SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 6, 1995
ALBA-WALDENSIAN, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6150 56-0359780
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
201 St. Germain Avenue, S.W., P.O. Box 100, Valdese, NC 28690
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 874-2191
Not applicable
(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
Pursuant to an Asset Purchase Agreement dated March 6, 1995 between
the Registrant and Kayser-Roth Corporation, the Registrant acquired all of
the assets associated with the Balfour Healthcare Division of Kayser-Roth
Corporation for $14,973,014.00. The assets acquired include a manufactur-
ing facility located in Rockwood, Tennessee, all healthcare related
machinery (including knitting, sewing, dying and other equipment involved
in the manufacturing process), office equipment, furniture and fixtures,
raw materials, work-in- process and inventories and all accounts receivable
not collected as of March 6, 1995 relating to the Balfour Healthcare
Division. The purchase price was paid in cash and was financed by a loan
from First Union National Bank of North Carolina. The purchase price was
determined following negotiations with Kayser-Roth Corporation and due
diligence conducted by the Registrant and was approved by the Registrant's
Board of Directors.
The assets acquired were used by Kayser-Roth Corporation to manufac-
ture and distribute component and finished tubular knit products. Products
manufactured include gown cuffs, stockinette drapes, orthopedic stockinette
for casting systems, patient footwear, infant caps and specialty products.
The Registrant intends to continue to use the assets acquired in the same
manner they were used prior to the acquisition. Under a transition
agreement, Kayser-Roth Corporation will continue to manufacture sock
products at the Rockwood, Tennessee plant for a phase-out period of
approximately six months.
Prior to December 31, 1994, the Registrant paid a royalty to Kayser-
Roth Corporation for the license to use the brand name "No Nonsense." The
license expired on December 31, 1994 and was not renewed by the Registrant.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Audited financial statements of the Balfour Healthcare Divison of
Kayser-Roth Corporation are not available as of the date of this filing.
The required financial statements will be filed under cover of a Form 8-K/A
as soon as practicable but in any event no later than May 20, 1995, 60 days
after this Form 8-K is required to be filed.
(b) Pro Forma Financial Information.
The pro forma financial information required with respect to the
acquisition of the Balfour Healthcare Division of Kayser-Roth Corporation are
not available as of the date of this filing. The required pro forma
financial statements will be filed under cover of a Form 8-K/A as soon as
practicable but in any event no later than May 20, 1995, 60 days after this
Form 8-K is required to be filed.
Page 2 of 4 Pages
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(c) Exhibits
2 Asset Purchase Agreement dated as of March 6, 1995
between the Registrant and Kayser-Roth Corporation.
23.1 Consent of Arthur Andersen LLP (to be filed by amendment).
Page 3 of 4 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
ALBA-WALDENSIAN, INC.
By: /s/ Thomas Nail
Thomas Nail
Treasurer, Secretary and Chief Financial
Officer
Dated: March 20, 1995
Page 4 of 4 Pages
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
EXHIBITS
FORM 8-K
CURRENT REPORT
Date of Report Commission File Number
March 6, 1995 1-6150
ALBA-WALDENSIAN, INC.
EXHIBIT INDEX
Exhibit No Exhibit Description
2 Asset Purchase Agreement dated as of March 6, 1995
between the Registrant and Kayser-Roth Corporation.
(Page __ of the sequentially numbered pages).
23.1 Consent of Arthur Andersen LLP (to be filed by amendment).
ASSET PURCHASE AGREEMENT,
dated March 6, 1995,
between
KAYSER-ROTH CORPORATION,
AS SELLER
and
ALBA-WALDENSIAN, INC.,
AS PURCHASER
TABLE OF CONTENTS
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Page No.
RECITALS
I. TERMS OF SALE ..........................................................1
1.1 Sale of the Assets
1.1.1 Real Property ..................................................2
1.1.2 Tangible Personal Property .....................................2
1.1.3 Inventories and Stores and Supplies ............................2
1.1.4 Contract Rights ................................................2
1.1.5 Intellectual Property ..........................................2
1.1.6 Governmental Licenses, Permits and Approvals ...................3
1.1.7 Records ........................................................3
1.1.8 Accounts Receivable and Customer Purchase Orders ...............3
1.1.9 Other Assets ...................................................3
1.2 Excluded Assets ................................................3
1.2.1 Sock Inventory .................................................3
1.2.2 Sock Equipment .................................................3
1.2.3 Accounts Receivable ............................................4
1.2.4 Intellectual Property ..........................................4
1.2.5 Cash ...........................................................4
1.2.6 Insurance Policies .............................................4
1.2.7 Computer Hardware and Software .................................4
1.2.8 Other Assets, Etc...............................................4
1.2.9 Miscellaneous Rights ...........................................4
1.3 Nonassignable Assets ...........................................4
1.3.1 Nonassignability ...............................................4
1.3.2 If Waivers or Consents Cannot Be Obtained ......................5
1.4 Bill of Sale, Deed and Transfer Documents ......................6
II. PAYMENT ...............................................................6
2.1 Cash Payment at Closing ..........................................6
2.2 Leased Equipment Cash Payment ....................................7
III. ASSUMPTION OF LIABILITIES ............................................7
3.1 Assumed Liabilities ..............................................7
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IV. REPRESENTATIONS AND WARRANTIES ........................................7
4.1 Representations and Warranties of K-R .....................7
4.1.1 Corporate Matters .........................................7
4.1.2 Authorization and Effect of Agreement .....................8
4.1.3 No Restrictions or Consents ...............................8
4.1.4 Financial Statements ......................................9
4.1.5 Transactions with Affiliates .............................10
4.1.6 Compliance with Laws .....................................10
4.1.7 Assets; Title ............................................10
4.1.8 Rockwood Facility ........................................11
4.1.9 Insurance ................................................11
4.1.10 Intellectual Property ................................... 12
4.1.11 Litigation; Decrees ..................................... 12
4.1.12 Contract Rights ......................................... 12
4.1.13 Employee Plans .......................................... 14
4.1.14 Accounts Receivable ..................................... 16
4.1.15 Inventories ............................................. 16
4.1.16 Labor Relations and Employment .......................... 16
4.1.17 Environmental Matters ................................... 17
4.1.18 Condition of Assets ..................................... 18
4.1.19 No Changes .............................................. 18
4.1.20 Conduct of Business ..................................... 18
4.1.21 Brokers and Finders ..................................... 19
4.2 Representations and Warranties of Purchaser ..............19
4.2.1 Corporate Organization ...................................19
4.2.2 Authorization and Effect of Agreement ....................19
4.2.3 No Restrictions or Consents ..............................20
4.2.4 Financial Capacity .......................................20
4.2.5 Fraudulent Conveyances ...................................21
4.2.6 Brokers and Finders ......................................21
4.3 Certain Limitations on Representations and Warranties ....21
V. COVENANTS ..............................................................21
5.1 Reserved..................................................21
5.2 Press Releases ...........................................22
5.3 Injunctions ..............................................22
5.4 Consents and Approvals ...................................22
5.5 Reserved..................................................22
5.6 Reserved..................................................22
5.7 Reserved..................................................22
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5.8 Satisfaction of Conditions ................................22
5.9 Financing .................................................23
5.10 Transition Services .......................................23
5.11 Inventory and Accounts Receivable Statements ..............23
VI. THE CLOSING ...........................................................23
6.1 Conditions Precedent to Obligations of Purchaser and K-R ..23
6.2 Additional Conditions Precedent to Obligations of Purchaser 23
6.2.1 No Material Misrepresentation or Breach ...................24
6.2.2 Opinion of Counsel ........................................24
6.2.3 Financing .................................................24
6.2.4 No Litigation .............................................24
6.2.5 Environmental Examinations ................................24
6.3 Additional Conditions Precedent to Obligations of K-R .....25
6.3.1 No Material Misrepresentation or Breach ...................25
6.3.2 Opinion of Counsel ........................................25
6.4 The Closing ...............................................25
6.5 Termination ...............................................25
VII. SURVIVAL AND INDEMNIFICATION ..........................................26
7.1 Survival of Representations, Warranties and Covenants .....26
7.2 Indemnication .............................................26
7.3 Limitations on Liability ..................................28
7.4 Indemnification Procedures ................................29
VIII. OTHER POST-CLOSING COVENANTS .........................................32
8.1 Personnel Matters .........................................32
8.1.1 Employees and Employee Benefit Plans ......................32
8.1.2 Retirement Plans ..........................................33
8.1.3 Employment and Plan Amendments or Terminations ............34
8.1.4 Employee Information ......................................34
8.2 General Post-Closing Matters ..............................34
8.2.1 Post-Closing Notifications ................................34
8.2.2 Names, Trademarks, Etc.....................................35
8.2.3 Access.....................................................35
8.2.4 Certain Tax Matters .......................................37
8.2.5 Payments Received by the Parties After Closing ............37
8.2.6 Action with Respect to Accounts Receivable ................37
8.2.7 Action with Respect to Inventory ..........................38
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8.2.8 Inventory and Accounts Receivable Remedies ................40
8.2.9 Action with Respect to Audit ..............................40
IX. PRORATIONS..............................................................40
9.1 Personal Property Taxes ...................................40
9.2 Real Property Taxes .......................................41
9.3 Payment of Prorated Taxes and Tax Responsibility ..........41
9.4 Utilities..................................................42
9.5 Cooperation ...............................................42
9.6 Survival...................................................42
X. MISCELLANEOUS PROVISIONS ................................................42
10.1 Notices ...................................................42
10.2 Bulk Transfer Law .........................................43
10.3 Expenses...................................................43
10.4 Successors and Assigns ....................................44
10.5 Waiver ....................................................44
10.6 Entire Agreement ..........................................44
10.7 Amendments, Supplements, Etc...............................44
10.8 Rights of the Parties .....................................45
10.9 Further Assurances ........................................45
10.10 Applicable Law ............................................45
10.11 Jurisdiction ..............................................45
10.12 Titles and Headings .......................................45
10.13 Certain Interpretive Matters and Definitions ..............45
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<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into this 6th day of March, 1995 by and between Kayser-Roth Corporation,
a Delaware corporation ("K-R"), and Alba-Waldensian, Inc., a Delaware
corporation ("Purchaser").
RECITALS:
A. K-R is presently engaged at its facility located at 425 North
Gate Way Avenue, Rockwood, Tennessee in the business (the "Business") of
designing, manufacturing and marketing certain textile products used in
the healthcare industry, including without limitation healthcare
specific socks and footwear as listed or described on Exhibit A
(collectively, the "Products") through its Balfour Healthcare division
(the "Healthcare Division");
B. K-R desires to sell and deliver to Purchaser, and Purchaser
desires to purchase and accept from K-R, certain assets relating to the
Business, on the terms and subject to the conditions set forth in this
Agreement; and
C. K-R desires to delegate to Purchaser, and Purchaser is
willing to assume from K-R, certain liabilities relating to the Business
on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
I. TERMS OF SALE
1.1 Sale of the Assets. Upon the terms and subject to the
conditions hereinafter set forth, at the Closing referred to in Section
6.4 below, K-R agrees to sell, transfer and deliver to Purchaser, and
Purchaser agrees to purchase and accept from K-R, the property and
assets of K-R enumerated below (collectively, the "Assets"), as they
exist on the date of the Closing, free and clear of all liens, pledges,
options, security interests,
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claims, charges or other encumbrances except for Permitted Liens and
Permitted Exceptions (as defined in Section 4.1.7). Subject to Section
1.2, the Assets shall consist of the following:
1.1.1 Real Property. The real property in Rockwood, Tennessee owned
in fee by K-R and described in Schedule 1.1.1, together with the
buildings, structures, fixtures and improvements now erected thereon and
all easements, rights and privileges appurtenant thereunto
(collectively, the "Rockwood Facility");
1.1.2 Tangible Personal Property. All machinery, equipment, tools,
spare and maintenance parts, furniture, office equipment and other
tangible personal property owned by K-R as of the Closing which are
located at the Rockwood Facility and which are used in the Business,
including without limitation those listed on Schedule 1.1.2
(collectively, the "Tangible Personal Property");
1.1.3 Inventories and Stores and Supplies. All raw materials,
components, work-in-process of the Products, finished Products,
packaging materials and stores and supplies used in the Business owned
by K-R as of the Closing and located at the Rockwood Facility
(collectively, "Inventories");
1.1.4 Contract Rights. Subject to Section 1.3, all rights and
incidents of interest of K-R as of the Closing in and to all leases,
agreements and purchase orders or other contracts and contractual rights
and obligations of K-R relating to the Business (collectively,
"Contracts"), but excluding K-R's contracts relating to raw materials
not exclusively used by the Healthcare Division which contracts are not
being transferred;
1.1.5 Intellectual Property. K-R's entire right, title and interest
in, under and to the patents, if any, trademarks, service marks, trade
names, and application therefor owned by K-R and used in the Business
which are described in Schedule 1.1.5, all customer lists and trade
secrets owned by K-R and used in the Business, and the goodwill of the
Business, including without limitation the name "Balfour Healthcare"
and, to the extent transferable, the telephone number 615/354-0410 and
related lines (collectively, "Intellectual Proper Rights"); provided
that K-R and Purchaser shall have joint rights to any trade secrets used
both in the Business and K-R's other businesses;
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1.1.6 Governmental Licenses. Permits and Approvals. To the extent
transferable under applicable law, all rights and incidents of interest
in, to and under all licenses, permits and approvals described in
Schedule 1.1.6 (collectively, "Permits") issued to K-R by any federal,
state, local or foreign governmental or regulatory authority (or any
department, agency, authority or political subdivision thereof (each, a
"Governmental Entity")) and in effect or required for operation of the
Business as of the Closing;
1.1.7 Records. All customer and supplier lists and all other books,
records, accounts, files, catalogues, sales materials, employment
records (subject to Section 8.1.4), and related materials relating to
the Healthcare Division and the Business owned by K-R as of the Closing,
whether in written, electronic or other form;
1.1.8 Accounts Receivable and Customer Purchase Orders. All of K-R's
rights and interests in all accounts and notes receivable arising from
the sale of Products, which remain uncollected as of the close of
business on March 4, 1995 (the "Accounts Receivable") and all of K-R's
interests in and rights under all K-R bids and all open customer
purchase orders and customer contracts for the purchase of Products; and
1.1.9 Other Assets. Except for the Excluded Assets (as hereinafter
defined), any other tangible assets owned by K-R that are located as of
the Closing at the Rockwood Facility and relate to the Business.
1.2 Excluded Assets. Notwithstanding anything contained in this
Agreement to the contrary, K-R shall retain and the Assets shall not
include any of the following rights, properties and assets
(collectively, "Excluded Assets"):
1.2.1 Sock Inventory. All sock raw materials, packaging, dyes and
work-in- process inventories located at the Rockwood Facility other than
that associated with or related to any Products;
1.2.2 Sock Equipment. Except as listed or described in Schedule
1.1.2, all K-R sock manufacturing equipment located at the Rockwood
Facility;
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1.2.3 Accounts Receivable. Any accounts receivable other than the
Accounts Receivable, including any accounts receivable arising from
K-R's sock manufacturing business (not including any Products) located
at the Rockwood Facility;
1.2.4 Intellectual Property. The corporate names "Kayser-Roth" and
all variations thereof and all other names containing "Kayser-Roth"
(collectively, the "K-R Trade Names"), all trademarks, (including but
not limited to the "Burlington," "Bioguard", "Green Toe Seam", "Cool
Max", "Landing Pad", "Duramax", "PrimaNatural", "PrimaSport" and
"PrimaClassic" marks), patents, service marks, copyrights, applications
therefor and all other intellectual property rights owned by K-R, other
than the Intellectual Property Rights;
1.2.5 Cash. All cash, cash in banks, cash equivalents, deposits and
funds, including without limitation all checks or other instruments of
payment, received by K-R including such instruments of payment received
in K-R's lockbox, prior to the Closing, except for collections with
respect to any Accounts Receivable listed on the certified list of
Inventory and Accounts Receivable to be delivered at Closing as set
forth in Section 5.11;
1.2.6 Insurance Policies. All insurance policies of K-R, whether
pertaining to the Assets, Products or the Business, and all rights of
every nature and description under or arising out of such policies;
1.2.7 Computer Hardware and Software. The Tandem computer and all
computer software owned by or licensed to K-R;
1.2.8 Other Assets. Etc. Any right, property or asset which is
listed or described in Schedule 1.2.8; and
1.2.9 Miscellaneous Rights. All rights (including refunds and claims
thereto) relating to the liabilities retained by K-R as set forth in
Section 3.1(b) hereof
1.3 Nonassignable Assets.
1.3.1 Nonassignability. To the extent that any Contract or Permit to
be transferred pursuant to the terms of Section 1.1.4 or 1.1.6 is not
capable of being transferred without the consent, approval or waiver of
a third person or entity (including without limitation a Governmental
Entity) and such transfer or attempted transfer would constitute
4
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a breach thereof or a violation of any law, nothing in this Agreement
will constitute a transfer or an attempted transfer thereof; provided,
however, that K-R will use its reasonable efforts after Closing, and
Purchaser will cooperate with K-R, to obtain such consents, approvals
and waivers, and to obtain any other consents, approvals and waivers
necessary to transfer to Purchaser all of such Contracts and Permits;
provided further, however, that K-R will not be obligated to pay any
consideration therefor (except to the extent amounts are expended by
K-R's employees and/or agents in the use of its reasonable efforts) or
to incur any additional liability or obligation in connection therewith
(except to the extent amounts are expended by K-R's employees and/or
agents in the use of its reasonable efforts) or remain secondarily
liable thereon.
1.3.2 If Waivers or Consents Cannot Be Obtained. (a) Except as
provided in paragraph (b) of this Section 1.3.2, if the consents,
approvals and waivers referred to in Section 1.3.1 are not obtained
prior to the Closing, K-R will cooperate in any reasonable arrangement
requested by Purchaser to provide Purchaser with all of the benefits
under such Contract or Permit as if such Contract or Permit had been
assigned to Purchaser, including enforcement for the benefit of
Purchaser of any and all rights of K-R against any other party thereto.
(b) Purchaser recognizes that pursuant to the equipment lease listed
in Schedule 1.3.2 (the "Equipment Lease") K-R leases certain equipment
used in the Business, which equipment (the "Leased Equipment") is
identified on Schedule 1.3.2. Purchaser recognizes that the Equipment
Lease may not be assigned to Purchaser without the consent of the lessor
thereunder. Subject to the last proviso in the last sentence of Section
1.3.1, prior to Closing, K-R and Purchaser will use their respective
reasonable efforts to obtain the lessor's consent to the assignment of
the Equipment Lease to Purchaser and the release of K-R's obligations
thereunder. If K-R cannot obtain such consent and such release with
respect to the Equipment Lease, then, at the Closing, K-R may, at its
option, either (i) purchase the Leased Equipment under such Equipment
Lease from the lessor thereof and then require Purchaser to purchase
from K-R the Leased Equipment so purchased (the
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purchase price to be paid by Purchaser to K-R for such Leased Equipment
shall be equal to the purchase price therefor paid by K-R to the lessor
thereof), or (ii) sublease to Purchaser the Leased Equipment under the
Equipment Lease, on substantially the same terms and conditions as set
forth in such Equipment Lease, provided K-R has obtained the lessor's
consent thereto and in such case, K-R would, notwithstanding the proviso
in the last sentence of Section 1.3.1, either pay consideration or
remain liable with respect to such lease obligation, as the case may be.
1.4 Bill of Sale. Deed and Transfer Documents. At the Closing,
the sale, conveyance, assignment, transfer and delivery of the Assets
will be effected by delivery by K-R to Purchaser of (a) a bill of sale
and instrument of assignment (the "Bill of Sale") with respect to the
Assets other than the Rockwood Facility in the form of Exhibit 1.4(a)
hereto, (b) a special warranty deed (the "Deed"), in recordable form,
with respect to the Rockwood Facility in the form of Exhibit 1.4(b)
hereto, (c) an assignment of trademarks (the 'Trademark Assignment") in
the form of Exhibit 1.4(c) hereto and (d) such other instruments of
conveyance, transfer and assignment as shall be reasonably necessary in
the opinion of Purchaser's counsel to vest in Purchaser K-R's right,
title and interest to the Assets in accordance with this Agreement (the
"Transfer Documents").
II. PAYMENT
2.1 Cash Payment at Closing. At the Closing, Purchaser will pay
to K-R $14,425,000, plus or minus the amount by which Inventory and
Accounts Receivable, as reflected on the Inventory Statement and the
Accounts Receivable Statement (as such terms are hereinafter defined),
is greater or less than the amount of $2,800,000 (the "Cash Payment") by
wire transfer of immediately available funds to such account as K-R
designates in writing prior to the Closing. The parties agree that the
Cash Payment at Closing is $14,973,014, and the amounts on the Inventory
Statement and Accounts Receivable Statement are $1,391,735 and
$1,956,279, respectively.
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2.2 Leased Equipment Cash Payment. At the Closing, the payment for
the Leased Equipment sold by K-R to Purchaser pursuant to Section
1.3.2(b)(i), if any, will also be made by Purchaser to K-R by wire
transfer of immediately available funds as provided in Section 2.1.
III. ASSUMPTION OF LIABILITIES
3.1 Assumed Liabilities. (a) At the Closing, Purchaser will
deliver to K-R an undertaking in the form of Exhibit 3.1(a) hereto (the
"Undertaking") pursuant to which Purchaser will assume and thereafter in
due course pay, perform and fully satisfy, in a timely manner and in
accordance with the terms thereof, only the following liabilities of
K-R, (i) liabilities under the Equipment Lease and the other Contracts,
(ii) liabilities for vacation and holiday compensation owed to Employees
of the Business (as defined in Section 4.1.13) and (iii) liabilities for
prorated taxes as provided in Article IX (collectively, the "Assumed
Liabilities").
(b) Retained Liabilities. For purposes of this Agreement,
except for the Assumed Liabilities, Purchaser shall not assume and K-R
shall retain, and, after giving effect to the Closing, Purchaser shall
not have assumed, and shall not in any respect be responsible for, any
of K-R's liabilities or obligations with respect to the Business of any
nature whatsoever (whether known or unknown and whether absolute,
accrued, contingent or otherwise and whether due or to become due)
arising on or prior (and to the full extent so arising on or prior) to
the Closing, including, without limitation, any liability for Taxes and
Tax Returns.
IV. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of K-R. Subject to Section
4.3, K-R represents and warrants to Purchaser on and as of the date of
the Closing, as follows:
4.1.1 Corporate Matters. K-R is a corporation duly organized,
validly existing and in good standing under Delaware law and K-R has the
requisite corporate power and authority to own, lease or otherwise hold
its properties and assets and to carry
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on the Business as presently conducted. K-R is duly qualified to conduct
business as a foreign corporation in good standing in every state of the
United States in which its ownership or lease of property or conduct of
the Business makes such qualification necessary, except for such states
in which K-R's failure to be so qualified would not have a material
adverse effect on the business, prospects, financial condition or
results of operations of the Business (a "Material Adverse Effect").
Anything herein to the contrary notwithstanding, K-R is qualified to do
business as a foreign corporation and in good standing in the State of
Tennessee.
4.1.2 Authorization and Effect of Agreement. K-R has the requisite
corporate power and authority to execute and deliver this Agreement, the
Transfer Documents and the Transition Services Agreement (as hereinafter
defined) and other agreements contemplated to be executed and delivered
by K-R at the Closing ("Related Agreements") and to perform the
transactions contemplated by this Agreement and the Related Agreements
to be performed by it. The Board of Directors of K-R has taken all
action required by law, its Certificate of Incorporation, its Bylaws or
otherwise to be taken by it to authorize the execution and delivery of
this Agreement and the Related Agreements and the performance by K-R of
the transactions contemplated hereby and thereby. This Agreement has
been and at the Closing the Related Agreements will be duly executed and
delivered by K-R, and assuming the due execution and delivery of this
Agreement and the Related Agreements by Purchaser, constitutes and with
respect to the Related Agreements will constitute, valid and binding
obligations of K-R enforceable against K-R in accordance with their
terms, except that such enforcement may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally or (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
4.1.3 No Restrictions or Consents. (a) Without regard to Section
1.3.1, the execution and delivery of this Agreement and the Related
Agreements by K-R does not, and the performance by K-R of the
transactions contemplated hereby and thereby to be
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performed by it will not, conflict with, or result in any violation of,
or constitute a default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any performance required or the maturity of any debt or
obligation or the loss of a material benefit or result in the creation
or imposition of any lien upon any of the Assets under, any provision of
the Certificate of Incorporation or By-laws of K-R, any Contract or any
Permit, except as listed or described in Schedule 4.1.3 and except for
such violations, defaults, rights of termination, cancellation or
acceleration or losses that, individually or in the aggregate, would not
have a Material Adverse Effect.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to K-R under any
applicable law in connection with the execution and delivery of this
Agreement and the Related Agreements by K-R or the performance by K-R of
the transactions contemplated hereby and thereby to be performed by it,
except for (i) the filing and recording of appropriate documents as
provided by the laws of the State of Tennessee, relating to conveyances
of interests in real property and (ii) such of the foregoing (A) as are
listed or described in Schedule 4.1.3 or (B) which, if not so obtained
or made, would not have a Material Adverse Effect.
4.1.4 Financial Statements. Schedule 4.1.4 contains the unaudited
special purpose financial statements of the Business for the twelve
months ended January 29,1994, the eleven months ended December 31,1994
and the one month ended January 28,1995 (the "Special Purpose Financial
Statements"). The balance sheet and the related notes thereto as of
January 28, 1995 included in the Special Purpose Financial Statements
shall be hereinafter referred to as the "Special Purpose Balance Sheet"
and January 28, 1995 shall be hereinafter referred to as the "Special
Purpose Balance Sheet Date". The Special Purpose Financial Statements
have been prepared on the basis of presentation described in the notes
thereto and except as described in such notes, the Special Purpose
Financial Statements fairly present in all material respects the
operating income and net assets of the
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Business as of and for the periods ended January 29, 1994, December
31,1994 and January 28, 1995. The amounts reflected in the Special
Purpose Financial Statements are as included in K-R's financial
statements for the same periods covered thereby, which financial
statements of K-R have been prepared in accordance with generally
accepted accounting principles, except that the financial statements for
the one month period ended January 28, 1995 do not reflect normal year
end adjustments. Also attached as part of Schedule 4.1.4 is certain
information prepared by K-R regarding the allocated expenses included in
the Special Purchase Financial Statements, which information is true and
correct in all material respects.
4.1.5 Transactions with Affiliates. The Special Purpose Financial
Statements do not reflect purchases or sales of Products or inventory
from or to Affiliates of K-R and the Business which were on terms and/or
conditions other than prevailing fair market value.
4.1.6 Compliance with Laws. Except as listed or described in
Schedule 4.1.6, the Business has been conducted in compliance with all
applicable laws, orders, ordinances, rules and regulations of any
Governmental Entity having jurisdiction over the Business or any of the
Assets, excluding those relating to environmental matters, but
including, without limitation, all such laws relating to antitrust,
consumer protection, currency exchange, equal opportunity, health,
occupational safety, pension, securities and trading-with-the-enemy
matters, other than such violations which would not individually or in
the aggregate have a Material Adverse Effect.
4.1.7 Assets: Title. Except for the Excluded Assets and as listed or
described in Schedule 4.1.7, the Assets constitute all of the material
personal property owned by K-R and used in the conduct of the Business
as currently conducted. K-R has good and marketable fee simple title to
the Rockwood Facility, subject only to the Permitted Exceptions. As used
in this Agreement, "Permitted Exceptions" means: (i) any real estate
taxes, water and sewer taxes, and other assessments that are not yet due
and payable; (ii) matters that an accurate survey would disclose; (iii)
those covenants, restrictions, reservations, easements and similar
agreements affecting the Rockwood Facility or any part
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of it which do not materially impair the value of the Rockwood Facility
or the use of the Rockwood Facility as presently operated; (iv) zoning
laws, ordinances and regulations, building codes, rules and other
governmental laws, regulations, rules and orders affecting the Rockwood
Facility or any part of it which do not materially impair the use of the
Rockwood Facility as presently operated; and (v) those items listed on
Exhibit B to the Deed which is Exhibit 1.4(b) hereto. K-R has good title
to all the other Assets which it purports to own, including, without
limitation, all of the Assets reflected in the Special Purpose Balance
Sheet (except for Assets sold since the Special Purpose Balance Sheet
Date in the ordinary course of business and consistent with past
practice), free and clear of all title defects or objections, liens,
claims, charges, security interests or other encumbrances of any nature
whatsoever including, without limitation, leases, chattel mortgages,
conditional sales contracts, collateral security arrangements and other
title or interest retention arrangements ("Liens"), except (a) Liens on
the Leased Equipment under the Equipment Lease, (b) Liens that are
listed or described in Schedule 4.1.7, (c) mechanics', carriers',
workers', repairmen's or other like Liens arising or incurred in the
ordinary course of business, and (d) Liens for current taxes,
assessments and other governmental charges which are not yet due and
payable or which may thereafter be paid without penalty or (e) Liens
which are being contested in good faith and which are listed or
described in Schedule 4.1.7. (The items referred to in the exceptions to
the immediately preceding sentence are hereinafter referred to as
''Permitted Liens").
4.1.8 Rockwood Facility. (a) K-R has received no written notice from
any governmental authority of any pending or threatened condemnation
proceedings, building code violations, zoning change, or other
proceeding or action that will materially affect the size of, use of,
improvements on, construction on or access to the Rockwood Facility.
(b) K-R's has not granted any person or entity an option or
right of first refusal to purchase all or any of the Rockwood Facility
or any interest therein.
4.1.9 Insurance. K-R has made available to Purchaser schedules of
all material policies of fire, liability and other forms of insurance
covering occurrences as of,
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or claims made on, the date hereof and maintained by K-R to the extent
applicable to the Business.
4.1.10 Intellectual Property. Schedule 1.1.5 lists or describes
all Intellectual Property Rights, applications therefor and a list
of.all licenses and other agreements relating thereto as of the date
hereof Except as set forth in Schedule 4.1.10, K-R has the sole
exclusive right to use the Intellectual Property Rights, and following
the consummation of the transactions contemplated hereby Purchaser will
have the sole and exclusive right to use the Intellectual Property
Rights; no claims have been asserted by any person to the use of any
such Intellectual Property Rights, or challenging or questioning the
validity or effectiveness of any such license or agreement.
4.1.11 Litigation: Decrees. Except as listed or described in
Schedule 4.1.11, there are no lawsuits, claims, inquiries, proceedings
or investigations by or before any court or governmental or other
regulatory or administrative agency or commission relating to the
Business or the Assets pending or to the knowledge of K-R, threatened
against or affecting the Business, which may reasonably be expected to
individually or in the aggregate have a Material Adverse Effect, or
which questions or challenges the validity of this Agreement or any
action taken or to be taken by K-R pursuant to this Agreement or in
connection with the transactions contemplated hereby. K-R is not subject
to any judgment, injunction, rule, order or decree of any Governmental
Entity applicable to the conduct of the Business which may individually
or in the aggregate reasonably be expected to have a Material Adverse
Effect.
4.1.12 Contract Rights. Except as listed or described in Schedule
4.1.12, as of the date hereof, K-R is not a party to or bound by any
Contract with respect to the Business or the Employees (as defined in
Section 4.1.13) that is of a type described below:
(a) Any employment or consulting Contract with an Employee,
agent, consultant or advisor (other than those terminable at will);
(b) Any employment Contract, or any other Contract that
contains any severance or termination pay, liabilities or obligations;
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(c) Any collective bargaining or union contracts or agreements;
(d) Any Contract for capital expenditures or the acquisition or
construction of fixed assets which requires aggregate future payments in
excess of $25,000;
(e) Any Contract relating to cleanup, abatement or other
actions in connection with environmental liabilities;
(f) Any Contract granting to any person a first-refusal,
first-offer or similar preferential right to purchase or acquire any of
the Assets or any part of the Business;
(g) Any license or royalty Contract which pursuant to the terms
thereof requires future payments by K-R;
(h) Any Contract under which K-R has borrowed any money or
issued any note, bond, indenture or other evidence of indebtedness for
borrowed money, or guaranteed indebtedness for money borrowed by others
or Contracts or agreements to acquire any such debt obligations of
others, which is not expressly set forth in the Special Purpose Balance
Sheet and would constitute an Assumed Liability;
(i) Any Contract with any manufacturer's representative,
salesman, distributor, dealer or other sales agent having a remaining
term in excess of one year and which is not terminable without penalty
on 60 calendar days or less notice;
(j) Any Contract under which K-R (i) is a lessee of real
property, (ii) is a lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by a third
person or entity in any such case which requires aggregate annual
payments in excess of $50,000, (iii) is a lessor of real property or
(iv) is a lessor of any tangible personal property owned by K- R in any
such case which requires aggregate annual payments in excess of $50,000;
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(k) Any other Contract which involves future payments by or to
K-R in excess of $100,000 other than a purchase or sales order entered
into in the ordinary course of the conduct of the Business;
(l) Any Contract which restricts the ability of K-R to conduct
the Business in any geographic area; or
(m) Any contract for the purchase or sale by the Business of
Products or inventory to or from an Affiliate of K-R on other than
prevailing fair market value terms and conditions.
Except as set forth in Schedule 4.1.12, each Contract listed or
described in Schedule 4.1.12 is a valid and binding obligation of K-R
and, to the knowledge of K-R, the other parties thereto (subject to
bankruptcy, insolvency, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally) and is in
full force and effect. Except as set forth in Schedule 4.1.12, K-R has
performed all material obligations required to be performed by it
through the date hereof under each of the Contracts so listed or
described and is not (with or without the lapse of time or the giving
of notice, or both) in, or alleged to be in, material breach or default
in any respect thereunder, and, to the knowledge of K-R, no other party
to any of such Contracts has materially breached or defaulted
thereunder, and no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice or
both, would constitute such default or breach by K-R or, to the
knowledge of K- R, by any such other party. Complete and correct copies
of each of such Contracts, together with all amendments thereto, have
heretofore been made available to Purchaser by K-R.
4.1.13 Employee Plans. (a) For purposes of this Agreement, the term
"Employee Plan" means each employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and each other bonus, deferred compensation, incentive
compensation, stock purchase, stock option,
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employment, consulting, severance or termination pay, hospitalization or
other medical, life, disability or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plan,
program, agreement or arrangement, whether subject to ERISA, that
provides benefits for Employees and that is sponsored, maintained or
contributed to by K-R or by any of its subsidiaries or divisions, or by
any trade or business, whether or not incorporated which together with
K-R would be deemed a "single employer plan" within the meaning of
Section 4001 of ERISA (an "ERISA Affiliate"), within the last six years,
in respect of Employees of the Business. As used in this Agreement, the
term "Employee" means each person employed at the Rockwood Facility and
those other persons identified in Schedule 4.1.13. The term "Employee"
will include, where an Employee Plan provides benefits for beneficiaries
or dependents, the beneficiaries and dependents of an Employee. Schedule
4.1.13 lists or describes all Employee Plans other than Employee Plans
listed or described in Schedule 4.1.12 or mandated by Law. None of the
Employee Plans is a "multiemployer" plan within the meaning of Section
3(37) of ERISA.
(b) With respect to each Employee Plan listed in Schedule 4.1.13,
K-R has delivered to Purchaser, to the extent applicable, a copy of (i)
the plan document for each Employee Plan as currently in effect (or a
description of any Employee Plan for which there is no plan document),
including any related trust agreement and any other agreement entered
into in connection with such Employee Plan, (ii) the most recent annual
report (Form 5500 Series) filed with the Internal Revenue Service, (iii)
the most recent actuarial report, if any, with respect to the most
recently completed plan year, and (iv) the most recent summary plan
description, together with each summary of material modifications.
(c) There is not any pending or, to the knowledge of K-R,
threatened material claim by or on behalf of any Employee Plan, by any
Employee covered under any Employee Plan or otherwise involving any
Employee Plan (other than routine claims for benefits).
(d) Except as set forth in Schedule 4.1.13, no Employee Plan provides
benefits, including, without limitation, death or medical benefits
(whether or not insured),
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with respect to any Employee for periods extending beyond their
retirement or other termination of service other than (i) coverage
mandated by applicable Law, (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section 3
(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of K-R or an ERISA Affiliate or (iv) benefits
the full cost of which is borne by the Employee.
(e) Except as set forth in Schedule 4.1.13 and subject to Section
8.1.2 and Purchaser's compliance with Section 8.1.1, the consummation of
the transactions contemplated by this Agreement will not (i) entitle any
Employee to severance pay, unemployment compensation or any other
similar payment, except as expressly provided in this Agreement, (ii)
accelerate the time of payment or vesting, or increase the compensation
due to any such Employee, (iii) result in any employment-related
expenses or liabilities the full cost of which will not be paid by K-R,
or (iv) result in any liability under Section 406 of ERISA or Section
4975 of the Code. Purchaser will not be responsible for any COBRA
violations occurring or arising with respect to Employees prior to
Closing or which arise with respect to Employees not hired by Purchaser
which nonhiring is not in violation of this Agreement.
4.1.14 Accounts Receivable. All Accounts Receivable of the Business,
whether reflected in the Special Purpose Balance Sheet or otherwise,
represent sales of Product actually made in the ordinary course of
business. Schedule 4.1.14 is an accurate aging report for the accounts
receivable of the Business as of March 4,1995.
4.1.15 Inventories. All Inventories of the Business, whether reflected
in the Special Purpose Balance Sheet or otherwise, consist of a quality
and quantity usable and salable in the ordinary course of business,
except for items of obsolete materials and materials of below-standard
quality, which obsolete and below-standard quality items will not
individually or in the aggregate have a Material Adverse Effect.
4.1.16 Labor Relations and Employment. Except to the extent set forth
in Schedule 4.1.16, (a) there are no unfair labor practices nor are
there any unfair labor
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practice complaints relating to the Business pending or, to the
knowledge of K-R, threatened against or affecting K-R before the
National Labor Relations Board which would have a Material Adverse
Effect; (b) there is no labor strike or stoppage actually pending or, to
the knowledge of K-R, threatened against or affecting the Business; (c)
no representation question exists with respect to the employees of the
Business; (d) there is no collective bar- gaining agreement which is
binding on the Business or restricts the Business from relocating or
closing any of its operations; and (e) none of the employees of the
Business has suffered an "employment loss" (as defined in the Worker
Adjustment and Retraining Notification Act of 1988) within 90 days prior
to the Closing Date.
4.1.17 Environmental Matters. Except as set forth in this Section
4.1.17, K-R makes no representation in this Agreement relating to
environmental matters. (a) For purposes of this Section 4.1.17, the
following definitions shall be applicable.
i) "Environmental Proceeding" means any written claim, demand,
action, cause of action, investigation, order, directive or notice by
any person or entity, including those by any third party or any
Governmental Entity but excluding those by Purchaser or its Affiliates,
alleging potential liability of the Business arising out of, based on or
resulting from any violation, or alleged violation, of any Environmental
Law by K-R in relation to the Business.
ii) "Environmental Laws" means all federal, state, and local laws
and regulations relating to pollution or protection of human health or
the environment, including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
any hazardous, toxic or polluting substance or waste, including
petroleum products or radioactive materials ("Hazardous Materials"), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials as in effect on the date hereof
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(b) Except as set forth in Schedule 4.1.17, to the knowledge of
K-R, the Business is operated by K-R in compliance with all applicable
Environmental Laws (which compliance includes, but is not limited to,
the possession by K-R of all permits and other governmental
authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), except for any
noncompliance that individually or in the aggregate would not have a
Material Adverse Effect. K-R has not received any written communication
from any Governmental Entity that alleges that the Business is not in
such compliance, which noncompliance individually or in the aggregate
would have a Material Adverse Effect.
4.1.18 Condition of Assets. Except as expressly set forth in this
Agreement, Seller expressly disclaims any other representation and
warranty of any kind or nature, express or implied, as to the condition,
value or quality of the Assets and SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE OR FITNESS FOR ANY
PARTICULAR PURPOSE WITH RESPECT TO ANY OF THE ASSETS. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, THE ASSETS SHALL BE TRANSFERRED
TO PURCHASER "AS IS" AND "WHERE IS".
4.1.19 No Changes. Except as listed or described in Schedule 4.1.19
and except as a result of matters required by this Agreement, since the
Special Purpose Balance Sheet Date, there have not been any changes in
the Business that, individually or in the aggregate, would have a
Material Adverse Effect, except K-R makes no representation as to the
effect on the Business of consummation of the transactions contemplated
hereby or Purchaser's failure to hire all the Employees.
4.1.20 Conduct of Business. Since December 31, 1994, K-R has not
with respect to the Business (i) engaged in any transaction or activity
other than in the ordinary course, (ii) paid any bonus (except certain
bonuses paid to certain Employees in February, 1995 and certain
transition bonus agreements entered into in February 1995) or granted
any increase in rates of pay or any increase in pension, retirement or
other benefits other than
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nominal cost of living or merit increases made in accordance with past
practices (such as the regular increase implemented in February, 1995),
(iii) made, or committed to make, any capital expenditures or
investments relating to the Business aggregating more than $10,000 other
than routine maintenance and repair in the ordinary course of business,
or (iv) failed to use all reasonable efforts to maintain the goodwill of
the suppliers, contractors, licensors, employees, customers,
distributors and others having business relations with the Business.
4.1.21 Brokers and Finders. With the exception of a fee payable to
Booz Allen & Hamilton, Inc. by K-R, neither K-R nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
4.2 Representations and Warranties of Purchaser. Subject to
Section 4.3, Purchaser represents and warrants to K-R as follows:
4.2.1 Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under Delaware law and
Purchaser has the requisite corporate power and authority to own, lease
or otherwise hold its properties and assets and to carry on its business
as presently conducted. Purchaser is duly qualified to conduct business
as a foreign corporation in good standing in North Carolina and in
Tennessee.
4.2.2 Authorization and Effect of Agreement. Purchaser has the
requisite corporate power and authority to execute and deliver this
Agreement and the Undertaking and to perform the transactions
contemplated by this Agreement and the Undertaking to be performed by
it. The Board of Directors of Purchaser has taken all action required by
law, its Certificate of Incorporation, its Bylaws or otherwise to be
taken by it to authorize the execution and delivery of this Agreement
and the Undertaking and the performance by Purchaser of the transactions
contemplated hereby and thereby. Purchaser has all requisite corporate
power to purchase, own and hold the Assets and to carry on the Business
upon the consummation of the transactions contemplated by this Agreement
and the Undertaking. This Agreement has been and at the Closing the
Undertaking will be duly executed and
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delivered by Purchaser and this Agreement constitutes and when executed
and delivered at the Closing the Undertaking will constitute valid and
binding obligation of Purchaser enforceable against Purchaser in
accordance with their terms, except that such enforcement may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally or (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.2.3 No Restrictions or Consents. (a) The execution and delivery of
this Agreement and the Undertaking by Purchaser does not, and the
performance by Purchaser of the transctions contemplated hereby and
thereby to be performed by it will not, conflict with, or result in any
violation of, or constitute a default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any performance required or the maturity
of any debt or obligation or the loss of a material benefit under, any
provision of the Certificate of Incorporation or By-Laws of Purchaser or
any contract or permit applicable to Purchaser, which violations,
defaults, rights of termination, cancellation or acceleration or losses
would, individually or in the aggregate, materially adversely affect
Purchaser's ability to consummate the transactions contemplated by this
Agreement.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be
obtained or made by or with respect to Purchaser under any applicable
law in connection with the execution and delivery of this Agreement and
the Undertaking by Purchaser or the performance by Purchaser of the
transactions contemplated hereby and thereby to be performed by it,
except for (i) such consents, approvals, orders, authorizations,
registrations, declarations or filings, which the failure to obtain or
make would not, individually or i n the aggregate, materially adversely
effect Purchaser's ability to consummate the transactions contemplated
by this Agreement.
4.2.4 Financial Capacity. Attached hereto as Exhibit 4.2.4 is a true
and correct copy of a letter dated February 23, 1995 from First Union
National Bank of North
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Carolina (the "Bank") (the "Financing Commitment") regarding the Bank's
commitment to provide Purchaser with $21,500,000 of debt financing to
fund the Cash Payment and other capital requirements.
4.2.5 Fraudulent Conveyances. Purchaser has financed or will finance
its purchase of the Assets in such a manner that such financing will not
create any liability to K-R under any federal or state fraudulent
conveyance or transfer law.
4.2.6 Brokers and Finders. Neither Purchaser nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
4.3 Certain Limitations on Representations and Warranties. (a)
Each of the parties is a sophisticated legal entity that was advised by
experienced counsel and, to the extent it deemed necessary, other
advisors in connection with this Agreement. Accordingly, each of the
parties hereby acknowledges that there are no representations or
warranties by or on behalf of any party hereto or any of its respective
Affiliates or representatives other than those expressly set forth in
this Agreement.
(b) All references in this Agreement to the "knowledge of K-R" or
"known to K-R" or similar language will be deemed to be references
solely to the actual knowledge of the persons listed in Schedule 4.3
(Purchaser hereby expressly acknowledging that such persons are under no
obligation to conduct any particular inquiry for purposes of this
Agreement). All references in this Agreement to the "knowledge of
Purchaser" or "known to Purchaser" or similar language will be deemed to
be references solely to the actual knowledge of the persons listed in
Schedule 4.3 (K-R hereby expressly acknowledging that such persons are
under no obligation to conduct any particular inquiry for purposes of
this Agreement).
V. COVENANTS
5.1 Reserved.
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5.2 Press Releases. No party will issue or cause the publication
of any press release or other public announcement with respect to this
Agreement or the transactions contemplated hereby without the prior
consent of K-R and Purchaser, which consent will not be unreasonably
withheld; provided, however, that nothing herein will prohibit any party
from issuing or causing publication of any such press release or public
announcement to the extent that such party determines such action to be
required by law or the rules of any national stock exchange applicable
to it or its Affiliates, in which event the party making such
determination will, if practicable in the circumstances, use all
reasonable efforts to allow the other party hereto reasonable time to
comment on such release or announcement in advance of its issuance.
5.3 Injunctions. Without limiting the generality or effect of any
provision of Article VI, if any United States, or state court having
jurisdiction over any party issues or otherwise promulgates any
injunction, decree or similar order prior to the Closing which prohibits
the consummation of the transactions contemplated hereby, the parties
will use their respective reasonable efforts to have such injunction
dissolved or otherwise eliminated as promptly as possible.
5.4 Consents and Approvals. Subject to the last proviso to Section
1.3.1, K-R will use its reasonable efforts to promptly obtain all
consents, approvals and waivers to the assignment to Purchaser of the
Contracts and Permits set forth in Schedule 4.1.3.
5.5 Reserved.
5.6 Reserved.
5.7 Reserved.
5.8 Satisfaction of Conditions. Without limiting the
generality or effect of any provision of Article VI, prior to the
Closing, each of the parties hereto will use its respective reasonable
efforts with due diligence and in good faith to satisfy promptly all
conditions required hereby to be satisfied by such party prior to the
Closing, insofar as such conditions are within the control of such
party.
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5.9 Financing. Purchaser shall use its best efforts to obtain the
financing described in the Financing Commitment. In the event that such
financing is not available, Purchaser shall use its reasonable efforts
to arrange for substitute financing.
5.10 Transition Services. Concurrently herewith, Purchaser and K-R will
enter into an agreement for transition services (the "Transition
Services Agreement") in the form of Exhibit 5.10 attached hereto,
contemplating Purchaser's utilization of certain facilities and services
to be provided by K-R and K-R's use of certain space at the Rockwood
Facility.
5.11 Inventory and Accounts Receivable Statements. At the Closing, K-R
will deliver to Purchaser a certified statement of the total dollar
amount of Inventory located at the Rockwood Facility as of the Closing
Date (the "Inventory Figure") based upon a physical inventory taken on
or after March 4, 1995 (the "Inventory Statement") (which physical
inventory may be observed by representatives of the Purchaser) and a
certified statement of Accounts Receivable prepared as of the close of
business on March 4,1995 (the "Accounts Receivable Statement"). All
collections with respect to any such Accounts Receivable shall be the
property of and belong to Purchaser and any Inventory shipped, delivered
or otherwise removed from the Rockwood Facility shall be for the account
of Purchaser.
VI. THE CLOSING
6.1 Conditions Precedent to Obligations of Purchaser and K-R. The
obligations of Purchaser and K-R under this Agreement to consummate the
transactions contemplated hereby are subject to the satisfaction or
waiver, at or prior to the Closing, of the conditions that there shall
not have been entered a preliminary or permanent injunction, temporary
restraining order or other judicial or administrative order or decree in
any jurisdiction, the effect of which prohibits the Closing.
6.2 Additional Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser under this Agreement to consummate the
transactions
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contemplated hereby will be subject to the satisfaction, at or prior to
the Closing, of the following additional conditions, any one or more of
which may be waived in writing at the option of Purchaser:
6.2.1 No Material Misrepresentation or Breach. K-R shall have
complied, in all material respects, with all agreements required by this
Agreement to be complied with by it prior to the Closing, and the
representations and warranties of K-R contained in this Agreement shall
be true and correct in all material respects as of the date when made
and as of the Closing Date as though such representations and warranties
were made at and as of such date, except for representations or
warranties made as of a specified date, which shall be true and correct
in all material respects as of the specified date, and K-R shall have
delivered to Purchaser a certificate dated the Closing Date and signed
by one of its executive officers to the foregoing effect.
6.2.2 Opinion of Counsel. Purchaser shall have received from Jerome A.
Perlmutter, Esq., Vice-President-General Counsel of K-R, and Dechert
Price & Rhoads, counsel for K-R, opinions dated the Closing Date in form
and substance satisfactory to Purchaser, to the effects set forth in
Exhibit 6.2.2 hereto.
6.2.3 Financing. Purchaser shall have obtained the financing
contemplated by Financing Commitment or, in the event such financing is
unavailable, substitute financing on terms reasonably satisfactory to
Purchaser.
6.2.4 No Litigation. On the Closing Date, there shall be no litigation
pending which challenges or questions the validity or legality of this
Agreement or the transactions contemplated hereby.
6.2.5 Environmental Examinations. The results of the Phase I and Phase
II, if any, audit of the Rockwood Facility shall not have revealed any
environmental condition(s) at the Rockwood Facility which would require
remediation under applicable Environmental Laws at a cost in excess of
$50,000, unless prior to Closing K-R agrees in writing that it will pay
for such amounts in excess of $50,000.
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6.3 Additional Conditions Precedent to Obligations of K-R. The
obligations of K-R under this Agreement to consummate the transactions
contemplated hereby will be subject to the satisfaction, at or prior to
the Closing, of the following additional conditions which may be waived
in writing at the option of K-R:
6.3.1 No Material Misrepresentation or Breach. Purchaser shall have
complied, in all material respects, with all agreements required by this
Agreement to be complied with by it prior to the Closing, and the
representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though such representations and
warranties were made at and as such date, except for representations or
warranties made as of a specified date, which shall be true and correct
in all material respects as of the specified date, and Purchaser shall
have delivered to K-R a certificate dated the Closing Date and signed by
one of its executive officers to the foregoing effect.
6.3.2 Opinion of Counsel. K-R shall have received from Sigmon, Clark,
Mackie & Hutton, P.A., counsel for Purchaser, an opinion dated the
Closing Date in form and substance satisfactory to K-R, to the effects
set forth in Exhibit 6.3.2 hereto.
6.4 The Closing. Subject to the fulfillment or waiver of the
conditions precedent specified in Sections 6.1, 6.2 and 6.3, the closing
of the purchase and sale of the Assets contemplated hereby (the
"Closing") will take place on March 6,1995. If the Closing occurs, the
Closing shall be deemed effective for all purposes as of the close of
business on March 4, 1995 (the "Closing Date"). The Closing will take
place at 10:00 M., Eastern Time, at the offices of K-R, 4905 Koger
Blvd., Greensboro, North Carolina 27407.
6.5 Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of Purchaser and K-R;
(b) By either Purchaser or K-R if the Closing shall not have
occurred on or before March 6, 1995;
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(c) By either Purchaser or K-R if there shall have been
entered a final, nonappealable order or injunction of any Governmental
Entity restraining or prohibiting the consummation of the transactions
contemplated hereby or any material part thereof; or
(d) By Purchaser in accordance with Section S.l(c).
In the event of the termination of this Agreement under this Section
6.5, each party hereto will pay all of its own fees and expenses. There
will be no further liability hereunder on the part of any party hereto
if this Agreement is so terminated, except under Section S.l(b) and
except by reason of a material breach of any covenant contained in this
Agreement.
VII. SURVIVAL AND INDEMNIFICATION
7.1 Survival of Representations. Warranties and Covenants. Each of
the representations and warranties contained in Article IV will survive
the Closing and remain in full force and effect for one year. Any claim
for indemnification with respect to any of such matters which is not
asserted by notice given as herein provided which specifically
identifies a particular breach and the underlying facts relating thereto
within one year after the Closing may not be pursued and is hereby
irrevocably waived.
7.2 Indemnification. (a) Definitions. For purposes of this
Agreement, (i) "Indemnity Payment" means any amount of Indemnifiable
Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee"
means any person or entity entitled to indemnification under this
Agreement, (iii) "Indemnifying Party" means any person or entity
required to provide indemnification under this Agreement, (iv)
"Indemnifiable Losses" means any and all claims, demands, actions or
suits, settlements and compromises relating thereto and reasonable
attorneys' fees and expenses in connection therewith, losses,
liabilities, costs and expenses, net of the amount of (i) any tax
benefit resulting to the Indemnitee, or (ii) any recovery, settlement or
otherwise by the Indemnitee under or pursuant to any insurance coverage
or other indemnification agreement, or pursuant to any claim or
recovery against or settlement with any other person or entity (a 'Third
Party
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Recovery"), and (v) "Third Party Claim" means any claim, action or
proceeding made or brought by any person or entity who or which is not a
party to this Agreement or an Affiliate of a party to this Agreement.
(b) K-R's Indemnity. Subject to Sections 7.1, 7.3 and 7.4, following
the Closing, K-R will indemnify, defend and hold harmless Purchaser and
its directors, officers, employees, agents and representatives from and
against any and all Indemnifiable Losses incurred by Purchaser relating
to, resulting from or arising out of:
(i) Any breach by K-R of any of the representations or
warranties of K-R contained in this Agreement or the certificate to be
delivered pursuant to Section 6.2.1;
(ii) Any breach by K-R of any covenant of K-R contained in
this Agreement; and
(iii) any and all liabilities arising out of or relating to
the owner- ship or operation of the Business or the Assets by K-R
prior to the Closing other than the Assumed Liabilities.
(c) Purchaser's Indemnity. Subject to Sections 7.1, 7.3 and 7.4,
following the Closing, Purchaser shall indemnify, defend and hold
harmless K-R and its directors, officers, partners, employees, agents
and representatives from and against any and all Indemnifiable Losses
relating to, resulting from or arising out of:
(i) Any breach by Purchaser of any of the representations or
warranties of Purchaser contained in this Agreement or the certificate
to be delivered pursuant to Section 6.3.1;
(ii) Any breach by Purchaser of any covenant of Purchaser
contained in this Agreement;
(iii) Any Assumed Liabilities; and
(iv) Any liability arising out of the conduct of the
Business, after the Closing Date.
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7.3 Limitations on Liability. (a) Notwithstanding
anything to the contrary contained in this Agreement, no claim for
indemnification may be asserted under Section 7.2(b) with respect to any
matter K-R proves by clear and convincing evidence was known to Purchaser
on or before the Closing Date.
(b) Notwithstanding any other provision hereof or of any
applicable law Purchaser will not be entitled to make a claim against K-R
under Section 7.2(b) unless and until the aggregate amount of claims
which may be asserted for Indemnifiable Losses under Section 7.2(b)
exceeds $250,000, and then only to the extent of the excess;
provided,however, that this Section 7.3(b) shall not apply to any breach
of the representation and warranty set forth in Section 4.1.4; and
provided further that if the adjusted operating income of the Business
for the 12 month period ended January 28, 1995 (determined using the same
basis of presentation described in the notes to the Special Purpose
Financial Statements) is less than that shown in the Special Purpose
Financial Statements for such 12 month period, but the representations
contained in Section 4.1.4 have not been breached because such shortfall
is not material to such financial statements, then such $250,000 shall be
reduced, dollar for dollar, by the amount of such shortfall.
(c) Notwithstanding any other provision hereof or of any
applicable law,the aggregate indemnification obligations of K-R under
Section 7.2(b) shall not exceed $7,075,000.
(d) As between K-R, on the one hand, and Purchaser, on the
other hand,the rights and obligations set forth in this Article VII will
be the exclusive rights and obligations with respect to this Agreement,
the events giving rise to this Agreement and the transactions provided
for herein or contemplated hereby (other than the transactions provided
in the Transition Services Agreement). Without limiting the generality
or effect of the foregoing, as a material inducement to the other party
hereto entering into this Agreement, and in light of, among other factors,
the acknowledgements contained in Section 4.3, each of the parties to
this Agreement hereby waives any claim or cause of action, known or
unknown, foreseen or unforeseen, which it otherwise might assert,
including without
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limitation under the common law or federal or state securities, trade
regulation,environmental (including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or any other statutes, regulations or ordinances now or
hereafter in effect or under he common law) or other laws now
or hereinafter in effect, by reason of this Agreement, the events giving
rise to this Agreement and the transactions provided for herein or
contemplated hereby or thereby (other than the Transition Services
Agreement) except for claims or causes of action brought under
and subject to the terms and conditions of this Article VII.
(e) Notwithstanding anything to the contrary contained in the
Deed, the warranties and covenants of title contained therein are not
intended to, and shall not,extend, amplify or otherwise alter the
warranties of K-R contained herein or the survival thereof, as set
forth herein, and Purchaser hereby releases K-R from any and all
claims with respect to the warranties and covenants of title contained
in the Deed.
7.4 Indemnification Procedures. (a) If any Indemnitee
receives notice of the assertion or commencement of any Third Party
Claim against such Indemnitee with respect to which an Indemnifying Party
is obligated to provide indemnification under this Agreement, the
Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 calendar days
after receipt of such notice of such Third Party Claim. Such notice will
describe the Third Party Claim in reasonable detail, will include copies
of all material written evidence thereof and will indicate the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that has
been or maybe sustained by the Indemnitee. The Indemnifying Party will
have the right to participate in, or, by giving written notice to the
Indemnitee, to assume, the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying Party's
own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within thirty calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 7.4(a), an
Indemnitee receives written notice
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from the Indemnifying Party that the Indemnifying Party has elected to
assume the defense of such Third Party Claim as provided in the last
sentence of Section 7.4(a), the Indemnifying Party will not be liable
for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if
the Indemnifying Party fails to take reasonable steps necessary to defend
diligently such Third Party Claim within ten calendar days after
receiving written notice from the Indemnitee that the Indemnitee believes
the Indemnifying Party has failed to take such steps, the Indemnitee may
assume its own defense and the Indemnifying Party will be liable for
all reasonable costs or expenses paid or incurred in connection
therewith. Without the prior written consent of the Indemnitee, the
Indemnifying Party will not enter into any settlement of any Third Party
Claim unless such settlement provides for the full and unconditional
release of the Indemnitee from any and all liabilities and obligations
related to such Third Party Claim. If a firm offer is made to settle a
Third Party Claim and such offer provides for such release of the
Indemnitee and the Indemnifying Party desires to accept and agree to
such offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to such
firm offer within ten calendar days after its receipt of such notice, the
Indemnitee may continue to contest or defend such Third Party Claim
and,in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim will not exceed the amount of such settlement
offer, plus costs and expenses paid or incurred by the Indemnitee through
the end of such ten calendar day period.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a
"Direct Claim") will be asserted by giving the Indemnifying Party
reasonably prompt written notice thereof, but in any event not later
than 30 calendar days after the Indemnitee becomes aware of such Direct
Claim, and the Indernnifying Party will have a period of 30 calendar days
within which to respond in writing to such Direct Claim. If the
Indemnifying Party does not so respond within such 30 calendar day
period, the Indemnifying Party will be deemed to have rejected such
claim, in which
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event the Indemnitee will be free to pursue such remedies as may be
available to the Indemnitee on the terms and subject to the provisions of
this Article VII.
(d) A failure to give timely notice or to include any
specified information in any notice as provided in Sections 7.4(a),
7.4(b) or 7.4(c) will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of
such failure, any party which was entitled to receive such notice was
deprived of its right to recover any payment under its applicable
insurance coverage or was otherwise prejudiced as a result of such
failure.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by a Third
Party Recovery, the amount of such Third Party Recovery, less any costs,
expenses, premiums or taxes incurred in connection therewith (in cluding,
but not limited to, any future increase in insurance
premiums, retroactive premiums, costs associated with any loss of
insurance and replacement thereof or self insured component of such
insurance coverage) will promptly be repaid by the Indemnitee to the
Indemnifying Party. If such amount has not been repaid by the Indemnitee
to the Indemnifying Party within five days of the Indemnitee's receipt
of the Third Party Recovery, such amount will accrue interest from the
date of payment thereof to the date of repayment at a rate of interest
equal to Nationsbank's prime rate, as publicly announced and in effect
from time to time during such period, plus 1 1/2%, calculated on the
basis of the actual number of days elapsed over 365. The Indemnitee
will use all reasonable efforts to pursue any such claim, recovery,
settlement or payment by or against any such insurer or such other person
or entity. Purchaser shall use reasonable efforts to obtain a waiver from
its insurers of any rights they have to be subrogated to
Purchaser's indemnification rights against K-R hereunder unless such
waiver would result in a breach of or termination of any insurance under
Purchaser's insurance policies.
(f) In addition to the procedures set forth above, with
respect to claims made for the breach of Section 4.1.17 ("Environmental
Claims"), the following procedures shall also apply:
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a) the Indemnitee shall cooperate with the Indemnifying Party in
connection with defending, remedying, compromising or settling an
Environmental Claim, which cooperation shall include but not be limited
to:
(l) furnishing such non-privileged records,
information and testimony and attending such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested
by the Indemnifying Party, subject to Section 5.1(b) of this Agreement
(regarding confidentiality);
(2) providing reasonable access upon prior
written notice to any property if such access is necessary to perform
remediation;
(3) providing any and all reasonable
assistance in securing any required permits or approvals (including
without limitation by holding in its name any such permit where necessary
or appropriate) in order to perform any remediation;
(4) providing such decisions, comments or
information as may reasonably be requested by the Indemnifying Party to
avoid delay in the performance of the remediation and in otherwise
managing, settling or defending any Environmental Claim; and
(5) obtaining any reasonably necessary
easements and access to utilities at the Indemnifying Party's cost.
VIII. OTHER POST-CLOSING COVENANTS
8.1 Personnel Matters.
8.1.1 Employees and Employee Benefit Plans. (a) Except as
specifically provided in this Section 8.1 or as required by law,
effective as of the Closing Date, K-R shall have no liability or
obligation to provide benefits to Employees pursuant to any
Employee Plan.
(b) Effective as of the Closing Date, the employment of
all Employees with K-R shall terminate. Purchaser will, effective as of
the Closing Date, offer employment at the same wage rate and including
any and all benefits offered under Purchaser's employee
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benefit plans (which employee benefit plans Purchaser represents are in
the aggregate substantially equivalent to K-R's employee benefits plans)
to each Employee employed in the Healthcare Division or engaged in making
Products terminated pursuant to the preceding sentence; provided that the
provisions of this paragraph shall not be interpreted to grant any Employee
any greater right to continued employment with Purchaser than such Employee
had with K-R prior to the Closing. Notwithstanding anything contained
herein to the contrary, Purchaser acknowledges and agrees that
Purchaser's obligations to consummate the transactions contemplated hereby
shall not be conditioned upon any Employee or Employees agreeing to continue
his or their employment with Purchaser following the Closing.
(c) Purchaser agrees that, to the extent certain employees
previously employed by K-R at the Rockwood Facility in the design,
manufacture and marketing of socks (exclusive of the Products and to whom
Purchaser is not obligated to offer employment pursuant to Section
8.1.1(b)) have the requisite qualifications and Purchaser intends to hire
personnel at the Rockwood Facility with such qualifications, such
former employees of K-R will be given priority in consideration for the
positions to be filled.
(d) Purchaser agrees that, under any employee benefit plan
made available or established after the Closing, Employees will receive
credit for their years of service with the Business or otherwise with K-R
or any prior Affiliate thereof prior to the Closing in determining
eligibility and vesting thereunder (but not for purposes of determining
benefit accruals), and in determining the amount of benefits under any
applicable sick leave,vacation or severance plan. Purchaser will: (i)
cover Employees as of the Closing under a group health plan substantially
equivalent to that provided by K-R immediately before the Closing Date,
(ii) waive any preexisting condition limitations applicable to
Employees under any group health plan made available to Employees to the
extent that an Employee's condition would not have operated as a
preexisting condition limitation under any applicable group health plan,
and (iii) take all action necessary to ensure that Employees are given
full
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credit for all co-payments and deductibles incurred under any group
health plan provided by K-R for the plan year that includes the Closing
Date.
8.1.2 Retirement Plans. As of the Closing, K-R will cause
Employees to fully vest in their accrued benefits under the Kayser-Roth
Personal Account Retirement Plan and the Kayser-Roth Corporation
Employees' Savings Plan (the "Retirement Plans"). Purchaser shall not
assume any liabilities or obligations with respect to the Retirement
Plans, which will be retained by K-R. As soon as practicable after the
Closing, but subject to the terms of the Retirement Plans and applicable
law, K-R will distribute or cause to be distributed to Employees their
vested benefits under the Retirement Plans.
8.1.3 Employment and Plan Amendments or Terminations. Except
as provided in Section 8.1.1, no provision of this Section 8.1 will limit
Purchaser's right and authority to discontinue, suspend or modify the
employment of any Employee or benefits provided to any or all Employees
after the Closing; provided, however, that in the event of any such
discontinuance, suspension or modification, Purchaser will be liable for
(i) all employee benefit liabilities or obligations related to such
discontinuance, suspension or modification under all plans and arrangements
established by Purchaser after Closing and (ii) any severance
benefits owing to Employees under the Purchaser's severance plan
only which are due to such discontinuance, suspension or modification,
and Purchaser will indemnify, defend and hold harmless K-R and its
respective directors, officers, partners,employees, agents and
representatives from and against any and all Indemnifiable Losses they
may suffer or incur as a result thereof K-R shall not be liable for any
liability or obligation that may a rise from the amendment or termination
by Purchaser of any employee benefit plan established by Purchaser under
this Section 8.1.
8.1.4 Employee Information. Each of K-R and Purchaser will, to
the extent permitted by law, provide the other, in a timely manner, any
information with respect to any Employee's employment with and
compensation from K-R or Purchaser, as the case maybe, or rights or
benefits under any employee benefit plan which the other party hereto
may reasonably request.
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8.2 General Post-Closing Matters.
8.2.1 Post-Closing Notifications. Purchaser and K-R will, and
each will cause its respective Affiliates to, comply with any
post-Closing notification or other requirements,to the extent then
applicable to such party, of any antitrust, trade competition,
investment,control or other Law of any Governmental Entity having
jurisdiction over the Business.
8.2.2 Names. Trademarks. Etc. Purchaser will revise trademarks
and Product literature, change signage and stationery, and otherwise
discontinue use of K-R Trade Names as promptly as practicable after the
Closing; provided, however, that for a period of 60 days from the Closing
Date, Purchaser may consume stationery and similar supplies on hand as of
the Closing which contain K-R Trade Names thereon provided that such
items are overstamped or otherwise appropriately indicate that the
Business is then being conducted by Purchaser. Without limiting the
generality or effect of the foregoing,Purchaser will discontinue (a) no
later than the close of business on the Closing Date, affixing in any
manner whatsoever any K-R Trade Name to any Product, and (b) no
later than the earlier of the close of business on the 60th calendar day
after the Closing Date or as soon as practicable, selling, shipping and
delivering any assembled Product having any K-R Trade Name affixed
thereto in any manner whatsoever. Nothing in this Section 8.2.2 will
affect the rights and obligations of the parties under Section 7.2.
8.2.3 Access. (a) For purposes of this Agreement, (i) "Taxes"
means any taxes, charges, fees, levies, penalties or other assessments,
including without limitation, income, gross receipts, excise, real and
personal and intangible property, sales, use, transfer,license, payroll,
recording, ad valorem and franchise taxes, imposed by any United
States,state, local or foreign taxing authority or any agency thereof,
including any interest, penalties or additions attributable thereto; and
(ii) "Tax Returns" means returns, reports, or information returns or
statements relating to Taxes (including amendments thereto) required to
be filed with the appropriate United States, state, local or foreign
taxing authority or any agency thereof
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(b) On the Closing Date, or as soon thereafter as
practicable, and in no event later than 60 calendar days after the
Closing Date, K-R will deliver to Purchaser all original agreements,
documents, books, records and files relating to the Business or
the Assets (collectively, "Records") in its possession to the extent not
then located at the Rockwood Facility, subject to the following
exceptions:
(i) Purchaser recognizes that certain Records may contain
only incidental information relating to the Business or may primarily
relate to K-R, or the businesses of K-R other than the Business, and K-R
may retain such Records if K-R delivers appropriately excised copies of
such Records; and
(ii) K-R may retain any Tax Returns.
After the Closing, Purchaser will retain all Records (except those
Records referred to in Section 8.2.3(a)(i) and (ii)) required to be
retained pursuant to obligations imposed by any applicable Law. Before
disposing of any Records relating to periods prior to the Closing Date,
Purchaser will give notice to such effect to K-R and give K-R at its
cost and expense an opportunity to remove and retain all or any part of
such Records as K-R may elect in its discretion.
(c) After the Closing, upon reasonable notice, each party
hereto will give,or cause to be given, to the representatives,
employees, counsel and accountants of the other parties hereto access,
during normal business hours, to Records relating to periods prior to or
including the Closing, and will permit such persons to examine and copy
such Records to the extent reasonably requested by such other parties in
connection with Tax and financial reporting matters (including without
limitation any Tax Return relating to state or local real property
transfer or gains taxes), audits, legal proceedings,
governmental investigations and other business purposes; provided,
however, that nothing herein will obligate any party to take actions that
would unreasonably disrupt the normal course of its business, violate the
terms of any contract to which it is a party or to which it or any of
its assets is subject or grant access to any of its proprietary,
confidential or classified information. Purchaser will provide or will
make available to K-R access to, and assistance
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from, Purchaser's employees for the purposes of, and with the
limitations described in, the preceding sentence. The parties hereto will
cooperate with each other in the conduct of any tax audit, claim for
refund of income taxes, or similar proceedings involving or
otherwise relating to any of the Assets or the Business (or the income
therefrom or assets thereof) with respect to any Tax and each will
execute and deliver such powers of attorney and other documents as are
necessary to carry out the intent of this Section 8.2.3(c). Purchaser
will be responsible for ensuring that such information and Tax Returns
can be provided to K-R in the event that Purchaser disposes of the Assets
or any portion of the Business.
8.2.4 Certain Tax Matters. Purchaser will pay all sales, use,
transfer, stamp,conveyance, value added or other similar taxes, duties,
excise or governmental charges imposed by any taxing jurisdiction,
domestic or foreign, and all recording or filing fees,notarial fees and
other similar costs of Closing with respect to the transfer of the
Assets or otherwise on account of this Agreement or the transactions
contemplated hereby. Purchaser will reasonably cooperate with K-R in
providing such Tax related certificates and information requested for
purposes of reducing or eliminating Taxes arising from the transfer of
the Assets. Purchaser will deliver to K-R a resale certificate
substantially in the form shown in Schedule 8.2.4(a). Purchaser will
accept from K-R a certificate substantially in the form shown in Schedule
8.2.4(b) relating to withholding of Taxes under Section 1445 of the Code
and upon receipt of such certificate will not withhold any amounts owing
to K-R under that Code provision.
8.2.5 Payments Received by the Parties After Closing. To the
extent payments are received by either party that properly belong to the
other party on or after the Closing Date, the parties hereto agree to
promptly remit such amounts to the appropriate party.
8.2.6 Action with Respect to Accounts Receivable.
(a) From and after the Closing, Purchaser will use
its reasonable best efforts to collect the Accounts Receivable, and will
not settle or compromise any outstanding amount thereof without the prior
written consent of K-R. All amounts received
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from any customer on account of Accounts Receivable listed on the
Accounts Receivable Statement to be delivered to Purchaser at Closing
pursuant to Section 5.11 hereof shall be deemed to be payment in respect
of the oldest receivable due from such customer unless the customer has
given notice to Purchaser, a copy of which shall be sent to K-R, that
a dispute exists with respect to such receivable and that the payment
currently being made is not to be applied to the payment thereof
(b) Purchaser shall permit representatives of K-R
reasonable access to the books and records of the Purchaser to enable K-R
to verify compliance with the provisions of this Section and will provide
K-R with weekly reports concerning the nature, extent and results of its
collection efforts hereunder. Subject to the consent of Purchaser, which
shall not be unreasonably withheld, K-R will have the right to assist in
the collection of any Accounts Receivable at K-R's own expense, and
Purchaser will cooperate in good faith with K-R in its collection
efforts.
(c) In the event that there remain Accounts Receivable
reflected on the Accounts Receivable Statement (described in Section
5.11) which have not been collected at the end of a one hundred and
twenty day period following the Closing Date,Purchaser shall have the
right to require K-R to purchase from time to time thereafter all such
uncollected Accounts Receivable for an amount equal to the face amount
thereof (as reflected on the Accounts Receivable Statement) payable upon
the assignment of such accounts to K-R (K-R thereafter to be entitled to
take such action as deemed appropriate to endeavor to effect collection
thereof).
8.2.7 Action with Respect to Inventory.
(a) As soon as practicable, but in no event later than 60 days
following the Closing Date, Purchaser's independent public accountants (the
"Auditors") will audit the Inventory Statement for the purpose of valuing the
Inventory. The audit and Inventory valuation shall be done in accordance with
generally accepted auditing standards using the same accounting
principles used by K-R in connection with the preparation of the
Special Purpose Financial Statements, consistently applied. Upon
completion, the Auditors will then
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deliver to K-R a statement of the value of the Inventory (the "Inventory
Closing Statement"),as so determined.
(b) Unless K-R delivers written notice to Purchaser that
it disagrees with the Inventory Closing Statement on or prior to the 30th
day after K-R's receipt of the Inventory Closing Statement, K-R shall be
deemed to have accepted and agreed to the Inventory Closing Statement. If
K-R so notifies Purchaser of its objection to the Inventory Closing
Statement, K-R and Purchaser shall, within 30 days following such notice
(the"Resolution Period"), attempt to resolve their differences and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive.
(c) At the conclusion of the Resolution Period, all
amounts remaining in dispute shall be submitted to a firm of nationally
recognized independent public accountants(the "Neutral Auditors")
selected by K-R and Purchaser within 10 days after the expiration of the
Resolution Period. If K-R and Purchaser are unable to agree on the
Neutral Auditors, K-R and Purchaser shall have the right to request the
American Arbitration Association to appoint the Neutral Auditors who
shall not have had a material relationship with K-R, Purchaser or any of
their respective Affiliates within the past two years. Each party agrees
to execute, if requested by the Neutral Auditors, a reasonable
engagement letter. All fees and expenses relating to the work, if any, to
be performed by the Neutral Auditors shall be borne equally by K-R and
Purchaser. The Neutral Auditors shall act as an arbitrator to determine,
based solely on presentations by K-R and Purchaser, and not
by independent review, only those issues still in dispute. The Neutral
Auditors' determination shall be made within 30 day s of their selection,
shall be set forth in a written statement delivered to K-R and Purchaser
and shall be final, binding and conclusive. The term "Final Inventory
Closing Statement" as hereinafter used, shall mean the definitive
Inventory Closing Statement agreed to by Purchaser and K-R in accordance
with Section 8.2.7(b) or the definitive Inventory Closing Statement
resulting from the determinations made by the Neutral Auditors in
accordance with this Section 8.2.7(c) (in addition to those
items thereto fore agreed to by K-R and Purchaser).
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(d) If the Inventory Figure (as defined in Section 5.11)
is less than the inventory value shown on the Final Inventory Closing
Statement, then Purchaser shall pay K-R the amount of such difference. If
the Inventory Figure is more than the inventory value shown on the Final
Inventory Closing Statement, then K-R shall pay Purchaser the amount of
such difference. Any required payment hereunder shall be made within
five business days after the Final Inventory Closing Statement is agreed
to by Purchaser and K-R or any remaining disputed items are ultimately
determined by the Neutral Auditors. Any payments made hereunder are
considered adjustments to the Cash Payment.
8.2.8 Inventory and Accounts Receivable Remedies. The procedures
under Section 8.2.6 and 8.2.7 will be the exclusive remedies for any
breach of Section 4.1.14 (Accounts Receivable), 4.1.15 (Inventory) and
4.1.4 (Financial Statements) with respect to Inventory and Accounts
Receivable.
8.2.9 Action with Respect to Audit. Following Closing, at the
request of Purchaser, K-R will engage Arthur Andersen & Co. to conduct an
audit of the financial statements of the Business for the periods
requested by Purchaser. All costs of Arthur Andersen & Co. and other
out-of-pocket expenses associated with such audit shall be paid by
Purchaser as and when incurred by K-R. Notwithstanding anything
contained herein to the contrary, such audited financial statements s
hall not constitute representations or warranties of K-R, and Purchaser
agrees that K-R shall have no liability to Purchaser or any other party
(including Purchaser's shareholders) for such audited financial
statements or for or arising out of such audit, and Purchaser may not use
such financial statements, any so-called representation letters, or any
information learned by Arthur Andersen & Co. in the course of such audit
and contained in its work papers to assert any claim against K-R
under this Agreement or otherwise; provided that this provision shall not
bar Purchaser from asserting a claim against K-R based upon information
independently developed by Purchaser's accountants without any reliance
on the work of Arthur Andersen & Co.Purchaser agrees to indemnify,
defend and hold harmless K-R and its directors, officers,employees,
agents and representatives from and against any and all claims, demands,
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actions, suits, settlements, losses, liabilities, costs and expenses,
including reasonable attorney's fees, arising from or relating to such
audited financial statements or such audit. Purchaser desires to have the
Arthur Andersen & Co. audit referred to above completed within 70 days
after the Closing Date so as to permit the filing of such audited
financial statements with Purchaser's Form 8-K with respect to the
transaction contemplated hereby. K-R agrees to cooperate with Arthur
Andersen & Co. in connection with the audit contemplated by this Section
8.2.9 and to cooperate with Purchaser's auditor in connection with its
review or audit of the financial statements of the Business.
IX. PRORATIONS
9.1 Personal Property Taxes. Personal property and similar
ad valorem taxes associated with the Assets that are imposed on a
periodic basis and are payable fora tax period that includes (but does
not end on) the Closing Date shall be prorated as of the Closing Date,
and K-R shall bear the proportion, and shall have the sole
responsibility for such taxes (and any payments due on account of such
taxes) equal to a fraction, the numerator of which is equal to the number
of days which shall have elapsed from the beginning of the applicable tax
period to the date immediately preceding the Closing Date and the
denominator of which is the number of days in the entire applicable tax
period.Purchaser shall have the sole responsibility for the rest of such
taxes (and any payments due on account of such taxes). If the tax
statement or appropriate information for such tax year is in the
possession of the parties on the Closing Date, payment of the prorated
taxes shall be accomplished on such date. If such taxes have not been
paid by K-R and if the tax statement for the applicable tax year is not
in the possession of the parties on the Closing Date, the tax proration
payment shall be made by K-R to Purchaser based on a reasonable estimate
taking into account the prior year's taxes and any publicly announced
tax rate increase or decrease or change in the law governing such taxes,
and Purchaser shall pay such taxes for such period when due (or if such
taxes have been paid in advance, Purchaser shall
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reimburse K-R for its proportionate share of such taxes), and any
adjustments shall be made as soon thereafter as the tax statement or
appropriate information is received.
9.2 Real Property Taxes. The real property taxes and
assessments required to be paid by K-R in respect of the Rockwood Facility
shall be prorated as of the Closing Date between Purchaser and K-R in
the same manner as described in Section 9.1 except that in calculating
the amount of any real property taxes, the parties shall also take
into account any change in assessments.
9,3 Payment of Prorated Taxes and Tax Responsibility.
Subject to the rights and obligations set forth in Sections 9.1 and 9.2
above, (i) Purchaser shall be solely responsible for taxes relating to
the Assets applicable to or arising from the period on and after the
Closing Date, and K-R shall be solely responsible for taxes relating to
the Assets applicable to or arising from the period prior to the Closing
Date, and (ii) K-R shall indemnify and hold Purchaser harmless from any
liability for taxes relating to the Assets accruing prior to the Closing
Date, and Purchaser shall indemnify and hold K-R harmless from any
liability for taxes relating to the Assets accruing on and after the
Closing Date.
9.4 Utilities. K-R shall attempt to obtain final meter
readings at the Rockwood Facility immediately preceding the Closing Date
and shall pay for, or cause to be paid, all utilities to such date. In
the event it shall not be practicable to obtain the meter reading for any
utility as of that date or there are utilities which are not metered,
then as soon as all such utility bills are finally received, the parties
shall, on a pro rata basis, pay their respective shares of such bills.
9.5 Cooperation. The parties will cooperate with one
another in connection with the preparation and filing of Tax Returns
covered by Sections 9.1 and 9.2 hereof and in the determination of such
taxes.
9.6 Survival. The obligations of Purchaser and K-R under
this Article IX shall survive the Closing.
X. MISCELLANEOUS PROVISIONS
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10.1 Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided
in this Agreement, will be deemed to have been duly given when delivered
in person or when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by mail simultaneously dispatched) or one
business day after having been dispatched by a nationally recognized
overnight courier service to the appropriate party at the address
specified below:
(a) If to Purchaser, to:
Alba-Waldensian,Inc.
201 St. Germain, S.W.
P.O. Box 100
Valdese, North Carolina 28690-0100
Facsimile No.: (704) 879-6595
Attention: Mr. Thomas F. Schuster
with a copy to:
Sigmon, Clark, Mackie & Hutton, P.A.
200 First Avenue, NW
First Union National Bank, 5th Floor
Hickory, North Carolina 28603
Facsimile No.: (704) 328-6876
Attention: Warren Hutton, Esq.
(b) If to K-R:
Kayser-Roth Corporation
4905 Koger Boulevard
Greensboro, North Carolina 27407
Facsimile No.: (910) 547612
Attention: Jerome A. Perlmutter, Esq.
with a copy to:
Dechert Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, D.C. 20005
Facsimile No.: (202) 626-3334
Attention: Sander M. Bieber, Esq.
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or to such other address or addresses as any such party may from time to
time designate as to itself by like notice.
10.2 Bulk Transfer Law. The parties waive compliance with the
provisions of any Uniform Commercial Code or other bulk transfer law
which applies to the transactions contemplated by this Agreement. K-R
agrees to indemnify and hold harmless Purchaser against any and all
claims (except any claim with respect to the Assumed Liabilities) made
by creditors of K-R asserted against Purchaser by reason of
noncompliance with the Bulk Sales provision of the Uniform Commercial
Code as enacted in the State of Tennessee in connection with the
transactions contemplated by this Agreement.
10.3 Expenses. Except as otherwise expressly provided herein,
(a) K-R will pay all expenses incurred by it incident to this Agreement
and in preparing to consummate and consummating the transactions
provided for herein, (b) Purchaser will pay any expenses incurred by it
incident to this Agreement and in preparing to consummate
and consummating the transactions provided for herein, and (c) payments
with respect to taxes described in Section 8.2.4 will be made in
accordance with Section 8.2.4.
10.4 Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but will not be assignable or
delegatable by any party without the prior written consent of the other
parties hereto.
10.5 Waiver. Either Purchaser or K-R by written notice to the
other may(a) extend the time for performance of any of the obligations
or other actions of the other under this Agreement, (b) waive any
inaccuracies in the representations or warranties of the other contained
in this Agreement, (c) waive compliance with any of the covenants of the
other contained in this Agreement, or (d) waive or modify performance of
any of the obligations of the other under this Agreement. Except as
provided in the immediately preceding sentence, no action taken pursuant
to this Agreement will be deemed to constitute a waiver of compliance
with any representations, warranties or covenants contained in this
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Agreement and will not operate or be construed as a waiver of any
subsequent breach, whether of a similar or dissimilar nature.
10.6 Entire Agreement. This Agreement (including the Schedules hereto)
and the Related Agreements supersede any other agreement, whether
written or oral, that may have been made or entered into by any party or
any of their respective Affiliates (or by any director, officer or
representative thereof) prior to the date hereof relating to the matters
contemplated hereby or thereby including the Letter of Intent between
Purchaser and K-R dated December 13,1994. This Agreement (together with
the Schedules hereto)and the Related Agreements constitute the entire
agreement by and among the parties hereto and there are no agreements or
commitments by or among such parties or their Affiliates except as
expressly set forth or referred to herein or therein.
10.7 Amendments. Supplements. Etc. This Agreement may be
amended or supplemented at any time by additional written agreements as
may mutually be determined by Purchaser and K-R to be necessary,
desirable or expedient to further the purposes of this Agreement, or to
clarify the intention of the parties hereto.
10.8 Rights of the Parties. Except as provided in Article VIII
or in Section 9.4, nothing expressed or implied in this Agreement is
intended or will be construed to confer upon or give any person or entity
other than the parties hereto and their respective Affiliates any rights
or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
10.9 Further Assurances. After the Closing, each party hereto
shall from time to time, at the request of the other party hereto and
without further cost or expense to the other party, execute and deliver
such other necessary instruments of conveyance and transfer and take such
other necessary actions as the other party may reasonably request,in
order to more effectively consummate the transactions contemplated
hereby.
10.10 Applicable Law. This Agreement and the legal relations
among the parties hereto will be governed by and construed in
accordance with the substantive laws
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of the State of North Carolina, without giving effect to the principles
of conflicts of law thereof
10.11 Jurisdiction. Each party irrevocably submits to the
exclusive jurisdiction of the federal and state courts of the State of
North Carolina for purposes of any action, suitor other proceeding
arising out of this Agreement or any transaction contemplated hereby.
10.12 Titles and Headings. Titles and headings to Sections
herein are inserted for convenience of reference only, and are not
intended to be a part of or to affect the meaning or interpretation of
this Agreement.
10.13 Certain Interpretive Matters and Definitions. (a) Unless
the context otherwise requires, (i) all references to Sections or
Schedules are to Sections or Schedules of or to this Agreement, (ii) each
term defined in this Agreement has the meaning assigned to it, (iii) each
accounting term not otherwise defined in this Agreement has the
meaning assigned to it in accordance with generally accepted accounting
principles applied on a consistent basis, (iv) "or" is disjunctive but
not necessarily exclusive, (v) words in the singular include the plural
and vice versa, and (vi) the terms "subsidiary" and "Affiliate" have
the meanings given to those terms in Rule 12b-2 of Regulation 12B under
the Securities Exchange Act of 1934, as amended. All references to "$" or
dollar amounts will be to lawful currency of the United States of
America. The parties agree that time is of the essence.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent
to which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
KAYSER-ROTH CORPORATION
By: Frank B. Stull
Name: Frank B. Stull
Title: Senior Vice President &
Chief Financial Officer
ALBA-WALDENSIAN, INC.
By: Thomas F. Schuster
Name: Thomas F. Schuster
Title: President and Chief Executive Officer
