PVA AGREEMENT
ISOLYSER COMPANY, INC.
AND
THANTEX HOLDINGS, INC.
August __, 1998
PVA AGREEMENT, dated August ___, 1998 (this "Agreement"), between ISOLYSER
COMPANY, INC., a Georgia corporation ("Isolyser"), and THANTEX HOLDINGS, INC., a
Delaware corporation ("Holdings"). Certain capitalized terms shall have the
meaning set forth in Article I.
WHEREAS, Isolyser owns 8,185,747 pounds of PVA inventory and Isolyser holds
certain patent rights involving PVA (the "PVA Patents"); and
WHEREAS, Isolyser or Isloyser Affiliates have contracted to sell to Thantex
Specialties, Inc., a Delaware corporation ("Specialties") a plant in Arden, N.C.
and a plant in Abbeville, S.C. and in connection with such transactions,
Isolyser will receive an equity interest in Specialties; and
WHEREAS, the parties have reached certain agreements with respect to
Isolyser's PVA inventory, the plants owned by Specialties and the PVA Patents.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Holdings and Isolyser hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Certain Defined Terms. (a) As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" of a specified Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with, such specified Person.
"Control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as a trustee or executor
(in each case, acting in a fiduciary capacity), of the power to direct or cause
the direction of the management or policies of a Person, whether through the
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ownership of voting securities, as trustee or executor (in each case, acting in
a fiduciary capacity), by contract or credit arrangement or otherwise.
"Encumbrance" means a pledge, lien, security interest, mortgage, charge,
adverse claim of ownership or use, or other encumbrance of any kind.
"Initial Sale" means the sale of 4,500,000 pounds of PVA pursuant to
Section 2.01.
"Isolyser Parties" means Isolyser and all entities controlled by Isolyser.
"PVA" means poly-vinyl alcohol fiber, having the specifications listed on
Exhibit A.
"PVA Equivalent" mean (i) PVA, (ii) PVA woven rollgoods, (iii) PVA nonwoven
rollgoods and (iv) products made from PVA rollgoods.
"PVA Equivalent Pounds" means the pounds of PVA in the PVA Equivalent or
used in the making of the PVA Equivalent and shall include the gross waste
pounds resulting from the conversion of PVA fiber to a converted product and
only pertains to the PVA component of converted goods.
"PVA Inventory" means the PVA owned by Isolyser on the date of this
Agreement as more fully described on the attached Exhibit B.
"PVA License" means the license from Isolyser, as licensor in the form
attached hereto as Exhibit C.
"Related Transactions" means those transactions by and among Holdings,
Isolyser and their Affiliates more fully described on Exhibit D.
"Remaining Inventory" means the 3,685,747 pounds of PVA Inventory remaining
after the Initial Sale; poundage for which Isolyser has rebated a pro rata share
of the Option price pursuant to Section 2.04(b)(3) shall no longer be considered
a part of "Remaining Inventory".
"TS Plants" mean the Arden, N.C. plant owned, or to be owned by Specialties
and the Abbeville, S.C. plant owned, or to be owned by Specialties.
ARTICLE II.
SALES TO HOLDINGS
AND LICENSE
SECTION 2.01 Initial Sale. Isolyser shall sell and Holdings or its
Affiliates shall purchase 4,500,000 pounds of PVA at the closing of the Related
Transactions. The PVA will be sold pursuant to a bill of sale in substantially
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the form attached hereto as Exhibit E. The PVA to be sold and its locations are
listed on Exhibit B-1.
SECTION 2.02 Purchase Price for Holdings. The purchase price of any PVA
Inventory purchased by Holdings or its Affiliates shall be $0.45 per pound of
PVA Inventory. The purchase price to be paid at the Initial Sale shall be paid
by wire transfer. The purchase price for any other purchases of PVA from
Isolyser will be FOB warehouse, 30 day terms.
SECTION 2.03 License Agreement. At the Initial Sale, Isolyser shall deliver
the License.
SECTION 2.04 Holdings Option on Remaining Inventory.
(a) Holdings shall have the option (the "Holdings Option") to acquire
the Remaining Inventory in accordance with the terms and conditions of Section
2.02. Holdings shall pay $200,000 at the closing of the Initial Sale for the
Holdings Option. Holdings shall purchase in increments of not less than 10,000
pounds. The Holdings Option shall expire on the fourth anniversary of the
Initial Sale.
(b) Notwithstanding the Holdings Option, Isolyser shall have the right
to utilize all or part of the Remaining Inventory upon the following terms and
conditions:
(1) Isolyser shall provide Holdings with a non-binding rolling
three month forecast of its PVA requirements, including
purchases from Holdings or its Affiliates pursuant to Sections
2.07, 3.01 and 3.02 and including Isolyser's estimated use of
the PVA fiber in the Remaining Inventory.
(2) Isolyser will give Holdings not less than thirty (30) days
prior written notice of its intentions to use a part of the
Remaining Inventory and Holdings shall have the right to
exercise all or part of the Holdings Option within such thirty
(30) day period. After the expiration of the thirty day period
and the use by Isolyser of the specified amount of PVA, the
Holdings Option shall remain in full force and effect with the
remainder of the Remaining Inventory.
(3) With respect to each pound of PVA used by Isolyser or
otherwise unavailable for purchase under the Holdings Option
(because of casualty loss, theft, or otherwise), Isolyser
agrees to promptly rebate to Holdings within five (5) days of
recognition an amount equal to the per pound price of the
Holdings Option ($200,000 /3,685,747) times the number of
pounds then recognized as eliminated from the Holdings Option.
(4) Isolyser will provide upon request quarterly reports to
Holdings on the current poundage of the Remaining Inventory
and its locations.
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SECTION 2.05 Protection of Remaining Inventory. Isolyser agrees to keep the
Remaining Inventory fully insured in an amount not less than the replacement
cost of the PVA and to provide Holdings with a copy of the insurance policy. The
Remaining Inventory shall be kept at the locations set forth on the attached
Exhibit __, unless the parties agree in writing otherwise (for which Holdings
shall not unreasonably withhold its agreement). Holdings shall have the right to
inspect the Remaining Inventory upon request, after reasonable notice and at
reasonable times.
SECTION 2.06 Quality of PVA. Isolyser represents and warrants that the PVA
to be sold or optioned to Holdings is of good, merchantable quality,
commercially usable, consumable and saleable in the ordinary course of business
and meets the specifications set forth in Exhibit A. All sales of PVA will be
for "white fiber" unless specifically designated as "green fiber". Isolyser
agrees that in no event will it transfer to Holdings or its designee "green
fiber" in a greater ratio than 20% green to 80% white. Isolyser represents and
warrants that it has good and marketable title to the PVA which is subject to
this Agreement and that it will not encumber or permit any Encumbrances of the
PVA during the term of this Agreement, except for Holdings security interests
more fully described on Exhibit F and the existing security interests in the
PVA.
SECTION 2.07. Exclusive Converter. (a) Isolyser agrees that the Isolyser
Parties will use the TS Plants owned by Specialties as their exclusive converter
of PVA woven and non- woven rollgoods for such products as each of the TS Plants
is capable of producing and provided that the TS Plant is competitive with
respect to price, quality, delivery and other material converter terms with
respect to the products required by the Isolyser Party. An Isolyser Party may
use a third party converter when the objectives of the Isolyser Party are
broader than mere conversion of product.
(b) Isolyser agrees to cause each Isolyser Party to abide by the terms
of this Section.
(c) The provisions of this Section will terminate with respect to each
TS Plant upon the earlier of (i) divesture of the TS Plant by Specialties to an
unrelated third party and (ii) Isolyser or an Isolyser Affiliate no longer owns
an equity interest in such TS Plant. In the event that an Isolyser Party sells a
business or substantially all of the assets of a business which previously
utilized a TS Plant for conversion of PVA to an unrelated third party, the
purchaser of such business or asssets shall have no obligation to continue the
relationship with the TS Plant.
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ARTICLE III
ISOLYSER PURCHASES
SECTION 3.01 Isolyser Purchase Obligation.
(a) Isolyser agrees to purchase from Holdings or its Affiliates
2,600,000 pounds of PVA Equivalents. The purchase price for the PVA component of
any PVA Equivalents shall be $0.80 per PVA Equivalent Pound, FOB with 30 day
terms. Isolyser agrees to purchase 650,000 PVA Equivalent Pounds per year,
measured on a cumulative basis from the date of this Agreement, in relatively
equal quarterly amounts, until the 2.6 million pounds has been purchased.
(b) Isolyser shall provide Holdings with a non-binding rolling three
month forecast of its PVA purchases.
(c) Isolyser shall have the right to cure any breach of its purchase
obligations by payment of the purchase price for the unpurchased poundage within
30 days of notice from Holdings, which payment may be used as a credit against
future purchases of PVA Equivalents.
(d) Specialties and Isolyser shall negotiate in good faith the cost of
converted PVA goods, including a reasonable margin for Holdings and a reasonable
price for Isolyser, pursuant to the terms of Section 2.07 above.
SECTION 3.02 Additional Isolyser Purchases. After Isolyser has purchased
the required amounts of PVA Equivalents required by Section 3.01, Holdings
agrees to sell additional PVA Equivalents (but not PVA fiber) upon the following
terms and conditions:
(a) The purchase price for the PVA component of any PVA Equivalents
shall be the lesser of $0.80 per PVA Equivalent Pound or the then current market
pricing for PVA fiber, but in no event less than $0.45 per PVA Equivalent Pound.
(b) Holdings will be obligated to sell PVA Equivalents to Isolyser only
to the extent that (i) Holdings has PVA remaining from the Initial Sale or from
purchases under the Holdings Option that Holdings has elected in its sole
discretion to purchase, and (ii) Holdings does not want to use such remaining
PVA for its own purposes or uses.
SECTION 3.03 Security Agreement. In order to provide security for its
obligations under this Agreement, Isolyser shall deliver to Holdings a Security
Agreement and UCC Financing Statements in substantially the form attached hereto
as Exhibit F.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01 Further Instruments. Each of the parties hereto shall execute
and deliver such documents and other papers and take such further actions as may
be reasonably required to carry out the provisions hereof and give effect to the
transactions contemplated hereby.
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SECTION 4.02 Holdings Authority. Holdings represents and warrants that this
Agreement and all agreements and actions contemplated by this Agreement have
been duly authorized, that the transactions do not violate any agreements by
which Holdings or its Affiliates are bound and that there is no pending or
threatened litigation relating to the subject matters of this Agreement.
SECTION 4.03 Isolyser Authority. Isolyser represents and warrants that this
Agreement and all agreements and actions contemplated by this Agreement have
been duly authorized, that the transactions do not violate any agreements by
which Isolyser or its Affiliates are bound and that there is no pending or
threatened litigation relating to the subject matters of this Agreement.
SECTION 4.04. Waiver. At any time prior to the Closing, each of the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party to be bound thereby.
SECTION 4.05. Expenses. Except as otherwise expressly provided herein, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
SECTION 4.06. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
Person, by courier service, by cable, by telecopy, by telegram, by telex or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
11.02):
(a) if to Isolyser: Isolyser Company, Inc.
650 Engineering Drive
Norcross, GA 30092
Chief Financial Officer
Telecopier: (770)441-2592
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with a copy to: Arnall Golden & Gregory, LLP
1201 West Peachtree Street
2800 One Atlantic Center
Atlanta, GA 30309-3450
Attn: Stephen D. Fox, Esq.
Telecopier: (404)873-8529
(b)if to Holdings: Holdings Holdings, Inc.
4838 Jenkins Avenue
North Charleston, SC 29405
Attn: Jerry Zucker and James G. Boyd
Telecopier: (843)747-4092
with a copy to: Buist, Moore, Smythe & McGee, PA
5 Exchange Street
P.O. Box 999
Charleston, SC 29401
Attn: Susan M. Smythe, Esq.
Telecopier (843) 723-7398
SECTION 4.07. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 4.08. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
SECTION 4.09. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, between
Isolyser and Holdings with respect to the subject matter hereof and except as
otherwise expressly provided herein. The exhibits referred to in and attached to
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this Agreement form a part of this Agreement and by reference are incorporated
herein.
SECTION 4.10. Assignment. This agreement shall be binding on the parties,
their successors and permitted assigns. Holdings may fulfill its obligations
hereunder through a Holdings Related Party, provided Holdings remains primarily
liable. Isolyser may fulfill its obligations hereunder through an Isolyser
Related Party, provided Isolyser remains primarily liable. Except as otherwise
provided in this agreement, neither party hereto may assign its rights or
delegate its obligations under this Agreement without the prior written consent
of the other party.
SECTION 4.12. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by Isolyser and Holdings.
SECTION 4.13. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.
SECTION 4.14. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Isolyser and Holdings have caused this PVA Agreement to
be executed as of the date first written above by their respective officers
hereunto duly authorized.
ISOLYSER COMPANY, INC.
By:___________________
Its:__________________
THANTEX HOLDINGS, INC.
By:___________________
Its:__________________
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