the Business are obtained or made from or to a single
supplier or customer (including any Person associated or
affiliated with a supplier or customer), and Seller has not
received any written notification nor any oral notification
from any such source of supply or outlet for sales that such
Person intends to terminate its relationship with the
Business.
4.20. Financial Statements. Seller has delivered to
Buyer statements of assets and operations of the Business for
the fiscal year ended January 1, 1995 and the 39-week period
ended October 31, 1995 and Cost Department Reports for the
Business for the fiscal years ended January 3, 1993, January
2, 1994 and January 1, 1995, and the 39-week period ended
October 31, 1995 (the "Financial Statements"). The Financial
Statements fairly present in all material respects the assets
and results of operations of the Business as of the respective
dates and for the respective periods indicated, including
normal accruals and intercompany eliminations.
4.21. Books and Records. All the books and records of
Seller related to the Business and the Purchased Assets,
copies of which are to be delivered at Buyer's expense to
Buyer as it may request, have been maintained in the ordinary
course of business consistent with the past practices of
Seller and do not contain any material inaccuracies or
discrepancies.
4.22. Condition of Real Property. Except as set forth
in Schedule 4.22:
(a) Seller has not received any notice of
administrative agency action, litigation, condemnation
FORM 10-K Page 81
Exhibit 2.4 (continued)
proceeding, or proceeding of any kind pending against Seller
that relates to or affects any portion of the Realty,
including any requests for public dedication, nor does Seller
know of any basis for any such action;
(b) To the best of Seller's knowledge, all buildings
and improvements located on the Realty fully conform with all
applicable zoning regulations and building codes and
restrictions and are located entirely within the boundary
lines of the Realty. To the best of Seller's knowledge,
(i) none of the buildings or improvements located on the
Realty are prior, nonconforming structures under either the
applicable zoning regulations or the applicable building
codes, and (ii) all of the buildings are structurally sound in
all material respects consistent with their current use;
(c) To the best of Seller's knowledge, each parcel of
Realty may be used for the operation of the Business without
violating any federal, state, local, or any other governmental
building, zoning, health, safety, platting, subdivision or
other statute, ordinance or regulation, or any applicable
private restriction; such use is not a pre-existing,
nonconforming use; and no notice of the violation of any of
the same has been received by Seller; and
(d) To the best of Seller's knowledge, each parcel of
Realty is currently served by the following public utility
services sufficient for the operation of such Realty:
electricity, gas, water, sanitary sewer and telephone. Seller
will reasonably cooperate with Buyer to assure that those
utility services will continue after the Closing.
4.23. Business Names. Schedule 4.23 lists all names
under which the Business, or any portion thereof, has been
operated during the past five years.
4.24. Environmental Matters. Except as set forth in
Schedule 4.24:
(a) The Realty and any other real property owned,
leased or operated by Seller in connection with the Business
currently or in the past (all of which Realty and other real
property is listed in Schedule 4.24), including without
limitation the improvements thereon and the soil and
groundwater thereunder, (i) does not contain and is not
contaminated by any Hazardous Material, other than Hazardous
FORM 10-K Page 82
Exhibit 2.4 (continued)
Materials at naturally occurring background levels and
Hazardous Materials properly stored and used in the ordinary
course of business as listed on current MSDS reports for each
facility operated by the Business; (ii) does not contain
underground storage tanks (other than one petroleum
underground storage tank located on the Leased Realty); (iii)
has never been used for the generation, treatment, storage or
disposal of any Hazardous Material (other than in the ordinary
course of business in compliance with applicable Environmental
Laws), or for mining, land filling, dumping, gasoline station,
dry cleaning or commercial petroleum product storage purposes;
(iv) has not been the subject of any activities representing
a violation or alleged violation of any Environmental Law or
any action by a governmental authority pursuant to any
Environmental Law within the past five years, and is in
compliance in all material respects with all Environmental
Laws; (v) does not otherwise contain a condition that is a
threat to the safety or health of the public or environment;
(vi) has not had any release of any Hazardous Material from,
on, in or upon it (other than in the ordinary course of
business in compliance with applicable Environmental Laws) and
does not face any current risk, to Seller's knowledge, of
contamination by any Hazardous Material from any nearby
property; and (vii) to Seller's knowledge, has never been the
subject of an environmental audit or assessment, or remedial
action for an environmental problem performed by a Person
other than Seller or an agent of Buyer in connection with this
Agreement. With respect to any real property owned, leased or
operated by Seller in the past in connection with the
Business, but not currently owned, leased or operated by
Seller, the representations set forth above in this Section
4.24 shall be deemed to apply as of the last date that Seller
owned, leased or operated the property in question.
(b) Except as set forth in Schedule 4.24, in
connection with the Business, Seller: (i) has never sent a
Hazardous Material to a site that, pursuant to any
Environmental Law, (1) has been placed on the "National
Priorities List", the "CERCLIS" list, or any similar state or
federal list, or (2) is subject to or the source of a claim,
an administrative order or other request to take "removal",
"remedial", "corrective" or any other "response" action, as
defined in any Environmental Law, or to pay for the costs of
any such action at the site; (ii) is in material compliance
with all Environmental Laws in all of its activities and
operations; (iii) is not involved in any suit or proceeding
FORM 10-K Page 83
Exhibit 2.4 (continued)
and has not received any notice or request for information
from any governmental authority or other third party with
respect to a release or threatened release of any Hazardous
Material or a violation or alleged violation of any
Environmental Law, and has not received notice of any claims
from any person or entity relating to property damage or to
personal injuries from exposure to any Hazardous Material; and
(iv) has timely filed every report required to be filed,
acquired all necessary material certificates, approvals and
permits (all of which shall be transferred to Buyer to the
extent permitted by law, none of which shall be lost or
materially modified as a result of this transaction other than
as required by law and all of which are listed on Schedule
4.12, which also specifically identifies any such material
certificates, approval or permit that are not permitted by law
to be transferred or may be lost or materially modified as a
result of this transaction as required by law), and generated
and maintained all required data, documentation and records
under all Environmental Laws.
(c) To the best knowledge of Seller, no material
expense or change in the Business will be required to comply
with any prospective requirement adopted or promulgated prior
to the date hereof under any Environmental Law and to be
applicable to the Business in the future, other than permits
required under Title V of the Clean Air Act for Facility 6.
4.25. Compliance With Laws. In connection with the
Business, Seller has duly complied in all material respects
with the provisions of all federal, state and local law, rules
and regulations (other than Environmental Laws, compliance
with which by Seller is described in Section 4.24) applicable
to the Purchased Assets or the Business.
4.26. Minimum Purchases. Pursuant to the Agreement
dated March 30, 1994 between Seller and ▇▇▇▇ Composites and
Polymers (including all amendments and supplements thereto,
the "▇▇▇▇▇▇▇▇▇ Agreement"), Seller has purchased an aggregate
amount of Polymer A (as defined in the ▇▇▇▇▇▇▇▇▇ Agreement) in
1995 equal to or exceeding the minimum purchase requirement
for such period necessary to maintain Seller's exclusive
"Field of Uses" (as defined in the ▇▇▇▇▇▇▇▇▇ Agreement).
Cone's minimum purchase requirements of Polymer A under the
▇▇▇▇▇▇▇▇▇ Agreement for 1996, 1997, 1998 and 1999 are 400,000
pounds, 600,000 pounds, 1,000,000 pounds and 1,000,000 pounds,
respectively, of Polymer A, provided that any purchases in any
FORM 10-K Page 84
Exhibit 2.4 (continued)
year in excess of such amount shall be carried forward and
applied to the threshold in subsequent periods. Seller has
delivered to Buyer a true and correct copy of the ▇▇▇▇▇▇▇▇▇
Agreement and such document states the entire agreement
between ▇▇▇▇▇▇▇▇▇ Co. and Seller purported to be addressed
thereby. Seller's inventory of such Polymer A was
approximately 300,000 pounds at December 31, 1995. There are
no outstanding purchase orders for Polymer A. Polymer A has
a shelf-life (for the purposes of the proposed use of Polymer
A in the Hydrophilic Foam Business) of at least two years.
4.27. Periphlex Agreement. Seller is a party to a
Contract dated as of June 30, 1994 with Periphlex U.S.A. Ltd.
("Periphlex"), as amended by an Addendum to Contract dated
April 24, 1995 (the "Periphlex Contract"), pursuant to which,
to Seller's knowledge, Periphlex has completed the Project (as
defined in the Periphlex Contract and which includes the
fabrication, construction and assembly of a machine and
related equipment to manufacture hydrophilic foam, which will
incorporate Seller's proprietary processes and technology
necessary to produce such foam). Seller has performed all of
its obligations under the Periphlex Contract. Seller has
delivered to Buyer a true and correct copy of the Periphlex
Contract and such document states the entire agreement between
Periphlex and Seller purported to be addressed thereby.
Seller has not requested that Periphlex perform any services
with respect to the Business other than the services required
under the Periphlex Contract.
4.28. Accuracy of Information. All written information
given to Buyer by Seller relating to the Business or Purchased
Assets, taken as a whole, does not contain any material
inaccuracies. Seller makes no representations or warranties
regarding the Business or Purchased Assets other than as set
forth in this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1. Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of the State of North Carolina and has the requisite
power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
FORM 10-K Page 85
Exhibit 2.4 (continued)
5.2. Authority Relative to this Agreement. Buyer has
the power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by Buyer and no other proceedings on the
part of Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by
Buyer and constitutes the legal, valid and binding agreement
of Buyer.
5.3. Consents and Approvals; No Violation. To the best
knowledge of Buyer, 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, other than the
filings, if any, required under the HSR Act and the expiration
of the waiting period thereunder. Neither the execution,
delivery and performance of this Agreement by Buyer nor the
operation of the Business by Buyer will: (a) conflict with or
result in any breach of any provision of the articles 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.
5.4. Qualification. Buyer knows of no facts that
would, under present law, disqualify Buyer as a transferee of
any of the licenses, permits and authorizations described in
Section 4.12 that are transferrable or as owner and operator
of the Business. In the event Buyer becomes aware of any such
facts, it will promptly notify Seller in writing thereof and
use its best efforts to prevent any such disqualification.
5.5. Litigation. There are no legal, administrative,
arbitration or other proceedings or governmental
investigations pending or, to the knowledge of Buyer,
FORM 10-K Page 86
Exhibit 2.4 (continued)
threatened against Buyer seeking to enjoin the transactions
contemplated hereby or recover damages in connection
therewith.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BRITISH VITA
British Vita represents and warrants to Seller as
follows:
6.1. Organization and Authority. British Vita is a
company duly organized, validly existing and in good standing
under the laws of the United Kingdom with the requisite power
and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by British Vita and no other proceedings on
the part of British Vita are necessary to authorize this
Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by British Vita and constitutes the legal, valid and
binding agreement of British Vita.
6.2. Consents and Approvals; No Violation. To the best
knowledge of British Vita, there is no requirement applicable
to British Vita 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 British Vita of the transactions contemplated
hereby, other than the filings, if any, required under the HSR
Act and the expiration of the waiting period thereunder. The
execution, delivery and performance of this Agreement by
British Vita will not: (a) conflict with or result in any
breach of any provision of the organizational documents of
British Vita; (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 British Vita 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 and that is applicable to British Vita.
FORM 10-K Page 87
Exhibit 2.4 (continued)
6.3. Litigation. There are no legal, administrative,
arbitration or other proceedings or governmental
investigations pending or, to the knowledge of British Vita,
threatened against British Vita seeking to enjoin the
transactions contemplated herein or recover damages in
connection therewith.
ARTICLE VII
COVENANTS OF SELLER AND BUYER
7.1. Conduct of Business. Except as otherwise
expressly provided in or contemplated by this Agreement, prior
to the Closing Date, without the prior written consent of
Buyer, Seller will not, except in the ordinary course of
business:
(a) enter into any contract or commitment material to
the Business;
(b) create or assume any mortgage, pledge, lien, or
other encumbrance with respect to the Purchased Assets,
whether now owned or hereafter acquired;
(c) sell, assign, lease, transfer or otherwise dispose
of any of the Purchased Assets; or
(d) increase the rate of compensation payable to any
of the Business Employees, other than increases in the
ordinary course of business consistent with past practices.
7.2. Access to Information. (a) Between the date of
this Agreement and the Closing Date, Seller shall: (i) give
Buyer and its authorized representatives reasonable access
during normal business hours to the Purchased Assets and to
all books, records, offices and other facilities and
properties relating to the Business; (ii) permit Buyer to make
such inspections thereof and perform such soil and groundwater
tests, surveys, environmental assessments and audits, and
other inspections, tests and inquiries as Buyer may desire;
and (iii) cause its officers or other appropriate officials to
furnish Buyer with such financial and operating data and other
information with respect to the Business as Buyer may from
time to time reasonably request; provided, however, that any
such investigation by Buyer shall be conducted in such a
manner as not to interfere unreasonably with the operation of
the Business, and Buyer shall promptly repair and indemnify
Seller against any damages, costs or claims caused by it or
FORM 10-K Page 88
Exhibit 2.4 (continued)
such representatives in connection with such inspections,
tests and inquiries (other than damages, costs or claims
caused by Seller or arising with respect to the condition of
any of the facilities or Business prior to such inspection,
test or inquiry).
(b) From the date of this Agreement until the Closing
Date (or at any time after the date hereof if this Agreement
is terminated pursuant to Article X, Buyer and British Vita:
(i) will hold, and will use its best efforts to cause its
officers, directors, employees, lenders, accountants,
representatives, agents, consultants and advisors to hold, in
strict confidence all information (other than such information
as may be publicly available) furnished to Buyer in connection
with the transactions contemplated by this Agreement
(collectively, the "Information"); and (ii) will not, without
the prior written consent of Seller, release or disclose any
Information to any other person, except to Buyer's officers,
directors, employees, lenders, attorneys, accountants,
representatives, agents, consultants and advisors who need to
know the Information in connection with the consummation of
the transactions contemplated by this Agreement, who are
informed by Buyer of the confidential nature of the
Information, and who agree to be bound by the terms and
conditions of this Section 7.2(b) and will use the Information
solely for the purposes of evaluating the transactions
contemplated hereby. In the event Buyer or any Person to whom
Buyer transmits the Information pursuant to this Agreement
becomes legally compelled to disclose any of the Information,
Buyer will provide Seller with prompt notice so that Seller
may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this Section 7.2(b),
or both. If the transactions contemplated by this Agreement
are not consummated, the Information will be returned to
Seller immediately upon Seller's request therefor.
7.3. Employees and Employee Benefits. (a) Buyer and
Seller agree that on the Closing Date the employees of Seller
employed solely in the Business (the "Business Employees")
shall cease to be employees of Seller and shall be employed by
Buyer on an employment-at-will basis (except to the extent
otherwise agreed in writing by Buyer or to the extent
employment agreements are assumed by Buyer pursuant to Section
2.8). Seller shall be responsible for payment of any vested
vacation or holidays or similar benefits earned prior to the
Closing Date, even if such vacation or holidays are taken
after the Closing Date. Seller represents that pursuant to
FORM 10-K Page 89
Exhibit 2.4 (continued)
its vacation policies the full amount of vacation to which an
employee of the Business is entitled in any fiscal year vests
on the first day of such fiscal year.
(b) Concurrently with the Closing, Seller shall notify
the employees of the Business of such employees' rights to
receive the full amount of vested vacation pay in connection
with the termination of such employees' employment with Seller
and shall permit such employees to waive the right to receive
such payment at such time and in lieu thereof to receive such
payments from Buyer. Within 30 days following the Closing
Date, Seller shall provide to Buyer a list of all employees
electing to so defer the payment of such vacation pay, each
such employee's salary or wage rate and the aggregate amount
of such vacation pay for 1996 based upon such salary and wage
rates, and Seller shall pay to Buyer such aggregate amount at
such time. Buyer shall permit employees of the Business to
take vacation time during 1996 consistent with Seller's
vacation policies (with such employees' service with Seller to
constitute service with Buyer for such purpose) and shall pay
such employees set forth in the list described in the
foregoing sentence (at the salary rate set forth in such list)
such vacation pay upon two-weeks' written notice therefor in
accordance with Seller's current vacation pay policy. All
amounts received by Buyer pursuant to this Section 7.3(b)
shall be maintained by Buyer in a segregated account until
applied from time to time to fund the payment to employees of
vacation pay as contemplated hereby and, prior to such time
such funds are so applied, such funds shall not be commingled
with other funds of Buyer.
(c) Seller shall, if requested by Buyer, assign to
Buyer the unemployment insurance and worker's compensation
experience ratings applicable to the Business and take such
steps as Buyer shall reasonably request to effect such
assignment, if such assignment is permitted by law and is not
prejudicial to Seller. Buyer shall pay to Seller any cost,
expense or penalty of Seller relating to such assignment.
7.4. Consummation of Agreement. Buyer and Seller will
use each of their reasonable efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by
each of them under this Agreement so that the transactions
contemplated hereby shall be consummated. Except for events
that are the subject of specific provisions of this Agreement,
FORM 10-K Page 90
Exhibit 2.4 (continued)
if any event should occur, either within or outside the
control of Buyer or Seller, that could materially delay or
prevent fulfillment of the conditions upon the obligations of
any party hereto to consummate the transactions contemplated
by this Agreement, Buyer and Seller will notify the others of
any such event and each of them will use their reasonable,
diligent and good faith efforts to cure or minimize the same
as expeditiously as possible.
7.5. Filings. Buyer and Seller have filed Notification
and Report Forms under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and regulations
thereunder (the "HSR Act") with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") and shall respond as
promptly as practicable to all inquiries received from the FTC
or the Antitrust Division for additional information or
documentation.
7.6. Further Assurances. Subject to the terms and
conditions of this Agreement, each of the parties hereto will
use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate the transactions contemplated hereby.
7.7. Actions by British Vita. British Vita shall cause
Buyer to perform its obligations hereunder, and in the event
of any failure by Buyer to perform such obligations, British
Vita shall perform such obligations, without any requirement
that Seller first exhaust any legal remedies it may have
against Buyer.
7.8. Assistance in Pending Litigation. After the
Closing Date, Buyer shall upon Seller's reasonable request, in
connection with any litigation described in Schedule 4.9 or
any other litigation arising after the date hereof involving
the Business, provide reasonable assistance to Seller in
connection with such litigation or investigation by providing
Seller reasonable access to applicable records transferred to
Buyer hereunder, permitting its employees to be available to
provide applicable information or testify in such litigation
(including depositions) and to otherwise reasonably cooperate
with Seller in connection with such litigation. Seller shall
reimburse Buyer for its reasonable expenses incurred in
providing such assistance.
FORM 10-K Page 91
Exhibit 2.4 (continued)
7.9. Other Covenants. Buyer and Seller will take all
action, do, or cause to be done all other covenants and
agreements contained in this Agreement other than in this
Article VII. Buyer and Seller will not take any action and
will not cause any action to be taken prohibited from being
taken by any covenants and agreements contained in this
Agreement other than in this Article VII.
ARTICLE VIII
CLOSING CONDITIONS
8.1. 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 (subject to Article X hereof) of the
following conditions:
(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) Seller and Buyer shall have received the approval
or consent of all Governmental Authorities required to approve
or consent to the transactions contemplated hereby, including
without limitation the filings contemplated by Section 7.5.
8.2. 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 (subject to Article X hereof) 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 Assumption Agreement, the Buyer Leases and memorandum
thereof (in recordable form), the Escrow Agreement, and the
Sublease Agreement.
FORM 10-K Page 92
Exhibit 2.4 (continued)
(b) All representations and warranties of Buyer
contained in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made as of
such date (except as otherwise contemplated by this
Agreement). Buyer shall have performed and complied in all
material respects with all covenants and agreements contained
in this Agreement required to be performed and complied with
by them at or prior to the Closing Date. Seller shall have
received a certificate to the matters set forth in this
subparagraph (a) signed on behalf of Buyer by its President;
(c) 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;
(d) Seller shall have received an opinion from
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P. A., dated as of the Closing
Date in substantially the form attached hereto as Exhibit E;
(e) Seller shall have received from Buyer copies,
certified by its Secretary or an Assistant Secretary, of
resolutions of Buyer's board of directors authorizing the
execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection
herewith and the transactions contemplated hereby;
(f) As of the Closing Date, Seller shall have received
from Buyer the following documents:
(i) A long-form certificate of good standing of
Buyer's corporate status from the State of North Carolina;
(ii) A true and complete copy of Buyer's articles
of incorporation and all amendments thereto, certified by the
Secretary of State of the State of North Carolina;
(iii) A true and complete copy of Buyer's bylaws,
certified by its Secretary;
(iv) A certificate of Buyer's Secretary that
Buyer's articles of incorporation have not been amended since
the date of the certificate described in subsection (ii) above
and that nothing has occurred since the date of issuance of
the good standing certificate specified in subsection (i)
above that would adversely affect Buyer's corporate good
standing; and
FORM 10-K Page 93
Exhibit 2.4 (continued)
(v) A certificate from Buyer's Secretary
attesting to the incumbency and signatures of any of Buyer's
officers who will execute documents at the closing or who have
executed the Agreement.
8.3. 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 (subject to Article X hereof) of the following
conditions, any one or more of which may be waived by Buyer:
(a) Seller shall have delivered and executed: (i) the
general warranty deeds to the Purchased Realty; (ii) the Buyer
Leases and memorandum thereof (in recordable form); (iii) the
Escrow Agreement; (iv) the Sublease Agreement; (v) the
Assumption Agreement; and (vi) all bills of sale, certificates
of title, odometer affidavits, assignments of leases and
agreements and other instruments necessary to transfer title
to the Purchased Assets to Buyer in accordance with this
Agreement.
(b) All representations and warranties of Seller
contained in this Agreement shall be true and correct as of
the Closing Date as though made as of such date. Seller shall
have performed and complied with all covenants and agreements
contained in this Agreement required to be performed and
complied with by them at or prior to the Closing Date. Buyer
shall have received a certificate to the matters set forth in
this subparagraph (a) signed on behalf of Seller by its
President or a Vice President.
(c) Consents from third parties and Governmental
Authorities as shall be required and that are listed in
Schedule 4.3 shall have been obtained.
(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.
(e) Buyer shall have received an opinion from ▇▇▇▇ ▇.
▇▇▇▇▇▇, dated as of the Closing Date in substantially the form
attached hereto as Exhibit F.
FORM 10-K Page 94
Exhibit 2.4 (continued)
(f) Buyer shall have received from Seller copies,
certified by its respective Secretary or an Assistant
Secretary, of resolutions adopted on behalf of Seller
authorizing the execution, delivery and performance of this
Agreement and all instruments and documents to be delivered in
connection herewith and the transactions contemplated hereby.
(g) As of the Closing Date, Buyer shall have received
from Seller the following documents:
(i) A long-form certificate of good standing of
Seller's corporate status from its jurisdiction of
incorporation, and certificates of qualification to do
business as a foreign corporation for Seller from such
jurisdictions where Seller's activities in the Business would
require it to be so qualified;
(ii) A true and complete copy of Seller's
articles of incorporation and all amendments thereto certified
by the jurisdiction of incorporation;
(iii) A true and complete copy of Seller's bylaws
certified by its respective Secretary;
(iv) A certificate from Seller's Secretary that
its respective articles of incorporation have not been amended
since the date of the certificate described in subsection (ii)
above and that nothing has occurred since the date of issuance
of the good standing certificate specified in subsection (i)
above that would adversely affect Seller's corporate good
standing; and
(v) A certificate from Seller's Secretary
attesting to the incumbency and signatures of any of Seller's
officers who will execute documents at the Closing or who have
executed the Agreement.
(h) Buyer shall have completed a review of the
Business and shall not have given notice to Seller that Buyer
has determined not to proceed with the consummation of the
transactions contemplated hereby because a representation or
warranty of Seller set forth herein (without regard to any
qualification set forth therein with respect to Seller's
knowledge) is not true, accurate or complete.
(i) To the extent deemed necessary by Buyer, Buyer
shall have received environmental assessment and audit
FORM 10-K Page 95
Exhibit 2.4 (continued)
reports, prepared at the expense of Buyer, for each site
listed on Schedule 4.13, by a qualified independent
environmental consultant acceptable to Buyer, and such other
analyses, reports and examinations as Buyer shall request, at
its expense, and Buyer shall be satisfied on the basis of such
studies, in its sole, absolute and unqualified discretion,
that no material environmental problems exist with respect to
the Business or any of the Purchased Assets. Buyer shall
deliver copies of such reports to Seller.
(j) Buyer shall have received at its own expense
policies of title insurance with respect to the Realty
(excluding any Leased Real Property), along with as-built
surveys of such Realty, such insurance policies insuring that
title to all such properties is in accordance with this
Agreement.
(k) Pursuant to the Lease Agreement dated as of
December 1, 1984 between Seller and City of Tupelo,
Mississippi, Seller shall have repurchased the "Project" (as
defined in such Lease Agreement), and shall hold such Project
free and clear of all liens and encumbrances.
(l) Buyer shall have received such other documents,
opinions and certificates that it has reasonably requested in
connection with the conveyance of the Purchased Assets and the
consummation of the other transactions contemplated hereby.
(m) No events or conditions shall have occurred with
respect to the Purchased Assets or the Business or any of
Seller's relationships with customers or suppliers of the
Business that have or would be likely to have a Material
Adverse Effect on the Business.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.1. 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 IX. All
claims of any kind against Seller (except as provided in
Sections 9.2(b)(iii) and 11.13 and except for claims of actual
FORM 10-K Page 96
Exhibit 2.4 (continued)
intentional fraud) that relate in any way to the repre-
sentations, warranties, this Agreement or any document
delivered hereunder shall be made under, and subject to the
limitations set forth in, this Article IX.
9.2. 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, asserted against or
incurred by a Buyer Entity: (i) 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; (ii) resulting from,
arising out of, or in connection with any violation or alleged
violation of any Environmental Law with respect to the
Business that occurs or commences prior to the Closing Date
(but not to the extent such violation or alleged violation is
continued by Buyer by an act or omission after a reasonable
period after the management of Buyer become aware of such
violation (other than violations currently known by employees
of the Business)), any violation or alleged violation of any
Environmental Law that results from any act or omission of
Seller or any of tenants of Seller (other than Buyer), any
presence, generation, treatment, storage, disposal, transport,
release, threatened release or suspected release of any
Hazardous Material in connection with the Business, or on, in,
to or from the Purchased Assets or Realty (or any part thereof
including without limitation the soil and groundwater
thereunder), that occurs or results from activities occurring
prior to the Closing Date, and/or any presence, generation,
treatment, storage, disposal, transport, release, threatened
release or suspected release of any Hazardous Material by
Seller or through any act or omission of Seller or any tenant
of Seller (other than Buyer); (iii) resulting from, arising
out of, or in connection with any loss or modification of use
of any of the Facilities or any portion of any Facility as a
result of any order, decree, decision or other action by any
judicial authority or Governmental Authority under any
Environmental Law or in connection with the release or
FORM 10-K Page 97
Exhibit 2.4 (continued)
discharge of any Hazardous Material requiring the cessation or
material modification of business operations at such Facility
or portion thereof to the extent that such releases,
discharges and operations are in all applicable regards
consistent with those releases, discharges and operations
historically made or conducted at such Facility by the Seller;
(iv) resulting from any claim made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with
respect to any matter existing or commencing on or prior to
the Closing Date; and (v) resulting from, arising out of, or
in connection with any liability of Seller not specifically
assumed by Buyer pursuant to this Agreement (the immediately
preceding clauses (i), (ii), (iii) and (iv), collectively,
"Buyer's Damages").
9.3. 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:
(a) Notwithstanding anything to the contrary contained
in this Agreement, Seller will have indemnity obligations
hereunder only with respect to Buyer's Damages (other than
Buyer's Damages listed in clause (ii), (iii) or (iv) of
Section 9.2) that in the aggregate exceed $50,000, as measured
beginning on the Closing Date.
(b) Except as set forth in subparagraph (c) below, a
claim, or notice of a claim or a potential claim for Buyer's
Damages must be in writing and (other than Buyer's Damages
listed in clauses (ii) or (iv) of Section 9.2) must be
delivered to Seller within two (2) years after the Closing
Date; provided, however, that a claim, or notice of a claim or
a potential claim, for Buyer's Damages with respect to any
liability of Seller not expressly and voluntarily assumed by
Buyer pursuant to this Agreement must be delivered in writing
to Seller within three (3) years after the Closing Date.
Notwithstanding anything to the contrary contained in this
Agreement, a Buyer Entity is not required to institute
proceedings of any kind whatsoever within such three-year or
two-year period, as the case may be.
(c) Notwithstanding anything to the contrary contained
in this Agreement, any claim for Buyer's Damages that any
Buyer Entity may have against Seller (i) arising in connection
with tax liabilities of any kind whatsoever, (ii) arising in
connection with Seller's breach of any of its representations
and warranties contained in Section 4.13 or (iii) as described
FORM 10-K Page 98
Exhibit 2.4 (continued)
in clauses (ii) or (iv) of Section 9.2 may be made by such
Buyer Entity Buyer at any time without regard to the time
limitations imposed by the immediately preceding subparagraph
(b), but shall in all other respects remain subject to the
provisions of this Article IX, including without limitation,
to the extent applicable, the provisions of subparagraph
9.3(a).
(d) Notwithstanding anything to the contrary contained
in this Agreement, with respect to Seller's indemnification
obligations of Buyer hereunder, Buyer first shall have
recourse against the balance of all monies held in escrow
pursuant to the Escrow Agreement (which is provided for in
Section 2.2(b)) and then against Seller.
(e) Seller's obligation to indemnify Buyer Entities
hereunder (other than its obligation with respect to Buyer's
Damages listed in clause (ii) of Section 9.2, which obligation
shall not be subject to any dollar limitation) shall terminate
upon payment in the aggregate by Seller to Buyer Entities of
Buyer's Damages (other than Buyer's Damages listed in clause
(ii) of Section 9.2) equal to the Purchase Price; provided
that Seller's obligation to indemnify Buyer's Entities
hereunder as a result of Seller's breach of the warranty set
forth in Section 4.18 (but only to extent that such breach of
warranty arises with respect to any claim of infringement of
United States Patent Number 5,460,655) shall terminate upon
payment in the aggregate by Seller to Buyer's Entities of
Buyer's Damages in connection with any such claim of
infringement of such patent equal to $2,500,000.
(f) Any claim for Buyer's Damages hereunder shall be
reduced by the amount of any insurance (including title
insurance) proceeds actually received by Buyer in respect of
the same matter underlying such claim for Buyer's Damages.
(g) 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 and exercise of
its rights under the Escrow Agreement; 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.
FORM 10-K Page 99
Exhibit 2.4 (continued)
9.4. Third Party Actions or Claims; Remediation
Procedures. (a) Defenses. If any action or claim shall be
brought or asserted against any Buyer Entity by a Third Party
(a "Third-Party Claim") in respect of which indemnity may be
sought from Seller, such Buyer Entity shall promptly notify
Seller in writing of such claim, and Seller shall assume the
defense thereof, including the employment of counsel and the
payment of all expenses. Such Buyer Entity shall have the
absolute right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Buyer
Entity unless: (i) the employment thereof has been
specifically authorized by Seller in writing; (ii) Seller
shall have failed to assume the defense and to employ counsel
satisfactory to such Buyer Entity in such Buyer Entity's good
faith discretion; or (iii) the named parties to any such
action (including any impleaded parties) include both such
Buyer Entity and Seller, and such Buyer Entity shall have been
advised by such counsel that there may be one or more legal
defenses available to it that are different from or in
addition to those available to Seller, in which case, if such
Buyer Entity notifies Seller in writing that it elects to
employ separate counsel at the expense of Seller, Seller shall
not have the right to assume the defense of such action on
behalf of such Buyer Entity, it being understood, however,
that Seller shall not, in connection with any one such action
or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys
at any time for all Buyer Entities.
(b) Resolution of Third-Party Claims. Upon a
judgment, order, decree or decision being rendered by any
court of law or equity or any proper arbitral tribunal or
Governmental Authority (a "Decision"), Seller agrees to, and
shall, indemnify and hold harmless each Buyer Entity against
the amount of the Decision (plus any other losses or
liabilities relating to such Decision). If any Third-Party
Claim is settled with the written consent of Seller, Seller
agrees to, and shall, indemnify and hold harmless each Buyer
Entity against the amount of such settlement (plus any other
liabilities relating to such settlement).
(c) Remediation Procedures. (i) Prior to the
implementation of any plan to remediate any violation or
alleged violation of any Environmental Law or any Hazardous
FORM 10-K Page 100
Exhibit 2.4 (continued)
Material or other environmental condition with respect to
which it has rights of indemnification hereunder, Buyer shall
provide reasonable written notice thereof to Seller setting
forth such remediation plan and the estimated costs thereof.
Seller shall have the right to approve Buyer's remediation
plan, which approval shall not be unreasonably withheld and
shall be deemed given if within ten (10) days after Seller's
receipt of such remediation plan Seller fails to provide Buyer
with written notice of its objection to such plan, identifying
specific reasonable objections. Buyer shall revise the
remediation plan to address any reasonable objections of
Seller. Buyer's failure to provide such notice or plan of
remediation or Buyer's implementation of a plan of remediation
as to which Seller has objected shall not limit in any way
Buyer's right to indemnification as set forth herein, but may
give rise to a separate action by Seller against Buyer for any
actual loss caused by a breach of this Section 9.4(c)(i),
which action is subject to arbitration pursuant to Section
11.9. Notwithstanding the foregoing provisions of this
Section 9.4(c)(i), in the event that Buyer reasonably and in
good faith determines that it must act with immediacy to
remediate any violation or alleged violation of any
Environmental Law or any Hazardous Material or other
environmental condition, it shall not be required to provide
the notice or a plan of remediation to Seller as set forth in
the first sentence of this Section 9.4(c)(i), but shall
provide a copy of its remediation plan to Seller as promptly
as is reasonably possible. In the event Buyer conducts
remediation work for which it has rights of indemnification
hereunder pursuant to a plan approved by Seller, Seller shall
reimburse Buyer for the cost of such work. In the event Buyer
conducts remediation work for which it has rights of
indemnification hereunder that is not pursuant to a plan
approved by Seller, Seller shall reimburse Buyer for the
reasonable cost of such work. Subject to the foregoing, all
such reimbursement payments shall be made by Seller to Buyer
within ten (10) days after Seller's receipt of Buyer's written
request therefor.
(ii) Notwithstanding the foregoing provisions of
this Section 9.4(c)(i), Buyer may at its option require that
Seller remediate any violation or alleged violation of any
Environmental Law or any Hazardous Material or other
environmental condition with respect to which Buyer has rights
of indemnification hereunder, in which case Buyer shall
provide reasonable written notice thereof to Seller and Seller
shall within a reasonable period provide to Buyer Seller's
FORM 10-K Page 101
Exhibit 2.4 (continued)
plan of remediation. Buyer shall have the right to approve
Seller's remediation plan, which approval shall not be
unreasonably withheld and shall be deemed given if within ten
(10) days after Buyer's receipt of such remediation plan Buyer
fails to provide Seller with written notice of its objection
to such plan, identifying specific reasonable objections.
Seller shall revise the remediation plan to address any
reasonable objections by Buyer, and upon approval or deemed
approval of the plan, Seller shall at its sole cost and
expense complete the required remediation work. Without
limiting the foregoing, Seller shall complete all remediation
work currently underway by Seller at any Facility (including
without limitation remediation work underway at Facility 1 and
Facility 5, remediation work reasonably contemplated at
Facility 5 as described in Schedule 9.4 and remediation work
reasonably contemplated by the Comprehensive Site Assessment
Plan submitted to the North Carolina Department of
Environment, Health and Natural Resources on or about December
31, 1995 with respect to Facility 1; provided that all such
remediation work shall be performed pursuant to a plan
approved by the Buyer and otherwise in accordance with this
Section 9.4(c)(ii)). Seller shall perform all remediation
work required by Buyer under this Section 9.4(c)(ii) at
Seller's risk and expense in accordance with applicable
Environmental Laws and the requirements of Governmental
Authorities as promptly as is reasonably possible, minimizing
interference with Buyer's operations and property. Seller
shall maintain in good and safe condition all ▇▇▇▇▇, borings,
equipment and other property relating to remediation work by
Seller, and Buyer shall have no responsibility of any kind in
connection therewith. Seller shall make such reports to
Governmental Authorities as are required, and simultaneously
send copies of such reports to Buyer. Seller shall conduct
remediation work only through qualified professional
environmental contracting firms approved in advance by Buyer,
which approval shall not to be unreasonably withheld (Law
Engineering and Environmental Services ("Law Engineering") is
hereby approved by Buyer with respect to continuing ongoing
remediation work at Facility 1). The scheduling of all
remediation work and the location of all ▇▇▇▇▇, borings,
equipment and operations by Seller and its contractors must be
approved in advance by Buyer, which approval shall not be
unreasonably withheld. Buyer shall provide Seller and its
contractors reasonable access to Buyer's facilities necessary
for Seller and its contractors to perform such remediation
work. Seller or its contractors shall remain the owner of all
such ▇▇▇▇▇ and equipment installed at a Facility by Seller or
its contractors, as well as all Hazardous Materials, samples
FORM 10-K Page 102
Exhibit 2.4 (continued)
and contaminated media removed by them, all of which promptly
shall be properly disposed of by Seller at an off-site
location. At the conclusion of remediation work at any
Facility, Seller and its contractors shall close all ▇▇▇▇▇ and
borings in accordance with legal requirements and remove all
of their equipment. Upon the completion of each phase of
remediation work, Seller and its contractors shall restore the
Facility in question to its condition prior to the
commencement of the remediation work, reasonable wear and tear
excepted. Seller shall provide evidence of, and shall cause
to be maintained throughout the period of remediation work,
comprehensive general public liability insurance coverage for
Seller and its contractors in amounts reasonably satisfactory
to Buyer covering all actions of Seller and its contractors at
any Facility. Seller agrees, upon Buyer's request, promptly
to supply to Buyer copies of all written information in its
possession relating to remediation work by Seller, and to
notify Buyer at least two (2) business days in advance of any
remediation work to be performed by Seller. Buyer shall have
the right to observe and verify all such work. Seller shall
also provide Buyer with copies of all notices, orders, claims,
lawsuits, actions, complaints, requests for information and
other correspondence with any Governmental Authority, or any
private third party, relating to any alleged violation of any
Environmental Law or Hazardous Material with respect to any
Facility. Seller agrees to indemnify, defend and hold
harmless each 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
attorneys' fees and consultant and expert witness fees,
arising in any manner, directly or indirectly, out of or by
reason of any remediation work by Seller or its contractors or
agents.
(iii) For the purposes of this Section 9.4, the
terms "remediation" or "remediate" shall include
investigative, response, removal, remedial, treatment,
cleanup, disposal and other corrective actions.
9.5. Seller's Payment of Its Indemnification
Obligations. Within a reasonable time after delivery by a
Buyer Entity to Seller of a claim for Buyer's Damages, Seller
shall pay such Buyer Entity in Cash, subject to prior
arbitration as may be required in accordance with Section 11.9
and subject to the other provisions of this Article IX, the
amount set forth in such claim for Buyer's Damages.
FORM 10-K Page 103
Exhibit 2.4 (continued)
9.6. Conflict with the Escrow Agreement. In the event
there is any inconsistency or conflict, regarding the payment
and disbursement of the portion of the Purchase Price held
back from Seller and placed in escrow pursuant to the Escrow
Agreement (which is provided for in Section 2.2(b)), between
this Article IX and the Escrow Agreement, for so long as the
Escrow Agreement is effective and is applicable, the Escrow
Agreement shall control over the provisions of this Article
IX.
9.7. Indemnification by Buyer. Buyer agrees to
indemnify, defend and hold harmless Seller from and against
all demands, claims, actions, losses, damages, liabilities,
fines, penalties, governmental requirements, administrative
proceedings, personal injury claims (including claims for
death), property damage claims, liens, costs and expenses,
including, without limitation, attorney's fees and consultant
and expert witness fees, asserted against or incurred by
Seller resulting from Buyer's use of any vehicle to be
transferred by Seller to Buyer pursuant to this Agreement or
the Services Agreement prior to Buyer's completion of the
retitling and licensing of such vehicle as contemplated hereby
and thereby.
ARTICLE X
TERMINATION
10.1. Termination. This Agreement may be terminated:
(a) At any time by mutual consent of Seller and Buyer;
(b) By either party, if Closing hereunder has not
taken place on or before January 31, 1996 (subject, however,
to the provisions of Section 7.4);
(c) By Seller if all the conditions in Sections 8.1
and 8.2 have not been satisfied or waived by the Closing Date;
(d) By Buyer if all the conditions set forth in
Sections 8.1 and 8.3 have not been satisfied or waived by the
Closing Date;
10.2. Procedure and Effect of Termination or Failure to
Close. In the event of termination of this Agreement and
abandonment of the transactions contemplated hereby by any or
FORM 10-K Page 104
Exhibit 2.4 (continued)
all of the parties pursuant to Section 10.1, 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. If this Agreement is terminated as
provided herein:
(a) 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 Article IX or in
Section 10.2(b) and in Sections 7.2(b), 11.1 and 11.2 hereof;
and
(b) All filings, applications and other submissions
relating to the transfer of the Purchased Assets shall, to the
extent practicable, be withdrawn from the agency or other
Person to which made.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Commissions. Seller and Buyer represent and
warrant to each other that 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.
11.2. 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.
11.3. Further Assurances. Subject to the terms and
conditions of this Agreement, each of the parties hereto will
use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary,
FORM 10-K Page 105
Exhibit 2.4 (continued)
proper or advisable under applicable laws and regulations to
consummate and make effective the sale of the Purchased Assets
pursuant to this Agreement. From time to time after the
Closing Date, without further consideration, Seller will, at
its expense, execute and deliver, or cause to be executed and
delivered, such documents to Buyer as Buyer may reasonably
request in order to more effectively vest in Buyer good title
to the Purchased Assets. From time to time after the Closing
Date, without further consideration, Buyer will, at Buyer's
expense, execute and deliver such documents to Seller as
Seller may reasonably request in order to consummate the sale
of the Purchased Assets pursuant to this Agreement.
11.4. Amendment and Modification. This Agreement may
not be amended, modified or supplemented except by written
agreement executed by Seller and Buyer.
11.5. Waiver of Compliance; Consents. Except as
otherwise provided in this Agreement, any failure of any of
the parties to comply with any obligation, representation,
warranty, covenant, agreement or condition herein may be
waived by the party entitled to the benefits thereof only by
a written instrument signed by the party granting such waiver,
but such waiver or failure to insist upon strict compliance
with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 11.5.
11.6. 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:
Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
FORM 10-K Page 106
Exhibit 2.4 (continued)
(b) If to Buyer or British Vita, to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Company Solicitor
Telecopy: 011 44 161-655-3957
with copies to:
Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
11.7. 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, other than
Buyer's collateral assignment thereof to any lenders, 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.
11.8. 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 North Carolina, without regard to its conflicts-of-
laws principles. Buyer, British Vita 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
Guilford County, North Carolina, or in the United States
FORM 10-K Page 107
Exhibit 2.4 (continued)
District Court for the Middle District of North Carolina,
Greensboro Division. 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 11.6, 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 forum
non conveniens, or any similar basis to the maximum extent
permitted by law.
11.9. Arbitration. Except as otherwise provided herein
or in any other agreement contemplated hereby between Seller
and Buyer (including without limitation the exceptions set
forth in Section 2.13 hereof) and notwithstanding Section
11.8, 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 (including without limitation
the Escrow Agreement) (collectively, "Disputes"), between
Seller and Buyer shall be resolved by binding arbitration as
provided in this Section 11.9. 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 either in Guilford
County or Mecklenburg County, North 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.
FORM 10-K Page 108
Exhibit 2.4 (continued)
Notwithstanding anything to the contrary contained in
this Section 11.9, 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.
11.10. 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.
11.11. Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of
this Agreement.
11.12. Public Announcements. Prior to the Closing Date,
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.
11.13. 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. Except as otherwise
provided herein, this Agreement supersedes all prior
agreements and understandings between the parties with respect
FORM 10-K Page 109
Exhibit 2.4 (continued)
to the transactions contemplated by this Agreement, including
the letter of intent signed by British Vita on September 18,
1995 and accepted by Seller on September 19, 1995, and the
amendment thereto signed by British Vita on November 27, 1995
and accepted by Seller on November 27, 1995.
11.14. 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.
[Signatures begin on next page]
FORM 10-K Page 110
Exhibit 2.4 (continued)
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.
CONE ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and
General Counsel
VITAFOAM INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:Corporate Secretary
BRITISH VITA PLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:Company Solicitor
FORM 10-K Page 111
Exhibit 2.4 (continued)
STATE OF NORTH CAROLINA
LEASE AGREEMENT
COUNTY OF GUILFORD
THIS LEASE AGREEMENT is made and entered into as of the
22nd day of January, 1996, by and between CONE ▇▇▇▇▇
CORPORATION, a North Carolina corporation with offices in
Greensboro, North Carolina ("Landlord") and VITAFOAM
INCORPORATED, a North Carolina corporation with offices in
High Point, North Carolina ("Tenant").
PRELIMINARY STATEMENT
A. Landlord is the owner of that certain parcel of land
(the "Land") containing approximately 15.14 acres, located on
the northwest side of Yanceyville Street, in the City of
Greensboro, Guilford County, North Carolina, identified as
Guilford County Tax Parcel No. ▇▇▇-▇▇▇-▇▇ and outlined in blue
on Exhibit A attached hereto.
B. Landlord or its predecessor in title has previously
constructed on the Land a manufacturing/warehouse building
(the "Building") containing approximately 144,000 square feet
of floor area, and outlined in red on Exhibit A attached
hereto, and certain improvements appurtenant to the Building,
such as roadways, rail spurs, loading docks, parking areas,
and utility facilities (collectively, with the Building, the
"Improvements"). The Building, the Improvements, and the
portion of the Land on which the Building and the Improvements
are located, are referred to collectively in this Lease as the
"Premises."
C. Under the terms of an Acquisition Agreement dated
January 19, 1996 between Landlord and Tenant (the "Acquisition
Agreement"), Landlord has agreed to convey certain assets to
Tenant, and also has agreed to lease the Premises to Tenant
for a period of approximately six (6) months. Tenant intends
to occupy the Building and use the other Improvements for the
manufacture of rebonded polyurethane foam, carpet underlay and
related products. In order to evidence their agreement
regarding Tenant's lease of the Premises, the parties are
entering into this Lease Agreement (this "Lease").
FORM 10-K Page 112
Exhibit 2.4 (continued)
LEASE
NOW, THEREFORE, in consideration of the mutual covenants
and conditions contained in this Lease, including the covenant
to pay rent, and other good and valuable consideration,
Landlord and Tenant hereby agree, for themselves, their
successors and assigns, as follows:
1. Premises. Landlord leases to Tenant, and Tenant
accepts and rents from Landlord, the Premises, for the term
and on the terms and conditions set forth in this Lease. In
additon to the Premises, Tenant shall have the non-exclusive
right to use all other improvements located on the Land that
are necessary to its use and enjoyment of the Premises.
2. Term. The term of this Lease shall begin on the
date that the Premises are delivered to Tenant, as provided in
Section 3, and shall end at midnight on the last day of the
sixth (6th) complete calendar month following the commencement
date; provided, however, that Tenant in its sole discretion
may extend the term of this Lease for an additional period of
six (6) months by delivery of written notice to Landlord at
least thirty (30) days prior to the expiration of the initial
term of this Lease.
3. Delivery of Premises. Landlord shall remove from
the Premises all chemicals and other "Hazardous Material" (as
defined in the Acquisition Agreement) that have no further use
in operations at the Premises, all drums containing
unidentified substances, all spilled chemicals and other
Hazardous Material, and all unidentified substances on floors
or in spill containment areas. Landlord shall complete this
work and deliver the Premises on or before January 22, 1996.
Tenant acknowledges that it has inspected the Improvements,
that Landlord makes no representations or warranties as to the
condition of the Improvements or their suitability for any
particular purpose, except as may be expressly set forth in
the Acquisition Agreement, and that Landlord shall have no
responsibility to make any repairs or alterations to the
Improvements prior to their delivery to Tenant, except as
provided above.
4. Rent. Tenant shall pay to Landlord as monthly rent
the sum of $8,164.97 per month, payable in advance on the
first day of each calendar month, commencing on the
commencement date of the term of this Lease and continuing
FORM 10-K Page 113
Exhibit 2.4 (continued)
throughout the term of this Lease. If the commencement date
falls on a day other than the first day of a calendar month,
the installment of rent payable for the initial partial
calendar month shall be payable on the first day of the
following calendar month. All rent shall be paid to Landlord
at the address to which notices to Landlord are given as set
forth in Section 22 below, and shall be paid without demand,
setoff or deduction. Rent for any partial month shall be
prorated on a daily basis.
5. Additional Rent. If Tenant does not pay such
expenses directly as provided in this Lease, Tenant shall pay
to Landlord, as additional rent, the following operating
expenses incurred by Landlord with respect to the Premises
during the term of this Lease:
(a) All real estate taxes and assessments
levied or assessed against the Premises;
(b) The cost of all utility services provided
to the Premises, including but not limited to
electricity, natural gas, water and sewer services
and trash removal; and
(c) All other costs incurred by Landlord in
performing any items of maintenance that are the
obligation of Tenant under Section 6 below,
including but not limited to the cost of janitorial
services, security services, maintenance of
landscaped and paved areas, maintenance of utility
systems and other similar expenditures.
Tenant shall reimburse Landlord for each of the foregoing
expenses within ten (10) days after receipt of a written
statement from Landlord, detailing the expense incurred by
Landlord.
6. Repair and Maintenance. Landlord shall maintain the
entire Premises in the condition existing as of the date of
this Lease (ordinary wear and tear excepted), including
without limitation the Building and other Improvements on the
Premises, and all roofs and exterior walls, driveways and
parking areas, and shall make all necessary repairs to the
building structure and concealed systems (including without
limitation plumbing, electrical, heating and air conditioning)
within or servicing the Premises; provided, however, that
FORM 10-K Page 114
Exhibit 2.4 (continued)
Landlord shall not be required to effect any repair the
reasonable cost of which would exceed $50,000, in which case
Tenant may immediately terminate this Lease or may effect such
repair and offset against payments due to Landlord hereunder
or under any other agreement its reasonable cost of effecting
such repair. Landlord shall also make any modifications to
the Premises required to comply with applicable legal
requirements, including without limitation the Americans with
Disabilities Act. If any repairs required to be made by
Landlord to the Premises are not completed within ten (10)
days after written notice of the need for the repairs has been
given by Tenant to Landlord (or, in the event of an emergency,
if not made as soon as reasonably practical), then Tenant may
make the needed repairs on behalf of and at the expense of
Landlord. Landlord shall reimburse Tenant for the reasonable
cost of the repairs within ten (10) days after written demand,
accompanied by supporting invoices. If any repairs required
to be made by Landlord are commenced when necessary, but
cannot be completed within ten (10) days, then Landlord shall
have an additional reasonable period of time to complete the
repairs, so long as it continues to prosecute the completion
of the repairs with due diligence, and provided it keeps
Tenant fully informed as to the progress of the repairs.
Tenant shall keep the Premises in a safe, neat and clean
condition at all times, and shall be responsible the routine
maintenance and upkeep of the Improvements (including minor
non-structural repairs to the interior of the Building, and
the general policing of paved and landscaped areas). Tenant
also shall be responsible for any repairs to Tenant's personal
property and equipment placed on the Premises.
7. Alterations and Personal Property. Subject to the
proviso of the first sentence of Section 6, Tenant shall have
no right to make any structural alterations to the Building
without the prior written consent of Landlord, which may be
withheld in Landlord's sole discretion. If Landlord approves
any such alterations, Tenant must obtain from Landlord
approval in writing in advance of plans and specifications for
the work, and shall keep the Premises free and clear of any
lien or claim of lien arising out of any such work occurring,
or allegedly occurring, by, through or under Tenant. Tenant
shall immediately pay and discharge any such lien or claim of
lien that is filed.
FORM 10-K Page 115
Exhibit 2.4 (continued)
All inventory, equipment, fixtures and furnishings
installed in or attached to the Premises by and at the expense
of Tenant may be removed by Tenant at any time during the
Lease term provided Tenant is not in default hereunder, and
provided that such removal will not damage the Premises or
that any damage caused by such removal will be promptly
repaired by Tenant at its expense. Any such property not so
removed before the expiration of the term of this Lease or the
earlier termination of this Lease shall, as Landlord's option,
become the property of Landlord, or shall be removed by
Tenant. Tenant shall repair any damage caused by removal, and
these obligations shall survive termination of this Lease or
expiration of the Lease term. All personal property owned by
Tenant shall be brought onto the Premises at Tenant's sole
risk, and Tenant hereby releases Landlord from any liability
for damage to such property, no matter how caused.
8. Taxes. Landlord shall pay, prior to delinquency,
all real estate taxes and assessments that are levied or
assessed against the Land during the term of this Lease.
Tenant shall pay, prior to delinquency, all taxes,
assessments, license fees and other charges of any nature
whatsoever that are levied or assessed against any personal
property or equipment of Tenant or are otherwise based on
Tenant's operations within the Premises during the term of
this Lease. On demand by Landlord, Tenant shall furnish
Landlord with satisfactory evidence of the payments.
9. Utilities and Services. Tenant shall make all
arrangements for and pay for all utilities and services
furnished to the Premises, including, without limitation, gas,
electricity, water, sewer and telephone service, and for all
charges for initiation of service therefor. Notwithstanding
the foregoing, Landlord agrees to continue to supply steam to
the Premises, in the manner, quantity and price ($4.80 per
1,000 pounds) that it currently is being supplied from
Landlord's adjacent manufacturing facility.
10. Damage by Casualty or Fire. If the Building or
other Improvements are totally or partially damaged or
destroyed by casualty, explosion or fire, however caused, or
by the elements, and Landlord's architect reasonably estimates
that the damage will take longer than thirty (30) days to
repair, then either party shall have the right to terminate
this Lease by delivery of written notice of such termination
FORM 10-K Page 116
Exhibit 2.4 (continued)
to the other party within thirty (30) days after such damage
or destruction. Upon any such termination, Landlord shall be
entitled to receive all insurance proceeds payable with
respect to such damage or destruction, excluding the proceeds
of any separate policy of insurance maintained by Tenant on
its personal property, equipment or trade fixtures. If this
Lease is not terminated as provided above, then Landlord shall
repair and restore the Building and the other Improvements to
substantially the same condition as existed prior to the
casualty, and Tenant shall be entitled to an abatement of rent
in proportion to the degree in which Tenant's use and
enjoyment of the Premises is interfered with during the period
of damage, repair or restoration.
11. Insurance. Landlord shall maintain, at its expense,
throughout the term of this Lease, a policy of standard fire
and extended coverage insurance on the Improvements in an
amount equal to the full replacement cost of the Improvements.
Tenant shall maintain, at its expense, throughout the term of
this Lease, a policy of commercial general liability insurance
with a single limit of liability of not less than $5,000,000
per occurrence, and shall maintain on all its personal
property, inventory, fixtures and equipment a policy of
standard fire and extended coverage insurance, in an amount
sufficient to meet the co-insurance requirements of such
policy. Prior to the commencement of the term of this Lease,
and thereafter from time to time upon request, each party
shall provide the other party with certificates (or upon
request, copies) of the insurance policies required to be
maintained under this Section 11.
12. Taking for Public Use. If the entire Premises are
taken for any public or any quasi-public use under any statute
or by right of eminent domain, or by private purchase in lieu
thereof, then this Lease shall automatically terminate as of
the date that title is vested in the condemning authority. If
any part of the Premises is so taken as to render the
remainder thereof unusable for the purposes for which the
Premises are leased, then either party shall have the right to
terminate this Lease by delivery of written notice to the
other party within thirty (30) days after the date of such
taking, time being of the essence.
If any part of the Premises is so taken and this Lease is
not terminated under the provisions of the preceding paragraph
of this Section 12, then the rent shall be apportioned
according to the space so taken, and Landlord shall, to the
FORM 10-K Page 117
Exhibit 2.4 (continued)
extent possible with any award of damages from such taking,
restore the remaining portion of the Premises to the extent
necessary to render it reasonably suitable for the purposes
for which it is leased, and shall make all repairs to any
Building damaged by such taking to the extent necessary to
constitute the Building a complete architectural unit.
All compensation awarded or paid upon such a total or
partial taking of the Premises shall belong to and be the
property of Landlord without any participation by Tenant;
provided, however, that nothing contained herein shall be
construed to preclude Tenant from prosecuting any claim
directly against the condemning authority in such condemnation
proceedings for loss of business, or for depreciation to,
damage to, the cost of removal of, or the value of stock,
trade fixtures, furniture, and other personal property
belonging to Tenant; provided, further, that no such claim
shall diminish or otherwise adversely affect Landlord's award.
13. Indemnity and Waiver. Tenant shall protect,
indemnify, defend and save Landlord harmless from and against
any and all claims, demands, causes of action and other
expenses of any nature whatsoever (including attorneys' fees),
for injury to or death of persons, or loss of or damage to
property, occurring on or about the Premises, and resulting
from the use and occupancy of the Premises by Tenant, its
agents or employees. The foregoing indemnity shall not extend
to any matters resulting, directly or indirectly, from the
negligence or intentional misconduct of Landlord, or to any
claims relating to any "Hazardous Material" or "Environmental
Law," as those terms are defined in Section 19.
Landlord shall not be responsible or liable for any
event, act or omission to the extent covered by insurance
maintained by Tenant, or required by this Lease to be
maintained by Tenant, and Tenant shall require its insurers to
include in Tenant's insurance policies effective waivers of
subrogation rights for the benefit of Landlord, its agents and
employees.
Landlord hereby releases and waives all claims against
Tenant, its agents and employees, for injury or damage to the
Improvements, to the extent covered by insurance maintained by
Landlord, or required by this Lease to be maintained by
Landlord, and Landlord shall use its best efforts (but shall
not be required to pay any additional or special charges for
endorsements) to cause its insurers to include in Landlord's
FORM 10-K Page 118
Exhibit 2.4 (continued)
insurance policies effective waivers of subrogation rights for
the benefit of Tenant, its agents and employees.
14. Default. The occurrence of any one of the following
shall constitute a default by Tenant:
(a) Failure to pay rent or any other amount
payable under this Lease within ten (10) days after
written notice that such amount is past due; or
(b) Failure to perform any other provision of
this Lease if the failure to perform is not cured
within thirty (30) days after notice thereof has
been given to Tenant; provided, however, that if
the default is not reasonably capable of being
cured in thirty (30) days, Tenant shall not be in
default if it commences the cure within that thirty
(30) day period and diligently prosecutes the cure
to completion.
15. Landlord's Remedies. Landlord shall have the
following remedies if Tenant defaults. These remedies are not
exclusive; they are cumulative in addition to any remedies now
or later allowed by law.
(a) Landlord shall have the right to
terminate Tenant's right of possession of the
Premises without terminating this Lease, and as
long as Landlord does not terminate this Lease,
collect rent when due. Tenant shall surrender
possession of the Premises to Landlord and Landlord
shall have the right to enter the Premises without
notice to vacate (any right to which is hereby
waived by Tenant) and relet them, without prior
notice or demand, using such reasonable force as
may be necessary, changing any or all locks on the
Premises all without being liable for forcible
entry, trespass, or other tort. Tenant shall be
liable immediately to Landlord for all costs
Landlord shall incur in reletting the Premises
including, without limitation, broker's
commissions, expenses for remodeling required by
the reletting, and like costs. Reletting can be
for a period shorter or longer than the remaining
term of the Lease. Tenant shall pay to Landlord
the rent due under this Lease on the date that the
rent is due, less the rent Landlord receives from
FORM 10-K Page 119
Exhibit 2.4 (continued)
any reletting. No act by Landlord allowed by this
Section 15(a) or surrender of possession of the Premises
pursuant to this Section 15(a) shall terminate this Lease
unless Landlord notifies Tenant that Landlord elects to
terminate this Lease.
(b) Landlord shall have the right to
terminate this Lease without notice to vacate (any
right to which is hereby waived by Tenant) and
Tenant's rights to possession of the Premises at
any time, and reenter the Premises as described in
Section 15(a). No act by Landlord other than the
giving notice of termination to Tenant shall
terminate this Lease. Upon termination, Landlord
shall have the right to pursue its remedies at law
or in equity to recover of Tenant all amounts of
rent then due or thereafter accruing and such other
damages as are caused by Tenant's default.
Without limiting the foregoing, Tenant shall pay, upon
demand, all cost and expenses, including reasonable attorneys'
fees, incurred by Landlord in enforcing Tenant's obligations
under this Lease.
16. Assignment and Subleasing. Tenant shall not sell,
assign, pledge or hypothecate this Lease or sublease the
Premises or any part thereof without the prior written consent
of Landlord, which may be withheld by Landlord in its sole
discretion. Consent by Landlord to one assignment or
subleasing shall not destroy or operate as a waiver of the
prohibitions contained in this Section 16 as to future
assignments or subleases, and all such later assignments or
subleases shall be made only with Landlord's prior written
consent. In the event any assignment of this Lease or
sublease of the Premises or any part thereof is made by
Tenant, whether or not the same is consented to by Landlord,
Tenant shall remain liable to Landlord for payment of all rent
and other charges provided in this Lease, and for the faithful
performance of all of the covenants and conditions of this
Lease by any assignee or subtenant to the same extent as if
the Lease had not been assigned or the Premises had not been
subleased.
17. Quiet Enjoyment. Provided Tenant performs all its
covenants, agreements and obligations hereunder, Landlord will
warrant and defend Tenant in the peaceful and quiet enjoyment
of the Premises, subject to enforceable easements, restrictive
covenants and rights of way, if any, against the lawful claims
of all persons claiming under Landlord.
FORM 10-K Page 120
Exhibit 2.4 (continued)
18. Use Clause/Compliance with Legal Requirements.
Tenant shall use the Premises only for general manufacturing
and related office purposes. Tenant shall obey and comply
with all laws, rules, regulations, ordinances and other legal
requirements of all legally constituted authorities existing
at any time during the Lease term that are applicable to
Tenant's operations at the Premises. Tenant shall not cause
or permit a nuisance to exist on or about the Premises, and
shall at all times maintain the Premises in a clean and
attractive condition; provided, however, that the foregoing
provision shall not be deemed to impose upon Tenant any
obligation to remedy any situation or condition in existence
as of the date of this Lease.
19. Hazardous Materials. The environmental provisions
set forth in this Section 19 are in addition to and supplement
the environmental provisions of the Acquisition Agreement,
which shall remain in full force and effect with respect to
the Premises notwithstanding this Lease. For the purposes of
this Lease, the terms "Hazardous Material" and "Environmental
Law" shall have the meanings given those terms in the
Acquisition Agreement.
Landlord and Tenant shall promptly, after either of them
learns of the occurrence thereof, give written notice to the
other of receipt of any notice of violation or claim, or a
request for information, relating in any manner to any
Hazardous Material or Environmental Law in connection with the
Premises. Landlord and Tenant shall, upon receipt by either
of them of any environmental sampling or testing results
relating in any manner to the Premises, provide the other with
copies of documents relating to such environmental
investigations.
Tenant agrees that it shall not generate, use, store,
release or dispose of any Hazardous Material on the Premises
except in material compliance with applicable Environmental
Laws. Tenant shall, at its sole cost and expense, cure within
thirty (30) days after written notice from Landlord any breach
of this Section 19 by Tenant by taking all necessary response
and corrective actions in accordance with all applicable
Environmental Laws. If Tenant is responsible by virtue of
this Section 19 for the removal or remediation of any
Hazardous Material, Tenant shall carry out and complete, at
FORM 10-K Page 121
Exhibit 2.4 (continued)
its sole cost and expense, such response actions, including
without limitation, any investigation, reporting, removal,
remediation, repair, closure, detoxification, decontamination,
restoration and other clean-up of the Premises required under
applicable Environmental Laws, as promptly as reasonably
possible. All response actions shall be undertaken with
disclosure to Landlord of and approval by Landlord of response
plans.
Landlord shall, at its sole cost and expense, cure within
thirty (30) days after written notice from Tenant any breach
by Landlord of this Section 19 by taking all necessary
response and corrective actions in accordance with all
applicable Environmental Laws. If Landlord is responsible for
the removal or remediation of any Hazardous Material by virtue
of this Section 19, Landlord shall carry out and complete, at
its sole cost and expense, such response actions, including
without limitation, any investigation, reporting, removal,
remediation, repair, closure, detoxification, decontamination,
restoration and other clean-up of the Premises required under
applicable Environmental Laws, as promptly as reasonably
possible. All response actions shall be undertaken so as to
minimize interruption of Tenant's business and with disclosure
to Tenant of and approval by Tenant of response plans. IT IS
UNDERSTOOD AND AGREED THAT TENANT HAS NO RESPONSIBILITY FOR OR
AUTHORITY OVER ANY HAZARDOUS MATERIALS LOCATED IN, ON OR ABOUT
THE PREMISES, EXCEPT TO THE EXTENT, IF ANY, BROUGHT THEREON BY
OR AT THE DIRECTION OF TENANT AND THOSE HAZARDOUS MATERIALS
PROPERLY STORED AND LISTED ON AN MSDS REPORT MAINTAINED BY
LANDLORD WITH RESPECT TO THE PREMISES ON THE DATE OF THIS
LEASE AND ACQUIRED BY TENANT PURSUANT TO THE ACQUISITION
AGREEMENT. LANDLORD RETAINS COMPLETE RESPONSIBILITY FOR AND
AUTHORITY OVER ANY AND ALL HAZARDOUS MATERIALS IN, ON OR ABOUT
THE PREMISES EXCEPT FOR THOSE BROUGHT THEREON BY TENANT AND SO
ACQUIRED.
Tenant agrees to indemnify, defend and hold harmless
Landlord, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all claims,
damages, actions, proceedings, costs, liens, requirements,
judgments, losses, penalties, fines, settlements and
liabilities of any kind (including without limitation
attorneys' fees and court costs, and consultant and expert
witness fees arising in any manner, directly or indirectly,
out of or by reason of (1) any breach of any of the
warranties, representations, covenants or agreements in this
Section 19 by Tenant, (2) any violation or alleged violation
FORM 10-K Page 122
Exhibit 2.4 (continued)
of any Environmental Law by Tenant with respect to the
Premises (provided such violation or alleged violation does
not represent the substantial continuation of a violation or
alleged violation that commenced prior to the Term when
Landlord operated the Premises, except for a violation that
continues beyond a reasonable period after the management of
Tenant become aware of such violation (other than violations
currently known by employees of Landlord who have been or may
become employees of Tenant as contemplated by the Acquisition
Agreement)), and/or (3) any presence, generation, treatment,
storage, disposal, transport, release, threatened release or
suspected release of any Hazardous Material brought on, in, to
or from the Premises by Tenant. Tenant agrees to employ
security measures, consistent with the security measures
historically employed by Landlord at the Premises, to prevent
unauthorized dumping of Hazardous Materials on the Premises by
third parties.
Landlord agrees to indemnify, defend and hold harmless
Tenant, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all claims,
damages, actions, proceedings, costs, liens, requirements,
judgments, losses, penalties, fines, settlements and
liabilities of any kind (including without limitation
attorneys' fees and court costs, and consultant and expert
witness fees arising in any manner, directly or indirectly,
out of or by reason of (1) any breach by Landlord of this
Section 19, (2) any violation or alleged violation of any
Environmental Law by Landlord, and/or (3) any presence,
generation, treatment, storage, disposal, transport, release,
threatened release or suspected release of any Hazardous
Material on, in, to or from the Premises that does not result
solely and directly from Tenant's activities in the Premises.
In the event of a breach by Landlord of this Section 19,
Tenant may at any time thereafter terminate this Lease by
written notice to Landlord. The provisions of this Section 19
shall survive the expiration or earlier termination of the
term of this Lease.
20. [INTENTIONALLY DELETED]
21. Waiver. The waiver by either Landlord or Tenant of
any breach of any covenant or agreement of this Lease shall
not be deemed a waiver of any other default concerning the
same or any other covenant or agreement of this Lease. The
receipt and acceptance by Landlord of delinquent or partial
rent shall not constitute a waiver of that or any other
default.
FORM 10-K Page 123
Exhibit 2.4 (continued)
22. Notice. Any notice that either party desires or is
required to give the other party shall be in writing and shall
be deemed to have been sufficiently given if either delivered
by hand delivery or sent by prepaid, registered or certified
mail, addressed to the other party at the address set forth
below:
Landlord: Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice
President and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Tenant: Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: 011 44 161-655-3957
Either party may change its address by notifying the
other party of the change of address in the foregoing manner.
23. Surrender and Holding Over. Upon the expiration or
earlier termination of the Lease term, Tenant shall surrender
possession of the Premises in as good a condition as delivered
to it, reasonable wear and tear and damage by fire and other
casualty excepted. Upon the expiration or earlier termination
of this Lease, Tenant shall remove from the Premises all
chemicals and other Hazardous Material that have been placed
on the Premises by or at the direction of Tenant and have no
further use in operations at the Premises, all drums
containing unidentified substances that have been placed on
the Premises by or at the direction of Tenant, all chemicals
or other Hazardous Materials spilled at the Premises by
Tenant, and all unidentified substances on floors or in spill
FORM 10-K Page 124
Exhibit 2.4 (continued)
containment areas placed there by or at the direction of
Tenant. If Tenant remains in possession of the Premises
following the expiration or earlier termination of this Lease
term with the consent of Landlord but without any written
agreement between the parties, Tenant shall be only a tenant
at will, and there shall be no renewal of this Lease or
exercise of any option by operation of law.
24. Applicable Law. This Lease has been entered into
under, and shall be governed by, the laws of the State of
North Carolina.
25. Nature and Extent of Agreement. This instrument and
the Acquisition Agreement contain the complete agreement of
the parties regarding the terms and conditions of the lease of
the Premises, and there are no oral or written conditions,
terms, understandings or other agreements pertaining thereto
which have not been incorporated in this Lease or in the
Acquisition Agreement. This instrument creates only the
relationship of landlord and tenant between the parties as to
the Premises. This Lease may be amended only by a written
instrument executed by Landlord and Tenant.
[signatures on following page]
FORM 10-K Page 125
Exhibit 2.4 (continued)
IN WITNESS WHEREOF, the parties have executed this Lease
under seal as of the day and year first above written.
CONE ▇▇▇▇▇ CORPORATION
[CORPORATE SEAL] By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Attest:
__________________________
Secretary
VITAFOAM INCORPORATED
[CORPORATE SEAL] By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Attest:
__________________________
Secretary
FORM 10-K Page 126
Exhibit 2.4 (continued)
STATE OF NORTH CAROLINA
LEASE AGREEMENT
COUNTY OF ▇▇▇▇▇▇▇▇ AND OPTION TO PURCHASE
THIS LEASE AGREEMENT AND OPTION TO PURCHASE is made and
entered into as of the 22nd day of January, 1996, by and
between CONE ▇▇▇▇▇ CORPORATION, a North Carolina corporation
with offices in Greensboro, North Carolina ("Landlord") and
VITAFOAM INCORPORATED, a North Carolina corporation with
offices in High Point, North Carolina ("Tenant").
PRELIMINARY STATEMENT
A. Landlord is the owner of that certain parcel of land
(the "Land") containing approximately 54.8 acres, located at
the southwest corner of State Route 1532 and State Route 1571
(Glenola Road), in New Market Township, ▇▇▇▇▇▇▇▇ County, North
Carolina. The Land is more particularly described on Exhibit
A attached hereto.
B. Landlord or its predecessor in title has previously
constructed on the Land a manufacturing building (the
"Building") containing approximately 97,000 square feet of
floor area, together with associated improvements such as
parking areas and utility facilities (collectively, with the
Building, the "Improvements") on the Land. The Land, the
Building and the other Improvements are referred to
collectively in this Lease as the "Premises."
C. Under the terms of an Olympic Division Acquisition
Agreement dated January 19, 1996 between Landlord and Tenant
(the "Acquisition Agreement"), Landlord has agreed to convey
certain assets to Tenant, and also has agreed to lease the
Premises to Tenant for a period of approximately six (6)
months, with an option to extend the term for an additional
six (6) months, and to grant to Tenant an option to purchase
the Premises for its book value as of the date of the exercise
of the option. Tenant intends to occupy the Building and use
the other Improvements for the manufacture of beds,
mattresses, bedding and related products. In order to
evidence their agreement regarding Tenant's lease and purchase
option of the Premises, the parties are entering into this
Lease Agreement and Option to Purchase (this "Lease").
FORM 10-K Page 127
Exhibit 2.4 (continued)
LEASE
NOW, THEREFORE, in consideration of the mutual covenants
and conditions contained in this Lease, including the covenant
to pay rent, and other good and valuable consideration,
Landlord and Tenant hereby agree, for themselves, their
successors and assigns, as follows:
1. Premises. Landlord leases to Tenant, and Tenant
accepts and rents from Landlord, the Premises, for the term
and on the terms and conditions set forth in this Lease.
2. Term. The term of this Lease shall begin on the date
that the Premises are delivered to Tenant, as provided in
Section 3, and shall end at midnight on the last day of the
sixth (6th) complete calendar month following the commencement
date.
At the expiration of the initial term of this Lease,
provided Tenant is not in material default under this Lease
beyond the expiration of any applicable cure period, Tenant
shall have one option to extend the term for an additional
period of six (6) months (the "Renewal Period"), upon the same
terms and conditions set forth in this Lease. The "Option"
(as defined in Section 26) shall remain in effect during the
Renewal Period. Tenant shall exercise its renewal option by
delivery of written notice to Landlord on or before the
expiration of the initial term. All references to the "Lease
term" or the "term of this Lease" shall, unless the context
clearly indicates a different meaning, be deemed to include
the Renewal Period, if properly exercised.
3. Delivery of Premises. Landlord shall remove from the
Premises all chemicals and other "Hazardous Material" (as
defined in the Acquisition Agreement) that have no further use
in operations at the Premises, all drums containing
unidentified substances, all spilled chemicals and other
Hazardous Material, and all unidentified substances on floors
or in spill containment areas. Landlord shall complete this
work and deliver the Premises to Tenant on or before January
22, 1996. Tenant acknowledges that it has inspected the
Improvements, that Landlord makes no representations or
warranties as to the condition of the Improvements or their
suitability for any particular purpose, except as may be
expressly set forth in the Acquisition Agreement, and that
Landlord shall have no responsibility to make any repairs or
alterations to the Improvements prior to their delivery to
Tenant, except as provided above.
FORM 10-K Page 128
Exhibit 2.4 (continued)
4. Rent. Tenant shall pay to Landlord as monthly rent
the sum of $10,015.26 per month, payable in advance on the
first day of each calendar month, commencing on the
commencement date of the term of this Lease and continuing
throughout the term of this Lease. If the commencement date
falls on a day other than the first day of a calendar month,
the installment of rent payable for the initial partial
calendar month shall be payable on the first day of the
following calendar month. All rent shall be paid to Landlord
at the address to which notices to Landlord are given as set
forth in Section 22 below, and shall be paid without demand,
setoff or deduction. Rent for any partial month shall be
prorated on a daily basis.
5. Additional Rent. If Tenant does not pay such
expenses directly as provided in this Lease, Tenant shall pay
to Landlord, as additional rent, the following operating
expenses incurred by Landlord with respect to the Premises
during the term of this Lease:
(a) All real estate taxes and assessments
levied or assessed against the Premises;
(b) The cost of all utility services provided
to the Premises, including but not limited to
electricity, natural gas and water services and
trash removal; and
(c) All other costs incurred by Landlord in
performing any items of maintenance that are the
obligation of Tenant under Section 6 below,
including but not limited to the cost of janitorial
services, security services, maintenance of
landscaped and paved areas, maintenance of utility
systems and other similar expenditures.
Tenant shall reimburse Landlord for each of the foregoing
expenses within ten (10) days after receipt of a written
statement from Landlord, detailing the expense incurred by
Landlord.
6. Repair and Maintenance. Landlord shall maintain the
entire Premises in the condition existing as of the date of
this Lease (ordinary wear and tear excepted), including
without limitation the Building and other Improvements on the
Premises, and all roofs and exterior walls, driveways and
FORM 10-K Page 129
Exhibit 2.4 (continued)
parking areas, and shall make all necessary repairs to the
building structure and concealed systems (including without
limitation plumbing, electrical, heating and air conditioning)
within or servicing the Premises; provided, however, that
Landlord shall not be required to effect any repair the
reasonable cost of which would exceed $50,000, in which case
Tenant may immediately terminate this Lease or may effect such
repair and offset against payments due to Landlord hereunder
or under any other agreement its reasonable cost of effecting
such repair. Landlord shall also make any modifications to
the Premises required to comply with applicable legal
requirements, including without limitation the Americans with
Disabilities Act. If any repairs required to be made by
Landlord to the Premises are not completed within ten (10)
days after written notice of the need for the repairs has been
given by Tenant to Landlord (or, in the event of an emergency,
if not made as soon as reasonably practical), then Tenant may
make the needed repairs on behalf of and at the expense of
Landlord. Landlord shall reimburse Tenant for the reasonable
cost of the repairs within ten (10) days after written demand,
accompanied by supporting invoices. If any repairs required
to be made by Landlord are commenced when necessary, but
cannot be completed within ten (10) days, then Landlord shall
have an additional reasonable period of time to complete the
repairs, so long as it continues to prosecute the completion
of the repairs with due diligence, and provided it keeps
Tenant fully informed as to the progress of the repairs.
Tenant shall keep the Premises in a safe, neat and clean
condition at all times, and shall be responsible the routine
maintenance and upkeep of the Improvements (including minor
non-structural repairs to the interior of the Building, and
the general policing of paved and landscaped areas). Tenant
also shall be responsible for any repairs to Tenant's personal
property and equipment placed on the Premises.
7. Alterations and Personal Property. Subject to the
proviso of the first sentence of Section 6, Tenant shall have
no right to make any structural alterations to the Building
without the prior written consent of Landlord, which may be
withheld in Landlord's sole discretion. If Landlord approves
any such alterations, Tenant must obtain from Landlord
approval in writing in advance of plans and specifications for
the work, and shall keep the Premises free and clear of any
lien or claim of lien arising out of any such work occurring,
or allegedly occurring, by, through or under Tenant. Tenant
shall immediately pay and discharge any such lien or claim of
lien that is filed.
FORM 10-K Page 130
Exhibit 2.4 (continued)
All inventory, equipment, fixtures and furnishings
installed in or attached to the Premises by and at the expense
of Tenant may be removed by Tenant at any time during the
Lease term provided Tenant is not in default hereunder, and
provided that such removal will not damage the Premises or
that any damage caused by such removal will be promptly
repaired by Tenant at its expense. Any such property not so
removed before the expiration of the term of this Lease or the
earlier termination of this Lease shall, as Landlord's option,
become the property of Landlord, or shall be removed by
Tenant. Tenant shall repair any damage caused by removal, and
these obligations shall survive termination of this Lease or
expiration of the Lease term. All personal property owned by
Tenant shall be brought onto the Premises at Tenant's sole
risk, and Tenant hereby releases Landlord from any liability
for damage to such property, no matter how caused.
8. Taxes. Landlord shall pay, prior to delinquency, all
real estate taxes and assessments that are levied or assessed
against the Premises during the term of this Lease. Tenant
also shall pay, prior to delinquency, all taxes, assessments,
license fees and other charges of any nature whatsoever that
are levied or assessed against any personal property or
equipment of Tenant or are otherwise based on Tenant's
operations within the Premises during the term of this Lease.
On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of the payments.
9. Utilities and Services. Tenant shall make all
arrangements for and pay for all utilities and services
furnished to the Premises, including, without limitation, gas,
electricity, water and telephone service, and for all charges
for initiation of service therefor.
10. Damage by Casualty or Fire. If the Building or other
Improvements are totally or partially damaged or destroyed by
casualty, explosion or fire, however caused, or by the
elements, and Landlord's architect reasonably estimates that
the damage will take longer than thirty (30) days to repair,
then either party shall have the right to terminate this Lease
by delivery of written notice of such termination to the other
party within thirty (30) days after such damage or
destruction. Upon any such termination, Landlord shall be
entitled to receive all insurance proceeds payable with
respect to such damage or destruction, excluding the proceeds
of any separate policy of insurance maintained by Tenant on
its personal property, equipment or trade fixtures. If this
FORM 10-K Page 131
Exhibit 2.4 (continued)
Lease is not terminated as provided above, then Landlord shall
repair and restore the Building and the other Improvements to
substantially the same condition as existed prior to the
casualty, and Tenant shall be entitled to an abatement of rent
in proportion to the degree in which Tenant's use and
enjoyment of the Premises is interfered with during the period
of damage, repair or restoration. Notwithstanding the
foregoing, if Landlord notifies Tenant of its election to
terminate this Lease and Tenant exercises its Option to
purchase the Premises (pursuant to Section 26) within thirty
(30) days after the date of Landlord's notice, then this Lease
shall not terminate, nor shall Landlord be required to repair
or restore the Building, but the proceeds of insurance shall
be applied in the manner provided in Section 26(g).
11. Insurance. Landlord shall maintain, at its expense,
throughout the term of this Lease, a policy of standard fire
and extended coverage insurance on the Improvements in an
amount equal to the full replacement cost of the Improvements.
Tenant shall maintain, at its expense, throughout the term of
this Lease, a policy of commercial general liability insurance
with a single limit of liability of not less than $5,000,000
per occurrence, and shall maintain on all its personal
property, inventory, fixtures and equipment a policy of
standard fire and extended coverage insurance, in an amount
sufficient to meet the co-insurance requirements of such
policy. Prior to the commencement of the term of this Lease,
and thereafter from time to time upon request, each party
shall provide the other party with certificates (or upon
request, copies) of the insurance policies required to be
maintained under this Section 11.
12. Taking for Public Use. If the entire Premises are
taken for any public or any quasi-public use under any statute
or by right of eminent domain, or by private purchase in lieu
thereof, then this Lease shall automatically terminate as of
the date that title is vested in the condemning authority. If
any part of the Premises is so taken as to render the
remainder thereof unusable for the purposes for which the
Premises are leased, then either party shall have the right to
terminate this Lease by delivery of written notice to the
other party within thirty (30) days after the date of such
taking, time being of the essence.
If any part of the Premises is so taken and this Lease is
not terminated under the provisions of the preceding paragraph
of this Section 12, then the rent shall be apportioned
according to the space so taken, and Landlord shall, to the
FORM 10-K Page 132
Exhibit 2.4 (continued)
extent possible with any award of damages from such taking,
restore the remaining portion of the Premises to the extent
necessary to render it reasonably suitable for the purposes
for which it is leased, and shall make all repairs to any
Building damaged by such taking to the extent necessary to
constitute the Building a complete architectural unit.
All compensation awarded or paid upon such a total or
partial taking of the Premises shall belong to and be the
property of Landlord without any participation by Tenant;
provided, however, that nothing contained herein shall be
construed to preclude Tenant from prosecuting any claim
directly against the condemning authority in such condemnation
proceedings for loss of business, or for depreciation to,
damage to, the cost of removal of, or the value of stock,
trade fixtures, furniture, and other personal property
belonging to Tenant; provided, further, that no such claim
shall diminish or otherwise adversely affect Landlord's award.
13. Indemnity and Waiver. Tenant shall protect,
indemnify, defend and save Landlord harmless from and against
any and all claims, demands, causes of action and other
expenses of any nature whatsoever (including attorneys' fees),
for injury to or death of persons, or loss of or damage to
property, occurring on or about the Premises, and resulting
from the use and occupancy of the Premises by Tenant, its
agents or employees. The foregoing indemnity shall not extend
to any matters resulting, directly or indirectly, from the
negligence or intentional misconduct of Landlord, or to any
claims relating to any "Hazardous Material" or "Environmental
Law," as those terms are defined in Section 19.
Landlord shall not be responsible or liable for any
event, act or omission to the extent covered by insurance
maintained by Tenant, or required by this Lease to be
maintained by Tenant, and Tenant shall require its insurers to
include in Tenant's insurance policies effective waivers of
subrogation rights for the benefit of Landlord, its agents and
employees.
Landlord hereby releases and waives all claims against
Tenant, its agents and employees, for injury or damage to the
Improvements, to the extent covered by insurance maintained by
Landlord, or required by this Lease to be maintained by
Landlord, and Landlord shall use its best efforts (but shall
not be required to pay any additional or special charges for
endorsements) to cause its insurers to include in Landlord's
FORM 10-K Page 133
Exhibit 2.4 (continued)
insurance policies effective waivers of subrogation rights for
the benefit of Tenant, its agents and employees.
14. Default. The occurrence of any one of the following
shall constitute a default by Tenant:
(a) Failure to pay rent or any other amount
payable under this Lease within ten (10) days after
written notice that such amount is past due; or
(b) Failure to perform any other provision of
this Lease if the failure to perform is not cured
within thirty (30) days after notice thereof has
been given to Tenant; provided, however, that if the
default is not reasonably capable of being cured in
thirty (30) days, Tenant shall not be in default if
it commences the cure within that thirty (30) day
period and diligently prosecutes the cure to
completion.
15. Landlord's Remedies. Landlord shall have the
following remedies if Tenant defaults. These remedies are not
exclusive; they are cumulative in addition to any remedies now
or later allowed by law.
(a) Landlord shall have the right to terminate
Tenant's right of possession of the Premises without
terminating this Lease, and as long as Landlord does
not terminate this Lease, collect rent when due.
Tenant shall surrender possession of the Premises to
Landlord and Landlord shall have the right to enter
the Premises without notice to vacate (any right to
which is hereby waived by Tenant) and relet them,
without prior notice or demand, using such
reasonable force as may be necessary, changing any
or all locks on the Premises all without being
liable for forcible entry, trespass, or other tort.
Tenant shall be liable immediately to Landlord for
all costs Landlord shall incur in reletting the
Premises including, without limitation, broker's
commissions, expenses for remodeling required by the
reletting, and like costs. Reletting can be for a
period shorter or longer than the remaining term of
the Lease. Tenant shall pay to Landlord the rent
due under this Lease on the date that the rent is
due, less the rent Landlord receives from any
reletting. No act by Landlord allowed by this
FORM 10-K Page 134
Exhibit 2.4 (continued)
Section 15(a) or surrender of possession of the Premises
pursuant to this Section 15(a) shall terminate this Lease
unless Landlord notifies Tenant that Landlord elects to
terminate this Lease.
(b) Landlord shall have the right to terminate
this Lease without notice to vacate (any right to
which is hereby waived by Tenant) and Tenant's
rights to possession of the Premises at any time,
and reenter the Premises as described in Section
15(a). No act by Landlord other than the giving
notice of termination to Tenant shall terminate this
Lease. Upon termination, Landlord shall have the
right to pursue its remedies at law or in equity to
recover of Tenant all amounts of rent then due or
thereafter accruing and such other damages as are
caused by Tenant's default.
Without limiting the foregoing, Tenant shall pay, upon
demand, all cost and expenses, including reasonable attorneys'
fees, incurred by Landlord in enforcing Tenant's obligations
under this Lease.
16. Assignment and Subleasing. Tenant shall not sell,
assign, pledge or hypothecate this Lease or sublease the
Premises or any part thereof without the prior written consent
of Landlord, which may be withheld by Landlord in its sole
discretion. Consent by Landlord to one assignment or
subleasing shall not destroy or operate as a waiver of the
prohibitions contained in this Section 16 as to future
assignments or subleases, and all such later assignments or
subleases shall be made only with Landlord's prior written
consent. In the event any assignment of this Lease or
sublease of the Premises or any part thereof is made by
Tenant, whether or not the same is consented to by Landlord,
Tenant shall remain liable to Landlord for payment of all rent
and other charges provided in this Lease, and for the faithful
performance of all of the covenants and conditions of this
Lease by any assignee or subtenant to the same extent as if
the Lease had not been assigned or the Premises had not been
subleased.
17. Quiet Enjoyment. Provided Tenant performs all its
covenants, agreements and obligations hereunder, Landlord will
warrant and defend Tenant in the peaceful and quiet enjoyment
of the Premises, subject to enforceable easements, restrictive
covenants and rights of way, if any, against the lawful claims
of all persons claiming under Landlord.
FORM 10-K Page 135
Exhibit 2.4 (continued)
18. Use Clause/Compliance with Legal Requirements.
Tenant shall use the Premises only for general manufacturing
and related office purposes. Tenant shall obey and comply
with all laws, rules, regulations, ordinances and other legal
requirements of all legally constituted authorities existing
at any time during the Lease term that are applicable to
Tenant's operations at the Premises. Tenant shall not cause
or permit a nuisance to exist on or about the Premises, and
shall at all times maintain the Premises in a clean and
attractive condition; provided, however, that the foregoing
provision shall not be deemed to impose upon Tenant any
obligation to remedy any situation or condition in existence
as of the date of this Lease.
19. Hazardous Materials. The environmental provisions
set forth in this Section 19 are in addition to and supplement
the environmental provisions of the Acquisition Agreement,
which shall remain in full force and effect with respect to
the Premises notwithstanding this Lease. For the purposes of
this Lease, the terms "Hazardous Material" and "Environmental
Law" shall have the meanings given those terms in the
Acquisition Agreement.
Landlord and Tenant shall promptly, after either of them
learns of the occurrence thereof, give written notice to the
other of receipt of any notice of violation or claim, or a
request for information, relating in any manner to any
Hazardous Material or Environmental Law in connection with the
Premises. Landlord and Tenant shall, upon receipt by either
of them of any environmental sampling or testing results
relating in any manner to the Premises, provide the other with
copies of documents relating to such environmental
investigations.
Tenant agrees that it shall not generate, use, store,
release or dispose of any Hazardous Material on the Premises
except in material compliance with applicable Environmental
Laws. Tenant shall, at its sole cost and expense, cure within
thirty (30) days after written notice from Landlord any breach
of this Section 19 by Tenant by taking all necessary response
and corrective actions in accordance with all applicable
Environmental Laws. If Tenant is responsible by virtue of
this Section 19 for the removal or remediation of any
Hazardous Material, Tenant shall carry out and complete, at
its sole cost and expense, such response actions, including
without limitation, any investigation, reporting, removal,
FORM 10-K Page 136
Exhibit 2.4 (continued)
remediation, repair, closure, detoxification, decontamination,
restoration and other clean-up of the Premises required under
applicable Environmental Laws, as promptly as reasonably
possible. All response actions shall be undertaken with
disclosure to Landlord of and approval by Landlord of response
plans.
Landlord shall, at its sole cost and expense, cure within
thirty (30) days after written notice from Tenant any breach
by Landlord of this Section 19 by taking all necessary
response and corrective actions in accordance with all
applicable Environmental Laws. If Landlord is responsible for
the removal or remediation of any Hazardous Material by virtue
of this Section 19, Landlord shall carry out and complete, at
its sole cost and expense, such response actions, including
without limitation, any investigation, reporting, removal,
remediation, repair, closure, detoxification, decontamination,
restoration and other clean-up of the Premises required under
applicable Environmental Laws, as promptly as reasonably
possible. All response actions shall be undertaken so as to
minimize interruption of Tenant's business and with disclosure
to Tenant of and approval by Tenant of response plans. IT IS
UNDERSTOOD AND AGREED THAT TENANT HAS NO RESPONSIBILITY FOR OR
AUTHORITY OVER ANY HAZARDOUS MATERIALS LOCATED IN, ON OR ABOUT
THE PREMISES, EXCEPT TO THE EXTENT, IF ANY, BROUGHT THEREON BY
OR AT THE DIRECTION OF TENANT AND THOSE HAZARDOUS MATERIALS
PROPERLY STORED AND LISTED ON AN MSDS REPORT MAINTAINED BY
LANDLORD WITH RESPECT TO THE PREMISES ON THE DATE OF THIS
LEASE AND ACQUIRED BY TENANT PURSUANT TO THE ACQUISITION
AGREEMENT. LANDLORD RETAINS COMPLETE RESPONSIBILITY FOR AND
AUTHORITY OVER ANY AND ALL HAZARDOUS MATERIALS IN, ON OR ABOUT
THE PREMISES EXCEPT FOR THOSE BROUGHT THEREON BY TENANT AND SO
ACQUIRED.
Tenant agrees to indemnify, defend and hold harmless
Landlord, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all claims,
damages, actions, proceedings, costs, liens, requirements,
judgments, losses, penalties, fines, settlements and
liabilities of any kind (including without limitation
attorneys' fees and court costs, and consultant and expert
witness fees arising in any manner, directly or indirectly,
out of or by reason of (1) any breach of any of the
warranties, representations, covenants or agreements in this
Section 19 by Tenant, (2) any violation or alleged violation
of any Environmental Law by Tenant with respect to the
Premises (provided such violation or alleged violation does
FORM 10-K Page 137
Exhibit 2.4 (continued)
not represent the substantial continuation of a violation or
alleged violation that commenced prior to the Term when
Landlord operated the Premises, except for a violation that
continues beyond a reasonable period after the management of
Tenant become aware of such violation (other than violations
currently known by employees of Landlord who have been or may
become employees of Tenant as contemplated by the Acquisition
Agreement)), and/or (3) any presence, generation, treatment,
storage, disposal, transport, release, threatened release or
suspected release of any Hazardous Material brought on, in, to
or from the Premises by Tenant. Tenant agrees to employ
security measures, consistent with the security measures
historically employed by Landlord at the Premises, to prevent
unauthorized dumping of Hazardous Materials on the Premises by
third parties.
Landlord agrees to indemnify, defend and hold harmless
Tenant, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all claims,
damages, actions, proceedings, costs, liens, requirements,
judgments, losses, penalties, fines, settlements and
liabilities of any kind (including without limitation
attorneys' fees and court costs, and consultant and expert
witness fees arising in any manner, directly or indirectly,
out of or by reason of (1) any breach by Landlord of this
Section 19, (2) any violation or alleged violation of any
Environmental Law by Landlord, and/or (3) any presence,
generation, treatment, storage, disposal, transport, release,
threatened release or suspected release of any Hazardous
Material on, in, to or from the Premises that does not result
solely and directly from Tenant's activities in the Premises.
In the event of a breach by Landlord of this Section 19,
Tenant may at any time thereafter terminate this Lease by
written notice to Landlord. The provisions of this Section 19
shall survive the expiration or earlier termination of the
term of this Lease.
20. [INTENTIONALLY DELETED]
21. Waiver. The waiver by either Landlord or Tenant of
any breach of any covenant or agreement of this Lease shall
not be deemed a waiver of any other default concerning the
same or any other covenant or agreement of this Lease. The
receipt and acceptance by Landlord of delinquent or partial
rent shall not constitute a waiver of that or any other
default.
FORM 10-K Page 138
Exhibit 2.4 (continued)
22. Notice. Any notice that either party desires or is
required to give the other party shall be in writing and shall
be deemed to have been sufficiently given if either delivered
by hand delivery or sent by prepaid, registered or certified
mail, addressed to the other party at the address set forth
below:
Landlord: Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Tenant: Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: 011 44 161-655-3957
Either party may change its address by notifying the
other party of the change of address in the foregoing manner.
23. Surrender and Holding Over. Upon the expiration or
earlier termination of the Lease term, Tenant shall surrender
possession of the Premises in as good a condition as delivered
to it, reasonable wear and tear and damage by fire and other
casualty excepted. Upon the expiration or earlier termination
of this Lease, Tenant shall remove from the Premises all
chemicals and other Hazardous Material that have been placed
on the Premises by or at the direction of Tenant and have no
further use in operations at the Premises, all drums
containing unidentified substances that have been placed on
the Premises by or at the direction of Tenant, all chemicals
or other Hazardous Materials spilled at the Premises by
Tenant, and all unidentified substances on floors or in spill
FORM 10-K Page 139
Exhibit 2.4 (continued)
containment areas placed there by or at the direction of
Tenant. If Tenant remains in possession of the Premises
following the expiration or earlier termination of this Lease
term with the consent of Landlord but without any written
agreement between the parties, Tenant shall be only a tenant
at will, and there shall be no renewal of this Lease or
exercise of any option by operation of law.
24. Applicable Law. This Lease has been entered into
under, and shall be governed by, the laws of the State of
North Carolina.
25. Nature and Extent of Agreement. This instrument and
the Acquisition Agreement contain the complete agreement of
the parties regarding the terms and conditions of the lease of
the Premises, and there are no oral or written conditions,
terms, understandings or other agreements pertaining thereto
which have not been incorporated in this Lease or in the
Acquisition Agreement. This instrument creates only the
relationship of landlord and tenant between the parties as to
the Premises. This Lease may be amended only by a written
instrument executed by Landlord and Tenant.
26. Option to Purchase. Landlord hereby grants unto
Tenant the right, privilege and option ("Option") to purchase
the Premises upon the following terms and conditions:
(a) The purchase price for the Premises shall
be the book value of the Premises, as reflected on
Landlord's financial statements maintained in
accordance with generally accepted accounting
principles consistently applied, as of the date of
exercise of the Option. The purchase price shall
be payable in cash or certified Greensboro, North
Carolina funds at closing.
(b) Tenant must exercise this Option on or
before the date of expiration or earlier
termination of the Lease term pursuant to the terms
hereof, as the term may be extended under Section
2, by delivery of written notice to Landlord,
accompanied by an ▇▇▇▇▇▇▇ money deposit in the
amount of Ten Thousand and No/100 Dollars
($10,000.00). The Option shall lapse if not
properly exercised within the time period set forth
above, and Tenant may not exercise the Option if it
is in default, beyond the expiration of any
FORM 10-K Page 140
Exhibit 2.4 (continued)
applicable cure period, in any material respect under
this Lease. Upon proper exercise of this Option, the
provisions of this Section 26 shall constitute a contract
of sale and shall be binding upon Landlord and Tenant.
(c) If Tenant exercises this Option, the
closing of the purchase and sale of the Premises
shall occur on or before the date thirty (30) days
after the date of Tenant's notice exercising the
Option, on a date acceptable to Landlord and
Tenant, at the offices of Tenant's attorney in
Charlotte, North Carolina. Time shall be of the
essence. If the date of closing falls after the
expiration of the Lease term, this Lease shall
continue in full force and effect through that
date; otherwise, this Lease shall terminate upon
closing.
(d) At the closing, Landlord shall execute
and deliver to Tenant the following items:
(i) A good and sufficient general
warranty deed conveying valid,
insurable, marketable and
indefeasible fee simple title to the
Premises free and clear of all liens
and encumbrances of any nature,
except for liens and encumbrances
created by Tenant and restrictions
and rights of way of record in
existence as of the date hereof; ad
valorem real property taxes for the
calendar year of sale (which shall be
prorated on a calendar year basis
through the date of closing); and
such other matters as are expressly
approved by Tenant in writing.
(ii) An Owner's Affidavit in a form
reasonably acceptable to Tenant and
its title insurer, affirming that
there has been no skill, labor or
material furnished to the Premises by
Landlord for which mechanics' or
materialmen's liens could be filed;
FORM 10-K Page 141
Exhibit 2.4 (continued)
(iii) An affidavit stating that Landlord is
not a "foreign person" within the
meaning of Section 1445(f)(3) of the
Internal Revenue Code of 1986, as
amended; and
(iv) All other documents affecting title
to the Premise and necessary to
transfer title to Tenant, free and
clear of all liens and encumbrances
(except as set forth in subparagraph
(i) above).
(e) Landlord shall be responsible for the
cost of preparation of its deed and the payment
of revenue stamps thereon. Tenant shall be
responsible for the cost of recording the deed.
Landlord and Tenant will each be responsible for
the remainder of their respective closing costs,
including attorneys' fees.
(f) On or before the tenth day after the
delivery to Landlord of the notice exercising the
Option (the "Inspection Date"), Tenant shall
deliver to Landlord a statement of objections to
Landlord's title and shall notify Landlord in
writing of the nature of such objections. If
objections to title are made as provided in the
foregoing sentence, Landlord shall use reasonable
efforts to cure the objections within ten (10)
days after receipt of Tenant's statement, but
shall not be required to expend in excess of
$10,000. If Landlord fails to cure the
objections within that ten (10)-day period,
Tenant may, by delivery of written notice to
Landlord, either (i) terminate its obligation to
purchase the Premises and receive a return of all
▇▇▇▇▇▇▇ money paid to Landlord in connection with
the exercise of the Option; (ii) proceed to close
the purchase of the Premises, in which case the
purchase price for the Premises shall not be
adjusted and such objectives shall be deemed to
have been waived; or (iii) cure the objections at
Landlord's reasonable expense, not to exceed
$25,000, and treat that expense as a credit
against the purchase price for the Premises. On
FORM 10-K Page 142
Exhibit 2.4 (continued)
or before the Inspection Date, Tenant may cause to be
prepared, at its expense, a survey of the Premises
certified by a registered land surveyor, showing the
boundaries and the acreage of the Premises, and the
location of all easements, buildings, improvements and
encroachments, if any, located thereon. Tenant's
objections to title may be based solely on such surveys.
(g) If, after the date of exercise of this
Option, but prior to closing, any eminent domain
proceedings are commenced against the Premises,
or the Premises is damaged by fire or other
casualty, and the reasonable cost of repairing
the damage exceeds Twenty-Five Thousand and
No/100 Dollars ($25,000.00), then Tenant may, at
its election, either terminate its obligation to
purchase the Premises and receive a return of all
▇▇▇▇▇▇▇ money paid to Landlord in connection with
the exercise of the Option, or proceed to close
the purchase of the Premises, in which case the
purchase price for the Premises shall not be
adjusted, but Landlord shall assign to Tenant all
of its right, title and interest in any
condemnation or insurance proceeds.
(h) If Landlord defaults in the performance
of its obligations under this Section 26, Tenant
shall be entitled to a return of any ▇▇▇▇▇▇▇
money it has paid to Landlord in connection with
the exercise of this Option, or to obtain the
remedy of specific performance, but no other
remedy. If Tenant defaults in the performance of
any of its obligations under this Section 26,
Landlord shall be entitled to retain all ▇▇▇▇▇▇▇
money paid by Tenant to Landlord in connection
with the exercise of this Option as liquidated
damages for that default, and Tenant shall have
no further liability for that default.
[signatures on following page]
FORM 10-K Page 143
Exhibit 2.4 (continued)
IN WITNESS WHEREOF, the parties have executed this Lease
under seal as of the day and year first above written.
CONE ▇▇▇▇▇ CORPORATION
[CORPORATE SEAL] By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Attest:
___________________________
Secretary
VITAFOAM INCORPORATED
[CORPORATE SEAL] By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
Attest:
___________________________
Secretary
FORM 10-K Page 144
Exhibit 2.4 (continued)
STATE OF NORTH CAROLINA
SUBLEASE AGREEMENT
COUNTY OF GUILFORD
THIS SUBLEASE AGREEMENT is entered of the 22nd day of
January, 1996, by and between CONE ▇▇▇▇▇ CORPORATION, a North
Carolina corporation with offices in Greensboro, North
Carolina ("Landlord"), and VITAFOAM INCORPORATED, a North
Carolina corporation with offices in High Point, North
Carolina ("Tenant").
RECITALS
A. High Point Industrial Leasing, a Limited
Partnership, a North Carolina limited partnership with offices
in High Point, North Carolina ("Prime Landlord") and Landlord
previously have entered into a Lease Agreement dated July 18,
1977 (the "Prime Lease"), pursuant to which Prime Landlord
leases to Landlord three contiguous tracts of land in the City
of High Point, Guilford County, North Carolina, containing an
aggregate of approximately 6.32 acres, and the improvements
located thereon (collectively, the "Premises"), on the terms
and conditions set forth in the Prime Lease. The Premises
include a manufacturing building containing approximately
_________ square feet of floor area (the "Building") and other
related improvements including areas, roadways and utility
facilities (collectively, with the Building the
"Improvements"). A map showing the location of the Premises
is attached hereto as Exhibit A. A memorandum of the Prime
Lease is recorded in Deed Book 2892 at Page 120 in the
Guilford County Public Registry.
B. Under the terms of an Acquisition Agreement dated
January 19, 1996 between Landlord and Tenant (the "Acquisition
Agreement"), Landlord has agreed to convey certain assets to
Tenant, and also has agreed to sublease the Premises to Tenant
for a period of approximately two (2) years. Tenant intends
to occupy the Building and use the other Improvements for the
manufacture of beds, mattresses, bedding and related products.
In order to evidence their agreement regarding Tenant's
sublease of the Premises, the parties are entering into this
Sublease Agreement (this "Lease"). Landlord and Tenant have
requested Prime Landlord to join in the execution of this
Lease, in order to consent to its terms as required by
Paragraph 11 of the Prime Lease.
FORM 10-K Page 145
Exhibit 2.4 (continued)
LEASE
NOW, THEREFORE, in consideration of the mutual covenants
and conditions contained in this Lease, including the covenant
to pay rent, and other good and valuable consideration,
Landlord and Tenant hereby agree, for themselves, their
successors and assigns, as follows:
1. Premises. Landlord subleases to Tenant, and Tenant
accepts and rents from Landlord, the Premises, for the term
and on the terms and conditions set forth in this Lease, and
in the Prime Lease, a copy of which has been delivered by
Landlord to Tenant.
2. Term. The term of this Lease shall begin on the
date that the Premises are delivered to Tenant, as provided in
Section 3, and shall end at midnight on December 30, 1997.
3. Delivery of Premises. Landlord shall remove from
the Premises all chemicals and other "Hazardous Material" (as
defined in the Acquisition Agreement) that have no further use
in operations at the Premises, all drums containing
unidentified substances, all spilled chemicals and other
Hazardous Material, and all unidentified substances on floors
or in spill containment areas. Landlord shall complete this
work and deliver the Premises to Tenant on or before January
22, 1996. Tenant acknowledges that it has inspected the
Improvements, that Landlord makes no representations or
warranties as to the condition of the Improvements or their
suitability for any particular purpose, except as may be
expressly set forth in the Acquisition Agreement, and that
Landlord shall have no responsibility to make any repairs or
alterations to the Improvements prior to their delivery to
Tenant, except as provided above.
4. Rent. Tenant shall pay to Landlord as monthly rent
the sum of $9,200.00 per month, payable in advance on the
first day of each calendar month, commencing on the
commencement date of the term of this Lease and continuing
throughout the term of this Lease. If the commencement date
falls on a day other than the first day of a calendar month,
the installment of rent payable for the initial partial
calendar month shall be payable on the first day of the
following calendar month. All rent shall be paid to Landlord
at the address to which notices to Landlord are given as set
forth in Section 22 below, and shall be paid without demand,
setoff or deduction. Rent for any partial month shall be
prorated on a daily basis.
FORM 10-K Page 146
Exhibit 2.4 (continued)
5. Additional Rent. If Tenant does not pay such
expenses directly as provided in this Lease, Tenant shall pay
to Landlord, as additional rent, the following operating
expenses incurred by Landlord with respect to the Premises
during the term of this Lease:
(a) All real estate taxes and assessments
levied or assessed against the Premises;
(b) The cost of all utility services provided
to the Premises, including but not limited to
electricity, natural gas, water and sewer services
and trash removal; and
(c) All other costs incurred by Landlord in
performing any items of maintenance that are the
obligation of Tenant under Section 6 below,
including but not limited to the cost of janitorial
services, security services, maintenance of
landscaped and paved areas, maintenance of utility
systems and other similar expenditures.
Tenant shall reimburse Landlord for each of the foregoing
expenses within ten (10) days after receipt of a written
statement from Landlord, detailing the expense incurred by
Landlord.
6. Repair and Maintenance. Landlord shall maintain, or
cause Prime Landlord to maintain, the entire Premises in the
condition existing as of the date of this Lease (ordinary wear
and tear excepted), including without limitation the Building
and other Improvements on the Premises, and all roofs and
exterior walls, driveways and parking areas, and shall make
all necessary repairs to the building structure and concealed
systems (including without limitation plumbing, electrical,
heating and air conditioning) within or servicing the
Premises; provided, however, that Landlord shall not be
required to effect any repair the reasonable cost of which
would exceed $50,000, in which case Tenant may immediately
terminate this Lease or may effect such repair and offset
against payments due to Landlord hereunder or under any other
agreement its reasonable cost of effecting such repair.
Landlord shall also make any modifications to the Premises
required to comply with applicable legal requirements,
including without limitation the Americans with Disabilities
Act. If any repairs required to be made by Landlord to the
Premises are not completed within ten (10) days after written
FORM 10-K Page 147
Exhibit 2.4 (continued)
notice of the need for the repairs has been given by Tenant to
Landlord (or, in the event of an emergency, if not made as
soon as reasonably practical), then Tenant may make the needed
repairs on behalf of and at the expense of Landlord. Landlord
shall reimburse Tenant for the reasonable cost of the repairs
within ten (10) days after written demand, accompanied by
supporting invoices. If any repairs required to be made by
Landlord are commenced when necessary, but cannot be completed
within ten (10) days, then Landlord shall have an additional
reasonable period of time to complete the repairs, so long as
it continues to prosecute the completion of the repairs with
due diligence, and provided it keeps Tenant fully informed as
to the progress of the repairs.
Tenant shall keep the Premises in a safe, neat and clean
condition at all times, and shall be responsible the routine
maintenance and upkeep of the Improvements (including minor
non-structural repairs to the interior of the Building, and
the general policing of paved and landscaped areas). Tenant
also shall be responsible for any repairs to Tenant's personal
property and equipment placed on the Premises.
Notwithstanding the foregoing, Tenant shall have no
responsibility whatsoever for any underground storage tanks
located on the Premises as of the date of this Lease.
7. Alterations and Personal Property. Subject to the
proviso of the first sentence of Section 6, Tenant shall have
no right to make any structural alterations to the Building
without the prior written consent of Landlord and Prime
Landlord, which may be withheld in their sole discretion. If
Landlord and Prime Landlord approve any such alterations,
Tenant must obtain from Landlord and Prime Landlord approval
in writing in advance of plans and specifications for the
work, and shall keep the Premises free and clear of any lien
or claim of lien arising out of any such work occurring, or
allegedly occurring, by, through or under Tenant. Tenant shall
immediately pay and discharge any such lien or claim of lien
that is filed.
All inventory, equipment, fixtures and furnishings
installed in or attached to the Premises by and at the expense
of Tenant may be removed by Tenant at any time during the
Lease term provided Tenant is not in default hereunder, and
provided that such removal will not damage the Premises or
that any damage caused by such removal will be promptly
repaired by Tenant at its expense. Any such property not so
removed before the expiration of the term of this Lease or the
FORM 10-K Page 148
Exhibit 2.4 (continued)
earlier termination of this Lease shall, as Landlord's option,
become the property of Landlord, or shall be removed by
Tenant. Tenant shall repair any damage caused by removal, and
these obligations shall survive termination of this Lease or
expiration of the Lease term. All personal property owned by
Tenant shall be brought onto the Premises at Tenant's sole
risk, and Tenant hereby releases Landlord from any liability
for damage to such property, no matter how caused.
8. Taxes. Tenant shall pay, prior to delinquency, all
real estate taxes and assessments that are levied or assessed
against the Premises during the term of this Lease. Tenant
also shall pay, prior to delinquency, all taxes, assessments,
license fees and other charges of any nature whatsoever that
are levied or assessed against any personal property or
equipment of Tenant or are otherwise based on Tenant's
operations within the Premises during the term of this Lease.
On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of the payments.
9. Utilities and Services. Tenant shall make all
arrangements for and pay for all utilities and services
furnished to the Premises, including, without limitation, gas,
electricity, water, sewer and telephone service, and for all
charges for initiation of service therefor.
10. Damage by Casualty or Fire. If the Building or
other Improvements are totally or partially damaged or
destroyed by casualty, explosion or fire, however caused, or
by the elements, and Landlord's architect reasonably estimates
that the damage will take longer than thirty (30) days to
repair, then either party shall have the right to terminate
this Lease by delivery of written notice of such termination
to the other party within thirty (30) days after such damage
or destruction. Upon any such termination, Landlord (subject
to the rights of Prime Landlord under the Prime Lease) shall
be entitled to receive all insurance proceeds payable with
respect to such damage or destruction, excluding the proceeds
of any separate policy of insurance maintained by Tenant on
its personal property, equipment or trade fixtures. If this
Lease is not terminated as provided above, then Landlord shall
repair and restore, or cause Prime Landlord to repair and
restore, the Building and the other Improvements to
substantially the same condition as existed prior to the
casualty, and Tenant shall be entitled to an abatement of rent
in proportion to the degree in which Tenant's use and
enjoyment of the Premises is interfered with during the period
of damage, repair or restoration.
FORM 10-K Page 149
Exhibit 2.4 (continued)
11. Insurance. Landlord shall maintain, at its expense,
throughout the term of this Lease, a policy of standard fire
and extended coverage insurance on the Improvements in an
amount sufficient to comply with the requirements of the Prime
Lease. Tenant shall maintain, at its expense, throughout the
term of this Lease, a policy of commercial general liability
insurance with a single limit of liability of not less than
$5,000,000 per occurrence, and shall maintain on all its
personal property, inventory, fixtures and equipment a policy
of standard fire and extended coverage insurance, in an amount
sufficient to meet the co-insurance requirements of such
policy. Prior to the commencement of the term of this Lease,
and thereafter from time to time upon request, each party
shall provide the other party with certificates (or upon
request, copies) of the insurance policies required to be
maintained under this Section 11.
12. Taking for Public Use. If the entire Premises are
taken for any public or any quasi-public use under any statute
or by right of eminent domain, or by private purchase in lieu
thereof, then this Lease shall automatically terminate as of
the date that title is vested in the condemning authority. If
any part of the Premises is so taken as to render the
remainder thereof unusable for the purposes for which the
Premises are leased, then either party shall have the right to
terminate this Lease by delivery of written notice to the
other party within thirty (30) days after the date of such
taking, time being of the essence.
If any part of the Premises is so taken and this Lease is
not terminated under the provisions of the preceding paragraph
of this Section 12, then the rent shall be apportioned
according to the space so taken, and Landlord or Prime
Landlord shall, to the extent possible with any award of
damages from such taking, restore the remaining portion of the
Premises to the extent necessary to render it reasonably
suitable for the purposes for which it is leased, and shall
make all repairs to any Building damaged by such taking to the
extent necessary to constitute the Building a complete
architectural unit.
Subject to the rights of Prime Landlord under the Prime
Lease, all compensation awarded or paid upon such a total or
partial taking of the Premises shall belong to and be the
property of Landlord without any participation by Tenant;
provided, however, that nothing contained herein shall be
construed to preclude Tenant from prosecuting any claim
FORM 10-K Page 150
Exhibit 2.4 (continued)
directly against the condemning authority in such condemnation
proceedings for loss of business, or for depreciation to,
damage to, the cost of removal of, or the value of stock,
trade fixtures, furniture, and other personal property
belonging to Tenant; provided, further, that no such claim
shall diminish or otherwise adversely affect Landlord's award.
13. Indemnity and Waiver. Tenant shall protect,
indemnify, defend and save Landlord harmless from and against
any and all claims, demands, causes of action and other
expenses of any nature whatsoever (including attorneys' fees),
for injury to or death of persons, or loss of or damage to
property, occurring on or about the Premises, and resulting
from the use and occupancy of the Premises by Tenant, its
agents or employees. The foregoing indemnity shall not extend
to any matters resulting, directly or indirectly, from the
negligence or intentional misconduct of Landlord, or to any
claims relating to any "Hazardous Material" or "Environmental
Law," as those terms are defined in Section 19.
Landlord shall not be responsible or liable for any
event, act or omission to the extent covered by insurance
maintained by Tenant, or required by this Lease to be
maintained by Tenant, and Tenant shall require its insurers to
include in Tenant's insurance policies effective waivers of
subrogation rights for the benefit of Landlord, its agents and
employees.
Landlord hereby releases and waives all claims against
Tenant, its agents and employees, for injury or damage to the
Improvements, to the extent covered by insurance maintained by
Landlord, or required by this Lease to be maintained by
Landlord, and Landlord shall use its best efforts (but shall
be required to pay additional or special charges for
endorsements) to cause its insurers to include in Landlord's
insurance policies effective waivers of subrogation rights for
the benefit of Tenant, its agents and employees.
14. Default. The occurrence of any one of the following
shall constitute a default by Tenant:
(a) Failure to pay rent or any other amount
payable under this Lease within ten (10) days after
written notice that such amount is past due; or
FORM 10-K Page 151
Exhibit 2.4 (continued)
(b) Failure to perform any other provision of
this Lease if the failure to perform is not cured
within thirty (30) days after notice thereof has
been given to Tenant; provided, however, that if
the default is not reasonably capable of being
cured in thirty (30) days, Tenant shall not be in
default if it commences the cure within that thirty
(30) day period and diligently prosecutes the cure
to completion.
15. Landlord's Remedies. Landlord shall have the
following remedies if Tenant defaults. These remedies are not
exclusive; they are cumulative in addition to any remedies now
or later allowed by law.
(a) Landlord shall have the right to
terminate Tenant's right of possession of the
Premises without terminating this Lease, and as
long as Landlord does not terminate this Lease,
collect rent when due. Tenant shall surrender
possession of the Premises to Landlord and Landlord
shall have the right to enter the Premises without
notice to vacate (any right to which is hereby
waived by Tenant) and relet them, without prior
notice or demand, using such reasonable force as
may be necessary, changing any or all locks on the
Premises all without being liable for forcible
entry, trespass, or other tort. Tenant shall be
liable immediately to Landlord for all costs
Landlord shall incur in reletting the Premises
including, without limitation, broker's
commissions, expenses for remodeling required by
the reletting, and like costs. Reletting can be
for a period shorter or longer than the remaining
term of the Lease. Tenant shall pay to Landlord
the rent due under this Lease on the date that the
rent is due, less the rent Landlord receives from
any reletting. No act by Landlord allowed by this
Section 15(a) or surrender of possession of the
Premises pursuant to this Section 15(a) shall
terminate this Lease unless Landlord notifies
Tenant that Landlord elects to terminate this
Lease.
(b) Landlord shall have the right to
terminate this Lease without notice to vacate (any
right to which is hereby waived by Tenant) and
FORM 10-K Page 152
Exhibit 2.4 (continued)
Tenant's rights to possession of the Premises at any
time, and reenter the Premises as described in Section
15(a). No act by Landlord other than the giving notice
of termination to Tenant shall terminate this Lease.
Upon termination, Landlord shall have the right to pursue
its remedies at law or in equity to recover of Tenant all
amounts of rent then due or thereafter accruing and such
other damages as are caused by Tenant's default.
Without limiting the foregoing, Tenant shall pay, upon
demand, all cost and expenses, including reasonable attorneys'
fees, incurred by Landlord in enforcing Tenant's obligations
under this Lease.
16. Assignment and Subleasing. Tenant shall not sell,
assign, pledge or hypothecate this Lease or further sublease
the Premises or any part thereof without the prior written
consent of Landlord, which may be withheld by Landlord in its
sole discretion. Consent by Landlord to one assignment or
subleasing shall not destroy or operate as a waiver of the
prohibitions contained in this Section 16 as to future
assignments or subleases, and all such later assignments or
subleases shall be made only with Landlord's prior written
consent. In the event any assignment of this Lease or
sublease of the Premises or any part thereof is made by
Tenant, whether or not the same is consented to by Landlord,
Tenant shall remain liable to Landlord for payment of all rent
and other charges provided in this Lease, and for the faithful
performance of all of the covenants and conditions of this
Lease by any assignee or subtenant to the same extent as if
the Lease had not been assigned or the Premises had not been
subleased.
17. Quiet Enjoyment. Provided Tenant performs all its
covenants, agreements and obligations hereunder, Landlord will
warrant and defend Tenant in the peaceful and quiet enjoyment
of the Premises, subject to enforceable easements, restrictive
covenants and rights of way, if any, against the lawful claims
of all persons claiming under Landlord.
18. Use Clause/Compliance with Legal Requirements.
Tenant shall use the Premises only for general manufacturing
and related office purposes. Tenant shall obey and comply
with all laws, rules, regulations, ordinances and other legal
requirements of all legally constituted authorities existing
at any time during the Lease term that are applicable to
Tenant's operations at the Premises. Tenant shall not cause
FORM 10-K Page 153
Exhibit 2.4 (continued)
or permit a nuisance to exist on or about the Premises, and
shall at all times maintain the Premises in a clean and
attractive condition; provided, however, that the foregoing
provision shall not be deemed to impose upon Tenant any
obligation to remedy any situation or condition in existence
as of the date of this Lease.
19. Hazardous Materials. The environmental provisions
set forth in this Section 19 are in addition to and supplement
the environmental provisions of the Acquisition Agreement,
which shall remain in full force and effect with respect to
the Premises notwithstanding this Lease. For the purposes of
this Lease, the terms "Hazardous Material" and "Environmental
Law" shall have the meanings given those terms in the
Acquisition Agreement.
Landlord and Tenant shall promptly, after either of them
learns of the occurrence thereof, give written notice to the
other of receipt of any notice of violation or claim, or a
request for information, relating in any manner to any
Hazardous Material or Environmental Law in connection with the
Premises. Landlord and Tenant shall, upon receipt by either
of them of any environmental sampling or testing results
relating in any manner to the Premises, provide the other with
copies of documents relating to such environmental
investigations.
Tenant agrees that it shall not generate, use, store,
release or dispose of any Hazardous Material on the Premises
except in material compliance with applicable Environmental
Laws. Tenant shall, at its sole cost and expense, cure within
thirty (30) days after written notice from Landlord any breach
of this Section 19 by Tenant by taking all necessary response
and corrective actions in accordance with all applicable
Environmental Laws. If Tenant is responsible by virtue of
this Section 19 for the removal or remediation of any
Hazardous Material, Tenant shall carry out and complete, at
its sole cost and expense, such response actions, including
without limitation, any investigation, reporting, removal,
remediation, repair, closure, detoxification, decontamination,
restoration and other clean-up of the Premises required under
applicable Environmental Laws, as promptly as reasonably
possible. All response actions shall be undertaken with
disclosure to Landlord of and approval by Landlord of response
plans.
FORM 10-K Page 154
Exhibit 2.4 (continued)
Landlord shall, at its sole cost and expense, cure within
thirty (30) days after written notice from Tenant any breach
by Landlord of this Section 19 by taking all necessary
response and corrective actions in accordance with all
applicable Environmental Laws. If Landlord is responsible for
the removal or remediation of any Hazardous Material by virtue
of this Section 19, Landlord shall carry out and complete, at
its sole cost and expense, such response actions, including
without limitation, any investigation, reporting, removal,
remediation, repair, closure, detoxification, decontamination,
restoration and other clean-up of the Premises required under
applicable Environmental Laws, as promptly as reasonably
possible. All response actions shall be undertaken so as to
minimize interruption of Tenant's business and with disclosure
to Tenant of and approval by Tenant of response plans. IT IS
UNDERSTOOD AND AGREED THAT TENANT HAS NO RESPONSIBILITY FOR OR
AUTHORITY OVER ANY HAZARDOUS MATERIALS LOCATED IN, ON OR ABOUT
THE PREMISES, EXCEPT TO THE EXTENT, IF ANY, BROUGHT THEREON BY
OR AT THE DIRECTION OF TENANT AND THOSE HAZARDOUS MATERIALS
PROPERLY STORED AND LISTED ON AN MSDS REPORT MAINTAINED BY
LANDLORD WITH RESPECT TO THE PREMISES ON THE DATE OF THIS
LEASE AND ACQUIRED BY TENANT PURSUANT TO THE ACQUISITION
AGREEMENT. LANDLORD RETAINS COMPLETE RESPONSIBILITY FOR AND
AUTHORITY OVER ANY AND ALL HAZARDOUS MATERIALS IN, ON OR ABOUT
THE PREMISES EXCEPT FOR THOSE BROUGHT THEREON BY TENANT AND SO
ACQUIRED.
Tenant agrees to indemnify, defend and hold harmless
Landlord, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all claims,
damages, actions, proceedings, costs, liens, requirements,
judgments, losses, penalties, fines, settlements and
liabilities of any kind (including without limitation
attorneys' fees and court costs, and consultant and expert
witness fees arising in any manner, directly or indirectly,
out of or by reason of (1) any breach of any of the
warranties, representations, covenants or agreements in this
Section 19 by Tenant, (2) any violation or alleged violation
of any Environmental Law by Tenant with respect to the
Premises (provided such violation or alleged violation does
not represent the substantial continuation of a violation or
alleged violation that commenced prior to the Term when
Landlord operated the Premises, except for a violation that
continues beyond a reasonable period after the management of
Tenant become aware of such violation (other than violations
currently known by employees of Landlord who have been or may
become employees of Tenant as contemplates by the Acquisition
FORM 10-K Page 155
Exhibit 2.4 (continued)
Agreement), and/or (3) any presence, generation, treatment,
storage, disposal, transport, release, threatened release or
suspected release of any Hazardous Material brought on, in, to
or from the Premises by Tenant. Tenant agrees to employ
security measures, consistent with the security measures
historically employed by Landlord at the Premises, to prevent
unauthorized dumping of Hazardous Materials on the Premises by
third parties.
Landlord agrees to indemnify, defend and hold harmless
Tenant, its officers, directors, shareholders, employees,
agents, successors and assigns, from and against all claims,
damages, actions, proceedings, costs, liens, requirements,
judgments, losses, penalties, fines, settlements and
liabilities of any kind (including without limitation
attorneys' fees and court costs, and consultant and expert
witness fees arising in any manner, directly or indirectly,
out of or by reason of (1) any breach by Landlord of this
Section 19, (2) any violation or alleged violation of any
Environmental Law by Landlord, (3) any presence, generation,
treatment, storage, disposal, transport, release, threatened
release or suspected release of any Hazardous Material on, in,
to or from the Premises that does not result solely and
directly from Tenant's activities in the Premises, and/or (4)
the underground storage tanks located on the premises as of
the date of this Lease.
In the event of a breach by Landlord of this Section 19,
Tenant may at any time thereafter terminate this Lease by
written notice to Landlord. The provisions of this Section 19
shall survive the expiration or earlier termination of the
term of this Lease.
20. [INTENTIONALLY DELETED]
21. Waiver. The waiver by either Landlord or Tenant of
any breach of any covenant or agreement of this Lease shall
not be deemed a waiver of any other default concerning the
same or any other covenant or agreement of this Lease. The
receipt and acceptance by Landlord of delinquent or partial
rent shall not constitute a waiver of that or any other
default.
22. Notice. Any notice that either party desires or is
required to give the other party shall be in writing and shall
be deemed to have been sufficiently given if either delivered
by hand delivery or sent by prepaid, registered or certified
FORM 10-K Page 156
Exhibit 2.4 (continued)
mail, addressed to the other party at the address set forth
below:
Landlord: Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Tenant: Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: 011 44 161-655-3957
Either party may change its address by notifying the
other party of the change of address in the foregoing manner.
23. Surrender and Holding Over. Upon the expiration or
earlier termination of the Lease term, Tenant shall surrender
possession of the Premises in as good a condition as delivered
to it, reasonable wear and tear and damage by fire and other
casualty excepted. Upon the expiration or earlier termination
of this Lease, Tenant shall remove from the Premises all
chemicals and other Hazardous Material that have been placed
on the Premises by or at the direction of Tenant and have no
further use in operations at the Premises, all drums
containing unidentified substances that have been placed on
the Premises by or at the direction of Tenant, all chemicals
or other Hazardous Materials spilled at the Premises by
Tenant, and all unidentified substances on floors or in spill
containment areas placed there by or at the direction of
Tenant. If Tenant remains in possession of the Premises
following the expiration or earlier termination of this Lease
term with the consent of Landlord but without any written
agreement between the parties, Tenant shall be only a tenant
at will, and there shall be no renewal of this Lease or
exercise of any option by operation of law.
FORM 10-K Page 157
Exhibit 2.4 (continued)
24. Applicable Law. This Lease has been entered into
under, and shall be governed by, the laws of the State of
North Carolina.
25. Nature and Extent of Agreement. This instrument and
the Acquisition Agreement contain the complete agreement of
the parties regarding the terms and conditions of the lease of
the Premises, and there are no oral or written conditions,
terms, understandings or other agreements pertaining thereto
which have not been incorporated in this Lease or in the
Acquisition Agreement. This instrument creates only the
relationship of landlord and tenant between the parties as to
the Premises. This Lease may be amended only by a written
instrument executed by Landlord and Tenant.
26. Consent to Sublease. Tenant represents and warrants
to Landlord that Prime Landlord has consented to the sublease
of the Premises by Landlord to Tenant under this Lease, as
required by the terms of the Prime Lease.
[signatures on following page]
FORM 10-K Page 158
Exhibit 2.4 (continued)
IN WITNESS WHEREOF, the parties have executed this Lease
under seal as of the day and year first above written.
LANDLORD:
CONE ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TENANT:
VITAFOAM INCORPORATED
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
FORM 10-K Page 159
Exhibit 2.4 (continued)
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is made as of
January 22, 1996 by and between CONE ▇▇▇▇▇ CORPORATION, a
North Carolina corporation ("Cone"), and VITAFOAM
INCORPORATED, a North Carolina corporation ("Vita").
RECITALS
Cone and Vita have entered into an Olympic Division
Acquisition Agreement, dated January 19, 1996, pursuant to
which Cone has agreed to sell, and Vita has agreed to
purchase, certain real and personal properties and other
assets (the "Assets") used in manufacturing, converting and
selling polyurethane foam, polyester fiber and related
products manufactured at six facilities located in North
Carolina and Mississippi (the "Business").
Cone provides certain bookkeeping, transportation and
other support services and systems in connection with the
operation of the Business, and it is willing to provide for a
fee those of such services and systems specifically designated
herein to Vita upon Vita's purchase of the Assets and
Business. Vita desires to obtain those services and the use
of those systems as provided herein in connection with its
ownership of the Assets and operation of the Business.
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, receipt of which is
hereby acknowledged, Cone and Vita agree as follows:
1. Services and Systems. (a) Cone shall provide to
Vita services and systems described below (the "Services and
Systems"):
(i) maintenance of accounts receivable, billing
and sales reporting; and
(ii) mainframe operational support of business unit
operating systems related to delivery tickets,
order processing and billing; and
(iii) preparation of invoices; and
(iv) at the request of Vita, provision of
transportation services; and
FORM 10-K Page 160
Exhibit 2.4 (continued)
(v) at the request of Vita, office space and
office services to the extent currently made
available to management of the Business at
Cone's North Pointe Facility located at ▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
and
(vi) such other services as may be agreed upon by
Cone and Vita from time to time.
The Services and Systems shall be substantially equivalent to
the services and systems provided to the Business by Cone
during the ninety (90) days prior to the execution of this
Agreement. The Services and Systems shall be provided by Cone
hereunder for a period of six months commencing on the date
hereof, unless any Service or System is earlier terminated by
notice from Vita to Cone; provided that Cone shall provide the
Services and Systems described in clauses (i), (ii) and (iii)
above through March 31, 1997. On January 26, 1996, Vita shall
purchase, and Cone shall cause to be sold to Vita, the
vehicles listed on Schedule 1 attached hereto, which vehicles
are presently leased by Cone from Third Parties and are used
primarily in the Business at the prices set forth therein
which prices are equal, on an item-by-item basis, to the
termination costs changed by the lessors of such vehicles;
provided, however, that if the aggregate amount of such
termination costs includes breakage fees, penalties or other
contractual charges or fees for the early termination of the
lease applicable to such vehicles ("Early Termination Fees")
in the aggregate in excess of $10,000, then, at Cone's option,
either (i) the purchase price to be paid by Vita for such
vehicles shall be reduced by such excess amount or (ii) Buyer
shall purchase only the number of such vehicles such that the
aggregate Early Termination Fees associated therewith do not
exceed $10,000. Vita shall notify Cone by 5:00 p.m. on
January 25, 1996 if it believes the Early Termination Fees
with respect to such vehicles exceeds $10,000, and in the
event Vita fails to so notify Cone by such time the Early
Termination Fees shall be conclusively presumed to be no more
than $10,000. Cone shall permit Vita to use such vehicles
from the date hereof until January 26, 1996 (and with respect
to vehicles to be purchased hereunder for such additional
reasonable period, not to exceed 5 days, until the retitling
and transfer of registration of such vehicles is completed).
(b) In addition, Cone shall provide the following
transitional services (the "Assistance") to Vita for a
reasonable period of time after the date hereof:
FORM 10-K Page 161
Exhibit 2.4 (continued)
(i) assistance in establishing ADP as an outside
payroll administrator for all hourly and
salaried employees of the Business, including
providing necessary employee data with
respect to such employees not currently
enrolled by ADP;
(ii) assistance in establishing cash management
policies and procedures, including
establishing lock-box accounts;
(iii) provision of hard-copy records of accounts
payable of the Business as of the date hereof
(Cone shall nonetheless remain liable for the
payment of such accounts payable); and
(iv) assistance in continuing the third-party
credit union currently located in the
Business's facilities.
2. Personnel. Cone shall also make available to Vita
the expertise and manpower reasonably required in Cone's
principal office in Greensboro, North Carolina (the "Office")
to provide the Services and to process that part of its work
necessary to be performed under the Systems at the Office.
Vita shall permit only ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (and such other persons
approved by Cone) to access Cone's computer network in
performing the Services and Systems.
3. Fees, Payment of Fees.
(a) Vita shall pay Cone a monthly fee for Cone's
undertakings pursuant to this Agreement equal
to Cone's actual cost (the "Cost of Services")
of providing the Services and Systems (other
than the Services and Systems described in
clauses (i), (ii) and (iii) of Section 1(a))
in such calendar month determined in a manner
consistent with Cone's historical internal
cost-allocation accounting practices and a
monthly Fee of $9,583 for the Services and
Systems described in clauses (i), (ii) and
(iii) of Section 1(a) for such Services and
Systems until September 30, 1996 (subject to
adjustment upon agreement of the parties to
reflect any change in the scope of such
Services and Systems); (from October 1, 1996
FORM 10-K Page 162
Exhibit 2.4 (continued)
through March 31, 1997, Cone shall provide the
Services and Systems described in clauses (i),
(ii) and (iii) of Section 1(a) free of charge)
(the "Computer Fee").
(b) On the first day of each month during the term
of the Agreement (beginning February 1, 1996),
Vita shall pay Cone for the Services and the
Systems to be provided by Cone during that
month based Cone's good faith estimate of the
Cost of Services for such month (the "Base
Fee") and the Computer Fee. Within fifteen
(15) days after the last day of each month (a
"Period") during the term of this Agreement
(e.g. the first Period will begin on the date
hereof and will end on January 31, 1996), Cone
shall calculate the actual amount of the Cost
of Services for such Period (the "Final Fee").
In the event that the Final Fee for such
Period exceeds the Base Fee paid for such
Period, Vita shall promptly pay such excess to
Cone. In the event that the Final Fee for a
Period is less than the Base Fee paid for such
Period, such difference shall be applied to
reduce additional fee payments by Vita
hereunder, and to the extent such difference
is not fully set off against fees due
hereunder the remainder shall be promptly
reimbursed by Cone to Vita.
4. Modification of Services and Systems. Cone's
obligation to provide the Services and Systems under this
Agreement is limited to those Services and Systems that have
been provided to the Business by Cone during the ninety (90)
days preceding the execution of this Agreement. Cone shall
not be required to increase or modify those Services or
Systems except upon its express written agreement entered into
in its sole discretion, at Vita's request.
5. Expense Reimbursement. In addition to all fees and
payments described elsewhere in this Agreement, Vita shall
reimburse Cone on a monthly basis for all direct out-of-pocket
costs and expenses incurred by Cone in providing the Services
and Systems hereunder, including, but not limited to, the
following:
FORM 10-K Page 163
Exhibit 2.4 (continued)
(a) Travel and subsistence expenses of Cone
personnel when away from their principal place
of employment and incurred in connection with
the Services and Systems and Assistance
provided by Cone to Vita under this Agreement;
and
(b) The cost of any materials, supplies and
equipment, including postage, overnight
delivery charges and similar expenses,
purchased for, or utilized in the provision of
the Services and Systems or the Assistance to
Vita under this Agreement; and
(c) Telephone and other communication expenses
applicable to the Services and Systems or the
Assistance.
6. Term and Termination.
(a) The term of this Agreement shall commence on
January 22, 1996 and terminate on January 22,
1997.
(b) This Agreement may be terminated prior to
January 22, 1997 (i) as provided in Section 9,
and (ii) by Vita upon thirty (30) days prior
written notice given as provided in Section
11.
7. Custody of Books and Records, Confidentiality.
(a) Cone may from time to time have custody of
"hard copy" books and records of, or
pertaining to, Vita. Vita shall have
reasonable access to such materials for all
purposes, including for the making of copies
thereof. Upon the termination of this
Agreement, Cone shall deliver custody of such
materials (or duplicates of any such materials
consolidated into Cone's files or records) to
Vita upon Vita's request. Vita acknowledges
and agrees that the Systems utilize data which
is contained in "soft" computer tapes, disks
and data bases, which data is intermingled or
otherwise incorporated into data which is
essential, proprietary and confidential to
FORM 10-K Page 164
Exhibit 2.4 (continued)
Cone. Vita agrees that such data will not be
turned over or made available to Vita during
the term, or upon termination, of this
Agreement and that Cone shall have no
obligation to eradicate, erase or destroy such
data.
(b) Cone shall make all reasonable efforts to hold
in confidence and not to disclose to any third
party (other than Vita or its agents or
accountants and other than pursuant to an
order or subpoena of a court or governmental
agency) any confidential information or data
received from Vita pursuant to this Agreement.
8. Relationship of Cone and Vita. Cone shall provide
the Services, the Systems and the Assistance pursuant to this
Agreement solely as an independent contractor. The parties
hereto acknowledge and agree that this Agreement is not
intended, nor should it be construed, to create a relationship
of employer and employee, principal and agent, master and
servant, partners, joint venturers, or any other relationship
other than independent contractor and contractee. The parties
also acknowledge and agree that Cone is not, and should not be
deemed to be, acting as an auditor or an accountant on behalf
of Vita and shall not be expected to undertake the
responsibilities, or to satisfy the standards of care, of an
accountant. In connection with its providing the Services and
Systems and the Assistance hereunder, Cone shall not be liable
for any consequential damages or loss of profits of Vita.
9. Bankruptcy and Change in Ownership. In the event
that either party hereto (i) becomes insolvent, (ii) commits
an act of bankruptcy, (iii) takes advantage of any law for the
benefit of debtors or such party's creditors, (iv) suffers a
receiver to be appointed for it or any of its property, (v)
has a change in control of the majority of its stock ownership
other than to an assignee permitted under Section 13, or (vi)
commits a default of any other agreement between the parties,
the other party may, then or thereafter, upon giving written
notice, terminate this Agreement and exercise such other and
further rights and remedies as it may have pursuant to law.
10. Impossibility of Performance. If Cone is rendered
unable, wholly or in part, by "force majeure" to carry out its
obligations under this Agreement, the obligations of Cone, as
FORM 10-K Page 165
Exhibit 2.4 (continued)
far as they are affected by the "force majeure," shall be
suspended during, but no longer than, the continuance of the
"force majeure." To the extent possible, Cone shall remove the
"force majeure" with all reasonable dispatch, but shall not be
required in this connection to settle strikes, lockouts or
other labor difficulties contrary to its wishes. The term
"force majeure" as used herein shall mean an act of God,
strike, lockout, act of the public enemy, war blockade, public
riot, lightning, fire, storm, hurricane, flood, explosion,
governmental restraint unavailability of equipment, equipment
breakdown or any other cause, whether of the kind specifically
mentioned above or otherwise, which is not reasonably within
the control of Cone.
11. Notices. Any notice, request, demand, report or
other instrument which may be required or permitted to be
given to or furnished to or served upon either party hereto
shall be in writing and shall be deemed sufficiently given or
furnished or serviced at the time of delivery if delivered to
such party or to an officer of such party, or three (3) days
after deposit in the United States mail, first class and
prepaid, if mailed, addressed to such party at its address set
forth below, or at such other address as the party to be
addressed shall designate by written notice to the party
giving such notice or furnishing such report or making such
request or demand. The address of the parties hereto for the
foregoing purposes are as follows:
Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Company Solicitor
Telecopy: 011 44 161-655-3957
Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and
General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
FORM 10-K Page 166
Exhibit 2.4 (continued)
12. Controlling Law. This Agreement shall be deemed to
be a contract made under the laws of the State of North
Carolina and shall be interpreted in accordance with, and
construed under, such laws.
13. Assignment. This Agreement shall not be assignable
in whole or in part by either party hereto.
14. Section Headings. The section headings throughout
this Agreement are for convenience and reference only, and the
words contained therein shall not in any way be held to
explain, modify, amplify, or aid in the interpretation,
construction, or meaning of the provisions of this Agreement.
15. Complete Agreement. This Agreement contains the
entire agreement between the parties with respect to the
transactions herein contemplated. This Agreement cannot be
modified or amended orally but can only be modified or amended
by written instrument executed by both parties.
16. Severability. In the event any provisions hereof
shall be modified or held ineffective by any court in any
respect, such adjudication shall not invalidate or render
ineffective the balance of the provisions of this Agreement.
17. 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.
[Signatures to Follow]
FORM 10-K Page 167
Exhibit 2.4 (continued)
IN WITNESS WHEREOF, Cone and Vita have signed this
Agreement as of the day and year first above written.
CONE ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
VITAFOAM INCORPORATED
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
FORM 10-K Page 168
Exhibit 2.4 (continued)
Schedule 1 to Services Agreement
January 22, 1996
______________________________
Schedule 1
Leased Vehicles
A. Lessor: Citicorp
Vehicle Description Serial No. Price
'95 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $15,941.64
'95 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $13,571.52
'95 Ford ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $15,545.06
'95 Plymouth Voyager SF ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $15,312.50
'95 Chevy ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $14,970.01
'95 Ford Taurus GL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $13,820.67
'95 Ford Taurus GL ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $13,415.22
'95 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $36,013.36
'95 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $36,013.36
'95 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $36,013.36
'95 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ S/A ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $36,786.95
'95 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ S/A ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $37,068.24
'95 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ S/A ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $37,068.24
'94 GMC ▇▇▇▇▇ ▇▇▇▇▇▇ S/A ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $34,816.93
'95 Buick LeSabre ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $16,904.79
▇. ▇▇▇▇▇▇: GE Capital
Vehicle Description Serial No. Price
53' Squeeze Trailer ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $36,246
▇. ▇▇▇▇▇▇: Southern National
Vehicle Description Serial No. Price
35' Furn. Van ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $24,439
GMC Topkick ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $20,817
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $24,159
Inthr. 8100 Tractor ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $30,543
FORM 10-K Page 169
Exhibit 2.4 (continued)
▇. ▇▇▇▇▇▇: Fifth Third
Vehicle Description Serial No. Price
'94 Plymouth Grand Voyager SE ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $10,116
'94 Chevy Caprice ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,511
'94 Chevy Caprice ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,066
'94 Chevy Caprice ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,066
'94 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,066
'94 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,820
'94 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,754
'94 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,099
'94 Chevy Caprice Classic ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,099
'94 Chevy Pickup ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 8,664
'94 Chevy Pickup ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $ 9,182
'94 Ford Taurus SW ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $10,116
GMC Truck C7H042 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $32,064
GMC Truck C7H042 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $32,064
GMC Truck C7H042 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $32,064
'94 Inthr 8100 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ $37,632
FORM 10-K Page 170
Exhibit 2.4 (continued)
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "License Agreement"), dated
as of January 22, 1996, is made by and between CONE ▇▇▇▇▇
CORPORATION, a North Carolina corporation ("Licensor"), and
VITAFOAM INCORPORATED, a North Carolina corporation
("Licensee").
STATEMENT OF PURPOSE
Pursuant to an Olympic Division Acquisition Agreement
dated January 19, 1996 between Licensee and Licensor (the
"Acquisition Agreement"), Licensor has agreed to grant to
Licensee an exclusive (subject to an existing license granted
by Licensor, the rights and benefits to which are being
concurrently transferred to Licensee), irrevocable,
transferable, worldwide license to certain proprietary
technology owned by Licensor and used in its Hydrophilic Foam
Business (as defined below) for a period of five years and to
grant to Licensee an option to purchase such technology at the
expiration of such period.
STATEMENT OF AGREEMENT
For good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
I. Definitions. In addition to the terms defined
elsewhere herein, the following terms shall have the following
meanings (capitalized terms used herein and not defined herein
shall have the meanings given to them in the Acquisition
Agreement):
"Documentation" means all written specifications,
manuals, drawings, diagrams, flow charts and other documents
which relate to the Licensed Technology and which are
necessary or helpful with respect to the operations of the
Hydrophilic Foam Business.
"Excess Accumulated Sales" shall mean the gross sales, if
any, of the Hydrophilic Foam Business for any two-calendar
quarter period reduced by the amount of TRS Royalties included
in such amount, all as determined in accordance with GAAP, to
FORM 10-K Page 171
Exhibit 2.4 (continued)
the extent that the cumulative amount of such sales less TRS
Royalties from the date hereof through the end of such period
exceeds Fifty Million Dollars ($US 50,000,000).
"GAAP" shall mean generally accepted accounting
principles, as recognized by the American Institute of
Certified Public Accountants and Financial Accounting
Standards Board, consistently applied.
"Hydrophilic Foam Business" shall mean that portion of
the Business comprising the manufacture and sale of
reticulated absorbent foam products based on the proprietary
technology currently employed by Licensor at its facility
located on Pleasant Garden Road in ▇▇▇▇▇▇▇▇ Township, Guilford
County, North Carolina.
"Licensed Technology" shall mean any and all copyrights,
patents, patent applications, processes, computer programs and
program rights, know-how, Trade Secrets, goodwill and other
similar intangible rights and interests owned or used by
Licensor in connection with the Hydrophilic Foam Business,
including licenses and Documentation thereof including but not
limited to the rights and interests of Licensor under the
Settlement Agreement dated July 11, 1995 among Licensor, Time
Release Sciences, Inc. and the shareholders of Time Release
Sciences, Inc.
"Licensee" shall mean Vitafoam Incorporated, a North
Carolina corporation, and its successors and assigns.
"License Termination Date" shall mean the fifth
anniversary of the date hereof.
"Licensor" shall mean Cone ▇▇▇▇▇ Corporation, a North
Carolina corporation, and its successors and assigns.
"Licensor's Accountants" shall mean McGladrey & ▇▇▇▇▇▇,
LLP, or such other accounting firm that serves as Licensor's
independent accountants.
"Limited Accumulated Sales" shall mean the gross sales,
if any, of the Hydrophilic Foam Business for any two-calendar
quarter period reduced by the amount of TRS Royalties included
in such amount, all as determined in accordance with GAAP, to
the extent that the cumulative amount of such sales less TRS
Royalties from the date hereof through the end of such period
does not exceed Fifty Million Dollars ($US 50,000,000).
FORM 10-K Page 172
Exhibit 2.4 (continued)
"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.
"Trade Secrets" means business or technical information
of Licensor including, but not limited to, methods, programs,
Documentation, formulae, devices, compilations of information,
techniques and processes, which information is not generally
known to other Persons and which derives actual or potential
commercial value from not being generally known or readily
ascertainable to other Persons, all with respect to the
Hydrophilic Foam Business.
"TRS Royalties" shall mean all royalties payable by Time
Release Sciences, Inc., its successors and assigns, pursuant
to the Modification of License Agreement dated as of July 1,
1995 between Licensor and Time Release Sciences, Inc., as
amended or modified.
II. Grant of License. Subject to the terms and
conditions of this Agreement, Licensor hereby grants to
Licensee, and Licensee hereby receives and accepts from
Licensor, a perpetual, irrevocable, transferable, worldwide
license to use, sublicense and in any other manner exploit the
Licensed Technology or any portion thereof, whether in its
operation of the Hydrophilic Foam Business or otherwise. Such
license shall be exclusive, except to the extent that Licensor
has granted a license to Time Release Sciences, Inc., its
successors and assigns, pursuant to the Modification of
License Agreement dated as of July 1, 1995 between Licensor
and Time Release Sciences, Inc., as amended or modified.
Licensor has assigned to Licensee all of Licensor's rights,
benefits and obligations under such agreement with Time
Release Sciences, Inc.
III. Royalties. Licensee shall pay to Licensor the
following royalties at the following times:
A. Within forty-five (45) days after the end of
each of the second and fourth calendar quarters through the
License Termination Date, an amount equal to five percent (5%)
of the Limited Accumulated Sales, if any, for such preceding
two-calendar-quarter period; and
FORM 10-K Page 173
Exhibit 2.4 (continued)
B. Within forty-five (45) days after the end of
each of the second and fourth calendar quarters through the
License Termination Date, an amount equal to seven percent
(7%) of Excess Accumulated Sales, if any, for such preceding
two-calendar-quarter period; provided, however, that in the
event that Licensee ceases to be entitled, under the ▇▇▇▇▇▇▇▇▇
Agreement (as defined in the Acquisition Agreement), to the
benefit of the exclusive "Field of Uses" (as defined in the
▇▇▇▇▇▇▇▇▇ Agreement) as a result of the minimum purchase
requirements for Polymer A (as defined in the ▇▇▇▇▇▇▇▇▇
Agreement) in 1996 and 1997 not being satisfied, Licensee's
obligation to make any payment of royalties pursuant to this
Section 3 of this License Agreement with respect to any sales
occurring after such date shall automatically and immediately
terminate. The failure of Licensee to pay any royalties to
Licensor pursuant to this License Agreement shall not entitle
Licensor to terminate this License Agreement.
IV. Royalty Report. In connection with making payments
pursuant to Section 3, Licensee shall deliver to Licensor a
report setting forth in reasonable detail the gross sales, as
determined in accordance with GAAP, of the Hydrophilic Foam
Business, if any, for the period in respect of which such
payment is made and the cumulative gross sales, as determined
in accordance with GAAP, of the Hydrophilic Foam Business from
the date hereof through the end of such period. Upon the
reasonable request of Licensor, Licensee shall permit Licensor
and Licensor's Accountants to examine and audit the books and
records of Licensee solely for the purpose of determining the
accuracy of such report.
V. Sale of Hydrophilic Foam Business; TRS Royalties.
A. Licensee agrees that it shall not sell the
assets comprising the Hydrophilic Foam Business or sublicense
its the rights to the Licensed Technology to any Person at any
time prior to the License Termination Date unless: (i) such
Person assumes Licensee's obligation to make payments to
Licensor under this License Agreement with respect to the
period remaining through the License Termination Date (which
unless otherwise agreed by Licensee and Licensor will not
terminate Licensee's obligation under Section 3); or (ii)
Licensee agrees to continue to make payments to Licensor
pursuant to Section 3 for the period remaining through the
License Termination Date based upon sales of the Hydrophilic
Foam Business, or any successor business using such Licensed
Technology, as operated by such Person for such periods; or
(iii) Licensor consents to such sale or sublicense in writing.
FORM 10-K Page 174
Exhibit 2.4 (continued)
B. Promptly upon receipt by Licensee of any TRS
Royalties, to the extent such TRS Royalties are paid in
respect of the period commencing on the date hereof and
terminating on the License Termination Date, Licensee shall
remit to Licensor such TRS Royalties.
VI. No Sale or Pledge of Licensed Technology. Except as
otherwise expressly provided in or contemplated by this
License Agreement, prior to the date next following the
License Termination Date, without the prior written consent of
Licensee, Licensor will not:
A. create or assume any mortgage, pledge, lien, or
other encumbrance with respect to the Licensed Technology; or
B. sell, assign, license, transfer or otherwise
dispose of any of the Licensed Technology.
VII. Obligations of Licensor. Upon execution of this
Agreement, Licensor shall deliver to Licensee all of the
Information.
VIII. Ownership. During the term of this License
Agreement, Licensor shall own all right, title and interest in
and to the Licensed Technology. Licensee shall own all right,
title and interest in and to any developments to, or
modifications and enhancements of, the Licensed Technology.
IX. Option to Purchase Licensed Technology. Licensor
hereby grants to Licensee an irrevocable option to purchase
the Licensed Technology on the License Termination Date for
$1.00 on the License Termination Date. Such option shall be
deemed automatically exercised by Licensee unless 60 days
prior to the License Termination Date Licensee provides
Licensor written notice of its intention not to exercise such
option. Upon the exercise of such option, on the License
Termination Date, Licensor shall deliver to Licensee such
bills of sale, patent assignments (in recordable form) and
other documents necessary to transfer to Licensee all of
Licensor's rights in the Licensed Technology.
X. Term. The license granted under this License
Agreement shall be effective as of the date hereof and shall
remain in effect until the License Termination Date.
FORM 10-K Page 175
Exhibit 2.4 (continued)
XI. 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 Licensor, to:
Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Licensee, to:
Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copies to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Company Solicitor
Telecopy: 011 44 161-655-3957
and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
FORM 10-K Page 176
Exhibit 2.4 (continued)
XII. 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 assigns.
XIII. Governing Law; Jurisdiction. The execution,
interpretation and performance of this License Agreement shall
be governed by the internal laws and judicial decisions of the
State of North Carolina, without regard to its conflicts-of-
laws principles. Licensee and Licensor 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 License may be brought in
any court of general jurisdiction of Guilford County, North
Carolina, or in the United States District Court for the
Middle District of North Carolina, Greensboro Division. By
its execution and delivery of this License 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 12, 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 forum non
conveniens, or any similar basis to the maximum extent
permitted by law.
XIV. Arbitration. Notwithstanding Section 13, 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
License Agreement, or any other agreement entered into
pursuant to this License Agreement (collectively, "Disputes"),
between Licensor and Licensee shall be resolved by binding
arbitration as provided in this Section 14. 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 License
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 License Agreement.
FORM 10-K Page 177
Exhibit 2.4 (continued)
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 either in Guilford
County or Mecklenburg County, North 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 14, Licensor and Licensee preserve, without
diminution, certain remedies that either of them may employ or
exercise freely, either alone, in conjunction with, or during
a Dispute. Licensor and Licensee 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) obtaining provisional or ancillary remedies including
injunctive relief, requestration, garnishment, attachment,
appointment of a receiver and filing an involuntary bankruptcy
proceeding; and (ii) 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.
XV. 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.
XVI. Interpretation. The section headings contained in
this License Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of
this License.
XVII. Entire Agreement. This License Agreement and the
documents delivered pursuant to this License Agreement, embody
the entire agreement and understanding of the parties hereto
in respect of the subject matter hereof.
[Signatures to Follow]
FORM 10-K Page 178
Exhibit 2.4 (continued)
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
CONE ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
VITAFOAM INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
FORM 10-K Page 179
Exhibit 2.4 (continued)
HOLD BACK ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into this 22nd
day of January, 1996, and is by and between VITAFOAM
INCORPORATED, a North Carolina corporation ("Buyer"), FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association ("Escrow Agent"), and CONE ▇▇▇▇▇ CORPORATION, a
North Carolina corporation ("Seller").
BACKGROUND STATEMENT
Buyer, Seller and British Vita PLC have entered into an
acquisition agreement ("Acquisition Agreement") for the
purchase of the "Olympic Division" of Seller, also known as
the "Olympic Products Company," dated as of January 19, 1996.
The Acquisition Agreement sets forth certain indemnification
obligations of Seller. As required by the Acquisition
Agreement on the Inventory Payment Date ( as defined herein),
Buyer will deposit with Escrow Agent a portion of the Purchase
Price of Seller's Business. Escrow Agent will hold such
deposit in escrow in accordance with the terms and conditions
hereof for the purpose of securing, to the extent of the
escrowed funds, such indemnification obligations of Seller.
Unless otherwise defined herein, the capitalized terms used
herein shall have the meanings given to them in the
Acquisition Agreement.
STATEMENT OF AGREEMENT
In consideration of the premises and mutual covenants
contained herein, the adequacy and sufficiency of which are
hereby acknowledged, the parties hereto, for themselves, their
successors and assigns, agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
1.1. Defined Terms. The following terms shall have the
following meanings:
"Acquisition Agreement" shall have the meaning given to
it in the Background Statement hereof.
"Buyer" shall have the meaning given to it in the
introduction hereof.
FORM 10-K Page 180
Exhibit 2.4 (continued)
"Buyer's Costs and Expenses" shall mean, with respect to
a Claim not involving a Third Party, all costs and expenses,
including attorney's fees, incurred by Buyer associated with
or relating to such Claim.
"Cash Deposit" shall have the meaning given to it in
Section 2.2.
"Claim" shall mean a claim for indemnification under the
Acquisition Agreement by Buyer; provided, however, that a
Claim shall not include Buyer's Costs and Expenses.
"Closing Date" shall mean January 22, 1996.
"Escrowed Funds" shall mean the Cash Deposit plus the
investment proceeds of the Cash Deposit as invested in
accordance with Section 3.1.
"Escrow Maturity Date" shall have the meaning given to it
Section 2.3.
"Final Decision" shall have the meaning given to it
Section 4.3.
"Inventory Payment Date" shall mean the first date upon
which Seller is required to make an Inventory Payment pursuant
to Article II of the Acquisition Agreement (as such term is
defined in the Acquisition Agreement).
"Negotiation Period" shall have the meaning given to it
in Section 4.3(a).
"Objection" shall mean a written objection by Seller to
a Claim stating in reasonable detail the basis for such
objection.
"Proper Settlement" shall have the meaning given to it in
Section 4.3(b).
"Purchase Price" shall have the meaning given to it in
the Acquisition Agreement.
"Release" shall mean a written declaration, executed by
Seller and Buyer, specifying the resolution of an Objection
and the disposition to be made of the Escrowed Funds or any
portion thereof that was the subject of such Objection.
FORM 10-K Page 181
Exhibit 2.4 (continued)
"Reserved Funds" shall have the meaning given to it
Section 4.2.
"Seller" shall have the meaning given to it in the
introduction hereof.
"Third Party" 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 other than Buyer
and Seller.
"Uncontested Claim" shall have the meaning given to it in
Section 4.3.
"Unresolved Claim" shall have the meaning given to it in
Section 4.3.
"Withdrawal of Claim" shall mean a written declaration
executed by Buyer withdrawing a Claim.
"Withdrawal of Objection" shall mean a written
declaration executed by Seller withdrawing an Objection.
1.2. References to Exhibits and Sections. Unless
otherwise indicated, references to "Exhibits" and "Sections"
herein shall refer to those certain Exhibits attached hereto
and Sections herein, respectively.
ARTICLE II
THE ESCROW
2.1. Appointment of Escrow Agent. Buyer and Seller
hereby designate and appoint Escrow Agent to serve as escrow
agent, and Escrow Agent hereby confirms its agreement to act
as escrow agent upon the terms, conditions and provisions of
this Escrow Agreement.
2.2. Creation of the Escrow Fund. On the Inventory
Payment Date, Buyer shall hold back from the portion of the
Purchase Price payable by it to Seller on the Inventory
Payment Date and deposit with Escrow Agent to be held,
invested, administered and distributed in accordance with the
terms and conditions hereof (by wire transfer of immediately
available funds) the amount of $ 4,000,000 (the "Cash
Deposit"), as required by the Acquisition Agreement.
FORM 10-K Page 182
Exhibit 2.4 (continued)
2.3. Termination of Escrow Agreement. This Escrow
Agreement will terminate on the later of (a) the first
anniversary of the Closing Date (the "Escrow Maturity Date"),
or (b) the date on which the final Unresolved Claim with
respect to the Escrowed Funds is resolved in accordance with
Section 4.3.
2.4. Administration of the Escrowed Funds. The Escrowed
Funds, including the proceeds from investment thereof as
provided in Section 3.1, shall be held, invested, administered
and distributed by Escrow Agent pursuant to this Escrow
Agreement. Seller and Buyer agree that the escrow of the Cash
Deposit pursuant to this Escrow Agreement is irrevocable.
Neither this Escrow Agreement nor any provision hereof may be
amended, modified, waived, discharged, or terminated except in
a writing executed by all parties hereto. Escrow Agent
acknowledges receipt of the Cash Deposit and agrees not to
permit any withdrawal or distribution thereof, or any of the
investment proceeds thereof (as invested in accordance with
Section 3.1), except pursuant to the terms and conditions of
this Escrow Agreement.
ARTICLE III
INVESTMENT OF THE ESCROWED FUNDS
3.1. Investment. With respect to the Escrowed Funds,
Escrow Agent shall, upon the written direction of Seller (with
a copy to Buyer), from time to time during the term of this
Escrow Agreement invest the Escrowed Funds in short-term money
market funds maintained by an incorporated bank organized and
doing business under the laws of the United States of America,
or of any state thereof, provided that the total amount of the
combined capital and surplus of such bank is at least
$50,000,000.
3.2. Income and Expenses. All income received from the
deposit or investment of the Escrowed Funds shall become part
of the Escrowed Funds and shall be disbursed and disposed of
in the same manner as the Cash Deposit; provided, however, all
income earned on Reserved Funds deposited into an interest-
bearing savings account pursuant to Section 4.2 shall become
additional Reserved Funds to be disbursed and disposed of in
the same manner as Reserved Funds. Expenses incurred by
Escrow Agent in the investment of the Escrowed Funds shall be
reimbursed to Escrow Agent from the Escrowed Funds.
FORM 10-K Page 183
Exhibit 2.4 (continued)
3.3. Reserved Funds. Notwithstanding the foregoing,
Escrow Agent shall not invest any Reserved Funds, as defined
in Section 4.2, except as expressly provided in that Section.
ARTICLE IV
DISTRIBUTION OF THE ESCROWED FUNDS
4.1. Notice of Claims. At any time prior to the close
of business on the Escrow Maturity Date, Buyer may deliver
notice of a Claim to Escrow Agent (with a copy being
contemporaneously delivered to Seller) ("Notice of Claim").
Any such Notice of Claim by Buyer is conclusive and is given
in its sole discretion, limited only by Buyer's obligation to
act in good faith.
4.2. Reservation of Funds. Upon receipt of a Claim,
Escrow Agent shall withdraw from the Escrowed Funds an amount
equal to the amount stated in the Claim, plus Buyer's good
faith estimate of Buyer's Costs and Expenses with respect to
such Claim (collectively, the "Reserved Funds"). Escrow Agent
shall place such Reserved Funds in an interest-bearing savings
account in an institution of the type described in Section
3.1.
4.3. Objections and Resolution of Claims. (a) If the
Claim specified in Buyer's Notice of Claim does not involve a
Third Party, Seller shall have fifteen (15) days to deliver to
Escrow Agent (with a copy being contemporaneously delivered to
Buyer) an Objection. If no Objection is timely delivered,
such Claim becomes an "Uncontested Claim." If an Objection is
timely filed and Escrow Agent shall not have received a
Release, Withdrawal of Claim or Withdrawal of Objection within
thirty (30) days (the "Negotiation Period") from the date the
Objection was delivered to Escrow Agent, such claim shall
become an "Unresolved Claim," and either Buyer or Seller may
submit it to arbitration in accordance with Section 10.9 of
the Acquisition Agreement. Upon the rendering of the
arbitration decision and after any and all appeals of such
Final Decision have been exhausted or become untimely
(resulting in a "Final Decision"), Buyer shall submit to
Escrow Agent a copy of such decision, and Escrow Agent shall
make a disbursement of the Escrowed Funds in accordance with
Section 5.1 hereof.
(b) If the Claim specified in Buyer's Notice of Claim
does involve a Third Party, the defense of such Claim shall be
FORM 10-K Page 184
Exhibit 2.4 (continued)
conducted by Seller in accordance with Article IX of the
Acquisition Agreement; provided, however, in the event that
Seller does not, in accordance with Article IX of the
Acquisition Agreement, assume the defense of such Claim and
employ counsel satisfactory to Buyer in Buyer's good faith
discretion, such Claim shall become, without further action by
anyone, an "Uncontested Claim," and Escrow Agent shall make a
disbursement of the Escrowed Funds in accordance with Section
5.1 hereof. Otherwise, if an Objection is timely filed and
Escrow Agent shall not have received a Release, Withdrawal of
Claim or Withdrawal of Objection within thirty (30) days (the
"Negotiation Period") from the date the Objection was
delivered to Escrow Agent, such claim shall become an
"Unresolved Claim," subject to resolution by a court of
competent jurisdiction or a proper arbitral tribunal. Upon
the rendering of a judgment or decision by such a court of
competent jurisdiction or proper arbitral tribunal and after
any and all appeals of such judgment or decision have been
exhausted or become untimely, or a settlement agreement has
been executed to which Seller has given its written consent,
Buyer shall submit such judgment or decision (a "Final
Decision") or settlement agreement (a "Proper Settlement") to
Escrow Agent, and Escrow Agent shall make a disbursement of
the Escrowed Funds in accordance with Section 5.1 hereof.
4.4. Unresolved Claims at Maturity Date. All Reserved
Funds relating to any Unresolved Claims at the Escrow Maturity
Date shall be held by Escrow Agent until Escrow Agent's
receipt of a Release, a Withdrawal of Claim, a Withdrawal of
Objection, a Final Decision, or a Proper Settlement resolving
all disputes with respect to such Unresolved Claims, upon
which Escrow Agent shall pay and disburse such Reserved Funds
in accordance with Section 5.1.
ARTICLE V
DISPOSITION OF THE ESCROWED FUNDS
5.1. Payment of Claims and Balance of the Escrowed
Funds. Escrow Agent shall pay and disburse the Escrowed
Funds, which include the Reserved Funds, as follows:
(a) On the date six (6) months after the Closing
Date, Escrow Agent shall pay and disburse to Seller (in the
manner set forth in a written notice delivered by Seller to
Escrow Agent) an amount equal to the aggregate of (i) the
balance of the Escrowed Funds, less (ii) $2,000,000, less
(iii) any Reserved Funds;
FORM 10-K Page 185
Exhibit 2.4 (continued)
(b) As specified in any Claim with respect to which
Seller shall have delivered a Withdrawal of Objection;
(c) As specified in any Release received by Escrow
Agent;
(d) As specified in any Uncontested Claim, Final
Decision, or Proper Settlement;
(e) Buyer's Cost and Expenses with respect to a
Claim that has been resolved favorably to Buyer pursuant to a
Final Decision; and
(f) Upon the Escrow Maturity Date, Escrow Agent
shall pay and disburse to Seller (in the manner set forth in
a written notice delivered by Seller to Escrow Agent) an
amount equal to the balance of the Escrowed Funds, less any
Reserved Funds.
5.2. Timing of Distributions; Cooperation with Escrow
Agent. All disbursements hereunder shall be made by Escrow
Agent by wire transfer of immediately available funds to such
account(s) as may be designated in writing by the receiving
party in advance of the disbursement within five (5) business
days following the events or dates described in Section 5.1.
Each of the parties shall cooperate with and deliver to Escrow
Agent such additional information and documents as Escrow
Agent shall reasonably request in the performance of its
obligations under this Escrow Agreement.
ARTICLE VI
ESCROW AGENT'S DUTIES
6.1. General. Escrow Agent shall be obligated to
perform only such duties as are expressly set forth in this
Escrow Agreement, and shall not be required, in carrying out
its duties under this Escrow Agreement to refer to the
Acquisition Agreement, except as expressly set forth herein.
Escrow Agent may rely on, and shall be protected in acting or
refraining from acting upon, any written notice, instruction
or request furnished to it under this Escrow Agreement and
believed in good faith by it to be genuine and to have been
signed or presented by the proper party or parties, provided
that, as set forth in Section 7.7, any modification of this
Escrow Agreement shall be required to be signed by the parties
hereto. Escrow Agent acts under this Escrow Agreement as a
FORM 10-K Page 186
Exhibit 2.4 (continued)
depositary only and is not a party to or bound by any
agreement or undertaking that may be evidenced by or arise out
of any items deposited with or delivered to it pursuant to
this Escrow Agreement. Escrow Agreement is not responsible or
liable in any manner for the sufficiency, correctness,
genuineness or validity of any such items, and it undertakes
no responsibility or liability for the form or execution of
such items presented to it or the identity, authority, title
or rights of any person executing or depositing same. Escrow
Agent shall not be liable to any of the parties to this Escrow
Agreement or their respective heirs, successors and assigns
for any action taken or omitted to be taken in good faith;
provided, however, that Escrow Agent shall be and remain
liable beyond: (a) its resignation or termination as Escrow
Agent; (b) the Escrow Maturity Date; and (c) its fulfillment
of all of its obligations, responsibilities and duties
hereunder for any damages arising from its willful misconduct
or gross negligence in connection with the carrying out of its
obligations as Escrow Agent hereunder.
6.2. Indemnification of Escrow Agent. Buyer and Seller,
jointly and severally, shall indemnify Escrow Agent for and
hold Escrow Agent harmless against, any loss, damage,
liability or expense incurred by Escrow Agent not caused by
gross negligence or willful misconduct on its part, arising
out of, or in connection with, its entering into this Escrow
Agreement and the carrying out of its duties under this Escrow
Agreement, including the costs and expenses of defending
itself against any claim of liability in connection with
carrying out its duties or participating in any legal
proceedings in connection with this Escrow Agreement
(including reasonable attorneys' fees). Escrow Agent may
consult with appropriately qualified counsel of its choice,
and shall have full and complete authorization and protection
for any action taken or suffered by it under this Escrow
Agreement in good faith and in accordance with the opinion of
such counsel.
6.3. Resignation or Termination of Escrow Agent. Escrow
Agent may, upon reasonable advance written notice, resign and
be discharged from its duties or obligations under this Escrow
Agreement by giving notice of such resignation to Buyer and
Seller specifying the date upon which such resignation shall
take effect. Buyer and Seller shall have the right to
terminate by mutual agreement the appointment of Escrow Agent
under this Escrow Agreement by giving to it notice of such
termination, specifying the date upon which such termination
FORM 10-K Page 187
Exhibit 2.4 (continued)
shall take effect. In either such event, the resigning or
terminated Escrow Agent shall remain liable for any actions
taken or omitted in the carrying out of its duties under this
Escrow Agreement as Escrow Agent. In either such event, Buyer
and Seller shall designate a successor Escrow Agent, who shall
become bound by the terms of this Escrow Agreement; provided,
however, that the designation of a successor Escrow Agent
shall not affect the validity of any action taken or any
document executed by the predecessor Escrow Agent. Upon
demand of any such successor Escrow Agent, all of the Escrowed
Funds shall be turned over and delivered to such successor
Escrow Agent, which shall, thereupon, be bound by all of the
provisions of this Escrow Agreement. Escrow Agent's
agreements and obligations under this Escrow Agreement shall
terminate and Escrow Agent shall be discharged from further
duties and obligations under this Escrow Agreement upon the
final payment of all of the Escrowed Funds in accordance with
the terms of Section 5.1.
ARTICLE VII
ESCROW AGENT'S FEES AND EXPENSES; MISCELLANEOUS
7.1. Fee Schedule. Escrow Agent's charges for its
services and expenses incurred hereunder shall be as set forth
in Exhibit A hereto.
7.2. Compensation of Escrow Agent. Except as otherwise
provided herein, all compensation of Escrow Agent, routine
expenses, disbursements and advances (including reasonable
attorneys' fees) incurred in the administration of any Claim
or pursuant to a dispute among any of the parties hereto shall
be paid by Buyer and Seller in equal shares and shall be
payable within a reasonable time after their receipt of
written notice from Escrow Agent or by set-off against amounts
otherwise payable to Buyer or Seller hereunder.
7.3. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be
deemed given and received (a) on the date of delivery when
delivered by hand or when transmitted by confirmed
simultaneous telecopy, (b) on the following business day when
sent by receipted overnight courier, or (c) three (3) business
days after deposit in the United States Mail when mailed by
registered or certified mail, return receipt requested, first
class postage prepaid, as follows:
FORM 10-K Page 188
Exhibit 2.4 (continued)
If to Cone ▇▇▇▇▇:
Cone ▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice
President and General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
Vitafoam Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
British Vita PLC
Middleton, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: 011 44 161-655-3957
If to Escrow Agent to:
First Union National Bank of North Carolina
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 28288-1179
Attention: Bond Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as shall be furnished in writing in
accordance with the provisions of this Section 7.3 by any
party to the other parties.
7.4. Headings. The Section headings in this Escrow
Agreement are inserted solely as a matter of convenience for
reference and shall not in any way affect the meaning or
interpretation of any of the provisions of this Escrow
Agreement.
7.5. Counterparts. This Escrow 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.
FORM 10-K Page 189
Exhibit 2.4 (continued)
7.6. Prior Agreements. This Escrow Agreement supersedes
all prior agreements, oral and written, among the parties
hereto with respect to the subject matter hereunder, except
for the Acquisition Agreement.
7.7 Amendment; Waiver. This Escrow Agreement may not be
amended except by an instrument in writing signed by the
parties hereto. No term or condition of this Escrow Agreement
shall be deemed to have been waived, nor shall there be any
estoppel against the enforcement of any provision of this
Escrow Agreement, except by written instrument signed by the
party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to
the specific term or condition waived and shall not constitute
a waiver of such term or condition for the future or as to any
act other than that specifically waived.
7.8. Severability. Should any provision of this Escrow
Agreement, or the application thereof, be held invalid or
unenforceable by a court of competent jurisdiction, the
remainder of this Escrow Agreement, or alternative
applications thereof, other than the provision(s) that shall
have been held invalid or unenforceable, shall not be affected
thereby and shall continue to be valid and enforceable to the
fullest extent permitted by law or equity.
7.9. Assignment. This Escrow Agreement shall not be
assignable by Buyer, except as a collateral assignment to any
lender(s), without the written consent of the other parties to
this Escrow Agreement. Any attempt to do so shall be null and
void and of no legal effect whatsoever. Nothing contained in
this Escrow Agreement, express or implied, is intended to
confer upon any person or entity, other than the parties
hereto and their permitted successors, assigns and transferees
any rights or remedies under or by reason of this Escrow
Agreement.
7.10. Binding Effect. This Escrow Agreement shall be
binding upon, and shall inure to the benefit of, the parties
hereto and their respective permitted successors, assigns and
transferees.
7.11. Governing Law. This Escrow Agreement shall be
construed and enforced in accordance with the laws of the
State of North Carolina, without regards to its conflicts-of-
laws principles.
FORM 10-K Page 190
Exhibit 2.4 (continued)
7.12. Arbitration. All disputes under this Escrow
Agreement between or among the parties hereto, including the
resolution of any Unresolved Claims in accordance with Section
4.3, shall be submitted to arbitration in accordance with the
procedures set forth in Section 10.9 of the Acquisition
Agreement.
[Signatures to Follow]
FORM 10-K Page 191
Exhibit 2.4 (continued)
IN WITNESS WHEREOF, Seller, Buyer and Escrow Agent have
caused this Escrow Agreement to be signed by their respective
duly authorized officers as of the date first above written.
CONE ▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
VITAFOAM INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as Escrow Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Trust Officer
FORM 10-K Page 192
Exhibit 2.4 (continued)
Exhibit A to Escrow Agreement
Acquisition of the Olympic Division
of Cone ▇▇▇▇▇ Corporation
January 22, 1996
______________________________
EXHIBIT A
FEES PAYABLE TO ESCROW AGENT
Escrow Agent annual fees: $1,500.00 in advance
Activity charges: $25.00 per wire transfer
$10.00 per check
Out-of-pocket expenses: Billed at cost
(shipping, postage,
telephone, legal
publication, etc.)
[The foregoing fees are subject to First Union's review and
acceptance of the final documents that sets forth its duties and
responsibilities.]