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ASSET PURCHASE AGREEMENT
BETWEEN
UNIFI MANUFACTURING, INC.
AND
DILLON YARN CORPORATION
__________________________________
October 25, 2006
__________________________________
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TABLE OF CONTENTS
PAGE #
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ARTICLE 1
DEFINITIONS................................................1
ARTICLE 2
PURCHASE AND SALE OF ASSETS................................1
2.1 Purchased
Assets...........................................1
ARTICLE 3
EXCLUDED ASSETS............................................2
3.1 Excluded
Assets............................................2
ARTICLE 4
ASSUMED LIABILITIES AND EXCLUDED LIABILITIES...............3
4.1 The
Buyer's Assumption of Liabilities......................3
4.2 Excluded
Liabilities.......................................4
4.3 Straddle
Liabilities.......................................6
ARTICLE 5
PURCHASE PRICE AND PURCHASE PRICE ALLOCATION...............6
5.1 Purchase
Price.............................................6
5.2
Adjustments to Form of Purchase Price......................6
5.3
Closing
Inventory..........................................6
5.4
Allocation.................................................7
5.5 Sales,
Use, Transfer and Similar Taxes and Charges.........7
ARTICLE 6
THE SELLER'S REPRESENTATIONS AND WARRANTIES................8
6.1
Organization...............................................8
6.2 No
Conflict................................................8
6.3
Authority..................................................8
6.4 Filing
Requirements........................................8
6.5 Real
Property..............................................9
6.6 Tangible
Personal Property.................................9
6.7
Litigation................................................10
6.8 Contracts
and Other Agreements............................10
6.9
Intellectual Property.....................................10
6.10
Taxes.....................................................11
6.11
Product Liability.........................................12
6.12
Employee Benefit Plans....................................12
6.13
Broker's Fee..............................................15
6.14
Compliance with Laws; Permits.............................15
6.15
Environmental Compliance..................................15
6.16
No Material Adverse Change................................16
6.17
Prepaid Expenses..........................................16
6.18
Investment Representation.................................16
ARTICLE 7
THE BUYER'S REPRESENTATIONS AND WARRANTIES................16
7.1
Organization..............................................16
7.2 No
Conflict...............................................16
7.3
Authority.................................................17
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7.4 Broker's
Fee..............................................17
7.5 Filing
Requirements.......................................17
7.6 Unifi
Stock Consideration.................................17
7.7
Capitalization............................................17
7.8 Delivery
of SEC Filings...................................18
7.9 No
Material Adverse Change................................18
7.10
SEC Filings; Material Contracts...........................18
7.11
Form S-3 Eligibility......................................18
ARTICLE 8
PRE-CLOSING PERIOD........................................19
8.1
Due
Diligence; Confidentiality............................19
8.2 Operate
Purchased Assets in the Ordinary Course;
No Material Change or Material Commitments................19
8.3 Efforts to
Preserve Relationships and Organization........20
8.4 Work
Diligently Towards Closing...........................20
8.5 Prompt
Notification of Breach.............................21
8.6
Shareholder Vote..........................................21
8.7 Update of
Prepaid Expenses Schedule.......................21
ARTICLE 9
GOVERNMENTAL CONSENTS.....................................21
9.1
Cooperation...............................................21
ARTICLE 10
NON-COMPETITION; NON-SOLICITATION.........................22
10.1
Non-Competition...........................................22
10.2
Exceptions................................................22
10.3
Non-Solicitation..........................................22
10.4
Remedies for Breach; Severability.........................23
ARTICLE 11
CLOSING; DELIVERIES BY THE PARTIES; CONDITIONS PRECEDENT..23
11.1
The Closing; Further Assurances...........................23
11.2
Buyers' Deliveries........................................24
11.3
The Seller's Deliveries...................................24
11.4
Release of Transferred Employees from
Confidentiality Undertaking...............................25
11.5
Conditions to Each Party's Obligations....................25
11.6
Conditions to Obligations of the Buyer....................26
11.7 Conditions to
Obligations of the Seller...................27
ARTICLE 12
TAXES AND PRORATIONS......................................27
12.1
Utility Accounts..........................................27
12.2
Prepaid Items.............................................27
ARTICLE 13
COVENANTS.................................................28
13.1
Accounts Receivable; Claims...............................28
13.2
Business Records..........................................28
13.3
Access to Business Records................................28
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13.4
Tax Matters...............................................28
13.5
Litigation Assistance.....................................29
13.6
Post-Closing Administration of Certain Contracts..........29
13.7
Transferred Employees.....................................30
13.8
Correspondence............................................32
13.9
Pro Forma Financials......................................33
ARTICLE 14
BULK SALES ACT............................................33
ARTICLE 15
RIGHT OF TERMINATION......................................33
15.1
Termination...............................................33
15.2
Effect of Termination.....................................34
ARTICLE 16
BUYER'S INDEMNITY.........................................34
ARTICLE 17
SELLER'S INDEMNITY........................................34
ARTICLE 18
INDEMNIFICATION PROCEDURES AND LIMITATIONS................35
18.1
Period for Taking Action..................................35
18.2
Notice....................................................35
18.3
Limitations on Indemnification............................35
18.4
Procedure.................................................36
18.5
Applicability to Claims; Exclusive Remedy.................36
18.6
Limitation of Liability...................................36
ARTICLE 19
CONFIDENTIALITY...........................................36
19.1
Pre-Closing Confidentiality Obligations...................36
19.2
Post-Closing Confidentiality Obligations..................37
ARTICLE 20
DISPUTE RESOLUTION........................................37
20.1
Forum.....................................................37
20.2
Waivers...................................................37
20.3
Waiver of Jury Trial......................................38
ARTICLE 21
MISCELLANEOUS.............................................38
21.1
Press Release.............................................38
21.2
Expenses and Fees.........................................38
21.3
Amendments; Waiver........................................38
21.4
Parties in
Interest.......................................38
21.5
Assignment................................................38
21.6
Merger....................................................39
21.7
Notices...................................................39
21.8
Governing Law.............................................39
21.9
Specific Performance......................................39
21.10
Schedules and Exhibits....................................40
21.11
Usage.....................................................40
21.12
Headings..................................................40
21.13
References................................................40
21.14
Counterparts..............................................40
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SCHEDULES
Schedule 1.06
Assigned IP Licenses
Schedule 1.07
Assigned Software
Schedule 1.09
Assumed Contracts
Schedule 1.10
Assumed Leases
Schedule 1.20
Covered Employees
Schedule 1.46
Leased Assets
Schedule 1.49
Liens
Schedule 1.57
Owned Real Property
Schedule 1.59
Permits
Schedule 1.60
Permitted Liens
Schedule 1.63
Real Property Leases
Schedule 3.1
Excluded Equipment
Schedule 6.2
Seller's Consents
Schedule 6.4
Seller's Filing Requirements
Schedule 6.6
Exceptions to Tangible Personal Property
Schedule 6.7
Litigation
Schedule 6.8
Material Contracts
Schedule 6.9(e)
Intellectual Property Rights Actions
Schedule 6.11
Product Liability Claims
Schedule 6.12(a)
Employee Benefit Plans
Schedule 6.12(b)
Compliance
Schedule 6.12(i)
WARN
Schedule 6.14(b)
Permits
Schedule 6.15
Environmental Compliance
Schedule 6.16
No Material Adverse Change
Schedule 6.17
Prepaid Items
Schedule 7.2
Buyer's Conflicts
Schedule 7.5
Buyer's Filing Requirements
Schedule 7.7
Unifi Parent Capitalization
Schedule 8.2
Material Change or Commitments
Schedule 8.2(b)
New Capital Expenditures or Commitments
EXHIBITS
Exhibit A
Definitions
Exhibit B
Form of American Drawtech Manufacturing Agreement
Exhibit C
Form of Bill of Sale, Assignment and Assumption Agreement
Exhibit D
Form of Dillon Manufacturing Agreement
Exhibit E
Form of Guaranty
Exhibit F
Form of Registration Rights Agreement
Exhibit G
Form of Sales and Services Agreement
Exhibit H
Form of Affidavit (Real Property Lease)
Exhibit I
Form of Limited Warranty Deed
ANNEXES
Annex A Methodology of
Valuation of Inventory
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THIS ASSET PURCHASE
AGREEMENT (this
"AGREEMENT")
is entered into on
October 25, 2006, by
and among Unifi
Manufacturing, Inc.,
a North Carolina
corporation (the
"BUYER"), and Dillon Yarn Corporation, a South Carolina
corporation (the "SELLER"), and solely for the purposes of
ARTICLES 10, 20 and
21, the individuals who are signatories hereto (the "PRINCIPALS"). The Buyer
and the Seller are
collectively
the "PARTIES" and individually each is a
"PARTY" to this Agreement.
R E C I T A L S :
-----------------
A. Upon the
terms and subject to the conditions contained herein,
the Buyer wishes to
acquire, and the Seller wishes to sell, the Purchased
Assets (as defined below) located at the Dillon Facilities (as defined below),
where the Seller is engaged in, among other things, the Business (as defined
below).
B.
Concurrently with the execution and delivery of this Agreement,
certain shareholders
of the Seller have
executed and delivered to the Buyer a
Voting Agreement.
NOW, THEREFORE,
in consideration of the premises, covenants,
representations and
warranties contained
herein, and other good
and valuable
consideration, the
adequacy and receipt of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms capitalized in this
Agreement
shall have the meanings set forth in EXHIBIT A hereto.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1
PURCHASED ASSETS. Upon
the terms and subject to the conditions
set forth in this
Agreement, on the
Closing Date, the Seller shall transfer,
sell, assign, convey and deliver to the Buyer, and the Buyer shall
purchase and
accept from the
Seller, free and clear of all Liens
(other than Permitted
Liens), all of the
Seller's right, title
and interest in and to the following
property and assets, real, personal or mixed, tangible and
intangible, of every
kind and description,
located at the Dillon
Facilities, or
otherwise used or
held for use in
connection with
operation of the Business, other than the
Excluded Assets (collectively, the "PURCHASED ASSETS"):
(a)
All Owned Real Property;
(b)
All Leased Real Property;
(c)
All Miscellaneous Tangibles;
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(d)
All Business Records;
(e)
Subject to SECTION 13.6, all Assumed Contracts;
(f)
All Improvements;
(g)
All Equipment;
(h)
All Inventory;
(i)
All Assigned Intellectual Property;
(j)
All goodwill arising
in connection with the ownership,
operation or conduct
of (i) the Purchased
Assets and (ii) the Business as
conducted by the Seller; and
(k)
All Permits to the extent transferable or assignable to
the Buyer by the
Seller without
breaching any applicable Law or any other
enforceable obligation of the Seller.
ARTICLE 3
EXCLUDED ASSETS
3.1
EXCLUDED ASSETS.
Notwithstanding
ARTICLE 2, the following
assets are expressly
excluded from the purchase and sale contemplated hereby
and, as such, are not Purchased Assets (collectively, the "EXCLUDED
ASSETS"):
(a)
All real property, whether owned or leased by the
Seller, together with
all improvements,
fixtures and equipment
located on or
attached or
appurtenant thereto,
other than the Owned
Real Property and
the
Leased Real Property;
(b)
All accounts and notes receivable of the Seller arising
in connection
with the operation or conduct of the
Purchased Assets or the
Business that correspond to a period prior to the Closing Date;
(c)
All cash or
cash equivalents on hand or in banks,
including investments, of the Seller;
(d)
All prepaid Taxes,
expenses and advances of the Seller
arising in connection with the operation or conduct of the
Purchased Assets
or
the Business that
correspond
to a period prior to
the Closing Date,
except
those which shall be prorated and allocated to the Buyer in
accordance
with
ARTICLE 12;
(e)
All Taxes withheld by
the Seller from its
employees'
salaries and wages, and other Taxes of the Seller incurred by it as
an employer
or as a vendor, and rights to claims for refunds of Taxes arising
in connection
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with the operation or
conduct of the
Purchased Assets or
the Business
that
correspond to a period prior to the Closing Date;
(f)
All insurance policies of the Seller or its Affiliates;
(g)
All Claims of the Seller against third parties (whether
known or unknown on the Closing Date) with respect to the
Purchased Assets or
the Business;
(h)
All assets in respect of the Benefit Plans;
(i)
The industrial business equipment located at the Dillon
Facility and described on SCHEDULE 3.1;
(j)
The equipment owned by
American Drawtech
Corporation
located at the Dillon Facility and described on SCHEDULE 3.1;
and
(k)
All Software other than the Assigned Software.
ARTICLE 4
ASSUMED LIABILITIES AND EXCLUDED LIABILITIES
4.1
THE BUYER'S
ASSUMPTION
OF LIABILITIES. Subject to the
provisions of SECTIONS 4.2, 4.3 and 13.7 and ARTICLES 17 and 18,
and in partial
consideration of the sale of the Purchased Assets to the Buyer, at
the Closing,
the Buyer shall
assume from the Seller
only the following
Liabilities,
but
excluding the Excluded Liabilities (collectively, the "ASSUMED
LIABILITIES"):
(a)
All Liabilities
arising from or
attributable
to the
ownership or use of
the Purchased
Assets or operation or conduct of the
Business attributable
to any date that
occurs on or after the
Closing Date,
including all Claims, Actions, contracts, licenses, sublicenses, agreements,
leases, commitments
sales and purchase
orders attributable to any date that
occurs on or after the Closing Date;
(b)
All Liabilities assumed by, retained by or agreed to be
performed by the
Buyer or any of their Affiliates pursuant to any of the
Ancillary Agreements;
(c)
Accounts payable that
arise from or in connection with
the ownership
or use of the
Purchased Assets or operation or conduct of
the
Business attributable to any date that occurs on or after the
Closing Date;
(d)
All Liabilities
attributable to Products manufactured,
shipped or sold at or from the Dillon Facilities on or after the Closing
Date,
except as to any such Products that were manufactured at the Dillon
Facilities
prior to the Closing Date;
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(e)
With respect
to all Transferred Employees: (i) all
wages and salaries
earned (or otherwise
attributable to any date that occurs)
after the Closing Date, and (ii) all Liabilities with respect to benefits and
Claims incurred,
accrued
or earned under any benefits plan or other
compensation,
retirement or other
benefit arrangement
of the Buyer or
their
Affiliates, which arise or are incurred after the Closing Date;
(f)
All Liabilities
related to and
obligations under
the
Assumed Contracts and
the Assumed Leases that arise from or in connection with
the ownership or use of the Purchased Assets or the operation or
conduct of the
Business on or after the Closing Date;
(g)
All Liabilities
related to and
obligations under
the
Permits assigned by
the Seller to the Buyer in accordance with this Agreement
that arise from or in
connection with the
ownership or use of
the Purchased
Assets or the
operation or conduct
of the Business
on or after the
Closing
Date;
(h)
All customer
rebates in respect of all sales of
Products made after the Closing Date; PROVIDED that the Seller shall
promptly
reimburse the Buyer
for rebates paid to
customers which accrue
in respect of
all sales of Product made on or prior to the Closing Date;
(i)
All Liabilities
under
any collective bargaining
agreement or labor agreement; and
(j)
Notwithstanding
anything contained
herein or in the
Ancillary Agreements, Liabilities arising from, in connection with
or otherwise
with respect
to any Environmental Conditions at or from the Leased Real
Property or the Owned Real Property existing as of the date of this
Agreement
of which the Seller has no Knowledge as of the date of this
Agreement.
4.2
EXCLUDED LIABILITIES. Notwithstanding anything to the contrary,
express or implied,
contained in this Agreement (other than as provided in
SECTIONS 4.1, 4.3 and 13.7 and ARTICLES 16 and 18), any and all
Liabilities of
the Seller which are not expressly assumed pursuant to SECTION 4.1,
shall be
and remain the obligation and Liability of the Seller to pay and/or
discharge,
and the Buyers
shall not assume, or in any way have any
obligation
to the
Seller with
respect to, any such Liabilities, including the following
Liabilities (collectively, the "EXCLUDED LIABILITIES"):
(a)
Accounts payable
of the Seller or its Affiliates
arising in connection with the operation or conduct of the
Purchased Assets
or
the Business, if
incurred (or otherwise
attributable to any date that occurs)
prior to the Closing Date;
(b)
With respect to all
Covered Employees:
(i) all wages
and salaries earned
(or otherwise
attributable to any date that occurs) on or
prior to the Closing Date, (ii) all Liabilities with respect to benefits and
Claims incurred,
accrued
or earned under any benefits plan or other
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compensation, retirement, post-retirement, or other benefit
arrangement of the
Seller or its Affiliates, which relate to or arise from
events occurring on or
prior to the Closing Date, and (iii) any liability or
obligation with
respect
to any Benefit Plan
except as expressly assumed by the Buyer under
SECTION
13.7;
(c)
Liabilities of the Seller or its Affiliates related to
all unused vacation
benefits of Covered
Employees accrued through the Closing
Date;
(d)
All Liabilities of the Seller or its Affiliates related
to workers'
compensation
assessments and Claims
(whether or not reported)
attributable to any date that occurs on or prior to the Closing
Date;
(e)
All Liabilities of the
Seller or its
Affiliates with
respect to retirement benefits and post-retirement health care for
employees of
the Business on or prior to the Closing Date;
(f)
All Liabilities of the Seller or its Affiliates (i) for
compensation, benefits
or any other obligation arising in connection with the
Business as a result of the employment of, or provision of services by, any
Person who is not a
Transferred
Employee, or the termination of any such
employment or
provision of services,
on or prior to the
Closing Date or (ii)
arising in connection
with the employment of
any Transferred
Employee on or
prior to the Closing Date;
(g)
All Liabilities
of the Seller or its Affiliates,
whether presently existing or arising hereafter, attributable to any Excluded
Asset;
(h)
All Liabilities of the Seller or its Affiliates arising
from or attributable to the ownership or use of the Purchased Assets or
operation or conduct of the Business (or any other activity conducted at the
Dillon Facilities) by
the Seller or any of its Affiliates and attributable to
any date that occurs prior to the Closing Date;
(i)
Payment for goods or services refused by the Seller or
its Affiliates prior to the Closing Date;
(j)
All Liabilities
resulting from or relating to any
Claims by third
parties for
damage to Persons or property arising out of
Defects or alleged Defects in the Products, or arising under warranties
issued
by the Seller or its Affiliates, with respect to Products
manufactured, shipped
and/or sold in connection with the Business prior to the Closing
Date;
(k)
All Liabilities
resulting from any violation by the
Seller or its Affiliates of any federal, state or local Law (including
ERISA,
the Code and the Fair Labor Standards Act, as amended) arising in connection
with the ownership or
use of the Purchased
Assets or operation or
conduct of
the Business on or prior to the Closing Date;
(l)
All Liabilities
and expenses of the Seller or its
Affiliates for
federal, state, local or foreign income Taxes and any other
Taxes of any kind
whatsoever, or which
may be or become owed by the Buyer
arising from or
concerning the
operation of the Business by the Seller or its
Affiliates, in each
case, for any period (or portion thereof) ending prior to
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the Closing Date,
including interest or
penalties with respect
thereto (and
including any Liabilities and expenses pursuant to any tax sharing
agreement,
tax indemnification or similar arrangement), other than as
described in SECTION
5.5 or Taxes which are to be pro-rated at the Closing Date
pursuant to
ARTICLE
12; and
(m)
All Liabilities
related to any Indebtedness of the
Seller or its Affiliates.
4.3
STRADDLE LIABILITIES.
The Parties
agree that for
purposes of
SECTIONS 4.2(B)(III),
4.2(D) and
4.2(K), any Liability arising out of or
relating to a
continuing course of
conduct or a series of separate acts that
together constitute one act which began prior to the Closing Date
and continues
after the Closing Date, shall be treated in part as an Assumed
Liability and in
part as an Excluded
Liability,
allocated pro rata based on the relative
duration of or
relative harm caused
by the conduct or series of acts prior to
and after Closing.
ARTICLE 5
PURCHASE PRICE AND PURCHASE PRICE ALLOCATION
5.1
PURCHASE PRICE.
Subject to SECTION 5.2, the consideration for
the Purchased Assets shall consist of:
(a)
An amount equal to
$40,000,000 (the "CASH
PAYMENT"),
which amount shall be payable by the Buyer in cash;
(b)
The assumption by the Buyer of the Assumed Liabilities;
and
(c)
$25,000,000, payable
in kind in the form of
shares of
the Common Stock,
par value $0.10 per
share (the "UNIFI
COMMON STOCK"),
of
Unifi Parent
(the "UNIFI STOCK CONSIDERATION"). For the purposes of this
SECTION 5.1(C),
each share of Unifi
Common Stock shall be valued on the basis
of the average closing
sale price on The New
York Stock Exchange
during the
five trading
days ending two days prior to the date
of this Agreement.
The
parties have agreed that such average closing sale price is
$2.46.
5.2
ADJUSTMENTS TO FORM OF
PURCHASE PRICE. The total number of
shares of Unifi Common Stock that may be issued as the Unifi Stock
Consideration may not
exceed 8,333,333. If, as a result of the foregoing
limitation, less than
$25,000,000 in value (as determined pursuant to SECTION
5.1(C)) of shares of Unifi Common Stock are issued to the
Seller, the Buyer
shall increase the Cash Payment by the shortfall.
5.3
CLOSING INVENTORY(a)
. At least three
Business Days prior
to
the Closing Date, the Seller shall prepare and deliver to the Buyer
a statement
(the "INVENTORY
STATEMENT"), setting
forth a good faith estimate of the value
of the Inventory
as of the Closing Date
determined
in accordance with the
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methods, assumptions,
standards of
measurement
and procedures set forth in
ANNEX A (with POY costing based on November 2006 purchases and
variable, fixed
and overhead costs
based on the Seller's
2006 annual
operating budget) and
based on a physical
inventory count conducted by the Seller or its agents (the
"CLOSING INVENTORY").
The Buyer shall be permitted to review the working
papers, trial balances
and similar materials of the Seller and of its advisors
used in connection with the preparation of the Inventory
Statement.
The Buyer
and the Seller shall seek in good faith to resolve any differences which they
may have with respect to the Inventory Statement and the Closing
Inventory. If
the Closing Inventory is less than Fourteen Million Dollars
($14,000,000), the
Buyer may terminate
this Agreement by giving written notice to the Seller;
PROVIDED, HOWEVER, this sentence shall not apply if the Seller
agrees to reduce
the Cash Payment
at Closing by an amount equal to the excess of Fourteen
Million Dollars ($14,000,000), OVER the amount of the Closing
Inventory.
5.4
ALLOCATION. The consideration paid or delivered by the Buyer to
the Seller (and the Assumed Liabilities) shall be allocated among
the Purchased
Assets as reasonably determined by the Buyer in a manner consistent with
Section 1060 of the
Code and the
regulations
thereunder. The Seller
and the
Buyer agree to use the allocations determined pursuant to this
SECTION 5.4 (the
"ALLOCATIONS") for all Tax purposes, including those matters
subject to Section
1060 of the Code and the regulations thereunder. The Parties
further agree that
they shall not take any position inconsistent with the Allocations upon any
examination of
any such Tax Return, in any refund claim or in any Tax
litigation. The Buyer
and the Seller shall
notify the other Party
within ten
(10) Business
Days if it
receives written notice that any Tax Authority
proposes any allocation different from the Allocations.
5.5
SALES, USE, TRANSFER
AND SIMILAR TAXES AND CHARGES. The Buyer
and the Seller
shall on an equal
basis bear all sales or use Taxes and any
transfer, transfer gain, documentation, gross receipts, customer duties,
value
added and other Taxes and charges (including deed stamps), upon or
with respect
to the sale or
transfer of the
Purchased Assets by the Seller to the Buyer
pursuant to this Agreement. To the extent that any applicable
Law imposes upon
the Seller the obligation to report or to pay such Taxes, charges,
interest or
penalties, the
Buyer shall promptly, but in no event later than ten (10)
Business Days after
receipt of the
Seller's invoice for the amount of such
payments, reimburse the Seller for half of such amount. If the sale
or transfer
of any or all of the Purchased Assets is exempt from such Taxes or
charges, the
Buyer shall provide the Seller with appropriate exemption documents prior to
the Closing Date.
The Seller and the
Buyer shall jointly
file all required
change of ownership and similar statements.
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ARTICLE 6
THE SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to the Buyer as follows:
6.1
ORGANIZATION. The
Seller is duly organized, validly existing
and in good standing
in the State of South Carolina. The Seller has full
corporate power to
carry on the Business as now being conducted at or from the
Dillon Facilities and
to execute, deliver
and perform its
obligations under
this Agreement and the Ancillary Agreements to which it is a
party.
6.2
NO CONFLICT. Except as
set forth on SCHEDULE 6.2, neither the
execution,
delivery or
performance
of this Agreement or the Ancillary
Agreements to which it is a party, nor the consummation of the transactions
contemplated by this Agreement or by the Ancillary Agreements to which it is a
party will
(i) violate any provision of the Seller's certificate of
incorporation or
by-laws, or any Law by which the Seller or any of its
properties may be bound; or (ii) conflict with, result in a breach
of the terms
and conditions
of, result in the
imposition of any Lien (other than Permitted
Liens) on or with
respect to any of the
Purchased Assets as a result of the
provision of, or constitute a default under, any agreement to which the
Seller
is a party or by which the Seller or any of its properties may be
bound.
6.3
AUTHORITY. Other than
the shareholder
approval described in
SECTION 8.6, the Seller has taken all necessary corporate action to authorize
the transactions contemplated by this Agreement and the Ancillary
Agreements to
which it is a party, the performance by the Seller of its
obligations hereunder
and thereunder, and the execution and delivery by the Seller of all
instruments
and other documents contemplated hereby and thereby. This Agreement
constitutes, and
each Ancillary Agreement to which it is a party, when
executed, will constitute, legal, valid and binding
obligations of the Seller,
enforceable against it
in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, or similar
Laws affecting
the enforcement of
creditors' rights
generally and rules
and Laws concerning
equitable remedies.
6.4
FILING
REQUIREMENTS.
Except for
filing
and approval
requirements
under the HSR Act or any other antitrust pre-merger or
pre-acquisition
requirements and as
set forth on SCHEDULE
6.4, no consent,
authorization,
or approval
of, or exemption by, or filing with, any
Governmental Authority, is required in connection with the
execution,
delivery
and performance
by the Seller of this Agreement or the other Ancillary
Agreements to which it
is a party or of any of the instruments or agreements
herein referred to, or the taking of any action herein or therein
contemplated
to be taken by the Seller.
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6.5
REAL PROPERTY.
(a)
OWNED REAL PROPERTY.
The Seller is the
owner of good,
valid and marketable
fee title to the Owned Real Property, free and clear of
all Liens, other than
Permitted Liens. The Seller has not granted,
made or
entered into any option, commitment or agreement to or with
any Person for the
purchase of the Owned Real Property or for the possession or occupancy by any
Person of any
part of the
Owned Real Property or the facilities located
thereon.
(b)
LEASED PROPERTY. Set
forth on SCHEDULE 1.63 is a true,
accurate and complete
list of the only leases, subleases, licenses and other
agreements under which
the Seller uses or occupies the Leased Real Property in
connection with the
Business. The Seller has delivered or caused to be
delivered to the Buyers true and complete copies of the Real Property
Leases,
including all
modifications,
amendments and
supplements
thereto. The Real
Property Leases
are in full
force and effect, unimpaired by any acts or
omissions of the Seller, and constitute the legal, valid and
binding obligation
of the Seller,
enforceable
against the Seller in accordance with their
respective terms and,
to the Seller's Knowledge, against any other party
thereto. All rent and
other sums and charges
payable by the Seller
as tenant
thereunder are
current, no notice of default or
termination
thereunder
is
outstanding, no
termination event or
condition or uncured default on the part
of the Seller or, to the Seller's Knowledge, the landlord, exists thereunder,
and no event has
occurred and no condition exists which, with the giving of
notice, the
lapse of time,
or both, would constitute such a default or
termination event or condition.
(c)
ENTIRE PREMISES. The Owned Real Property and the Leased
Real Property comprise all of the real property presently used by
the Seller or
its Affiliates in the
conduct and operation
of the Purchased
Assets and the
Business.
(d)
USE OF LEASED REAL PROPERTY. The Seller has not
subleased, sublicensed or given any other Person the right to use
or occupy any
of the Leased Real Property.
(e)
CONDEMNATION. There
are no pending, and the Seller has
not received
written notice and has no Knowledge of any threatened or
contemplated,
condemnation
proceeding affecting
any part of the Owned
Real
Property or the Leased Real Property or of any sale or other
disposition of any
part of the
Owned Real Property or the Leased Real Property in lieu of
condemnation.
(f)
CASUALTY. No portion
of the Owned Real Property or the
Leased Real Property has suffered any material damage by fire or
other casualty
which has not been repaired and substantially restored to its original
condition.
6.6
TANGIBLE PERSONAL PROPERTY. Except as disclosed on SCHEDULE
6.6.
(a)
The Seller
has good and marketable title to the
Equipment, the
Miscellaneous
Tangibles and the
Inventory and other
tangible
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personal property
(excluding the Leased Assets) (collectively, the "TANGIBLE
PROPERTY"), free and clear of all Liens other than Permitted
Liens.
(b)
No third party has any option or right of first refusal
to purchase all or any part of the Tangible Property except for
Inventory to be
sold in the Ordinary Course of Business.
(c)
There are no Liens,
other than
Permitted Liens, or
rights, uses, or
privileges
of others with respect
to the Tangible
Property
except as may be imposed by bulk sales and transfer Laws.
(d)
All property
and assets comprising any part of the
Purchased Assets
are sold "as is" with
no warranty
of any kind,
express or
implied, and specifically no express warranties, or warranty of
merchantability
or fitness for any
particular purpose is
given by the Seller
hereunder. The
Purchased Assets
constitute
all of the assets
(real or personal),
Permits,
contracts, properties
and rights
(other than the
Excluded Assets) which
are
necessary for the
continued conduct of the Business after the Closing in
substantially the same manner as conducted by the Seller prior to
the Closing.
6.7
LITIGATION. Except as
disclosed on SCHEDULE 6.7:
(a)
There is no Action pending or, to the Seller's
Knowledge, threatened
against the Seller or
any of its Affiliates as a result
of the Seller's
ownership or operation of the Purchased Assets or against the
Purchased Assets or Business; and
(b)
The use or operation
of the Purchased Assets is not
subject to any injunction, order, judgment, writ or decree.
6.8
CONTRACTS AND OTHER AGREEMENTS. The Material Contracts listed
on SCHEDULE
6.8 constitute all of the Material Contracts related to the
Purchased Assets and
the Business.
The Seller has
delivered or caused to
be
delivered to the Buyers true and complete copies of all the
Material Contracts,
including all modifications, amendments and supplements
thereto. The
Material
Contracts are in full force and effect, unimpaired by any acts or
omissions of
the Seller, and
constitute
the legal,
valid and binding
obligation
of the
Seller, enforceable
against the Seller in
accordance with their terms and, to
the Sellers'
Knowledge,
against any other
party thereto. To the Seller's
Knowledge, each other
party to the Material
Contracts is in compliance in all
material respects with
all the provisions
thereof, and no other
party to any
Material Contract has
notified the Seller that it considers the Seller or its
Affiliates to be in breach in any material respect thereof.
The Seller has not
received written
notice that any Person
intends to terminate or default under
any Material Contract before its stated term, if any.
6.9
INTELLECTUAL PROPERTY.
With respect to the Business:
(a)
To the Seller's
Knowledge, the
Assigned
Intellectual
Property constitutes all of the Intellectual Property Used in or necessary
for
the conduct and operation of the Business as currently conducted by
the Seller;
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(b)
There are no Patents,
Copyrights or Trademarks Used in
or necessary
for the conduct or operation of the Business as currently
conducted by the Seller;
(c)
The Seller owns or
possesses or has the
right to use,
sell, license, sublicense, distribute, reproduce display or perform,
pursuant
to valid and enforceable, written licenses, sublicenses, agreements, or
permissions all
Assigned Intellectual Property. Each item of Assigned
Intellectual Property
owned or used by the
Seller immediately prior to the
Closing Date
hereunder will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the
Closing Date;
(d)
There are no Liens other than Permitted Liens on any of
the Assigned Intellectual Property;
(e)
Except as set forth on SCHEDULE 6.9(E):
(i) there is no Action
pending or, to the
Seller's
Knowledge, threatened,
against the Seller or any of its Affiliates relating to
the operation of the Business alleging the infringement or
misappropriation
of
the Intellectual Property rights of any other Person; and
(ii) to
the Seller's Knowledge, the operation of the
Business does
not infringe upon or constitute a misappropriation of the
Intellectual Property rights of any other Person;
(f)
All Assigned
IP Licenses within the Assigned
Intellectual Property
are subsisting, valid
and are in full force and effect;
and
(g)
To the Seller's Knowledge, no Person is infringing upon
or misappropriating the Assigned Intellectual Property.
6.10
TAXES. The Seller and
its Affiliates have properly prepared
and duly and timely filed all Tax Returns required to be filed by
the Seller or
its Affiliates in connection with the Purchased Assets or the Business and all
such Tax Returns (including information provided therewith or with respect
to
thereto) are true,
complete and correct
in all respects.
The Seller and its
Affiliates have duly and timely paid all Taxes properly
payable and due by
the
Seller or its
Affiliates in respect
of the Business or the
Purchased Assets
(whether or not
shown as due on such
Tax Returns),
and have made adequate
provisions for any
Taxes that are not yet
due and payable
in respect of the
Purchased Assets or the Business, for all taxable periods, or
portions thereof,
ending on or before the date hereof. No audit or other proceeding by any Tax
Authority is pending or threatened with respect to any Taxes due from
or with
respect to the Seller
and its Affiliates
in connection with the Purchased
Assets or the Business, nor has any audit of any such Tax Return
been conducted
within the previous five taxable years of the Seller or its
Affiliates.
There
are no Tax
deficiencies of any kind assessed against or relating to the
Seller
and its Affiliates
with respect to any
taxable periods
prior to the
Closing
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Date of a character or nature that would result in a Claim against the Buyer,
or a Lien upon the Purchased Assets. No claim in writing has been made
by any
Tax Authority in a jurisdiction where the Seller and its Affiliates
do not file
Tax Returns with respect to the Purchased Assets or the Business that they
are
or may be subject
to taxation by that jurisdiction with respect to the
Business. There
are no outstanding agreements extending or waiving the
statutory period of limitations applicable to any claim for, or
the period for
the collection or assessment or reassessment of, Taxes due from the Seller
or
its Affiliates
with respect to the
Purchased Assets or the Business for any
taxable period and no
request for any such waiver or extension is currently
pending. There are no
Liens for Taxes upon the Purchased Assets, except for
Permitted Liens.
6.11 PRODUCT
LIABILITY.
To the Seller's Knowledge, except as
disclosed on SCHEDULE
6.11, during the one year period
prior to the date
of
this Agreement,
there have been no Claims in excess of
$50,000 asserted
or
threatened in
writing against the Seller or its Affiliates for product
liability in respect of any Product manufactured, sold or distributed at any
time by the Seller or its Affiliates in connection with the
Business, including
any Claim on account of any express or implied warranty, except for normal
returns and allowances.
6.12
EMPLOYEE BENEFIT PLANS.
(a)
Except as disclosed in SCHEDULE 6.12(A), with respect
to the employees,
consultants,
officers or
directors of the
Business or any
former employee,
consultant, officer or
director of the Business, the Seller
does not maintain
or contribute to or have any obligation to maintain or
contribute to, or have any direct or indirect liability,
whether contingent
or
otherwise, with respect to any plan, program, arrangement or agreement that
is
a pension,
profit-sharing,
savings,
retirement,
employment,
consulting,
severance pay, termination, executive compensation, incentive compensation,
deferred compensation,
bonus, stock purchase,
stock option, phantom
stock or
other
equity-based
compensation,
change-in-control, retention, salary
continuation, vacation, sick leave, disability, death benefit,
group insurance,
hospitalization, medical, dental, life (including all individual
life insurance
policies as to which the Seller is the owner, the beneficiary,
or both), Code
Section 125
"cafeteria" or
"flexible" benefit,
employee loan, educational
assistance or fringe benefit plan, whether written or oral,
including, any (i)
"employee benefit
plan" within the
meaning of Section 3(3) of ERISA, or (ii)
other employee benefit plan, agreement, program, policy,
arrangement or payroll
practice, whether or
not subject to ERISA
(including any
funding mechanism
therefor now in effect or required in the future as a result of the
transaction
contemplated by this
Agreement or otherwise) under which any employees,
consultants, officers
or directors
of the Business or any former
employee,
consultant, officer or director of the Business has any present or
future right
to benefits
(collectively, the
"BENEFIT Plans"). If any Benefit Plan is a
"multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA
("MULTIEMPLOYER
PLAN"), then,
other than as
specifically stated
below, any
representation contained in this SECTION 6.12 with respect to such
Benefit Plan
is made to the best of the Seller's Knowledge.
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<PAGE>
(b)
Except as disclosed in SCHEDULE 6.12(B), to the
Seller's Knowledge (i)
each Benefit Plan has been established and administered
in all material
respects in accordance
with its terms and in compliance with
the applicable
provisions of ERISA,
the Code and all other
applicable laws,
rules and regulations;
(ii) with respect to any Benefit Plan, other than
routine claims for
benefits, no Liens, Actions or complaints to or by any
Person or Governmental
Authority have been
filed or made against such Benefit
Plan or the Seller
or, to the
Knowledge of the Seller, against any other
Person; (iii) no
individual who has performed services for the Seller has been
improperly excluded
from participation in any Benefit Plan; and (iv) there are
no audits or proceedings initiated pursuant to the Employee Plans
Compliance
Resolution System or
similar proceedings
pending with the
Internal Revenue
Service or Department of Labor with respect to any Benefit
Plan.
(c)
The Seller has not received any notification that any
Multiemployer Plan
disclosed in SCHEDULE 6.12(A) is in reorganization (within
the meaning of Section
4121 of ERISA),
is insolvent (within the meaning of
Section 4245 of ERISA) or has been terminated (within the meaning of Title
IV
of ERISA) and, to the Knowledge of the Seller, no Multiemployer
Plan disclosed
in SCHEDULE
6.12(A) is expected to be in reorganization, insolvent or
terminated. The
Buyers will not have (i) any obligation to make any
contribution to any
Multiemployer Plan
disclosed in SCHEDULE
6.12(A) or (ii)
any withdrawal liability from any such Multiemployer Plan under
Section 4201 of
ERISA which they would not have had but for the transactions contemplated by
this Agreement,
including any withdrawal liability were the Buyers to withdraw
partially or
completely
from such Multiemployer Plan. Other than as
specifically stated in the first sentence of this SECTION 6.12(C),
this SECTION
6.12(C) is not limited to the Knowledge of the Seller.
(d)
All contributions (including all employer contributions
and employee salary reduction contributions) or premium payments required to
have been made under
the terms of any
Benefit Plan,
or in accordance with
applicable Law, as of the date hereof, have not been timely made.
The Seller is
not, and does not
expect to be, in
respect of any of the
Purchased Assets,
subject to any Lien
pursuant to Section 412(n) of the Code or Title IV of
ERISA.
(e)
The Seller and any of its ERISA Affiliates does not now
and in the past six years has not established, maintained or
contributed to any
employee benefit plan subject to Title IV of ERISA.
(f)
The Seller
has no obligation to provide or make
available
post-employment welfare benefits or welfare benefit coverage for
any
employee or former
employee, except as
may be required under the Consolidated
Omnibus Budget
Reconciliation Act of
1985, as amended
("COBRA"), and at
the
expense of the employee or former employee. Each Benefit Plan which
is a "group
health plan" within the meaning of Section 5000(b)(1) of the Code and Section
607(l) of ERISA has been administered in material compliance with, and the
Seller has
otherwise complied with COBRA and the regulations promulgated
thereunder.
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<PAGE>
(g)
Neither the execution
and delivery of this
Agreement,
nor the consummation of the transactions contemplated hereby will
(either alone
or in combination
with another event) with respect to any
shareholders
or
former shareholders of
the Seller or any employees, consultants, officers or
directors of the Business, or any former employees,
consultants,
officers or
directors of the Business, including the Transferred
Employees in the case
of
CLAUSES (i) to (iv),
(i) result in any payment becoming due, or increase the
amount of any
compensation due, to
any employee of the Seller; (ii) increase
any benefits otherwise
payable under any Benefit Plan; (iii) result in the
acceleration of the
time of payment or
vesting of any such
compensation
or
benefits; (iv) result in the payment of any amount that could,
individually or
in combination
with any other such
payment, constitute an
"excess parachute
payment," as
defined in Section 280G(b)(1) of the Code; (v) result in the
triggering or imposition of any restrictions or limitations on the rights of
the sponsor of any Benefit Plan to amend or terminate such Benefit Plan; (vi)
result in a complete or partial withdrawal from any Multiemployer
Plan; (vii)
constitute a
transaction described
in Section
4069 or 4212(c) of
ERISA; or
(viii) result
in a violation of the privacy requirements of the Health
Insurance Portability
and Accountability Act of 1996 ("HIPAA") and the
regulations promulgated thereunder.
(h)
The Seller has no plan, contract or commitment, whether
legally binding
or not, to create any additional employee benefit or
compensation plans,
policies or
arrangements or, except as may be required by
applicable law, to
modify any Benefit Plan with respect to the Business or the
Transferred Employees.
(i)
The Buyer will not incur any liability or obligation
under the Worker Adjustment and Retraining Notification Act
("WARN") if, during
the 90-day period
following the Closing Date, only terminations of employment
in the normal course of operations occur. SCHEDULE 6.12(I) contains a list
of
all employees
or former employees of the Seller who have suffered an
"employment loss" (as
defined in the regulations under WARN) during the 90-day
period preceding
the Closing
Date at each "single
site of employment" (as
defined in the regulations under WARN) included in the
Business, and the
date
of such employment loss and applicable site of employment for each
such person.
(j)
The Seller has made available to the Buyer with respect
to each Benefit Plan,
a true, correct and
complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable: (i) the most recent documents constituting the Benefit
Plan and all
amendments thereto,
(ii)
any related trust agreement or other funding
instrument; (iii) the
most recent
IRS determination letter; (iv) the most
recent summary plan
description,
summary of material
modifications
and any
other written
communication (or a description of any oral communications) by
the Seller to its
employees concerning
the extent of the
benefits provided
under a Benefit Plan; (v) audited financial statements and actuarial
valuation
reports; and (vi) any
other documents in
respect of a Benefit Plan reasonably
requested by the Buyer.
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<PAGE>
6.13
BROKER'S FEE. The
Seller has not incurred any obligation or
liability, contingent
or otherwise, for broker's or finder's fees with respect
to the matters provided for in this Agreement.
6.14
COMPLIANCE WITH LAWS; PERMITS.
(a)
The Seller
is in material compliance with all Laws
applicable to the Business or the Purchased Assets.
(b)
Except as disclosed in SCHEDULE 6.14(B), the Seller has
all Permits required for the conduct of Business as now being
conducted, all of
which are in full force and effect. All such Permits are listed on SCHEDULE
6.14(B) other than routine permits for the use and occupancy of the
Leased Real
Property. There are no
Actions pending
or, to the
Knowledge of the Seller,
threatened to
terminate or
otherwise limit rights under any such Permits,
except as disclosed on SCHEDULE 6.14(B).
The representations
and warranties set forth in this Section 6.14 do not apply
to compliance with Environmental Laws or Permits required under
Environmental
Laws, which are addressed in Section 6.15.
6.15
ENVIRONMENTAL COMPLIANCE.
(a)
To the Seller's Knowledge, the operations and
properties of the
Business are and have
been in the preceding
five years in
compliance in all material respects with Environmental Laws.
(b)
To the Seller's Knowledge, the Seller possesses and is
and has been
for the preceding five years in compliance in all material
respects with all Permits required under Environmental Laws for the operation
of the Business.
(c)
Except as disclosed in SCHEDULE 6.15, to the Seller's
Knowledge, the Seller has not caused, nor is it responsible for,
any release or
disposal of any Hazardous Materials, except in compliance with
Environmental
Laws, and to Seller's Knowledge there are no events, conditions,
including any
condition on, in or under the Leased Real Property arising out of any release
or disposal of
Hazardous Materials,
or circumstances reasonably likely to
result in liability of the Seller pursuant to Environmental
Laws.
(d)
No Environmental
Claims that remain
unresolved
have
been asserted in writing or to the Seller's Knowledge, threatened against the
Seller or any of its
Affiliates with
respect to the
Purchased Assets or
the
Business.
(e)
The Seller has delivered to the Buyer true and complete
copies of all environmental assessment reports or other
documentation
related
to the condition of the environment or the requirements of
Environmental
Laws
in the possession
or control of the Seller or its Affiliates, regarding
environmental
conditions or compliance with Environmental Laws at any of the
15
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properties currently
or formerly owned or operated by the Seller or any of its
Affiliates or at
any other location for which the Seller or any of its
Affiliates may be liable with respect to the Business.
6.16 NO
MATERIAL ADVERSE CHANGE. Except as set forth in
SCHEDULE
6.16, since September 30, 2006, there has not been any event,
change or effect
that is or would
reasonably
be expected to be materially adverse to the
condition (financial
or otherwise), properties, liabilities or results of
operations of the Business and the Purchased Assets, taken as a whole. Except
as set forth in SCHEDULE 6.16, since September 30, 2006, the Seller
has not:
(a)
sold, leased,
abandoned or otherwise
transferred (or
contracted to
sell, lease or otherwise transfer) any of the assets or
properties of
the Business, except in the Ordinary Course of Business
consistent with the Seller's past practice in the previous 12
months;
(b)
suffered or incurred any damage, destruction or other
casualty loss, individually or in the aggregate in excess of
$100,000 to any of
the Purchased
Assets (other than the
Leased Real Property),
normal wear and
tear excepted; or
(c)
agreed, whether in
writing or
otherwise,
to take an
action described in the foregoing clauses (a) and (b).
6.17
PREPAID EXPENSES.
SCHEDULE 6.17 is a true, complete and
accurate list of
prepaid rent,
other prepaid charges due under any Assumed
Contracts and all real
and personal property
Taxes levied on the Purchased
Assets as of the date hereof.
6.18
INVESTMENT
REPRESENTATION. The
Seller is acquiring
the Unifi
Stock Consideration for its own account for investment, and not
with a view to,
or for sale in connection with, any distribution thereof, and does
not have any
present intention of distributing or selling the same.
ARTICLE 7
THE BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants to the Seller as follows.
7.1
ORGANIZATION. The Buyer is duly organized, validly existing and
in good standing
under the Laws of the
State of North
Carolina and has
full
corporate power to
execute, deliver and
perform its
obligations
under this
Agreement and the Ancillary Agreements to which it is a party.
7.2
NO CONFLICT. Except as
set forth in SCHEDULE 7.2, neither the
execution,
delivery or
performance
of this Agreement or the Ancillary
Agreements to
which it is a party, nor the consummation of transactions
contemplated by this Agreement or by the Ancillary Agreements to which it is a
16
<PAGE>
party, will (i)
violate any provision of the Buyer's articles of incorporation
or bylaws, or any Law by which the Buyer or any of its properties
may be bound;
or (ii) conflict with,
result in a breach of
the terms and
conditions of, or
constitute a default
under, any agreement
to which the Buyer is a party or by
which it or any of its properties may be bound.
7.3
AUTHORITY. The Buyer
has taken all necessary corporate action
to authorize the transactions contemplated by this Agreement and
the Ancillary
Agreements to
which it is a party, the performance by the Buyer of its
obligations hereunder
and thereunder, and the execution and delivery by
the
Buyer of all instruments and other documents contemplated hereby and thereby.
This Agreement
constitutes,
and each Ancillary Agreement to which it is a
party, when executed, will constitute, legal, valid and binding
obligations of
the Buyer enforceable
against the Buyer in
accordance with their
respective
terms, except
as enforcement may be limited by bankruptcy, insolvency,
reorganization, or
similar Laws affecting the enforcement of creditors' rights
generally and rules and Laws concerning equitable remedies.
7.4
BROKER'S FEE.
The Buyer has not
incurred any
obligation
or
liability, contingent
or otherwise, for broker's or finder's fees with respect
to the matters provided for in this Agreement.
7.5
FILING
REQUIREMENTS.
Except for
filing
and approval
requirements
under the HSR Act or any other antitrust pre-merger or
pre-acquisition
requirements and as
set forth on SCHEDULE
7.5, no consent,
authorization,
or approval
of, or exemption by, or filing with, any
Governmental Authority, is required in connection with the
execution,
delivery
and performance
by the Buyer of this Agreement or the other Ancillary
Agreements or of any of the instruments or agreements
herein referred to, or
the taking of any
action herein or
therein contemplated to be taken by the
Buyer.
7.6
UNIFI STOCK CONSIDERATION. The Unifi Stock Consideration,
when
issued, sold and delivered in accordance with this Agreement,
will be duly and
validly issued, fully
paid and non-assessable, and will be free of any Liens,
other than
restrictions
on transfer under applicable state and federal
securities laws.
7.7
CAPITALIZATION.
(a)
Set forth on SCHEDULE 7.7 is (i) the authorized capital
stock of Unifi Parent on the date hereof; (ii) the number of shares of
capital
stock issued and
outstanding;
(iii) the number of shares of capital stock
issuable pursuant
to the Unifi
Parent stock plans; and (iv) the number of
shares of capital
stock issuable and reserved for issuance pursuant to
securities exercisable
for, or convertible into or exchangeable for any shares
of capital stock of Unifi Parent. All of the issued and outstanding
shares of
Unifi Parent capital stock have been duly authorized and validly
issued and are
fully paid,
nonassessable and free of pre-emptive rights. Except as described
in the SEC Filings, no
Person is entitled to pre-emptive or similar statutory
or contractual rights with respect to any securities of Unifi
Parent. Except as
set forth on SCHEDULE 7.7, there are no outstanding warrants, options,
convertible securities
or other rights,
agreements
or arrangements of any
character under which
Unifi Parent is or may
be obligated to issue any equity
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securities of any
kind, or to
transfer any equity securities of any kind.
Except as described
in the SEC
Filings, Unifi Parent does not know of any
voting agreements,
buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among any of the
security holders of
Unifi Parent relating
to the securities held
by them. Except as set
forth on
SCHEDULE 7.7,
Unifi Parent has not granted any Person the right to
require
Unifi Parent to register any securities of Unifi Parent under the
Securities
Act, whether
on a demand
basis or in
connection
with the registration of
securities of Unifi
Parent for its own account or for the account of any other
Person.
(b)
All of the outstanding shares of capital stock of Unifi
Parent are, and as of the Closing, will be, duly authorized, validly issued,
fully paid and
nonassessable and none
of such securities
are or were at the
time of issuance
subject to any
preemptive rights
(statutory or
otherwise),
except such rights as have lapsed or been validly waived.
7.8
DELIVERY OF SEC FILINGS. The Buyer has provided the Seller with
copies of Unifi
Parent's most recent Annual Report on Form 10-K for the fiscal
year ended June 25, 2006 (the "UNIFI ANNUAL REPORT"), and all other reports
filed by Unifi Parent
pursuant to the
Securities
Exchange Act of 1934, as
amended (the
"EXCHANGE ACT") since the filing of the Unifi Annual Report
(collectively, the "SEC FILINGS")
7.9
NO MATERIAL
ADVERSE CHANGE. Since the filing of the Unifi
Annual Report or as
otherwise identified and described in the SEC Filings,
there has not been:
(i)
any declaration or payment of any dividend, or
any authorization or payment of any distribution, on any of the capital stock
of Unifi Parent, or
any redemption
or repurchase of any
securities of
Unifi
Parent;
(ii) any
material damage, destruction or loss,
whether or not covered by insurance to any assets or
properties
of or any of
its subsidiaries; or
(iii) any
event, change or effect that is or would
reasonably be expected to be materially adverse to the condition
(financial or
otherwise), properties, liabilities, or results of operation or the
business of
Unifi Parent and its subsidiaries, taken as a whole.
7.10 SEC
FILINGS; MATERIAL
CONTRACTS.
As of its filing date,
each
SEC Filings,
was, on its face, appropriately responsive, in all material
respects to the requirements of the Exchange Act and did not
contain any untrue
statement of a material fact or omit to state any material
fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
7.11 FORM
S-3 ELIGIBILITY.
Unifi Parent is
currently eligible to
register the
resale of the Unifi Stock Consideration by the Seller on a
registration statement on Form S-3 under the Securities Act.
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<PAGE>
ARTICLE 8
PRE-CLOSING PERIOD
The Seller and the
Buyer covenant
and agree that
between the date
of
this Agreement and the Closing Date:
8.1
DUE DILIGENCE;
CONFIDENTIALITY. The Buyer and its
Representatives shall be entitled to conduct a review of the Dillon
Facilities,
the Purchased Assets
and the Business (the "DUE DILIGENCE") in a manner which
does not unreasonably interfere with the operations of the Business. In
furtherance thereof,
the Seller and its Affiliates shall, to the extent
reasonably required for the performance by the Buyer of its Due
Diligence:
(a)
make available the
information in the
Seller's or its
Affiliates' po
