ASSET PURCHASE AGREEMENT
BY AND AMONG
FOAMEX CARPET CUSHION, INC.,
FOAMEX INTERNATIONAL INC.,
GENERAL FELT INDUSTRIES, INC.,
AND
TRACE FOAM LLC
Dated as of February 27, 1998
ARTICLE I. DEFINITIONS ..................................................... 1
Section 1.1. Definitions .......................................... 1
Section 1.2. Accounting Terms and
Determinations ....................................... 6
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES ............................ 7
Section 2.1. Purchase and Sale of Purchased Assets ................ 7
Section 2.2. Assumption of Liabilities ............................ 7
Section 2.3. Purchase Price ....................................... 7
Section 2.4. Payment of the Purchase Price at Closing ............. 7
Section 2.5. Allocation of Purchase Price ......................... 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER AND
TRACE FOAM .................................................. 8
Section 3.1. Authority of Seller ................................. 8
Section 3.2. No Conflict or Violation; Consents ................... 9
Section 3.3. Litigation ........................................... 10
Section 3.4. Litigation ........................................... 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
PURCHASER .................................................... 10
Section 4.1. Authority of Purchaser ............................... 10
Section 4.2. No Conflict or Violation ............................. 11
Section 4.3. Litigation ........................................... 11
Section 4.4. Brokers .............................................. 11
Section 4.5. Retention of Assets .................................. 11
ARTICLE V. CERTAIN COVENANTS AND AGREEMENTS ................................ 12
Section 5.1. Xxxx-Xxxxx-Xxxxxx and Other Filings .................. 12
Section 5.2. Transfer Taxes ....................................... 12
Section 5.3. Certain Provisions Relating to Consents .............. 12
Section 5.4. Efforts .............................................. 13
Section 5.5. Sums Received in Respect of Business ................ 13
Section 5.6. Retention of Assets .................................. 13
ARTICLE VI. POST-CLOSING AGREEMENTS ........................................ 13
Section 6.1. Collection of Receivables ............................ 13
Section 6.2. Mail ................................................. 13
Section 6.3. Bulk Sales Laws ...................................... 13
ARTICLE VII. INDEMNIFICATION ............................................... 14
Section 7.1. Survival ............................................. 14
Section 7.2. Indemnification Provisions for
Benefit of Seller .................................. 14
Section 7.3. Matters Involving Third Parties ...................... 14
Section 7.4. Exclusive Remedy ..................................... 16
ARTICLE VIII. POST-CLOSING MATTERS GENERALLY ............................... 16
Section 8.1. Ongoing Cooperation .................................. 16
Section 8.2. Litigation Support ................................... 17
Section 8.3. Further Assurances ................................... 17
ARTICLE IX. MISCELLANEOUS PROVISIONS ....................................... 17
Section 9.1. Notices .............................................. 17
(i)
Section 9.2. Amendments ........................................... 19
Section 9.3. Assignment and Parties in Interest ................... 19
Section 9.4. Expenses ............................................. 20
Section 9.5. Entire Agreement ..................................... 20
Section 9.6. Descriptive Headings ................................. 20
Section 9.7. Counterparts ......................................... 20
Section 9.8. Governing Law ........................................ 21
Section 9.9. Construction ......................................... 22
Section 9.10. Severability ......................................... 22
Section 9.11. Specific Performance ................................. 22
Section 9.12. Ancillary Agreements ................................. 22
ARTICLE X. FOAMEX INTERNATIONAL GUARANTY ................................... 22
Section 10.1. Guaranty ............................................. 22
Section 10.2. Nature of Guaranty ................................... 22
Section 10.3. Limitation on Guaranty ............................... 23
SCHEDULES AND EXHIBITS
----------------------
SCHEDULE
NUMBER SCHEDULE NAME
3.2(a) Seller Conflicts
EXHIBIT EXHIBIT NAME
A Assumption Agreement
B Xxxx of Sale
(iii)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 27, 1998, by and among Foamex Carpet Cushion, Inc., a
Delaware corporation ("Purchaser"), Foamex International Inc., a Delaware
corporation ("Guarantor"), General Felt Industries, a Delaware corporation
("Seller"), and Trace Foam LLC, a Delaware limited liability company ("Trace
Foam").
PRELIMINARY STATEMENT
WHEREAS, Seller has engaged in the business of manufacturing and
distributing carpet cushion (the "Business"); and
WHEREAS, Seller desires to dispose of the Business, and Purchaser
desires to acquire from Seller the Business, on a going concern basis, subject
to substantially all of its liabilities, upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined
elsewhere herein, the terms defined in the introductory paragraph and the
Recitals to this Agreement shall have the respective meanings specified therein,
and the following terms shall have the meanings specified below when used herein
with initial capital letters:
"Affiliate" means "affiliate" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended.
"Agreement" has the meaning set forth in the preamble, and shall
include all Schedules and Exhibits hereto.
"Ancillary Agreements" means, collectively, the Assumption
Agreement, the Xxxx of Sale and the Note.
"Assumed Liabilities" means all Liabilities Seller relating to the
Business, no matter when arising, except for Excluded Liabilities.
"Assumption Agreement" refers to the Assumption Agreement to be
executed at Closing by Purchaser, in the form attached hereto as Exhibit
A.
"Xxxx of Sale" refers to the Xxxx of Sale to be executed at Closing
by Seller, in the form attached hereto as Exhibit B.
"Business" has the meaning set forth in the Recitals hereto.
"Business Day" refers to a day, other than a Saturday or a Sunday,
on which commercial banks are not required or authorized to close in the
City of New York.
"Closing" means the closing of the transactions contemplated hereby.
"Closing Date" means February 27, 1998.
"Code" refers to the Internal Revenue Code of 1986, as amended.
"Contracts" refers to, collectively, all contracts, agreements,
commitments, arrangements, instruments, guaranties, bids and proposals to
which Seller is a party and relating to the Business as of the Closing
Date, all unfilled orders outstanding as of the Closing Date for the
purchase of raw materials, goods or services by Seller relating to the
Business, and all unfilled orders outstanding as of the Closing Date for
the sale of goods or services by Seller in connection with the Business,
including, without limitation, the Supply Agreement and the Administrative
Services Agreement; provided, however, that Contracts shall not include
Leases.
"Damages" refers to any losses, amounts paid in settlement, Taxes,
claims, damages, Liabilities, obligations, judgments, settlements and
reasonable out-of-pocket costs (including costs of investigation or
enforcement), expenses and attorneys' fees, including, without limitation,
consequential damages and punitive damages assessed in a third party
action.
"Dispute" has the meaning set forth in Section 8.4.
"Excluded Assets" refers to, collectively, (a) the promissory note,
dated February 27, 1998, in the principal amount of $34 million, by Foamex
L.P. in favor of Seller, (b) the property of Seller located in Pico
Xxxxxxx, California as described in the Lease, dated February 27, 1998,
between Trace Foam and Purchaser (together with the
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buildings, structures, fixtures and all other improvements thereto), and
leaseholds and rights in respect thereof and all easements and uses which
benefit such property, (c) up to $4.8 million in cash or cash equivalents
of Seller, (d) any books, records and information related primarily to any
of the Excluded Assets or Excluded Liabilities; provided, however, that
Seller shall furnish Purchaser copies of such books and records to the
extent they relate to Assumed Liabilities or Purchased Assets, and (e) all
past, present or future claims, chooses in action and rights or actions by
Seller against third parties to the extent relating to any Excluded Asset
or Excluded Liability.
"Excluded Liabilities" refers to, collectively, all Liabilities of
Seller to the extent related to an Excluded Asset.
"GAAP" refers to United States generally accepted accounting
principles, as in effect from time to time.
"Governmental Agency" means (a) any international, foreign, federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof, (b) any governmental agency, authority,
board, bureau, commission, department or instrumentality, (c) any court or
administrative tribunal, (d) any non-governmental agency, tribunal or
entity that is vested by a governmental agency with applicable
jurisdiction, or (e) any arbitration tribunal or other non-governmental
authority with applicable jurisdiction.
"indemnified Party" has the meaning set forth in Section 7.3.
"indemnifying Party" has the meaning set forth in Section 7.3.
"Intellectual Property" means, collectively: (i) trademarks and
service marks (registered or unregistered), trade dress, trade names and
other names and slogans embodying business or product goodwill or
indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patents, patentable inventions, discoveries, improvements,
ideas, know-how, formula methodology, processes, technology and computer
programs, software and databases (including source code, object code,
development documentation, programming tools, drawings, specifications and
data) and all applications or registrations in any jurisdiction pertaining
to the foregoing, including all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof; (iii) trade
secrets, including confidential and other non-public
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information, and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs, mask works or
other works, and registrations or applications for registration of
copyrights in any jurisdiction; (v) Internet Web sites, domain names and
registrations or applications for registration thereof; (vi) licenses,
immunities, covenants not to xxx and the like relating to any of the
foregoing; (vii) books and records describing or used in connection with
any of the foregoing; (viii) the name "General Felt"; and (ix) claims or
causes of action arising out of or related to infringement or
misappropriation of any of the foregoing.
"Leases" means all leases, subleases, and occupancy agreements with
respect to all real property leased by Seller and used or occupied
primarily in connection with the Business.
"Legal Requirement" means any judgment, order, statute, law, rule,
regulation, constitutions, ordinance, principle of common law, or treaty
of any Governmental Agency.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due).
"Material Adverse Effect" refers to a material adverse effect with
respect to the assets, liabilities, results of operations, properties,
condition (financial or otherwise), prospects or business of the Business,
taken as a whole.
"Note" has the meaning set forth in Section 2.4.
"Permit" refers to any permit, approval, authorization, license,
variance permission or product registration required by a Governmental
Agency under any applicable Legal Requirement.
"Person" refers to any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or any other
entity.
"Personal Property" means all of the machinery, equipment, test
equipment, computers, tools, discs, molds and parts, vehicles, furniture,
furnishings, office supplies and other supplies, and other tangible
personal property, including any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other
Person, (a) owned by Seller and (b) used in connection with the Business,
including all warranties and
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licenses received from manufacturers and sellers of the aforesaid items
and any related claims, credits and rights of recovery with respect to
such items.
"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Assets" refers to all of Seller's business, properties,
assets, goodwill, rights and claims of whatever kind and nature, real or
personal, tangible or intangible, known or unknown, actual or contingent
and wherever situated, which are used in, held for use by, or related to
the Business, but excluding all Excluded Assets, as the same may exist on
the Closing Date, including, without limitation, the following:
(a) all Personal Property;
(b) all inventory, including inventory of the Business held at any
location controlled by Seller and any inventory of the Business previously
purchased and in transit to Seller;
(c) all rights to products sold or leased and to any products
under research or development for the Business prior to or on the Closing
Date;
(d) all receivables and other claims for money or other
obligations due to Seller arising out of the Business;
(e) all prepaid expenses (other than those relating to Excluded
Assets and Excluded Liabilities);
(f) all of the Intellectual Property and know-how to the extent
related to the Business;
(g) all right, title and interest in, to and under all Contracts
and Leases, including, without limitation, Seller's right to receive
payment for products sold or services rendered pursuant to, and to receive
goods and services pursuant to, such agreements and to assert claims and
take other rightful actions in respect of breaches, defaults and other
violations of such contracts and otherwise;
(h) all books and records relating primarily to the Business
(including such books and records as are contained in computerized storage
media), including, without limitation, books and records related to
inventory, purchasing, accounting, sales, pricing, research and
development, quality control, engineering, manufacturing, maintenance,
repairs, marketing, banking, Intellectual Property, shipping records, and
all files, customer and
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supplier lists, records, literature and correspondence and other
communication; provided, however, that Seller shall be entitled to make
and retain copies of such books and records to the extent they relate to
Excluded Assets or Excluded Liabilities;
(i) to the extent legally assignable, all Permits or applications
therefor;
(j) claims, deposits, prepayments, prepaid assets, refunds, causes
of action, rights of recovery, rights of setoff and rights of recoupment
of Seller as of the Closing Date, including, any such rights of Seller
under any property, casualty, workers' compensation or other insurance
policy, except to the extent related to Excluded Assets or Excluded
Liabilities; (k) any other tangible assets of Seller primarily related to
the Business and which are of a nature not customarily reflected in the
books and records of a business, such as assets which have been written
off for accounting purposes but which are still used by or of value to the
Business.
"Purchaser" has the meaning set forth in the preamble hereto.
"Purchaser Obligations" has the meaning set forth in Section 10.1
"Schedules" or "Disclosure Schedules" refers to, collectively, the
various Schedules referred to in this Agreement delivered separately to
Purchaser on or before the date of this Agreement and initialed by the
parties.
"Seller" has the meaning set forth in the preamble hereto.
"Trace Foam" has the meaning set forth in the preamble hereto.
"Trace Foam Indemnification Rights" means all of the rights of Trace
Foam for indemnification for breach of a representation, warranty or
covenant contained in the Transfer Agreement.
"Transfer Agreement" means the Transfer Agreement, dated as of
February 27, 1998, by and between Trace Foam and Foamex L.P.
Section 1.2. Accounting Terms and Determinations. All references
in this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted
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accounting principles in effect in the United States of America at the time of
application thereof. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and certificates
and reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a consistent basis.
ARTICLE II.
PURCHASE AND SALE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
Section 2.1. Purchase and Sale of Purchased Assets. On the terms
and subject to the conditions set forth in this Agreement, effective as of
February 27, 1998 (a) Purchaser shall purchase from Seller, and Seller shall
sell, transfer, assign, convey and deliver to Purchaser, all of the Purchased
Assets, and (b) Purchaser shall purchase from Trace Foam, and Trace Foam shall
sell, transfer, assign, convey and deliver to Purchaser, all of the Trace Foam
Indemnification Rights.
Section 2.2. Assumption of Liabilities. On the terms and subject
to the conditions set forth in this Agreement, effective as of February 27,
1998, Purchaser shall assume and become responsible for all of the Assumed
Liabilities, excluding the Excluded Liabilities.
Section 2.3. Purchase Price. On the terms and subject to the
conditions set forth in this Agreement, the purchase price for the Business
shall be $90.2 million (the "Purchase Price").
Section 2.4. Payment of the Purchase Price at Closing. On the
terms and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser shall deliver the following amounts:
(a) Twenty million dollars ($20,000,000) in immediately available
funds by wire transfer to Seller.
(b) A promissory note (the "Note") in the amount of $70.2 million,
which note shall be (i) secured by a first lien on the Purchased Assets
and (ii) guaranteed by Foamex International Inc. pursuant to Article X
hereof.
Section 2.5. Allocation of Purchase Price.
(a) As soon as reasonably practicable (but not later than sixty
(60) days) following the Closing, Purchaser shall prepare and deliver to
Seller a schedule which shall set
7
forth the allocation of the Purchase Price among the Purchased Assets and
the Assumed Liabilities. Such allocation shall be based on an appraisal
performed by a qualified appraiser chosen by Purchaser (the fees and
expenses of which shall be borne by Purchaser) and shall be subject to the
reasonable review and approval of Seller. Subject to the requirements of
any applicable Tax law, all Tax Returns filed by Purchaser and Seller
shall be prepared consistently with such allocation.
(b) If Purchaser and Seller are unable to agree upon any of the
matters set forth in Section 2.5(a), within thirty (30) days (or such
later date as is mutually agreed upon by both parties), the matter or
matters in dispute shall be submitted to independent accountants of
nationally recognized standing reasonably satisfactory to Purchaser and
Seller.
(c) After the Closing Date, Seller shall prepare, in consultation
with the Purchaser and Purchaser's accountants, those statements or forms
(including Form 8594) required by Section 1060 of the Code and the
regulations promulgated thereunder. Such statements or forms shall be
prepared consistently with the allocation under this Section 2.5. Such
statements or forms shall be filed by the parties with their respective
federal income Tax Returns as required by Section 1060 of the Code and the
regulations promulgated thereunder and each party shall provide the other
party with a copy of such statement or form as filed.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER AND TRACE FOAM
Seller and Trace Foam, as applicable, represent and warrants to Purchaser as
follows:
Section 3.1. Authority.
(a) Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware. Seller is duly
qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify would
not have a Material Adverse Effect. Seller has full corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance by Seller of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Seller, and
this Agreement constitutes the legal,
8
valid and binding obligation of Seller enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which
affect creditors' rights generally, and by legal and equitable limitations
on the enforceability of specific remedies.
(b) Trace Foam is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of
Delaware. Trace Foam is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect. Trace Foam
has full power and authority to execute, deliver and perform this
Agreement. The execution, delivery and performance by Trace Foam of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part
of Trace Foam, and this Agreement constitutes the legal, valid and binding
obligation of Trace Foam enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
enforceability of specific remedies.
Section 3.2. No Conflict or Violation.
(a) Except as set forth on Schedule 3.2(a), neither the execution
and delivery of this Agreement by Seller, the consummation of the
transactions contemplated hereby, nor the fulfillment of the terms and
compliance with the provisions hereof will conflict with or result in a
material breach of or a material default (or in an occurrence which with
the lapse of time or action by a third party, or both, could result in a
material default) with respect to any of the terms, conditions or
provisions of any applicable order, writ or decree of any court or of any
Governmental Agency, applicable to Seller, or of the Certificate of
Incorporation or By-Laws of Seller, or of any indenture, contract,
agreement, lease, or other instrument to which Seller is a party or
subject or by which Seller or any of its properties or assets are bound,
or of any applicable statute, rule or regulation to which Seller or its
businesses is subject.
(b) Neither the execution and delivery of this Agreement by Trace
Foam, the consummation of the transactions contemplated hereby, nor the
fulfillment of the terms and compliance with the provisions hereof will
conflict with or result in a material breach of or a material default (or
in an occurrence which with the lapse of time or action by a third party,
or both, could result in
9
a material default) with respect to any of the terms, conditions or
provisions of any applicable order, writ or decree of any court or of any
Governmental Agency, applicable to Trace Foam, or of the certificate of
formation or the operating agreement of Trace Foam, or of any indenture,
contract, agreement, lease, or other instrument to which Trace Foam is a
party or subject or by which Trace Foam or any of its properties or assets
are bound, or of any applicable statute, rule or regulation to which Trace
Foam or its businesses is subject.
Section 3.3. Litigation.
(a) There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions or decrees pending or, to the
knowledge of Seller, threatened against Seller at law, in equity, or
admiralty, or before or by any Governmental Agency, which seeks to
restrain or enjoin the consummation of the transactions contemplated
hereby.
(b) There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions or decrees pending or, to the
knowledge of Trace Foam, threatened against Trace Foam at law, in equity,
or admiralty, or before or by any Governmental Agency, which seeks to
restrain or enjoin the consummation of the transactions contemplated
hereby.
Section 3.4. No Defaults. No default exists, and no event has
occurred which with notice or lapse of time, or both, would constitute a
default, in the due performance and observance of any term, covenant or
condition of the Transfer Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 4.1. Authority of Purchaser. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Purchaser has full power and authority to execute, deliver
and perform this Agreement and each of the Ancillary Agreements. The execution,
delivery and performance by Purchaser of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of Purchaser, and this Agreement constitutes, and each of the
Ancillary Agreements upon its execution will constitute, the legal, valid and
binding obligation of Purchaser enforceable in accordance with its terms, except
as such enforcement may be
10
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by legal
and equitable limitations on the enforceability of specific remedies. Purchaser
has full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
Section 4.2. No Conflict or Violation. Neither the execution and
delivery of this Agreement by Purchaser, the consummation of the transactions
contemplated hereby, nor the fulfillment of the terms and compliance with the
provisions hereof will conflict with or result in a material breach of or a
material default (or in an occurrence which with the lapse of time or action by
a third party, or both, could result in a material default) with respect to any
of the terms, conditions or provisions of any applicable order, writ or decree
of any court or of any Governmental Agency, applicable to Purchaser, or of the
Certificate of Incorporation or By-Laws of Purchaser, or of any indenture,
contract, agreement, lease, or other instrument to which Purchaser is a party or
subject or by which Purchaser or any of its properties or assets are bound, or
of any applicable statute, rule or regulation to which Purchaser or its
businesses is subject.
Section 4.3. Litigation. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions or decrees pending or, to
the knowledge of Purchaser, threatened against Purchaser at law, in equity, or
admiralty, or before or by any Governmental Agency, which seeks to restrain or
enjoin the consummation of the transactions contemplated hereby.
Section 4.4. Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Purchaser
without the intervention of any other person acting on its behalf in such manner
as to give rise to any valid claim by any such person against Seller or its
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
Section 4.5. Retention of Assets. Purchaser has no present plan
or intention to transfer any of the assets acquired pursuant to this Agreement
to any person (other than in the ordinary course of business) and has no present
plan or intention to acquire all or part of the assets of Foamex L.P. (other
than in the ordinary course of business). Purchaser and Seller acknowledge that,
pursuant to the New GFI Security Agreement, dated as of February 27, 1998, made
by Purchaser in favor of Citicorp USA, Inc., as collateral agent, the assets
acquired pursuant to this Agreement have been pledged as security for the
obligations of Purchaser under (i) the Credit Agreement, dated as of February
27, 1998, among Purchaser, the institutions from time to time party thereto as
lenders, the institutions from time to time party thereto as issuing banks, and
Citicorp USA, Inc. and
00
Xxx Xxxx xx Xxxx Xxxxxx, as administrative agents, and (ii) the Note.
ARTICLE V.
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1. Government Filings. As promptly as practicable,
following the execution and delivery of this Agreement by the parties, Seller
and Purchaser shall prepare and file any application, report, or other filing
required to be submitted to any Governmental Agency in connection with the
transactions contemplated hereby.
Section 5.2. Transfer Taxes. Any sales, recording, transfer, use
or other similar taxes or fees (other than gains and income taxes) imposed as a
result of the sale of the Business to Purchaser pursuant to this Agreement shall
be divided equally between Seller and Purchaser. Seller and Purchaser shall
timely prepare and timely file all Tax Returns with respect to any such sales,
transfer use or other similar Taxes. At the Closing, Purchaser shall remit to
Seller such properly completed resale exemption certificates and other similar
certificates or instruments as are necessary to claim available exemptions from
the payment of sales, transfer, use or other similar taxes under applicable law.
Purchaser shall cooperate with Seller in preparing such forms and will execute
and deliver such affidavits and forms as are reasonably requested by Seller.
Section 5.3. Certain Provisions Relating to Consents.
(a) Seller shall use commercially reasonable efforts to obtain all
third party consents that are required in connection with the transactions
contemplated by this Agreement. Seller shall not obtain any consent that
will affect Purchaser to its material economic detriment, including any
modification of any Contract, Lease or Permit, unless Purchaser expressly
approves the obtaining of such consent. Purchaser shall cooperate as
reasonably necessary or desirable to secure the third party consents,
including, without limitation, providing to such third party information,
including financial information, regarding Purchaser's intended use of the
Purchased Assets.
(b) In the event that any consent is not obtained on or prior to
the Closing Date, Seller shall use commercially reasonable efforts (i) to
provide to Purchaser at Purchaser's expense the benefits of the applicable
Contract or Lease, (ii) to cooperate in any reasonable and lawful
arrangement designed to provide such benefits to Purchaser and (iii) to
enforce at the request of Purchaser and for the account of Purchaser, at
Purchaser's expense, any rights of
12
Seller arising from any such Contract or Lease (including the right to
elect to terminate such Contract or Lease in accordance with the terms
thereof upon the request of Purchaser).
Section 5.4. Efforts. Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto shall use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
Section 5.5. Sums Received in Respect of Business. Seller shall
pay or cause to be paid over to Purchaser, promptly after the receipt thereof
after the Closing Date, all sums received in respect or on account of the
Purchased Assets other than the consideration received by Seller as set forth in
Article II hereof and other amounts paid to Seller by Purchaser pursuant to this
Agreement.
Section 5.6. Retention of Assets. Purchaser agrees that it will
not hereafter make any transfer or acquisition described in Section 4.5 hereof
for two years after the date of this Agreement, except in the event of a
presently unforeseen material change in circumstances necessitating such change.
Purchaser and Seller acknowledge that, pursuant to the TFLLC Note Assignment and
Security Agreement, upon consummation of the merger of Seller with and into
Trace Foam, Trace Foam, as surviving corporation, will assign its rights to the
Note to Citicorp USA, Inc., as collateral agent, in connection with the
execution of the Amended and Restated Term Credit Agreement, dated as of
February 27, 1998, among Trace Foam, the institutions from time to time party
thereto as lenders, and Citicorp USA, Inc. and The Bank of Nova Scotia, as
administrative agents.
ARTICLE VI.
POST-CLOSING AGREEMENTS
Section 6.1. Collection of Receivables. Seller agrees that
Purchaser shall have the right and authority to collect for its own account or
the account of its Affiliates all receivables which are transferred and assigned
to Purchaser as provided herein and Purchaser and its Affiliates have the right
to endorse with the name of Seller any checks received on account of any such
receivable. Seller agrees that it will promptly transfer and deliver to
Purchaser any cash or other property which Seller may receive in respect of such
receivables.
Section 6.2. Mail. Seller agrees that Purchaser and Purchaser's
Affiliates shall have the right and authority to open
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all mail received by the Business, even if addressed to Seller, for processing
or forwarding to Seller, as appropriate.
Section 6.3. Bulk Sales Laws. Purchaser hereby waives any
requirement that Seller comply with any bulk sales laws applicable to the
transactions contemplated hereby.
ARTICLE VII.
INDEMNIFICATION
Section 7.1. Survival. The representations and warranties of
Trace Foam contained in Section 3.3 and of Purchaser contained in Section 4.3
shall survive until April 30, 1999. All of the representations and warranties of
Trace Foam (other than Section 3.3), all of the representations and warranties
of Purchaser (other than Section 4.3) and all of the covenants of Seller and
Purchaser contained in this Agreement shall survive the Closing and continue in
full force and effect forever thereafter.
Section 7.2. Indemnification Provisions for Benefit of Seller.
(a) In the event Purchaser breaches (or in the event any third
party alleges facts that, if true, would mean Purchaser has breached) any
of its representations, warranties or covenants contained in this
Agreement or in any certificate delivered by Purchaser pursuant to this
Agreement or Purchaser fails to pay any Assumed Liability and provided
that Seller makes a written claim for indemnification against Purchaser
within the applicable survival period, then Purchaser agrees to indemnify
Seller, Seller's Affiliates and each of their respective partners,
directors, officers, employees and agents from and against the entirety of
any Damages any such person suffers resulting from, arising out of,
relating to, in the nature of or caused by such breach.
(b) In the event Seller or Trace Foam breaches (or in the event
any third party alleges facts that, if true, would mean Seller or Trace
Foam has breached) any of its representations, warranties or covenants
contained in this Agreement or in any certificate delivered by Seller or
Trace Foam pursuant to this Agreement and provided that Seller makes a
written claim for indemnification against Purchaser or Trace Foam, as the
case may be, within the applicable survival period, then Purchaser and
Trace Foam, as applicable, agree to indemnify Seller, Seller's Affiliates
and each of their respective partners, directors, officers, employees and
agents from and against the entirety of any
14
Damages any such person suffers resulting from, arising out of, relating
to, in the nature of or caused by such breach.
Section 7.3. Matters Involving Third Parties.
(a) If any third party notifies any party hereto (the "Indemnified
Party") with respect to any matter which may give rise to a claim for
indemnification against the other party hereto (the "Indemnifying Party")
under this Article VII, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly and in any event within five Business
Days after receiving any written notice from a third party; provided that
no delay on the part of the Indemnified Party in notifying the
Indemnifying Party will relieve the Indemnifying Party from any obligation
hereunder unless, and then solely to the extent that, the Indemnifying
Party is prejudiced thereby.
(b) Once the Indemnified Party has given notice of the matter to
the Indemnifying Party, the Indemnified Party may, subject to the
Indemnifying Party's rights to assume the defense of such matter pursuant
to paragraph (c) below, defend against the matter in any manner it deems
appropriate.
(c) The Indemnifying Party may at any point in time choose to
assume the defense of all of such matter, in which event:
(i) the Indemnifying Party shall defend the Indemnified
Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party,
(ii) the Indemnified Party may retain separate counsel at its
sole cost and expense (except that the Indemnifying Party shall be
responsible for the fees and expenses of such separate co-counsel to
the extent the Indemnified Party reasonably concludes that either
(x) the counsel the Indemnifying Party has selected has a conflict
of interest, or (y) there are legal defenses available to the
Indemnified Party that are different from or additional to those
available to the Indemnifying Party (but only to the extent of such
additional defenses)), and
(iii) the Indemnifying Party shall reimburse the Indemnified
Party for the reasonable costs of defense or investigation for the
period prior to the assumption of the defense.
(d) Assumption of the defense of any matter by the Indemnifying
Party shall without further action constitute
15
an irrevocable waiver by the Indemnifying Party of its right to claim at a
later date that such third party action for which the defense was assumed
is not a proper matter for indemnification pursuant to this Article VII.
(e) The Indemnified Party shall not consent to the entry of a
judgment or enter into any settlement with respect to any matter which may
give rise to a claim for indemnification without the written consent of
the Indemnifying Party, which consent may not be unreasonably withheld or
delayed. The Indemnifying Party shall not consent to the entry of a
judgment with respect to any matter which may give rise to a claim for
indemnification or enter into any settlement which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the
written consent of the Indemnified Party (not to be unreasonably withheld
or delayed).
Section 7.4. Exclusive Remedy. In the absence of intentional
misrepresentation, omission or breach of this Agreement, after the Closing Date,
and except as provided in Section 9.11, the indemnification provisions set forth
in this Article VII will constitute the sole and exclusive recourse and remedy
for monetary damages available to the parties hereto with respect to the breach
of any representation, warranty or covenant contained in this Agreement or in
any certificate delivered pursuant to this Agreement.
ARTICLE VIII.
POST-CLOSING MATTERS GENERALLY
Section 8.1. Ongoing Cooperation. Seller and Purchaser shall
cooperate fully with each other and make available or cause to be made available
to each other in a timely fashion such tax data, prior tax returns and filings
and other information as may be reasonably required for the preparation by
Purchaser or Seller of any tax returns, elections, consents or certificates
required to be prepared and filed by Purchaser or Seller and any audit or other
examination by any taxing authority, or judicial or administrative proceeding
relating to liability for taxes including, without limitation, sales taxes and
sales tax audits. Purchaser and Seller will each retain and provide to the other
party all records and other information which may be relevant to any such tax
return, audit or examination, proceeding or determination, and will each provide
the other party with any final determination of any such audit or examination,
proceeding or determination that affects any amount required to be shown on any
tax return of the other party for any period. Without limiting the generality of
the foregoing, each of Purchaser and Seller will retain copies of all tax
returns, supporting work
16
schedules and other records relating to tax periods or portions thereof ending
prior to or on the Closing Date. Purchaser shall provide Seller with any
necessary payroll records attributable to the period prior to the Closing Date.
Purchaser shall cooperate with Seller to the extent reasonably necessary for
Seller's preparation of its financial statements and tax returns and in the
sharing of financial and accounting information with respect thereto or with
respect to any audit, examination, or other proceeding with respect thereto.
Section 8.2. Litigation Support. In the event and for so long as
any party actively is contesting or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity practice, plan, occurrence,
event, incident, action, failure to act or transaction on or prior to the
Closing Date involving Seller, Purchaser shall cooperate with the contesting or
defending party and its counsel in such contest or defense, make available its
personnel, and provide such testimony and access to its books and records as may
be reasonably necessary in connection with the contest or defense, at the sole
cost and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Article VII).
Section 8.3. Further Assurances. From time to time, at
Purchaser's reasonable request and expense, (a) Seller will (and will cause its
and its Affiliates, officers, directors, employees and agents to) execute and
deliver such other instruments of conveyance and transfer and take such other
actions as Purchaser may reasonably request in order to (i) perfect and record,
if necessary, the sale, assignment, conveyance, transfer, and delivery to
Purchaser of the Purchased Assets, and (ii) convey, transfer to and vest in
Purchaser and to put Purchaser in possession and operating control of all or any
part of the Purchased Assets, including, without limitation, cooperating with
and assisting Purchaser in the prosecution of any claims and in the collection
or reduction to possession of accounts receivable and all the other Purchased
Assets and (b) Trace Foam will (and will cause its and its Affiliates, officers,
directors, employees and agents to) execute and deliver such other instruments
of conveyance and transfer and take such other actions as Purchaser may
reasonably request in order to convey, transfer to and vest in Purchaser and to
put Purchaser in possession and operating control of all or any part of the
Trace Foam Indemnification Rights.
17
ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.1. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day, (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid), or (d) seven Business Days after the
date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the parties at the addresses indicated below:
18
If to Purchaser or 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
Facsimile No. (000) 000-0000
With a copy Xxxxxxx Xxxx & Xxxxxxxxx
(which shall 000 Xxxx 00xx Xxxxxx
not constitute Xxx Xxxx, Xxx Xxxx 00000
notice) to: Attention: Xxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
If to Seller: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Facsimile No. (000) 000-0000
With a copy Xxxxxxx Xxxx & Xxxxxxxxx
(which shall 000 Xxxx 00xx Xxxxxx
not constitute Xxx Xxxx, Xxx Xxxx 00000
notice) to: Attention: Xxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
If to Trace Foam: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Xx.
Facsimile No. (000) 000-0000
With a copy Xxxxxxx Xxxx & Xxxxxxxxx
(which shall 000 Xxxx 00xx Xxxxxx
not constitute Xxx Xxxx, Xxx Xxxx 00000
notice) to: Attention: Xxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
Section 9.2. Amendments. The terms, provisions, and conditions of
this Agreement may not be changed, modified, or amended in any manner except by
an instrument in writing duly executed by each of the parties hereto.
Section 9.3. Assignment and Parties in Interest.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be transferred or assigned (by
operation of law or otherwise) by any party hereto except with the prior
written consent of the other parties hereto.
19
(b) Notwithstanding any provision of this Agreement to the
contrary, Purchaser, Guarantor, Seller and Trace Foam hereby acknowledge
and agree that (i) each of Purchaser and Seller may collaterally assign
its rights, title and interest to any payments under this Agreement to any
of its creditors and (ii) upon receipt of written notice from any such
creditor that an "Event of Default" has occurred, Purchaser, Guarantor or
Seller, as the case may be, will tender any payments due under this
Agreement to such creditor in accordance with the instructions set forth
in such notice; provided, however, in the event that such party tenders
payment to Purchaser or Seller, as the case may be, such payment shall be
a complete discharge of such party's obligation to such creditor for such
payment and such party shall thereafter have no further liability to such
creditor with respect to such payment.
(c) Except as provided in Article IX, this Agreement will not
confer any rights or remedies upon any person or entity other than the
parties hereto and their respective permitted successors and assigns.
Section 9.4. Expenses. Except as set forth in Section 5.2, each
party to this Agreement shall bear all of its legal, accounting, investment
banking, and other expenses incurred by it or on its behalf in connection with
the transactions contemplated by this Agreement.
Section 9.5. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, supersedes and is in full substitution for any and all prior agreements
and understandings between them relating to such subject matter, and no party
shall be liable or bound to the other party hereto in any manner with respect to
such subject matter by any warranties, representations, indemnities, covenants,
or agreements except as specifically set forth herein or in an amendment hereto
executed in accordance with Section 9.2 hereof. The Exhibits and Schedules to
this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.
Section 9.6. Descriptive Headings. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 9.7. Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
20
Section 9.8. Governing Law; Arbitration.
(a) This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of
the State of New York, applicable to contracts made and performed therein.
(b) The parties shall initially attempt to resolve by direct
negotiation any dispute, controversy or claim arising out of or relating
to this Agreement or its breach, interpretation, termination or validity
(each, a "Dispute").
(c) If the parties are not able to settle the Dispute by direct
negotiations within thirty (30) days after written notice by one party to
the other of the Dispute, any party may initiate an arbitration to resolve
the Dispute; except as expressly provided in Section 9.11, the parties
hereto agree that arbitration pursuant to this Section shall be the sole
means of resolving Disputes, and that no party shall commence any
proceeding in any court or tribunal with respect to a Dispute. All such
Disputes shall be arbitrated in New York, New York pursuant to the Rules
of the American Arbitration Association except that the parties expressly
do not constitute the American Arbitration Association as administrator of
the arbitration as provided in Rule 3 of such Rules. Each of Purchaser and
Sellers shall select an arbitrator, and the two arbitrators shall select a
third arbitrator. The arbitrators shall be certified public accountants,
attorneys or other persons, in each case, who are experienced in the
buying and selling of businesses. If the two arbitrators fail to agree
upon the appointment of a third arbitrator, each of them shall name a
candidate, and the decision as to the third arbitrator shall be made by
drawing lots.
(d) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines, which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding and
the commencement of an arbitration proceeding shall be deemed the
commencement of an action for those purposes. The Federal Arbitration Act
shall apply to the construction, interpretation and enforcement of this
arbitration provision.
(e) Purchaser and Seller shall each bear the expense of its own
arbitrator and shall jointly and equally bear the expense of the third
arbitrator. The remaining costs of the arbitration proceedings shall be
allocated by the board.
21
Section 9.9. Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law shall also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
Section 9.10. Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument.
Section 9.11. Specific Performance. Without limiting or waiving in
any respect any rights or remedies of Purchaser under this Agreement now or
hereinafter existing at law or in equity or by statute, Purchaser shall be
entitled to seek specific performance of the obligations to be performed by the
Seller in accordance with the provisions of this Agreement.
Section 9.12. Ancillary Agreements. To the extent any Ancillary
Agreement contains any representation or warranty that provides for different or
conflicting rights, duties or obligations from those representations and
warranties contained herein, the provisions of this Agreement shall control.
ARTICLE X.
FOAMEX INTERNATIONAL GUARANTY
Section 10.1. Guaranty. Guarantor hereby irrevocably and
unconditionally guarantees to Seller the agreements to be performed by Purchaser
hereunder (the "Purchaser Obligations").
Section 10.2. Nature of Guaranty. The guaranty to be provided by
Guarantor pursuant to Section 10.1 hereof is a guaranty of payment and
performance, not merely of collection. If Purchaser shall fail timely to perform
or pay any Purchaser Obligation hereunder, Guarantor shall pay or perform such
Purchaser Obligation as and when due. Guarantor hereby waives (i) promptness,
diligence, notice, disclosure, demand for, presentment, protest and dishonor,
and (ii) except as set forth below, any right to force Seller to proceed first,
concurrently or jointly against Purchaser, any other guarantor, surety or other
co-obligor. Seller hereby agrees that prior to enforcing its rights of payment
and performance against Guarantor pursuant to Section 10.1 hereof with respect
to any Purchaser Obligation, Seller shall have (x) made demand on Purchaser to
perform such Purchaser Obligation, (y) given Purchaser a reasonable
22
opportunity to comply with such Purchaser Obligation, and (z) determined in its
reasonable discretion that Purchaser has not or will not comply with such
Purchaser Obligation.
Section 10.3. Limitation on Guaranty. Notwithstanding anything to
the contrary contained in this Agreement, the scope of Guarantor's liability
hereunder (as guarantor) shall in no event be greater than the scope of the
liability of Purchaser under this Agreement. Seller expressly agrees that the
defenses available to Guarantor shall be no less than the defenses which are, or
would have been, available to Purchaser.
23
IN WITNESS WHEREOF, Purchaser, Guarantor, Seller and Trace
Foam have executed and delivered this Agreement as of the day and year first
written above.
FOAMEX CARPET CUSHION, INC.
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
GENERAL FELT INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Vice President
TRACE FOAM LLC
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Vice President
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