ASSET PURCHASE AGREEMENT
DATED AS OF APRIL 29, 1999
BETWEEN ITHACA INDUSTRIES, INC.,
AS SELLER
AND
GLENDALE GROUP, LTD.,
AS BUYER
TABLE OF CONTENTS
Page
1. Transfer of Assets and Liabilities......................................1
1.1 Assets to be Sold................................................1
1.2 ▇▇▇▇▇ City Assets................................................2
1.3 Wilkesboro Assets................................................2
1.4 General Assets...................................................2
1.5 Excluded Assets..................................................3
1.6 Liabilities to be Assumed........................................3
1.7 Liabilities Not Assumed..........................................4
2. The Closing.............................................................5
2.1 Closing; Closing Date............................................5
3. Consideration and Payment...............................................5
3.1 Payment on the Closing Date......................................5
3.2 Closing Tangible Net Worth.......................................6
3.3 Allocation.......................................................7
4. General Representations and Warranties of the Seller....................7
4.1 Due Incorporation and Qualification..............................7
4.2 Authority to Execute and Perform Agreements......................8
4.3 Non-contravention................................................8
4.4 Financial Statements.............................................8
4.5 Litigation.......................................................9
4.6 Employees........................................................9
4.7 Employee Benefit Plans..........................................10
4.8 Insurance.......................................................11
4.9 Operation of the Business.......................................12
4.10 Real Property...................................................13
4.10.1 Condemnation....................................................13
4.10.2 Casualty........................................................13
4.10.3 Real Property Taxes.............................................13
4.10.4 Survey..........................................................14
4.10.5 Mechanics and Other Liens.......................................14
4.10.6 Loan Documents..................................................14
4.11 Accounts Receivable.............................................14
4.12 Inventory.......................................................15
4.13 Accounts Payable................................................15
4.14 Tangible Property...............................................15
4.15 Intangible Property.............................................15
4.16 Agreements......................................................17
4.17 Suppliers and Customers.........................................18
4.18 No Material Adverse Change......................................18
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4.19 Full Disclosure.................................................18
4.20 No Broker.......................................................19
5. Representations and Warranties of the Seller Concerning the ▇▇▇▇▇ City
Business...............................................................19
5.1 Tax Matters.....................................................19
5.2 Compliance with Laws............................................19
5.3 Real Estate.....................................................20
5.3.1 Ownership of Premises...........................................20
5.3.2 Leased Properties...............................................20
5.3.3 Entire Premises.................................................21
5.3.4 Space Leases....................................................21
5.3.5 No Options......................................................21
5.3.6 Condition and Operation of Improvements.........................21
5.3.7 Real Property Laws..............................................22
5.4 Ownership and Adequacy of Assets................................22
5.5 Environmental Matters...........................................22
6. Representations and Warranties of the Seller Concerning the Wilkesboro
Business...............................................................24
6.1 Tax Matters.....................................................24
6.2 Compliance with Laws............................................24
6.3 Real Estate.....................................................25
6.3.1 Ownership of Premises...........................................25
6.3.2 Leased Properties...............................................25
6.3.3 Entire Premises.................................................25
6.3.4 Space Leases....................................................26
6.3.5 No Options......................................................26
6.3.6 Condition and Operation of Improvements.........................26
6.3.7 Real Property Laws..............................................27
6.4 Ownership and Adequacy of Assets................................27
6.5 Environmental Matters...........................................27
7. Representations and Warranties of the Buyer............................29
7.1 Due Incorporation and Qualification.............................29
7.2 Authority to Execute and Perform Agreements.....................29
7.3 Non-contravention...............................................29
7.4 No Broker.......................................................29
7.5 Financing.......................................................29
8. Covenants and Agreements...............................................30
8.1 Conduct of Business.............................................30
8.2 Insurance.......................................................30
8.3 Preservation of Business........................................30
8.4 Litigation......................................................30
8.5 Continued Effectiveness of Representations and Warranties of the
Seller..........................................................30
8.6 Corporate Examinations and Investigation........................30
8.7 Other Transactions..............................................31
8.8 Third Party Consents............................................32
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8.9 Environmental Transfer, Laws....................................32
8.10 Title Report and Survey.........................................32
8.11 Employment Status...............................................32
8.12 Replacement of Letters of Credit................................33
8.13 Y2K Compliance..................................................33
9. Conditions Precedent to the Obligations of the Buyer...................33
9.1 Representations and Covenants of the Seller.....................33
9.2 Governmental Permits and Approvals..............................33
9.3 Consents........................................................34
9.4 No Material Adverse Change......................................34
9.5 Litigation......................................................34
9.6 Opinion of Counsel to the Seller................................34
9.7 Additional Closing Documents of the Seller......................34
9.8 Title Insurance.................................................35
9.9 Survey..........................................................35
9.10 Estoppel Certificates...........................................35
9.11 Environmental Audit.............................................36
9.12 Existing Liens..................................................37
9.13 Completion of Financing.........................................37
10. Conditions Precedent to the Obligation of the Seller...................37
10.1 Representations and Covenants of the Buyer......................37
10.2 Governmental Permits and Approvals..............................37
10.3 Litigation......................................................37
10.4 Opinion of Counsel to the Buyer.................................37
10.5 Consent of the Lenders Under the Bank Credit Agreement..........37
10.6 Additional Closing Documents of the Buyer.......................37
10.7 Receipt of Replacement Letters of Credit........................38
11. Post-Closing Covenants and Agreements..................................38
11.1 Audit of Business...............................................38
11.2 Expenses of Sale................................................38
11.3 Indemnification of Brokerage....................................38
11.4 Bulk Sales Laws.................................................38
11.5 Collection of Receivables.......................................39
11.6 Mail ...........................................................39
11.7 True-Up of Bonus Plan Obligation................................39
11.8 Further Assurances..............................................39
11.9 Transitional Agreements.........................................39
11.10 Non-Competition Covenant of the Seller..........................40
11.11 Corporate Records Retained by the Seller........................41
11.12 Business Records Acquired by the Buyer..........................41
11.13 Transition of Life Insurance Benefits...........................41
11.14 Confidentiality.................................................41
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12. Survival of Representations and Warranties of the Seller...............42
13. Indemnification........................................................43
13.1 Obligation of the Seller to Indemnify...........................43
13.2 Obligation of the Buyer to Indemnify............................43
13.3 Notice to Indemnifying Party....................................44
14. Indemnification by the Seller for Environmental Actions and Environmental
Compliance Costs.......................................................44
14.1 Obligation of the Seller to Indemnify...........................44
14.2 Procedure for Indemnification for Environmental Liabilities.....45
15. Limitation on Indemnification..........................................46
16. Termination of Agreement...............................................47
17. Miscellaneous
17.1 Certain Definitions.............................................48
17.2 Publicity.......................................................50
17.3 Notices.........................................................50
17.4 Entire Agreement................................................51
17.5 Waivers and Amendments..........................................51
17.6 Governing Law...................................................52
17.7 Binding Effect; No Assignment...................................52
17.8 Variations in Pronouns..........................................52
17.9 Counterparts....................................................52
17.10 Exhibits and Schedules..........................................52
17.11 Headings........................................................52
17.12 No Third Party Rights...........................................53
17.13 Specific Performance............................................53
Schedules
---------
Schedule 1.3 (▇▇▇▇▇ City Capitalized Equipment)
Schedule 1.2 (Wilkesboro Capitalized Equipment)
Schedule 1.5 (Excluded Assets)
Schedule 4.1 (Jurisdiction)
Schedule 4.3 (Non-Contravention)
Schedule 4.5 (Litigation)
Schedule 4.6 (Employees)
Schedule 4.7.1 (Employee Benefit Plans)
Schedule 4.7.3 (Administration of Employee Benefit Plan)
Schedule 4.7.5 (Welfare Plan)
Schedule 4.8 (Insurance)
Schedule 4.9 (Operation of the Business)
Schedule 4.10.3 (Real Property Taxes)
Schedule 4.10.6 (Loan Documents)
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Schedule 4.15 (Intangible Property)
Schedule 4.16 (Assumed Agreements)
Schedule 4.17 (Suppliers and Customers)
Schedule 5.2 (▇▇▇▇▇ City-Compliance with Laws)
Schedule 5.3.1(a) (▇▇▇▇▇ City-Ownership of Premises)
Schedule 5.3.1(b) (▇▇▇▇▇ City-Title Defects)
Schedule 5.3.2(a) (▇▇▇▇▇ City-Leased Properties)
Schedule 5.3.2(b) (▇▇▇▇▇ City-Title Defects)
Schedule 5.3.4 (▇▇▇▇▇ City-Space Leases)
Schedule 5.3.5 (▇▇▇▇▇ City-Options)
Schedule 5.4 (▇▇▇▇▇ City-Permitted Liens)
Schedule 5.5 (▇▇▇▇▇ City-Environmental Matters)
Schedule 5.5(b) (▇▇▇▇▇ City-Environmental Permits)
Schedule 5.5(i) (▇▇▇▇▇ City-Hazardous Substance Location)
Schedule 6.2 (Wilkesboro-Compliance with Laws)
Schedule 6.3.1(a) (Wilkesboro-Ownership of Premises)
Schedule 6.3.1(b) (Wilkesboro-Title Defects)
Schedule 6.3.2(a) (Wilkesboro-Leased Properties)
Schedule 6.3.2(b) (Wilkesboro-Title Defects)
Schedule 6.3.4 (Wilkesboro-Space Leases)
Schedule 6.3.5 (Wilkesboro-Options)
Schedule 6.4 (Wilkesboro-Permitted Liens)
Schedule 6.5 (Wilkesboro-Environmental Matters)
Schedule 6.5(b) (Wilkesboro-Environmental Permits)
Schedule 6.5(i) (Wilkesboro-Hazardous Substance Location)
Schedule 8.12 (Letters of Credit)
Exhibits
--------
Exhibit A (Projected Balance Sheet)
Exhibit B (Wilkesboro Lease)
Exhibit C (Opinion of PW)
Exhibit D (▇▇▇▇ of Sale and Assignment)
Exhibit E (Trademark Assignment)
Exhibit F (Patent Assignment)
Exhibit G (Real Property Lease Assignment & Assumption Agreement)
Exhibit H (Opinion of KC)
Exhibit I (Assumption of Liabilities)
Exhibit J-1 (Assumption of ▇▇▇▇▇▇ Employment Agreement)
Exhibit J-2 (Assumption of ▇▇▇▇▇ Employment Agreement
Exhibit J-3 (Assumption of Wiley ▇. ▇▇▇▇▇ Employment Agreement)
v
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated as of April 29, 1999 (this
"AGREEMENT"), by and among Glendale Group, Ltd., a North Carolina corporation
(the "BUYER"), and Ithaca Industries, Inc., a Delaware corporation (the
"SELLER").
W I T N E S S E T H:
WHEREAS, the Seller owns and leases certain assets at its ▇▇▇▇▇ City
and Liberty operations which are used for the purpose of engaging in the
business of manufacturing, marketing and distributing women's hosiery (the
"▇▇▇▇▇ CITY BUSINESS");
WHEREAS, the Seller owns and leases certain assets at its Wilkesboro
operations which are used for the purpose of engaging in the business of
manufacturing, marketing and distributing women's hosiery (the "WILKESBORO
BUSINESS");
WHEREAS, the ▇▇▇▇▇ City Business and the Wilkesboro Business, and all
contracts, rights, intangible assets, liabilities and obligations related
thereto are hereinafter referred to as the "BUSINESS";
WHEREAS, the Buyer wishes to purchase and acquire from the Seller and
the Seller wishes to sell, assign and transfer to the Buyer, all of the Assets
(as defined in Section 1.1) and the Business for the Purchase Price (as defined
in Section 3) and the assumption by the Buyer of the Assumed Liabilities (as
defined in Section 1.6) and upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Seller has determined that it is in the best interest of
the Seller and its shareholders that the Seller sell the Assets and the Business
to the Buyer, in consideration of the payment of the Purchase Price and the
assumption of the Assumed Liabilities, all upon the terms and conditions and
subject to the provisions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and other mutual benefits to be
derived hereby, the parties hereto agree as follows:
1. TRANSFER OF ASSETS AND LIABILITIES.
1.1 ASSETS TO BE SOLD. Subject to the terms and conditions of
this Agreement and in consideration of the payment of the Purchase Price and
assumption of the Assumed Liabilities, at the Closing (as defined in Section
2.1, the Seller shall sell, assign, transfer and convey to the Buyer, free and
clear of all Liens (as defined in Section 17.1 (k)) except Liens securing
Assumed Liabilities, all the assets, properties and rights of the Seller of
every type and description relating to the Business, whether currently idle or
in use, real, personal or mixed, tangible or intangible, ▇▇▇▇▇▇ or inchoate,
known or unknown, fixed or
unfixed, accrued, absolute, contingent or otherwise, wherever located and
whether or not reflected on the books and records of the Seller or specifically
referred to in this Agreement, except Excluded Assets (as defined in Section
1.5) (all of such assets, properties and rights, collectively, the "ASSETS"),
including, without limitation, all of the Seller's right, title and interest in
and to the ▇▇▇▇▇ City Assets (as defined in Section 1.2), the Wilkesboro Assets
(as defined in Section 1.3) and the General Assets (as defined in Section 1.4).
1.2 ▇▇▇▇▇ CITY ASSETS. The ▇▇▇▇▇ City Assets shall include all
the assets used in connection with the ▇▇▇▇▇ City Business, including, without
limitation, all ▇▇▇▇▇ City Owned Real Property (as defined in Section 5.3.1) and
▇▇▇▇▇ City Leased Real Property (as defined in Section 5.3.2) and all machinery,
equipment (excluding equipment on loan from vendors), fixtures, furniture and
other personalty located therein or thereon or attached thereto, including
without limitation all equipment as capitalized on the Seller's books and
records set forth on Schedule 1.2 (the "▇▇▇▇▇ CITY OPERATING ASSETS").
1.3 WILKESBORO ASSETS. The Wilkesboro Assets shall include all
the assets used in connection with the Wilkesboro Business, including, without
limitation, all Wilkesboro Owned Real Property (as defined in Section 6.3.1) and
Wilkesboro Leased Real Property (as defined in Section 6.3.2) and all machinery,
equipment (excluding equipment on loan from vendors), fixtures, furniture and
other personalty located therein or thereon or attached thereto, including
without limitation all equipment as capitalized on the Seller's books and
records set forth on Schedule 1.3 (the "WILKESBORO OPERATING ASSETS").
1.4 GENERAL ASSETS. The General Assets shall include all the
assets (other than the ▇▇▇▇▇ City Assets and the Wilkesboro Assets) used in
connection with the Business, including, without limitation, the following:
(a) all intangible assets, interests and rights
related to the ▇▇▇▇▇ City Operating Assets, the Wilkesboro Operating Assets or
the Business, including, without limitation, all names, trade names, trademarks,
service marks, patents, copyrights (including applications for, rights to
acquire and other rights with respect to any of the foregoing), Trade Secrets
(as defined in Section 4.15.2), and other intellectual property held or used by
the Seller in connection with the Business, including, without limitation, the
intellectual property and computer software set forth on Schedule 4.15, all
advertising, sales and promotional materials, catalogues, price lists, mailing
lists, lists of customers, lists of suppliers, distribution lists, production
data, licenses, technology, know-how, franchises, ▇▇▇▇▇ City Permits (as defined
in Section 5.2), Wilkesboro Permits (as defined in Section 6.2), authorizations,
procedures and documentation;
(b) those contracts and agreements of the Seller set
forth on Schedule 4.16, all Real Property Leases (as defined in Section 6.3.2)
and all Space Leases (as defined in Section 6.3.4);
(c) all of the books, records and files of the Seller
or pertaining to the Business, including, without limitation, all computerized
records and other computerized
2
storage media and all software and user manuals and documentation relating
thereto;
(d) all accounts receivable, motor vehicles,
inventories of raw materials, work in process, finished products, irregular
goods, goods and parts, office and other supplies, rights under open orders for
the purchase or sale of assets, customer orders, prepayments of every kind,
security deposits and other deposits of every kind, in each case used in or
related to the Business, and all insurance proceeds relating to any of the
Assets;
(e) the goodwill of the Seller relating to the
Business;
(f) all of the other assets, tangible and intangible,
of the Business listed or reflected on the Projected Balance Sheet (as defined
in Section 3.1); and
(g) all assets used in or relating to the Business.
1.5 EXCLUDED ASSETS. The Seller will retain and not transfer,
and the Buyer will not purchase or acquire, (i) the closed Clinton hosiery
facility or any equipment located at the Clinton hosiery facility, (ii) office
furniture, furnishings and equipment relating to the portion of the Wilkesboro
facility to be leased by the Seller from the Buyer pursuant to Section 3.1(d)
below, (iii) the other assets listed on Schedule 1.5, and (iv) all corporate
records, including but not limited to the Seller's corporate minute books, and
tax records of the Seller, except for records, including but not limited to
personnel records, pertaining to the Business (the "BUSINESS RECORDS"), which
the Buyer will purchase and acquire (collectively, the "EXCLUDED ASSETS").
1.6 LIABILITIES TO BE ASSUMED. Effective as of the Closing,
the Buyer shall, without any further responsibility or liability of or recourse
to the Seller or its shareholders, directors, officers, employees, agents,
consultants, representatives, successors, transferees or assignees, absolutely
and irrevocably assume and be solely liable and responsible for the following
liabilities and obligations of the Seller, but in all events excluding the
Excluded Liabilities (as defined in Section 1.7), to the extent existing on the
Closing Date (the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations of the Seller
arising from and after the Closing Date under that certain Subordinated
Promissory Note dated March 24, 1998, from the Seller, as maker, to Glendale
Hosiery Company ("GLENDALE"), as payee, and in principal amount of $736,000 (the
"PROMISSORY NOTE"). The Buyer shall deliver to the Seller a consent from
Glendale to the assumption by the Buyer of the Promissory Note which consent
shall also discharge the Seller from any further liabilities under the
Promissory Note;
(b) all liabilities and obligations up to $100,000 of
the Seller to Glendale arising from and after the Closing Date pursuant to
Section 3.1(d) of the Asset Purchase Agreement dated as of March 13, 1998 by and
between the Seller and Glendale (the "SECTION 3.1(D) OBLIGATION"). The Buyer
shall deliver to the Seller a consent from Glendale to the assumption by the
Buyer of the 3.1(d) Obligation which consent shall also discharge
3
the Seller from any further liabilities under the Section 3.1(d) Obligation;
(c) all liabilities and obligations of the Seller
arising from and after the Closing Date under the Ithaca Industries, Inc.
Hosiery Division Incentive Bonus Plan (the "BONUS PLAN");
(d) all trade payables and accrued expenses of the
Seller related to the Business, as reflected on the Projected Balance Sheet;
(e) all obligations and liabilities of the Seller
arising from and after the Closing Date under the contracts and agreements of
the Seller set forth on Schedule 4.16, all Real Property Leases and Space Leases
and all liabilities and unperformed and unfulfilled obligations relating to all
purchase orders and sale orders that are assigned to the Buyer pursuant to
Section 1.4(d) hereof; and
(f) all health and hospitalization claims, and all
workers compensation claims with respect to Transferred Employees for costs
(doctor visits, hospitalization) actually incurred by the Employee after the
Closing Date, and all payroll and associated costs after the Closing Date.
1.7 LIABILITIES NOT ASSUMED. Anything in this Agreement to the
contrary notwithstanding, the Buyer shall not assume or in any way be liable or
responsible for, and the Seller shall be responsible for the payment,
performance and discharge of, any liabilities or obligations of the Seller
except as specifically provided in Section 1.6. Without limiting the generality
of the foregoing, and notwithstanding anything to the contrary in Section 1.6,
the Buyer shall not assume, the Assumed Liabilities shall not include, and the
Seller shall retain and indemnify the Buyer against, pursuant to Section 12, the
following (collectively, the "EXCLUDED LIABILITIES"):
(a) all liabilities, obligations and expenses
relating to the Excluded Assets;
(b) all liabilities, obligations and expenses of any
kind in excess of that amount properly accrued on the Closing Balance Sheet;
(c) any Taxes (as defined in Section 5.1) payable by
Seller in accordance with Section 11.2;
(d) defaults by the Seller under any contracts or
other agreements (including, without limitation, Real Property Leases) (i)
occurring on or before the Closing Date or (ii) caused by or arising out of the
execution or performance of this Agreement or the consummation of the
transactions contemplated hereby;
(e) all liabilities, obligations and expenses of any
kind or nature relating to Environmental Actions (as defined in Section 17.1(f))
attributable to the ownership
4
or operation of the Business or the Assets by the Seller on or prior to the
Closing Date or to events that have occurred, or conditions that existed, on or
prior to the Closing Date;
(f) all claims, liabilities and obligations, known or
unknown, whether absolute, contingent or otherwise, the existence of which is a
breach of any representation, warranty, covenant or agreement of the Seller set
forth in this Agreement;
(g) all accrued interest on the Promissory Note as of
the Closing Date;
(h) all obligations of the Seller pursuant to the
Section 3.1(d) Obligation in excess of $100,000;
(i) all health and hospitalization claims, and
workers compensation claims for costs (doctor visits, hospitalization) actually
incurred by the Employee prior to and including the Closing Date and all payroll
and associated costs through the Closing Date; and
(j) all other liabilities, obligations and expenses
of any nature whatsoever, known or unknown, whether absolute, contingent or
otherwise, not expressly assumed by the Buyer pursuant to Section 1.6.
2. THE CLOSING.
2.1 CLOSING; CLOSING DATE. The closing of the sale and
purchase of the Assets contemplated hereby (the "CLOSING") shall take place at
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at 10:00 a.m. local time on the business day next
following the day upon which all of the conditions to the Closing set forth in
Sections 9 and 10 have been satisfied or waived by the party entitled to waive
the same, but in no event later than April 30, 1999 or at such other place or
such other time or date as the parties may mutually agree in writing. The time
and date upon which the Closing occurs is referred to herein as the "CLOSING
DATE."
3. CONSIDERATION AND PAYMENT.
Subject to the terms and conditions of this Agreement, in
reliance upon the representations, warranties and agreements of the Seller
contained herein, and in consideration of the sale, assignment, transfer and
delivery of the Assets referred to in Section 1, the Buyer agrees to make the
payments provided for in Section 3.1 (the "PURCHASE PRICE"):
3.1 PAYMENT ON THE CLOSING DATE.
(a) At the Closing the Buyer will pay or cause to be
paid, in cash, by wire transfer of immediately available funds, an amount equal
to (i) 95% of the "Estimated Tangible Net Worth" of the Business, as reflected
on the projected balance sheet
5
as of April 30, 1999 attached hereto as Exhibit A or as updated by the Seller
prior to the Closing (the "PROJECTED BALANCE SHEET"), plus (ii) $500,000, and
less (iii) the agreed value ($500,000) of the Seller's common stock referred to
in Section 3.1(b) below.
(b) At the Closing, the Buyer shall deliver a
certificate representing 400,000 shares of the Seller's common stock, par value
$.01 per share, duly endorsed for transfer to the Seller.
(c) At the Closing the Buyer shall deliver to the
Seller evidence reasonably satisfactory to the Seller that all persons entitled
to participate in the Bonus Plan have consented and agreed to the Buyer's
assumption of all payment obligations under that Plan and have released the
Seller from any and all liability thereunder.
(d) At the Closing the Buyer and the Seller will
enter into a lease, in substantially the form of Exhibit B attached hereto, for
the approximately 35,000 square feet of office space at the Seller's Wilkesboro
facility and for an appropriate number of parking spaces, which provides that
the initial four years of occupancy will be rent free to the Seller.
3.2 CLOSING TANGIBLE NET WORTH.
(a) Within 60 days after the Closing, the Buyer's
independent auditors shall conduct a full audit (the "FINAL AUDIT") of the
balance sheet of the Business as of the Closing Date and shall determine the
Tangible Net Worth of the Business as of the Closing Date but excluding all
Excluded Assets and Excluded Liabilities on a basis consistent with the
Projected Balance Sheet (but in accordance with GAAP) and in accordance with the
procedures set forth in this Section 3.2 (the "CLOSING TANGIBLE NET WORTH").
(b) Within 5 business days after the preparation of
the Final Audit, the Buyer shall cause a copy of the Final Audit containing the
statement of Closing Tangible Net Worth (the "CLOSING BALANCE SHEET") to be
delivered to the Seller. Following delivery of the Closing Balance Sheet to the
Seller, the Seller and its professional advisors shall be permitted to review
the Buyer's independent auditors' work papers relating to the Closing Balance
Sheet, provided that the Seller executes a release letter in standard form
required by the Buyer's independent auditors. The Closing Balance Sheet shall
become final and binding upon the parties on the thirtieth day following
delivery thereof to the Seller unless the Seller gives written notice of its
disagreement (a "NOTICE OF DISAGREEMENT") to the Buyer prior to such date. Any
Notice of Disagreement shall specify in reasonable detail the nature and amount
of any disagreement so asserted. If a timely Notice of Disagreement is received
by the Buyer, then the Closing Balance Sheet (as revised in accordance with
clause (x) or (y) below) shall become final and binding upon the parties on the
earlier of (x) the date the parties hereto resolve in writing any differences
they have with respect to any matter specified in the Notice of Disagreement or
(y) the date any matters properly in dispute are finally resolved in writing by
the Accounting Firm (as defined below). During the 30 days immediately following
the delivery of a Notice of Disagreement, the Seller and the Buyer
6
shall seek in good faith to resolve in writing any difference which they may
have with respect to each matter specified in the Notice of Disagreement. During
such period, the Buyer shall have full access to the working papers of the
Seller prepared in connection with the Seller's preparation of the Notice of
Disagreement. At the end of such 30-day period, the Seller and the Buyer shall
submit to a nationally recognized accounting firm (the "ACCOUNTING FIRM") for
review and resolution of any and all matters which remain in dispute and which
were properly included in the Notice of Disagreement, and the Accounting Firm
shall make a final determination of the Closing Tangible Net Worth, which
determination shall be final and binding on the parties (it being understood,
however, that the Accounting Firm shall act as an arbitrator to determine, based
solely on presentations by the Buyer and the Seller (and not by independent
review), only those matters which remain in dispute and which were properly
included in the Notice of Disagreement). The Accounting Firm shall be selected
by the Seller and the Buyer or, if the parties are unable to agree, by the
Seller's and the Buyer's independent accountants and, if they are unable to
agree, by the American Arbitration Association. The Closing Balance Sheet shall
become final and binding on the Buyer and the Seller on the date the Accounting
Firm delivers its final resolution to the parties (which final resolution shall
be delivered as soon as practicable following the selection of the Accounting
Firm). The fees and expenses of the Accounting Firm pursuant to this Section
shall be borne 50% by the Buyer and 50% by the Seller.
(c) Within 5 business days following the final
determination of Closing Tangible Net Worth under Section 3.2(a) and 3.2(b) (the
"FINAL ADJUSTMENT DATE"), the Buyer shall pay to the Seller the amount by which
Closing Tangible Net Worth exceeds 95% of the Estimated Tangible Net Worth or
the Seller shall pay to the Buyer the amount by which the 95% of the Estimated
Tangible Net Worth exceeds Closing Tangible Net Worth, in each case, in cash, by
wire transfer of immediately available funds.
3.3 ALLOCATION. Within 60 days of the Closing Date, the Buyer
will deliver to the Seller Schedule 3.3 which will set forth the allocation of
the Purchase Price among the Assets. The allocation delivered by the Buyer shall
be based on the Buyer's reasonable, good faith determination of the fair market
value of the Assets and shall be subject to the Seller's consent, which shall
not be unreasonably withheld or delayed. The parties agree to file all tax
reports, returns and claims and other statements consistent with such allocation
set forth on Schedule 3.3 (and in particular to report the information required
by section 1060(b) of the Code) in a manner consistent with such allocation and
shall not make any inconsistent written statement or take any inconsistent
position on any returns, in any refund claim, during the course of any Internal
Revenue Service or other tax audit, for any financial or regulatory purpose, in
any litigation or investigation or otherwise, so long as there exists a
reasonable basis in law to maintain such position. Each party shall notify the
other party if it receives notice that the Internal Revenue Service proposes any
allocation different from Schedule 3.3.
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4. GENERAL REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer as follows:
4.1 DUE INCORPORATION AND QUALIFICATION. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and lawful authority to
own, lease and operate its assets, properties and business and to carry on the
Business as now conducted. The Seller is qualified to transact business and is
in good standing as a foreign corporation in each jurisdiction set forth on
Schedule 4.1, which are the only jurisdictions in which the operations of the
Business require the Seller to be so qualified, except for such jurisdictions in
which the failure to be so qualified is not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Business or
the Assets.
4.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. The Seller
has the requisite corporate power and authority to enter into, execute and
deliver this Agreement and each and every agreement and instrument contemplated
hereby to which the Seller is or will be a party, and to perform fully the
Seller's obligations hereunder and thereunder, and this Agreement and each such
other agreement and instrument, upon execution and delivery by the Seller, will
be duly executed and delivered by the Seller and (assuming due execution and
delivery hereof and thereof by the other parties hereto and thereto) will be
valid and binding obligations of the Seller enforceable against the Seller in
accordance with their respective terms.
4.3 NON-CONTRAVENTION. Neither the execution and delivery of
this Agreement or any other agreement or instrument contemplated hereby, the
consummation of the transactions contemplated hereby or thereby nor the
performance of this Agreement or any other agreement or instrument contemplated
hereby in accordance with their respective terms and conditions by the Seller
(a) requires the approval or consent of any governmental body or (except as
otherwise specified on Schedule 4.3 hereto) of any other person, (b) except as
specified on Schedule 4.3, conflicts with or results in any breach or violation
of, results in a material modification of the effect of, otherwise causes the
termination of or gives any other contracting party the right to terminate, or
constitutes (or with notice or lapse of time or both would constitute) a default
under, any agreement, indenture, note, bond, loan, instrument, lease,
conditional sale contract, mortgage, license, franchise, commitment or other
binding arrangement, certificate of incorporation, by-law, judgment, decree,
order, statute, rule, Permit or governmental regulation applicable to the
Seller, the Business or any of the Assets or (c) results in the creation of any
Lien on any of the Assets.
4.4 FINANCIAL STATEMENTS.
4.4.1 The unaudited balance sheet of the Business as
of January 31, 1999, and the related statements of income and retained earnings
and cash flows for the year then ended, including the footnotes thereto, which
have been delivered to the Buyer, fairly present the financial position, results
of operations and cash flows of the Business at such date and for the year then
ended in accordance with GAAP. The balance sheet included in
8
the financial statements as at January 31, 1999 and for the year then ended is
sometimes referred to herein as the "UNAUDITED BALANCE SHEET."
4.4.2 The unaudited balance sheet of the Business as
at February 28, 1999, and the related statements of income and retained earnings
and cash flows for the month then ended, including the footnotes thereto, which
have been delivered to the Buyer, fairly present the financial position, results
of operations and cash flows of the Business at such date and for the month then
ended in accordance with GAAP except that such financial statements do not
reflect any Excluded Assets or Excluded Liabilities. The foregoing financial
statements of the Seller as at February 28, 1999 and for the month then ended,
are sometimes referred to herein as the "INTERIM FINANCIALS," the balance sheet
included in the Interim Financials is sometimes referred to herein as the
"INTERIM BALANCE SHEET" and February 28, 1999, is sometimes referred to herein
as the "INTERIM BALANCE SHEET DATE."
4.5 LITIGATION. The Seller is not subject to any outstanding
orders, judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against or involving the Business or any
of the Assets. Except as set forth on Schedule 4.5, the Seller is not a party to
or, to the knowledge of the Seller, threatened with, any litigation or judicial,
administrative or arbitration proceeding involving the Business or the Assets.
Except as set forth on Schedule 4.5, the Seller does not know of any dispute
with any person under contract with the Seller that materially adversely
affects, or may materially adversely affect the Business or any of the Assets.
Except as set forth on Schedule 4.5, to the knowledge of the Seller, there is no
fact, event or circumstance that is reasonably likely to give rise to any
action, suit, claim or proceeding relating to the Business or any of the Assets
that would be required to be set forth on Schedule 4.5 if currently pending or
threatened.
4.6 EMPLOYEES.
4.6.1 Schedule 4.6 sets forth (a) the name and total
compensation of each key Employee and of each employee, consultant or agent of
the Seller employed in connection with the Business (each an "EMPLOYEE") whose
current annual rate of compensation (including bonuses and commissions) exceeds
$50,000 and (b) all wage or salary increases or bonuses received by such persons
since January 31, 1999 and any accrual for or commitment or agreement by the
Seller to pay such increases or bonuses. None of such persons has indicated in
writing to the Seller or to any of the officers or directors of the Seller an
intention to cancel or otherwise terminate such person's relationship with the
Seller.
4.6.2 The Seller has previously delivered to the
Buyer a true and complete list as set forth on Schedule 4.6 of (i) all effective
employment or consulting agreements including memoranda or letters of
understanding and accepted offers of employment with current or former
Employees, including current or former directors and consultants, of the
Business, if still in effect and (ii) all union or collective bargaining
agreements covering Employees. Schedule 4.6 contains a list of all current
Employees, together with the title or job classification of each such Employee,
the Employee's current
9
annual rate of base salary or wage, and the Employee's title or job
classification. Copies of each and employment agreement listed on Schedule 4.6
have been delivered to the Buyer.
4.6.3 Except as set forth in Schedule 4.6, (i) there
is no unfair labor practice complaint against the Seller relating to any
Employee pending before the National Labor Relations Board; (ii) there is no
labor strike, slowdown or stoppage actually pending or threatened against the
Seller relating to the Business; (iii) no representation petition respecting the
Employees has been filed with the National Labor Relations Board; (iv) the
Seller has not experienced any primary work stoppage or any attempt to unionize
involving the Employees; (v) no labor union represents or purports to represent
any Employee and there has not been any attempt by any union to organize or
represent the Employees within the last five years; (vi) there are no material
controversies pending between the Seller and any of the Employees, nor to the
Seller's knowledge are any such material controversies threatened; (vii) the
Seller is in compliance with all laws and governmental rules and regulations
relating to the employment of the Employees, including any provisions thereof
relating to wages, hours, collective bargaining and the payment of social
security, withholding and similar taxes; (viii) the Seller has not received
notice that any management Employee intends to terminate his or her employment;
(ix) there are no complaints by or on behalf of any current or former Employee
pending or threatened to be brought before any court, agency of the United
States or any state or local government, alleging discrimination or wrongful
termination of employment on account of sex, race, age, color, national origin,
handicap, marital status, height, weight, payment of wages and benefits (or the
failure to pay same); and (x) all of the Seller's employment, consulting or
similar contracts or arrangements with the Employees may be terminated without
notice and without cost or penalty.
4.7 EMPLOYEE BENEFIT PLANS.
4.7.1 Except as set forth on Schedule 4.7.1, there
are no material employee benefit plans or arrangements of any type (including,
without limitation, plans described in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations thereunder
("ERISA")), under which the Seller has any direct or indirect, actual or
contingent liability with respect to any current or former Employee of the
Business or any entity (each a "Commonly Controlled Entity") that would be
treated as an employer along with the Seller under section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986 of any Employee, as amended, and the
regulations thereunder (the "Code") (collectively, "BENEFIT PLANS").
4.7.2 With respect to each Benefit Plan (where
applicable), the Seller has delivered to the Buyer upon the Buyer's written
request complete and accurate copies of (a) all plan texts and agreements, (b)
all plan summaries and employee communications, (c) all funding vehicles, (d)
the most recent annual report, (e) the most recent annual and periodic
accounting of plan assets, (f) the most recent determination letter received
from the Internal Revenue Service and (g) the most recent actuarial valuation.
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4.7.3 With respect to each Benefit Plan, except as
set forth on Schedule 4.7.3, (a) if intended to qualify under Code section
401(a), such Benefit Plan so qualifies and its related trust is exempt from
taxation under Code section 501(a), (b) each such Benefit Plan has been
administered in accordance with its terms and applicable law, (c) the Seller has
no direct or indirect, actual or contingent liability with respect to any
Benefit Plan other than to make contributions to Benefit Plans covering current
and former Employees in accordance with the terms of such plans, (d) there are
no actions, suits or claims pending (other than routine claims for benefits) or,
to the knowledge of the Seller, threatened, with respect to any Benefit Plan or
against the assets of any Benefit Plan, (e) no nonexempt "prohibited
transaction" (as defined in ERISA section 406 or in Code section 4975) has
occurred, (f) all contributions and premiums due to any Benefit Plan have been
made on a timely basis and (g) all contributions made or required to be made
under any Benefit Plan meet the requirements for deductibility under the Code
and all required contributions to any Benefit Plan that have not been made have
been properly recorded on the books of the Seller in accordance with GAAP.
4.7.4 No Benefit Plan is or has ever been subject to
Title IV of ERISA, Code section 412 or ERISA section 302.
4.7.5 With respect to each Benefit Plan that is a
"welfare plan" (as defined in ERISA section 3(l)), except as set forth on
Schedule 4.7.5, (a) no such plan provides medical or death benefits (whether or
not insured) with respect to current or former Employees beyond their
termination of employment (other than coverage mandated by the Consolidated
Omnibus Budget Reconciliation Act of 1986, as amended, the cost of which is
fully paid by the employee or former employee), (b) there are no reserves,
assets, surplus or prepaid premiums under any such plan and (c) the Seller and
any Commonly Controlled Entity have complied with the requirements of Code
section 4980B.
4.7.6 The consummation of the transactions
contemplated by this Agreement will not (a) entitle any individual to severance
pay, unemployment compensation or similar pay, (b) accelerate the time of
payment or vesting or increase the amount of compensation due to any individual
(c) result in the payment of an amount that would not be deductible due to the
application of Code section 28OG or (d) constitute or involve a non-exempt
prohibited transaction (within the meaning of Code section 4975 or ERISA section
406 or a breach of fiduciary responsibility within the meaning of ERISA section
502(l)).
4.7.7 No Benefit Plan is a "multiemployer plan" (as
defined in ERISA section 3(37)), or a multiple employer plan within the meaning
of the Code or ERISA.
4.8 INSURANCE. Schedule 4.8 sets forth a list and brief
description of all policies or binders of fire, liability, product liability,
workers' compensation, vehicular or other insurance held by or on behalf of the
Seller covering any portion of the Business or the Assets, describing each
pending claim thereunder of more than $5,000 and setting forth the aggregate
amounts paid out under each such policy from December 31, 1993 through the date
hereof and the aggregate limit, if any, of the insurer's liability thereunder.
Such
11
policies and binders are valid and enforceable in accordance with their terms,
are in full force and effect and insure against risks and liabilities to the
extent and in the manner deemed appropriate and sufficient by the Seller. The
Seller is not in default with respect to any provision contained in any such
policy or binder nor has the Seller failed to give any notice or present any
claim under any such policy or binder in due and timely fashion. Except for
claims set forth on Schedule 4.8, there are no outstanding unpaid claims under
any such policy or binder. All policies of liability and casualty insurance
(collectively, "INSURANCE POLICIES") heretofore contracted for by or behalf of
the Seller with respect to each parcel of Real Property, or customarily
maintained with respect to similar properties in the applicable region, or
required in connection with the ownership, leasing, use, occupancy or operation
of each parcel of Real Property as currently used, occupied and operated, have
been issued to the Seller by reputable insurance companies and are currently in
full force and effect. The Seller has not received or been informed by a third
party of the receipt by it of any notice from any governmental authority having
jurisdiction over the Real Property or from any insurance carrier or
organization (a) threatening a suspension, revocation, modification or
cancellation of any Insurance Policy or a material increase in any premium in
connection therewith or (b) informing the Seller that any coverage listed on
Schedule 4.8 will or may not be available in the future on substantially the
same terms as now in effect, and, to the best of the Seller's knowledge, there
is no basis for the issuance of any such notice or the taking of any such
action. There is no material inaccuracy in any application for such policies or
binders, no failure to pay premiums when due and no similar state of facts that
might form the basis for termination of any such insurance.
4.9 OPERATION OF THE BUSINESS. Except as set forth on Schedule
4.9, since January 31, 1999 the Seller has not:
(a) changed, or agreed to change, in any manner the
character of the Business;
(b) (i) hired, or agreed to hire for use in the
Business, any Employee or consultant for annual compensation (including bonuses
and commissions) exceeding $50,000, (ii) entered into or amended, or agreed to
enter into or amend, any employment agreement with any Employee, (iii) entered
into, or agreed to enter into, any agreement with any labor union or association
representing any Employee, (iv) entered into or amended, or agreed to enter into
or amend, any Benefit Plan, (v) made any change in the actuarial methods or
assumptions used in funding any pension plan relating to the Employees or (vi)
made any change in the assumptions or factors used in determining benefit
equivalencies thereunder;
(c) waived, or agreed to waive, any right of material
value to the Business or any of the Assets;
(d) made, or agreed to make, any change in its
accounting methods or practices or any change in depreciation or amortization
policies or rates adopted by it that relate to the Business or the Assets;
12
(e) materially changed, or agreed to materially
change, any of its business policies or practices that relate to the Business,
including, without limitation, advertising, marketing, pricing, purchasing,
personnel, sales, returns or budget policies or practices;
(f) increased the wages, salary, bonus, benefits
provided under a Benefit Plan or other direct or indirect compensation, for or
to any Employee, or made any commitment to increase the same;
(g) paid, or agreed to pay, any severance or
termination pay to any Employee;
(h) except in the ordinary course of business, (i)
entered into, or agreed to enter into, any lease (as lessor or lessee) on behalf
of the Business or (ii) sold, abandoned or made, or agreed to sell, abandon or
make, any other disposition of any of the assets or properties of the Business;
(i) granted or suffered, or agreed to grant or
suffer, any Lien on any of the assets or properties of the Business;
(j) entered into or amended, or agreed to enter into
or amend, any contract or other agreement by or to which the Assets or the
Business are bound or subject, pursuant to which it agrees to indemnify any
party on behalf of the Business or pursuant to which it agrees to refrain from
competing with any party with respect to the Business;
(k) except in the ordinary course of business,
incurred or assumed, or agreed to incur or assume any liability (whether or not
currently due and payable) in connection with the Business;
(l) terminated, or agreed to terminate, or failed to
renew any contract or other agreement that is or was material to any of the
Assets or the assets, properties, business, prospects, operations or condition
(financial or otherwise) of the Business or received a written indication (that
was not subsequently withdrawn) that a party to such contract or agreement
intends to terminate or fail to renew such contract or agreement;
(m) except in the ordinary course of business,
entered into or amended, or agreed to enter into or amend, any material contract
or other agreement or other material transaction relating to the Business or
waived any material right under any such material contract or other agreement;
(n) except for inventory or equipment in the ordinary
course of business, sold, abandoned or made any other disposition of any of the
Assets; or
13
(o) undertaken a capital project or authorized or
committed to
undertake a capital project in connection with the Business involving the
expenditure of $25,000 or more.
4.10 REAL PROPERTY.
4.10.1 CONDEMNATION. The Seller has not received
notice, and has no knowledge of, any pending, threatened or contemplated
condemnation proceeding affecting the Real Property (as defined in Section
6.3.3) or any part thereof or of any sale or other disposition of the Real
Property or any part thereof in lieu of condemnation.
4.10.2 CASUALTY. No portion of the Real Property has
suffered any material damage by fire or other casualty that has not heretofore
been completely repaired and restored to its original condition. No portion of
the Real Property is located in a special flood hazard area as designated by
Federal governmental authorities.
4.10.3 REAL PROPERTY TAXES. Each of the parcels
included in the Real Property is assessed for real estate tax purposes as a
wholly independent tax lot, separate from any adjoining land or improvements not
constituting a part of such parcel. Schedule 4.10.3 sets forth for each such
parcel its assessed valuation for real property tax purposes and the amount of
all real property taxes (including all city, town, school, fire district,
garbage district and other special taxes and also including any special
assessments or conditional levies) levied for each of the current tax year and
the preceding tax year, and sets forth with respect to each such parcel in each
such year whether certiorari proceedings were instituted and, if so, whether the
same are pending or have been adjudicated or settled (and if adjudicated or
settled, the terms of such judgment or settlement). Except as otherwise set
forth herein, the assessment for each Improvement (as defined in Section 6.3.6)
set forth on Schedule 4.10.3 reflects the current state of completion and
condition of such Improvement. The Seller has no knowledge of any pending or
contemplated reassessment of any parcel included in the Owned Real Property (as
defined in Section 6.3.1), or of any pending or contemplated reassessment of any
parcel included in the Leased Real Property (as defined in Section 6.3.2) that
would result in a change in the rent, additional rent or other sums and charges
payable by the Seller under the Real Property Lease covering such Leased Real
Property.
4.10.4 SURVEY. There are no encroachments or other
facts or conditions affecting any parcel of Real Property that would be revealed
by an accurate survey or careful physical inspection thereof that would,
individually or in the aggregate, (a) interfere in any material respect with, or
materially increase the cost of, the use, occupancy or operation thereof as
currently used, occupied and operated or as intended to be used, occupied and
operated or (b) materially reduce the fair market value thereof below the fair
market value such parcel would have had but for such encroachment or other fact
or condition. To the Seller's knowledge, no portion of any Improvement
encroaches upon any property not included within the Real Property or upon the
area of any easement affecting the Real Property.
14
4.10.5 MECHANICS AND OTHER LIENS. The Seller does not
owe any money to any architect, contractor, subcontractor or materialman for
labor or materials performed, rendered or supplied to or in connection with any
Real Property within the past four months. There is no work being done at or
materials being supplied to any parcel of Real Property at the date hereof other
than routine maintenance projects having an aggregate cost through completion of
not more than $5,000.
4.10.6 LOAN DOCUMENTS. Schedule 4.10.6 contains a
true, correct and complete Schedule of all notes, bonds, mortgages, deeds of
trust, collateral security documents, guarantees and other related documents
binding upon the Seller or the Seller and one or more others, in connection with
any and all secured financings encumbering or otherwise affecting the Seller's
interest in the Real Property, including all amendments, modifications,
extensions and supplements thereto (collectively, the "LOAN DOCUMENTS"). The
Seller covenants and agrees to cause all of the Liens on the Real Property to be
released and discharged of record at or prior to the Closing and to deliver all
such releases and/or other documents that the Buyer or the Buyer's title
insurance company shall reasonably request to effect and evidence the full
release and discharge of record of all Liens on the Real Property.
4.11 ACCOUNTS RECEIVABLE. All accounts receivable relating to
the Business reflected on the Closing Balance Sheet (a) will have arisen in the
ordinary course of business of the Seller and (b) subject only to a reserve for
bad debts computed in accordance with GAAP and reasonably estimated to reflect
the probable results of collection, will have been fully collected or will be
fully collectible in the ordinary course of business of the Seller in the
aggregate recorded amounts thereof in accordance with their terms. All items
that are required by GAAP to be reflected as accounts receivable on the Closing
Balance Sheet and on the books of the Seller will be so reflected and any
reserve accounts relating thereto will have been established in accordance with
GAAP.
4.12 INVENTORY. The inventory of the Seller that relates to
the Business as set forth on the Closing Balance Sheet (other than irregular
merchandise) will be, and the inventory of the Seller that relates to the
Business currently is, in good and merchantable condition, and is or will be
suitable, usable and salable in the ordinary course of business for the purposes
for which intended. The materials, supplies and work-in-process, and additions
thereto, included in such inventory (a) are substantially equivalent in quality
to the materials, supplies and work-in-process, and additions thereto, generally
included in such inventory in the past, (b) are suitable for the manufacture and
distribution of the Seller's products in a manner substantially equivalent in
quality to that achieved generally by the Business in the past, (c) are not in
excess of the normal purchasing patterns of the Seller as they relate to the
Business, and (d) are valued consistent with GAAP at lower of cost or market on
a first-in first-out basis ("FIFO").
4.13 ACCOUNTS PAYABLE. The Seller has not delayed or postponed
the payment of accounts payable and other liabilities of the Business outside
the ordinary course of business. All accounts payable of the Business reflected
on the Closing Balance Sheet will
15
have been incurred in the ordinary course of business, and recorded consistent
with GAAP and past practice.
4.14 TANGIBLE PROPERTY. The facilities, machinery, equipment,
rental equipment, furniture, buildings and other improvements, fixtures,
vehicles, structures, software, any related capitalized items and other tangible
property included in any of the Assets (the "TANGIBLE PROPERTY") are in good
operating condition and repair, subject to continued repair and replacement in
accordance with past practice, and are suitable for their intended use. During
the past year there has not been any significant interruption of the operations
of the Business due to inadequate maintenance of any Tangible Property. All
material leases, conditional sale contracts, franchises or licenses pursuant to
which the Seller may hold or use any interest owned or claimed by the Seller
(including, without limitation, options) in or to Tangible Property have been
delivered or made available to the Buyer and are valid, subsisting agreements,
in full force and effect and binding upon the parties thereto in accordance with
their terms and, with respect to performance by the Seller, there is no default
or event of default or event that with notice or lapse of time or both would
constitute a default.
4.15 INTANGIBLE PROPERTY.
4.15.1 Schedule 4.15 sets forth a complete and accurate list
of:
(a) all United States and foreign trademarks, service
marks, trade names, brand names, trade dress, designs and logos, corporate
names, product or service identifiers, whether registered or not registered, and
pending applications for registration therefor of the Seller that are owned by
it, filed by or on behalf of it and used in the conduct of the Business (except
for those trademark, trade names and corporate names listed on Schedule 1.5) and
all registrations therefore ("TRADEMARKS");
(b) all United States and foreign patents and all
pending United States and foreign patent applications, including any divisions,
continuations, continuations- in-part substitutions or reissues thereof, whether
or not patents are issued on such applications and whether or not such
applications are modified, withdrawn or resubmitted, issued to, used by or filed
by or on behalf of the Seller in connection with the Business ("PATENTS");
(c) all United States and foreign copyrights
including copyrights for printed matter, databases, software and source codes,
whether registered or not registered, and all United States and foreign
copyright registrations and pending applications for copyright registration
therefore issued to, used by, filed by or on behalf of the Seller in connection
with the Business ("COPYRIGHTS");
(d) all existing license agreements or arrangements
to which the Seller is party, whether as licensor or licensee or otherwise, with
respect to any Trademark, Patent or Copyright except for software license
agreements generally available to the public
16
under which the Seller is a licensee; and
4.15.2 Except as set forth on Schedule 4.15, all designs,
plans, trade secrets, inventions, know-how, processes, procedures, formulas and
similar rights used by the Seller in connection with the Business, to the extent
not in the public domain (collectively, "TRADE SECRETS"), are owned by the
Seller, free and clear of any and all liabilities, obligations, licenses, Liens
(other than Liens securing indebtedness under the Bank Credit Agreements),
assignments or claims, whether written, oral or implied in fact or law.
4.15.3 Except as set forth on Schedule 4.15:
(a) no Trademarks or Trade Secrets are necessary or
contemplated in the conduct of the Business;
(b) no Patents, inventions, Copyrights, databases,
software, source codes, Trade Secrets or other intangible property rights, or
licenses, franchises, drawings or other proprietary information relating to any
of the foregoing are necessary for the conduct of the Business;
(c) each of the items listed on Schedule 4.15
pursuant to clauses (a), (b) and (c) of Section 4.15.1 (i) is owned by the
Seller, free and clear of any and all liabilities, obligations, licenses, (other
than Liens securing indebtedness under the Bank Credit Agreements) assignments
or claims, whether written, oral or implied in fact or law, (ii) are
transferable to the Buyer hereunder without the approval or consent of any
person and (iii) will continue to be valid and in full force and effect after
the Closing;
(d) none of the items listed on Schedule 4.15 and
used in the Business is the subject of any claim or pending or threatened claim
made by or against the Seller for infringement of any Patent, Trademark, Trade
Secret, Copyright, industrial property right or other proprietary right or to
any claim of unfair competition and, to the knowledge of the Seller, no such
claim is threatened and no basis for any such claim exists; and
(e) to the Seller's knowledge, no person, other than
employees of the Seller, is permitted to possess any copies of or use any of the
databases, software or source codes listed on Schedule 4.15 that contain Trade
Secrets of the Seller.
4.15.4 To its knowledge, the Seller is not, in the operation
or conduct of the Business, making use of any confidential information, Trade
Secret, Patent, Trademark or Copyright of any person except with written
permission or as a result of the acquisition by the Seller of the business of
such person.
4.15.5 Except as set forth on Schedule 4.15, all licenses,
agreements or arrangements listed on Schedule 4.15 (a) are in full force and
effect, (b) are transferable to the Buyer hereunder without the approval or
consent of any person and (c) will continue to
17
be valid, binding and in full force and effect after the Closing. Except as set
forth on Schedule 4.15, neither the Seller nor, to the knowledge of the Seller,
any other party to any of such licenses, agreements or arrangements is in
default or alleged default thereunder, in any respect, nor is there any event
which with notice or lapse of time or both would constitute a default
thereunder.
4.15.6 True and correct copies of all letters Patent,
Trademark and Copyright registrations or applications therefor, and licenses,
agreements and arrangements included in any of the Assets have been delivered to
the Buyer, and the originals of all such items will be delivered to the Buyer on
the Closing Date.
4.16 AGREEMENTS. Schedule 4.16 sets forth all of the material
contracts and other agreements relating to the Business to which the Seller is a
party, or by which it is bound, or by or to which any portion of the Business or
any of the Assets are bound or subject, including any of the following contracts
and other agreements, in each case, relating to the Business: (a) contracts and
other agreements with any affiliate of the Seller or any current or former
officer, director, employee, consultant, agent or stockholder of the Seller or
any such affiliate, (b) contracts and other agreements with any labor union or
association representing any Employees, (c) contracts and other agreements not
made in the ordinary course of business, (d) contracts for the purchase of
materials, supplies, goods, services, equipment or other assets providing for
annual payments by the Seller of, or pursuant to which in the last year the
Seller paid in the aggregate, $25,000 or more, (e) sales, distribution or other
similar agreements providing for the sale by the Seller of materials, supplies,
goods, services, equipment or other assets that provides for annual payments to
the Seller of, or pursuant to which in the last year the Seller was paid in the
aggregate, $25,000 or more, (f) distributorship, sales representative,
marketing, agency, dealer or other similar agreements, (g) contracts and other
agreements for the sale of any portion of the Business or any of the Assets
other than in the ordinary course of business or for the grant to any person of
any preferential rights to purchase any portion of the Business or any of the
Assets, (h) joint venture agreements, (i) financing agreements, (j) contracts
and other agreements containing covenants of the Seller (or any affiliate
thereof relating to the Seller) not to compete in any line of business or with
any person in any geographical area or (k) any other material contract or other
agreement, whether or not made in the ordinary course of business. All of the
contracts and other agreements set forth on Schedule 4.16 or any other Schedule
hereto have been delivered or made available to the Buyer upon the Buyer's
written request and are valid, subsisting agreements, in full force and effect
and binding upon the parties thereto in accordance with their respective terms
and the Seller is not in default under any of them, and, to the Seller's
knowledge, no other party to any such contract or other agreement is in default
thereunder. Except as separately identified on Schedule 4.16, the Seller is not
a party to or bound by or subject to any contract or other agreement relating to
the Business that either individually or in the aggregate materially and
adversely affects, or, without breach by one of the parties thereto, may
materially and adversely affect, the Business or any of the Assets or that was
entered into other than in the ordinary course of business. Except as separately
identified on Schedule 4.16, no approval or consent of any person is needed in
order that (i) the contracts and other agreements set forth on
18
Schedule 4.16, the Real Property Leases (as defined in Section 6.3.2) and the
Space Leases (as defined in Section 6.3.4) continue in full force and effect
following the consummation of the transactions contemplated by this Agreement
and (ii) the contracts listed on Schedule 4.16, the Real Property Leases and the
Space Leases can be assigned to and assumed by the Buyer and remain in full
force and effect after such assignment and assumption. The Seller's failure to
identify on Schedule 4.16 any contract or agreement required to be disclosed
thereon will not constitute a breach of this Section 4.16 provided that (A) such
failure to identify any such contract or agreement does not have a material
adverse effect on the Buyer and (B) upon the later identification of any such
contract or agreement the Seller promptly assigns its rights thereunder to the
Buyer.
4.17 SUPPLIERS AND CUSTOMERS. Schedule 4.17 sets forth by
dollar volume for the two years ended January 31, 1999 and January 31, 1998, the
ten largest suppliers and the ten largest customers of the Business. Except as
specifically identified on Schedule 4.17, no single supplier or customer is of
material importance to the Business. To the knowledge of the Seller, the
relationships of the Seller with each of the suppliers and customers of the
Business are good commercial working relationships and no supplier or customer
of the Business has canceled or otherwise terminated, or threatened in writing
to cancel or otherwise terminate, its relationship with the Seller, or has
during the last 12 months decreased materially, or threatened to decrease or
limit materially, any such supplier's provision of services, supplies or
materials to the Business or any such customer's usage or purchase of services
or products of the Business. To the Seller's knowledge, the consummation of the
transactions contemplated hereby will not adversely affect the relationship of
the Business with any such supplier or customer. True and correct copies of all
customer and supplier lists of the Business have been delivered to the Buyer.
4.18 NO MATERIAL ADVERSE CHANGE. Since January 31, 1999, there
has been no material adverse change in the assets, properties, business,
prospects, operations or condition (financial or otherwise) of the Business or
any of the Assets, and the Seller does not know of any such change that is
threatened, nor has there been any damage, destruction or loss materially
adversely affecting the Business or any of the Assets, whether or not covered by
insurance.
4.19 FULL DISCLOSURE. All documents and other papers delivered
by or on behalf of the Seller to the Buyer in connection with this Agreement and
the transactions contemplated hereby are true, complete and authentic. This
Agreement, all documents and other papers delivered by or on behalf of the
Seller to the Buyer in connection with this Agreement and the transactions
contemplated hereby and the information furnished by or on behalf of the Seller
to the Buyer in connection with this Agreement and the transactions contemplated
hereby do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made not false or misleading.
There is no fact known to the Seller that materially adversely affects, or so
far as the Seller is aware, will materially adversely affect, the Business or
any of the Assets or the ability of the Seller to perform this Agreement or the
agreements referred to herein and the transactions contemplated hereby or
thereby.
19
4.20 NO BROKER. No broker, finder, agent or similar
intermediary has acted for or on behalf of the Seller or any of its respective
affiliates, in connection with this Agreement or the transactions contemplated
hereby, and no broker, finder, agent or similar intermediary is entitled to any
broker's, finder's or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with the Seller or any
affiliate thereof or any action taken by any of the Seller or any affiliate
thereof.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLER CONCERNING THE ▇▇▇▇▇
CITY BUSINESS. The Seller represents and warrants to the Buyer as follows:
5.1 TAX MATTERS. No state of facts exists or has existed that
arose or is based upon facts or circumstances that occurred after March 24, 1998
and that would constitute grounds for the assessment against the Buyer, whether
by reason of transferee liability or otherwise, of any liability for any
federal, state, county, local, foreign or other tax (including, without
limitation, income, profits, premium, estimated, excise, sales, withholding,
value-added, capital stock, transfer, use, occupancy, gross receipts, franchise,
employment, payroll related, property or any other tax of any sort), whether or
not measured in whole or in part by net income, and including deficiencies,
interest, penalties and additions to tax thereon and obligations under any tax
sharing, tax allocation or similar agreement to which the Seller is a party and
including expenses associated with contesting any proposed adjustment related to
any of the foregoing (collectively, "TAXES") attributable to any period ending
on or before the Closing Date relating to the income, assets and operations of
the ▇▇▇▇▇ City Business or the ▇▇▇▇▇ City Assets, or arising out of the
transactions contemplated by this Agreement, other than any Taxes accrued on the
Closing Balance Sheet. There is no pending or threatened Tax audit of any Tax
return filed by or on behalf of the Seller or with respect to any of the income,
assets and operations of the ▇▇▇▇▇ City Business or the ▇▇▇▇▇ City Assets.
5.2 COMPLIANCE WITH LAWS. Since March 24, 1998, the Seller has
complied in all material respects with all federal, state, county, local and
foreign laws, ordinances, regulations, orders, judgments, injunctions, awards or
decrees applicable to the ▇▇▇▇▇ City Business and the ▇▇▇▇▇ City Assets. To the
Seller's knowledge, the Seller would not be in violation of any law, ordinance,
regulation or other requirement applicable to the ▇▇▇▇▇ City Business or any of
the ▇▇▇▇▇ City Assets that has been enacted or adopted but is not yet effective,
if such law, ordinance, regulation or other requirement were effective at the
date hereof. To the Seller's knowledge, since March 24, 1998, the Seller has not
made any illegal payment on behalf of the ▇▇▇▇▇ City Business to officers or
employees of any governmental or regulatory body or to customers for the sharing
of fees or to customers or suppliers for rebating of charges, engaged in any
other illegal reciprocal practices or illegally given any consideration to
purchasing agents or other representatives of customers in respect of sales made
or to be made by the Seller that relate to the ▇▇▇▇▇ City Business. Except as
set forth on Schedule 5.2, no license, permit, certificate of occupancy,
exemption, consent, waiver, authorization, franchise, right, order or approval
of any federal, state, county, local or foreign governmental or regulatory body
or any insurance company or fire rating or similar board or organization
(collectively, "PERMITS") is material to or necessary for the
20
conduct of the ▇▇▇▇▇ City Business or the ownership or use of the ▇▇▇▇▇ City
Assets (any such Permits, "▇▇▇▇▇ CITY PERMITS"). All Permits included on
Schedule 5.2 are in full force and effect and no proceeding is pending or, to
the knowledge of the Seller, threatened, to revoke or limit any such Permit.
Except as set forth on Schedule 5.2, no action by the Seller or the Buyer is
required in order that all such Permits will remain in full force and effect
following the consummation of the transactions provided for herein.
5.3 REAL ESTATE.
5.3.1 OWNERSHIP OF PREMISES. Since March 24, 1998,
the Seller has done nothing to impair its ownership of good, marketable and
insurable fee title to the land described on Schedule 5.3.1(a) and to all of the
buildings, structures and other improvements located thereon (collectively, the
"▇▇▇▇▇ CITY OWNED REAL PROPERTY") free and clear of all Title Defects (as
defined in this Section) except as listed on Schedule 5.3.1(b) For purposes of
this Agreement, "TITLE DEFECTS" shall mean and include any mortgage, deed of
trust, Lien (other than Liens securing indebtedness under the Bank Credit
Agreements), pledge, security interest, claim, lease, charge, option, right of
first refusal, easement, restrictive covenant, encroachment or other survey
defect, encumbrance or other restriction or limitation whatsoever.
5.3.2 LEASED PROPERTIES. Schedule 5.3.2(a) is a true,
correct and complete Schedule of all leases, subleases, licenses and other
agreements (collectively, the "▇▇▇▇▇ CITY REAL PROPERTY LEASES") under which the
▇▇▇▇▇ City Business uses or occupies or has the right to use or occupy, now or
in the future, any real property (the land, buildings, structures and other
improvements covered by the ▇▇▇▇▇ City Real Property Leases being referred to
herein as the "▇▇▇▇▇ CITY LEASED REAL PROPERTY"), which Schedule 5.3.2(a) sets
forth the date of and parties to each ▇▇▇▇▇ City Real Property Lease, the date
of and parties to each amendment, modification and supplement thereto, the term
and renewal terms (whether or not exercised) thereof and a brief description of
the ▇▇▇▇▇ City Leased Real Property covered thereby. The Seller has heretofore
delivered to the Buyer true, correct and complete copies of all ▇▇▇▇▇ City Real
Property Leases (including all modifications, amendments and supplements). Since
March 24, 1998, the Seller has done nothing to adversely affect the validity or
effectiveness of any ▇▇▇▇▇ City Real Property Lease. From and after March 24,
1998, (i) All rent and other sums and charges payable by the Seller as tenant
under all ▇▇▇▇▇ City Real Property Leases are current, no notice of default or
termination under any ▇▇▇▇▇ City Real Property Lease is outstanding, (ii) no
termination event or condition or uncured default on the part of the Seller or,
to the best of the Seller's knowledge, the landlord, exists under any ▇▇▇▇▇ City
Real Property Lease, and (iii) no event has occurred and no condition exists
which, with the giving of notice or the lapse of time or both, would constitute
such a default or termination event or condition. Except for any interest which
arose on or prior to March 24, 1998, to the Seller's knowledge there is no
underlying mortgage, deed of trust, lease grant of term or other estate in or
interest affecting the fee simple reversionary interest of the landlord under
the ▇▇▇▇▇ City Real Property Leases in and to the ▇▇▇▇▇ City Leased Real
Property that is superior to the interest of the Seller as tenant under the
applicable ▇▇▇▇▇ City Real Property Leases. The Seller holds the leasehold
estate under and interest in each
21
▇▇▇▇▇ City Real Property Lease free and clear of all Title Defects (exclusive of
mortgages which will be assumed by the Buyer or satisfied by the Seller at the
Closing) except those Title Defects listed on Schedule 5.3.2(b). None of the
Seller, or any affiliate or stockholder thereof has any ownership, financial or
other interest in the landlord under any ▇▇▇▇▇ City Real Property Lease.
5.3.3 ENTIRE PREMISES. All of the land, buildings,
structures, plants, facilities and other improvements used by the Seller in the
conduct of the ▇▇▇▇▇ City Business are included in the ▇▇▇▇▇ City Owned Real
Property and the ▇▇▇▇▇ City Leased Real Property. The ▇▇▇▇▇ City Leased Real
Property and the ▇▇▇▇▇ City Owned Real Property are collectively referred to
herein as the "▇▇▇▇▇ CITY REAL PROPERTY."
5.3.4 SPACE LEASES. Schedule 5.3.4 is a true, correct
and complete Schedule of all leases, subleases, licenses and other agreements
(collectively, the "▇▇▇▇▇ CITY SPACE LEASES") granting to any person or entity
other than the Seller any right to the possession, use, occupancy or enjoyment
of the ▇▇▇▇▇ City Real Property or any portion thereof, which Schedule sets
forth the date of and parties to each ▇▇▇▇▇ City Space Lease, the date of and
parties to each amendment, modification and supplement thereto, the term and
renewal terms (whether or not exercised) thereof and a brief description of the
portion of the ▇▇▇▇▇ City Real Property covered thereby. The Seller has
heretofore delivered to the Buyer true, correct and complete copies of all ▇▇▇▇▇
City Space Leases (including all modifications, amendments and supplements).
Each ▇▇▇▇▇ City Space Lease is valid, binding and in full force and effect, all
rent and other sums and charges payable by the tenant or occupant thereunder
(each a "▇▇▇▇▇ CITY SPACE TENANT") are current, no notice of default or
termination under any ▇▇▇▇▇ City Space Lease is outstanding, no termination
event or condition or uncured default on the part of the Seller or, to the best
of the Seller's knowledge, the ▇▇▇▇▇ City Space Tenant, exists under any ▇▇▇▇▇
City Space Lease, and no event has occurred and no condition exists that, with
the giving of notice or the lapse of time or both, would constitute such a
default or termination event or condition. The Seller holds the landlord's
interest in each ▇▇▇▇▇ City Space Lease free and clear of all Title Defects
(exclusive of mortgages which will be satisfied by the Seller at the Closing).
None of the Seller, or any affiliate thereof has any ownership, financial or
other interest in the Space Tenant under any ▇▇▇▇▇ City Space Lease.
5.3.5 NO OPTIONS. Except as set forth on Schedule
5.3.5, none of the Seller, or any affiliate thereof owns or holds, or is
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the ▇▇▇▇▇ City Real
Property or any portion thereof or interest therein.
5.3.6 CONDITION AND OPERATION OF IMPROVEMENTS. To the
Seller's knowledge, all components of all buildings, structures and other
improvements included within the ▇▇▇▇▇ City Real Property (the "▇▇▇▇▇ CITY
IMPROVEMENTS"), including but not limited to the roofs and structural elements
thereof and the heating, ventilation, air conditioning, plumbing, electrical,
mechanical, sewer, waste water, storm water, paving and parking equipment,
systems and facilities included therein, are in good operating condition
22
and repair, subject to continued repair and replacement in accordance with past
practice. To the Seller's knowledge, all water, gas, electrical, steam,
compressed air, telecommunication, sanitary and storm sewage lines and systems
and other similar systems serving each ▇▇▇▇▇ City Real Property parcel are
installed and operating and are sufficient to enable each such parcel to
continue to be used and operated in the manner currently being used and
operated, and any so-called hookup fees or other associated charges have been
fully paid. To the Seller's knowledge, each such utility or other service is
provided by a public or private utility or service company and enters the
applicable ▇▇▇▇▇ City Real Property parcel from an adjacent public street or
valid private easement owned by the supplier of such utility or other service.
To the Seller's knowledge, each ▇▇▇▇▇ City Improvement has direct access to a
public street adjoining the ▇▇▇▇▇ City Real Property on which such ▇▇▇▇▇ City
Improvement is situated over the driveways and accessways currently being used
in connection with the use and operation of such ▇▇▇▇▇ City Improvement, and no
existing accessway, crosses or encroaches upon any property or property interest
not owned or leased by the Seller. To the Seller's knowledge, no ▇▇▇▇▇ City
Improvement or portion thereof is dependent for its access, operation or utility
on any land, building or other improvement not included in the ▇▇▇▇▇ City Real
Property.
5.3.7 REAL PROPERTY LAWS. Since March 24, 1998 the
Seller has done nothing to cause the ▇▇▇▇▇ City Real Property and its continued
use, occupancy and operation as currently used, occupied and operated to
constitute a material nonconforming use under any applicable building, zoning,
subdivision or other land use or similar law, ordinance, regulation, order or
decree (collectively, "REAL PROPERTY LAWS"). To Seller's knowledge, the
continued existence, use, occupancy and operation of each ▇▇▇▇▇ City Improvement
in the manner presently used, occupied or operated is not dependent on the
granting of any special permit, exception, approval or variance. The Seller has
no knowledge of any pending or anticipated change in any Real Property Law that
would have a material adverse effect upon the ownership, use, occupancy or
operation of the ▇▇▇▇▇ City Real Property or any portion thereof, or upon the
making of reasonable additions or alterations to the ▇▇▇▇▇ City Improvements
thereat or upon reconstruction of any ▇▇▇▇▇ City Improvement in the event of a
casualty. No dispute currently exists between the Seller and any governmental
authority having jurisdiction over the ▇▇▇▇▇ City Real Property with respect to
any Real Property Law or the application thereof to the ▇▇▇▇▇ City Real
Property.
5.4 OWNERSHIP AND ADEQUACY OF ASSETS. Except for any defects
in title that existed on or before March 24, 1998, the Seller owns outright and
has good title to all of the ▇▇▇▇▇ City Assets being transferred to the Buyer
hereunder (other than the ▇▇▇▇▇ City Leased Real Property and leased equipment),
in each case free and clear of any Liens (other than Liens securing indebtedness
under the Bank Credit Agreements) other than equipment Liens as described in
Schedule 5.4). To the Seller's knowledge, the ▇▇▇▇▇ City Assets include all
rights, properties and other assets necessary to the conduct of the ▇▇▇▇▇ City
Business in the same manner as it has been conducted prior to the date hereof.
23
5.5 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
5.5:
(a) Since March 24, 1998 neither the Seller's conduct
of the ▇▇▇▇▇ City Business nor its ownership or operation of the ▇▇▇▇▇ City
Assets is or has been in material violation of any applicable Environmental Law.
(b) To the Seller's knowledge, the Seller has all
▇▇▇▇▇ City Permits required pursuant to Environmental Laws in connection with
the ownership or operation of the ▇▇▇▇▇ City Business or the ▇▇▇▇▇ City Assets,
all such ▇▇▇▇▇ City Permits are in full force and effect, no action or
proceeding to revoke, limit or modify any such ▇▇▇▇▇ City Permits is pending and
the ownership and operation of the ▇▇▇▇▇ City Business and the ▇▇▇▇▇ City Assets
is in material compliance in all respects with all terms and conditions thereof.
All such ▇▇▇▇▇ City Permits are listed on Schedule 5.5(b).
(c) The Seller has not received, and will not receive
due to the consummation of this transaction, any Environmental Action relating
to its ownership or operation of the ▇▇▇▇▇ City Business or the ▇▇▇▇▇ City
Assets.
(d) To the Seller's knowledge, the Seller has filed
all notices since March 24, 1998 required under Environmental Laws indicating
the past or present Release (as defined in Section 17.1(n)), generation,
treatment, storage or disposal of Hazardous Substances (as defined in Section
17.1(j)) in connection with its ownership or operation of the ▇▇▇▇▇ City
Business or the ▇▇▇▇▇ City Assets.
(e) Since March 24, 1998, the Seller has not entered
into any written agreement with any governmental authority or any other person
by which the Seller has assumed responsibility, either directly or as a
guarantor or surety for the remediation of any condition arising from or
relating to a Release or threatened Release of Hazardous Substances into the
Environment (as defined in Section 17.1(e)).
(f) To the Seller's knowledge, there is not now and
has not been since March 24, 1998 a Release or threatened Release of Hazardous
Substances into the Environment at, on, in or under any of the ▇▇▇▇▇ City
Assets, or arising in any way out of its ownership or operation of the ▇▇▇▇▇
City Business or the ▇▇▇▇▇ City Assets.
(g) There is not now and since March 24, 1998 has not
been at any time, on or in any of the ▇▇▇▇▇ City Assets and, to the knowledge of
the Seller, was not at, on or in any real property previously owned, leased or
operated by the Seller or any predecessor or affiliate in connection with the
▇▇▇▇▇ City Business (i) any generation, use, handling, Release, treatment,
recycling, storage or disposal of any "hazardous wastes" (as defined in the
Resource Conservation and Recovery Act), (ii) any underground storage tank,
surface impoundment, lagoon or other containment facility (past or present) for
the temporary or permanent storage, treatment or disposal of Hazardous
Substances, (iii) any landfill or solid waste disposal area, (iv) any
asbestos-containing material, (v) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other
24
equipment, (vi) any Release or threatened Release, or any visible signs of
Releases or threatened Releases, of a Hazardous Substance to the Environment in
form or quantity requiring Remedial Action (as defined in Section 17.1(o)) under
Environmental Laws or (vii) any Hazardous Substances present at such property,
excepting such quantities as are or were handled in accordance with all
applicable manufacturer's instructions and Environmental Laws and in proper
storage containers, and as are necessary for the operations of the Business and
the Assets.
(h) To the knowledge of the Seller, based on
reasonable investigation, there is no basis or reasonably anticipated basis for
any Environmental Action or Environmental Compliance Costs (as defined in
Section 17.1(g)) in connection with the ▇▇▇▇▇ City Business or the ▇▇▇▇▇ City
Assets.
(i) Since March 24, 1998 the Seller has not
transported, stored, treated or disposed, nor has it allowed or arranged for any
third persons to transport, store, treat or dispose, any Hazardous Substance
generated in connection with its ownership or operation of the ▇▇▇▇▇ City
Business or the ▇▇▇▇▇ City Assets to or at (i) any location other than a site
lawfully permitted to receive such substances for such purposes or (ii) any
location designated for Remedial Action pursuant to Environmental Laws; nor has
it performed, arranged for or allowed by any method or procedure such
transportation or disposal in contravention of any Environmental Laws or in any
other manner that may result in Environmental Compliance Costs or in an
Environmental Action. All locations at which any Hazardous Substances generated
in connection with the Seller's ownership or operation of the ▇▇▇▇▇ City
Business or the ▇▇▇▇▇ City Assets have been disposed of are listed on Schedule
5.5(i).
6. REPRESENTATIONS AND WARRANTIES OF THE SELLER CONCERNING THE
WILKESBORO BUSINESS. The Seller represents and warrants to the Buyer as follows:
6.1 TAX MATTERS. No state of facts exists or has existed that
would constitute grounds for the assessment against the Buyer, whether by reason
of transferee liability or otherwise, of any liability for any Taxes
attributable to any period ending on or before the Closing Date relating to the
income, assets and operations of the Wilkesboro Business or the Wilkesboro
Assets other than any Taxes accrued on the Closing Balance Sheet, or arising out
of the transactions contemplated by this Agreement. There is no pending or
threatened Tax audit of any Tax return filed by or on behalf of the Seller with
respect to any of the income, assets and operations of the Wilkesboro Business
or the Wilkesboro Assets.
6.2 COMPLIANCE WITH LAWS. The Seller has complied in all
material respects with all federal, state, county, local and foreign laws,
ordinances, regulations, orders, judgments, injunctions, awards or decrees
applicable to the Wilkesboro Business and the Wilkesboro Assets. To the
knowledge of the Seller, the Seller would not be in violation of any law,
ordinance, regulation or other requirement applicable to the Wilkesboro Business
or any of the Wilkesboro Assets that has been enacted or adopted but is not yet
effective, if
25
such law, ordinance, regulation or other requirement were effective at the date
hereof. The Seller has not made any illegal payment on behalf of the Wilkesboro
Business to officers or employees of any governmental or regulatory body or to
customers for the sharing of fees or to customers or suppliers for rebating of
charges, engaged in any other illegal reciprocal practices or illegally given
any consideration to purchasing agents or other representatives of customers in
respect of sales made or to be made by the Seller that relate to the Wilkesboro
Business. Except as set forth on Schedule 6.2, no Permit is material to or
necessary for the conduct of the Wilkesboro Business or the ownership or use of
the Wilkesboro Assets (any such Permits, "WILKESBORO PERMITS"). All Permits
included on Schedule 6.2 are in full force and effect and no proceeding is
pending or, to the knowledge of the Seller, threatened, to revoke or limit any
such Permit. Except as set forth on Schedule 6.2, no action by the Seller or the
Buyer is required in order that all such Permits will remain in full force and
effect following the consummation of the transactions provided for herein.
6.3 REAL ESTATE.
6.3.1 OWNERSHIP OF PREMISES. The Seller is the owner
of good, marketable and insurable fee title to the land described on Schedule
6.3.1(a) and to all of the buildings, structures and other improvements located
thereon (collectively, the "WILKESBORO OWNED REAL PROPERTY" and together with
the ▇▇▇▇▇ City Real Property, the "OWNED REAL PROPERTY") free and clear of all
Title Defects (as defined in Section 5.3.1) except as listed on Schedule
6.3.1(b).
6.3.2 LEASED PROPERTIES. Schedule 6.3.2(a) is a true,
correct and complete Schedule of all leases, subleases, licenses and other
agreements (collectively, the "WILKESBORO REAL PROPERTY LEASES" and together
with the ▇▇▇▇▇ City Real Property Leases, the "REAL PROPERTY LEASES") under
which the Wilkesboro Business uses or occupies or has the right to use or
occupy, now or in the future, any real property (the land, buildings, structures
and other improvements covered by the Wilkesboro Real Property Leases being
referred to herein as the "WILKESBORO LEASED REAL PROPERTY" and together with
the ▇▇▇▇▇ City Leased Real Property, the "LEASED REAL PROPERTY"), which Schedule
6.3.2(a) sets forth the date of and parties to each Wilkesboro Real Property
Lease, the date of and parties to each amendment, modification and supplement
thereto, the term and renewal terms (whether or not exercised) thereof and a
brief description of the Wilkesboro Leased Real Property covered thereby. The
Seller has heretofore delivered to the Buyer true, correct and complete copies
of all Wilkesboro Real Property Leases (including all modifications, amendments
and supplements). Each Wilkesboro Real Property Lease is valid, binding and in
full force and effect, all rent and other sums and charges payable by the Seller
as tenant thereunder are current, no notice of default or termination under any
Wilkesboro Real Property Lease is outstanding, no termination event or condition
or uncured default on the part of the Seller or, to the best of the Seller's
knowledge, the landlord, exists under any Wilkesboro Real Property Lease, and no
event has occurred and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute such a default or termination event
or condition. To the Seller's knowledge there is no underlying mortgage, deed of
trust, lease grant of term or other estate in or interest affecting the fee
simple reversionary interest of the
26
landlord under the Wilkesboro Real Property Leases in and to the Wilkesboro
Leased Real Property that is superior to the interest of the Seller as tenant
under the applicable Wilkesboro Real Property Leases. The Seller holds the
leasehold estate under and interest in each Wilkesboro Real Property Lease free
and clear of all Title Defects (exclusive of mortgages which will be assumed by
the Buyer or satisfied by the Seller at the Closing) except those Title Defects
listed on Schedule 6.3.2(b). None of the Seller, or any affiliate or stockholder
thereof has any ownership, financial or other interest in the landlord under any
Wilkesboro Real Property Lease.
6.3.3 ENTIRE PREMISES. All of the land, buildings,
structures, plants, facilities and other improvements used by the Seller in the
conduct of the Wilkesboro Business are included in the Wilkesboro Owned Real
Property and the Wilkesboro Leased Real Property. The Wilkesboro Leased Real
Property and the Wilkesboro Owned Real Property are collectively referred to
herein as the "WILKESBORO REAL PROPERTY." The Wilkesboro Real Property and the
▇▇▇▇▇ City Real Property are collectively referred to herein as the "REAL
PROPERTY."
6.3.4 SPACE LEASES. Schedule 6.3.4 is a true, correct
and complete Schedule of all leases, subleases, licenses and other agreements
(collectively, the "WILKESBORO SPACE LEASES" and together with the ▇▇▇▇▇ City
Space Leases, the "SPACE LEASES") granting to any person or entity other than
the Seller any right to the possession, use, occupancy or enjoyment of the
Wilkesboro Real Property or any portion thereof, which Schedule sets forth the
date of and parties to each Wilkesboro Space Lease, the date of and parties to
each amendment, modification and supplement thereto, the term and renewal terms
(whether or not exercised) thereof and a brief description of the portion of the
Wilkesboro Real Property covered thereby. The Seller has heretofore delivered to
the Buyer true, correct and complete copies of all Wilkesboro Space Leases
(including all modifications, amendments and supplements). Each Wilkesboro Space
Lease is valid, binding and in full force and effect, all rent and other sums
and charges payable by the tenant or occupant thereunder (each a "WILKESBORO
SPACE TENANT" and together with the ▇▇▇▇▇ City Space Tenants, the "SPACE
TENANTS") are current, no notice of default or termination under any Wilkesboro
Space Lease is outstanding, no termination event or condition or uncured default
on the part of the Seller or, to the best of the Seller's knowledge, the
Wilkesboro Space Tenant, exists under any Wilkesboro Space Lease, and no event
has occurred and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default or termination event or
condition. The Seller holds the landlord's interest in each Wilkesboro Space
Lease free and clear of all Title Defects (exclusive of mortgages which will be
satisfied by the Seller at the Closing). None of the Seller, or any affiliate
thereof has any ownership, financial or other interest in the Space Tenant under
any Wilkesboro Space Lease.
6.3.5 NO OPTIONS. Except as set forth on Schedule
6.3.5, none of the Seller, or any affiliate thereof owns or holds, or is
obligated under or a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell or dispose of the Wilkesboro Real
Property or any portion thereof or interest therein.
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6.3.6 CONDITION AND OPERATION OF IMPROVEMENTS. All
components of all buildings, structures and other improvements included within
the Wilkesboro Real Property (the "WILKESBORO IMPROVEMENTS" and together with
the ▇▇▇▇▇ City Improvements, the "IMPROVEMENTS"), including but not limited to
the roofs and structural elements thereof and the heating, ventilation, air
conditioning, plumbing, electrical, mechanical, sewer, waste water, storm water,
paving and parking equipment, systems and facilities included therein, are in
good operating condition and repair, subject to continued repair and replacement
in accordance with past practice. To the Seller's knowledge, all water, gas,
electrical, steam, compressed air, telecommunication, sanitary and storm sewage
lines and systems and other similar systems serving each Wilkesboro Real
Property parcel are installed and operating and are sufficient to enable each
such parcel to continue to be used and operated in the manner currently being
used and operated, and any so-called hookup fees or other associated charges
have been fully paid. To the Seller's knowledge, each such utility or other
service is provided by a public or private utility or service company and enters
the applicable Wilkesboro Real Property parcel from an adjacent public street or
valid private easement owned by the supplier of such utility or other service.
To the Seller's knowledge, each Wilkesboro Improvement has direct access to a
public street adjoining the Wilkesboro Real Property on which such Wilkesboro
Improvement is situated over the driveways and accessways currently being used
in connection with the use and operation of such Wilkesboro Improvement, and no
existing accessway, crosses or encroaches upon any property or property interest
not owned or leased by the Seller. To the Seller's knowledge, no Wilkesboro
Improvement or portion thereof is dependent for its access, operation or utility
on any land, building or other improvement not included in the Wilkesboro Real
Property.
6.3.7 REAL PROPERTY LAWS. The Wilkesboro Real
Property and its continued use, occupancy and operation as currently used,
occupied and operated does not constitute a material nonconforming use under any
applicable Real Property Law. The continued existence, use, occupancy and
operation of each Wilkesboro Improvement in the manner presently used, occupied
or operated is not dependent on the granting of any special permit, exception,
approval or variance. The Seller has no knowledge of any pending or anticipated
change in any Real Property Law that would have a material adverse effect upon
the ownership, use, occupancy or operation of the Wilkesboro Real Property or
any portion thereof, or upon the making of reasonable additions or alterations
to the Wilkesboro Improvements thereat or upon reconstruction of any Wilkesboro
Improvement in the event of a casualty. No dispute currently exists between the
Seller and any governmental authority having jurisdiction over the Wilkesboro
Real Property with respect to any Real Property Law or the application thereof
to the Wilkesboro Real Property.
6.4 OWNERSHIP AND ADEQUACY OF ASSETS. The Seller owns outright
and has good title to all of the Wilkesboro Assets being transferred to the
Buyer hereunder (other than the Wilkesboro Leased Real Property and leased
equipment), in each case free and clear of any Liens (other than Liens securing
indebtedness under the Bank Credit Agreements and equipment Liens as described
in Schedule 6.4. The Wilkesboro Assets include all rights, properties and other
assets necessary to the conduct of the Wilkesboro Business in the same manner as
it has been conducted prior to the date hereof.
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6.5 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
6.5:
(a) Neither the Seller's conduct of the Wilkesboro
Business nor its ownership or operation of the Wilkesboro Assets is or has been
in material violation of any applicable Environmental Law.
(b) The Seller has all Wilkesboro Permits required
pursuant to Environmental Laws in connection with the ownership or operation of
the Wilkesboro Business or the Wilkesboro Assets, all such Wilkesboro Permits
are in full force and effect, no action or proceeding to revoke, limit or modify
any such Wilkesboro Permits is pending and the ownership and operation of the
Wilkesboro Business and the Wilkesboro Assets is in material compliance in all
respects with all terms and conditions thereof. All such Wilkesboro Permits are
listed on Schedule 6.5(b).
(c) The Seller has not received, and will not receive
due to the consummation of this transaction, any Environmental Action relating
to its ownership or operation of the Wilkesboro Business or the Wilkesboro
Assets.
(d) The Seller has filed all notices required under
Environmental Laws indicating the past or present Release (as defined in Section
17.1(n)), generation, treatment, storage or disposal of Hazardous Substances (as
defined in Section 17.1(j)) in connection with its ownership or operation of the
Wilkesboro Business or the Wilkesboro Assets.
(e) The Seller has not entered into any written
agreement with any governmental authority or any other person by which the
Seller has assumed responsibility, either directly or as a guarantor or surety
for the remediation of any condition arising from or relating to a Release or
threatened Release of Hazardous Substances into the Environment (as defined in
Section 17.l(e)).
(f) To the Seller's knowledge, there is not now and
has not been at any time in the past a Release or threatened Release of
Hazardous Substances into the Environment at, on, in or under any of the
Wilkesboro Assets, or arising in any way out of its ownership or operation of
the Wilkesboro Business or the Wilkesboro Assets.
(g) There is not now and has not been at any time in
the past at, on or in any of the Wilkesboro Assets and, to the knowledge of the
Seller, was not at, on or in any real property previously owned, leased or
operated by the Seller or any predecessor or affiliate in connection with the
Wilkesboro Business (i) any generation, use, handling, Release, treatment,
recycling, storage or disposal of any "hazardous wastes" (as defined in the
Resource Conservation and Recovery Act), (ii) any underground storage tank,
surface impoundment, lagoon or other containment facility (past or present) for
the temporary or permanent storage, treatment or disposal of Hazardous
Substances, (iii) any landfill or solid waste disposal area, (iv) any
asbestos-containing material, (v) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other equipment, (vi) any Release or
29
threatened Release, or any visible signs of Releases or threatened Releases, of
a Hazardous Substance to the Environment in form or quantity requiring Remedial
Action (as defined in Section 17.1(o)) under Environmental Laws or (vii) any
Hazardous Substances present at such property, excepting such quantities as are
or were handled in accordance with all applicable manufacturer's instructions
and Environmental Laws and in proper storage containers, and as are necessary
for the operations of the Business and the Assets.
(h) To the knowledge of the-Seller, based on
reasonable investigation, there is no basis or reasonably anticipated basis for
any Environmental Action or Environmental Compliance Costs (as defined in
Section 17.1(g)) in connection with the Wilkesboro Business or the Wilkesboro
Assets.
(i) The Seller has not transported, stored, treated
or disposed, nor has it allowed or arranged for any third persons to transport,
store, treat or dispose, any Hazardous Substance generated in connection with
its ownership or operation of the Wilkesboro Business or the Wilkesboro Assets
to or at (i) any location other than a site lawfully permitted to receive such
substances for such purposes or (ii) any location designated for Remedial Action
pursuant to Environmental Laws; nor has it performed, arranged for or allowed by
any method or procedure such transportation or disposal in contravention of any
Environmental Laws or in any other manner that may result in Environmental
Compliance Costs or in an Environmental Action. All locations at which any
Hazardous Substances generated in connection with the Seller's ownership or
operation of the Wilkesboro Business or the Wilkesboro Assets have been disposed
of are listed on Schedule 6.5(i).
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller as follows:
7.1 DUE INCORPORATION AND QUALIFICATION. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the state of North Carolina and has the corporate power and lawful authority
to own, lease and operate its assets, properties and business and to carry on
its business as now conducted. Prior to the consummation of the Closing, the
Buyer is not required to be qualified as a foreign corporation in any
jurisdiction.
7.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. The Buyer has
the requisite corporate power and authority to enter into, execute and deliver
this Agreement and each and every other agreement and instrument contemplated
hereby to which the Buyer is or will be a party, and to perform fully the
Buyer's obligations hereunder and thereunder, and this Agreement and each such
other agreement and instrument, upon execution and delivery by the Buyer, will
be duly executed and delivered by the Buyer and (assuming due execution and
delivery hereof and thereof by the other parties hereto and thereto) will be
valid and binding obligations of the Buyer enforceable against the Buyer in
accordance with their respective terms.
30
7.3 NON-CONTRAVENTION. Neither the execution and delivery of
this Agreement or any other agreement or instrument contemplated hereby, the
consummation of the transactions contemplated hereby or thereby nor the
performance of this agreement or any other agreement or instrument contemplated
hereby in accordance with their respective terms and conditions by the Buyer (a)
requires the approval or consent of any governmental body or (b) conflicts with
or results in any breach or violation of, results in a material modification of
the effect of, otherwise causes the termination of, or constitutes (or with
notice or lapse of time or both would constitute) a default under, any
certificate of incorporation, by-law, judgment, decree, order, statute, rule,
Permit or governmental regulation applicable to the Buyer.
7.4 NO BROKER. No broker, finder, agent or similar
intermediary has acted for or on behalf of the Buyer or any affiliate of the
Buyer in connection with this Agreement or the transactions contemplated hereby,
and no broker, finder, agent or similar intermediary is entitled to any
broker's, finder's or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with the Buyer or any of
its affiliates; provided, however, that the Buyer has received financial advice
from ▇▇▇▇▇▇ Capital, L.L.C. ("▇▇▇▇▇▇") and that the Buyer will be solely
responsible for the fees and expenses of such firm.
7.5 FINANCING. The Buyer has received commitment letters for
the financings needed to effectuate the transactions contemplated by this
Agreement. The Buyer has delivered to the Seller true and complete copies of all
such financing commitment letters and the Buyer has no reason to believe it will
not be able to consummate the financing described thereon.
8. COVENANTS AND AGREEMENTS. The parties covenant and agree as follows:
8.1 CONDUCT OF BUSINESS. From the date hereof through the
Closing Date, the Seller shall conduct the Business in the ordinary course of
business and, without the prior written consent of the Buyer, the Seller shall
not undertake any of the actions specified in Sections 4.9, 5.5(i) and 6.5(i).
8.2 INSURANCE. From the date hereof through the Closing Date,
the Seller shall maintain in force (including necessary renewals thereof) the
insurance policies relating to the Business or any of the Assets listed on
Schedule 4.8, except to the extent that they may be replaced with policies
appropriate to insure the assets, properties and business of the Business or any
of the Assets to the same extent as currently insured.
8.3 PRESERVATION OF BUSINESS. From the date hereof through the
Closing Date, the Seller shall use its best efforts to preserve the business
organization of the Business intact, use its best efforts to keep available the
services of the employees and the present consultants and agents of the
Business, use its best efforts to maintain the present suppliers and customers
of the Business and use its best efforts to preserve the goodwill of the
Business.
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8.4 LITIGATION. From the date hereof through the Closing Date,
the Seller shall promptly notify the Buyer of any investigations of which the
Seller has knowledge or any lawsuits, claims or proceeding that after the date
hereof are commenced or, to the knowledge of the Seller, threatened against the
Seller or against any officer, director, employee, consultant, agent,
stockholder or other representative of the Seller arising out of or relating to
the affairs or conduct of the Business or relating to any of the Assets.
8.5 CONTINUED EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES
OF THE SELLER. From the date hereof through the Closing Date, the Seller shall
not take any action that would result (or omit to take any action if such
omission would result) in nonsatisfaction of the condition set forth in Section
9.1 that all representations and warranties contained in Sections 4, 5 and 6
shall continue to be true in all material respects on and as of the Closing Date
as if made on and as of the Closing Date and the Seller shall promptly give
notice to the Buyer of any event, condition or circumstance occurring from the
date hereof through the Closing Date that would cause such representations and
warranties to become untrue in any respect or that would constitute a violation
or breach of this Agreement.
8.6 CORPORATE EXAMINATIONS AND INVESTIGATIONS.
(a) Prior to the Closing Date, the Buyer shall be
entitled, through its employees and representatives, including, without
limitation, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., Deloitte & Touche, and
▇▇▇▇▇▇ to make such investigation of the assets, properties, business and
operations of the Business and such examination of the books, records and
financial conditions of the Business as the Buyer reasonably deems necessary.
Any such investigation and examination shall be conducted at reasonable times
and under reasonable circumstances and the Seller shall cooperate fully therein.
No investigation by the Buyer shall, however, diminish or obviate in any way any
of the representations, warranties, covenants or agreements of the Seller under
this Agreement. In order that the Buyer may have full opportunity to make such
business, accounting, legal and environmental review, examination or
investigation as it deems necessary, the Seller shall furnish or make available
to the representatives of the Buyer during such period all such information and
copies of such documents concerning the affairs of the Seller as such
representatives may reasonably request, and the Seller shall cause its officers,
employees, consultants, agents, accountants and attorneys to cooperate fully
with such representatives in connection with such review and examination and to
make full disclosure to the Buyer of all material facts affecting the financial
condition and business operations of the Business. In addition, the Seller shall
make available to the Buyer and its representatives full and complete copies of
all returns, reports and forms filed by the Seller relating to Taxes on the
Business for taxable periods for which the statute of limitations for the
assessment of taxes has not expired.
(b) Notwithstanding the foregoing, without the prior
written consent of the Seller, the Buyer shall not take groundwater or soil
samples or perform any soil or groundwater testing. If the Buyer requests
permission to engage in groundwater and/or soil sampling or testing, and such
permission is denied by the Seller, then the Buyer may elect within five
business days of such denial to terminate this Agreement without penalty.
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8.7 OTHER TRANSACTIONS. Prior to the Closing Date or
termination of this Agreement other than by the Seller's breach, neither the
Seller nor any of its respective representatives shall, directly or indirectly,
(a) encourage, initiate or engage in any discussions or negotiations with, or
provide any information to, any corporation, partnership, person or other entity
or group, other than the Buyer, concerning or (b) consummate, any sale of all or
any material part of the Assets or the Business, any merger or consolidation of
the Seller with or into any other entity or any other transaction effecting a
change in control of the Seller or otherwise involving all or any material part
of the Business or any of the Assets (each an "ACQUISITION"), except for
discussions and negotiations with respect to consents necessary to the
transactions contemplated hereby and except for any sales of any of the Assets
in the ordinary course of the Seller's business; provided, however, that nothing
contained in this Section 8.7 shall (i) prohibit the Seller from selling,
assigning or transferring its business or assets to another person or from
merging or consolidating with another person, so long as the prospective buyer
agrees to honor this Agreement and to consummate the transactions contemplated
by this Agreement and the Seller remains liable under Sections 13 and 14 hereof,
or (ii) prohibit the Board of Directors of the Seller from furnishing
information to, or entering into discussions or negotiations with, or otherwise
facilitating any effort or attempt to make or implement an Acquisition with, any
person or entity that after the date hereof makes an unsolicited written, bona
fide proposal (an "UNSOLICITED PROPOSAL") to acquire the Business or the Assets
pursuant to a merger, consolidation, share exchange, sale of stock or sale of
assets or other similar transaction, if, and only to the extent that (A) the
Board of Directors of the Seller receives the written advice of counsel that
such action is necessary for the Board of Directors of the Seller to comply with
its fiduciary duties to shareholders under applicable law and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, the Seller provides reasonable notice to the Buyer
to the effect that it is furnishing information to, or entering into discussions
or negotiations with, or otherwise facilitating any effort or attempt to make or
implement an Acquisition Proposal with, such person or entity. If any third
party contacts the Seller or any of its affiliates with any proposal or
expression of interest concerning any such transaction, the Seller promptly
shall notify the Buyer of the identity of such third party and the nature and
terms, if any, of such proposal or expression of interest.
8.8 THIRD PARTY CONSENTS. Prior to the Closing Date, the
Seller, at its sole expense, shall obtain all consents, permits and approvals
from parties to any contracts or other agreements with the Seller that relate to
the Business or any of the Assets, and from governmental and regulatory
authorities, that may be required in connection with the performance by the
Seller of its obligations under this Agreement, the continuance of such
contracts or other agreements after the Closing, the assignment of such
contracts or other agreements to the Buyer and the continued validity and
effectiveness of all Permits after the Closing. All such consents shall be in
writing and executed counterparts thereof shall be delivered to the Buyer at or
prior to the Closing. The Seller shall not agree to any modification of any
contract, agreement or Permit in the course of obtaining any such consent.
33
In the event any such consent or approval is not
obtained and the Buyer chooses to waive, in part, this Section 8.8 on or prior
to the Closing Date, the Seller shall assist the Buyer in obtaining any such
approval or consent after the Closing Date until such time as such consent or
approval has been obtained; and the Seller will cooperate with the Buyer in any
lawful and economically feasible arrangement to provide that the Buyer shall
receive the interest of the Seller in the benefits under any such instrument,
contract, lease or permit or other agreement or arrangement, including
performance by the Seller as agent, if economically feasible, provided that the
Buyer shall undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent the Buyer would have been responsible
therefor hereunder if such consent or approval had been obtained.
8.9 ENVIRONMENTAL TRANSFER, LAWS. The Seller represents and
warrants to the Buyer that no Environmental Laws require the submission of
notice to the Buyer or to any government authority in connection with the
transfer of title to the Assets and to the Business, except for Environmental
Laws concerning the transfer or modification of permits, licenses or
authorizations issued pursuant to Environmental Laws.
8.10 TITLE REPORT AND SURVEY. Within ten (10) days after the
date hereof, the Seller shall deliver to the Buyer's counsel copies of all
existing title policies and surveys with respect to the Real Property.
8.11 EMPLOYMENT STATUS.
(a) At the Closing, the Buyer shall offer employment
to such of Sellers' Employees as Buyer shall determine in its sole discretion.
(b) As soon as practicable following the Closing
Date, the Seller shall cause the Ithaca Industries Employee Retirement Plan (the
"401(k) Plan") to transfer to a plan sponsored or to be established by the Buyer
all assets under such plan and liabilities for benefit payments with respect to
any participant who, immediately after the Closing, is employed by the Buyer.
The Seller shall, prior to such transfer, contribute to the 401(k) Plan all
amounts required to be contributed to the 401(k) Plan on account of the period
through the Closing Date. The Buyer represents and covenants that the transferee
plan (i) is or will be a qualified plan and (ii) will preserve all accrued
benefits to the extent as required by section 411(d)(6) of the Code.
(c) The Buyer shall be solely responsible for any
severance or termination pay due on account of the termination of employment of
the Seller's employees on or after the Closing Date, either because they are not
offered employment by the Buyer or for any other reason other than their refusal
to accept employment on substantially the same terms and conditions as in effect
at the time of Closing. The Seller shall be solely responsible for any severance
or termination pay due on account of the termination of employment of any of the
Seller's employees prior to the Closing Date.
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8.12 REPLACEMENT OF LETTERS OF CREDIT. Set forth on Schedule
8.12 is a list of all letters of credit posted by or on behalf of the Seller in
connection with the Business. The Buyer agrees that it will replace each letter
of credit on or prior to the Closing Date with letters of credit issued by the
Buyer's lenders and cause Seller's letters of credit to be returned to the
Seller at Closing or in the alternative the Buyer will supply a back-to-back
letter of credit to Seller's issuer. The Buyer agrees to indemnify and hold
harmless the Seller from and against any losses incurred by the Seller after the
Closing in connection with, or in any way relating to, the Buyer's failure to
replace the letters of credit listed on Schedule 8.12 or failure to issue a
back-to-back letter of credit.
8.13 Y2K COMPLIANCE. The Seller will, at its own expense,
continue its Y2K compliance activities and testing related to the Business in
accordance with past practices up until the Closing.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The
obligations of the Buyer to complete the Closing are subject to the fulfillment
on or prior to the Closing Date of the following conditions, any one or more of
which may be waived by it:
9.1 REPRESENTATIONS AND COVENANTS OF THE SELLER. The
representations and warranties of the Seller contained in this Agreement shall
be true in all material respects, except where qualified by materiality, then
true according to their terms, on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date. The Seller and its
affiliates shall have performed and complied with all covenants or agreements
required by this Agreement to be performed or complied with by the Seller or its
affiliates on or prior to the Closing Date. The Seller shall have delivered to
the Buyer a certificate, dated the Closing Date and signed by a senior executive
officer of the Seller, to the foregoing effect and stating that all conditions
to the Buyer's obligations hereunder have been satisfied.
9.2 GOVERNMENTAL PERMITS AND APPROVALS. All Permits and
approvals from any governmental or regulatory body required for the lawful
consummation of the Closing shall have been obtained.
9.3 CONSENTS. All consents, permits and approvals from the
Seller's board of directors, lenders, parties to any contracts, leases or other
agreements of the Seller, and from governmental and regulatory authorities, that
may be required in connection with (a) the performance by the Seller of its
obligations under this Agreement, (b) the assignment of each of the contracts
and agreements listed on Schedules 4.16, the Real Property Leases and the Space
Leases and (c) the continued validity and effectiveness of the Permits after the
Closing shall have been obtained and no modification to any such contract,
agreement or Permit shall have been made in connection with the obtaining of
such consents. All consents and approvals from the Buyer's board of directors
and lenders shall have been obtained.
9.4 NO MATERIAL ADVERSE CHANGE. Since January 31, 1999, there
shall have been no material adverse change in the assets, properties, business,
prospects,
35
operations or condition (financial or otherwise) of the Business or any of the
Assets, and the Seller shall not know of any such change that is threatened, nor
shall there have been any damage, destruction or loss materially adversely
affecting the Business or any of the Assets, whether or not covered by
insurance.
9.5 LITIGATION. No action, suit or proceeding shall have been
instituted or, to the knowledge of the Seller, threatened by any governmental or
regulatory body or any other person before any court or governmental or
regulatory body to restrain, modify or prevent the carrying out of the
transactions contemplated hereby or that has or may have a material adverse
effect on any of the assets, properties, business, prospects, operations or
condition (financial or otherwise) of the Business or any of the Assets.
9.6 OPINION OF COUNSEL TO THE SELLER. The Buyer shall have
received an opinion substantially in the form attached as Exhibit C, of ▇▇▇▇,
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Seller, dated the Closing
Date and addressed to the Buyer.
9.7 ADDITIONAL CLOSING DOCUMENTS OF THE SELLER. The Seller
shall have executed and delivered to the Buyer the following documents, each
dated the Closing Date:
(a) a ▇▇▇▇ of sale and assignment in the form of
Exhibit D (the "▇▇▇▇ OF SALE AND ASSIGNMENT");
(b) a trademark assignment in the form of Exhibit E
(the "TRADEMARK ASSIGNMENT");
(c) a patent assignment in the form of Exhibit F (the
"PATENT ASSIGNMENT");
(d) an assignment and assumption in the form of
Exhibit G-1 and G-2 (a "REAL PROPERTY LEASE ASSIGNMENT AND ASSUMPTION
AGREEMENT") for each Real Property Lease;
(e) a special warranty deed (the "DEED") (or its
equivalent in each applicable state) in proper statutory form for recording for
each parcel of Owned Real Property;
(f) such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Assets or any part thereof as
the Buyer may reasonably require to assure the full and effective sale,
transfer, conveyance, assignment or delivery to it of the Assets (including the
▇▇▇▇▇ City Permits and the Wilkesboro Permits);
(g) any and all real property transfer tax returns
and other similar filings required by law in connection with the transactions
contemplated hereby and relating to the Real Property and the Real Property
Leases, any part thereof or ownership interest therein, all duly and properly
executed and acknowledged by the Seller, together with such
36
filings as shall have been required by law or reasonably requested by the Buyer;
(h) an affidavit of an officer of the Seller sworn to
under penalty of perjury, setting forth the Seller's name, address and Federal
tax identification number and stating that the Seller is not a "foreign person"
within the meaning of section 1445 of the Code; and
(i) a certificate, in form and substance satisfactory
to the Buyer in its reasonable judgment, signed by the secretary of the Seller,
certifying that full and complete copies of the following are attached thereto:
(i) minutes of the board of directors of the Seller authorizing and approving
this Agreement and the transactions contemplated hereby and (ii) such other
documents or instruments as the Buyer may reasonably request to carry out the
intent and purpose of this Agreement.
9.8 TITLE INSURANCE. The Buyer shall have received, at its own
cost and expense, an owner's extended coverage policy of title insurance with
respect to each parcel of Owned Real Property and a leasehold extended coverage
policy of title insurance with respect to each parcel of Leased Real Property,
in each case issued on the Closing Date. Each such title insurance policy shall
be in an amount designated by the Buyer and shall insure the Buyer's ownership
of fee title (with respect to the Owned Real Property) or leasehold title (with
respect to the Leased Real Property) without any of the Schedule B standard
preprinted exceptions (other than taxes not yet due and payable) and free and
clear of Title Defects and other exceptions to or exclusions from coverage
except those Title Defects listed on Schedules 5.3.1(b), 5.3.2(b), 6.3.1(b) and
6.3.2(b). Each such title insurance policy shall be in form satisfactory to the
Buyer.
9.9 SURVEY. The Buyer shall have received, at the Buyer's
expense, a current survey of each parcel of Owned Real Property and of each
parcel of Leased Real Property, in each case prepared in insurable form in
accordance with standards applicable to registered and licensed land surveyors
making surveys in the States in which such parcels are located. Each such survey
shall be certified to the Buyer and the Title Company and shall be in form
satisfactory to the Buyer.
9.10 ESTOPPEL CERTIFICATES.
(a) The Buyer shall have received, without expense to
it, a current estoppel certificate from the landlord under each Real Property
Lease stating (i) that such Real Property Lease is in full force and effect and
has not been amended, modified or supplemented other than as set forth on
Schedules 5.3.2(a) and 6.3.2(a), (ii) that all rent and other sums and charges
payable under such Real Property Lease are current and setting forth the date
through which such payments have been made, (iii) setting forth the term of such
Real Property Lease, (iv) the amount of any tenant security or other similar
deposit held by or on behalf of such landlord under such Real Property Lease,
(v) that no notice of default on the part of the Seller or termination notice
has been served under such Real Property Lease that remains outstanding, (vi)
that to the best of such landlord's knowledge, no
37
uncured default or termination event or condition exists under such Real
Property Lease and that no event has occurred or condition exists that, with the
giving of notice or the lapse of time or both, would constitute such a default
or termination event or condition and (vii) that the consummation of the
transactions provided for herein will not constitute a default under such Real
Property Lease or grounds for the termination thereof or for the exercise of any
other right or remedy adverse to the interests of the tenant thereunder. Each
such estoppel certificate shall otherwise be in form satisfactory to the Buyer.
(b) The Buyer shall have received, without expense to
it, a current estoppel certificate from the Space Tenant under each Space Lease
stating (i) that such Space Lease is in full force and effect and has not been
amended, modified or supplemented other than as set forth on Schedules 5.3.4 and
6.3.4, (ii) that all rent and other sums and charges payable under such Space
Lease are current and setting forth the date through which such payments have
been made, (iii) that no rent or other sum or charge has been paid more than one
month in advance, (iv) the amount of any tenant security or other similar
deposit made under such Space Lease, (v) that no notice of default or
termination under such Space Lease is outstanding, (vi) that to the best of such
Space Tenant's knowledge, the landlord under such Space Lease is not in default
of any obligations on its part to be performed under such Space Lease, (vii)
that no default, event or condition has occurred or exists under such Space
Lease that entitles such Space Tenant to terminate such Space Lease and that no
event has occurred or condition exists that, with the giving of notice or the
lapse of time or both, would entitle such Space Tenant to terminate such Space
Lease, (viii) that, as of the date of such certificate, such Space Tenant has no
charge, lien, claim, defense or offset of any kind against the rents or other
charges payable by such Space Tenant under such Space Lease or otherwise against
the Seller, (ix) that any and all construction and/or alteration work required
to be performed by the landlord under such Space Lease has been performed and
(x) that the consummation of the transactions provided for herein will not
constitute a default under such Space Lease or grounds for the termination
thereof or for the exercise of any other right or remedy adverse to the
interests of the Seller as landlord thereunder. Each such estoppel certificate
shall otherwise be in form satisfactory to the Buyer.
9.11 ENVIRONMENTAL AUDIT. An environmental consultant,
selected by the Buyer shall have delivered to the Buyer final written reports of
the results of environmental assessments, including evaluation of compliance
with Environmental Laws, of the Business and the Assets, which shall be
satisfactory in scope and content to the Buyer. The environmental consultant's
assessments and reports shall be conducted and prepared at the sole expense of
the Buyer.
9.12 EXISTING LIENS. Prior to the Closing, the Buyer shall
have received copies of Requests for Information (Form UCC-11), or equivalent
reports, listing all effective financing statements that name the Seller as
debtor and that are filed in any county of North Carolina.
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9.13 COMPLETION OF FINANCING. The Buyer shall have completed
the financings contemplated by the commitment letters, copies of which have
heretofore been delivered to the Seller.
10. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE SELLER. The
obligations of the Seller to complete the Closing are subject to the fulfillment
on or prior to the Closing Date of the following conditions, any one or more of
which may be waived by the Seller.
10.1 REPRESENTATIONS AND COVENANTS OF THE BUYER. The
representations and warranties of the Buyer contained in this Agreement shall be
true in all material respects on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date. The Buyer shall have
performed and complied with all covenants and agreements required by this
Agreement to be performed or complied with by the Buyer on or prior to the
Closing Date. The Buyer shall have delivered to the Seller a certificate, dated
the Closing Date and signed by a senior executive officer of the Buyer, to the
foregoing effect and stating that all conditions to the Seller's obligations
hereunder have been satisfied.
10.2 GOVERNMENTAL PERMITS AND APPROVALS. All Permits and
approvals from any governmental or regulatory body required for the lawful
consummation of the Closing shall have been obtained.
10.3 LITIGATION. There shall not be in effect any preliminary
or permanent injunction or other order issued by a court or other governmental
body or agency of competent jurisdiction directing that the transactions
contemplated hereby not be consummated.
10.4 OPINION OF COUNSEL TO THE BUYER. The Seller shall have
received an opinion substantially in the form attached hereto as Exhibit H of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., counsel to the Buyer, dated the
Closing Date and addressed to the Seller.
10.5 CONSENT OF THE LENDERS UNDER THE BANK CREDIT AGREEMENT.
Seller shall have received consent from the lenders under the Bank Credit
Agreements to the transactions contemplated hereby; provided that the Seller
hereby represents and warrants to the Buyer that it has no reason to believe it
will not be able to obtain the consent of such lenders.
10.6 ADDITIONAL CLOSING DOCUMENTS OF THE BUYER.
(a) The Buyer shall have executed and delivered to
the Seller the following documents, each dated the Closing Date:
(i) an assumption of liabilities in the form
of Exhibit I (the "ASSUMPTION OF LIABILITIES");
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(ii) a Real Property Lease Assignment and
Assumption Agreement for each Real Property Lease;
(iii) a certificate, in form and substance
reasonably satisfactory to the Seller, signed by the secretary of the Buyer,
certifying that full and complete copies of the following are attached thereto:
(A) resolutions of the board of directors of the Buyer authorizing and approving
this Agreement and the transactions contemplated hereby and (B) such other
documents or instruments as the Seller may reasonably request to carry out the
intent and purpose of this Agreement; and
(iv) an assumption of the Seller's
employment agreements with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ "Buzz" ▇▇▇▇▇ and Wiley ▇.
▇▇▇▇▇ substantially in the form of Exhibit J-1, J-2 and J-3.
10.7 RECEIPT OF REPLACEMENT LETTERS OF CREDIT. The Seller
shall have received the letters of credit referred to in Section 8.12.
11. POST-CLOSING COVENANTS AND AGREEMENTS.
11.1 AUDIT OF BUSINESS. The Buyer shall at its expense conduct
a Final Audit in accordance with the terms and conditions of Section 3.2(a).
11.2 EXPENSES OF SALE. Except to the extent otherwise
expressly provided in this Agreement, the parties to this Agreement shall bear
their respective direct and indirect expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and the
transactions contemplated hereby, whether or not the transactions contemplated
hereby are consummated, including, without limitation, all fees, charges,
disbursements and expenses of agents, representatives, counsel and accountants.
All transfer, documentary, gross receipt, sales and use taxes and similar
liabilities, if any, resulting from the sale, assignment, transfer and delivery
hereunder of any of the Assets or the Business shall be paid by the Seller.
11.3 INDEMNIFICATION OF BROKERAGE. The Buyer, on the one hand,
and the Seller, on the other hand, each agrees to indemnify and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed by
or on behalf of the Buyer or any of its affiliates (other than ▇▇▇▇▇▇, for whom
the Buyer shall be solely responsible), on the one hand, or by the Seller or any
of its affiliates, on the other hand, and to bear the cost of legal expenses
incurred in defending against any such claim.
11.4 BULK SALES LAWS. The Buyer and Seller acknowledge that
this transaction involves a transfer in bulk, and not in the ordinary course of
the Seller's business, a major part of the materials, supplies, merchandise or
other inventory of the Seller's business and acknowledge that the North Carolina
bulk transfer laws are applicable to the transactions contemplated by this
Agreement. The Seller agrees promptly and
40
diligently to pay and discharge when due or to contest or litigate all claims of
creditors that are asserted against the Buyer by reason of any non-compliance
with such laws, except to the extent such claims are Assumed Liabilities.
11.5 COLLECTION OF RECEIVABLES. The Seller agrees that the
Buyer shall have the right and authority to collect for its own account or the
account of its affiliates all receivables of the Seller that are transferred and
assigned to the Buyer as provided herein and the Buyer and its affiliates have
the right to endorse with the name of the Seller any checks received on account
of any such receivable. The Seller agrees that it will promptly transfer and
deliver to the Buyer any cash or other property that the Seller may receive in
respect of such receivables.
11.6 MAIL. The Seller agrees that at any time and from time to
time after the Closing, the Buyer and the Buyer's affiliates shall have the
right and authority to open all mail received by the Business, even if addressed
to the Seller, for processing or forwarding to the Seller, as appropriate.
11.7 TRUE-UP OF BONUS PLAN OBLIGATION. Within 10 days after
the actual obligation of the Seller under the Bonus Plan is finally determined,
the Seller shall notify the Buyer thereof and if the amount as determined is
less than $270,000, which amount shall be calculated in accordance with the
analysis dated February 10, 1999 provided by the Seller to the Buyer, the Buyer
shall pay to the Seller, in cash or equivalent, the difference. Any disagreement
between the Buyer and the Seller shall be settled by submitting the issue to the
Accounting Firm, whose decision shall be final and binding on both the Buyer and
the Seller and whose fees shall be paid one-half by the Seller and one-half by
the Buyer.
11.8 FURTHER ASSURANCES. At any time and from time to time
after the Closing, at the Buyer's or Seller's request and without further
consideration, the Seller and the Buyer shall execute and deliver such further
documents, and perform such further acts, as may be necessary in order to
effectively transfer and convey the Assets to the Buyer, or to enable the Buyer
to properly assume the Assumed Liabilities on the terms herein contained, and to
otherwise comply with the terms of this Agreement and consummate the
transactions herein provided.
11.9 TRANSITIONAL AGREEMENTS. The Seller agrees that in order
to effect an orderly transition of the Business to the Buyer,
(a) The Seller will provide to the Buyer, at a charge
of $100.00 per hour, assistance from appropriate Seller personnel in the
installation of the EDI and order entry system from Wilkesboro to ▇▇▇▇▇ City;
(b) The Seller will provide the following reporting
services as currently being performed (including but not limited to payroll,
production planning and order entry) to facilitate the management of the
Wilkesboro facilities for a period of up to five months, at the Buyer's
election, at the following charges to the Buyer: (i) source
41
payroll plus gross to net interface at a charge to the Buyer of $4,200.00 per
month; (ii) order processing and shipping plus EDI and accounts receivable
interfaces, at a charge to the Buyer of $8,400.00 per month; and (iii)
manufacturing (minus inventory), production planning, scheduling, and production
control, at a charge to the Buyer of $16,800.00 per month.
(c) The Seller will assume responsibility for, and
will pay, all health and hospitalization claims, and workers compensation claims
that are reported after the Closing for costs or occurrences dating prior to the
Closing Date, and all payroll and associated costs through the Closing Date.
(d) The Seller will, as soon as practicable but in no
event later than 5 days after the Closing, provide to the Buyer all accounts
receivable invoices showing customers, dates and amounts as of a date as near as
practicable to the Closing Date; and
(e) The Seller will permit the Buyer to utilize, in
the normal course of business, the Seller's telephone system for 30 days after
the Closing, at a cost of $500.00 per month plus the cost of calls made by the
Buyer; and
11.10 NON-COMPETITION COVENANT OF THE SELLER.
(a) NON-COMPETE. For a period of five years following
the Closing Date, the Seller shall not, directly or indirectly, through any
subsidiary or otherwise, in the Restricted Territory (as defined in Section
11.10(d)), in any form or manner, (i) engage in the women's hosiery business,
whether for its own account or for the account of any other person; or (ii)
become interested in any such person as a partner, stockholder, officer,
director, principal, agent, employee, trustee, consultant or in any other
relationship or capacity ("COMPETITION"); provided, however, Seller may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange if (x) the Seller or any of
its affiliates (1) is not a controlling person of, or a member of a group which
controls, such person and (2) does not, directly or indirectly, own 1% or more
of any class of securities of such person and (y) such person does not, directly
or indirectly, derive 20% or more of its total revenues from activities
described in clause (i) above. Notwithstanding the prior sentence, the Seller
may sell, assign or transfer all or substantially all its business or assets to,
or may merge or consolidate with, any person who is, or becomes, engaged in the
hosiery business.
(b) NO SOLICITATION. For a period of five years
following the Closing Date, the Seller shall not, directly or indirectly,
through any subsidiary or otherwise, in the Restricted Territory solicit or
enter into any transaction with any customer of the Buyer for the purpose of
making any sale to such customer of products, processes, goods or services the
sale of which would constitute Competition.
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(c) NO INDUCEMENT OF EMPLOYEES. For a period of five
years following the Closing Date, the Seller shall not, directly or indirectly,
through any subsidiary or otherwise, induce or attempt to induce any Employee to
leave his or her employment with the Buyer.
(d) RESTRICTED TERRITORY. For purposes of this
Agreement "Restricted Territory" shall mean:
(i) any State in which the Business
conducts, or has demonstrable plans to conduct, business as of the Closing Date;
(ii) any State east of the Mississippi River
and the State of Texas; and
(iii) the United States.
(e) SPECIFIC PERFORMANCE. The right and remedy to
have this Section 11.10 specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Buyer and that money
damages will not provide adequate remedy to the Buyer.
11.11 CORPORATE RECORDS RETAINED BY THE SELLER. After the
Closing Date, the Seller shall not destroy any book, record, report, file,
contract or any other document pertaining to the Business during the next six
years beginning on the Closing Date, without first giving 30 days prior written
notice of the documents intended to be destroyed to the Buyer, and allowing the
Buyer to copy, at the Buyer's expense, or to remove and take possession, at the
Buyer's expense, of any book, record, report, file, contract or any other
document intended to be destroyed. After the Closing Date, the Buyer shall be
entitled, through its officers, directors, employees, auditors and other
representatives, to full and free access to the books, records, reports, files,
contracts and other documents of the Seller, and the Buyer shall also be
entitled to make copies, at the Buyer's expense, of any such documents.
11.12 BUSINESS RECORDS ACQUIRED BY THE BUYER. After the
Closing Date, the Buyer shall not destroy any book, record, report, file,
contract or any other document pertaining to the Business Records during the
next six years beginning on the Closing Date, without first giving 30 days prior
written notice of the documents intended to be destroyed to the Seller, and
allowing the Seller to copy, at the Seller's expense, or to remove and take
possession, at the Seller's expense, of any book, record, report, file, contract
or any other document pertaining to the Business Records, intended to be
destroyed. After the Closing Date, the Seller shall be entitled, through its
officers, directors, employees, auditors and other representatives, to full and
free access for bona fide business purposes to the books, records, reports,
files, contracts and other documents pertaining to the Business Records for
periods prior to the Closing Date, and the Seller shall also be entitled to make
copies, at the Seller's expense, of any such documents.
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11.13 TRANSITION OF LIFE INSURANCE BENEFITS. For a period of
30 days after the Closing Date (or until such time as Buyer's life insurance
plan is established for employees of the Business and such employees are
transferred to Buyer's life insurance plan, if earlier), employees of the
Business will continue to receive life insurance benefits from the Seller
consistent with current practice. Buyer shall reimburse Seller at Seller's cost
for all of Seller's actual expenditures with respect to the provision of life
insurance benefits to such transferred employees.
11.14 CONFIDENTIALITY. The Buyer shall not use (except as
required by law or applicable regulation and then the Buyer shall use reasonable
efforts to permit the Seller an opportunity to review and comment on any such
disclosure prior to dissemination), and shall cause its officers not to use, in
any way whatsoever, any confidential information it has obtained from the Seller
pertaining to the non-hosiery business of the Seller ("Confidential
Information"). The Buyer shall keep confidential and shall not disclose, and
shall cause its officers to keep confidential and not disclose, any Confidential
Information. The term "Confidential Information" will not include information
which is or becomes publicly available other than as a result of disclosure by
the Buyer or its officers.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SELLER.
Notwithstanding any right of the Buyer fully to investigate the affairs of the
Seller and the Business and the Assets and notwithstanding any knowledge of
facts determined or determinable by the Buyer pursuant to such investigation or
right of investigation, the Buyer shall have the right to rely fully upon the
representations, warranties, covenants and agreements of the Seller contained in
this Agreement. All such representations, warranties, covenants and agreements
shall survive the execution and delivery hereof and the Closing hereunder,
except that:
(a) the representations and warranties of Seller
contained in Sections 4.17, 4.18 and 4.19 shall not survive the Closing Date;
(b) any theretofore unasserted General Claim (as
defined in this Section 12) shall expire on the close of business on the day
that is the second anniversary of the Closing Date;
(c) any theretofore unasserted Tax/Benefits Claim (as
defined in this Section 12) shall expire when the applicable period under the
statute of limitations therefor has expired; and
(d) any theretofore unasserted Covenant Claim (as
defined in this Section 12) and Environmental Claim (as defined in this Section
12) shall expire on the close of business on the day that is the sixth
anniversary of the Closing Date.
As used in this Agreement, the following terms have
the following meanings:
44
(i) "GENERAL CLAIM" means any claim arising
out of or otherwise in respect of any inaccuracy in or any breach of any
representation or warranty of the Seller contained in this Agreement or any
certificates or schedules delivered by the Seller pursuant hereto; provided that
the term General Claim shall not mean or include any Environmental Claim or Tax/
Benefits Claim;
(ii) "ENVIRONMENTAL CLAIM" means any claim
made pursuant to Section 14;
(iii) "TAX/BENEFITS CLAIM" means any claim
arising out of or otherwise in respect of any inaccuracy in or any breach of any
representation or warranty of the Seller contained in this Agreement related to
Taxes or any Benefit Plan; and
(iv) "COVENANT CLAIM" means any claim
arising out of or otherwise in respect of any breach of any covenant or
agreement of the Seller or the Buyer, as the case may be, contained in this
Agreement or any agreement contemplated hereby; provided that the term "Covenant
Claim" shall not mean or include any Environmental Claim.
13. INDEMNIFICATION.
13.1 OBLIGATION OF THE SELLER TO INDEMNIFY. Subject to the
limitations contained in Section 15, the Seller shall indemnify, defend and hold
harmless the Buyer, its directors, officers, employees, affiliates and assigns
(collectively, the "BUYER INDEMNIFIED PARTIES") and the Business from and
against any losses, liabilities, damages, deficiencies, costs or expenses
(including interest, penalties, amounts paid in settlement and reasonable
attorneys' fees and disbursements) (collectively, "LOSSES") based upon, arising
out of or otherwise in respect of:
(a) any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Seller contained in this
Agreement or any certificates or schedules delivered by the Seller pursuant
hereto or any facts or circumstances constituting such an inaccuracy or breach;
(b) any liability or obligation of, or claim against,
the Seller or any affiliate thereof (excluding the Assumed Liabilities) whether
or not such liability or obligation was known at the Closing;
(c) any liability or obligation of, or claim against,
the Seller, any of its Affiliates or all or any portion of the Business or any
of the Assets (other than the Assumed Liabilities) (i) relating to any period on
or prior to the Closing Date or (ii) arising out of any facts or circumstances
existing at or prior to the Closing Date whether or not such liability or
obligation was known at the time of Closing;
45
(d) any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby except to the extent that
claims relate to Assumed Liability;
(e) any Excluded Liability;
(f) enforcing Buyer's rights under this Agreement
(including this Article 13 thereof).
13.2 OBLIGATION OF THE BUYER TO INDEMNIFY.
(a) The Seller shall be entitled to rely fully upon
the representations, warranties, covenants and agreements of the Buyer contained
in this Agreement. All such representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement and the
Closing hereunder.
(b) The Buyer shall indemnify, defend and hold
harmless the Seller, its shareholders, directors and officers, from and against
any Losses based upon, arising out of or otherwise in respect of (i) any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Buyer contained in this Agreement or any certificate delivered
by the Buyer pursuant hereto or any facts or circumstances constituting such an
inaccuracy or breach or (ii) any Assumed Liability or (iii) enforcing Seller's
rights under this Agreement.
13.3 NOTICE TO INDEMNIFYING PARTY. If either the Buyer, on the
one hand, or the Seller, on the other, as the case may be (the "Indemnitee"),
has a claim or potential claim or receives notice of any claim or potential
claim or the commencement of any action or proceeding that could give rise to an
obligation on the part of the Seller, on the one hand, or the Buyer, on the
other, as the case may be, to provide indemnification (the "INDEMNIFYING PARTY")
pursuant to Section 13.1 or 13.2, the Indemnitee shall give the Indemnifying
Party reasonable notice thereof. The omission by any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that the
Indemnifying Party is actually prejudiced thereby. The Indemnifying Party may
elect to compromise or defend, at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, any such matter involving the asserted
liability of the Indemnitee. If the Indemnifying Party elects to compromise or
defend such asserted liability, it shall within 30 days (or sooner, if the
nature of the asserted liability so requires) notify the Indemnitee of its
intent to do so and the Indemnitee shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, any such asserted
liability. If the Indemnifying Party elects not to compromise or defend such
asserted liability, or fails to notify the Indemnitee of its election as herein
provided, the Indemnitee may, at the Indemnifying Party's expense, pay,
compromise or defend such asserted liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that if the settlement
or compromise does not
46
result in any liability to the Indemnified Party or otherwise adversely affect
the Indemnified Party, consent to such settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnitee and the Indemnifying Party
may each participate, at its own expense, in the defense of such asserted
liability. If the Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Notwithstanding the foregoing, the Indemnitee shall have the right to employ
separate counsel at the Indemnifying Party's expense and to control its own
defense of such asserted liability if (a) there are or may be legal defenses
available to such Indemnitee or to other Indemnitees that are different from or
additional to those available to the Indemnifying Party or (b) in the reasonable
opinion of counsel to such Indemnitee, a conflict or potential conflict exists
between the Indemnifying Party and such Indemnitee that would make such separate
representation advisable.
14. INDEMNIFICATION BY THE SELLER FOR ENVIRONMENTAL ACTIONS AND
ENVIRONMENTAL COMPLIANCE COSTS.
14.1 OBLIGATION OF THE SELLER TO INDEMNIFY.
(a) The Seller shall indemnify, defend and hold
harmless the Buyer Indemnified Parties and the Business from and against (i) any
and all Environmental Actions based upon, arising out of or otherwise in respect
of (A) any Release of Hazardous Substances on or prior to the Closing Date or
the ownership or operation of the Business or of the Assets on or prior to the
Closing Date, (B) any inaccuracy in or breach of any representation, warranty,
covenant or agreement of the Seller contained in this Agreement or in any
certificate, schedule, instrument or other document prepared by or on behalf of
the Seller and delivered pursuant hereto relating to Environmental Laws or (C)
any and all obligations, debts or liabilities of the Seller (other than Assumed
Liabilities) relating to Environmental Laws and (ii) any and all Losses based
upon, arising out of or otherwise in respect of any such Environmental Action
(not including diminution in value of any real property).
(b) The Seller shall indemnify, defend and hold
harmless the Buyer Indemnified Parties and the Business from and against any and
all Environmental Compliance Costs based upon, arising out of or otherwise in
respect of (i) the condition of the Environment on or prior to the Closing Date
on, at or under any real property owned, leased, operated or used by the Seller
in connection with the Business, (ii) the Seller's ownership or operation of the
Business or the Assets on or prior to the Closing Date, (iii) the condition of
the Assets on or prior to the Closing Date, (iv) any inaccuracy in or breach of
any representation, warranty, covenant or agreement of the Seller contained in
this Agreement or in any certificate, schedule, instrument or other document
prepared by or on behalf of the Seller and delivered pursuant hereto relating to
Environmental Laws and (v) any and all obligations, debts or liabilities of the
Seller (other than Assumed Liabilities) relating to Environmental Laws.
47
(c) This Section 14 shall be the Buyer Indemnified
Parties' and the Business's sole source of indemnification or other remedy
pursuant to this Agreement with respect to Losses arising pursuant to
Environmental Laws or principles of common law relating to pollution, protection
of the Environment or health and safety (with respect to health and safety, to
the extent relating to the presence of Hazardous Substances or the exposure of
the individuals to Hazardous Substances).
14.2 PROCEDURE FOR INDEMNIFICATION FOR ENVIRONMENTAL
LIABILITIES. Claims for indemnification pursuant to this Section 14 shall be
subject to the procedural provisions of Section 13.3; provided, however, that
the Indemnitee shall have the exclusive right to manage and control all actions
resulting in Environmental Compliance Costs with respect to which the Indemnitee
has made a claim for indemnification pursuant to Section 14.1(b). The Indemnitee
shall keep the Indemnifying Party fully informed of the progress of such
actions. The Indemnifying Party shall be obligated to indemnify the Indemnitee
for all Environmental Compliance Costs resulting from such actions but only to
the extent that such Environmental Compliance Costs are incurred or undertaken
in the manner in which a reasonable and prudent person to whom no indemnity was
available would incur or undertake such Environmental Compliance Costs, avoiding
any material disruption of the Business, taking into account the nature of the
Business and the condition of and the operations of the Assets, as well as
methods commonly used to minimize environmental liabilities, which include but
are not limited to passive remediation to resolve certain releases of Hazardous
Substances, regulatory variances, so-called "brownfields" legislation, policies
or programs (such as North Carolina's ▇▇▇▇▇▇▇▇▇▇ Property Reuse Act, 1997 N.C.
Sess. Laws 97-0357), and available defenses to regulatory enforcement, provided,
however, that it is acknowledged and agreed that such a reasonable and prudent
person would in any event comply with at least the minimum requirements of
Environmental Laws, and provided, further, that such a reasonable and prudent
person shall be assumed to have considered in its evaluation of the appropriate
action the possible future costs of leaving Hazardous Substances in the
environment, including possible future remedial obligations, diminished property
values, limits on the expansion of operations, and personal injury and property
damage claims by third parties arising out of the presence of the Hazardous
Substances.
15. LIMITATION ON INDEMNIFICATION. The indemnification provided for in
Articles 13 and 14 shall be subject to the following limitations:
(a) The Seller shall not be obligated to make any payment for
indemnification pursuant to Section 13.1 in respect of any General Claim (except
those based upon, arising out of or otherwise in respect of Sections 4.1, 4.2,
4.11, 4.20, 5.3.1 and 6.3.1 (the "BASKET EXCLUSIONS")) until the aggregate
amount of such payments, exclusive of those in respect of the Basket Exclusions,
exceeds $250,000 (the "BASKET AMOUNT"), whereupon the Seller shall be obligated
to pay all such amounts for indemnification in excess of the Basket Amount;
provided, however, that solely for determining whether the amount of the
Seller's indemnification obligations exceed $250,000 in the aggregate, a breach
of the Seller's representations or warranties shall be determined without regard
to any limitation or qualification as to materiality set forth in such
representation or warranty.
48
(b) The Buyer shall be entitled to receive any indemnification
payments in respect of the Basket Exclusions without regard to the individual or
aggregate amounts thereof and without regard to whether the aggregate of all
other indemnification payments shall have exceeded, in the aggregate, the Basket
Amount.
(c) The Seller's maximum liability for indemnification payment
under Article 13 shall be $6,000,000.
(d) In the event that the Indemnifying Party is obligated to
indemnify the Indemnified Party pursuant to this Article 13 or Article 14, the
Loss shall be reduced by the amount actually received by the Indemnified Party
from its insurance carriers.
(e) From and after the Closing Date, the remedies provided in
Section 11.10, Section 17.13 and Articles 13 and 14 of this Agreement shall be
exclusive and neither party shall be entitled to any other remedy at law or in
equity.
(f) No fact, circumstance or omission shall constitute a
breach of any representation, warranty, covenant or agreement of the Seller
contained in this Agreement or any certificates or schedules delivered by the
Seller pursuant hereto if ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ "Buzz" ▇▇▇▇▇ or Wiley ▇. ▇▇▇▇▇
has or had actual knowledge thereof on or prior to the date of this Agreement.
(g) To the extent that any fact, circumstance or omission
would constitute a breach hereunder and would also constitute or have
constituted a breach if timely asserted under the Asset Purchase Agreement dated
as of March 13, 1998 by and between the Seller and Glendale (the "ORIGINAL
AGREEMENT"), then the Buyer's sole remedy under this Agreement shall be an
assignment of the Seller's rights under the Original Agreement.
16. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated prior to the Closing as
follows:
(i) at the election of the Seller, if any one or more
of the conditions set forth in Section 10 has not been fulfilled as of April 30,
1999; provided, however, that there shall be a 30-day extension for any
outstanding consents from third parties required to be received hereunder.
(ii) at the election of the Buyer, if any one or more
of the conditions set forth in Section 9 has not been fulfilled as of April 30,
1999; provided, however, that there shall be a 30-day extension for any
outstanding consents from third parties required to be received hereunder.
(iii) at the election of the Seller or the Buyer, if
the Closing does not occur on or before April 30, 1999; provided, however, that
there shall be a 30-day extension for any outstanding consents from third
parties required to be received hereunder.
49
(iv) at any time on or prior to the Closing Date, by
mutual written consent of the Seller and the Buyer;
(v) at the election of the Seller, if there has been
a material breach of any representation, warranty, covenant or agreement on the
part of the Buyer contained in this Agreement, which breach has not been cured
within fifteen (15) Business Days of notice to Buyer of such breach;
(vi) at the election of the Buyer, if there has been
a material breach of any representation, warranty, covenant or agreement on the
part of the Seller contained in this Agreement, which breach has not been cured
within fifteen (15) Business Days notice to the Seller of such breach; or
(vii) at the election of the Buyer, if permission to
take ground water and/or soil samples is denied by the Seller under Section
8.6(b), within five business days of such denial.
(b) If this Agreement so terminates, it shall become null and
void and have no further force or effect, except that any such termination shall
be without prejudice to the rights of any party on account of the
nonsatisfaction of the conditions set forth in Sections 9 and 10 resulting from
the intentional or willful breach or violation of the representations,
warranties, covenants or agreements of another party under this Agreement.
Notwithstanding anything in this Agreement to the contrary, Sections 11.2, 11.3,
16(c) and 17.2 shall survive any termination of this Agreement.
(c) If this Agreement is terminated the Buyer and Seller agree
that for a period of one year following such termination each will not, directly
or indirectly, offer employment to any officer or employee of the other unless
such officer or employee has, without any solicitation or encouragement by the
other, already terminated his or her employment.
17. MISCELLANEOUS.
17.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(a) "AFFILIATE," with respect to any person, means and
includes any other person controlling, controlled by or under common control
with such person.
(b) "BANK CREDIT AGREEMENTS" means the Loan and Security
Agreement, dated as of March 24, 1998, between the Seller, the lenders party
thereto from time to time (the Lenders), NationsBank, N.A. (the Agent),
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC (the Syndication Agent and Arranger) and
Bank America Business Credit, Inc. (the Documentation Agent) and the Loan and
Security Agreement, dated as of March 24, 1998, between the Seller, the lenders
party thereto from time to time (the Lenders) and
50
NationsBank, N.A. (the Collateral Agent).
(c) "CONTRACTS AND OTHER AGREEMENTS" means and includes all
contracts, agreements, understandings, indentures, notes, bonds, loans,
instruments, leases, mortgages, franchises, licenses, commitments or binding
arrangements, express or implied.
(d) "DOCUMENT OR OTHER PAPER" means and includes any document,
agreement, instrument, certificate, notice, consent, affidavit, letter,
telegram, telex, statement, computer disk, microfiche or other document in
electronic format, schedule (including any schedule to this Agreement), exhibit
(including any Exhibit to this Agreement) or any other paper whatsoever.
(e) "ENVIRONMENT" means navigable waters, waters of the
contiguous zone, ocean waters, natural resources, surface waters, ground water,
drinking water supply, land surface, subsurface strata, ambient air, both inside
and outside of buildings and structures, man-made buildings and structures, and
plant and animal life on earth.
(f) "ENVIRONMENTAL ACTION" means any notification, whether
direct or indirect, formal or informal, written or oral, pursuant to
Environmental Laws or principles of common law relating to pollution, protection
of the Environment or health and safety (with respect to health and safety, to
the extent relating to the presence of Hazardous Substances or the exposure of
individuals to Hazardous Substances), that the ownership or operation of the
Business or any of the Assets, or any by-product thereof, or any of the current
or past operations of the Seller, or any by-product thereof, or any of the
property currently or formerly owned, leased or operated by the Seller, during
such ownership, lease, or operation, or the operations or property of any
predecessor of the Seller, during such ownership, lease or operation is, or may
be implicated in, or subject to any proceeding, action, investigation, claim,
lawsuit, order, agreement or evaluation by any governmental authority or any
other person.
(g) "ENVIRONMENTAL COMPLIANCE COSTS" means any expenditures,
costs, assessments or expenses (including, without limitation, any expenditures,
costs, assessments or expenses in connection with the conduct of any Remedial
Action, as well as reasonable fees, charges, disbursements and expenses of
attorneys, experts, personnel and consultants), whether direct or indirect,
necessary to cause the Business or any of the Assets to be in compliance with
any and all requirements, as in effect at the Closing Date and with respect to
which the Buyer reasonably believes the Business or any of the Assets are
obligated to comply, of Environmental Laws, principles of common law concerning
pollution, protection of the Environment or health and safety (with respect to
health and safety, to the extent relating to the presence of Hazardous
Substances or the exposure of individuals to Hazardous Substances), or Permits
issued pursuant to Environmental Laws; provided, however, that Environmental
Compliance Costs do not include expenditures, costs, assessments or expenses
necessary in connection with normal maintenance of the Business or any of the
Assets or the replacement of equipment in the normal course of events due to
51
ordinary wear and tear.
(h) "ENVIRONMENTAL LAWS" means all laws, ordinances,
regulations, codes, orders, judgments, injunctions, awards or decrees relating
to pollution, protection of the Environment, public or worker health and safety
(with respect to health and safety to the extent relating to the presence of
Hazardous Substances or the exposure of individuals to Hazardous Substances), or
the emission, discharge, release or threatened release of Hazardous Substances
into the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss.2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C.
ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ss. 136 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss.
651 et seq., the Asbestos Hazard Emergency Response Act, 15 U.S.C. ss. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Oil Pollution
Act of 1990, 33 U.S.C. ss. 2701 et seq., and analogous state acts.
(i) "GAAP" means generally accepted accounting principles then
in effect, consistently applied.
(j) "HAZARDOUS SUBSTANCE" means any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or waste, petroleum or petroleum-derived substance
or waste, radioactive substance or waste, or any constituent of any such
substance or waste, or any other substance regulated under or defined by any
Environmental Law.
(k) "LIEN" means any lien, pledge, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement, or
any other encumbrance, restriction or limitation whatsoever.
(l) "PERSON" means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, trust, unincorporated
organization, governmental or regulatory body or other entity.
(m) "PROPERTY" means real, personal or mixed property,
tangible or intangible.
(n) "RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into or through the indoor or outdoor Environment or into, through or
out of any property, including the movement of Hazardous Substances through or
in the air, soil, surface water, ground water or property.
52
(o) "REMEDIAL ACTION" means all actions, whether voluntary or
involuntary, reasonably necessary to comply with Environmental Laws to (i) clean
up, remove, treat, cover or in any other way adjust Hazardous Substances in the
indoor or outdoor Environment, (ii) prevent or control the Release of Hazardous
Substances so that they do not migrate or endanger or threaten to endanger
public health or welfare or the Environment or (iii) perform such remedial
studies, investigations, restoration and post- remedial studies, investigations
and monitoring as may be required by applicable Environmental Laws.
(p) "SELLER'S KNOWLEDGE" means the personal knowledge of ▇▇▇
▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ after due inquiry. "DUE INQUIRY" means conducting an
appropriate review with suitable employees, consultants and advisors who are
reasonably likely to have knowledge of the subject matter.
17.2 PUBLICITY. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby shall be
issued without advance approval of the form and substance thereof by the Seller
and the Buyer; provided, however, that the parties hereto may, on a confidential
basis, advise their respective affiliates, employees, customers, suppliers,
agents, accountants, attorneys and prospective financing sources with respect to
the contents of this Agreement and the transactions contemplated hereby.
17.3 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or overnight courier,
postage prepaid, and shall be deemed given when so delivered personally,
telegraphed, sent by facsimile or telexed with confirmed answerback or on the
next business day when given by overnight courier, as follows:
(a) if to the Seller, to it at:
Ithaca Industries, Inc.
Highway ▇▇▇ ▇.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
53
(b) if to the Buyer, to it at:
Glendale Group, Ltd.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Bank of America Corporate Center
Suite 4200
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
17.4 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules hereto) and the collateral agreements executed in connection with
the consummation of the transactions contemplated hereby contain the entire
agreement among the parties with respect to the transactions contemplated hereby
and supersede all prior agreements, written or oral, with respect thereto.
17.5 WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
Seller and the Buyer or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder, nor any single
or partial exercise of any right, power or privilege hereunder, preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy in or breach of any
representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
17.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina applicable
to agreements made
54
and to be performed entirely within such State, without regard to the choice of
law principles thereof.
17.7 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and legal representatives. This Agreement is not assignable except
(i) by operation of law, (ii) that the Buyer may assign any or all of its rights
to any subsidiary, to any successor to all or substantially all of its business
or assets or to any bank or other person that may provide financing for the
transactions contemplated by this Agreement (including but not limited to First
Union National Bank or any of its successors), and (iii) the Seller may assign
any or all of its rights to NationsBank, N.A. or to any successor of
NationsBank, N.A. under the Bank Credit Agreements and any amendments thereto.
17.8 VARIATIONS IN PRONOUNS. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person or persons may require.
17.9 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17.10 EXHIBITS AND SCHEDULES. The Exhibits and Schedules to
this Agreement (but not documents incorporated by reference to such Exhibits and
Schedules that are not separately attached hereto as Exhibits or Schedules) are
a part of this Agreement as if set forth in full herein. All references herein
to Sections, Exhibits and Schedules shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
17.11 HEADINGS. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
17.12 NO THIRD PARTY RIGHTS. Except as otherwise specifically
provided in Sections 13 and 14, nothing in this Agreement, expressed or implied,
is intended to confer on any person not a party hereto any rights or remedies by
reason of this Agreement.
17.13 SPECIFIC PERFORMANCE. The Seller and the Buyer each
acknowledge that the Buyer would not have an adequate remedy at law for money
damages in the event that this Agreement were not performed in accordance with
its terms and therefore agree that the Buyer shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ITHACA INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
GLENDALE GROUP, LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President