AGREEMENT AND
PLAN OF MERGER
among
FOAMEX INTERNATIONAL, INC.,
MERGER ACQUISITION CORP.
and
XXXXX HOLDINGS CORP.
Dated as of December 8, 1997
TABLE OF CONTENTS
Page
ARTICLE I.
THE MERGER
Section 1.1. The Merger......................................................................................1
Section 1.2. Closing.........................................................................................1
Section 1.3. Effective Time of the Merger....................................................................1
Section 1.4. Effects of the Merger...........................................................................2
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Class A Common Stock..............................................................2
Section 2.2. Redemption of Preferred Stock...................................................................2
Section 2.3. Stock Options...................................................................................3
Section 2.4. Effect on Capital Stock.........................................................................3
Section 2.5. Payment for Shares..............................................................................4
Section 2.6. Payment and Assumption of Certain Indebtedness; Calculation of Debt Amount......................6
Section 2.7. Dissenting Shares...............................................................................7
Section 2.8. Company Professional Expenses...................................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company...................................................8
Section 3.3. Representations and Warranties of Parent and Sub...............................................27
ARTICLE IV.
COVENANTS
Section 4.2. Termination of Certain Agreements..............................................................30
Section 4.3. Access to Information..........................................................................31
Section 4.4. All Reasonable Efforts.........................................................................31
Section 4.5. Consents and Approvals.........................................................................31
Section 4.6. Indemnification; Directors' and Officers' Insurance............................................31
Section 4.7. Publicity......................................................................................33
Section 4.8. Continuation of Employee Benefits..............................................................33
Section 4.9. No Shop........................................................................................34
Section 4.10. Notices of Certain Events......................................................................34
Section 4.11. Nondisclosure; Nonsolicitation.................................................................34
Section 4.12. Payment of Accrued Bonuses.....................................................................35
Section 4.13. Ongoing Insurance Cooperation..................................................................35
Section 4.14. Real Property Leases...........................................................................36
Section 4.15. Title Matters..................................................................................36
Section 4.16. Transfer Tax Forms.............................................................................36
Section 4.17. Certain Real Property Lease Matters............................................................36
ARTICLE V.
CONDITIONS PRECEDENT
Section 5.1. Conditions to Each Party's Obligation to Effect the Merger.....................................36
Section 5.2. Conditions to Obligation of Parent and Sub.....................................................36
Section 5.3. Conditions to Obligation of the Company........................................................37
ARTICLE VI.
TERMINATION
Section 6.1. Termination....................................................................................38
Section 6.2. Effect of Termination..........................................................................39
ARTICLE VII.
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival.......................................................................................39
Section 7.2. Indemnification Provisions for Benefit of Parent...............................................40
Section 7.3. Indemnification Provisions for Benefit of the Stockholders.....................................40
Section 7.4. Matters Involving Third Parties................................................................40
Section 7.5. Certain Additional Provisions Relating to Indemnification......................................41
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Survival of Certain Agreements.................................................................42
Section 8.2. Appointment of Stockholder Representative......................................................42
Section 8.3. Amendment......................................................................................42
Section 8.4. Waiver.........................................................................................42
Section 8.5. Notices........................................................................................43
Section 8.6. Validity.......................................................................................44
Section 8.7. Expenses and Obligations.......................................................................44
Section 8.8. Interpretation.................................................................................44
Section 8.9. No Recourse....................................................................................45
Section 8.10. Counterparts...................................................................................45
Section 8.11. Entire Agreement; No Third Party Beneficiaries.................................................45
Section 8.12. Governing Law..................................................................................45
Section 8.13. Jurisdiction; Service of Process...............................................................45
Section 8.14. Specific Performance...........................................................................46
Section 8.15. Assignment.....................................................................................46
Section 8.16. Binding Effect.................................................................................46
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 8,
1997 (this "Agreement"), is made and entered into by and among Foamex
International Inc., a Delaware corporation ("Parent"), Merger Acquisition Corp.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), Xxxxx
Holdings Corp., a Delaware corporation (the "Company"), and the parties who have
executed this Agreement as holders of the Company's Common Stock (the "Common
Stockholders"), as holders of the Company's Class A Common Stock (the "Class A
Stockholders", and together with the Common Stockholders the "Stockholders"),
solely for purposes of Section 2.2 as holders of the Company's Preferred Stock
(the "Preferred Stockholders"), and solely for purposes of Section 2.3 as
holders of the Performance Options exercisable for the Company's Common Stock
(the "Performance Option Holders").
WHEREAS, the Boards of Directors of Parent, Sub and the
Company and the stockholders of Sub and the Company have approved the
acquisition of the Company by Parent, by means of the merger (the "Merger") of
Sub with and into the Company, upon the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Sub shall be merged with
and into the Company at the Effective Time (as hereinafter defined). At the
Effective Time, the separate corporate existence of Sub shall cease, and the
Company shall continue as the surviving corporation and as a direct wholly owned
subsidiary of Parent (Sub and the Company are sometimes hereinafter referred to
as "Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under such name as is designated by Parent and set forth in the
Certificate of Merger (as hereinafter defined).
Section 1.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Merger (the "Closing")
shall take place at 10:00 a.m., New York time, on December 23, 1997 (the
"Closing Date"), at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date, time or place is agreed
to in writing by the parties hereto.
Section 1.3. Effective Time of the Merger. Subject to the
provisions of this Agreement, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, as provided in the DGCL, upon
the Closing. The Merger shall become effective upon such filing (the "Effective
Time").
Section 1.4. Effects of the Merger. (a) The Merger shall have
the effects as set forth in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
(a)(b) The directors and the officers of Sub immediately
prior to the Effective Time shall, from and after the Effective Time, be the
initial directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) At the Effective Time and without any further action
on the part of the Constituent Corporations, the Certificate of Incorporation of
the Company shall be the Certificate of Incorporation of the Surviving
Corporation, provided that such Certificate of Incorporation shall be amended
and restated in its entirety as set forth in Exhibit A.
(d) At the Effective Time and without any further action
on the part of the Constituent Corporations, the Bylaws of Sub shall be the
Bylaws of the Surviving Corporation.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Class A Common Stock. The Class A
Stockholders agree that, immediately prior to the Effective Time, the issued and
outstanding shares of the Company's Class A Common Stock, par value $.01 per
share, consisting of Class A Series I Common Stock and Class A Series II Common
Stock (the "Class A Common Stock"), shall be converted (the "Class A
Conversion") in full into shares of the Company's common stock, par value $.01
per share (the "Common Stock"), in accordance with the terms of the Class A
Common Stock. Accordingly, at the Effective Time, all shares of Class A Common
Stock shall be deemed for all purposes hereof to have been converted into duly
issued, fully paid and nonassessable shares of Common Stock. For purposes of the
Class A Conversion, each Class A Stockholder agrees that the "Fair Value" of the
Common Stock shall be equal to the Per Share Amount (as hereinafter defined)
determined by the Stockholder Representative pursuant to Section 2.5 and each
Class A Stockholder hereby waives any and all rights to require the Company to
obtain an independent investment banking valuation of the "Fair Value" of the
Common Stock. Promptly following the execution of this Agreement, the Company
shall provide a "Class A Mandatory Conversion Notice" pursuant to its
certificate of incorporation to each registered owner of its Class A Common
Stock (as defined) of the occurrence of a "Class A Automatic Conversion Date"
pursuant to Article Fourth, 2.d.a. of its certificate of incorporation, as of
the Closing Date.
Section 2.2. Redemption of Preferred Stock.
(a) Prior to the Closing Date, the Company shall call all
of the issued and outstanding 9% Cumulative Convertible Preferred Stock of the
Company (the "Preferred Stock") for redemption at the Effective Time. At the
Effective Time, Parent and Sub shall deliver or cause to be delivered to each
holder of the Preferred Stock an amount per share equal to $27.57 if the Closing
Date were to occur on December 23, 1997, plus an additional $.02 per day for
each day thereafter which the Closing Date is delayed, which is the "Redemption
Price" calculated as of the Effective Time pursuant to the provisions set forth
in paragraph (e) of the Company's Certificate of Designations as filed with the
Secretary of State of the State of Delaware on July 18, 1997 (the "Preferred
Stock Amount") in cash by wire transfer to a bank account designated by the
Company at least two business days before the Closing for each share of
Preferred Stock held by such holder (the "Preferred Stock Redemption").
(b) Parent and Sub shall not be obligated to pay the
Preferred Stock Amount to any holder with respect to any Preferred Stock, until
Parent shall have received the stock certificate or certificates (or affidavit
of lost certificate in form and substance reasonably satisfactory to Parent and,
if Parent shall request, the posting of a bond in form and substance reasonably
satisfactory to Parent) representing such Preferred Stock, together with a blank
stock power, duly executed, and such other documents as may be reasonably
required by Parent.
(c) Each Preferred Stockholder agrees to the Preferred
Stock Redemption and agrees at the Effective Time to surrender their Preferred
Stock in exchange for the Preferred Stock Amount, notwithstanding any failure by
the Company to comply with the redemption provisions of the Preferred Stock.
Section 2.3. Stock Options. Prior to the Closing, the Company
shall cause each outstanding option to purchase shares of the Common Stock (the
"Options"), whether or not vested, (a) to become exercisable for a period
beginning on such date after the date hereof as the Company shall determine and
ending immediately prior to the Effective Time and (b) to the extent such Option
is not exercised prior to the Effective Time, to be converted at the Effective
Time into the right to receive for the shares of Common Stock subject to such
Option an amount in cash (the "Option Consideration") equal to the difference
between (i) the Per Share Amount (as hereinafter defined) as determined by the
Stockholder Representative pursuant to Section 2.5 multiplied by the number of
shares of Common Stock subject to such Option, whether or not then vested, less
(ii) the aggregate exercise price of such Option, to the extent such difference
is a positive number. At the Closing, Parent and Sub shall deposit or shall
cause to be deposited in the Payment Fund immediately available funds in amounts
necessary to make the payments of the Option Consideration (the "Option Payment
Amount") to each holder of an Option at the Effective Time in accordance with
Section 2.5. Each Performance Option Holder agrees to the conversion of his
Options into the Option Consideration at the Effective Time as provided in this
Section 2.3.
Section 2.4. Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of
shares of capital stock of the Company or any holder of shares of capital stock
of Sub:
(a) Capital Stock of Sub. Each share of the capital stock
of Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of capital
stock of the Company that is owned by the Company ("Treasury Shares") shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or be deliverable in exchange therefor.
(c) Conversion of Common Stock. After giving effect to
the Class A Conversion, each issued and outstanding share of Common Stock
immediately prior to the Effective Time (other than Treasury Shares and
Dissenting Shares (as hereinafter defined)) shall be converted into the right to
receive an amount as determined by the Stockholder Representative in accordance
with Section 2.5(a) (the "Per Share Amount") equal to the Merger Consideration
(as hereinafter defined), divided by the number of outstanding shares of Common
Stock (including Dissenting Shares), subject to payment as provided in Section
2.5.
(d) Merger Consideration. For purposes of this Agreement,
"Merger Consideration" shall mean $98 million in cash plus, at Parent's option,
either (A) such number of shares of common stock, par value $.01 per share of
Parent (the "Foamex Common Stock") as will result in net proceeds of $15 million
to the Payment Fund upon consummation of the Foamex Stock Sale (as hereinafter
defined) or (B) $15 million in cash, minus the sum of (i) the Preferred Stock
Amount multiplied by the number of outstanding shares of Preferred Stock, (ii)
the Option Payment Amount, (iii) the Debt Amount (as hereinafter defined), (iv)
any amount payable by the Company pursuant to the Consent Letter (as hereinafter
defined), (v) the Company Professional Expenses (as hereinafter defined), and
(vi) any payroll tax imposed on the Company or its Subsidiaries (as hereinafter
defined) as a result of the exercise of the Options or the payment of the Option
Payment Amount.
Section 2.5. Payment for Shares.
(a) Delivery of Merger Consideration.
(i) On the Closing Date, the Stockholder
Representative shall deliver to Parent a statement (the "Per Share
Report") setting forth its detailed calculation of the Merger
Consideration, the Per Share Amount, the Reserve Holdback (as
hereinafter defined), the amount equal to the Reserve Holdback divided
by the sum of (x) the number of outstanding shares of Common Stock
(including Dissenting Shares, and giving effect to the Class A
Conversion), and (y) the number of shares of Common Stock issuable upon
the exercise of outstanding Options (the "Per Share Reserve Holdback"),
and the Per Share Amount less the Per Share Reserve Holdback (the
"Adjusted Per Share Amount") as of the Closing Date. Absent manifest
error, the Per Share Report shall be accepted by Parent.
(ii) The Stockholders and the holders of Options
agree that the Stockholder Representative may establish and maintain a
reserve in its sole discretion not to exceed $2.5 million for (i) the
payment of Damages and expenses resulting from the indemnification
obligations set forth in Section 7.2 and (ii) the payment of Damages
and expenses resulting from the indemnification obligations set forth
in Section 8.2 (the "Reserve Holdback").
(iii) At Closing, Parent and Sub shall deposit or
shall cause to be deposited with the Company, as paying agent, the
Merger Consideration and the Option Payment Amount, which Merger
Consideration and Option Payment Amount shall be held in a separate
account established for the benefit of the holders of shares of Common
Stock (after giving effect to the Class A Conversion) and the holders
of the Options (the "Payment Fund"). In the event Parent shall have
delivered the Foamex Common Stock as partial payment of the Merger
Consideration, immediately upon delivery of the Merger Consideration
and the Option Payment Amount, the Company shall, as agent for the
holders of the Common Stock, sell (the "Foamex Stock Sale") the Foamex
Common Stock pursuant to a Securities Purchase Agreement (herein so
called) for net proceeds of not less than $15 million in immediately
available funds, which proceeds shall be deposited in the Payment Fund;
provided, however, that if the Company is unable to consummate the
Foamex Stock Sale simultaneously with the Closing, then the Company
shall return the Foamex Common Stock to Parent at the Closing whereupon
Parent shall immediately deliver to the Company $15 million in cash
which shall be deposited in the Payment Fund. The Payment Fund shall
not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures.
(i) The Surviving Corporation shall distribute the
Merger Consideration at the Effective Time as set forth herein, to each
holder of record of a certificate or certificates ("Certificates")
previously representing shares of Common Stock or Class A Common Stock
(after giving effect to the Class A Conversion), excluding Certificates
representing Treasury Shares or Dissenting Shares. Upon surrender of
(A) a Certificate (or affidavit of lost Certificate in form and
substance reasonably satisfactory to the Surviving Corporation, and, if
the Surviving Corporation shall request, the posting of a bond in form
and substance reasonably satisfactory to the Surviving Corporation),
(B) a duly executed FIRPTA certificate substantially in the form of
Exhibit B, and (C) a Release substantially in the form of Exhibit F
hereto to the Surviving Corporation or to such other agent or agents as
may be appointed by the Surviving Corporation, together with a blank
stock power, duly executed, and together with such other documents as
may be reasonably required by the Surviving Corporation, the holder of
such Certificate shall be entitled to receive from the Surviving
Corporation in exchange for each share of Common Stock theretofore
represented by the Certificate so surrendered (after giving effect to
the Class A Conversion), the Adjusted Per Share Amount, without any
interest thereon, less an amount equal to the Excess Common Stock
Holdback, if any, divided by the number of outstanding shares of Common
Stock (including Dissenting Shares, and after giving effect to the
Class A Conversion).
(ii) The Surviving Corporation shall distribute the
Option Payment Amount at the Effective Time as set forth herein. At the
Effective Time, the Stockholder Representative shall deliver to the
Company a schedule setting forth (A) the Option Consideration into
which each holder's Option shall have been converted, (B) the Per Share
Reserve Holdback multiplied by the number of shares of Common Stock
subject to such holder's Option (the "Option Reserve Holdback"), and
(C) the difference between the Option Consideration and the Option
Reserve Holdback (the "Adjusted Option Consideration"). In no event
shall the Adjusted Option Consideration payable to any holder of an
Option be less than the withholding tax with respect to such Option. In
the event that the deduction of the Option Reserve Holdback from the
Option Consideration would cause a reduction in the Option
Consideration to an amount less than that permitted in the preceding
sentence, the excess Option Reserve Holdback shall be allocated pro
rata (including Dissenting Shares, and after giving effect to the Class
A Conversion) to reduce the Adjusted Per Share Amount payble with
respect to the shares of Common Stock (the amount of such reduction
being hereinafter referred to as the "Excess Common Stock Holdback").
Upon receipt by the Company of such schedule, the Company shall pay to
each holder of an Option, the Adjusted Option Consideration, net of any
withholding taxes applicable to the Option Consideration into which
such holder's Options shall have been converted (without consideration
of amounts withheld for the Option Reserve Holdback).
(iii) At the Effective Time, the Surviving
Corporation shall distribute the Reserve Holdback to the Stockholder
Representative from the Payment Fund to be held for the benefit of the
Stockholders and the holders of Options. At such time as the
Stockholder Representative deems appropriate, the pro rata portion of
the Reserve Holdback withheld from each holder of the Common Stock and
the Options shall be distributed to such holders.
(c) Unregistered Transfer of Capital Stock. In the event
of a transfer of ownership of capital stock of the Company which is not
registered in the transfer records of the Company, the appropriate Merger
Consideration may be issued to a transferee if the Certificate representing such
capital stock is presented to the Surviving Corporation, accompanied by all
documents reasonably required by the Surviving Corporation, including (i)
documents to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid and (ii) documents evidencing
transferee's representations or warranties to the Surviving Corporation with
respect to the ownership of such capital stock.
(d) No Further Ownership Rights in Company. At and after
the Effective Time, each holder of shares of Common Stock immediately prior to
the Effective Time (after giving effect to the Class A Conversion) shall cease
to have any rights as a stockholder of the Company, except for the right to
surrender such stockholder's Certificates and other documents required by
Section 2.5(b) in exchange for receipt of the Merger Consideration, and after
the Effective Time no transfer of shares of Common Stock which were outstanding
immediately prior to the Effective Time shall be made on the stock transfer
books of the Company. Any Certificates presented after the Effective Time for
transfer shall be cancelled and exchanged for the appropriate Merger
Consideration.
Section 2.6. Payment and Assumption of Certain Indebtedness;
Calculation of Debt Amount.
(a) At the Closing, Parent shall, or shall cause Sub to:
(i) pay or cause to be paid, by wire transfer of
immediately available funds, all principal and interest then owing
under the Credit Agreement, dated as of August 29, 1995, by an among
Xxxxx Industries, Inc., a wholly owned subsidiary of the
Company ("Xxxxx Industries"), Texas Commerce National Bank, as Agent,
and the other lenders party thereto, as amended (the "Credit
Agreement");
(ii) pay or cause to be paid all principal and
interest then owing under the Secured Promissory Installment Note,
dated November 10, 1995, payable to the Xxxxxx and Xxxx Xxxxxx Trust
Dated May 13, 1997 (as assignee of Xxxx of Arkansas Corporation);
(iii) deliver to the Trustee for the Xxxxx Industries
13 1/2% Senior Subordinated Notes due 2005 (the "Xxxxx Notes"), an
amount sufficient to pay the principal of, premium if any, and interest
to the date of redemption for the Xxxxx Notes not exchanged in the
Private Exchange Offer; and
(iv) consummate the Private Exchange Offer (as
contemplated by that certain letter agreement, dated November 12, 1997,
between the Company and Parent relating to the Xxxxx Notes (the
"Consent Letter")).
(b) For purposes of this Agreement, "Debt Amount" means
the following, without duplication:
(i) all amounts payable pursuant to clauses 2.6(a)(i)
and 2.6(a)(ii);
(ii) accrued and unpaid interest on the Xxxxx Notes
as of the Closing Date;
(iii) all other amounts payable by the Company
pursuant to the Consent Letter; provided that the parties agree that
any interest on the Xxxxx Notes not participating in the Private
Exchange Offer accruing after the Closing Date through the date of
redemption of such Xxxxx Notes shall be included for purposes of
determining the amounts payable pursuant to the Consent Letter;
(iv) all amounts owing as of the Closing Date under
the noncompetition provisions contained in Section 15(a) of the Asset
Purchase Agreement dated November 1, 1995 among Xxxx of Arkansas
Corporation, Xxxxxx Xxxxxx, Xxxxx Industries and Dude, Inc.;
(v) all amounts payable after the Closing (including
the costs of benefits) Date to X. X. Xxxxx, Xx. under the Employment
Agreement, dated August 29, 1995 by and between Xxxxx Industries and
X. X. Xxxxx, Xx.;
(vi) all other Indebtedness (as hereinafter defined)
of the Company and its Subsidiaries as of the Closing Date; provided,
however, in no event shall the principal amount of the Xxxxx Notes be
offset against the Merger Consideration.
(c) Not less than two (2) business days prior to the
Closing Date, the Company shall deliver to Parent its reasonable good faith
estimate of the Debt Amount as of the Closing Date. Such estimate shall be
subject to the approval of Parent, not to be unreasonably withheld.
Section 2.7. Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have
properly demanded appraisal for such shares in accordance with Section 262 of
the DGCL (collectively, the "Dissenting Shares") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders
instead shall be entitled to receive payment of the appraised value of such
shares of Common Stock held by them in accordance with the provisions of such
Section 262 of the DGCL, except that all Dissenting Shares held by stockholders
who shall have failed to perfect or who effectively shall have withdrawn or
otherwise lost their rights to appraisal of such shares of Common Stock under
such Section 262 of the DGCL shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.5, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of Common Stock.
The Company shall give Parent notice of any written demands for appraisal or
payment of the fair value of any Common Stock, withdrawals of such demands, and
any other instruments served pursuant to the DGCL received by the Company. Each
Stockholder hereby waives all dissenter and appraisal rights.
Section 2.8. Company Professional Expenses. At least two
business days prior to the Closing Date, the Company shall deliver to Parent a
statement of the Company Professional Expenses (the "Company Expense
Statement"). At the Closing, Parent shall pay all of the expenses reflected on
the Company Expense Statement by wire transfer of immediately available funds to
the account(s) designated in the Company Expense Statement on the Closing Date,
or at such later date as invoices for such amounts are rendered.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as of the date hereof and
as of the Closing Date as follows:
(a) Organization, Standing and Power. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation and
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as presently proposed by
the Company to be conducted. The Company and each of its Subsidiaries is duly
qualified to do business as a foreign corporation and in good standing to
conduct business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
could not reasonably be expected to have a Material Adverse Effect with respect
to the Company. Schedule 3.1(a) sets forth, for each of the Company and its
Subsidiaries, the jurisdiction in which such corporation is incorporated and
each jurisdiction in which such corporation is qualified to do business.
Complete and correct copies of the Company's and its Subsidiaries' respective
Certificates or Articles of Incorporation and Bylaws are attached to Schedule
3.1(a). As used in this Agreement: a "Material Adverse Effect" shall mean, with
respect to any party, any events, changes or effects which, individually or in
the aggregate, could reasonably be expected to have a material adverse effect on
(i) the business, properties, results of operations or financial condition of
the Company and its Subsidiaries, taken as a whole or (ii) the ability of the
Company and its Subsidiaries to consummate the Merger; provided, however, that
no events, changes or effects resulting from national economic conditions, from
general foam industry developments or conditions, or from
changes in laws, rules or regulations applicable to the Company or its
Subsidiaries (other than such laws, rules or regulations specifically directed
at the Company or its Subsidiaries) shall be deemed to constitute, create or
cause a Material Adverse Effect.
(b) Capital Structure. As of the date hereof, the
authorized capital stock of the Company consists of 50,000,000 shares of Common
Stock; 10,000,000 shares of Class A Common Stock, of which 9,000,000 shares are
designated Class A Series I Common Stock and 1,000,000 shares are designated
Class A Series II Common Stock; and 10,000,000 shares of preferred stock, par
value $.01 per share, of which 400,000 shares are designated as Preferred Stock.
As of the date hereof: (i) 28,267,185 shares of Common Stock are issued and
outstanding, (ii) 2,777,778 shares of Class A Series I Common Stock are issued
and outstanding, (iii) 375,159 shares of Class A Series II Common Stock are
issued and outstanding, (iv) 400,000 shares of Preferred Stock are issued and
outstanding, and (v) 2,358,352 shares of Common Stock are reserved for issuance
pursuant to outstanding Options. Schedule 3.1(b) sets forth a list of the record
owners of all classes of the Company's capital stock and Options as of the date
of this Agreement. Each outstanding share of capital stock of the Company is
duly authorized and validly issued, fully paid and nonassessable and free of any
preemptive rights, except as provided in that certain Stockholders Agreement,
dated August 29, 1995, among the Company and the holders of the Common Stock and
Class A Common Stock (the "Stockholders Agreement"), and was not issued in
violation of any preemptive rights or federal or state securities laws. After
giving effect to the Class A Conversion, the Preferred Stock Redemption, the
conversion of the outstanding Options as contemplated by Section 2.3, and the
termination of the Stockholders Agreement as contemplated by Section 4.2, at
Closing there will be no outstanding subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments or rights of any
type relating to the issuance, sale or transfer by the Company of any securities
of the Company, nor will there be outstanding any voting securities or
securities which are convertible into or exchangeable for any shares of capital
stock of the Company, and the Company will have no obligation of any kind to
issue any additional capital stock or voting securities.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and the Company and its
Subsidiaries have all requisite corporate power and authority to
consummate the Merger and the Related Transactions. The execution and
delivery of this Agreement and the consummation of the Merger have been
duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the
Company and, assuming that this Agreement constitutes the valid and
binding agreement of the other parties hereto, constitutes a valid and
binding obligation of the Company enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). As used in this Agreement, "Related
Transactions" shall mean a privately negotiated exchange offer on the
terms set forth in the Consent Letter (the "Private Exchange Offer"),
the defeasance and/or redemption of Xxxxx Notes not exchanged in the
Private Exchange Offer, and the contribution by the Surviving
Corporation and its Subsidiaries of all of their assets subject to all
of their liabilities to Foamex L.P. in exchange for limited partnership
interests.
(ii) Except as set forth in Schedule 3.1(c)(ii), none
of the execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder, the
consummation by the Company of the Merger or the consummation by the
Company and its Subsidiaries of the Related Transactions will (A)
violate, conflict with or result in any breach of any provision of the
Certificates or Articles of Incorporation or Bylaws of the Company or
any of its Subsidiaries, (B) violate, conflict with or result in a
violation or breach of, constitute a default (with or without due
notice or lapse of time or both) under, or provide any Person (as
hereinafter defined) with the right to exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any material Contract (as hereinafter defined), including,
without limitation, Real Property Leases, material Permit (as
hereinafter defined), note, bond, mortgage, indenture or deed of trust
to which the Company or any of its Subsidiaries is a party or to which
any of their property is subject, (C) violate any material order, writ,
judgment, injunction, decree, decision, ruling, subpoena or verdict
(each, an "Order") entered, issued, made or rendered by any
Governmental Entity (as hereinafter defined) or any material statute,
law, rule or regulation (each, a "Legal Requirement"), of any
Governmental Entity applicable to the Company, its Subsidiaries or any
of their properties (assuming all federal or state securities laws
filings are made), or (D) result in the imposition or creation of any
Lien (as hereinafter defined) upon or with respect to any of the
assets, including the Properties, owned, leased or used by the Company
or any of its Subsidiaries.
(iii) Except as set forth in Schedule 3.1(c)(iii), no
material consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is
required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the
Company, the consummation by the Company of the Merger or the
consummation by the Company and its Subsidiaries of the Related
Transactions except for: (A) the filing of a pre-merger notification
and report form by the Company under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder;
(B) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company does business; and (C)
such filings and approvals as may be required by any federal or state
securities laws.
(d) Subsidiaries.
(i) Schedule 3.1(d)(i) sets forth (A) the name of
each corporation of which the Company directly or indirectly owns
shares of capital stock having in the aggregate more than 50% of the
total combined voting power of the issued and outstanding shares of
capital stock entitled to vote generally in the election of directors
of such corporation (individually, a "Subsidiary" and collectively, the
"Subsidiaries") and (B)(1) the jurisdiction of incorporation thereof
and (2) the capitalization thereof and the percentage of each class of
voting stock owned by the Company or by any of its Subsidiaries.
(ii) All of the outstanding shares of capital stock
of each Subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable, have not been issued in violation of any
preemptive rights or federal or state securities law, and, except with
respect to the representations made as of the date of this Agreement,
as specified in Schedule
3.1(d)(ii), are owned of record and beneficially,
directly or indirectly, by the Company, free and clear of any Liens.
(iii) There are no options, warrants, calls,
subscriptions, conversion or other rights, agreements or commitments
obligating any of the Subsidiaries to issue any additional shares of
capital stock or voting securities of such Subsidiary or any other
securities convertible into, exchangeable for or evidencing the right
to subscribe for any shares of such capital stock or voting securities
or obligating the Company or any of its Subsidiaries to transfer any of
their respective shares of capital stock of any Subsidiary.
(iv) Except for the capital stock described on
Schedule 3.1(d)(i), neither the Company nor any of its Subsidiaries
owns any stock of, or any equity participation in, any Person.
(v) All of the Company's and its Subsidiaries'
operations are conducted by Xxxxx Industries. Except as disclosed on
Schedule 3.1(d)(v), none of the Company's Subsidiaries, other than
Xxxxx Industries, owns or leases any assets reflected on the financial
statements included in the SEC Documents, or used in the operations of
the business of the Company and its Subsidiaries.
(e) SEC Documents; Financial Statements.
(i) Schedule 3.1(e)(i) sets forth a list of each
report, schedule and registration statement (other than preliminary
material, including registration statements and amendments thereto not
declared effective by the Securities and Exchange Commission (the
"SEC")) filed by the Company or any of its Subsidiaries with the SEC
since January 1, 1995 and prior to the date of this Agreement (the "SEC
Documents"), which are all the documents (other than preliminary
material) that the Company and its Subsidiaries were required to file
with the SEC since such date. As of their respective dates, the SEC
Documents complied, with respect to form, in all material respects with
the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as
disclosed on Schedule 3.1(e)(i), the financial statements of Xxxxx
Industries included in the SEC Documents: (A) complied as to form in
all material respects with the published rules and regulations of the
SEC with respect thereto, (B) were prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Rule 10-01 of Regulation S-X of the SEC),
and (C) fairly present, in all material respects, in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, which will not be
material, either individually or in the aggregate) the consolidated
financial position of Xxxxx Industries and its consolidated
Subsidiaries as of their respective dates and the consolidated results
of operations and the consolidated cash flows of Xxxxx Industries and
its consolidated Subsidiaries for the periods presented therein. The
Company has delivered to Parent a true and complete copy of each SEC
Document.
(ii) As used herein, (A) the term "Interim Balance
Sheet" shall mean the unaudited consolidated balance sheet of Xxxxx
Industries as of September 30, 1997 included in the SEC Documents, and
(B) the term "Interim Balance Sheet Date" shall mean September 30,
1997.
(iii) The accounts receivable reflected on the
Interim Balance Sheet represent, and the accounts receivable to be
reflected on the accounting records of Xxxxx Industries at the
Effective Time will represent, valid obligations, subject to the
reserves shown on such financial statements and to returns, arising
from sales actually made or services actually performed in the ordinary
course of business consistent with past practice.
(iv) The materials, supplies and work-in-process
included in the inventory reflected on the Interim Balance Sheet or
acquired since the date thereof were acquired and have been maintained
in the ordinary course of business consistent with past practice.
(f) Undisclosed Liabilities.
(i) Except as disclosed on Schedule 3.1(f)(i), the
Company is not party to, or bound by, any Contracts (as hereinafter
defined). The Company has conducted no business operations other than
owning all of the outstanding capital stock of Xxxxx Industries, paying
expenses and other obligations relating to the Contracts disclosed on
Schedule 3.1(f)(i), paying Taxes and paying other obligations set forth
on Schedule 3.1(f)(i).
(ii) As of the Interim Balance Sheet Date and at the
Effective Time, the Company (on an unconsolidated basis) had and will
have no material liabilities or obligations, direct or indirect,
matured or unmatured, or absolute, contingent or otherwise
(collectively, "Liabilities"), except for: (A) on the Interim Balance
Sheet Date, Liabilities with respect to the Options, the Preferred
Stock, the Contracts listed on Schedule 3.1(f)(i) and as otherwise
reflected on Schedule 3.1(f)(i), (B) at the Effective Time, obligations
to pay the Preferred Stock Amount, the Option Payment Amount and the
Merger Consideration, Liabilities with respect to Dissenting Shares,
and obligations with respect to any Contract listed on Schedule
3.1(f)(i) which are set forth under the subheading "Continuing
Obligations".
(g Compliance with Applicable Laws.
(i) Except as disclosed in Schedule 3.1(g)(i), the
businesses of the Company and its Subsidiaries and the Properties and
the use thereof are not in violation of any material Legal Requirement
or Order of any Governmental Entity and no investigation or review by
any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the Knowledge of the Company, has been
threatened. The Company has delivered true and complete copies of the
documents listed on Schedule 3.1(g)(i) to Parent.
(ii) Since January 1, 1997, except as set forth on
Schedule 3.1(g)(ii), neither the Company nor any of its Subsidiaries
have received any notice or other communication (whether oral or
written) from any Governmental Entity or any other Person regarding (i)
any actual, alleged, possible, or potential violation of, or failure to
comply with, any material Legal Requirement or Order, (ii) any actual,
alleged, possible, or potential obligation on the part of the Company
or its Subsidiaries to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature, or (iii) any
Legal Requirement or Order specifically applicable to the Properties.
(iii) Schedule 3.1(g)(iii) sets forth a list of each
material permit, approval, consent, authorization, license, variance or
permission required by any Governmental Entity or Legal Requirement
(collectively, "Permits") that is necessary or appropriate for the
operations of the Company and its Subsidiaries or the Properties as
currently conducted and as presently proposed by the Company to be
conducted. All Permits included on Schedule 3.1(g)(iii), except as
noted therein, are in full force and effect in all material respects
and no proceeding is pending or, to the Knowledge of the Company,
threatened, to revoke or limit any such Permit. Except as set forth in
Schedule 3.1(g)(iii), (A) neither the Company nor any of its
Subsidiaries is in default, nor has it received any notice of any claim
of default, with respect to any material Permit; (B) since January 1,
1997, neither the Company nor its Subsidiaries have received any notice
or other communication (whether oral or written) from any Governmental
Entity or any other Person regarding (1) any actual, alleged, possible,
or potential violation of or failure to comply with any term or
requirement of any material Permit, or (2) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any material Permit,
and (C) all applications required to have been filed for the renewal of
material Permits have been duly filed on a timely basis with the
appropriate Governmental Entities, and all other filings required to
have been made with respect to such Permits have been duly made on a
timely basis with the appropriate Governmental Entities.
(h) Litigation. Except as set forth on Schedule 3.1(h),
there is no material suit, claim, action, arbitration or proceeding pending or,
to the Knowledge of the Company, threatened against the Company or any
Subsidiary of the Company or the Properties ("Company Litigation"), nor is there
any material Order of any Governmental Entity or arbitrator outstanding against
the Company or any Subsidiary of the Company ("Company Order"). Schedule 3.1(h)
sets forth a summary description of all such pending Company Litigation and
Company Orders. The Company has delivered to Parent true and complete copies of
all such Company Orders and all pleadings in such Company Litigation.
(i) Taxes. Except as set forth on Schedule 3.1(i)
hereto:
(i) the Company and each of its Subsidiaries has
filed (or joined in the filing of) when due all material Tax Returns
required by applicable Legal Requirements to be filed on or prior to
the date hereof with respect to the Company and each of its
Subsidiaries, and all Taxes shown to be due on such Tax Returns have
been paid;
(ii) all such Tax Returns were true, correct and
complete in all material respects as of the time of such filing;
(iii) all Taxes relating to periods ending on or
before the Closing Date owed by the Company and each of its
Subsidiaries (whether or not shown on any Tax Return) or to which the
Company and each of its Subsidiaries may be liable under Treasury
Regulations ss. 1.1502-6 (or analogous state or foreign provisions) by
virtue of having been a member of any "affiliated group" (or other
group filing on a combined or unitary basis) at any time on or prior to
the Closing Date, if required to have been paid, have been paid (except
for Taxes which are being contested in good faith);
(iv) The Company and each of its Subsidiaries have
withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party;
(v) any liability of the Company and each of its
Subsidiaries for Taxes not yet due and payable, or which are being
contested in good faith, has been provided for on the financial
statements contained in the SEC Documents in accordance with GAAP
applied on a consistent basis throughout the periods involved;
(vi) there is no formal action, suit, proceeding,
investigation, audit or written claim now pending against, or with
respect to, the Company or any of its Subsidiaries in respect of any
Tax or assessment, nor is any claim for additional Tax or assessment
asserted in writing by any Tax authority;
(vii) there is no outstanding request for any
extension of time within which to pay any Taxes of the Company or a
Subsidiary or file any Tax Returns in respect thereof;
(viii) there has been no waiver or extension of any
applicable statute of limitations for the assessment or collection of
any Taxes of the Company or any of its Subsidiaries;
(ix) no property of the Company or any of is
Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h) of the Code;
(x) none of the Subsidiaries has deferred gain or
loss arising from any intercompany transactions, within the meaning of
Treasury Regulations ss. 1.1502-13;
(xi) neither the Company nor any Subsidiary has filed
any agreement or consent under Section 341(f) of the Code;
(xii) neither the Company nor any of its Subsidiaries
is a party to any agreement, whether written or unwritten, providing
for the payment of Taxes, payment for Tax losses, entitlements to
refunds or similar Tax matters;
(xiii) no ruling with respect to Taxes (other than a
request for determination of the status of a qualified pension plan)
has been requested by or on behalf of the Company or any of its
Subsidiaries;
(xiv) neither the Company nor any of its Subsidiaries
has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code ending on the Closing
Date;
(xv) the Company is not a party to any tax reduction
proceedings; and
(xvi) as of the date of filing of the federal Tax
Return for the calendar year 1996, no excess loss account (within the
meaning of Treasury Regulations ss. 1.1502-19) existed with respect to
any of the Subsidiaries and the Company does not believe that any such
excess loss account in excess of $5 million exists as of the date
hereof.
(xvii) The term "Code" shall mean the Internal
Revenue Code of 1986, as amended. The term "Taxes" shall mean all
taxes, charges, fees, levies, or other similar assessments or
liabilities, including without limitation (a) income, gross receipts,
deed and mortgage recording taxes, ad valorem, premium, excise, real
property, personal property, sales, use, transfer, capital stock,
license, stamp, withholding, employment, payroll, and franchise taxes
imposed by the United States of America, or by any state, local, or
foreign government, or any subdivision, agency, or other similar person
of the United States or any such government; and (b) any interest,
fines, penalties, assessments, or additions to taxes resulting from,
attributable to, or incurred in connection with any Tax or any contest,
dispute, or refund thereof. The term "Tax Returns" shall mean any
report, return, or statement required to be supplied to a taxing
authority in connection with Taxes.
(j) Pension And Benefit Plans; ERISA.
(i) Schedule 3.1(j)(i) sets forth a complete and
correct list of:
(A) all "employee benefit plans", as defined
in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by the Company or
any of its Subsidiaries to which Company or any of its
Subsidiaries has any obligation or liability, contingent or
otherwise; and
(B) all material employment or consulting
agreements, and all material bonus or other incentive
compensation, deferred compensation, salary continuation,
disability, stock award, stock option, stock purchase or other
material employee benefit policies or arrangements which the
Company or any of its Subsidiaries maintains or to which the
Company or any of its Subsidiaries has any obligation or
liability (contingent or otherwise) (the documents referred to
in clauses (A) and (B) being collectively referred to herein
as the "Company Plans").
(ii) The Company and its Subsidiaries do not
currently have any material obligation or Liability (contingent or
otherwise) under Title IV of ERISA. No Company Plan is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer
Plan") or a plan that has two or more contributing sponsors at least
two of whom are not under common control, within the meaning of Section
4063 of ERISA (a "Multiple Employer Plan"), nor has the Company or any
of its Subsidiaries at any time contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan.
(iii) None of the Company Plans is subject to Title
IV of ERISA, and neither the Company nor any of its Subsidiaries has
incurred any material outstanding Liability under Section 4062 of ERISA
to the PBGC or to a trustee appointed under Section 4042 of ERISA.
(iv) The Company Plans intended to qualify under
Section 401(a) and, if applicable, Section 401(k) of the Code, are
qualified under such sections, and each trust maintained pursuant
thereto has been determined to be exempt from federal income taxation
under Section 501 of the Code by the IRS, and, to the Company's
Knowledge, nothing has occurred with respect to the operation of any
Company Plans that would cause the loss of such
qualification or exemption or the imposition of any penalty, Liability
or tax under ERISA or the Code.
(v) All contributions (including all employer
contributions and employee salary reduction contributions) required to
have been made under any of the Company Plans to any funds or trusts
established thereunder or in connection therewith have been made by the
due date thereof in all material respects.
(vi) There has been no material violation of ERISA or
the Code with respect to the filing of applicable reports, documents
and notices regarding the Company Plans with the Secretary of Labor or
the Secretary of the Treasury or the furnishing of required reports,
documents or notices to the participants or beneficiaries of the
Company Plans.
(vii) True, correct and complete copies of the
following documents, with respect to each of the Company Plans, have
been delivered to Parent by the Company, if applicable: (A) all plans
and related trust documents, and amendments thereto, (B) the most
recent Forms 5500, and (C) the most recent summary plan descriptions.
(viii) The Company Plans have been maintained and
administered in all material respects in accordance with their terms
and applicable laws, which include but are not limited to all
applicable provisions of ERISA and the Code.
(ix) Except as disclosed in Schedule 3.1(j)(ix),
there are no pending or, to the Knowledge of the Company, threatened
material actions, claims or proceedings against or relating to any
Company Plans, the assets of any of the trusts under such plans or the
plan sponsor or the plan administrator, or against any fiduciary of the
Company Plans with respect to the operation of such plans (other than
routine benefit claims).
(x) Neither the Company, nor, to the Knowledge of the
Company, any "party in interest" or "disqualified person" with respect
to the Company Plans has engaged in a non-exempt "prohibited
transaction," as defined in Section 4975 of the Code or Section 406 of
ERISA. No fiduciary has any material liability for breach of fiduciary
duty or any other failure to act or comply in connection with the
administration or investment of the assets of any of the Company Plans,
and to the Knowledge of the Company, no event has occurred which could
reasonably form the basis for any such material liability.
(xi) Except as otherwise provided in this Agreement
and as disclosed in Schedule 3.1(j)(xi), neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will: (a) result in any payment becoming due to any
current or former employee of the Company or any Subsidiary, (b)
increase any benefits otherwise payable under any of the Company Plans
or (c) result in the acceleration of the time of payment or vesting of
any benefits provided under any of the Company Plans.
(xii) Each "group health plan", as defined in Section
4980B of the Code, maintained by the Company and its Subsidiaries has
complied with the notice and coverage continuation requirements of
Section 4980B of the Code and Section 601 of ERISA, and the regulations
thereunder ("COBRA"). None of the Company Plans provide retiree health
or life insurance benefits except as may be required by COBRA or at the
expense of the participant or the participant's beneficiary.
(xiii) There has been no mass layoff or plant closing
as defined by the Worker Adjustment and Retraining Notification Act or
any similar state or local "plant closing" law with respect to
employees of the Company and its Subsidiaries.
(k) Absence of Certain Changes or Events. Except as set
forth in Schedule 3.1(k) or as expressly permitted by this Agreement, since the
Interim Balance Sheet Date, (i) the business of the Company and its Subsidiaries
has been carried on only in the ordinary and usual course and no event or events
has or have occurred that, either individually or in the aggregate, has had, or
reasonably could be expected to have, a Material Adverse Effect on the Company,
(ii) neither the Company nor any of its Subsidiaries has suffered an
extraordinary loss or casualty, whether or not covered by insurance, and (iii)
none of the events or actions which the Company and its Subsidiaries are
prohibited from taking pursuant to Section 4.1 shall have occurred or been
taken.
(l) Labor Matters.
(i) Except set forth on Schedule 3.1(l)(i), neither
the Company nor any of its Subsidiaries has agreed to recognize any
union or other collective bargaining unit, nor has any union or other
collective bargaining unit been certified as representing any employees
of the Company or any of its Subsidiaries. No labor organization or
group of employees of the Company or any of its Subsidiaries has made a
pending demand for recognition or certification, and there are no
representations or certification proceedings presently pending or, to
the Company's Knowledge, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority. To the Knowledge of the Company, there are no
organizing activities involving the Company or any of its Subsidiaries
pending with any labor organization or group of employees of the
Company or any of its Subsidiaries. There is no labor strike, slowdown,
work stoppage or lockout actually pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries. Except as set forth on Schedule 3.1(l), since January 1,
1996, no organization effort has been made or to the Knowledge of the
Company, threatened by or on behalf of any labor union.
(ii) Except as set forth on Schedule 3.1(l)(ii),
there are no material unfair labor practice charges, grievances or
complaints pending or, to the Company's Knowledge, threatened in
writing by or on behalf of any employee or group of employees of the
Company or any of its Subsidiaries.
(iii) Except as set forth on Schedule 3.1(l)(iii),
there are no material complaints, charges or claims against the Company
or any of its Subsidiaries pending or, to the Company's Knowledge,
threatened in writing to be brought or filed with any Governmental
Entity or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by
the Company or any of its Subsidiaries of any individual.
(m) Intellectual Property. Schedule 3.1(m) hereto is a
true and complete list of all material patents, trademarks, trade names, service
marks, internet web sites, domain names, franchises, copyrights, including
registrations and applications for registration of any of them owned or used by
the Company or any of its Subsidiaries in the conduct of their business and
operations. Except as set forth on Schedule 3.1(m), the Company and its
Subsidiaries own the entire right, title and interest in and to the Intellectual
Property (including, without limitation, the right to use and license the same)
free and clear of all Liens, except in the case of the representation and
warranty
made as of the date of this Agreement, those Liens set forth on Schedule 3.1(m).
Neither the Company nor any of its Subsidiaries is under any obligation to pay
royalties or similar payments in connection with any license, except pursuant to
the licensing agreements disclosed on Schedule 3.1(m). Except as set forth on
Schedule 3.1(m), there are no pending, or to the Knowledge of the Company,
threatened material actions affecting the Intellectual Property. Except as set
forth on Schedule 3.1(m), the Intellectual Property is valid, subsisting,
unexpired in proper form and enforceable and all renewal fees and other
maintenance fees which have fallen due have been paid. Except as set forth on
Schedule 3.1(m), the grants, registrations and applications for the Intellectual
Property have not lapsed, expired or been abandoned and no application or
registration thereof is the subject of any pending legal or governmental
proceeding before any Governmental Entity in any jurisdiction, and, to the
Company's Knowledge, no such proceeding is threatened. To the Knowledge of the
Company, except as set forth on Schedule 3.1(m), there are no conflicts with or
infringements of any Intellectual Property by any third party. Except as set
forth on Schedule 3.1(m), to the Knowledge of the Company, the conduct of the
business of the Company and its Subsidiaries as currently conducted does not
conflict with or infringe upon any proprietary right of any third party. No
former or present owners, employees, officers or directors of the Company or its
Subsidiaries hold any right, title or interest, directly or indirectly, in whole
or in part, in or to any Intellectual Property. The Company and its Subsidiaries
do not use the patents listed on Schedule 3.1(m) under the subheading "not used
in operations" in their operations as presently conducted and presently proposed
to be conducted. For purposes of this Agreement, the term "Intellectual
Property" means all material patents, trademarks, trade names, service marks,
internet web sites, domain names, franchises, copyrights, including
registrations and applications for registration of any of them, trade secrets,
know-how and processes owned or used by the Company or any of its Subsidiaries
in the conduct of their business and operations.
(n) Environmental Matters.
(i) For purposes of this Agreement "Environmental
Law" means any applicable international, federal, state, or local law,
statute, regulation, ordinance, order, or other legally binding
requirement, including, without limitation, common law, relating to the
protection of natural resources or the environment including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (33 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 7401
et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.) (but only to the extent it regulates occupational exposure to
hazardous materials), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the regulations
promulgated pursuant thereto, and any such applicable state or local
statutes, as such laws have been and may be amended or supplemented
through the Closing Date;
(ii) Except as disclosed on Schedule 3.1(n)(ii) or in
the Phase I Environmental Reports delivered to Parent:
(A) the operations of the Company and its
Subsidiaries are in material compliance with all applicable
Environmental Laws;
(B) the Company and its Subsidiaries
maintain all Permits required under Environmental Law that are
required for the conduct of their business, such
Permits are in force and effect, and all such Permits are
disclosed on Schedule 3.1(g)(iii);
(C) neither the Company, its Subsidiaries,
nor, to the Knowledge of the Company, any other Persons from
which the Company or its Subsidiaries has assumed Liability,
is subject to any Order or Lien relating to Environmental Laws
which could reasonably be expected to result in the Company
incurring material costs and liabilities under Environmental
Laws;
(D) no judicial or administrative
proceedings or investigations are pending or, to the Knowledge
of the Company, threatened against the Company, its
Subsidiaries or, to the Knowledge of the Company, any other
Person from which the Company or its Subsidiaries has assumed
Liability, by any Governmental Entity or other Person pursuant
to any applicable Environmental Laws (collectively,
"Environmental Claims") and, to the Company's Knowledge,
except as would not have a Material Adverse Effect, no basis
exists for the assertion of such an Environmental Claim;
(E) there have been no actual releases,
discharges or emissions by the Company of any substance
regulated under any Environmental Law into, onto, under, or
from any of the real properties currently or, to the Knowledge
of the Company, formerly owned, operated, or leased by the
Company, its Subsidiaries, or other Persons from which the
Company or its Subsidiaries has contractually assumed
liability, except, in the case of releases, discharges or
emissions that could not reasonably be expected to have a
Material Adverse Effect; and
(F) no real property currently or, to the
Knowledge of the Company, formerly, owned, operated or leased
or, to the Knowledge of the Company, used for disposal or
depositing of waste generated by the Company or its
Subsidiaries or, to the Knowledge of the Company, any other
Person from which the Company or its Subsidiaries has assumed
liability, is listed or, to the Knowledge of the Company, has
been proposed for listing on the National Priorities List, the
Comprehensive Environmental Response Compensation and
Liability and Information System ("CERCLIS") or any analogous
state lists.
(o) Real Property.
(i) Schedule 3.1(o)(i) sets forth all of the real
property owned in fee by each of the Company and/or its Subsidiaries as
indicated on Schedule 3.1(o)(i) (such owned property, together with the
property leased pursuant to the Real Property Leases (as hereinafter
defined), the "Properties"). Each of the Company or its Subsidiaries
has good, insurable and marketable fee title to each parcel of real
property and the improvements thereon owned by it free and clear of all
written or oral, recorded or unrecorded mortgages, deeds of trust,
pledges, liens, encumbrances, security interests, charges, claims,
options, rights of first refusals or restrictions (collectively,
"Liens") except (A) in the case of the representation and warranty made
as of the date of this Agreement, (1) those described in the SEC
Documents, (2) those reflected or reserved against in the financial
statements of Xxxxx Industries included in the SEC Documents, and (3)
those set forth on Schedule 3.1(o)(i) under the heading "Other Liens,"
and (B) those set forth on Schedule 3.1(o)(i) under the heading
"Permitted Liens" (such Liens in this clause B being referred to herein
as the "Permitted Liens").
(ii) Schedule 3.1(o)(ii) sets forth each material
lease, sublease, right of way, license, capital lease or other
agreement, all amendments thereto and modifications thereof, the date
and parties to such lease, sublease, right of way, license or capital
lease and the location of each of the premises demised (collectively,
the "Real Property Leases") under which the Company or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now or
in the future, any real property. Except as noted on Schedule
3.1(o)(ii), the Company has delivered to Parent true, correct and
complete copies of the Real Property Leases and, the leasehold
interests of the Company and its Subsidiaries created thereunder are
free and clear of all Liens except for the Permitted Liens, and, in the
case of the representation and warranty made as of the date of this
Agreement, except as set forth on Schedule 3.1(o)(ii). Neither the
Company nor any of its Subsidiaries have made an assignment of any Real
Property Lease listed on Schedule 3.1(o)(ii). Except as noted on
Schedule 3.1(o)(ii), each Real Property Lease is valid, binding and
enforceable against the Company or the Subsidiary party thereto, and,
to the Company's Knowledge, the other parties thereto in accordance
with its terms, and is in full force and effect. The Company or the
applicable Subsidiary has performed all material obligations required
to be performed by it under each of the Real Property Leases. To the
Company's Knowledge, no event has occurred which, with the giving of
notice or with the passage of time, or both, would constitute a default
under any Real Property Lease. There are no agreements or
understandings, written or oral, with any of the landlords under the
Real Property Leases other than as set forth in the Real Property
Leases. As of December 1, 1997, no prepayments of rent more than thirty
(30) days in advance have been made under the Real Property Leases,
other than security deposits and drawdowns under any letters of credit.
(iii) Neither the Company nor any of its Subsidiaries
has received, or been informed in writing of the receipt of, any
written notice that there is, and to the Company's Knowledge, there
does not exist, any material violation of a condition or agreement
contained in any easement, restrictive covenant or any similar
instrument or agreement affecting any of the Properties or any portion
thereof.
(iv) Neither the Company nor any of the Subsidiaries
has received notice from any utility company or municipality of any
discontinuation of presently available or otherwise necessary sewer,
water, electric, gas, telephone or other utilities or services for any
of the Properties or of any fact or condition which would otherwise
lead to discontinuance.
(v) The Company and its Subsidiaries have obtained
all material Permits and rights-of-way, including proof-of-dedication,
which are necessary to ensure vehicular and pedestrian ingress and
egress to and from the Properties. Neither the Company nor its
Subsidiaries has received notice of any proposed change or closure of
adjacent public streets, highways and roads that would impede vehicular
and pedestrian access and egress to and from the Properties. There are
no material restrictions on entrance to or exit from the Properties to
adjacent public streets and no conditions which will result in the
termination of the present access from the Properties to adjacent
public streets or existing highways and roads.
(vi) Neither the Company nor its Subsidiaries have
received any notices, oral or written, that any Governmental Entity
having the power of eminent domain over any of the Properties has
commenced or intends to exercise the power of eminent domain or a
similar
power with respect to all or any part of such Property or the
improvements thereon or any property owned by a party to a reciprocal
easement agreement affecting any of the Properties.
(vii) The improvements located on the Properties are
in good condition and are structurally sound, subject to normal wear
and tear, and all mechanical and other systems located therein or
thereon are in good operating condition, subject to normal wear and
tear.
(viii) Neither the Company nor any of its
Subsidiaries has received notice of any violation of any applicable
building, zoning, land use or other similar statutes, laws, ordinances,
regulations, permits or other requirements. The Company has no
Knowledge of, and neither the Company nor any of its Subsidiaries has
received notice of any pending or contemplated rezoning or other
proceeding affecting the Properties.
(ix) Except as noted on Schedule 3.1(o)(ii), the
Company has delivered true, correct and complete copies of each
sublease for space at any of the Properties, including each amendment
or modification thereof (the "Subleases") and the subleasehold
interests created thereunder are free and clear of Liens except for the
Permitted Liens and, in the case of the representation and warranty
made as of the date of this Agreement, except as set forth on Schedule
3.1(o)(ii). All of the Subleases are in full force and effect and no
material amount due under any Sublease remains unpaid, no material
controversy, claim, dispute or disagreement exists between the parties
to the Subleases, and, to the Knowledge of the Company, no event has
occurred which, with the giving of notice or with the passage of time,
or both would constitute a default thereunder by the Company or any
Subsidiaries thereof or, to the Knowledge of the Company, any party
thereto. No prepayments of rent due under any of the Subleases have
been made more than thirty days in advance, other than security
deposits and letters of credit relating the Subleases and there are no
agreements or understandings, written or oral, with any of the
subtenants under the Subleases other than as set forth in the
Subleases. All of the subtenants under the Subleases are currently
occupying the space covered by the Sublease with such subtenant.
(x) None of the Properties is located in any
conservation or historic district, or is historically certified,
subject to historic preservation rules, regulations or requirements or
designated as a landmark. No application or proceeding for any such
certification or designation is pending and, to the Company's
Knowledge, no such certification or designation is threatened.
(xi) Each of the Properties is an independent unit
which does not now rely on any facilities (other than facilities
covered by the Permitted Liens, including, without limitation, any
reciprocal easement agreements or facilities of municipalities or
public utility and water companies) located on any property not
included in the Properties to fulfill any municipal or governmental
requirement for the furnishing to any of the Properties of any
essential building or operational systems or utilities.
(xii) No management companies or managers are used by
the Company or any of its Subsidiaries to conduct business or operate
any of the Properties.
(xiii) No part of any of the Properties contains, is
located within, or abuts any flood plain, navigable water or other body
of water, tideland, wetland, marshland or any other area which it
subject to special state, federal or municipal regulation, control or
protection.
(p) Capital Expenditures. Schedule 3.1(p)(i) sets forth
all capital expenditures undertaken by the Company or any of its Subsidiaries
since January 1, 1997 or which are currently planned which, in either case, had
an individual cost in excess of $150,000.
(q) Condition and Compliance of Property.
(i) Schedule 3.1(q)(i) contains a list of owned
personal property of the Company and its Subsidiaries reflected on the
Interim Balance Sheet or purported to be owned by the Company or any of
its Subsidiaries with an original cost of $100,000 or more as of the
Interim Balance Sheet Date. The Company or a Subsidiary of the Company
has good title to all such personal property subject to no Lien except
Permitted Liens and, with respect to the representation and warranty
made as of the date hereof, except as set forth on Schedule 3.1(q)(i).
Each item of tangible personal property set forth on Schedule 3.1(q)(i)
is in good operating condition, normal wear and tear excepted.
(ii) Schedule 3.1(q)(ii) sets forth each personal
property lease: (i) under which the Company or a Subsidiary of the
Company is the lessee and (ii) under which the annual rent is $100,000
or more. Except as noted on Schedule 3.1(q)(ii), the Company has
delivered true, correct and complete copies of all such personal
property leases to Parent. Except as set forth in Schedule 3.1(q)(ii),
the Company or a Subsidiary of the Company holds good leaseholds in all
of the personal property shown or required to be shown on Schedule
3.1(q)(ii) as leased by the Company, in each case under valid and
enforceable leases. The Company and its Subsidiaries are not, and to
the Company's Knowledge no other party to any such personal property
lease is, in material breach of or default under any lease of any item
of personal property listed on Schedule 3.1(q)(ii) (and, to the
Company's Knowledge, no event has occurred which, with due notice or
lapse of time or both, would constitute such a lapse or default).
(r) Affiliate Agreements and Liabilities. Except as set
forth on Schedule 3.1(r):
(i) There are no material written or oral Contracts
between the Company or any of its Subsidiaries and any (A) Affiliate,
(B) holder of capital stock in the Company, or (C) Affiliate of such
holder (each, a "Seller Entity") including, without limitation, any
such Contracts relating to the provision of any services by the Company
or any of its Subsidiaries to any such Seller Entity, or by any such
Seller Entity to the Company or any of its Subsidiaries.
(ii) Since January 1, 1997, there have been no
material transactions, agreements, or arrangements between the Company
or any of its Subsidiaries and (A) any Seller Entity, (B) any director
or officer of the Company or any of its Subsidiaries or (C) any member
of the immediate family of any individual described in clause (A) or
(B) of this sentence, except pursuant to the terms of the Contracts set
forth on Schedule 3.1(r).
(iii) Except (A) as set forth in Sections 4.6. 4.12
and 4.13 or Article VII and (B) for rights of Dissenting Shares,
immediately after the Effective Time, the Company and its Subsidiaries
shall have no liability to any Seller Entity other than for the payment
of the Preferred Stock Amount, the Option Payment Amount and the Merger
Consideration.
(iv) Since January 1, 1997, no supplier of the
Company or any of its Subsidiaries has supplied the Company or such
Subsidiaries on terms more favorable than
those which could have been obtained by the Company or such Subsidiary
if such supplier was not also supplying an Affiliate of any Seller
Entity.
(s) Contracts.
(i) Schedule 3.1(s)(i) hereto lists all material
Contracts. For purposes of this Agreement, ("Contracts") means all of
the written or oral contracts, commitments, agreements, leases,
arrangements and understandings to which the Company or any of its
Subsidiaries is a party or which relate to the properties, conduct,
operations or financial condition of the Company or any of its
Subsidiaries.
(ii) Except as set forth in Schedule 3.1(s)(i), none
of the Company or any of its Subsidiaries is a party to or bound by
any:
(A) agreement or arrangement for the sale or
lease of any of its material assets other than in the ordinary
course of business consistent with past practice;
(B) agreement or other arrangement for the
purchase or sale of any real estate, machinery, equipment, or
other capital assets in excess of $150,000;
(C) Contract for the future purchase of
materials, supplies, services, merchandise, or equipment parts
in excess of $150,000;
(D) Contract pursuant to which it is or may
be obligated to make any material payments, contingent or
otherwise, on account of or arising out of prior acquisitions
or sales of businesses, assets, or stock of other companies;
(E) Contract imposing non-competition or
exclusive dealing obligations on it;
(F) Contract relating to any Indebtedness
(as hereinafter defined);
(G) material distribution, dealership,
representative, broker, sales agency, advertising or
consulting Contract, excepting any such contract that is
terminable by the Company or its Subsidiaries at will, or by
giving notice of thirty days or less, without Liability;
(H) material Contract providing for payments
to or by any Person based on sales, purchases, or profits,
other than direct payments for goods;
(I) material Contract relating to cleanup,
abatement or other actions in connection with environmental
Liabilities;
(J) Real Property Lease, Sublease, or lease
or other agreement for the use or leasing of real or personal
property with rent in excess of $150,000 per year;
(K) Contract or agreement for the employment
of any stockholder, director, officer, consultant or key
employee not terminable by the Company or its
Subsidiaries without penalty or Liability arising from such
termination or any severance or change-in-control contract or
arrangement;
(L) Intellectual Property license,
settlement or royalty agreement;
(M) Contract which (1) involves future
payment by or to the Company or any of its Subsidiaries in
excess of $150,000 or (2) is otherwise material to the extent
relating to the conduct of the business of the Company and its
Subsidiaries or the operation of the Properties.
(iii) "Indebtedness" means (without duplication),
with respect to the Company, whether recourse is to all or a portion of
the assets of the Company, (i) the principal of and premium, if any, in
respect of any indebtedness of the Company and its Subsidiaries for
money borrowed, (ii) the principal, premium, if any, and interest of
the Company and its Subsidiaries with respect to obligations evidenced
by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) all obligations of the Company and its
Subsidiaries in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto)
but only to the extent of drawings thereunder, (iv) every obligation of
the Company and its Subsidiaries issued or assumed as the deferred
purchase price of property or services (excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business consistent with past practices which are not overdue or in
default) which would be required to be included as a liability on a
balance sheet prepared in accordance with GAAP applied on a consistent
basis with the financial statements in the SEC Documents, (v) every
capital lease obligation (determined in accordance with GAAP applied on
a consistent basis with the financial statements in the SEC Documents)
of the Company and its Subsidiaries, (vi) all capital leases or debt
for borrowed money of other Persons secured by a Lien on any asset,
including the Properties, of the Company or its Subsidiaries, whether
or not such indebtedness is assumed by the Company or any of its
Subsidiaries, (vii) all obligations with respect to interest rate,
currency, or commodity, swaps, futures, collars, hedging contracts or
similar arrangements or agreements, and (viii) every obligation of the
type referred to in clauses (i) through (vii) of another Person, the
payment of which, in any case, the Company or any of its Subsidiaries
has guaranteed or is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise.
(iv) Each Contract is valid, binding and enforceable
against the Company or the Subsidiary party thereto, and, to the
Company's Knowledge, the other parties thereto in accordance with its
terms, and is in full force and effect. The Company or the applicable
Subsidiary has performed all material obligations required to be
performed by it under each of the Contracts. Except as set forth in
Schedule 3.1(s)(iv), neither the Company or its Subsidiaries nor, to
the Company's Knowledge, any other party thereto is in material breach
of or default under any Contract (and, to the Knowledge of the Company,
no event has occurred which, with due notice or lapse of time or both,
would constitute such a lapse or default). The Company has delivered to
Parent a true, correct and complete copy of each Contract or other
written evidence of such Contract, and all amendments thereto, except
to the extent otherwise noted in Schedule 3.1(s)(i).
(t) Insurance. Schedule 3.1(t) sets forth a list of all
material insurance policies, including all insurance policies relating to the
Properties and all material fidelity bonds or other insurance service contracts
(the "Insurance Policies") providing coverage for
the Properties or the operations of the Company and its Subsidiaries, the type
and amount of coverage, and the expiration dates of the Insurance Policies. All
Insurance Policies except policies for Directors and Officers Liability are
occurrence policies. There is no claim by the Company or any of its Subsidiaries
pending under any of the Insurance Policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies. All
premiums payable under all Insurance Policies have been paid, and the Company
has otherwise complied in all material respects with the terms and conditions of
all the Insurance Policies. The Insurance Policies are valid and enforceable in
accordance with their terms, are in full force and effect in all material
respects, and, to the Company's Knowledge, are issued by an insurer that is
financially sound and reputable and insure against risk and liabilities
customary in the industry and as required by Legal Requirements and the
Contracts. Neither the Company nor any of its Subsidiaries has received notice
from any insurance carrier: (i) threatening a suspension, revocation,
modification or cancellation of any Insurance Policy or a material increase in
any premium in connection therewith, or (ii) informing the Company that any
coverage listed on Schedule 3.1(t) will or may not be available in the future on
substantially the same terms as now in effect.
(u) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by the Seller
Entities and the Company and its Subsidiaries without the intervention of any
other Person acting on their behalf in such manner as to give rise to any valid
claim by any such Person against the Company, its Subsidiaries, or Parent for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with the Stockholders and the Company and its Subsidiaries.
(v) Product Liability. Except as disclosed in Schedule
3.1(v), (i) to the Company's Knowledge, there has been during the past three
years and there is no (A) notice, demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation of a civil, criminal or
administrative nature by or before any Governmental Entity against or involving
any product, substance or material manufactured, produced, distributed or sold
by or on behalf of the Company or its Subsidiaries (collectively, a "Product"),
or (B) class of claims or lawsuits involving a Product, which is pending or, to
the Company's Knowledge, threatened, on behalf of the ultimate retail purchaser
of any Product, resulting from an alleged defect in design, manufacture,
materials or workmanship of any Product, or any alleged failure to warn, or from
any breach of express or implied specifications or warranties or representations
(a "Product Claim"), and (ii) there has not been, nor is there under
consideration or investigation by the Company or its Subsidiaries, any Product
recall, rework, retrofit or post-sale warning (collectively, recalls, reworks,
retrofits and post-sale warnings are referred to in this Agreement as "Recalls")
conducted by or on behalf of the Company or its Subsidiaries concerning any
Products or, to the Knowledge of the Company, any Recall conducted by or on
behalf of any Person as a result of any alleged defect in any Product. Except as
disclosed in Schedule 3.1(v), there is no Product Claim pending or, to the
Company's Knowledge threatened. All Products sold since January 1, 1996, have
been of a quality generally consistent with the quality of Products sold by the
Company and its Subsidiaries in the past.
(w) Customers and Suppliers. Schedule 3.1(w) lists the
fifteen largest customers and the fifteen largest suppliers (measured by dollar
volume) of the Company and its Subsidiaries during each of the last fiscal year
and the first three fiscal quarters of the current fiscal year ("Major
Customers" and "Major Suppliers," respectively) and the amount of business done
with each Major Customer and Major Supplier in such period. Except as set forth
on Schedule 3.1(w), (i) neither the Company nor any or its Subsidiaries is
engaged in a material dispute with any Major Customer or Major Supplier and (ii)
since January 1, 1997, no Major Customer or Major Supplier has threatened in
writing any material modification or change in
the business relationship with the Company and its Subsidiaries, nor has such a
modification or change occurred since the Interim Balance Sheet Date. The
Company and its Subsidiaries have not received any rebate or payment from any
supplier with respect to goods or services to be purchased by the Company or any
of its Subsidiaries from and after January 1, 1998.
(x) Certain Payments. Since January 1, 1996, neither the
Company, its Subsidiaries nor any of their directors, officers, agents, or
employees, or to the Company's Knowledge any other Person associated with or
acting for or on behalf of the Company or its Subsidiaries, has directly or
indirectly made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services in violation of any Legal
Requirement.
(y) Accounts. Schedule 3.1(y) hereto correctly identifies
each bank account, brokerage account and safety deposit box maintained by or on
behalf or for the benefit of the Company or any of its Subsidiaries and the name
of each person with any power or authority to act with respect thereto.
(z) Books of Account. The books, records and accounts of
the Company and its Subsidiaries accurately and fairly reflect, in all material
respects, the transactions and the assets and liabilities of the Company and its
Subsidiaries. Neither the Company nor any of its Subsidiaries has engaged in any
material transaction with respect to its business, including the operation of
its Properties, maintained any bank account for its business or used any
material funds in the conduct of its business except for transactions, bank
accounts and fund which have been and are reflected in the normally maintained
books and records of the business. The minute books of the Company and its
Subsidiaries contain accurate and complete records, in all material respects, of
all meetings held of, and corporate action taken by, the stockholders, boards of
directors, and committees of the boards of directors of the Company and its
Subsidiaries, and no meeting of any such stockholders, boards of directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all such books and records shall
be delivered to Parent.
(aa) Certain Financial Matters. Based on the copy of the
Indenture, dated as of June 12, 1997, by and among Foamex, L.P., Foamex Capital
Corporation, General Felt Industries, Inc., Foamex Fibers, Inc. and The Bank of
New York, as Trustee (the "Foamex Indenture") provided to the Company by Parent:
(i) The Company had a Consolidated Cash Flow (as
defined in the Foamex Indenture) for the most recently ended four full
fiscal quarters for which internal financial statements are available
of not less than $25,000,000 (after giving pro forma effect to the
matters described in the second sentence of the definition of the term
Fixed Charge Coverage Ratio in the Foamex Indenture).
(ii) The Company has a Consolidated Net Worth (as
defined in the Foamex Indenture) greater than zero.
(bb) Power of Attorney. Schedule 3.1(ab) contains a
complete list of each Person to whom the Company or any of its Subsidiaries has
granted a power of attorney which is currently outstanding.
(cc) Schedules. Subject to Section 8.8(c), all of the
information set forth on the Schedules to this Agreement shall, for all purposes
of this Agreement, be deemed to be representations set forth in the text of this
Agreement.
Section 3.2. Representations and Warranties of Stockholders.
Each Stockholder, severally but not jointly, represents and warrants to Parent
and Sub as of the date hereof and as of the Closing Date as follows:
(a) Organization, Standing and Power. Such Stockholder,
if not a natural person, is an entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization.
(b) Authority; No Violations; Consents and Approvals.
(i) Such Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of such
Stockholder. This Agreement has been duly executed and delivered by
such Stockholder and, assuming this Agreement constitutes the valid and
binding agreement of the other parties hereto, constitutes a valid and
binding obligation of such Stockholder enforceable in accordance with
its terms and conditions except that the enforcement hereof may be
limited by (A) applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) None of the execution and delivery of this
Agreement and the consummation of the Merger will: (A) violate,
conflict with or result in any breach of any provision of the
organization documents of such Stockholder, (B) violate, conflict with
or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under the terms,
conditions or provisions of any note, bond, mortgage, indenture or deed
of trust, or any license, lease or agreement to which such Stockholder
is a party, or (C) violate any Order or Legal Requirement applicable to
such Stockholder, except such defaults and violations which, in the
aggregate, could not reasonably be expected to have a material adverse
effect on such Stockholder or on the ability of such Stockholder to
consummate the transactions contemplated hereby.
(iii) No material consent, approval, order or
authorization of, or registration, declaration or filing with, notice
to, or permit from any Governmental Entity, is required by or with
respect to such Stockholder in connection with the execution and
delivery of this Agreement by such Stockholder or the consummation by
such Stockholder of the transactions contemplated hereby.
(c) Title to Shares. Such Stockholder beneficially and of
record owns the number of shares of Class A Common Stock or Common Stock set
forth opposite such Stockholder's name on Schedule 3.1(b), free and clear of all
Liens.
(d) Stockholder Representative Knowledge and Intent. The
Stockholder Representative is an "Accredited Investor" within the meaning of
Regulation D, as amended, of the Securities Act. The shares of Foamex Common
Stock to be acquired by the Stockholder
Representative hereunder are not being acquired with a view to the public
distribution in violation of the Securities Act of such shares of Foamex Common
Stock or any interest therein.
Section 3.3. Representations and Warranties of Parent and Sub.
Parent and Sub, jointly and severally, represent and warrant to the Company and
each Stockholder as of the date hereof and as of the Closing Date as follows:
(a) Organization, Standing and Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a
foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation, ownership
or leasing of its properties, makes such qualification necessary, other than in
such jurisdictions where the failure so to qualify could not reasonably be
expected to have a material adverse effect on Parent and its Subsidiaries taken
as a whole or on the ability of Parent or its Subsidiaries to consummate the
Merger.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the Merger. The execution and delivery of this Agreement and
the consummation of the Merger have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent and
Sub and, assuming this Agreement constitutes the valid and binding
agreement of the other parties hereto, constitutes a valid and binding
obligation of Parent and Sub enforceable in accordance with its terms
and conditions except that the enforcement hereof may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and
the consummation of the Merger by each of Parent and Sub will not (A)
violate, conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of Parent or Sub, (B) except as
set forth on Schedule 3.3(b)(ii), violate, conflict with or result in a
violation or breach of, or constitute a default (with or without due
notice or lapse of time or both) under the terms, conditions or
provisions of any material note, bond, mortgage, indenture or deed of
trust, or any material license, lease or agreement to which Parent or
Sub is a party or to which any of their property is subject, or (C)
violate any material Order or Legal Requirement of any Governmental
Entity applicable to Parent or its Subsidiaries.
(iii) No material consent, approval, order or
authorization of, or registration, declaration or filing with, notice
to, or permit from any Governmental Entity, is required by or with
respect to Parent or Sub in connection with the execution and delivery
of this Agreement by each of Parent and Sub or the consummation by each
of Parent or Sub of the Merger, except for: (A) filings under the HSR
Act; (B) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware; and (C) such filings and approvals as
may be required by any applicable federal or state securities laws.
(c) Financing. At the Effective Time, Parent will have
sufficient funds available to satisfy, among other things, the obligation to pay
(i) the Merger Consideration, (ii) the Preferred Stock Amount, (iii) the Debt
Amount, (iv) the Option Payment Amount, and (v) the payment of all expenses
incurred by Parent or Sub in connection with the transactions contemplated
hereby.
(d) The Foamex Indenture. Attached to Schedule 3.3(d) is
a true, correct and complete copy of the Foamex Indenture.
(e) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by the Parent
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 the Company, its
Subsidiaries, or Parent for a finder's fee, brokerage commission or other
similar payment based on an arrangement with the Parent, other than CIBC whose
fees will be paid by Parent.
ARTICLE IV.
COVENANTS
Section 4.1. Covenants of the Company.
(a) Conduct of Business. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees as
to the Company and its Subsidiaries that (except as expressly permitted by this
Agreement, or to the extent that Parent shall otherwise expressly consent in
writing) each of the Company and its Subsidiaries shall carry on its businesses
in the usual, regular and ordinary course of business in substantially the same
manner as heretofore conducted (including, without limitation, with respect to
the collection of accounts receivable, the purchase of inventory, the payment of
trade payables and the maintenance of its properties, including the Properties)
and shall use all reasonable efforts to preserve intact its present business
organization, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it. Without limiting the generality of the foregoing, and
except as contemplated or permitted by this Agreement, without the prior express
written consent of Parent:
(i) The Company shall not, nor shall it permit any of
its Subsidiaries to: (A) declare or pay any dividends on or make other
distributions in respect of any of its capital stock; (B) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock; or (C) authorize,
issue or sell any additional shares of its capital stock or voting
securities or securities convertible into any such shares or voting
securities or grant any options, warrants or rights, to purchase any
such shares or voting securities, other than (1) the issuance of shares
of Common Stock pursuant to the conversion of Class A Common Stock or
Preferred Stock or (2) the issuance of shares of Common Stock pursuant
to the exercise of any Options outstanding on the date hereof.
(ii) Neither the Company nor any of its Subsidiaries
shall amend its Certificate of Incorporation or Bylaws.
(iii) The Company and its Subsidiaries shall not (A)
enter into any new Company Plan or amend any existing Company Plan, (B)
except as otherwise disclosed on Schedule 4.1(a)(iii), increase the
rate or terms of compensation of any of its directors, officers or
other employees whose compensation is determined other than by
multiplying the number of
hours worked by an hourly rate (a "Salaried Employee"), (C) make, or
agree to make (1) any accrual or arrangement for or payment of bonuses
or special compensation of any kind to any of its Salaried Employees
except as set forth on Schedule 4.12; or (2) any general increase in
the salary or bonus payable or to become payable by the Company to any
Employee other than Salaried Employees (other than, in the case of this
Clause 2, increases granted to individual employees for merit, length
of service, change in position or responsibility or other reasons
applicable to specific Employees and not generally to a class or group
thereof);
(iv) The Company and its Subsidiaries shall not enter
into any employment Contract with any director, executive officer or
Employee providing for the employment of any Employee (except for
at-will arrangements in the ordinary course of business) or any
severance or termination benefits payable or to become payable to any
Employee or make any loan to, or enter into any material transaction of
any other nature with, any director, executive officer or Employee.
(v) The Company and its Subsidiaries shall not incur,
or suffer to exist, any Lien on any of its assets, tangible or
intangible, including the Properties other than Permitted Liens.
(vi) The Company and its Subsidiaries shall not,
except in the ordinary course of business consistent with past practice
and pursuant to the Credit Agreement, incur any Indebtedness.
(vii) Except as set forth on Schedule 4.1(a)(vii),
the Company and its Subsidiaries shall not enter into or, except
pursuant to Section 4.2, terminate any Contracts, except for Contracts
not required to be listed on Schedule 3.1(s)(i) in the ordinary course
of business consistent with past practice.
(viii) Except to the extent set forth on Schedule
4.1(a)(viii), the Company and its subsidiaries shall not incur any
capital expenditures in excess of $150,000.
(ix) The Company and its Subsidiaries shall not, in
any single transaction or series of related transactions, make any
sale, assignment, transfer, abandonment, or other conveyance of any of
its assets or any part thereof in each case having a book value of
$100,000 or more or a fair market value in excess of $100,000, except
(A) transactions (other than purchase options) pursuant to existing
Contracts set forth on Schedule 3.1(s)(i) and (B) dispositions of
inventory or of wornout or obsolete equipment to an entity which is not
an Affiliate for fair or reasonable value in the ordinary course of
business.
(x) The Company and its Subsidiaries shall not,
except in the ordinary course of business consistent with past
practice, settle, release or forgive any material claim or litigation
or waive any material right.
(xi) The Company and its Subsidiaries shall not make,
change or revoke, or permit to be made, changed or revoked, any
election or method of accounting with respect to Taxes, or enter into,
or permit to be entered into, any closing or other agreement or
settlement with respect to Taxes.
(xii) The Company and its Subsidiaries shall not
enter into any joint venture or partnership for the conduct of its
business and operations.
(xiii) The Company and its Subsidiaries shall not
purchase or acquire substantially all of the assets or securities of
any other Person.
(xiv) The Company and its Subsidiaries shall not take
any action that would cause any of the representations and warranties
made by the Company in this Agreement not to remain materially true and
correct.
(xv) Except as set forth on Schedule 4.1(a)(xv), the
Company and/or its Subsidiaries, as the case may be, will not
terminate, amend, modify, assign, renew or extend any of the Real
Estate Leases or the Subleases or enter into any leases or subleases or
occupancy or license agreements with respect to any real property.
Section 4.2. Termination of Certain Agreements. Prior to the
Effective Time, the Company shall:
(a) cause the Monitoring and Oversight Agreement, dated
August 29, 1995, among the Company, Xxxxx Industries and Xxxxx, Muse & Co.
Partners, L.P. to be terminated as of the Effective Time (without any continuing
Liability thereunder on the part of the Company or its Subsidiaries) pursuant to
a Termination Agreement in the form of Exhibit C hereto;
(b) cause the Financial Advisory Agreement, dated August
29, 1995, among the Company, Xxxxx Industries and HM2/Management Partners, L.P.
to be terminated as of the Effective Time (without any continuing Liability
thereunder on the part of the Company or its Subsidiaries) pursuant to a
Termination Agreement in the form of Exhibit D hereto;
(c) cause the Stockholders Agreement to be terminated as
of the Effective Time (without any continuing Liability thereunder on the part
of the Company or its Subsidiaries);
(d) cause each of the employment agreements listed on
Schedule 4.2(b)(iv) to be terminated as of the Effective Time (without any
continuing Liability thereunder on the part of the Company or its Subsidiaries
except as contemplated by Section 4.12) pursuant to a Termination Agreement in
the form of Exhibit E hereto; and
(e) cause the termination of the Notification Factoring
Agreement dated January 31, 1997 between Xxxxx Industries and the CIT Group
prior to the Effective Time, notwithstanding the sixty-day notice period
contained in such agreement (without any continuing Liability thereunder on the
part of the Company or its Subsidiaries).
Section 4.3. Access to Information. Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent and such financing sources access, during normal
business hours during the period prior to the Effective Time, to all its
Properties (including real properties and manufacturing facilities), books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
during such period pursuant to SEC requirements, (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request, (c)
access to its accountants and key personnel, and (d) access to its properties to
permit environmental assessments, which assessments shall not include any
sampling and/or drilling. The Confidentiality Agreement, dated as of October 24,
1997, between Xxxxx Industries and Parent (the "Confidentiality Agreement")
shall apply with respect to information furnished thereunder or hereunder and
any other activities contemplated thereby.
Section 4.4. All Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the Merger and the Related Transactions, including to
facilitate the redemption of the Xxxxx Notes and to effect the Private Exchange
Offer.
Section 4.5. Consents and Approvals. The parties hereto each
shall cooperate with one another and use all reasonable efforts to prepare all
necessary documentation (including, without limitation, furnishing all
information required under the HSR Act), to effect promptly all necessary
filings and to obtain all necessary permits, consents, approvals, orders and
authorizations of or any exemptions by, all third parties and Governmental
Entities necessary to consummate the Merger and the Related Transactions. Each
party shall keep the other party apprised of the status of any inquiries made of
such party by the Antitrust Division of the United States Department of Justice
(the "DOJ") or any other Governmental Entity or members of their respective
staffs with respect to this Agreement or the transactions contemplated hereby.
Subject to the foregoing, the Company shall not obtain any consent that will
affect Parent or the Company to either of their economic detriment, including
any modification of any Contract or Permit; provided, however, that the failure
to obtain a consent due to this sentence shall not constitute a breach by the
Company of any of its covenants or obligations hereunder; provided, further,
that the provisions of this sentence (and the failure of Parent to grant any
such consent) shall not relieve the Company from Liability for its breach of any
other provision of this Agreement. Parent shall cooperate as reasonably
necessary to desirable to secure any third party consents, including, without
limitation, providing information to such third party, including financial
information; provided, however, that Parent shall not be required to incur any
Liability in connection therewith.
Section 4.6. Indemnification; Directors' and Officers'
Insurance. (a) The Company shall, and from and after the Effective Time, the
Surviving Corporation shall, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer, director, employee or agent of the Company or
any of its Subsidiaries other than any such person required pursuant to the
terms of this Agreement to deliver a release in the form of Exhibit F who has
failed to deliver such a release (the "Indemnitees") against all Damages or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation that is
(i) commenced by or on behalf of a Person other than the Company, any of its
Subsidiaries or their respective securityholders and (ii) is based in whole or
in part on or arising in whole or in part out of the fact that such person is or
was a director, officer, employee or agent of the Company or any of its
Subsidiaries whether pertaining to any matter existing or occurring at or prior
to the Effective Time or any acts or omissions occurring or existing at or prior
to the Effective Time and whether asserted or
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors or
officers as the case may be (and the Company and the Surviving Corporation, as
the case may be, shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnitee to the full extent permitted by
law). Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnitees (whether arising
before or after the Effective Time), (i) the Indemnitees may either retain the
Company's regularly engaged independent legal counsel or separate counsel
satisfactory to them and reasonably satisfactory to the Company (or them and
reasonably satisfactory to the Surviving Corporation after the Effective Time)
and the Company (or after the Effective Time, the Surviving Corporation) shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, the Company may
assume the defense of such matter as provided in Section 7.4(c); and (ii) the
Company (or after the Effective Time, the Surviving Corporation) will use all
reasonable best efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent, which consent
shall not unreasonably be withheld. Any Indemnitee wishing to claim
indemnification under this Section 4.6, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the Company (or after the
Effective Time, the Surviving Corporation) (but the failure so to notify shall
not relieve a party from any liability which it may have under this Section 4.6
except to the extent such failure prejudices such party's position with respect
to such claims), and shall deliver to the Company (or after the Effective Time,
the Surviving Corporation) the undertaking contemplated by Section 145(e) of the
DGCL. The Indemnitees as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnitees in which case such additional counsel as may be
required (as shall be reasonably determined by the Indemnitees and the Company
or the Surviving Corporation, as the case may be) may be retained by the
Indemnitees at the cost and expense of the Company (or Surviving Corporation).
The Company and Sub agree that the foregoing rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, existing in favor of the Indemnitees with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years and
sixty days from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities. Furthermore, the current provisions in the Company's Certificate of
Incorporation and Bylaws with respect to exculpation of director and officer
liability and indemnification shall be set forth in the certificate of
incorporation of the Surviving Corporation and shall not be amended for a period
of six years and sixty days following the Effective Time if such amendment would
materially and adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were directors, officers, employees or agents
of the Company in respect of actions or omissions occurring at or prior to the
Effective Time.
(b) For a period of six years and sixty days after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company and its Subsidiaries (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which in the aggregate are not materially less advantageous to the
Indemnified Parties) with respect to matters
arising before and acts or omissions occurring or existing at or prior to the
Effective Time including the transactions contemplated by this Agreement (other
than a claim, action, suit, proceeding or investigation brought or commenced by
or on behalf of the Company, any of its Subsidiaries or their respective
securityholders); provided that Parent shall not be required to pay an aggregate
premium for such insurance in excess of $250,000. Prior to the Effective Time,
the Company shall use reasonable efforts to assist Parent in obtaining such
insurance.
(c) The provisions of this Section 4.6 are intended to be
for the benefit of, and shall be enforceable by, each Indemnitee, his heirs and
his personal representatives and shall be binding on all successors and assigns
of Sub, the Company and the Surviving Corporation.
(d) At the Effective Time, the Company shall use its best
efforts to cause each executive officer and director of the Company and its
Subsidiaries to execute a Release substantially in the form of Exhibit F;
provided, however, that such release shall provide that no director or officer
of the Company or its Subsidiaries shall, by execution of such release, waive or
release any rights set forth in this Section 4.6. At the Effective Time, Parent,
Sub and the Company shall execute a Release substantially in the form of Exhibit
G; provided, however, that such Release shall not include any Stockholder not
delivering a release pursuant to Section 2.5(b)(i).
Section 4.7. Publicity. Prior to the Effective Time, the
parties shall consult with each other and shall mutually agree upon any press
release or public announcement pertaining to the Merger and shall not issue any
such press release or make any such public announcement prior to such
consultation and agreement, except as may be required by applicable law, in
which case the party proposing to issue such press release or make such public
announcement shall use reasonable efforts to consult in good faith with the
other party before issuing any such press release or making any such public
announcement.
Section 4.8. Continuation of Employee Benefits. As of the
Effective Time, Parent shall cause the Surviving Corporation to continue to
maintain all Company Plans, except for the any Options maintained by the Company
and the employment agreements set forth in Schedule 4.2(d). Notwithstanding the
foregoing, the Parent hereby reserves the right to cause the Surviving
Corporation to amend or terminate any Company Plan after the Effective Time in
accordance with its terms and applicable law. To the extent any Company Plan is
terminated or amended so as to reduce benefits that are being provided with
respect to participants thereunder. Parent shall arrange for each individual who
is a participant in such terminated or amended plan to participate in a
comparable employee benefit plan to the extent such a plan is maintained by
Parent in accordance with the eligibility criteria thereof; provided, that: (i)
service with the Company and the Subsidiaries by any employee prior to the
Effective Date shall be credited for eligibility and vesting purposes under such
plan, program or policy, but not for benefit accrual purposes, and (ii) with
respect to any welfare benefit plans to which such employees may become
eligible, Parent shall cause such plans to provide credit for any co-payments or
deductibles by such employees and waive all pre-existing condition exclusions
and waiting periods, other than limitations or waiting periods that have not
been satisfied under any welfare plans maintained by the Company and the
Subsidiaries for their employees prior to the Effective Time.
Section 4.9. No Shop. Until December 31, 1997:
(a) None of the Company, the Stockholders or their
respective Affiliates shall, directly or indirectly, through any representative
(including its Subsidiaries) or otherwise, solicit or
entertain offers from, negotiate with or in any manner encourage, discuss,
accept, or consider any proposal of any other Person relating to the acquisition
of the capital stock of the Company, its assets or business, in whole or in
part, whether directly or indirectly, through purchase, merger, consolidation,
or otherwise (other than transactions permitted by Section 4.1(a)(ix)); and
(b) The Company shall immediately notify Parent regarding
any contact between the Stockholders, the Company or their respective
representatives and any other Person regarding any such offer or proposal or any
related inquiry, including the terms of such offer or proposal.
Section 4.10. Notices of Certain Events. The Company shall
promptly notify Parent and Parent shall promptly notify the Company of:
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the consummation of the Merger and the Related Transactions;
(b) any notice or other communication from any
Governmental Entity in connection with the consummation of the Merger or the
Related Transactions;
(c) the occurrence of any event which could reasonably be
expected to result in a breach of any representation or warranty of the Company
contained in Article III; and
(d) any actions, suits, claims, investigations or
proceedings commenced or, to its Knowledge, threatened against, relating to or
involving or otherwise affecting the Company or any of its Subsidiaries, which
if pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.1(h) or that relate to the consummation of the
Merger or the Related Transactions.
Section 4.11. Nondisclosure; Nonsolicitation.
(a) For a period of two years following the Closing Date,
the Stockholders shall not use, divulge, furnish or make accessible to anyone
any material proprietary, non-public, confidential or secret information to the
extent relating to the Company or its Subsidiaries (including, without
limitation, customer lists, supplier lists and pricing and marketing
arrangements with customers or suppliers), and the Stockholders shall cooperate
reasonably with Parent in preserving such proprietary, confidential or secret
aspects of the Company.
(b) None of the Stockholders or their Affiliates shall,
for a period of two years from the Closing Date, knowingly solicit for hire any
current employees of the Company ("Employees") without the prior written consent
of Parent except for (i) Employees listed on Schedule 4.11(b) and (ii) Employees
who are no longer employed by the Company or Parent at the time of such
solicitation; provided that the foregoing shall not prohibit any general
advertisement or solicitation not specifically targeted at any Employee.
(c) To the extent any of the Employees listed on Schedule
4.11(b) are employed by any of the Stockholders or their Affiliates in the first
six months after the Closing Date, such employer will provide the full time
services of such employee to the Company, and the Company shall
reimburse such employer for its out-of-pocket expenses incurred in connection
with employing such Employees during such period.
Section 4.12. Payment of Accrued Bonuses. Parent shall, or
shall cause the Surviving Corporation to, pay all bonuses accrued by the Company
through the Closing Date as set forth on Schedule 4.12 on or before March 30,
1998. The Company confirms that except as set forth on Schedule 4.12, no bonuses
are payable under any Company Plans (other than pursuant to individual
employment agreements).
Section 4.13. Ongoing Insurance Cooperation.
(a) Each Seller Entity and the Company shall cooperate
fully with each other and make available or cause to be made available to each
other in a timely fashion such information and documentation as may be
reasonably required for the processing of insurance claims and the determining
of or obtaining of insurance coverage.
(b) With respect to any loss, liability or damage
relating to, resulting from or arising out of the ownership or conduct of the
business of the Company and its Subsidiaries on or prior to the Closing Date for
which any Seller Entity would be entitled to assert, or cause any other person
or entity to assert, a claim for recovery under any occurrence based insurance
policy maintained by or for the benefit of a Seller Entity in respect of the
Company or any Subsidiary with respect to periods prior to the Effective Time
("Seller Entity Insurance"), at the request of the Company, each Seller Entity
shall, at the Company's expense, assert, or assist the Company to assert, one or
more claims under such Seller Entity Insurance covering such loss, liability or
damage if the Company or any Subsidiary of the Company is not itself entitled to
assert such claim thereunder but such Seller Entity is so entitled and such
Seller Entity shall, at the Company's expense, pursue such claim in the ordinary
course of business consistent with past practice. Each such Seller Entity shall
promptly pay to the Company any amounts recovered in respect of any such claim,
but shall not be liable for any amounts in excess of such recovery. Each Seller
Entity will be deemed, solely for the purpose of asserting claims for Seller
Entity Insurance pursuant to the immediately preceding sentence, to have
retained liability for such loss, liability or damage to the extent of the
policy limits of the applicable Seller Entity Insurance. The Company agrees that
on or prior to the Closing Date, the Company will use commercially reasonable
efforts, not requiring the expenditure of any sums not reimbursed by Parent, to
have the Company and Xxxxx Industries named as additional insureds under each
Insurance Policy identified in Schedule 3.1(t) as being part of the Xxxxx, Muse
Master Program, if possible.
(c) Until the Closing Date, if any current Insurance
Policy is canceled or expires, the Company will use its reasonable efforts to
have such current Insurance Policy renewed or extended or to replace such
Insurance Policy with one or more Insurance Policies providing substantially the
same type and amount of coverage prior to such cancellation or expiration,
provided that any such renewal, extension or replacement is on reasonable terms.
Prior to the Effective Time, the Company shall use reasonable efforts to arrange
for a refund of the premium paid for any Insurance Policy to the extent related
to occurrences after the Closing Date.
(d) After the Closing Date, no Seller Entity shall
terminate or otherwise discontinue any current Seller Entity Insurance to the
extent it relates to the Company and its Subsidiaries prior to the Effective
Time.
Section 4.14. Real Property Leases. The provisions of Section
4.5 notwithstanding, during the period from the date of this Agreement and
continuing through the Effective Date, if Parent requests, the Company shall
reasonably cooperate with Parent, at Parent's expense, in obtaining (a) landlord
estoppel certificates, landlord consents (provided that the Company shall have
no obligation to pay for any such consent) and waivers of landlord's liens from
each landlord under each Real Property Lease, (b) such modifications and
amendments to the Real Property Leases as the Parent shall deem reasonably
necessary or desirable and (c) copies of all documents evidencing and relating
to the Real Property Leases.
Section 4.15. Title Matters. If Parent requests, the Company
shall reasonably cooperate with Parent, at Parent's expense, in obtaining a
title commitment (each a "Title Commitment" and collectively, the "Title
Commitments") or surveys issued by a title company or surveyor satisfactory to
Parent for each of the Properties as Parent shall deem necessary or desirable
and Parent shall furnish a copy of the same to Company. Without limiting the
foregoing, if requested by Parent, the Company and/or its Subsidiaries, as
applicable, will execute and deliver any title affidavit reasonably required by
Parent's title insurer and any other affidavits reasonably required to
effectuate the transactions contemplated under this Agreement with respect to
the Properties, including any Affidavits required by local law, statutory or
otherwise and to issue title insurance elected by the Parent.
Section 4.16. Transfer Tax Forms. The Company and/or its
Subsidiaries will reasonably cooperate with Parent to complete, execute and
deliver all transfer tax forms required in connection with the Merger.
Section 4.17. Certain Real Property Lease Matters. On or prior
to the Closing Date, the Company and its Subsidiaries shall make all payments
scheduled to be made on or prior to the Closing Date with respect to the Real
Property Leases with Dude, Inc., members of the Xxxxx family, trust for the
benefit of any of the foregoing, and their respective Affiliates. Such payments
shall be made notwithstanding any dispute, set-off or similar claims.
ARTICLE V.
CONDITIONS PRECEDENT
Section 5.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
Section 5.2. Conditions to Obligation of Parent and Sub. The
obligations of Parent and Sub to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by Parent and Sub:
(a) Covenants; Representations and Warranties.
(i) Each of the obligations of the Company or the
Stockholders required to be performed or complied with by it at or
prior to the Closing Date shall have been performed or complied with in
all material respects (except for those obligations which are qualified
as to materiality, which shall have been performed or complied with in
all respects).
(ii) Each of the representations and warranties of
the Company or the Stockholders contained in this Agreement shall be
true and correct in all respects as of the date of this Agreement and
as of the Closing Date, as though made at and as of the Closing (except
as to any representation or warranty which specifically relates to an
earlier date) and without giving effect to any qualification as to
"materiality" or "Material Adverse Effect" in such representation or
any Schedule to this Agreement, except for such breaches of
representations and warranties as could not reasonably be expected to
have a material adverse effect on (i) the business, properties, results
of operations, or financial condition of the Company and its
Subsidiaries, taken as a whole, (ii) the ability of the Company to
consummate the Merger, or (iii) solely with respect to the
representations and warranties contained in Section 3.1(c)(ii), the
ability of the Company and its Subsidiaries to consummate the Related
Transactions.
(iii) Parent and Sub shall have received a
certificate to the effect of the foregoing sections (i) and (ii),
signed by an executive officer of the Company.
(b) Material Adverse Effect. Since the Interim Balance
Sheet Date, there shall not have occurred a Material Adverse Effect, excluding
any event or effect resulting from or relating to the filing under the HSR Act.
(c) [Intentionally omitted.]
(d) Legal Opinion. Parent shall have received the opinion
of Weil, Gotshal & Xxxxxx, LLP, counsel to the Company and the Stockholders,
substantially in the form of Exhibit H hereto.
(e) Foamex Indenture. The representations and warranties
set forth in Section 3.1(aa) shall be true and correct in all respects as of the
Closing Date as if made on and as of the Closing Date.
Section 5.3. Conditions to Obligation of the Company. The
obligations of the Company to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by the Company:
(a) Covenants; Representations and Warranties. Each of
the obligations of Parent or Sub required to be performed by it at or prior to
the Closing pursuant to this Agreement shall have been duly performed and
complied with in all material respects (without giving effect to any
qualifications as to "materiality"), and the representations and warranties of
Parent and Sub contained
in this Agreement shall be true and correct in all material respects (without
giving effect to any qualifications as to "materiality") as of the date of this
Agreement and as of the Closing as though made at and as of the Closing (except
as to any representation or warranty which specifically relates to an earlier
date) and the Company shall have received a certificate to that effect signed by
an executive officer of Parent and Sub.
(b) Foamex Stock Sale. Unless Foamex shall have exercised
its option to deliver cash pursuant to Section 2.4(d), all conditions to the
Foamex Stock Sale shall have been satisfied or waived, and the parties thereto
stand ready to consummate the Foamex Stock Sale upon consummation of the Merger.
(c) Legal Opinion. The Stockholder Representative shall
have received the opinion of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for Parent,
substantially in the form of Exhibit I hereto.
ARTICLE VI.
TERMINATION
Section 6.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable, provided
that the party seeking to terminate this Agreement has used all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated;
(c) after December 31, 1997, (or, if either party elects
in writing and the condition set forth in Section 5.1(a) has been satisfied,
January 15, 1998) by either the Company or Parent, so long as such party is not
then in material breach of its representations, warranties, covenants and
obligations hereunder, if the Merger shall not have been consummated on or
before December 31, 1997 (or January 15, 1998); provided, that the right to
terminate this Agreement under this Section 6.1(c) shall not be available to any
party whose failure to fulfill any representations, warranties, covenants and
obligations under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date; provided, however, that
if either the Company or Parent delivers notice of termination of this Agreement
after December 31, 1997, the other party shall have the right to extend the term
of this Agreement to January 15, 1998 if the condition set forth in Section
5.1(a) has been satisfied;
(d) if the party seeking to terminate is not then in
material breach of its representations, warranties, covenants and obligations
under this Agreement, by (i) Parent if there has been a material breach by the
Company of its representations, warranties, covenants and obligations under this
Agreement, which breach is not cured within ten days following written notice of
such breach by Parent to the Company, or (ii) by the Company if there has been a
material breach by Parent of its representations, warranties, covenants and
obligations under this Agreement, which breach is not cured within ten days
following written notice of such breach by the Company to Parent; or
(e) by Parent, within five business days after the date
hereof, in the event that each of the employees listed on Schedule 6.1(e) shall
not have agreed to enter into employment agreements
on terms reasonably acceptable to Parent with respect to their employment with
the Surviving Corporation after the Closing Date. Parent's right to terminate
this Agreement pursuant to this clause (e) shall terminate at midnight on the
fifth business day following the date hereof.
(f) by Parent, within seven days after the date hereof,
in the event that the condition of the Company's title to its owned real
property shall not be satisfactory to Parent's lenders providing the financing
for the transactions contemplated hereby in their sole discretion ("Parent's
Lenders").
(g) by Parent, on or prior to 9:00 a.m., e.s.t., on
December 11, 1997, in the event that (1) the state of the leasehold interests
and required consents for the Merger, the Related Transactions and the financing
thereof for the Real Property Leases listed on Schedule 6.1(g) shall not be
satisfactory to Parent's Lenders, (ii) the Company has failed to provide any of
the Items noted as not provided in Schedule 3.1(o)(ii) or if such Items are not
reasonably acceptable to Parent and evidence that Xxxxx Industries, Inc., a
Delaware corporation, is the tenant under Items 3, 5, 6, 15, 20, 27, 33 and 34
on Schedule 3.1(o)(ii), or (iii) the Company has failed to provide the responses
that were due for Items 6 and 7 on Schedule 3.1(g)(ii) or the most recent
consent decree listed as Item 3 on Schedule 3.1(g)(i).
Section 6.2. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 6.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company except (i)
with respect to this Section 6.2 and the last sentence of Section 4.3, and (ii)
that no such termination shall relieve any party from liability for a material
breach hereof prior to the date of termination. Parent further agrees that
following such termination, it shall continue to be bound by all of the terms
and conditions contained in the Confidentiality Agreement.
ARTICLE VII.
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival. All of the representations, warranties
and covenants of the Company, the Stockholders, Parent and Sub contained in this
Agreement or in any certificate delivered by the Company pursuant to this
Agreement shall terminate at and not survive the Effective Time; provided,
however, that (a) the representations and warranties of the Company contained in
Sections 3.1(f) and the covenant contained in Section 4.17 shall survive until
Xxxxx 00, 0000, (x) the representations and warranties of the Company contained
in Sections 3.1(r) (but only to the extent relating to direct transactions
between the Company and its Subsidiaries and any Stockholder or Affiliate of the
Company (other than any portfolio company controlled by Xxxxx, Muse Xxxx and
Xxxxx Equity Fund II, L.P. ("Fund II"))) and 3.1(u), the representations and
warranties of Parent contained in Section 3.3(e), and the covenants contained in
Sections 4.1(a)(i) (to the extent related to actions other than those taken by
or at the express direction of any of the Stockholders) and 4.1(a) (but only to
the extent related to actions taken by or at the express direction of any of the
Stockholders) shall survive until June 30, 1998, (c) the covenant contained in
Section 4.6 shall survive until sixty days after the sixth anniversary of the
Closing Date, (d) the covenants in Section 4.11 shall survive for the periods
set forth in such section, (e) [intentionally omitted] and (f) Article II,
Sections 4.2, 4.8, 4.12 and 4.13, and Article VII (the items identified in this
clause (f) being referred to herein as the "Perpetual Provisions") shall survive
the Closing forever; provided, however, that the covenants contained in Section
4.2 shall terminate with respect to any agreement referenced therein for periods
after the
effective date of the termination of such agreement upon delivery to Parent of
evidence of termination of such agreement (with no further Liability beyond the
effective date of termination) in form reasonably acceptable to Parent.
Notwithstanding the foregoing, any notice given in accordance with Section 8.5
of this Agreement claiming an alleged breach of any representation, warranty or
covenant surviving the Effective Time hereunder shall without further action
extend the survival period for the representation, warranty or covenant alleged
to have been breached as applied to the circumstances set forth in such notice
until immediately after the final resolution of the matter.
Section 7.2. Indemnification Provisions for Benefit of Parent.
(a) The Stockholders shall indemnify, defend and hold harmless Parent and its
Affiliates (i) jointly and severally, from and against all Damages resulting
from or arising out of any breach of the representations and warranties set
forth in Sections 3.1(f), 3.1(r) (but in the case of Section 3.1(r) only to the
extent relating to direct transactions between the Company and its Subsidiaries
and any Stockholder or Affiliate of the Company (other than any portfolio
company controlled by Fund II)) and 3.1(u), and the covenant contained in
Section 4.1(a)(i) (to the extent related to actions other than those taken by or
at the express direction of any of the Stockholders) provided that Parent makes
a written claim for indemnification to the Stockholder Representative within the
applicable survival period, (ii) [intentionally omitted], (iii) severally, but
not jointly, from and against all Damages resulting from or arising out of any
breach by the Company of any of the covenants contained in Section 4.1(a) (but
only to the extent related to actions taken by or at the express direction of
any of the Stockholders), provided that Parent makes a written claim for
indemnification to the Stockholder Representative within the applicable survival
period, (iv) severally, but not jointly, from and against all Damages resulting
from or arising out of any breach by a Stockholder of the covenants contained in
Section 4.11 provided that Parent makes a written claim for indemnification to
the Stockholder Representative within the applicable survival period, (v)
severally, but not jointly, from and against all Damages resulting from or
arising out of any breach by a Stockholder of any of the Perpetual Provisions,
(vi) jointly and severally from and against all Damages resulting from or
arising out of any breach by the Company of the Perpetual Provisions, which
breach shall have occurred prior to or at the Effective Time, provided, with
respect to the covenants contained in Section 4.2 that Parent makes a written
claim for indemnification to the Stockholder Representative within the
applicable survival period, and (vii) jointly and severally from and against all
Damages resulting from or arising out of: (A) any Indebtedness except to the
extent included in the Debt Amount, (B) Preferred Stock (in excess of the
Preferred Stock Amount), (C) Options (in excess of the Option Payment Amount
less the aggregate Option Reserve Holdback), and (D) Common Stock (in excess of
the aggregate Merger Consideration less the aggregate Per Share Reserve Holdback
and the Excess Common Stock Holdback). In addition, Fund II shall indemnify the
Company and its Subsidiaries (or cause the Company and its Subsidiaries to be
indemnified) from and after the Effective Time from and against any Liability
arising under Title IV of ERISA and Section 412 of the Code to the extent, and
solely to the extent, incurred by reason of the Company and its Subsidiaries
being a member of a group of trades or businesses under common control or
treated as a single employer with Fund II pursuant to Section 414(b), (c) or (o)
of the Code.
(a)(b) In determining whether there has been a breach of (i)
Section 3.1(r) for purposes of Section 7.2(a)(i) and (ii) Section 4.1(a)(i) for
purposes of Section 7.2(a)(i) and Section 7.2(a)(iii), no effect shall be given
to any "Material Adverse Effect", "materiality" or similar qualifications
contained in such representation and warranty.
Section 7.3. Indemnification Provisions for Benefit of the
Stockholders. Parent shall indemnify, defend and hold harmless the Stockholders
and their Affiliates from and against all Damages resulting from or arising out
of any breach by Parent, Sub or the Surviving Corporation (after the Effective
Time) of any of the representations, warranties or covenants surviving the
Effective Time pursuant to Section 7.1 or any of the Perpetual Provisions.
Section 7.4. Matters Involving Third Parties.
(a) If any third party notifies any party entitled to
indemnity hereunder (the "Indemnified Party") with respect to any matter which
may give rise to a claim for indemnification against a party hereto (the
"Indemnifying Party") under this Article VII (a "Third Party Claim"), then the
Indemnified Party shall use reasonable efforts to notify the Indemnifying Party
thereof promptly and in any event within ten days after receiving any written
notice from a third party; provided, however, that no delay on the part of the
Indemnified Party in notifying Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder except to the extent that the Indemnifying
Party is prejudiced thereby; provided further, however, in the case of
Indemnified Parties pursuant to Section 7.2, such notice obligation shall be
satisfied by notice to the Stockholder Representative.
(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 reasonably deems
appropriate.
(c) The Indemnifying Party may at any point in time
choose to assume the defense of all of such matter by acknowledging in writing
that such matter is the obligation of the Indemnifying Party under Article VII,
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 costs and expense (except that the Indemnifying
Party shall be responsible for the fees and expenses of one separate
counsel for all Indemnified Parties to the extent the Indemnified Party
is advised, in writing by its counsel, 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), 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) 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;
provided, however, that if the Indemnifying Party has provided notice that the
matter is not a proper matter for indemnification hereunder, then the
Indemnified Party may take any such action without the consent of the
Indemnifying Party.
(e) The Indemnifying Party, without the written consent
of the Indemnified Party (not to be unreasonably withheld or delayed), 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.
Section 7.5. Certain Additional Provisions Relating to
Indemnification.
(a) Notwithstanding Section 8.14, after the Closing Date,
the indemnification provisions set forth in this Article VII shall constitute
the sole and exclusive recourse and remedy available to the parties hereto with
respect to the breach of any representation, warranty or covenant contained in
this Agreement, the Consent Letter or in any certificate delivered pursuant to
this Agreement except for actual fraud and except for equitable remedies with
respect to Sections 4.11.
(b) All payments by an Indemnifying Party under Article
VII shall be treated as an adjustment to the Merger Consideration for all
foreign, federal, state and local income tax purposes.
(c) The Stockholders waive any claim, cause of action, or
right of contribution against the Company and its Subsidiaries for any matters
for which Parent is rightfully entitled to indemnification pursuant to this
Article VII.
(d) For purposes of this Agreement, "Damages" means any
losses, amounts paid in settlement, claims, damages, Liabilities, obligations,
judgments, reasonable out-of-pocket expenses (including, without limitation,
costs of investigation, remediation and enforcement), and reasonable attorneys'
and consultants' fees; provided, however, that "Damages" shall only include
special or punitive damages if the underlying claim giving rise to such damages
is a Third Party Claim; and, provided, further, that in no event shall "Damages"
include any consequential damages.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Survival of Certain Agreements. The
Confidentiality Agreement and the Consent Letter shall survive the execution and
delivery of this Agreement, and the provisions of the Confidentiality Agreement
shall apply to all information and material delivered by any party hereunder.
Section 8.2. Appointment of Stockholder Representative. At the
Effective Time, without any further action on the part of the Stockholders,
Hicks, Muse, Xxxx & Xxxxx Equity Fund II, L.P. shall be deemed to have been
appointed as the representative and agent (the "Stockholder Representative") as
contemplated by this Agreement. The Stockholder Representative, by signing this
Agreement, accepts the appointment as Stockholder Representative and agrees to
abide by and act in accordance with the terms of this Agreement. The
Stockholders and holders of Options acknowledge and agree that the Stockholder
Representative shall have authority to take such actions and exercise such
discretion as are required of the Stockholder Representative pursuant to the
terms of this Agreement (and any such actions shall be binding on each
Stockholder), including, without limitation, to execute, acknowledge, deliver,
record and file all ancillary agreements, certificates and documents which the
Stockholder Representative deems necessary or
appropriate in connection with the consummation of the transactions contemplated
by the terms and provisions of this Agreement. The Stockholders and holders of
Options acknowledge and agree that the Stockholder Representative shall be
entitled to indemnification from the Stockholders and the holders of Options
from and against all Damages and other costs and expenses incurred by the
Stockholder Representative in the performance of its duties as Stockholder
Representative hereunder, except for Damages resulting from the Stockholder
Representative's willful misconduct or bad faith.
Section 8.3. Amendment. This Agreement may be amended,
modified or supplemented only by written agreement of Parent, Sub, the Company
and the Stockholder Representative. Any such amendment shall be binding on all
of the parties hereto regardless of whether they executed such amendment.
Section 8.4. Waiver. Any failure of Parent or Sub, on the one
hand, or of the Company, on the other hand, to comply with any obligation,
covenant, agreement or condition contained herein may be waived in writing by
the Company or Parent and Sub, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
other failure. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
Section 8.5. Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be 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:
(a) if to Parent or Sub, to:
Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to the Company or to the Stockholders, to:
Xxxxx Holdings Corp.
000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxx
Xxxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Simeon Gold
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
if to the Stockholder Representative, to:
Hicks, Muse, Xxxx & Xxxxx Equity Fund II, L.P.
c/o Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxx
Xxxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Simeon Gold
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Section 8.6. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
Section 8.7. Expenses and Obligations. All costs and expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement by Parent and Sub shall be paid by Parent and all costs and
expense incurred in connection with the consummation of the transactions
contemplated by this Agreement by the Company and the Stockholders shall be paid
by the Company; provided, however, that all costs and expenses incurred by the
Company and the Stockholders for legal, accounting and other professional
expenses to the extent related to this Agreement and the transactions
contemplated hereby (except to the extent such expenses relate to the Related
Transactions) (the "Company Professional Expenses") shall be deducted from the
Merger Consideration and paid as set forth in Article II.
Section 8.8. Interpretation. (a) When a reference is made in
this Agreement to Articles or Sections, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. The table of contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". As used herein, (i) the term "Affiliate" means
"affiliate" as defined in Rule 405 promulgated under the Securities Act; (ii)
the term "Person" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Entity or any other entity;
and (iii) the term "Knowledge", as applied to the Company, means the actual
knowledge of any person listed on Schedule 8.8 hereof.
(b) No provision of this Agreement will be interpreted in
favor of, or against, either of the parties hereto by reason of the extent to
which either such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
(c) The disclosure of any matter in the Schedules to this
Agreement shall not be construed as indicating that such matter is material.
(d) The parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant.
Section 8.9. No Recourse. Notwithstanding any of the terms or
provisions of this Agreement, each of Parent and Sub agree that neither it nor
any person acting on its behalf may assert any claims or causes of action
against any officer, director or stockholder of the Company by virtue of them
acting in their capacity as such in connection with or arising out of this
Agreement or the transactions contemplated hereby, except, and only to the
extent, (i) not released pursuant to a release executed in connection with this
Agreement or (ii) such Person is a party to this Agreement or another agreement
executed in connection herewith.
Section 8.10. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
Section 8.11. Entire Agreement; No Third Party Beneficiaries.
This Agreement (together with the Confidentiality Agreement and Consent Letter
and any other documents and instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and, except as provided in Sections 4.6 and 4.12, and Article VII, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.12. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.
Section 8.13. Jurisdiction; Service of Process. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of New York, County of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
New York, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world pursuant to the notice provisions of Section 8.5.
Section 8.14. Specific Performance. Without limiting or
waiving in any respect any rights or remedies of Parent under this Agreement now
or hereinafter existing at law or in equity or by statute, each of the parties
hereto shall be entitled to seek specific performance of the obligations to be
performed by the other in accordance with the provisions of this Agreement.
Section 8.15. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that (i) prior to or
after Closing, Parent may assign all of its rights hereunder to any Affiliate or
Parent, provided that no such assignment shall relieve Parent of its obligations
hereunder, (ii) Parent (or the assignee pursuant to clause (i)) has the right to
assign all of its rights hereunder to any other Person which acquires all or
substantially all of the assets of, or equity interest in, the Company, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder, and (iii) Parent may make a collateral assignment of its rights under
this Agreement to any institutional lender who provides funds to Parent or Sub
to consummate the Merger and the Related Transactions.
Section 8.16. Binding Effect. Subject to Section 8.15, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Each party executing a
signature page hereto acknowledges and agrees that the provisions of this
Agreement shall be binding upon and enforceable against such party regardless of
the fact that another Person intended to be a party hereto has not executed a
signature page to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PARENT:
FOAMEX INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxx
_______________________________
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
SUB:
MERGER ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxx
__________________________________
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
COMPANY:
XXXXX HOLDINGS CORP.
By: /s/ Xxxxx X. Xxxxxxxx
__________________________________
Name: Xxxxx X. Xxxxxxxx
Title: Senior V.P. - CFO
STOCKHOLDER REPRESENTATIVE:
HICKS, MUSE, XXXX & XXXXX EQUITY
FUND II, L.P.
By: HM2/GP Partners, L.P., as General Partner
By: Xxxxx, Muse GP Partners, L.P., its
General Partner
By: Xxxxx, Muse Fund II Incorporated,
it General Partner
By: /s/ Xxxxx X. Xxxxxxx
__________________________________
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
COMMON STOCKHOLDERS
/s/ Xxxxxxxx X. Xxxxxx, Xx.
___________________________
Xxxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxxx X. Xxxxxx
___________________________
Xxxxxx X. Xxxxxx
/s/ R. Xxxxx Xxxxx
___________________________
R. Xxxxx Xxxxx
/s/ Xxxxx X. Xxxx
___________________________
Xxxxx X. Xxxx
/s/ X. X. Xxxxx
___________________________
X. X. Xxxxx
X.X. XXXXX, XX. LIMITED PARTNERSHIP
By: X.X. XXXXX, XX., its general partner
___________________________
Signature
/s/ Xxxxx Xxxxx
___________________________
Xxxxx Xxxxx
/s/ Xxxxxxx X. Xxx
___________________________
Xxxxxxx X. Xxx
/s/ Xxxxxx X. Xxxxxxx
___________________________
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxx
___________________________
Xxxxxxx Xxxxx
/s/ Xxxxx X. Xxxxxxxxx
___________________________
Xxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxx
___________________________
Xxxx X. Xxxxxx
___________________________
Xxxxxxx X. Xxxxxxxxx
___________________________
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxxx
___________________________
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxx, Xx.
___________________________
Xxxxx X. Xxxxxxx, Xx.
/s/ Xxxxxx X. Xxxx, Xx.
___________________________
Xxxxxx X. Xxxx, Xx.
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
___________________________
Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
___________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxx
___________________________
Xxxxx X. Xxxxxx
/s/ X. X. Xxxx
___________________________
X. X. Xxxx
/s/ Xxxxx X. Xxxxxxx
___________________________
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
___________________________
Xxxxxxx X. Xxxxxxx
CCC/OMNI INVESTMENT PARTNERS
By: /s/ [Illegible]
_________________________
Its General Partner
By:_________________________
Name:________________
Title:_______________
XXXXXX X. XXXXX, XX., 1984 TRUST
By: /s/ Xxxxxx X. Xxxxx
_________________________
Xxxxxx X. Xxxxx, Trustee
XXXX XXXXXX XXXXX, 1984 TRUST
By: /s/ Xxxxxx X. Xxxxx
_________________________
Xxxxxx X. Xxxxx, Trustee
XXXX XXXXXXXXX XXXXX, 1984 TRUST
By: /s/ Xxxxxx X. Xxxxx
_________________________
Xxxxxx X. Xxxxx, Trustee
XXXXXX XXXXXXX XXXXX, 1984 TRUST
By: /s/ Xxxxxx X. Xxxxx
_________________________
Xxxxxx X. Xxxxx, Trustee
/s/ Xxxx X. Xxxx
____________________________
Xxxx X. Xxxx
/s/ Xxxxxxx X. Xxxx
____________________________
Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxxx
____________________________
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx, Xx.
___________________________
Xxxxxxx X. Xxxxxxx, Xx.
/s/ Xxxxxxx X. XxXxx
___________________________
Xxxxxxx X. XxXxx
/s/ Xxxxxxx Xxxxxxxxx Xxxxxx
___________________________
Xxxxxxx Xxxxxxxxx Xxxxxx
/s/ Xxxx X. Xxxxx
___________________________
Xxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
___________________________
Xxxxxx X. Xxxxx
/s/ Xxxxxxx X. XxXxxxxxx
___________________________
Xxxxxxx X. XxXxxxxxx
JDF FAMILY TRUST, U/A DTD 12-9-94
By: /s/ Xxxx X. Xxxxx
_________________________
Xxxx X. Xxxxx, Trustee
THE MUSE CHILDREN'S GS TRUST
By: /s/ Xxxxxx X. Xxxxx
_________________________
Xxxxxx X. Xxxxx, Co-Trustee
By: /s/ H. Xxxx Xxxxxxxx
_________________________
H. Xxxx Xxxxxxxx, Co-Trustee
/s/ Xxxx X. Xxxxx
___________________________
Xxxx X. Xxxxx
/s/ Xxxx X. Xxxxxx
___________________________
Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
___________________________
Xxxxxxx X. Xxxxxx
HICKS, MUSE, XXXX & XXXXX EQUITY FUND II, L.P.
By: HM2/GP Partners, L.P.,
as General Partner
By: Xxxxx, Muse GP Partners, L.P.,
its General Partner
By: Xxxxx, Muse Fund II Incorporated,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
____________________
Name:____________________
Title:___________________
CLASS A SERIES I STOCKHOLDERS
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
___________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxx
___________________________
Xxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxx
___________________________
Xxxxxx X. Xxxxx, Trustee
/s/ X.X. Xxxx
___________________________
X.X. Xxxx
/s/ W. Xxxxxx XxXxxx
___________________________
W. Xxxxxx XxXxxx, Trustee
/s/ Xxxx Xxxxxx
___________________________
Xxxx Xxxxxx
XxXxxx Family L.P.
By: /s/ W. Xxxxxx XxXxxx
_________________________________
W. Xxxxxx XxXxxx
General Partner
CLASS A SERIES II STOCKHOLDERS
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
___________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxx
___________________________
Xxxxx X. Xxxxxxx
___________________________
Xxxxxx X. Xxxxx, Trustee
/s/ X.X. Xxxx
___________________________
X.X. Xxxx
/s/ W. Xxxxxx XxXxxx
___________________________
W. Xxxxxx XxXxxx, Trustee
/s/ Xxxx Xxxxxx
___________________________
Xxxx Xxxxxx
FOR PURPOSES OF SECTION 2.2 ONLY
PREFERRED STOCKHOLDERS
HICKS, MUSE, XXXX & XXXXX EQUITY
FUND II, L.P.
By: HM2/GP Partners, L.P.,
as General Partner
By: Xxxxx, Muse GP Partners, L.P.,
as General Partner
By: Xxxxx, Muse Fund II Incorporated,
as General Partner
By: /s/ Xxxxx X. Xxxxxxx
____________________________
Name: Xxxxx X. Xxxxxxx
___________________________
Title: Treasurer
__________________________
/s/ Xxxxxx X. Xxxxx
___________________________
Xxxxxx X. Xxxxx
XXXXXX X. XXXXX, XX. 1984 TRUST
XXXX XXXXXX XXXXX 1984 TRUST
XXXX XXXXXXXXX XXXXX 1984 TRUST
XXXXXX XXXXXXX XXXXX 1984 TRUST
By: /s/ Xxxxxx X. Xxxxx
_________________________
Xxxxxx X. Xxxxx, Trustee
/s/ Xxxx X. Xxxx
____________________________
Xxxx X. Xxxx
THE MUSE CHILDREN'S GS TRUST
By: /s/ Xxxxxx X. Xxxxx
________________________
Xxxxxx X. Xxxxx, Co-Trustee
By: /s/ H. Xxxx Xxxxxxxx
________________________
H. Xxxx Xxxxxxxx, Co-Trustee
/s/ Xxxxxxx X. Xxxx
___________________________
Xxxxxxx X. Xxxx
/s/ Xxxx X. Xxxxx
___________________________
Xxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxxx, Xx.
___________________________
Xxxxxxxx X. Xxxxxx, Xx.
/s/ Xxxx X. Xxxxxx
___________________________
Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
___________________________
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
___________________________
Xxxxx X. Xxxxxxx
FOR PURPOSES OF SECTION 2.3 ONLY
PERFORMANCE OPTION HOLDERS
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
___________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxx
___________________________
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxx
___________________________
Xxxxx X. Xxxxxxx
INDEX
Adjusted Option Consideration................................. 7
Adjusted Per Share Amount ................................. 6
Affiliate ................................. 52
Agreement ................................. 2
CERCLA ................................. 21
CERCLIS ................................. 22
Certificate of Merger ................................. 3
Certificates ................................. 6
Class A Automatic Conversion Date ............................ 4
Class A Common Stock ................................. 3
Class A Conversion ................................. 3
Class A Mandatory Conversion Notice........................... 4
Class A Stockholders ................................. 2
Closing ................................. 2
Closing Date ................................. 2
COBRA ................................. 19
Code ................................. 17
Common Stock ................................. 3
Common Stockholders ................................. 2
Company ................................. 2
Company Expense Statement ................................. 9
Company Litigation ................................. 15
Company Order ................................. 15
Company Plans ................................. 18
Company Professional Expenses................................. 52
Confidentiality Agreement ................................. 37
Consent Letter ................................. 8
Constituent Corporations ................................. 2
Continuing Obligations ................................. 14
Contracts ................................. 26
Xxxxx Industries ................................. 8
Xxxxx Notes ................................. 8
Credit Agreement ................................. 8
Damages ................................. 49
Debt Amount ................................. 8
DGCL ................................. 2
Dissenting Shares ................................. 9
DOJ ................................. 37
Effective Time ................................. 3
Employees ................................. 41
Environmental Claims ................................. 22
Environmental Law ................................. 21
ERISA ................................. 17
Excess Common Stock Holdback ................................. 7
Exchange Act ................................. 13
Fair Value ................................. 3
Foamex Common Stock ................................. 5
Foamex Indenture ................................. 30
Foamex Stock Sale ................................. 6
Fund II ................................. 46
GAAP ................................. 13
Governmental Entity ................................. 12
HSR Act ................................. 12
Indebtedness ................................. 28
Indemnified Liabilities ................................. 38
Indemnified Party ................................. 48
Indemnifying Party ................................. 48
Indemnitees ................................. 37
Insurance Policies ................................. 28
Intellectual Property ................................. 21
Interim Balance Sheet ................................. 14
Interim Balance Sheet Date ................................. 14
Knowledge ................................. 53
Legal Requirement ................................. 12
Liabilities ................................. 14
Liens ................................. 23
Major Customers ................................. 30
Major Suppliers ................................. 30
Material Adverse Effect ................................. 10
Merger ................................. 2
Merger Consideration ................................. 5
Multiemployer Plan ................................. 18
Multiple Employer Plan ................................. 18
Option Consideration ................................. 4
Option Payment Amount ................................. 5
Option Reserve Holdback ................................. 7
Options ................................. 4
Order ................................. 12
Parent ................................. 2
Parents Lenders ................................. 45
Payment Fund ................................. 6
Per Share Amount ................................. 5
Per Share Report ................................. 6
Per Share Reserve Holdback ................................. 6
Performance Option Holders ................................. 2
Permits ................................. 15
Permitted Liens ................................. 23
Perpetual Provisions ................................. 46
Person ................................. 52
Preferred Stock ................................. 4
Preferred Stock Amount ................................. 4
Preferred Stock Redemption ................................. 4
Preferred Stockholders ................................. 2
Private Exchange Offer ................................. 11
Product ................................. 29
Product Claim ................................. 29
Properties ................................. 22
Real Property Leases ................................. 23
Recalls ................................. 29
Redemption Price ................................. 4
Related Transactions ................................. 11
Reserve Holdback ................................. 6
Salaried Employee ................................. 34
SEC ................................. 13
SEC Documents ................................. 13
Securities Act ................................. 13
Seller Entity ................................. 26
Seller Entity Insurance ................................. 41
Stockholder Representative ................................. 49
Stockholders ................................. 2
Stockholders Agreement ................................. 11
Sub ................................. 2
Subleases ................................. 24
Subsidiaries ................................. 12
Subsidiary ................................. 12
Surviving Corporation ................................. 2
Tax Returns ................................. 17
Taxes ................................. 17
Third Party Claim ................................. 48
Title Commitment ................................. 42
Treasury Shares ................................. 5
