EXHIBIT 10.C.4
ASSET PURCHASE AGREEMENT
by and among
DSG INTERNATIONAL LIMITED and/or
ASSOCIATED HYGIENIC PRODUCTS LLC
as the Purchaser
and
DRYPERS CORPORATION,
as Seller
Dated as of February 20, 2001
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 20, 2001 (the "Agreement"),
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by and among DSG International Limited, a British Virgin Island company and/or
Associated Hygienic Products LLC, a Delaware limited liability company,
(together with any subsidiary or affiliate to which such rights and obligations
may be assigned pursuant to Section 12.3 herein, the "Purchaser" and separately
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"DSG" and "AHP"), DRYPERS CORPORATION, a Delaware corporation (the "Company" or
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"Seller"). Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in Article XII or in the Bidding Procedures Order.
WHEREAS, the Company in its own name and through various subsidiaries is in
the business of manufacturing and marketing disposable baby diapers, training
pants, undergarments and pre-moistened baby wipes (the "Business") and owns or
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leases certain assets and properties related thereto; and
WHEREAS, the Company is the debtor and debtor in possession in Chapter 11
case number O0-39360-H4-11 (the "Case") pending before the United States
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Bankruptcy Court for the Southern District of Texas, Houston Division; and
WHEREAS, subject to the terms and conditions set forth herein, (i) the
Purchaser desires to purchase and obtain the assignment from the Company of, and
the Company desires to sell, convey, assign and transfer to the Purchaser, (a)
all assets and properties of the Company relating to the Business located in the
United States, but such assets shall not include the Excluded Domestic Assets;
in each case free and clear of Liens, including, in the case of the Company,
pursuant to sections 363(b) and (f) and 365 of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
I
PURCHASE AND SALE OF ASSETS AND STOCK
Section 1.1 Intentionally Omitted.
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Section 1.2 Purchase and Sale of Domestic Purchased Assets.
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Section 1.2.1 Sale of the Domestic Purchased Assets. On the terms and
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subject to the conditions set forth in this Agreement, pursuant to sections
363(b) and (f) and 365 of the Bankruptcy Code, at the Closing, the Company shall
sell, assign, transfer, convey, and deliver to the Purchaser, and the Purchaser
shall purchase and accept from the Company, the Company's rights, title, and
interests in and to the Business located in the United States (other than the
Excluded Domestic Assets), including, without limitation, in and to all the
assets, properties, rights, contractual rights of the Company, and claims of the
Company related to the Business (except as otherwise set forth in Section
1.2.2), wherever located, whether tangible or intangible,
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as the same shall exist at the Closing (such rights, title, and interests in and
to all such assets, properties, rights, contracts, and claims being collectively
referred to herein as the "Domestic Purchased Assets"), free and clear of all
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Liens, other than Permitted Liens. The Domestic Purchased Assets shall include,
without limitation, all the Seller's rights, title, and interests in and to the
assets, properties, rights, contracts, and claims described in clauses (a)
through (m) below to the extent they are owned by the Company (but shall
specifically exclude those assets, properties, rights, contracts, and claims set
forth in Section 1.2.2):
(a) all inventory, raw materials, work in process, finished goods,
samples, supplier spare parts, machinery, furnishings, furniture, fixtures,
office supplies, vehicles, equipment, computers, and other tangible personal
property (including all such items which are currently on order for use in the
Business in the United States);
(b) all Trade Receivables;
(c) the Intellectual Property, the rights to ▇▇▇ for, and remedies
against, present, and future infringements thereof, and the rights of priority
and protection of interests therein under applicable laws;
(d) all books and records of the Business, including, without
limitation, data processing records, employment and personnel records, customer
lists, files, and records, advertising and marketing data and records, credit
records, records relating to suppliers and other data as well as all copies of
marketing brochures and materials and other printed or written materials in any
form or medium relating to the Company's ownership or operation of the Business
that the Company is not required by law to retain and duplicates of any such
materials that the Company is required by law to retain;
(e) all rights under all warranties, representations and guarantees
made by suppliers, manufacturers, and contractors in connection with the
operation of the Business;
(f) all of the Company's rights to the licenses, Permits, approvals,
clearances and authorizations desirable or required to conduct the Business,
including all of the Company's Environmental Permits;
(g) all contracts listed on Schedule 1.2.1(g) (the foregoing being the
"Assumed Contracts"), and all rights of the Company thereunder,
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(h) all telephone numbers, other directory listings and Internet
domain names used by the Company in the conduct of the Business;
(i) all credits, prepaid expenses deferred charges, advance payments,
security deposits and prepaid items (and, in each case, security interests from
third parties relating thereto);
(j) all goodwill relating to the Domestic Purchased Assets and the
Business;
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(k) all computer software programs and databases used by the Company,
whether owned, licensed (subject to applicable restrictions), leased, or
internally developed; and
(1) all leases and subleases, including all amendments and
modifications pursuant to which the Company leases any real or personal property
that is listed as of the date hereof on Schedule 1.2.1(1) (the foregoing being
the "Assumed Leases").
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Section 1.2.2 Excluded Domestic Assets. The following assets, properties,
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and rights (the "Excluded Domestic Assets") are not included in the Domestic
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Purchased Assets and shall be retained by the Company:
(a) All contracts (other than contracts which have been included by
the Purchaser on Schedule 1.2.1(g)) (the "Excluded Contracts");
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(b) Any leases and subleases, including all amendments and
modifications, pursuant to which the Company leases any real or personal
property (unless such leases or subleases have been included by the Purchaser on
Schedule 1.2.1(1)) (the "Excluded Leases");
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(c) all cash and cash equivalents of the Company;
(d) all claims, counterclaims, demands and causes of action of the
Company, including without limitation, avoidance actions under sections 544,
547, 548, 549, 550 or 551 of the Bankruptcy Code;
(e) any other asset, property, right, contract or claim set forth in
Section 1.2.2(e) of the Seller Disclosure Letter;
(f) the Company's direct or indirect interest in the Subsidiaries;
(g) the Company's direct interest in Drypers Germany;
(h) the Puerto Rico Assets; and
(i) any claims of the Company against any of its direct or indirect
Subsidiaries arising pursuant to intercompany advances, promissory notes, or
otherwise and incurred prior to February 14, 2001.
Section 1.2.3 Assumed Liabilities. On the terms and subject to the
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conditions set forth in this Agreement, the transferee of the Domestic Purchased
Assets, upon the transfer of such assets to such transferee, shall assume from
the Company and thereafter pay, perform, or discharge in accordance with their
terms, only the following liabilities and obligations of the Company (the
"Assumed Liabilities"):
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(a) all liabilities and obligations with respect to, arising out of,
or related to, the ownership, possession or use of the Domestic Purchased
Assets, but in each case only to the extent arising out of or resulting from the
Conduct of the Business after the Closing
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Date; provided, however, that liabilities in respect of property Taxes for the
current tax year shall be prorated as of the Closing Date; and
(b) all obligations of the Company under the Assumed Contracts and
Assumed Leases which by the terms thereof are to be observed, paid, discharged
or performed, as the case may be, at any time after the Closing Date (including
obligations for goods in transit which have been ordered but not received by the
Company prior to the Closing), but excluding obligations and liabilities arising
out of any breach or default by the Company under any such Assumed Contract or
Assumed Lease prior to the Closing Date and excluding any cure amounts as set
forth in Section 1.2.4(d) below.
Section 1.2.4 Excluded Liabilities. Notwithstanding anything to the
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contrary contained herein, the Purchaser shall not assume, or in any way be
liable or responsible for, any liabilities, commitments or obligations of the
Company of any kind or nature whatsoever, known or unknown, accrued, fixed,
contingent or otherwise, liquidated or unliquidated, ▇▇▇▇▇▇ or inchoate, due or
to become due, except for the Assumed Liabilities. Without limiting the
generality of the foregoing, the transferee of the Domestic Purchased Assets
shall not assume, and the Company shall remain responsible for, the following:
(a) any liabilities or obligations (whether absolute, contingent or otherwise)
with respect to, arising out of, or related to, the Domestic Purchased Assets on
or prior to the Closing Date, including, without limitation, any liability or
obligation of the Company or any of its employees, consultants, directors,
officers, affiliates or agents arising out of, relating to, or caused by
(whether directly or indirectly), the Company's ownership, possession, interest
in, use or control of the Domestic Purchased Assets; (b) any liability or
obligation of the Company for any Taxes of any kind accrued for, applicable to
or arising from any period ending on or prior to the Closing Date including,
without limitation, property Taxes for periods prior to the Closing Date (but
excluding property Taxes for the current tax year, which shall be prorated as of
the Closing Date); (c) any liability or obligation of the Company or any
Commonly Controlled Entity in respect of any employee benefit plans relating
solely to the Company or its employees (including, without limitation, any
pension, welfare, or other Benefit Plans), consulting, severance, change in
control or similar agreements (unless and to the extent that the Purchaser in
its discretion expressly agrees in writing to assume any such obligations after
modifying or amending any such plans or agreements as it may in its sole
judgment elect); (d) any cure amounts that become payable in respect of the
assumption and assignment to the Purchaser of Assumed Contracts, Assumed Leases
or other executory contracts and unexpired leases assigned to the Purchaser
under section 365 of the Bankruptcy Code; (e) any liability or obligation
arising pursuant to Safety and Environmental Laws or principles of common law
relating to pollution, protection of the Environment or health and safety based
on events, conditions or circumstances occurring or existing or prior to the
Closing Date; (f) any obligations or liabilities of any of the Company or any
Subsidiary to Wasserstein, Perella and Co., Inc.; (g) any liability or
obligation (whether absolute, contingent or otherwise) with respect to, arising
out of, or related to the Excluded Domestic Assets; (h) any product liability or
claim for injury to person or property, regardless when made or asserted,
relating to products manufactured, distributed or sold by the Business on or
prior to the Closing Date; (i) any recalls on or after the Closing Date mandated
by any Governmental Body of the products of the Business manufactured,
distributed or sold by the Seller on or prior to the Closing Date; (j) any
intercompany payables and other liabilities or obligations to the Company or any
of its affiliates; or (k) all costs and expenses incurred by Seller incident to
their negotiation and preparation of
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this Agreement and their performance of and compliance with the terms,
conditions and arrangements contained herein.
Section 1.3 Intentionally omitted.
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Section 1.4 Purchase Price.
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Section 1.4.1 Intentionally Omitted.
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Section 1.4.2 Intentionally Omitted.
Section 1.4.3 Intentionally Omitted.
Section 1.4.4 Purchase Price. (a) Subject to Section 1.4.4 (b), the
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purchase price for the Domestic Purchased Assets shall be $38,460,000 (the
"Purchase Price") and $34,500,000 of the Purchase Price (net of any cash deposit
held by Purchaser) shall be paid on the Closing Date by wire transfer of
immediately available funds to an account which shall be designated in writing
by the Company at least one Business Day prior to the Closing Date. The balance
of $3,960,000 of the Purchase Price shall be paid and satisfied by the Purchaser
forgiving $3,960,000 in principal amount (including unpaid and accrued interest
on such principal amount) of the Paragon Subordinate DIP Loan as required by
Section 7.6 of this Agreement. Any cash deposit held by Purchaser shall be
applied on the Closing Date to the Purchase Price.
(b) Section 1.4.4(b) Working Capital Adjustment. The Purchase
Price shall be decreased by the Working Capital Adjustment.
"Working Capital Adjustment" shall be the amount by which the
aggregate inventory and receivables included in the Domestic Purchased Assets is
less as of Closing than the corresponding amounts on the Balance Sheet
previously furnished to Purchaser. The Working Capital Adjustment shall be made
within 45 days after the Closing, and the Parties shall escrow an agreed amount
of the Purchase Price paid at Closing to provide for such Working Capital
Adjustment.
II
THE CLOSING
Section 2.1 Closing. The Closing of the transactions contemplated by this
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Agreement shall take place at the offices of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second Business
Day after all conditions set forth in Articles VI and VII shall have been
satisfied or waived or at such other time, date and place as shall be fixed by
agreement among the parties (the date of the Closing being herein referred to as
the "Closing Date").
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Section 2.2 Acquisition Subsidiaries. On or before the Closing, the
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Purchaser may designate one or more of the Purchaser Acquisition Subsidiaries in
writing to receive all or part of the Domestic Purchased Assets.
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Section 2.3 Allocation of Asset Purchase Price. Not later than 30 days
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following the Closing Date, the Purchaser shall deliver to the Company a
schedule allocating the Purchase Price among the Domestic Purchased Assets,
which schedule shall be binding upon the Purchaser and the Company for all
accounting and tax purposes.
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows, but
with respect to the Purchaser, only to the extent of the assets being purchased
by such Purchaser and, with respect to each representation and warranty, only to
the extent the same could reasonably be expected to have a Seller Materail
Adverse Effect.
Section 3.1 Due Incorporation and Authority. The Company is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, and the Seller has all requisite corporate power and lawful
authority to own,lease and operate its properties and to carry on its business
as now being conducted, except where the failure to have such authority could
not reasonably be expected to (i) individually or in the aggregate, have a
material adverse effect on the properties, businesses, prospects, results of
operations or financial condition of the Company, or (ii) prevent or materially
interfere with the Seller's ability to consummate the transactions contemplated
hereby (the "Contemplated Transactions") (any event, effect or result described
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in clause (i) or (ii) above being a "Seller Material Adverse Effect").
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Section 3.2 Intentionally Omitted.
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Section 3.3 Qualification. The Company is duly qualified or otherwise
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authorized as a foreign entity to transact business and, to the extent
applicapable, is in good standing in each jurisdiction in which such
qualification or authorization is required by Law, except where the failure so
to qualify or be authorized could not reasonably be expected to have a Seller
Material Adverse Effect. Section 3.3 of the Seller Disclosure Letter lists each
jurisdiction in which the Company is so qualified or otherwise authorized.
Section 3.4 Intentionally Omitted.
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Section 3.5 Authority Relative to This Agreement. Except for any required
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approvals of the Bankruptcy Court, Seller has all necessary corporate power and
authority to execute and deliver this Agreement and, assuming the satisfaction
of the conditions set forth in Articles VI and VII, to perform its obligations
hereunder. The execution and delivery of this Agreement by Seller, the
performance by Seller of its obligations hereunder and the consummation by
Seller of the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of the Seller. This Agreement has been
duly and validly executed and delivered by Seller and (assuming due
authorization, execution and delivery hereof by the Purchaser and upon receipt
of any required approval of the Bankruptcy Court) constitutes the legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its terms.
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Section 3.6 SEC Documents. Since January 1, 1997, the Company has filed
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with the Securities and Exchange Commission (the "SEC") all reports, schedules,
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forms, statements and other documents (including exhibits and all other
information therein) required to be filed with the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
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rules and regulations of the SEC thereunder (the "SEC Documents"; the SEC
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Documents filed since January 1, 1997 and prior to the date of this Agreement
are referred to as the "Identified SEC Documents"). As of their respective
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dates, the SEC Documents compiled in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents when
filed contained, and, when considered as an entirety currently contain, any
untrue statement of a material fact or omitted or omit to state a material fact
or required to be stated therein or necessary in order to make statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 3.7 Financial Statements. The consolidated balance sheet of the
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Company as of December 31, 1999 and the related consolidated statements of
income, shareholder's equity and changes in financial position for the year then
ended, including the notes thereto, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent certified public accountants, which have been delivered to the
Purchaser, set forth the consolidated financial position of the Company as at
such a date and the consolidated results of operations of the Company for such
period, in each case in accordance with generally accepted accounting principles
consistently applied ("GAAP"). (The foregoing consolidated financial statements
of the Company as of December 31, 1999 and for the year then ended are sometimes
herein called the "Audited Financials.") The consolidated and consolidating
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balance sheets of the Company as of December 31, 2000, which have been delivered
to Purchaser, are sometimes herein called the "Balance Sheet" and December 31,
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2000 is sometimes herein called the "Balance Sheet Date." Except as set forth
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therein or in the notes thereto, the Company reasonably believes such Audited
Financials and Balance Sheet present fairly the financial position and results
of operations of the company as of their respective dates and for the respective
periods covered thereby.
Section 3.8 No Material Adverse Change. Except as set forth in Section 3.8
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of the Seller Disclosure Letter, since the Balance Sheet Date there has been no
change, event or occurrence which has had a Seller Material Adverse Effect, and
to the knowledge of the Company no such change, event or occurrence is
threatened, nor has there been any damage, destruction or loss which could
reasonably be expected to have or has had a Seller Material Adverse Effect,
whether or not covered by insurance.
Section 3.9 Taxes. Except as set forth in Section 3.9 of the Seller
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Disclosure Letter:
(a) The Company has timely filed (after giving effect to any
extensions of the time to file which were obtained) prior to the date of this
Agreement, and will file prior to the Closing Date, all material Tax Returns
required to be filed prior to the date of this Agreement or the Closing Date, as
the case may be, with respect to Taxes for periods ending on or after January 1,
1993, and such returns are true, correct and complete in all material respects
and all Taxes are shown to be due on such Tax Returns have been paid; and on or
before the Closing Date, the Company has paid or will pay (or the Company has
paid or will pay on its
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behalf), or has or will set up an adequate reserve for the payment of, all
material Taxes owed by the Company for all taxable periods through and including
the Closing Date.
(b) The Company has not filed or entered into any election,
consent or extension agreement that extends any applicable statue of
limitations, which statue of limitations has not expired.
(c) (i) The Company is not a party to any action or proceeding
pending or, to the Company's knowledge, threatened by an Governmental Authority
for assessment or collection of Taxes, (ii) no audit or investigation of the
Company, by any Governmental Authority is pending or threatened with respect to
Taxes, and (iii) no claim has been made by any Governmental Authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation in that jurisdiction.
(d) The Company (i) is not a party to, is not bound by, is not
under any obligation under any Tax sharing or similar agreement that includes
any other person, nor (ii) has any liability for Taxes of any person (other than
members of the affiliated group, within the meaning of Section 1504(a) of the
Code, filing consolidated federal income tax returns of which the Company is the
common parent) under Treasury Regulation (S) 1.1502-6, Treasury Regulation
(S) 1.1502-78 or similar provision of state, local or foreign law, as a
transferee or successor, by contract, or otherwise.
(e) The Company has not entered into nor is bound by any
closing agreement that could effect its Taxes for periods ending after the
Closing Date.
(f) No gain or loss from deferred intercompany transactions or
excess loss accounts of the Company will be triggered by the Contemplated
Transactions.
(g) The Company has not been in violation of any applicable
law relating to the payment or withholding of Taxes, and has duly and timely
withheld and paid over to the appropriate taxing authorities all material
amounts required to be so withheld and paid over.
(h) For all periods ending or transactions consummated after
December 31, 1995, the Company has made available to the Purchaser true and
complete copies of all Tax Returns of the Company together with all related
examination reports and statements of deficiency, and true and complete copies
of the portion of all other Tax Returns relating to the activities of the
Company together with all related examination reports and statements of
deficiency.
(i) There are no Liens for Taxes upon the assets or properties
of the Company except for statutory Liens for current Taxes not yet due, and the
Company has no knowledge of any claim relating to Taxes that, if adversely
determined, would result in any material Lien on any of the assets or property
of the Company.
(j) The Company is not a party to any lease arrangement
involving a defeasance of rent, interest or principal.
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(k) Any adjustment of Taxes of the Company, made by the IRS
which adjustment is required to be reported to the appropriate state, local, or
foreign Taxing authorities, has been so reported.
(l) The Company is not a direct or indirect beneficiary of a
guarantee of Tax benefits or any other arrangement that has the same economic
effect (including an indemnity from a seller or lessee of property, or other
insurance) with respect to any transaction or Tax opinion relating to the
Company.
(m) The Company has not ever been (i) a "passive foreign
investment company," (ii) a "foreign personal holding company" (iii) a "foreign
sales corporation," (iv) a "foreign investment company," or (v) a person other
than a United States person, each within the meaning of the Code.
(n) The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
Section 3.10 Permits. To the Company's knowledge, the Company has all
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licenses, permits, exemptions, consents, waivers, authorizations, rights,
certificates of occupancy, franchises, orders or approvals of, and has made all
required registrations with, any Governmental Body that are required for the
conduct of the business of, or the intended use of any properties of, the
Company (collectively, "Permits"), and no suspension or cancellation of any of
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the Permits is pending or, to the knowledge of the Company, threatened, except
where the failure to have, or the suspension or cancellation of, any of the
Permits, individually or in the aggregate, could not reasonably be expected to
have a Seller Material Adverse Effect (Permits other than those excluded by the
foregoing exception being the "Material Permits").
Section 3.11 No Breach.
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(a) The execution and delivery of this Agreement by the
Company does not, and, assuming any necessary approval of this Agreement by the
Bankruptcy Court, the performance of this Agreement by Seller will not:
(i) conflict with or violate any provision of any
Certificate of Incorporation or by-laws of the Company (to the extent that such
document is then governing such entity);
(ii) conflict with or violate any Law applicable to the
Company by which any property or asset of the Company is or may be bound or
affected, except for any such conflicts or violations that, individually or in
the aggregate, could not reasonably be expected to have a Seller Material
Adverse Effect; or
(iii) assuming that all Required Consents (as defined in
Section 3.11(b)) have been obtained or deemed by operation of the Sale Order to
have been given, result in any breach of or constitute a default (or an event
which with or without notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien, other than a
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Permitted Lien, on any property or asset of the Company or, under any note,
bond, mortgage, indenture, contract, agreement, commitment, lease, license,
permit, franchise or other instrument or obligation (collectively, "Contracts")
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to which the Company is a party or by which it or its assets or properties is
bound or affected, except for such breaches, defaults or other occurrences
which, individually or in the aggregate, could not reasonably be expected to
have a Seller Material Adverse Effect.
(b) Section 3.11 of the Seller Disclosure Letter identifies each
Contract to which the Company is a party or by it or its assets or properties is
or may be bound or affected in respect of which a Required Consent must be
obtained. For purposes hereof, a "Required Consent" means any consent under a
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Material Contract required so that the execution, delivery and/or performance by
the Seller of this Agreement, the consummation of the Contemplated Transactions,
and the assumption and/or continued enforcement thereof by the Purchaser as
contemplated hereby will not result in any breach of or constitute a default (or
an event which with or without notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, such Contract, or result in the creation of a
Lien, other than a Permitted Lien, on any property or asset of the Company. For
purposes hereof, the Company shall be deemed to have obtained a Required Consent
required to be obtained by the Company if, and to the extent that, pursuant to
the Sale Order the Company is authorized to assume and assign the Contract to
the Purchaser pursuant to section 365 of the Bankruptcy Code.
Section 3.12 Actions and Proceedings. Except as set forth in Section 3.12
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of the Seller Disclosure Letter, there are no outstanding Orders of any
Governmental Body against or involving the Company which could reasonably be
expected to have a Seller Material Adverse Effect or interfere with consummation
of the Contemplated Transactions. Except as to claims against the Company
arising prior to the Petition Date that are within the jurisdiction of the
Bankruptcy Court and are to be resolved in the Case, as of the date of this
Agreement, there are no actions, causes of action, suits, claims, complaints,
demands, litigations or legal, administrative or arbitral proceedings or
investigations (collectively, "Actions") (whether or not the defense thereof or
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liabilities in respect thereof are covered by insurance) pending, or, to the
Company's knowledge, threatened against or involving the Company or any of their
properties, owned or leased, which, individually or in the aggregate, could
reasonably be expected to have a Seller Material Adverse Effect.
Section 3.13 Contracts.
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(a) Section 3.13 of the Seller Disclosure Letter sets forth
all of the Material Contracts to which the Company is a party or by or to which
it or any of its properties may be bound or subject.
(b) To the knowledge of the Company, no parties to any
Material Contracts (other than the Company) are in default thereunder in any
respect nor does any condition exist that with notice can reasonably be expected
to or with lapse of time or both could constitute such a default thereunder
except where the existence of any such defaults (including the existence of any
conditions that with notice or lapse of time would constitute defaults) could
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not, individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect.
Section 3.14 Tangible Property. Except as set forth in Section 3.14 of the
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Seller Disclosure Letter, the facilities, machinery, equipment, furniture,
buildings and other improvements, fixtures, vehicles, structures, any related
capitalized items and other tangible property material to the business of the
Company (the "Tangible Property") are in commercially reasonable operating
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condition and repair, subject to continued repair and replacement in accordance
with industry practice, and are suitable for their intended use.
Section 3.15 Intellectual Property.
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(a) The Company owns or is licensed or otherwise has the right to
(i) with respect to such items that the Company claims to own outright, sell,
license and dispose of such items, without restriction, and (ii) with respect to
such items with respect to which the Company claims to have a license, use and
practice, all Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets,
Software and other proprietary rights (collectively, the "Intellectual
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Property") that are currently used in the businesses of the Company, the loss or
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cancellation of which could reasonably be expected to have a Seller Material
Adverse Effect. To the Company's knowledge, Section 3.15 lists all of the
material Intellectual Property of the Company.
(b) Except as set forth in Section 3.15 of the Seller Disclosure
Letter, the Company is not in breach of or default under any IP License which
will not be cured under section 365 of the Bankruptcy Code upon the assumption
and assignment thereof to the Purchaser.
(c) Neither the Company nor any of the Subsidiaries is in default
under any provisions of the Procter & ▇▇▇▇▇▇ Settlement Agreement.
(d) The Company has the exclusive right to file, procure and
maintain all registrations with respect to the Intellectual Property owned by
the Company.
(e) Neither the Company nor any Subsidiary has knowledge of any
challenge to the validity of any Patent or registered Trademark or Copyright
listed in Section 3.15(a) of the Seller Disclosure Letter.
Section 3.16 Title to Properties.
-------------------
(a) Intentionally Omitted.
(b) Section 3.16 of the Seller Disclosure Letter contains a true
and complete list of all real property owned by the Company ("Owned Real
----------
Property Assets"; Leased Real Property Assets and Owned Real Property Assets
---------------
collectively, "Real Property Assets").
--------------------
(c) All buildings, structures and other improvements in, on or
within the Real Property Assets are to the Company's knowledge in commercially
reasonable operating condition and repair, subject to continued repair and
replacement in accordance with past
11
practice, except for any failure to be in such condition and repair that could
not, individually or in the aggregate, have a Seller Material Adverse Effect.
Section 3.17 Employee Benefit Plans.
----------------------
(a) Section 3.17 of the Seller Disclosure Letter contains a true
and complete list of each "employee benefit plan" (within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
-----
of ERISA section 3(37)), stock purchase, stock option, severance, employment,
change-in control, fringe benefit, welfare benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA, whether formal or informal, oral or written, legally bonding or not,
under which any Employee or former employee (or his or her beneficiary) of the
Company has any present or future right to benefits or under which the Company
has any present or future liability. All such plans, agreements, programs,
policies and arrangements shall be collectively referred to as the "Benefit
-------
Plans."
-----
(b) With respect to each Benefit Plan, the Company has made
available to the Purchaser a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable any summary plan description and other written communications (or a
description of any oral communications) by the Company to its employees
concerning the extent of the benefits provided under a Benefit Plan.
(c) With respect to each Benefit Plan, no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the Company's knowledge, threatened, and no facts or
circumstances exist that could give rise to any such actions, suits or claims
which individually or in the aggregate could have a Seller Material Adverse
Effect.
Section 3.18 Employee Relations. None of the Employees of the Company or,
------------------
to the Company's knowledge, Foreign Employees is represented by a union, and no
union organizing efforts are now being conducted. The Company has not at any
time during the last three years had nor, to the knowledge of the Company, is
there now threatened, a strike, picket, work stoppage, work slowdown or other
labor dispute.
Section 3.19 Insurance. The Company has heretofore made available for
---------
inspection by the Purchaser true and correct copies of all policies or binders
of fire, liability, product liability, worker's compensation, directors and
officers liability, vehicular and other insurance held by or on behalf of the
Company which are presently in effect. Such policies and binders are valid and
binding in accordance with their terms, are in full force and effect, and insure
against risks and liabilities to an extent and in a manner customary in the
industries in which the Company operates. The Company has not received any
written notice of cancellation or non-renewal of any such policy or binder.
12
Section 3.20 Company Products. To the Company's knowledge, except as set
----------------
forth in Section 3.20 of the Seller Disclosure Letter, there are no statements,
citations or decisions by any Governmental Body specifically stating that any
Company Product is defective or unsafe or fails to meet any standards
promulgated by any such Governmental Body. Except as set forth in Section 3.20
of the Seller Disclosure Letter, there have been no recalls ordered by any such
Governmental Body with respect to any Company Product. Except as set forth in
Section 3.20 of the Seller Disclosure Letter, there is no (a) fact relating to
any Company Product that may impose upon the Company a duty to recall any
Company any Product or a duty to warn customers of a defect or of any Hazardous
Substance in any Company Product, (b) latent or overt design, manufacturing or
other defect in any Company Product, (c) Company Product, the reasonably
foreseeable use of which may expose any person to any Hazardous Substance or (d)
material liability for warranty claims or returns with respect to any Company
Product not fully reflected on the Audited Financials or Interim Financials.
Section 3.21 Operations of the Company and Subsidiaries.
------------------------------------------
(a) Except as set forth in Section 3.21 of the Seller Disclosure
Letter or as contemplated by this Agreement, since the Balance Sheet Date the
Company has not:
(i) waived in writing any material right under any
Material Contract or other agreement of the type required to be set forth in the
Seller Disclosure Letter;
(ii) made any material change in its accounting methods or
practices or made any material change in depreciation or amortization policies
or rates adopted by it;
(iii) except for inventory or equipment in the ordinary
course of business, sold, abandoned or made any other disposition of any of its
properties or assets or made any acquisition of all or any part of the
properties, capital stock or business of any other person;
(iv) made any investment in any person, including, without
limitation, any Subsidiary;
(v) transferred or disposed of its interest in any
Subsidiary.
(vi) canceled any debts owed to or claims held by the
Business (including the settlement of any claims or litigation) with a value
greater than $25,000, except for claims held by the Company against any
Subsidiary and incurred prior to February 14, 2001;
(vii) created, incurred or assumed, or agreed to create,
incur or assume, any indebtedness for borrowed money in respect of the Business
(other than money borrowed or advanced from the Company in the ordinary course
of the Business consistent with past practice); or
(viii) entered into or become committed to enter into any
other transaction material to the Business except in the ordinary course of the
Business or as contemplated by this Agreement.
13
(b) Intentionally Omitted.
Section 3.22 Consents and Approvals. No consent, approval, or authorization
----------------------
of, or declaration, filing, or registration with any Governmental Body is
required to be made or obtained by the Company in connection with the execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby, except (a) for approvals or authorizations of
the Bankruptcy Court, (b) for consents, approvals, authorizations, declarations,
or rulings identified in Section 3.22 of the Seller Disclosure Letter, and (c)
for consents, approvals, authorizations, declarations, filings, or
registrations, which, if not obtained, could not, individually or in the
aggregate, have a Seller Material Adverse Effect. The items referred to in
clauses (a) through (c) of this Section 3.22 are hereinafter referred to as the
"Government Requirements."
-----------------------
Section 3.23 Non-Competition Agreements. Except as set forth in Section
--------------------------
3.23 of the Seller Disclosure Letter, neither the Company, nor any officer,
director, or key employee of the Company, is a party to any agreement that
purports to restrict or prohibit it, directly or indirectly, from engaging in
any business currently engaged in by the Company.
Section 3.24 Board Approval and Recommendation. The Board of Directors of
---------------------------------
the Company has determined that an immediate sale and assignment of the
Company's assets pursuant to this Agreement under sections 363 and 365 of the
Bankruptcy Code is in the best interests of the Company.
Section 3.25 Brokers. Except for Wasserstein, Perella & Co., Inc., no
-------
person is entitled to any brokerage, financial advisory, finder's or similar fee
or commission payable by the Company in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. The fees of Wasserstein, Perella & Co., Inc. relating to the
transactions contemplated hereby shall be and remain liabilities solely of the
Company, which liabilities are not being assumed by the Purchaser.
Section 3.26 Purchased Property Held by Excluded Subsidiaries. None of the
------------------------------------------------
Excluded Subsidiaries, as of the date hereof or will, as of the Closing Date,
possess, own, have any right to or interest in the Domestic Purchased Assets. In
the event that any Excluded Subsidiary possesses, owns, or has any right to or
interest in the Domestic Purchased Assets, then notwithstanding anything else
herein contained, Seller at Seller's sole cost and expense, shall cause such
Domestic Purchased Assets to be transferred to the Purchaser, without any
increase in the Purchase Price. Seller's obligations under this Section shall
terminate one year from the Closing Date.
IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 Organization. The Purchaser is a corporation or limited
------------
liability company validly existing and in good standing under the laws of its
jurisdiction of incorporation.
14
Section 4.2 Authority to Execute and Perform Agreement. The Purchaser has
------------------------------------------
the full legal right and power and all authority and approvals to enter into,
execute and deliver this Agreement and each and every agreement and instrument
contemplated hereby to which the Purchaser is or will be a party and to perform
fully its obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by the Purchaser, and on the Closing Date each and every
agreement and instrument contemplated hereby to which the Purchaser is a party
will be duly executed and delivered by the Purchaser and (assuming due execution
and delivery hereof and thereof by the other parties hereto and thereto) this
Agreement and each such other agreement and instrument will be valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with their respective terms. The execution and delivery by the Purchaser of this
Agreement and each and every other agreement and instrument contemplated hereby
to which the Purchaser is a party, the consummation of the transactions
contemplated hereby and thereby and the performance by the Purchaser of this
Agreement and each such other agreement and instrument in accordance with their
respective terms and conditions will not (a) violate any provision of the
Purchaser's governing or organizational documents; (b) except for filings or
approvals required in connection with Government Requirements, require such the
Purchaser to obtain any consent, approval, authorization or action of, or make
any filing with or give any notice to, any Governmental Body or any other
person; (c) conflict with or result in the breach of any of the terms and
conditions of, result in a material modification of the effect of, otherwise
cause the termination of or give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or both constitute) a
default under, any Contract to which the Purchaser is a party or by or to which
the Purchaser or any of its properties is or may be bound or subject; or (d)
violate any Law or Order of any Governmental Body applicable to the Purchaser.
Section 4.3 Brokers. The Purchaser is responsible for any brokerage,
-------
financial advisory, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.
Section 4.4 Sufficient Funds. The Purchaser represents and warrants that it
----------------
has sufficient funds to satisfy its obligations under this Agreement and that,
no approval of, or waiver by, any lender is required as a condition to the
Purchaser's obtaining funds.
V
COVENANTS
Section 5.1 Conduct of Business by the Seller Pending the Closing. From the
-----------------------------------------------------
date hereof through the Closing Date, the Seller agrees that it (a) shall
conduct its Business in the ordinary course; and (b) shall conduct its Business
in a manner such that the representations and warranties contained in Article
III shall continue to be true and correct on and as of the Closing Date as if
made on and as of the Closing Date. The Seller shall give the Purchaser prompt
notice of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a material violation or material
breach of (i) any representation or warranty, whether made as of the date hereof
or as of the Closing Date, or (ii) any covenant of any Seller contained in this
Agreement. Without limiting the generality of the foregoing, except as provided
in the Seller Disclosure Letter or except as otherwise contemplated under this
15
Agreement, from the date hereof until the Closing Date, without the prior
written consent of the Purchaser: -
(a) The Company shall not adopt or propose any change in their
certificates of incorporation or bylaws or comparable governing documents,
except a change that would not have any adverse affect on the Contemplated
Transactions;
(b) The Company shall not declare, set aside, or pay any dividend or
other distribution with respect to any shares of their capital stock, or split,
combine, or reclassify any of their capital stock, or repurchase, redeem, or
otherwise acquire any shares of their capital stock;
(c) The Company shall not merge or consolidate with any other person
or (except in the ordinary course of business) acquire a material amount of
assets of any other person;
(d) The Company shall not and shall cause each Subsidiary (other than
the Excluded Subsidiaries) to not) lease, license, or otherwise surrender,
relinquish, encumber, or dispose of any Domestic Purchased Assets other than the
disposition of obsolete or damaged assets in the ordinary course of its business
or the sale of Inventory in the ordinary course of business; provided, however,
-------- -------
that the Seller may comply with the Bidding Procedures Order,
(e) The Company shall not change any method of accounting or
accounting practice used by them, except for any charge required by GAAP;
(f) The Company shall not establish or increase the benefits under, or
promise to establish, modify or increase the benefits under, any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan or employment, consulting
or severance agreement, or otherwise increase the compensation payable to any
directors, officers or employees of the Company or establish, adopt or enter
into any collective bargaining agreement;
(g) The Company shall not make or agree to make any capital
expenditures or capital additions that exceed amounts provided for in the
budget(s) established under any Order of the Bankruptcy Court authorizing
post-petition financing;
(h) The Company shall not in any material respect change its methods
of collecting Trade Receivables, and shall not make or agree to make any
settlement concerning a Trade Receivable in excess of $25,000 without consulting
with the Purchaser;
(i) The Company shall not permit a default or event of default to
exist or occur under the Procter & ▇▇▇▇▇▇ Settlement Agreement; and
(j) The Company shall not agree or commit to do any of the foregoing.
16
Section 5.2 Access and Information. The Seller shall afford to the
----------------------
Purchaser and to the Purchaser's financial advisors, legal counsel, accountants,
consultants, financing sources, and other authorized representatives reasonable
access during normal business hours throughout the period prior to the Closing
Date to all their books, records, properties, plants, and personnel which relate
to its respective business and, during such period, shall furnish as promptly as
practicable to the Purchaser (a) a copy of each material report, schedule, and
other document filed or received by them pursuant to the requirements of Laws
and (b) all other information as the Purchaser reasonably may request in
furtherance or the Contemplated Transactions, provided that the Purchaser shall
be bound by and shall comply with the terms of the Confidentiality Agreement
dated October 6, 2000 (the "Confidentiality Agreement") between the Company and
the Purchaser with respect to the Purchaser's ability to use or disclose any
such information and provided further, that no investigation pursuant to this
-------- -------
Section 5.2 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
transactions contemplated by this Agreement. The covenants and agreements in
this Section 5.2 shall be cumulative with and in addition to the covenants and
agreements contained in that certain Confidentiality Agreement dated October 6,
2000.
Section 5.3 Cure of Defaults. Subject to, among other provisions, Section
----------------
1.2.4(d) hereof, the Company shall, on or prior to the Closing, provide evidence
satisfactory to the Purchaser that it has cured any and all defaults and
breaches under and satisfied (or, with respect to any Assumed Liability or
obligation that cannot be rendered non-contingent and liquidated prior to the
Closing Date, made effective provision reasonably satisfactory to the Purchaser
and the Bankruptcy Court for satisfaction from funds of the Company of) any
Assumed Liability or obligation arising from or relating to pre-Closing periods
under the Assumed Contracts and Assumed Leases so that such contracts and leases
may be assumed by the Company and assigned to the Purchaser in accordance with
the provisions of section 365 of the Bankruptcy Code, the Sale Order and this
Agreement (including, without limitation, Section 1.2.3 hereof). The Company
shall be solely responsible for payment of and curing all defaults and the Sale
Order shall so provide. In any event, Seller's cure obligations shall be limited
to such matters as may be cured solely by the payment of money.
Section 5.4 Required Consents. The Company shall use commercially
-----------------
reasonable efforts, prior to the Closing, to obtain the Sale Order and all
Required Consents, and undertake all actions reasonably required pursuant to the
Sale Order and all Required Consents. The Purchaser shall not incur or be liable
for any expenses, costs or obligations in connection therewith. Seller shall not
be required to incur or be liable for any expenses, costs or obligations in
order to obtain any Required Consents. The Purchaser shall cooperate with the
Seller's efforts to obtain any Required Consents. Failure to obtain Required
Consent with respect to the Procter & ▇▇▇▇▇▇ U.S. and Canadian licenses shall
not entitle Purchaser to terminate this Agreement if such failure is due to
Purchaser's inability to satisfy any condition customarily imposed by The
Procter & ▇▇▇▇▇▇ Company with respect to transfer of licenses granted by it.
Section 5.5 Filings; Other Action. Subject to the terms and conditions
---------------------
hereof, as promptly as practicable the Seller and the Purchaser shall (a)
promptly make all filings and submissions required in order to satisfy all
necessary Government Requirements, (b) use commercially reasonable efforts to
cooperate with each other in (i) determining which filings are required to be
made prior to the Closing Date with, and which material consents, approvals,
17
permits, or authorizations are required to be obtained prior to the Closing Date
from, governmental or regulatory authorities of the United States and the
several states in connection with the execution and delivery of this Agreement
and the consummation of the Contemplated Transactions, and (ii) timely making
all such filings and timely seeking all such consents, approvals, permits, or
authorizations, and (c) use all commercially reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things reasonably necessary or appropriate to consummate the Contemplated
Transactions, as soon as practicable. In connection with the foregoing, the
Company will promptly provide to the Purchaser, and the Purchaser will promptly
provide to the Company, copies of all correspondence, filings, or communications
(or memoranda setting forth the substance thereof) between such party or any of
its representatives, on the one hand, and any Governmental Bodies, on the other
hand, with respect to this Agreement and the Contemplated Transactions. The
parties acknowledge that certain actions may be necessary with respect to the
foregoing in making notifications and obtaining clearances consents, approvals,
waivers, or similar third party actions that are material to the consummation of
the Contemplated Transactions, and each party agrees to take all commercially
reasonable actions as are necessary, to complete such notifications and obtain
such clearances, approvals, waivers, or third party actions. Neither the Seller
nor the Purchaser shall be required to incur or be liable for any expenses,
costs or obligations in order to satisfy any Government Requirements, except
payment of routine application or filing fees.
Section 5.6 Public Announcements. The parties will cooperate in the
--------------------
issuance of any press releases or otherwise in making any public statements
with respect to the Contemplated Transactions. The parties further agree
that no publicity release or public statement or public communication concerning
this Agreement or the Contemplated Transactions shall be made without written
advance approval thereof by the Company and the Purchaser, which approval shall
not be unreasonably withheld; provided, however, that a party may, without the
-------- -------
prior consent of the other party, but after providing notice thereof to the
other party, issue such press release or make such public statement as may, upon
the advice of counsel, be required by law or any listing agreement with any
national securities exchange.
Section 5.7 Permit Transfers. The Purchaser shall use commercially
----------------
reasonable efforts, at and as of the Closing, to cause the transfer or,
reissuance of any Material Permits or Material Environmental Permits to the
extent that such is required to cause the Material Permits and Material
Environmental Permits (on their present terms and conditions and without
modification or enhancement thereof) to remain in full force and effect in
the possession of the Purchaser after the Closing. Neither the Purchaser nor any
Seller shall be required to incur or be liable for any expenses, costs or
obligations in order to transfer, reissue or modify any Material Permits or
Material Environmental Permits, except payment of routine affiliation or filing
fees. The Company shall reasonably cooperate with the Purchaser in the
Purchaser's efforts to transfer or, reissue any Material Permits or Material
Environmental Permits.
Section 5.8 Further Assurances. Each of the parties shall execute such
------------------
Documents and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the Contemplated Transactions,
but Seller shall not be obligated to incur or be liable for any expense, cost or
obligations in connection therewith. Each such party shall use commercially
reasonable efforts to fulfill or obtain the fulfillment of the conditions to the
Closing set forth in Articles VI and VII.
18
Section 5.9 Bankruptcy Covenants.
--------------------
(a) The Company shall promptly provide the Purchaser with
proposed final drafts of all documents, motions, orders, filings or pleadings
that the Company proposes to file with the Bankruptcy Court which relate to the
approval or consummation of the Contemplated Transactions, this Agreement or any
provision therein or herein, and will provide the Purchaser with reasonable
opportunity to review and comment on such filings.
(b) Without limiting the generality of Section 5.9(a), the
Sale Order shall acceptable in form and substance to the Purchaser and its
counsel, including, without limitation, as to the adequacy of notice of the
hearing or hearings on the Company's motion for approval of the Contemplated
Transactions, the applicability of sections 363(f), 363(m) and 1146(c) of the
Bankruptcy Code to the Contemplated Transactions, the satisfaction of all cure
obligations, and the Purchaser's provision of adequate assurance of future
performance of the Assumed Contracts and Assumed Leases.
(c) In the event an appeal is taken, or a stay pending
appeal is requested or reconsideration is sought, from the Sale Order, the
Company shall promptly after becoming aware thereof notify the Purchaser of such
notice of appeal, request for a stay pending appeal or motion for
reconsideration. The Company shall also provide the Purchaser with written
notice (and copies) of any other or further notice of appeal, motion or
application filed in connection with any appeal from or application for
reconsideration of, either of such orders and any related briefs. The Company
shall also defend any such appeals or requests for stay of the Sale Order, but
shall not be required to expend unlimited funds in doing so.
Section 5.10 Tax Matters. During the period from the date of this Agreement
----------
to and including the Closing Date, the Company shall: (i)properly prepare, in
the ordinary course of business and consistent with past practice, and timely
file all Tax Returns required to be filed by it on or before the Closing Date
("Post-signing Returns"); (ii) fully and timely pay all Taxes due and payable in
--------------------
respect of such Post-signing Returns that are so filed; (iii) properly reserve
(and reflect such reserve in its books and records and financial statements), in
accordance with past practice and in the ordinary course of business, for all
Taxes payable by it (or them) for which no Post-signing Return is due prior to
or on the Closing Date; (iv) promptly notify the Purchaser of any material
federal, state or foreign income or franchise and any other suit, claim, action,
investigation, proceeding or audit (collectively, "Tax Actions") pending against
-----------
or with respect to the Company in respect of any Tax matter, including (without
limitation) Tax liabilities and refund claims, and not settle or compromise any
such Tax matter or Tax Action without the Purchaser's consent; (v) not make or
revoke any material Tax election or adopt or change a tax accounting method
without the Purchaser's consent; and (vi) terminate all Tax Sharing Agreements
to which the Company is a party such that there is no further Tax liability
thereunder.
Section 5.11 Transfer Taxes. In the event that section 1146(c) of the
--------------
Bankruptcy Code does not apply to all aspects of the Contemplated Transactions,
all personal property transfer, documentary, sales, use, registration,
value-added and other similar Taxes (including interest, penalties and additions
to Tax) incurred in connection with the Contemplated Transactions ("Transfer
--------
Taxes") shall be borne by the Purchaser.
-----
19
Section 5.12 Intentionally Omitted.
---------------------
Section 5.13 Delivery of the Seller Disclosure Letter. Concurrently with
----------------------------------------
the execution of this Agreement, Company shall deliver to the Purchaser its
complete Seller Disclosure Letter, a true and correct copy of which is attached
to this Agreement as Exhibit "A."
VI
CONDITIONS PRECEDENT TO OBLIGATION
OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to enter into and complete the Closing is
subject, at the option of the Purchaser acting in accordance with the provisions
of Article XI with respect to termination of this Agreement, 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 Purchaser:
Section 6.1 Representations and Covenants. All representations and
-----------------------------
warranties of the Seller contained in this Agreement shall be true in all
respects on and as of the Closing Date, with the same force and effect as though
made on and as of the Closing Date, except for such breaches that, individually
or in the aggregate, could not have a Seller Material Adverse Effect. The
Seller shall have performed and complied in all respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Seller on or prior to the Closing Date, except for such breaches that,
individually or in the aggregate, could not have a Seller Material Adverse
Effect.
Section 6.2 Consents and Approvals. All Required Consents shall have
----------------------
been obtained or deemed by operation of the Sale Order to have been given and
shall be in full force and effect, and the Purchaser shall have been furnished
with evidence reasonably satisfactory to it that each such Required Consent has
been either (i) expressly granted, or (ii) deemed, by operation of the Sale
Order, to have been given.
Section 6.3 Closing Deliveries. The Seller shall have made all
------------------
deliveries contemplated by Section 8.1.
Section 6.4 Government Requirements. Any person required in connection
-----------------------
with the Contemplated Transactions to file a notification and report form in
compliance with, or obtain any consent or approval required under, any
Government Requirements shall have filed such form or requested such consent or
approval and the applicable waiting period with respect to each such form
(including any extension thereof by reason of a request for additional
information) shall have expired or been terminated or the requisite consent or
approval required thereby shall have been obtained without any material
condition or limitation on terms acceptable to the Purchaser.
Section 6.5 No Claims. No Actions shall be pending or, to the knowledge
---------
of the Company or the Purchaser, threatened, before any Governmental Body
(including investigations instituted by the United States Department of Justice
or the Federal Trade Commission in connection with antitrust regulations) to
restrain or prohibit, or to obtain damages or a discovery order in respect of,
this Agreement or the consummation of the Contemplated Transactions or
20
which has had or may have, in the reasonable judgment of the Purchaser, a Seller
Material Adverse Effect or a material adverse effect upon any the Purchaser's
existing businesses, prospects, operations, assets, liabilities or financial
condition.
Section 6.6 Sale Order. The Sale Order in form and substance satisfactory
----------
to the Purchaser and its counsel, shall have been entered by the Bankruptcy
Court by March 5, 2001 and shall not be stayed or reversed, ordered to be
reconsidered, or, in any manner not approved by the Purchaser, amended or
modified.
Section 6.7 No Injunction. On the Closing Date, there shall not be any
-------------
order outstanding against any party hereto or law promulgated that prevents the
consummation of, the Contemplated Transactions or any of the conditions to the
consummation of the Contemplated Transactions which, in the case of any such
order, law, action or proceeding could reasonably be expected to materially
adversely affect Purchaser or the Purchased Property.
Section 6.8 No Material Adverse Change. Except as set forth in Section 3.8
--------------------------
of the Seller Disclosure Letter, between the Balance Sheet Date and Closing Date
there has been no change, event or occurrence which has had a Seller Material
Adverse Effect, nor has there been any damage, destruction or loss which could
reasonably be expected to have or has had a Seller Material Adverse Effect,
whether or not covered by Insurance.
Section 6.9 Bidding Procedures Order. The Bidding Procedures Order shall
------------------------
remain in full force and effect, and shall not have been stayed, vacated,
modified or supplemented without the Purchaser's prior consent, and the Company
shall have complied with the terms of the Bidding Procedures Order.
Section 6.10 Intentionally Omitted.
---------------------
Section 6.11 Intentionally Omitted.
---------------------
Section 6.12 Intentionally Omitted.
---------------------
Section 6.13 Intentionally Omitted.
---------------------
Section 6.14 Intentionally Omitted.
---------------------
VII
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE SELLER TO CLOSE
The obligation of the Seller to enter into and complete the Closing is
subject, at the option of the Seller acting in accordance with the provisions of
Article XI with respect to termination of this Agreement, 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 Company:
Section 7.1 Representation and Covenants. All representations and
----------------------------
warranties of the Purchaser contained in this Agreement shall be true in all
material respects on and as of the
21
Closing Date, with the same force and effect as though made on and as of the
Closing Date. The Purchaser shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
Section 7.2 Certain Consents and Approvals. All Required Consents shall
------------------------------
have been obtained or deemed by operation of the Sale Order to have been given
and shall be in full force and effect.
Section 7.3 Government Requirements. Any person required in connection
-----------------------
with the Contemplated Transactions to file a notification and report form in
compliance with, or obtain any consent or approval required under, any
Government Requirements shall have filed such form or requested such consent or
approval and the applicable waiting period with respect to each such form
(including any extension thereof by reason of a request for additional
information) shall have expired or been terminated or the requisite consent or
approval required thereby shall have been obtained without any material
condition or limitation.
Section 7.4 No Injunction. On the Closing Date, there shall not be any
-------------
order outstanding against any party hereto or law promulgated that prevents the
consummation of, the Contemplated Transactions.
Section 7.5 Payment. The Purchaser shall have paid the Purchase Price at
-------
the Closing.
Section 7.6 Replacement of Paragon Subordinate DIP Loan. Purchaser shall
-------------------------------------------
furnish to Seller satisfactory evidence that Purchaser has purchased $3,960,000
in principal and any unpaid interest accrued on such principal amount of the
Paragon Subordinate DIP Loan and any other amounts for which the Company is
liable thereunder, which amounts shall have been paid at the time and in the
manner required by the Bidding Procedures Order. Purchaser shall also furnish to
Seller satisfactory evidence that Purchaser has forgiven and waived all amounts
due by and from the Company with respect to any amount of the Paragon
Subordinate DIP Loan purchased by the Purchaser.
Section 7.7 Release of Subsidiaries; Subsidiary Indebtedness. Each
------------------------------------------------
Subsidiary of the Company shall have been released from, and shall have no
liability as a guarantor or otherwise in respect of, any liability of or to the
Company incurred prior to February 14, 2001, and any and all Liens on any
---
properties or assets of any such Subsidiary securing any such obligation or
liability of or to the Company as a guarantor of any such obligation of or to
the Company, shall have been satisfied and unconditionally released. Where
requested by the applicable Subsidiary, the satisfaction of any Indebtedness of
a subsidiary to the Company shall have been by way of a conversion of such
Indebtedness into equity.
VIII
DELIVERIES AT CLOSING
Section 8.1 The Seller's Deliveries at Closing. In addition to the other
----------------------------------
things required to be done hereby, at the Closing, the Company shall deliver, or
cause to be delivered, to the Purchaser the following:
22
(a) a certificate dated the Closing Date validly executed on
behalf of the Seller to the effect that the conditions set forth in Section 6.1
have been satisfied;
(b) a legal opinion of outside counsel to the Company, dated the
Closing Date, addressed to the Purchaser, confirming that such counsel has
reviewed the docket of the Bankruptcy Court and that the Sale Order was entered
by the Bankruptcy Court and was described in such opinion, amended or modified;
(c) Intentionally Omitted;
(d) all documents, certificates and agreements necessary to
transfer to the Purchaser good and marketable title to the Domestic Purchased
Assets, free and clear of any and all Liens thereon (other than Permitted
Liens), including:
(i) A duly executed Assignment and Assumption Agreement,
in customary form mutually agreeable to the parties;
(ii) assignments of all Assumed Contracts, Intellectual
Property and any other agreements and instruments consisting Domestic Purchased
Assets, dated the Closing Date, assigning to the Purchaser all of the Company's
right, title and interest therein and thereto; and
(iii) an assignment of lease, dated as of the Closing Date,
with respect to each Assumed Lease, in form reasonably acceptable to the
Purchaser;
(e) certified copies of all orders of the Bankruptcy Court
pertaining to the Contemplated Transactions, including the Sale Order, and
evidence of the entry of all such orders on the docket of the Chapter 11 case
and of the absence as of the Closing of any stay thereof; and
(f) Intentionally Omitted.
Section 8.2 The Purchaser's Deliveries at Closing. In addition to the other
-------------------------------------
things required to be done hereby, at the Closing, the Purchaser shall have
delivered or caused to be delivered to the Company, the amounts provided in
Section 1.4.4, and, in addition, the Purchaser shall deliver, or cause to be
delivered, to the Company the following:
(a) a certificate of the Purchaser dated the Closing Date and
validly executed on behalf of the Purchaser to the effect that the conditions
set forth in Section 7.1 have been satisfied;
(b) a duly executed Assignment and Assumption Agreement, in
customary form mutually agreeable to the parties; and
(c) the items required by Section 7.6.
23
Section 8.3 Required Documents. All documents to be delivered by the
------------------
Seller or to be entered into by the Seller and the Purchaser necessary to carry
out the transactions contemplated by this Agreement or contemplated by the terms
of this Agreement shall be reasonably satisfactory in form and substance to the
Purchaser and counsel to the Purchaser and all documents to be delivered by the
Purchaser necessary to carry out the transactions contemplated by this Agreement
or to be entered into by the Seller and the Purchaser necessary to carry out the
transactions contemplated by this Agreement shall be reasonably satisfactory in
form and substance to the Seller and counsel to the Seller.
IX
CERTAIN ADDITIONAL PROVISIONS AND COVENANTS
Section 9.1 Excluded Subsidiaries. From and after the Closing Date, the
---------------------
Company and each such Excluded Subsidiary shall cease using the Drypers name and
any stationery or material that includes such name for any and all purposes.
Section 9.2 Further Assurances. In addition to the provisions of this
------------------
Agreement, from time to time after the Closing Date, the Company and the
Purchaser will use commercially reasonable efforts to execute and deliver such
other instruments of conveyance, transfer or assumption, as the case may be, and
take such other action as may be reasonably requested to implement more
effectively the conveyance and transfer of the Domestic Purchased Property.
Seller shall not be required to incur or be liable for any expenses, costs or
obligations in connection with the foregoing other than reasonable attorneys
fees and expenses.
Section 9.3 Books and Records; Personnel. For a period of seven (7) years
----------------------------
after the Closing Date (or such longer period as may be required by any
governmental or regulatory body or authority or ongoing Legal Proceeding):
(a) The Purchaser shall not dispose of or destroy any of
the business records and files of the Business other than in connection with a
sale or other disposition of the Business or any portion thereof. If the
Purchaser wishes to dispose of or destroy such records and files after that
time, it shall first give sixty (60) days' prior written notice to the Company,
and the Company shall have the right, at its option and expense, upon prior
written notice to the Purchaser within such sixty-day period, to take possession
of the records and files within ninety (90) days after the date of the notice
from the Company.
(b) the Purchaser shall allow the Company and any of its
directors, officers, employees, counsel, representatives, accountants, and
auditors (collectively, the "Company Representatives") access to all business
-----------------------
records and files of the Company or the Business that are transferred to it in
connection herewith, which are reasonably required by such party in anticipation
of, or preparation for, any existing or future Legal Proceeding involving the
Company or Tax Return preparation, during regular business hours and upon
reasonable notice at the Purchaser's principal place of business or at any
location where such records are stored, and the Company Representatives shall
have the right at their cost to make copies of any such records and files;
provided, however, that any such access or copying shall be had or done in
24
such a manner so as not to interfere with the normal conduct of the Purchaser's
business or operations.
Section 9.4 Third Party Rights. No provision of this Agreement shall
------------------
create any third party beneficiary rights in any Employee, Foreign Employee or
any other persons or entities (including any beneficiary or dependent thereof),
in respect of continued employment (or resumed employment) for any specified
period of any nature or kind whatsoever, and no provision of this Agreement
shall create such third party beneficiary rights in any such persons or entities
in respect of any benefits that may be provided, directly or indirectly, under
any Benefit Plan or otherwise.
Section 9.5 Hold Harmless. Intentionally Omitted.
-------------
Section 9.6 Employment of the Company's Employees.
-------------------------------------
(a) The Company shall use commercially reasonable efforts
to retain Employees and to maintain in good standing through the Closing all
relationships and agreements with Employees, independent contractors or
consultants, in each case from the date hereof through the Closing Date and, in
the case of the Company, to cooperate with the Purchaser in hiring its Employees
offered employment pursuant to Section 9.6(b); provided, that the foregoing
shall not require that the Company offer any compensation or other incentives in
addition to the compensation and benefits being provided or required to be
provided as of the date of this Agreement.
(b) The Purchaser shall offer employment to certain Current
Employees effective as of the Closing Date, so as to avoid any statutory
liability of the Company to those employees.
(c) From the date hereof through the Closing, the Company
shall permit the Purchaser to communicate with its employees, and consultants,
at reasonable times and upon reasonable notice, concerning the Purchaser's
plans, operations, business, customer relations and general personnel matters
and to interview such employees and consultants and review the personnel records
and such other information concerning such employees and consultants as the
Purchaser may reasonably request (subject to obtaining any legally required
written permission of any affected employee, or consultant and to other
applicable law), provided that such contacts shall be conducted in a manner that
is reasonably acceptable to the Company.
(d) The Company shall be solely responsible for any and all
liabilities relating to or arising in connection with any actual, constructive
or deemed termination of employment (including without limitation, severance or
separation pay or benefits or other similar compensation or benefits under any
applicable law, regulation or Benefit Plan) to or with respect to any employee
of the Company other than a Purchaser Employee, and whether before the Closing
Date, or to any Purchaser Employee whether as a result of (A) any event
occurring before the Closing, or (B) any action or failure to act of the Company
(including without limitation, severance or separation pay or benefits under any
applicable law, regulation or Benefit Plan). Except as provided in this Section
9.6(d), the Purchaser shall be solely
25
responsible for any and all Liabilities relating to or arising in connection
with any actual, constructive or deemed termination of employment of any
Purchaser Employee.
Section 9.7 Workers' Compensation
---------------------
(a) From and after the Closing Date: (i) the Company
shall remain solely responsible for any and all liabilities relating to or
arising in connection with any and all claims for workers' compensation benefits
(x) incurred by or in respect of any employee of the Company who is not a
Purchaser Employee on, prior to or after the Closing Date, and (y) incurred by
or in respect of a Purchaser Employee on or before the Closing Date, and (ii)
the Purchaser shall be solely responsible for any and all liabilities to or in
respect of a Purchaser Employee relating to or arising in connection with any
and all claims for worker's compensation benefits incurred after the date of
employment.
(b) For purposes of this Section 9.8, a claim for
workers' compensation benefits shall be deemed to be incurred when the first
event giving rise to the claim occurs.
Section 9.8 Employment Taxes
----------------
(a) The Company and the Purchaser shall (i) treat the
Purchaser as a "successor employer" and the Company as a "Predecessor," within
the meaning of sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to
Purchaser Employees who are employed by the Purchaser for purposes of Taxes
imposed under the United States Federal Unemployment Tax Act ("FUTA") or the
----
United States Federal Insurance Contributions Act ("FICA"), and (ii) cooperate
----
with each other to avoid, to the extent possible, the filing of more than one
IRS Form W-2 with respect to each such Purchaser Employee for the calendar year
within which the Closing Date occurs.
(b) At the reasonable request of the Purchaser with
respect to any particular applicable Tax Law relating to employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care or other similar Tax other than Taxes imposed under FICA
and FUTA, the Company shall and the Purchaser shall (i) treat the Purchaser as a
successor employer and the Company as a predecessor employer, within the meaning
of the relevant provisions of such Tax Law, with respect to Purchaser Employees
who are employed by the Purchaser, and (ii) cooperate with each other to avoid,
to the extent possible, the filing of more than one individual information
reporting form pursuant to each such Tax Law with respect to each such Purchaser
Employee for the calendar year within which the Closing Date occurs.
Section 9.9 Paid Up License. The Purchaser acknowledges the Company
---------------
will, effective immediately prior to the Closing, deliver the licenses described
on Schedule 9.9, each of which shall be a perpetual, fully paid-up transferable
license to use any Intellectual Property (including without limitation the right
to use the "Drypers" brand and all its associated trademarks, logos, styles and
related elements) provided, however, that such license shall be granted only to
the extent the Intellectual Property to be licensed by the Company is owned by
the Company or any
26
of its Subsidiaries immediately prior to Closing. Such license shall be
exclusive as to Trademarks and non-exclusive as to all other Intellectual
Property.
Section 9.11 Transfer of Licenses and Trademarks. To the extent any of the
-----------------------------------
licensees identified on Schedule 9.9 request the Company to do so, effective
immediately prior to the Closing, the Company will execute an assignment of the
trademarks covered by such licenses and registered in the geographic areas
identified in Schedule 9.9. The registration of such transfer will be at the
sole cost and expense of such licensee and upon the effectiveness of such
transfer the Purchaser shall have no further obligation pursuant to Section
9.10 to maintain the transferred trademarks.
Section 9.10 Intellectual Property Fees. The Purchaser shall pay all
--------------------------
renewal fees and other fees and do all acts necessary to maintain the
registrations and application therefor and the continued existence of the
Intellectual Property licensed pursuant to Section 9.9. The Purchaser
undertakes not to do or permit to be done any act which would or might prejudice
or affect in any way the continued registration and/or existence of such
Intellectual Property or the licenses granted pursuant to Section 9.9. The
Purchaser shall cause any party who has or obtains any right or title to such
Intellectual Property to likewise comply with the obligations set out in this
Section 9.10. The Company shall use its best efforts to include a provision in
such license requiring the licensee thereof to reimburse the Purchaser for any
fees incurred by Purchaser to maintain the trademark registrations and
applications therefor.
X
SURVIVAL OF REPRESENTATION AND
WARRANTIES OF SELLER
Section 10.1 Survival of Representations and Warranties. Notwithstanding
------------------------------------------
any right of the Purchaser to investigate fully the affairs of the Company and
the Subsidiaries and notwithstanding any knowledge of facts determined or
determinable by the Purchaser pursuant to such investigation or right of
investigation, the Purchaser has the right to rely fully upon the
representations, warrants, covenants and agreements of the Seller contained in
this Agreement or in any documents delivered pursuant to this Agreement. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive until the Closing Date, at which time
they shall terminate.
XI
TERMINATION OF AGREEMENT
Section 11.1 Termination. This Agreement may be terminated prior to the
-----------
Closing as follows:
(a) at the election of the Seller, if any one or more of the
conditions to the obligation of the Seller to close set forth in Article VII has
not been fulfilled as of the scheduled Closing Date;
27
(b) at the election of the Purchaser, if any one or more of the
conditions to the obligation of the Purchaser to close set forth in Article VI
has not been fulfilled as of the scheduled Closing Date;
(c) at the election of the Seller or the Purchaser, if there is
any injunction, stay, order, or decree of any nature of any Governmental Body of
competent jurisdiction that is in effect that prohibits or materially restrains
the consummation of the Contemplated Transactions;
(d) at the election of the Seller, if the Purchaser has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not cured prior to the
scheduled Closing Date and which breach, individually or in the aggregate with
any other breaches, could have a Seller Material Adverse Effect;
(e) at the election of the Purchaser, if the Company has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not cured prior to the
scheduled Closing Date and which breach(es), individually or in the aggregate
with any other breaches, could have a Seller Material Adverse Effect;
(f) at any time on or prior to the Closing Date, by mutual
written consent of the Company and the Purchaser;
(g) at any time after March 23, 2001, at the election of the
Purchaser or the Seller, if by such date the Closing has not occurred; provided,
however, that neither the Seller, on the one hand, nor the Purchaser, on the
other hand, may terminate the Agreement pursuant to this Section 11.1(g) unless
at the time that such party seeks to exercise its right to terminate this
Agreement all conditions contained in Article VII, if termination is being
sought by the Purchaser, or Article VI, if termination is being sought by the
Seller, are, or are immediately capable of being, satisfied at the time that
such party gives notice of such termination;
(h) at any time after March 5, 2001, at the election of the
Purchaser or any of the Seller, if by such date the Sale Order has not been
entered; or
(i) at the election of the Purchaser on or prior to the Closing
Date pursuant to Section 6.14(a).
If this Agreement so terminates, it shall become null and void and have no
further force or effect, except as provided in Section 11.2.
Section 11.2 Survival After Termination.
--------------------------
(a) If this Agreement terminates pursuant to Section 11.1 and
the Contemplated Transactions are not consummated, this Agreement shall become
null and void and have no further force or effect. Notwithstanding anything in
this Agreement to the contrary, the provisions of Section 5.2 relating to the
obligation of the Purchaser to keep confidential and
28
not to use certain information and data obtained from the Company or the
Subsidiaries, as the case may be, and to return documents to the Company or the
Subsidiaries, as the case may be, shall remain in full force and effect.
(b) The parties agree that if this Agreement is terminated under
any subsection of Section 11.1 other than Section 11.1(d), then the Purchaser's
sole and exclusive remedy shall be to receive any deposit in accordance with the
Bidding Procedures Order or the Sale Order.
XII
GENERAL PROVISIONS
Section 12.1 Notices. All notices, claims, demands, and other
-------
communications hereunder shall be in writing and shall be deemed given upon (x)
confirmation of receipt of a facsimile transmission, (y) confirmed delivery by a
standard overnight carrier or when delivered by hand, or (z) the expiration of
five (5) Business Days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following address (or such other address for a party as shall he
specified by like notice):
(a) If to the purchaser, to:
▇▇▇▇▇ ▇▇▇▇▇
Associated Hygienic Products LLC,
a Delaware limited liability company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Pillsbury Winthrop LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (415)98-1200
(b) If to the Seller, to:
Drypers Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
29
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Section 12.2 Descriptive Headings. The headings contained in this
--------------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 12.3 Entire Agreement; Assignment. This Agreement (including the
----------------------------
Exhibits, the Seller Disclosure Letter, and the other documents and instruments
referred to herein), together with the Confidentiality Agreement, (a)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the parties, with respect to the
subject matter hereof, including, without limitation, any transaction between
the parties hereto and (b) shall not be assigned by operation of law or
otherwise; provided, however, that the Purchaser may assign all or any part of
-------- -------
its rights and obligations hereunder to any subsidiary or affiliate of the
Purchaser without the consent of the Company, but the Purchaser shall not be
relieved of its obligations hereunder as a result of such assignment.
Section 12.4 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of Texas without regard to
the rules of conflict of laws of the State of Texas and any other jurisdiction.
Section 12.5 Expenses. Except as otherwise provided herein and in the
--------
Bidding Procedures Order, whether or not the actions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection will
this Agreement and the transactions contemplated thereby shall be paid by the
party incurring such expenses.
Section 12.6 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of the parties hereto.
Section 12.7 Waiver. At any time prior to the Closing Date, the parties
-----
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
Section 12.8 Counterparts; Effectiveness. This Agreement may be executed
---------------------------
in two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement. This Agreement shall
become effective when each party hereto shall have received counterparts thereof
signed by all the other parties hereto.
30
Section 12.9 Severability; Validity; Parties in Interest. If any
-------------------------------------------
provision of this Agreement or the application thereof to any person or
circumstances is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provisions to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Nothing in this Agreement, express or implied, is
intended to confer upon any person not a party to this Agreement.
Section 12.10 Consent to Jurisdiction and Service of Process. All disputes
----------------------------------------------
arising out or related to this Agreement, including, without limitation, any
dispute relating to the interpretation, meaning or effect of any provision
hereof, will be resolved in the Bankruptcy Court and the parties hereto each
submit to the exclusive jurisdiction of the Bankruptcy Court for the purpose of
adjudicating any such dispute; provided, however, that the parties agree that if
-------- -------
the Bankruptcy Court does not accept jurisdiction over any such dispute, such
dispute shall then be brought exclusively in the courts of the State of Texas
located in Houston or of the United States of America for the Southern District
of texas and each party hereby expressly submits to the personal jurisdiction
and the venue of such courts for the purposes thereof and expressly waives any
claim of improper venue and any claim that such courts are an inconvenient
forum.
XIII
DEFINITIONS
Section 13.1 Certain Definitions. Capitalized terms used herein but not
-------------------
otherwise defined herein have the meaning assigned thereto in the Bankruptcy
Code. In addition to the terms defined above, as used in this Agreement, the
following terms have the following meanings:
"Accounts Payable" means all accounts payable of the Company and the
----------------
Subsidiaries taken as a whole, whether arising under a Contract or otherwise as
well as rights to rebates or credits from suppliers.
"Account Receivable" means any right to payment for goods sold or leased or for
------------------
services rendered, whether arising under a Contract or otherwise.
"affiliate" means, with respect to any person, any other person controlling,
---------
controlled by or under common control with, or the parents, spouse, lineal
descendants or beneficiaries of, such person.
"Asian Subsidiaries" means each of Drypers Malaysia SDN BHD, Drypers Marketing
------------------
SDN BHD, Drypers Asia Pte Ltd. and Drypers Asia (M) SDN BHD.
"Balance Sheet" shall have the meaning for such term set forth in Section 3.7.
-------------
"Bankruptcy Code" means title 11 of the United States Code, as amended from time
---------------
to time, as applicable to the Case.
"Bankruptcy Court" means the United States Bankruptcy Court for the Southern
----------------
District of Texas, Houston Division, or such other court with jurisdiction over
the Case.
31
"Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended,
----------------
promulgated under section 2075 of title 28 of the United States Code, as
applicable to the Case.
"Bidding Procedures" means the Bidding Procedures contained in the Bidding
------------------
Procedures Order as amended or modified from time to time with the consent of
the Purchaser and the Company.
"Bidding Procedures Order" means that certain Order entered by the Bankruptcy
------------------------
Court on December 22, 2000 approving the Bidding Procedures (as defined therein,
as amended by that certain Amended Order entered by the Bankruptcy Court on
January 19, 2001, as further amended by that certain First Amended Order entered
on January 25, 2001 and as further amended by that certain Second Amended Order
entered on February 1, 2001).
"Business Day" means any day other than a Saturday, Sunday or "legal holiday" as
------------
defined in Bankruptcy Rule 9006(a).
"Claim" means (a) right to payment, whether or not such right is reduced to
-----
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured, or (b) right to an
equitable remedy for breach of performance if such breach gives rise to a right
of payment, weather or not such right to an equitable remedy is reduced to
judgement, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company Products" means all goods manufactured by the Company or any of its
----------------
Subsidiaries.
"Copyrights" means any foreign or United States copyright registration and
----------
applications for registration thereof, and any non-registered copyrights.
"Employee" means any individual employed by the Company as of the Closing Date.
--------
"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.
"Excluded Subsidiaries" means each of DL, HPI, Drypers Mexico S.A. de C.V.,
---------------------
Drypers Holdings de Mexico SRL de CV, Drypers Servicios de Mexico SRL de CV,
Drypers Caribbean Holdings Limited, Ultracare Products International, Inc. and
Igienica Difusion, Inc. Ltd.
"Foreign Employee" means any individual employed by any Subsidiary organized in
----------------
a jurisdiction other than the United States.
"Hazardous Substance" means any toxic waste, pollutant, contaminant, hazardous
-------------------
substance, toxic substance, harzardous 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 regulated under or defined by any Safety and Environmental Law.
32
"Inactive Employee" means an employee who is not actively at work due to
-----------------
approved leave of absence, short-term disability leave or military leave.
"Indebtedness" means (i) any liability of any person (a) for borrowed money, (b)
------------
evidenced by a note or similar instrument (including a purchase money
obligation) given in connection with the acquisition of any property or assets
(other than inventory or similar property acquired in the ordinary course of
business), including securities, (c) for the payment of money relating to a
capitalized lease obligation, and (d) for any Claim; (ii) any liability of
others described in the preceding clause (i) which the person has guaranteed or
which is otherwise its legal liability; and (iii) any amendment, renewal,
extension or refunding of any liability of the types referred to in clauses (i)
and (ii) above.
"IRS" means the Internal Revenue Service.
---
"Internet Assets" means any internet domain names and other computer user
---------------
identifiers and any rights in and to sites on the world wide web including
rights in and to any text, graphics, audio and video files, and html or other
code incorporated in such sites.
"Inventories" means all of the inventory of the Company and its Subsidiaries,
-----------
including without limitation: (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in the business
of the Company and its Subsidiaries; (ii) all goods, wares and merchandise,
finished or unfinished, held for sale or lease or leased or furnished or to be
furnished under contracts of service; and (iii) all goods returned or
repossessed by the Company.
"Knowledge" means when used in reference to the Company (e.g. "to the Company's
---------
knowledge," "to the knowledge of the Company" and phrases of similar import)
means the knowledge of the Company's chief executive, operating and financial
officers, as well as the knowledge of the most senior executives, operating and
financial officers of each Subsidiary.
"Latin American Subsidiaries" means Seler S.A., New Dry S.A. Drypers do Brasil
---------------------------
Ind. e Com. Ltda., Drypers Andina + CIA, S.C.A.
"Legal Proceeding" means any judicial, administrative, regulatory or arbitral
----------------
proceeding, investigation or inquiry or administrative charge or complaint
pending at law or in equity before any governmental or regulatory body or
authority.
"Lien" shall have the meaning set forth in 11 U.S.C. (S) 101(37), and
----
specifically includes without limitation, any lien, claim, encumbrance, charge
and interest.
"Material Contract" means (i) any (x) Lease for real property or (y) Lease for
-----------------
personal property, in each case requiring aggregate payments after Closing of
$150,000 or more; (ii) any contract for the purchase of materials, supplies,
goods, and services, equipment or other assets that has a term of at least one
year and that requires aggregate payments after Closing of $150,000 or more;
(iii) any contract that requires aggregate payments after Closing of $150,000 or
more, including debt documents; (iv) any sales, distribution or other similar
contracts not entered into in the ordinary course providing for the sale by the
Company or any of its Subsidiaries of materials, supplies, goods, services,
equipment or other assets that requires aggregate payments after Closing of
33
$150,000 or more; (v) any acquisition, dispositioning, partnership, joint
venture or other similar Contract; or (vi) any Contract or agreement under which
any Subsidiary indemnifies or has any other contingent liability to any person.
"Patents" means any foreign or United States patents and 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.
"Permitted Liens" means (a) liens for taxes and other governmental charges and
---------------
assessments which are not yet due and payable, (b) liens of landlords and liens
of carriers, warehousemen, mechanics and materialmen and other like liens
arising in the ordinary course of business for sums not yet due and payable (c)
other liens or imperfections on property which are not material in amount or do
not materially detract from the value of or materially impair the existing use
of the property affected by such lien or imperfection and (d) any license of
Intellectual Property granted pursuant to Section 9.9..
"person" means any individual, corporation, partnership, limited liability
------
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Petition Date" means October 10, 2000.
-------------
"Procter & ▇▇▇▇▇▇" means The Procter & ▇▇▇▇▇▇ Company, an Ohio corporation.
----------------
"Procter and ▇▇▇▇▇▇ Settlement Agreement" means order approving the
---------------------------------------
implementation of the prepetition term sheet agreement by and between the
Company and Procter & ▇▇▇▇▇▇ dated October 9, 2000, as amended through the date
of this Agreement, (including all exhibits thereto and any related agreements,
including, without limitation, the U.S. License Agreement, dated December 13,
2000, between the Company and Procter & ▇▇▇▇▇▇ and the Canadian License
Agreement, dated December 13, 2000, between the Company and Procter & ▇▇▇▇▇▇).
"Procter and ▇▇▇▇▇▇ Settlement Order" means the Order of the Bankruptcy Court
-----------------------------------
authorizing and approving the Procter and ▇▇▇▇▇▇ Settlement Agreement.
"property" or "properties" means real, personal or mixed property, tangible or
-------- ----------
intangible.
"the Purchaser Disclosure Letter" means the disclosure letter delivered by the
-------------------------------
Purchaser to the Company in connection with the execution and delivery of this
Agreement by the parties hereto.
"Purchaser Employee" means a Current Employee who is hired by the Purchaser.
------------------
"Safety and Environmental Laws" means all Laws and Orders relating to pollution,
-----------------------------
protection of the Environment, public or worker health and safety, or the
emission, discharge, release or threatened release or Hazardous Substances into
the Environment or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S)9601 et seq., the Resource
------
Conservation and Recovery Act, 42
34
U.S.C. (S) 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. (S) 2601
-------
et seq., the Federal Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.,
------- -------
the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the Federal Insecticide,
-------
Fungicide and Rodenticide Act, 7 U.S.C. (S) 121 et seq., the Occupational Safety
-------
and Health Act, 29 U.S.C. (S) 661 et seq., the Asbestos Hazard Emergency
-------
Response Act, 15 U.S.C. (S) 2601 et seq., the Safe Drinking Water Act, 42 U.S.C.
-------
(S) 300f et seq., the Oil Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq., and
------- -------
analogous state and foreign Laws and Orders.
"Sale Order" means (i) an order of the Bankruptcy Court, in form and substance
----------
reasonably satisfactory to the Purchaser and the Company, approving the sale of
the Business, including all Domestic Purchased Assets and the assignment of all
Assumed Contracts, Assumed Leases by the Company to the Purchaser under this
Agreement pursuant to sections 105 and 363 of the Bankruptcy Code, in each case
free and clear of any Liens except as specifically set forth in this Agreement
as Permitted Lien or Assumed Liability, and finding that the Purchaser is acting
in good faith the Purchaser including for purposes of section 363(m) of the
Bankruptcy Code, and (ii) an order of orders of the Bankruptcy Court in form and
substance reasonably satisfactory to the Purchaser and the Company, approving
the assumption and assignment of all Assumed Contracts, and Assumed Leases by
the Company pursuant to section 365 of the Bankruptcy Code. The Sale Order shall
provide that all defaults of the Company under the Assumed Contracts and Assumed
Leases arising or accruing prior to the date of the Sale Order (without giving
effect to any acceleration clauses or any default provisions in such contracts
of a kind specified in section 365(b)(2) of the Bankruptcy Code) have been cured
or will be promptly cured by the Company such that the Purchaser shall have no
liability or obligation with respect to any default or obligation arising or
accruing prior to the date of the Closing, except as may otherwise be
specifically agreed as set forth in this Agreement; and that the Assumed
Contracts, and Assumed Leases will be transferred to, and remain in full force
and effect for the benefit of the Applicable the Purchaser, notwithstanding any
provision in such Assumed Contracts, Assumed Puerto Rico Contracts, Assumed
Leases and Assumed Puerto Rico Leases or in applicable law (including those
described in sections 365(b)(2) and (f) of the Bankruptcy Code) that prohibits,
restricts, or limits in any way such assignment or transfer.
"Seller Disclosure Letter" means the disclosure letter delivered by the Company
------------------------
to the Purchaser of the Agreement by the parties hereto pursuant to Section
5.13.
"Software" means any computer software programs, source code, object code, data
--------
and documentation.
"Subsidiaries" means the Company's subsidiaries and affiliates, including
without limitation the subsidiaries and affiliates set forth in Section 3.2 of
the Seller Disclosure Letter.
"Taxes" means (i) any and all federal, state, provincial, local, foreign and
-----
other taxes, levies, fees, imposts, duties, and similar governmental charges
(including any interest, fines, assessments, penalties or additions to tax
imposed in connection therewith or with respect thereto) including, without
limitation, taxes imposed on, or measured by, income, franchise, profits or
gross receipts, ad valorem, value added, capital gains, sales, goods and
services, use, real or personal property, capital stock, license, branch,
payroll, estimated withholding, employment, social security (or similar),
unemployment, compensation, utility, severance,
35
production, excise, stamp, occupation, premium, windfall profits, transfer and
gains taxes, and customs duties, and (ii) any transferee liability in respect of
any items described in clause (i) above.
"Tax Returns" means any and all reports, returns, declarations, claims for
-----------
refund, elections, disclosures, estimates, information reports or returns or
statements required to a supplied to a taxing authority in connection with
Taxes, including any schedule or attachment thereto or amendment thereof.
"Trade Secrets" means any trade secrets, research records, processes,
-------------
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service marks, trade
----------
dress, trade names, brand names, designs an logos, corporate names, product or
service identifiers, whether registered or unregistered, and all registrations
and applications for registration thereof.
"Treasury Regulation" means the regulations promulgated under the Code.
-------------------
36
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused this
Agreement to be executed on their behalf by their officers thereunto duly
authorized, as of the date first above written.
DSG International Limited
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
----------------------
Title: Vice President
---------------------
Associated Hygienic Products LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
----------------------
Title: President
---------------------
By:
---------------------------
Name:
----------------------
Title:
---------------------
DRYPERS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
Title: CHRMN & CEO
---------------------
37