1
EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
Between
CHIQUOLA FABRICS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
"BUYER"
JPS CONVERTER & INDUSTRIAL CORP.,
A DELAWARE CORPORATION
"COMPANY"
JPS TEXTILE GROUP, INC.,
A DELAWARE CORPORATION,
THE SOLE SHAREHOLDER OF THE COMPANY
REGARDING THE SALE OF THE COMPANY'S
COTTON COMMERCIAL PRODUCTS SEGMENT
AND THE XXXXXX PLANT IN KINGSPORT, TENNESSEE
DATED AS OF JUNE 24, 1999
2
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS.......................................................................... 1
1.1 Definition of "Business"................................................................ 1
1.2 Assets to be Transferred................................................................ 2
1.3 Excluded Assets......................................................................... 3
2. ASSUMPTION OF LIABILITIES............................................................................ 4
2.1 Liabilities to be Assumed............................................................... 4
2.2 Liabilities Not to be Assumed........................................................... 5
3. PURCHASE PRICE -PAYMENT.............................................................................. 6
3.1 Purchase Price.......................................................................... 6
3.2 Illustration of Purchase Price Calculation Methodology.................................. 6
3.3 Payment of Purchase Price............................................................... 6
3.4 Determination of Net Asset Value........................................................ 7
3.5 Prorations.............................................................................. 9
3.6 Other Payments and Adjustments.......................................................... 9
3.7 Allocation of Purchase Price............................................................ 10
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDER............................................ 10
4.1 Corporate............................................................................... 10
4.2 Authority............................................................................... 11
4.3 No Violation............................................................................ 11
4.4 Financial Statements.................................................................... 11
4.5 Tax Matters............................................................................. 12
4.6 Inventory............................................................................... 12
4.7 Absence of Certain Changes.............................................................. 12
4.8 Absence of Undisclosed Liabilities...................................................... 13
4.9 No Litigation........................................................................... 14
4.10 Compliance With Laws and Orders......................................................... 14
4.11 Title to and Condition of Properties.................................................... 16
4.12 Insurance............................................................................... 17
4.13 Contracts and Commitments............................................................... 18
4.14 Labor Matters........................................................................... 19
4.15 Employee Benefit Plans.................................................................. 19
4.16 Employment Compensation................................................................. 21
4.17 Trade Rights............................................................................ 21
4.18 Major Customers and Suppliers........................................................... 21
4.19 Product Warranty and Product Liability.................................................. 22
4.20 Affiliates' Relationships to Company.................................................... 22
4.21 No Brokers or Finders................................................................... 22
4.22 Year 2000............................................................................... 22
4.23 Disclosure.............................................................................. 23
3
5. REPRESENTATIONS AND WARRANTIES OF BUYER.............................................................. 23
5.1 Corporate............................................................................... 23
5.2 Authority............................................................................... 23
5.3 No Brokers or Finders................................................................... 23
5.4 No Violation............................................................................ 23
5.5 No Litigation........................................................................... 24
5.6 Disclosure.............................................................................. 24
6. EMPLOYEES -EMPLOYEE BENEFITS......................................................................... 24
6.1 Affected Employees...................................................................... 24
6.2 Retained Responsibilities............................................................... 24
6.3 Payroll Tax............................................................................. 25
6.4 Termination Benefits.................................................................... 25
6.5 Employee Benefit Plans.................................................................. 25
6.6 Comparable Benefits..................................................................... 25
7. OTHER MATTERS........................................................................................ 25
7.1 Title Insurance......................................................................... 25
7.2 Surveys................................................................................. 26
7.3 Environmental Audits.................................................................... 26
7.4 Noncompetition; Confidentiality......................................................... 26
7.5 Use of Name............................................................................. 28
7.6 Sales Tax Matters....................................................................... 28
7.7 Unemployment Compensation............................................................... 28
7.8 Access to Information and Records....................................................... 28
7.9 Bulk Sales Compliance................................................................... 29
7.10 Company's Xxxx and Hold Inventory....................................................... 29
7.11 General Administrative Services......................................................... 29
7.12 Software................................................................................ 29
8. FURTHER COVENANTS OF COMPANY......................................................................... 30
8.1 Conduct of Business Pending the Closing................................................. 30
8.2 Consents................................................................................ 31
8.3 Other Action............................................................................ 31
8.4 Disclosure.............................................................................. 31
9. FURTHER COVENANTS OF THE BUYER....................................................................... 31
9.1 Assistance with Accounts Receivable..................................................... 31
9.2 Financial Records....................................................................... 31
9.3 No Distributions........................................................................ 31
10. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.......................................................... 32
10.1 Representations and Warranties True on the Closing Date................................. 32
10.2 Compliance With Agreement............................................................... 32
10.3 Absence of Litigation................................................................... 32
10.4 Consents and Approvals.................................................................. 32
10.5 Title Insurance......................................................................... 33
ii
4
10.6 Estoppel Certificates................................................................... 33
10.7 Section 1445 Affidavit.................................................................. 33
10.8 Environmental Audit..................................................................... 33
10.9 Financing............................................................................... 33
10.10 Due Diligence Investigation............................................................. 33
11. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS........................................................ 34
11.1 Representations and Warranties True on the Closing Date................................. 34
11.2 Compliance With Agreement............................................................... 34
11.3 Absence of Litigation................................................................... 34
11.4 Satisfaction with Buyer's Financial Condition...........................................
12. INDEMNIFICATION...................................................................................... 34
12.1 By Company and Shareholder.............................................................. 34
12.2 By Buyer................................................................................ 35
12.3 Indemnification of Third-Party Claims................................................... 35
12.4 Payment................................................................................. 36
12.5 Indemnification for Environmental Matters............................................... 36
12.6 Limitations on Indemnification.......................................................... 37
12.7 No Waiver............................................................................... 38
13. CLOSING ........................................................................................ 38
13.1 Documents to be Delivered by Company.................................................... 38
13.2 Documents to be Delivered by Buyer...................................................... 39
14. TERMINATION.......................................................................................... 40
14.1 Right of Termination Without Breach..................................................... 40
14.2 Termination for Breach.................................................................. 40
15. RESOLUTION OF DISPUTES............................................................................... 41
15.1 Arbitration............................................................................. 41
15.2 Arbitrators............................................................................. 41
15.3 Procedures; No Appeal................................................................... 41
15.4 Authority............................................................................... 41
15.5 Entry of Judgment....................................................................... 42
15.6 Confidentiality......................................................................... 42
15.7 Continued Performance................................................................... 42
15.8 Tolling................................................................................. 42
16. MISCELLANEOUS........................................................................................ 42
16.1 Disclosure Schedule..................................................................... 42
16.2 Further Assurance....................................................................... 42
16.3 Disclosures and Announcements........................................................... 43
16.4 Assignment; Parties in Interest......................................................... 43
16.5 Law Governing Agreement................................................................. 43
16.6 Amendment and Modification.............................................................. 43
16.7 Notice.................................................................................. 43
iii
5
16.8 Expenses................................................................................ 45
16.9 Entire Agreement........................................................................ 46
16.10 Counterparts............................................................................ 46
16.11 Headings................................................................................ 46
16.12 Glossary of Terms....................................................................... 46
iv
6
DISCLOSURE SCHEDULES
Schedule 1.2(a) - Owned Real Property
Schedule 1.2(b) - Leased Real Property
Schedule 1.2(e) - Personal Property Leases
Schedule 1.1(a) - Contracts
Schedule 2.1(a) - Assumed Contracts (Not Otherwise Scheduled)
Schedule 3.2 Methodology for Purchase Price Calculation
Schedule 3.4(a) Accounting Policies
Schedule 3.6 Accounting Policies Relating to Accruals for Vacation
Pay, Etc.
Schedule 3.7 - Purchase Price Allocation
Schedule 4.1(c) - Foreign Corporation Qualification
Schedule 4.3 - Violation, Conflict, Default
Schedule 4.4(a) - Company Financial Statements
Schedule 4.4(b) - Business Financial Statements
Schedule 4.6. - Inventory Off Premises
Schedule 4.7. - Certain Changes
Schedule 4.8. - Off-Balance Sheet Liabilities
Schedule 4.9. - Litigation Matters
Schedule 4.10(a) - Non-Compliance with Laws
Schedule 4.10(b) - Licenses and Permits
Schedule 4.10(c) - Environmental Matters (Exceptions to Representations)
Schedule 4.11(a)(i) - Pre-Closing Liens
Schedule 4.11(a)(ii) - Post-Closing Liens
Schedule 4.12. - Insurance
Schedule 4.13(d) Sales Commitments
Schedule 4.13(f) - Collective Bargaining Agreements
Schedule 4.13(i) - Material Contracts
Schedule 4.14. - Labor Matters
Schedule 4.15(a) - Employee Plans/Agreements
Schedule 4.16. - Employment Compensation
Schedule 4.17. - Trade Rights
Schedule 4.18(a) - Major Customers
Schedule 4.18(b) - Major Suppliers
Schedule 4.18(c) - Dealers and Distributors
Schedule 4.19. - Product Warranty, Warranty Expense and Liability Claims
Schedule 4.20(a) - Contracts with Affiliates
Schedule 6.1 Affected Employees
Schedule 6.4 Severance Policy
Schedule 7.11 - General Administrative Services
v
7
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated June 24, 1999, by
and among Chiquola Fabrics, LLC, a Delaware limited liability company
("Buyer"), JPS Converter and Industrial Corp., a Delaware corporation
("Company") and JPS Textile Group, Inc., a Delaware corporation
("Shareholder").
RECITALS
A. The Company, through its "Cotton Commercial Products Segment,"
manufactures predominantly lightweight 100% cotton fabrics, polyester/cotton
blended fabrics and fabrics containing textured, continuous filament fillings
for industrial-end use, which products are sold primarily to the
apparel/pocketing, tapes, bookcloth, general industrial and high-pressure
laminate end-use markets (collectively, the "Cotton Commercial Products
Segment").
B. The Company conducts the Business at a manufacturing plant and
related facilities located on approximately 35 acres in Kingsport, Tennessee,
which is sometimes referred to as the "Xxxxxx Plant" (the "Facilities").
C. The Shareholder directly or indirectly owns all the
outstanding Stock of the Company.
D. The Buyer is a newly-formed Delaware limited liability
company.
E. Buyer desires to purchase from Company, and Company desires to
sell, and Shareholder desires to cause the Company to sell to Buyer, the
business and substantially all of the property and assets of the Company's
Cotton Commercial Products Segment and the Facilities, as set forth herein.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree
as follows.
1. PURCHASE AND SALE OF ASSETS
1.1 Definition of "Business".
As used herein, "Business" shall mean the manufacture, production,
marketing, distribution, exploitation, sale and related research and
development by Company and its affiliates of the Cotton Commercial Products
Segment. Such term shall include, without limitation and except as otherwise
specifically provided herein, all operations carried on by or primarily related
to products associated with the Cotton Commercial Products Segment which
includes all products manufactured by, and all assets located at, the
Facilities on the date hereof. Where the context allows, the term "Business"
shall also mean the Company insofar as the operation of the Business, as above
defined, is concerned.
8
1.2 Assets to be Transferred.
Subject to the terms and conditions of this Agreement, on the
Closing Date (as hereinafter defined) Company shall sell, transfer, convey,
assign, and deliver to Buyer, and Buyer shall purchase and accept, all of the
business, rights, claims and assets (of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued,
contingent or otherwise, and wherever situated) of Company, used, held for use
or acquired or developed for use in the Business, or developed in the course of
conducting the Business by persons employed in the Business (collectively the
"Purchased Assets"). The Purchased Assets shall include, but not be limited to,
all the following assets or rights of the Company related to the Business, to
the extent so used, held, acquired or developed solely for the Business, except
for the Excluded Assets as set forth in Section 1.3 hereof:
(a) Owned Real Property. All of the real property,
including fixtures, buildings, improvements and all appurtenant
rights, owned by Company described on Schedule 1.2(a) (the "Owned Real
Property").
(b) Leased Real Property. All of the leases of real
property with respect to real property leased by Company (the "Real
Property Leases") described on Schedule 1.2(b) with respect to the
real property described thereon (the "Leased Real Property").
(c) Personal Property. All machinery, equipment,
vehicles, tools, supplies, spare parts, furniture and all other
personal property used solely in the Business and not included in
inventory (other than personal property leased pursuant to Personal
Property Leases as hereinafter defined).
(d) Inventory. All inventories of raw materials,
work-in-process and finished goods (including all such in transit) and
miscellaneous inventory on the Closing Date, together with related
packaging materials relating solely to the Business (collectively the
"Inventory").
(e) Personal Property Leases. All leases of machinery,
equipment, vehicles, furniture and other personal property leased by
Company (the "Personal Property Leases") described in Schedule 1.2(e).
(f) Trade Rights. All the Company's interest in the trade
name "Xxxxxx Plant" and "Xxxxxx Brand" and related "Xxxxxx" trademarks
and service marks. Notwithstanding the foregoing, Company makes no
representations or warranties regarding its legal rights or claims to
the "Xxxxxx" name.
(g) Contracts. All the Company's rights in, to and under
Company's vendor and customer supply agreements, including cotton
agreements which are specifically identified, and up to the amount
identified in Schedule 1.1(a), purchase orders, sales agreements or
sales orders relating solely to the Business (hereinafter
"Contracts"). To the extent that any Contract for which assignment to
Buyer is provided herein is not assignable without the consent of
another party, this Agreement shall not constitute an assignment or an
attempted assignment thereof if such assignment or attempted
assignment would constitute a breach thereof. Company and Buyer agree
to use their
-2-
9
reasonable, good faith efforts to obtain the consent of such other
party to the assignment of any such Contract to Buyer in all cases in
which such consent is or may be required for such assignment. If any
such consent shall not be obtained, Company agrees to cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer the
benefits intended to be assigned to Buyer under the relevant Contract,
including enforcement at the cost and for the account of Buyer of any
and all rights of Company against the other party thereto arising out
of the breach or cancellation thereof by such other party or
otherwise. If and to the extent that such arrangement cannot be made,
Buyer, upon notice to Company, shall have no obligation pursuant to
Section 2.1 or otherwise with respect to any such Contract and any
such Contract shall not be deemed to be a Purchased Asset hereunder.
Nothing herein shall be deemed to require Company to make any payments
to obtain consents or approval from any third party to the assignment
by the Company to Buyer.
(h) Computer Software. All computer source codes, programs
and other software, including all machine readable code, printed
listings of code, documentation and related property and information
of Company, contingent upon Buyer negotiating, funding and making
satisfactory licensing arrangements with software providers; provided
Company shall not be responsible for the maintenance of such software,
provided Company makes no representations or warranties regarding Year
2000 readiness or system performance.
(i) Records and Files. All records, files, invoices,
customer lists, blueprints, specifications, designs, drawings,
accounting records, business records, operating data and other data,
relating in each case solely to the Business.
(j) Licenses; Permits. All licenses, permits and
approvals, to the extent transferable, relating solely to the
Business.
(k) Business Name. The name "Xxxxxx Plant," and all rights
to use or allow others to use such name, provided Company makes no
representation or warranty regarding its rights to such name.
(l) General Intangibles. All causes of action arising out
of occurrences before or after the Closing, and other intangible
rights and assets relating solely to the Business.
1.3 Excluded Assets.
Company shall retain all of its rights, claims and assets not
being acquired by Buyer hereunder not described in Section 1.1. Without
limiting the generality of the foregoing, and any contrary provisions of
Section 1.1 notwithstanding, Company shall not sell, transfer, assign, convey
or deliver to Buyer, and Buyer will not purchase or accept the following assets
of Company:
(a) Cash and Cash Equivalents. All cash and cash
equivalents, other than xxxxx cash balances at facilities of the
Business.
-3-
10
(b) Consideration. The consideration delivered by Buyer to
Company pursuant to this Agreement.
(c) Tax Credits and Records. Federal, state and local
income and franchise tax credits and tax refund claims and associated
returns and records. Buyer shall have reasonable access to such
records and may make excerpts therefrom and copies thereof.
(d) Notes and Accounts Receivable. Notes, drafts, accounts
receivable or other obligations for the payment of money.
(e) JPS Name. The name "JPS" and all rights to use or
allow others to use such name and all derivations thereof.
(f) Insurance Policies. The Company's insurance policies
covering the Business and any related pre-paid premiums.
2. ASSUMPTION OF LIABILITIES
2.1 Liabilities to be Assumed.
As used in this Agreement, the term "Liability" shall mean
and include any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, liquidated or unliquidated,
secured or unsecured. Subject to the terms and conditions of this Agreement, on
the Closing Date, Buyer shall assume and agree to perform and discharge the
following, and only the following, Liabilities of Company (collectively the
"Assumed Liabilities"):
(a) Certain Contractual Liabilities. Company's
Liabilities arising from and after the Closing Date under and pursuant
to the following Contracts:
(i) All Contracts described in any of Schedules
1.2(b), 1.2(e), and 1.2(g).
(ii) Every Contract entered into by Company in the
ordinary course of its business which does not involve
consideration or other expenditure by Company payable or
performable on or after the Closing Date in excess of $10,000
or performance over a period of more than three months.
The Contracts described in subsections 2.1(a)(i) and (ii)
above are hereinafter collectively described as the "Assumed Contracts" and set
forth on Schedule 2.1(a).
(b) Liabilities Under Permits and Licenses. Company's
Liabilities arising from and after the Closing Date under any permits
or licenses listed in Schedule 4.10(b) and assigned to Buyer at the
Closing.
(c) Liabilities Regarding Transferred Employees.
Liabilities assumed by Buyer pursuant to Sections 6.3, 6.4 and 6.6.
-4-
11
2.2 Liabilities Not to be Assumed.
Except as and to the extent specifically set forth in Section
2.1, Buyer is not assuming any Liabilities of Company and all such Liabilities
shall be and remain the responsibility of Company. The Company shall pay, and
the Shareholder shall cause the Company to pay, all Liabilities not
specifically assumed by Buyer. The Company and the Shareholder shall indemnify,
defend and hold the Buyer harmless against all costs and expenses (including,
without limitation, attorneys' fees, penalties and interest) arising from all
Company's Liabilities not specifically assumed by Buyer. Notwithstanding the
provisions of Section 2.1, Buyer is not assuming and Company shall not be
deemed to have transferred to Buyer the following Liabilities of Company:
(a) Taxes Arising from Transaction. Any taxes applicable
to, imposed upon or arising out of the sale or transfer of the
Purchased Assets to Buyer and the other transactions contemplated by
this Agreement, including but not limited to any income, transfer,
sales, use, gross receipts or documentary stamp taxes.
(b) Income and Franchise Taxes. Any Liability of Company
for Federal income taxes and any state or local income, profit or
franchise taxes (and any penalties or interest due on account
thereof).
(c) Insured Claims. Any Liability of Company insured
against, to the extent such Liability is or will be paid by an
insurer.
(d) Product Liability. Any Liability of Company arising
out of or in any way relating to or resulting from any product
manufactured, assembled or sold prior to the Closing Date (including
any Liability of Company for claims made for injury to person, damage
to property or other damage, whether made in product liability, tort,
breach of warranty or otherwise). The Company shall be responsible for
managing and defending product liability claims; provided, however,
Buyer shall reasonably and in good faith cooperate with Company in
such matters.
(e) Litigation Matters. Any Liability with respect to any
action, suit, proceeding, arbitration, investigation or inquiry,
whether civil, criminal or administrative ("Litigation") whether or
not described in Schedule 4.94.9 arising from or related to the
Business prior to the Closing Date.
(f) Infringements. Any Liability to a third party for
infringement of such third party's Trade Rights.
(g) Transaction Expenses. All Liabilities incurred by
Company in connection with this Agreement and the transactions
contemplated herein.
(h) Liability For Breach. Liabilities of Company for any
breach or failure to perform any of Company's covenants and agreements
contained in, or made pursuant to, this Agreement, or, prior to the
Closing, any other contract, whether or not assumed hereunder,
including breach arising from assignment of contracts hereunder
without consent of third parties.
-5-
12
(i) Liabilities to Affiliates. Except as specified herein,
Liabilities of Company to its present or former Affiliates.
(j) Employee Benefits. All wages, benefits, retirement
plan contributions (including, without limitation, obligations
relating to the Shareholder's defined benefit plan and post-retirement
benefit plan) and all other obligations owed to employees arising
prior to the Closing Date.
(k) Violation of Laws or Orders. Liabilities of Company
for any violation of or failure to comply with any statute, law,
ordinance, rule or regulation (collectively, "Laws") or any order,
writ, injunction, judgment, plan or decree (collectively, "Orders") of
any court, arbitrator, department, commission, board, bureau, agency,
authority, instrumentality or other body, whether federal, state,
municipal, foreign or other (collectively, "Government Entities").
3. PURCHASE PRICE - PAYMENT
3.1 Purchase Price.
The purchase price (the "Purchase Price") for the Purchased
Assets shall be (i) the Net Asset Value (as hereinafter defined), (ii) minus
Two Million, Five Hundred Thousand Dollars ($2,500,000).
3.2 Illustration of Purchase Price Calculation Methodology.
Schedule 3.2 correctly illustrates the methodology which
shall be used to calculate the Purchase Price based on assumed numbers.
3.3 Payment of Purchase Price.
The Purchase Price shall be paid by Buyer as follows:
(a) Promissory Note. At the Closing, Buyer shall deliver
to Seller a promissory note (the "Note") in the original principal
amount of One Million Dollars ($1,000,000), payable interest only,
paid quarterly in the first year; and equal, consecutive, quarterly
payments of principal and interest in the second and third year,
bearing interest at the rate paid to Buyer's primary lender (fixed at
Closing based on estimated rate), which note shall be subordinated to
the Buyer's debt to its lender, pursuant to subordination terms
reasonably acceptable to Company and the lender.
(b) Cash to Company. At the Closing, Buyer shall deliver
to Company the Purchase Price less One Million Dollars ($1,000,000) in
cash.
(c) Adjustment of Final Cash Purchase Price. On or before
the fifth business day following the final determination of the Final
Business Closing Balance Sheet (as hereinafter defined) (such date
being hereinafter referred to as the "Settlement Date"), either (i)
Company shall pay to Buyer the amount, if any, by which the sum of the
amounts paid to the Company on the Closing Date exceeds the Purchase
Price as
-6-
13
determined according to the Net Asset Value according to the Final Business
Closing Balance Sheet; or (ii) Buyer shall pay to Company the amount, if any,
by which the Purchase Price, as determined according to the Net Asset Value
according to the Final Business Closing Balance Sheet, exceeds the amount paid
to the Company on the Closing Date.
(d) Method of Payment. All payments under this Section 3.3 shall be
made in the form of certified or bank cashier's check payable to the order of
the recipient or, at the recipient's option, by wire transfer of immediately
available funds to an account designated by the recipient not less than 48
hours prior to the time for payment specified herein.
3.4 Determination of Net Asset Value.
(a) Definition of "Business Balance Sheet". The term "Business
Balance Sheet" as used herein shall mean a schedule in the form of a corporate
balance sheet showing the net book values of the assets being acquired by Buyer
at Closing set forth in the Recent Business Balance Sheet (as defined in
Section 4.4), but reflecting only the property, plant and equipment (net of
depreciation) and inventory (net of appropriate reserves) constituting
Purchased Assets. Each Business Balance Sheet shall be prepared in accordance
with the books and records of the Company and accounting policies (including
existing inventory reserve policy) of the Company and shall be in form and
level of detail as nearly as possible identical to, and in its accounting
principles and policies consistent in every respect with, the Recent Business
Balance Sheet, and accompanied by schedules setting forth in reasonable detail
all Purchased Assets included therein. Each Business Balance Sheet or its
accompanying schedules shall contain sufficient detail of the Purchased Assets
for the determination of Net Asset Value as defined (a) below. Schedule 3.4(a)
contains a statement of certain of the Company's accounting policies related to
plant, property and equipment and related depreciation and inventory and
related reserves.
(b) Definition of "Net Asset Value." The term "Net Asset Value"
shall mean the dollar amount of the tangible net book value of property, plant
and equipment (net of depreciation) and inventory (net of appropriate
reserves), both as reflected in the Final Closing Business Balance Sheet or
Estimated Closing Business Balance Sheet, as applicable. Only property, plant
and equipment (net of depreciation) and inventory (net of appropriate reserves)
shall be considered in the calculation of Net Asset Value.
(c) Estimated Closing Business Balance Sheet. For purposes of
determining the Net Asset Value and the Purchase Price payable by the Buyer at
the Closing, not less than two (2) business days prior to the Closing Date,
Company shall, in consultation with the Buyer, prepare and deliver to Buyer a
Business Balance Sheet as of the close of business on the business day
immediately prior to the Closing Date (hereinafter the "Effective Time") which
shall represent Company's reasonable estimate of the Final Closing Business
Balance Sheet. In the event Buyer shall object to any of the information set
forth on the Estimated Closing Business Balance Sheet or accompanying schedules
as presented by Company, the parties shall negotiate in good faith and agree on
-7-
14
appropriate adjustments to the end that such balance sheet and accompanying
schedules reflect a reasonable estimate of the Final Closing Business Balance
Sheet and Net Asset Value (the estimated balance sheet as finally determined by
the parties pursuant to this subsection is herein referred to as the "Estimated
Closing Business Balance Sheet"). In connection with the determination of the
Estimated Closing Business Balance Sheet, Company shall provide to Buyer such
information and detail as Buyer shall reasonably request.
(d) Final Closing Business Balance Sheet. The Final Closing
Business Balance Sheet shall be prepared by Company as of the Effective Time
and reviewed by the Company's independent accountants ("Company's Accountants")
shall be prepared as follows:
(i) Within 15 days after the Closing Date, Company shall
deliver to Buyer a Business Balance Sheet as of the Effective Time.
Such Final Closing Business Balance Sheet shall be accompanied by
detailed schedules of the Purchased Assets and Assumed Liabilities and
by a report (1) setting forth the amount of Net Asset Value (as
defined above) reflected in the balance sheet, (2) stating that (a)
the examination of the balance sheet has been made in accordance with
generally accepted auditing standards and (b) the balance sheet has
been prepared in accordance the books and records and accounting
policies (including existing inventory reserve policy) of the Company,
on a basis consistent with the accounting principles theretofore
followed by Company, except as otherwise provided in this Section 3.4,
and (3) setting forth the amount of any adjustment to the Purchase
Price to be paid and by whom pursuant to Section 3.3(c) hereof.
(ii) Within 30 days following the delivery of the Business
Balance Sheet referred to in (i) above, Buyer or the Buyer's
independent accountants ("Buyer's Accountants") may object to any of
the information contained in said balance sheet or accompanying
schedules which could affect the necessity or amount of any payment by
Buyer or Company pursuant to Section 3.3(c) hereof. Any such objection
shall be made in writing and shall state Buyer's determination of the
amount of the Net Asset Value.
In the event of a dispute or disagreement relating to
the balance sheet or schedules which Buyer and Company are unable to
resolve, either party may elect to have all such disputes or
disagreements resolved by an accounting firm of nationally recognized
standing (the "Third Accounting Firm") to be mutually selected by
Company and Buyer or, if no agreement is reached, by Company's
Accountants and Buyer's Accountants. The Third Accounting Firm shall
make a resolution of the Business Balance Sheet as of the Effective
Time and the calculation of Net Asset Value, which shall be final and
binding for purposes of this Article 3. The Third Accounting Firm
shall be instructed to use every reasonable effort to perform its
services within 15 days of submission of the balance sheet to it and,
in any case, as soon as practicable after such submission.
-8-
15
(iii) Company agrees to permit Buyer, Buyer's
Accountants, and their respective representatives, during
normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records of Company,
including but not limited to the books, records, schedules,
work papers and audit programs of Company and Company's
Accountants and access to representatives of Company's
Accountants, which documents and access are necessary to
review the Business Balance Sheet delivered by Company in
accordance with Section 3.4(d)(i). In addition, Buyer's
Accountants shall have the opportunity to observe the taking
of the inventory in connection with the preparation of such
balance sheet.
3.5 Prorations.
The following prorations relating to the Purchased Assets
will be made as of the Effective Time, with Company liable to the extent such
items relate to any time period up to and including the Effective Time and
Buyer liable to the extent such items relate to periods subsequent to the
Effective Time. Except as otherwise specifically provided herein, the net
amount of all such prorations will be settled and paid on the Settlement Date
as provided by Section 3.3(c) hereof:
(a) Personal property taxes, real estate taxes and
assessments and other taxes, if any, on or with respect to the
Purchased Assets; provided that special assessments for work actually
commenced or levied prior to the date of this Agreement shall be paid
by Company.
(b) Rents, additional rents, taxes and other items payable
by Company under any lease, license, permit, contract or other
agreement or arrangement to be assigned to or assumed by Buyer.
(c) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities; provided that
if practicable, meter readings shall be taken at the Effective Time
and the respective obligations of the parties determined in accordance
with such readings.
(d) All other prepaid items normally adjusted in
connection with similar transactions.
If the actual expense of any of the above items for the
billing period within which the Effective Time falls is not known on the
Settlement Date, the proration shall be made based on the expense incurred in
the previous billing period, for expenses billed less often than quarterly, and
on the average expense incurred in the preceding three billing periods, for
expenses billed quarterly or more often. Company agrees to furnish Buyer with
such documents and other records as shall be reasonably requested in order to
confirm all proration calculations.
3.6 Other Payments and Adjustments.
The amount of wages and other remuneration due in respect of
periods to and including the Effective Time to employees of the Business and
the amount of bonuses due to
-9-
16
such employees for all such periods will be paid by Company directly to such
employees. Buyer shall receive an estimated credit at Closing and a "true-up"
credit on the Settlement Date in an amount equal to all vacation, holiday and
sick pay unpaid by Company as of the Effective Time accrued by the Company on
its books and records pursuant to Company policy. Schedule 3.6 describes
certain relevant Company accounting policies related to accruals for vacation
pay.
3.7 Allocation of Purchase Price.
The aggregate Purchase Price (including the assumption by
Buyer of the Assumed Liabilities) shall be allocated among the Purchased Assets
for tax purposes in accordance with Schedule 3.7. Company and Buyer will follow
and use such allocation in all tax returns, filings or other related reports
made by them to any governmental agencies. To the extent that disclosures of
this allocation are required to be made by the parties to the Internal Revenue
Service ("IRS") under the provisions of Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") or any regulations thereunder, Buyer and
Company will disclose such reports to the other prior to filing with the IRS.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDER
Company and Shareholder, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct on
the date hereof, shall remain true and correct to and including the Closing
Date, shall be unaffected by any investigation heretofore or hereafter made by
Buyer, or any knowledge of Buyer other than as specifically disclosed in the
Disclosure Schedule delivered to Buyer at the time of the execution of this
Agreement, and shall survive the Closing of the transactions provided for
herein.
4.1 Corporate.
(a) Organization. Company and Shareholder are corporations
duly organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) Corporate Power. Company and Shareholder have all
requisite corporate power and authority to own, operate and lease its
properties, to carry on its business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company and Shareholder
pursuant hereto and to carry out the transactions contemplated hereby
and thereby.
(c) Qualification. Company is duly licensed or qualified
to do business as a foreign corporation, and is in good standing, in
each jurisdiction wherein the character of its properties which are
Purchased Assets or the nature of the Business makes such licensing or
qualification necessary, except where the failure to so qualify would
not be material to the Business; such jurisdictions are listed in
Schedule 4.1(c).
(d) No Subsidiaries. No portion of the Business is
conducted by the Company by means of any subsidiary or any other
interest in any corporation, partnership or other entity.
-10-
17
4.2 Authority.
The execution and delivery of this Agreement and the other
documents and instruments to be executed and delivered by Company and
Shareholder pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Company and Shareholder; provided that the Company shall obtain
Board of Directors approval prior to Closing. No other or further corporate act
or proceeding on the part of Company or the Shareholder is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by Company and/or the Shareholder pursuant hereto or the
consummation of the transactions contemplated hereby and thereby, and it is not
intended that Company be dissolved or its remaining operations terminated. This
Agreement constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Company and Shareholder pursuant
hereto will constitute, valid binding agreements of Company and Shareholder,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
4.3 No Violation.
Except as set forth on Schedule 4.3, neither the execution
and delivery of this Agreement or the other documents and instruments to be
executed and delivered by Company pursuant hereto, nor the consummation by
Company of the transactions contemplated hereby and thereby (a) will violate
any applicable Law or Order, (b) except for applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"), will
require any authorization, consent, approval, exemption or other action by or
notice to any Government Entity (including, without limitation, under any
"plant-closing" or similar law), or (c) subject to obtaining the consents
referred to in Schedule 4.3, will violate or conflict with, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
(as defined in Section 4.11(a), upon any of the assets of Company under, any
term or provision of the Certificate of Incorporation or By-laws of Company or
of any material contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Company is a party or by which
Company or any of its assets or properties may be bound or affected.
4.4 Financial Statements.
(a) Shareholder Financial Statements. Included as Schedule
4.4(a) are true and complete copies of the Shareholder's most recent
10-K containing annual financial statements for the year ending
November 3, 1998 and 10-Qs for the first and second quarters of 1999.
The financial statements contained in such 10K and 10Qs fairly present
the assets, liabilities and financial position and the results of
operations of the Shareholder as of the dates and for the periods
indicated and are prepared in accordance with generally accepted
accounting principles, consistently applied; provided the financial
statements contained in the 10-Qs are subject to normal year-end
adjustments and do not contain footnotes as may be required by
generally accepted accounting principles.
-11-
18
(b) Business Financial Statements. Included as Schedule
4.4(b) are financial statements of the Business (the "Business
Financial Statements"), consisting of (i) unaudited balance sheets of
the Business as of November 1, 1997 and November 3, 1998, and as of
June 5, 1999, (the latter such balance sheet sometimes referred to
herein as "Recent Business Balance Sheet"), and (ii) unaudited
statements of income and expense of the Business for the years ended
November 1, 1997 and November 3, 1998, and the six month period ended
June 5, 1999. All such financial statements are true and correct in
all material respects and are prepared from and are consistent in all
material respects with, such financial reports as have been prepared
and used by the Company in the ordinary course in managing the
Business and measuring and reporting its operating results and have
been prepared in accordance with the books and records of the Company
and accounting policies of the Company.
(c) Business Balance Sheets. Each Business Balance Sheet
shall be in accordance with the specifications set forth in Article 3.
The Final Closing Business Balance Sheet shall be true, complete and
accurate.
4.5 Tax Matters.
Shareholder, Company and all other members of their
affiliated group of corporations that file a consolidated tax return, have paid
or will pay all federal, state, foreign, county, local and other income, ad
valorem, excise, profits, franchise, occupation, property, payroll, sales, use,
gross receipts and other taxes (and any interest and penalties) and assessments
when due where the failure to pay such taxes could have an adverse impact on
the Purchased Assets or the Business.
4.6 Inventory.
All inventory of the Business reflected on the Recent
Business Balance Sheet consists of a quality and quantity usable and saleable
in the ordinary course of business. All inventory purchased or produced since
the date of such balance sheet consists of a quality and quantity usable and
saleable in the ordinary course of business. Except as set forth in Schedule
4.6, all inventory of the Business is located on premises at the Facility. All
work-in-process contained in inventory constitutes items in process of
production pursuant to the ordinary course of business for regular customers of
the Business. All work-in-process is of a quality ordinarily produced.
4.7 Absence of Certain Changes.
Except as and to the extent set forth in Schedule 4.7, since
the date of the Recent Business Balance Sheet there has not been:
(a) No Adverse Change. Any adverse change in the
financial condition, assets, Liabilities, business, prospects or
operations of the Business;
(b) No Damage. Any material loss, damage or destruction,
whether covered by insurance or not, in connection with or affecting
the Business or the Purchased Assets;
-12-
19
(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company who is employed in the Business or whose
compensation is reflected in the Business Financial Statements
(including, without limitation, any increase or change pursuant to any
bonus, pension, profit sharing, retirement or other plan or
commitment), or any bonus or other employee benefit granted, made or
accrued, except in the ordinary course of business;
(d) No Labor Disputes. Any labor dispute or disturbance,
other than routine individual grievances which are not material to the
financial condition or results of operations of the Business;
(e) No Commitments. Any commitment or transaction by
Company in connection with or affecting the Business (including,
without limitation, any borrowing or capital expenditure) other than
in the ordinary course of business consistent with past practice;
(f) No Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of Company that
are Purchased Assets (or would have been Purchased Assets had no sale,
lease, transfer or disposition occurred), except for the sale of
inventory items in the ordinary course of business;
(g) No Liens. Any material Lien made on any of the
properties or assets of Company that are Purchased Assets (or would
become Purchased Assets if not sold, leased, transferred or disposed
of prior to the Closing Date);
(h) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any contract in connection with
or affecting the Business, or any waiver of material rights
thereunder, other than in the ordinary course of business;
(i) Credit. Any grant of credit to any customer of the
Business or distributor of its products on terms or in amounts more
favorable than those which have been extended to such customer or
distributor in the past, any other change in the terms of any credit
heretofore extended, or any other change of Company's policies or
practices with respect to the granting of credit in connection with
the Business; or
(j) No Unusual Events. Any other material event or
condition not in the ordinary course of Company's operation of the
Business.
4.8 Absence of Undisclosed Liabilities.
Except as and to the extent specifically disclosed in the
Recent Balance Sheet, or in Schedule 4.8, Company does not have any
Liabilities, other than commercial liabilities and obligations incurred since
the date of the Recent Balance Sheet in the ordinary course of business and
consistent with past practice and none of which has or will have a material
adverse effect on the Business, financial condition or results of operations of
Company. Except as and to the extent described in the Recent Balance Sheet or
in Schedule 4.8, Company has no knowledge of any basis for the assertion
against Company of any liability which may give rise to Liabilities,
-13-
20
except commercial liabilities and obligations incurred in the ordinary course
of Company's business and consistent with past practice.
4.9 No Litigation.
Except as set forth in Schedule 4.9 there is no Litigation
pending or to the Company's or Shareholder's knowledge threatened against
Company or the Shareholder that involves the Business or the Purchased Assets,
nor does Company know of any basis for any Litigation. Except as set forth in
Schedule 4.9, neither Company, the Purchased Assets nor the Assumed Liabilities
is subject to any Order of any Government Entity with respect to the Business.
4.10 Compliance With Laws and Orders.
(a) Compliance. Except as set forth in Schedule 4.10(a),
to the best knowledge of the Company and the Shareholder, the Business
(including each and all of its operations, practices, properties and
assets) is in material compliance with all applicable Laws and Orders,
including, without limitation, those applicable to discrimination in
employment, occupational safety and health, trade practices,
competition and pricing, product warranties, zoning, building and
sanitation, employment, retirement and labor relations, product
advertising and the Environmental Laws as hereinafter defined, except
where non-compliance would not have an adverse effect on the Business.
Except as set forth in Schedule 4.10(a), Company has not received
notice of any violation or alleged violation of, and is subject to no
Liability for past or continuing violation of, any Laws or Orders with
respect to the operations of the Business. All reports and returns
required to be filed by Company with any Government Entity have been
filed, and to the best of the Company's and the Shareholder's
knowledge were accurate and complete when filed. Without limiting the
generality of the foregoing:
(i) To the best of the Company's and the
Shareholder's knowledge, the operation of the Business as it
is now conducted does not, nor does any condition existing at
any of the Facilities, in any manner constitute a nuisance or
other tortious interference with the rights of any person or
persons in such a manner as to give rise to or constitute the
grounds for a suit, action, claim or demand by any such
person or persons seeking compensation or damages or seeking
to restrain, enjoin or otherwise prohibit any aspect of the
conduct of the Business or the manner in which it is now
conducted.
(ii) Company has made all required payments to its
unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it
is required to maintain such accounts with respect to the
operations of the Business, and each of such accounts has a
positive balance.
(iii) Company has delivered to Buyer copies of all
reports of Company for the past five (5) years required under
the federal Occupational Safety and Health Act of 1970, as
amended, and under all other applicable health and safety
-14-
21
laws and regulations, with respect to the operations of the
Business. The deficiencies, if any, noted on such reports
have been corrected.
(b) Licenses and Permits. To the best of the Company's and
Shareholder's knowledge, Company has all material licenses, permits,
approvals, authorizations and consents of all Government Entities and
all certification organizations required for the conduct of the
Business and the operation of the Facilities. All such licenses,
permits, approvals, authorizations and consents are described in
Schedule 4.10(b), are in full force and effect and are assignable to
Buyer in accordance with the terms hereof. Except as set forth in
Schedule 4.10(b), the Business (including its operations, properties
and assets) is and has been in compliance with all such permits and
licenses, approvals, authorizations and consents.
(c) Environmental Matters. The applicable Laws relating to
pollution or protection of the environment, including Laws relating to
emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Waste
including, without limitation, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and their state and local
counterparts are herein collectively referred to as the "Environmental
Laws". Without limiting the generality of the foregoing provisions of
this Section 4.10, the Business is in full compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. Except as set forth in Schedule
4.10(c), there is no Litigation nor any demand, claim, hearing or
notice of violation pending or to the Company's and the Shareholder's
knowledge threatened against Company with respect to the Business
relating in any way to the Environmental Laws or any Order issued,
entered, promulgated or approved thereunder. Except as set forth in
Schedule 4.10(c), there are no past or present (or, to the best of
Company's knowledge, future) events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans which
may interfere with or prevent compliance or continued compliance with
the Environmental Laws or with any Order issued, entered, promulgated
or approved thereunder, or which may give rise to any Liability,
including, without limitation, Liability under CERCLA or similar state
or local Laws, or otherwise form the basis of any Litigation, hearing,
notice of violation, study or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release
or threatened release into the environment, of any Waste.
(Notwithstanding the foregoing, Company shall not be deemed to have
breached the representations contained in this subsection as a result
of minor or technical violations of Environmental Laws which do not
have an adverse effect on the Purchased Assets or the
-15-
22
Business and which do not cost more than $10,000 in the aggregate to
correct and remediate.
4.11 Title to and Condition of Properties.
(a) Marketable Title. Company has good, and with respect
to the real property, marketable, title to all the Purchased Assets,
free and clear of all mortgages, liens (statutory or otherwise),
security interests, claims, pledges, licenses, equities, options,
conditional sales contracts, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens") except those described in Schedule 4.11(a)(i);
and, in the case of real property, Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings
(and which have been sufficiently accrued or reserved against in the
Recent Business Balance Sheet), municipal and zoning ordinances and
easements for public utilities, none of which interfere with the use
of the property as currently utilized and minor imperfections of
title, if any, none of which (individually or in the aggregate) is
substantial in amount, or materially detracts from the value or
impairs the use of the real property or impairs the operations of the
Business ("Permitted Real Property Liens"). Except as set forth in
Schedule 4.11(a)(ii), none of the Purchased Assets are subject to any
restrictions with respect to the transferability thereof. At Closing,
Buyer will receive good, and in the case of the real property,
marketable title to all the Purchased Assets, free and clear of all
Liens of any nature whatsoever except those described in Schedule
4.11(a)(ii) and Permitted Real Property Liens.
(b) Condition. All tangible assets (real and personal)
constituting Purchased Assets hereunder are in good operating
condition and repair; provided that the equipment not currently in
operation as part of the ordinary course of business shall not be
subject to this subsection. All buildings, plants and other structures
owned or otherwise utilized by Company in operating the Business are
in good condition and repair and have no structural defects or defects
affecting the plumbing, electrical, sewerage, or heating, ventilating
or air conditioning systems.
(c) Real Property. Schedules 1.2(a) and 1.2(b) set forth
all real property owned, used or occupied by Company solely for
operation of the Business (the "Real Property"), including a
description of all land, and all encumbrances, easements or rights of
way of record (or, if not of record, of which Company has notice or
knowledge) granted on or appurtenant to or otherwise affecting such
Real Property, the zoning classification thereof, and all plants,
buildings or other structures located thereon. Schedule 1.2(b) also
sets forth, with respect to each parcel of Real Property which is
leased, the material terms of such lease. There are now in full force
and effect duly issued certificates of occupancy permitting the Real
Property and improvements located thereon to be legally used and
occupied as the same are now constituted. All of the Real Property has
permanent rights of access to dedicated public highways. To the best
of the Company's and the Shareholder's knowledge, no fact or condition
exists which would prohibit or adversely affect the ordinary rights of
access to and from the Real Property from and to the existing highways
and roads and there is no pending or threatened
-16-
23
restriction or denial, governmental or otherwise, upon such ingress
and egress. There is not (i) to the best of the Company's and the
Shareholder's knowledge, any claim of adverse possession or
prescriptive rights involving any of the Real Property, (ii) any
structure located on any Real Property which encroaches on or over the
boundaries of neighboring or adjacent properties or (iii) any
structure of any other party which encroaches on or over the
boundaries of any of such Real Property. None of the Real Property is
located in a flood plain, flood hazard area, wetland or lakeshore
erosion area within the meaning of any Law. No public improvements
have been commenced and to Company's knowledge none are planned which
in either case may result in special assessments against or otherwise
materially adversely affect any Real Property. To the best of the
Company's and the Shareholder's knowledge, no portion of any of the
Real Property has been used as a landfill or for storage or landfill
of hazardous or toxic materials. Company has no notice or knowledge of
any (i) planned or proposed increase in assessed valuations of any
Real Property, (ii) Order requiring repair, alteration, or correction
of any existing condition affecting any Real Property or the systems
or improvements thereat, (iii) condition or defect which could give
rise to an order of the sort referred to in "(ii)" above, or (iv)
underground storage tanks, or any structural, mechanical, or other
defects of material significance affecting any Real Property or the
systems or improvements thereat (including, but not limited to,
inadequacy for normal use of mechanical systems or disposal or water
systems at or serving the Real Property).
(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the Purchased Assets is subject to any Order to be
sold or is being condemned, expropriated or otherwise taken by any
Government Entity with or without payment of compensation therefor,
nor to the best of Company's knowledge has any such condemnation,
expropriation or taking been proposed.
(e) No Certified Survey Map Required. No certified survey
map or other state, municipal, or other governmental approval
regarding the division, platting, or mapping of real estate is
required as a prerequisite to the conveyance by Company to Buyer (or
as a prerequisite to the recording of any conveyance document) of any
Owned Real Property or Leased Real Property pursuant to the terms
hereof.
4.12 Insurance.
Set forth in Schedule 4.12 is a complete and accurate list
and description of all policies of fire, liability, product liability, workers
compensation, health and other forms of insurance presently in effect with
respect to the Business or the Purchased Assets, true and correct copies of
which have heretofore been delivered to Buyer. Schedule 4.12 indicates each
policy as to which (a) the coverage limit has been reached or (b) the total
incurred losses to date equal 75% or more of the coverage limit. No notice of
cancellation or termination has been received with respect to any such policy.
-17-
24
4.13 Contracts and Commitments.
(a) Real Property Leases. Except as set forth in Schedule
1.2(b), Company has no leases of real property used or held solely for
use in connection with the Business or the Purchased Assets.
(b) Personal Property Leases. Except as set forth in
Schedule 1.2(e), Company has no leases of personal property used or
held solely for use in connection with the Business or the Purchased
Assets involving consideration or other expenditure in excess of Ten
Thousand Dollars ($10,000) or involving performance over a period of
more than twelve (12) months.
(c) Purchase Commitments. Other than contracts for the
purchase of raw materials, Company has no purchase commitments for
inventory items or supplies in connection with the Business in excess
of three (3) months normal usage, or which are at an excessive price.
(d) Sales Commitments. Schedule 4.13(d) contains all of
the sales contracts or commitments to customers or distributors in
connection with or affecting the Business or the Purchased Assets
which are more than $10,000.
(e) Powers of Attorney. The Company has not given a power
of attorney, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever in connection with or affecting
the Business or the Purchased Assets.
(f) Collective Bargaining Agreements. Except as set forth
in Schedule 4.13(f), Company is not a party to any collective
bargaining agreements with any unions, guilds, shop committees or
other collective bargaining groups representing or purporting to
represent employees of the Business. Copies of any such agreements
have heretofore been delivered to Buyer.
(g) Contracts Subject to Renegotiation. Company is not a
party to any contract with any governmental body which is subject to
renegotiation in connection with or affecting the Business or the
Purchased Assets.
(h) Burdensome or Restrictive Agreements. Company is not a
party to nor is it bound by any agreement, deed, lease or other
instrument in connection with or affecting the Business or the
Purchased Assets which is so burdensome as to materially affect or
impair the operation of the Business. Without limiting the generality
of the foregoing, Company is not a party to nor is it bound by any
such agreement requiring Company to assign any interest in any trade
secret or proprietary information constituting Purchased Assets
hereunder, or prohibiting or restricting Company in its operation of
the Business from competing in any business or geographical area or
soliciting customers or otherwise restricting it from carrying on the
Business anywhere in the world.
(i) Other Material Contracts. Company has no lease,
license, contract or commitment of any nature affecting the Business
which is individually material to the
-18-
25
operations of the Business, except as explicitly described in Schedule
4.13(i) or in any other Schedule.
(j) No Default. Company is not in default under any lease,
license, contract or commitment in its operation of the Business, nor
has any event or omission occurred which through the passage of time
or the giving of notice, or both, would constitute a default
thereunder or cause the acceleration of any of Company's obligations
or result in the creation of any Lien on any Purchased Asset. To the
Company's and Shareholder's knowledge, no third party is in default
under any such lease, contract or commitment to which Company is a
party, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute a
default thereunder, or give rise to an automatic termination, or the
right of discretionary termination thereof.
4.14 Labor Matters.
Except as set forth in Schedule 4.14, within the last five
years Company has not experienced any labor disputes, union organization
attempts or any work stoppage due to labor disagreements in connection with the
Business. In its operation of the Business, except to the extent set forth in
Schedule 4.14, (a) Company is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice; (b) there is
no unfair labor practice charge or complaint against Company pending or
threatened; (c) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending or threatened against or affecting
Company nor any secondary boycott with respect to products of the Business; (d)
no question concerning representation has been raised or is threatened
respecting the employees of the Business; (e) no grievance which might have a
material adverse effect on the Business, nor any arbitration proceeding arising
out of or under collective bargaining agreements, is pending and no such claim
therefor exists; and (f) there are no administrative charges or court
complaints against Company concerning alleged employment discrimination or
other employment related matters pending or threatened before the U.S. Equal
Employment Opportunity Commission or any Government Entity.
4.15 Employee Benefit Plans.
(a) Disclosure. Schedule 4.15(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), which
are provided to, for the benefit of, or relate to, any persons
employed by Company in its operation of the Business ("Business
Employees") and summaries of the benefits provided thereunder. The
items described in the foregoing sentence are hereinafter sometimes
referred to collectively as "Employee
-19-
26
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." Each of the Employee Plans/Agreements is identified
on Schedule 4.15(a), to the extent applicable, as one or more of the
following: an "employee pension benefit plan" (as defined in Section
3(2) of ERISA), a "defined benefit plan" (as defined in Section 414 of
the Code), an "employee welfare benefit plan" (as defined in Section
3(1) of ERISA), and/or as a plan intended to be qualified under
Section 401 of the Code. No Employee Plan/Agreement is a
"multiemployer plan" (as defined in Section 4001 of ERISA), and
Company has never contributed nor been obligated to contribute to any
such multi-employer plan.
(b) Terminations, Proceedings, Penalties, etc. With
respect to each employee benefit plan (including, without limitation,
the Employee Plans/Agreements) that is subject to the provisions of
Title IV of ERISA and with respect to which the Company or any of its
assets may, directly or indirectly, be subject to any Liability,
contingent or otherwise, or the imposition of any Lien (whether by
reason of the complete or partial termination of any such plan, the
funded status of any such plan, any "complete withdrawal" (as defined
in Section 4203 of ERISA) or "partial withdrawal" (as defined in
Section 4205 of ERISA) by any person from any such plan, or
otherwise):
(i) no such plan has been terminated so as to
subject, directly or indirectly, any Purchased Assets to any
Liability or the imposition of any Lien under Title IV of
ERISA;
(ii) no proceeding has been initiated or threatened
by any person (including the Pension Benefit Guaranty
Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly
or indirectly, any Purchased Assets to any Liability or the
imposition of any Lien under Title IV of ERISA, whether to
the PBGC or to any other person or otherwise on account of
the termination of any such plan;
(iv) none of the Purchased Assets or the Business
shall be subject to any Lien or Liability at any time after
the Closing Date as a result of such plans or of ERISA; and
(v) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
(c) Payments and Compliance. With respect to each Employee
Plan/Agreement, (i) all payments due from Company to date have been
made and all amounts properly accrued to date as Liabilities of
Company which have not been paid have been properly recorded on the
books of Company and are reflected in the Recent Balance Sheet; (ii)
Company has complied with, and each such Employee Plan/Agreement
conforms in form and operation to, all applicable laws and
regulations, including but not limited to ERISA and the Code, in all
material respects and all reports
-20-
27
and information relating to such Employee Plan/Agreement required to
be filed with any governmental entity have been timely filed; (iii)
all reports and information relating to the savings, investment and
profit sharing plan of Shareholder required to be disclosed or
provided to participants or their beneficiaries have been timely
disclosed or provided, where the failure to disclose or provide may
have an adverse effect on Buyer or the Purchased Assets and Business
after the Closing Date; (iv) each such Employee Plan/Agreement which
is intended to qualify under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to such qualification, its related trust has been determined
to be exempt from taxation under Section 501(a) of the Code, and
nothing has occurred since the date of such letter that has or is
likely to adversely affect such qualification or exemption; and (v)
there are no actions, suits or claims pending (other than routine
claims for benefits) or threatened with respect to such Employee
Plan/Agreement or against the assets of such Employee Plan/Agreement.
(d) Future Commitments. Company has no announced plan or
legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
4.16 Employment Compensation.
Schedule 4.16 contains a true and correct list of all
Business Employees to whom the Company is paying compensation, including
bonuses and incentives, at an annual rate in excess of Ten Thousand Dollars
($10,000) for services rendered or otherwise; and in the case of salaried
employees such list identifies the current annual rate of compensation for each
employee and in the case of hourly or commission employees identifies certain
reasonable ranges of rates and the number of employees falling within each such
range.
4.17 Trade Rights.
In order to conduct the Business, as such is currently being
conducted, Company does not require any trademarks, service marks, copyrights,
patents or similar intellectual property rights that it does not already have.
Company is not infringing any such rights of another in the operation of the
Business.
4.18 Major Customers and Suppliers.
(a) Major Customers. Schedule 4.18(a) contains a list of
the 25 largest customers, including distributors, of the Business for
each of the two (2) most recent years (determined on the basis of the
total dollar amount of net sales) showing the total dollar amount of
net sales to each such customer during each such year. No present
customer listed on Schedule 4.18(a) which has made a purchase from the
Business in 1999 has advised the Company or Shareholder that it plans
to cease purchasing from the Business.
(b) Major Suppliers. Schedule 4.18(b) contains a list of
the 25 largest suppliers to the Business for each of the two (2) most
recent years (determined on the basis of the total dollar amount of
-21-
28
purchases) showing the total dollar amount of purchases from each such
supplier during each such year. No present customer listed on Schedule
4.18(b) which has supplied the Business in 1999 has advised the
Company or Shareholder that it plans to cease supplying the Business.
(c) Dealers and Distributors. Schedule 4.18(c) contains a
list by product line of all sales representatives, dealers,
distributors and franchisees of the Business, together with
representative copies of all sales representative, dealer, distributor
and franchise contracts and policy statements, and a description of
all substantial modifications or exceptions.
4.19 Product Warranty and Product Liability.
Except as set forth in Schedule 4.19, there is no claim
against or liability of the Company on account of product warranties or with
respect to the manufacture, sale or rental or defective products of the
Business, and to the knowledge of the Company and the Shareholder, there is no
basis for any such claim on account of defective products manufactured, sold or
rented by the Company in respect of the Business since January 1, 1998 that is
not fully covered by insurance.
4.20 Affiliates' Relationships to Company.
(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements concerning the Business between
Company and any Affiliate or between the Business and other business
units of the Company are described on Schedule 4.20(a).
(b) No Adverse Interests. No Affiliate has any direct or
indirect interest in (i) any entity which does business with Company
in connection with the operation of, or is competitive with, the
Business, or (ii) any property, asset or right which is used by
Company in the conduct of the Business.
4.21 No Brokers or Finders.
Neither Company nor any of its directors, officers,
employees, shareholders or agents have retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
4.22 Year 2000.
Except as expressly provided otherwise herein, neither
Company nor Shareholder make any warranty whatsoever regarding whether any
computer software is Year 2000 Compliant. As used herein, "Year 2000 Compliant"
shall mean (i) consistently and accurately handling and processing date and
time information and date with values before, during and after January 1, 2000,
(ii) functioning accurately and in accordance with its specifications without
interruptions, abnormal endings, degradation, change in operation or other
impact resulting from processing date or time date with values before, during
and after January 1, 2000, and (iii) responding to and processing two-digit
date input in a way that resolves any ambiguity as to century.
-22-
29
4.23 Disclosure.
All statements and information contained in any certificate,
instrument, Disclosure Schedule or document delivered by or on behalf of
Company at Closing shall be deemed representations and warranties by Company.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Company
and Shareholder, each of which is true and correct on the date hereof, shall
remain true and correct to and including the Closing Date, shall be unaffected
by any investigation heretofore or hereafter made by Company or any notice to
Company, and shall survive the Closing of the transactions provided for herein.
5.1 Corporate.
(a) Organization. Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out the
transactions contemplated hereby and thereby.
5.2 Authority.
The execution and delivery of this Agreement and the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the members and Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its members is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by Buyer pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the other documents and instruments to be executed and delivered
by Buyer pursuant hereto will constitute, valid and binding agreements of
Buyer, enforceable in accordance with their respective terms, except as such
may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable principles.
5.3 No Brokers or Finders.
Neither Buyer nor any of its members, directors, officers,
employees or agents have retained, employed or used any broker or finder in
connection with the transaction provided for herein or in connection with the
negotiation thereof.
5.4 No Violation.
To the knowledge of Buyer, neither the execution and delivery
of this Agreement or the other documents and instruments to be executed and
delivered by Buyer pursuant hereto, nor the consummation by Buyer of the
transactions contemplated hereby and thereby (a) will
-23-
30
violate any application Law or Order, (b) will require any authorization,
consent, approval, exempt or other action by or notice to any Governmental
Entity, or (c) will violate or conflict with, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, or result in the creation of any Lien upon any of the assets of
Buyer under any term or provision of the organization or governing documents of
Buyer or of any material contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Buyer is a party or
by which Buyer or any of its assets or properties may be bound or affected.
5.5 No Litigation
There is no Litigation against Buyer which (i) seeks to
restrain or enjoin the consummation of the transactions contemplated hereby or
(ii) if adversely determined, could be expected to have a material adverse
effect on the ability of Buyer to consummate the transactions contemplated by
this Agreement. Buyer is not in violation of any term of any judgment, decree,
injunction or order outstanding against it, which violation could reasonably be
expected to have a material adverse effect on the ability of Buyer to
consummate the transactions contemplated hereby.
5.6 Disclosure.
All statements and information contained in any certificate,
instrument or document delivered by or on behalf of Buyer shall be deemed
representations and warranties by Buyer.
6. EMPLOYEES - EMPLOYEE BENEFITS
6.1 Affected Employees.
"Affected Employees" shall mean the hourly and salaried
employees at the Facility listed on Schedule 6.1 and the marketing personnel of
the Business listed on Schedule 6.1.
6.2 Retained Responsibilities.
Company agrees to satisfy, or cause its insurance carriers to
satisfy, all claims for benefits, whether insured or otherwise (including, but
not limited to, workers' compensation, life insurance, medical and disability
programs), under Company's employee benefit programs brought by, or in respect
of, Affected Employees and other employees and former employees of the Company,
which claims arise out of events occurring on or prior to the Closing Date, in
accordance with the terms and conditions of such programs or applicable
workers' compensation statutes. The Company and Shareholder further agree to
pay and perform, or cause to be paid and performed, all retirement obligations
(including without limitation all obligations under the Shareholder's defined
benefit retirement plan) to Affected Employees and former employees of the
Company which accrued or related to employment prior to the Effective Time.
-24-
31
6.3 Payroll Tax.
Company agrees, unless the parties agree otherwise, to make a
clean cut-off of payroll and payroll tax reporting with respect to the Affected
Employees paying over to the federal, state and city governments those amounts
respectively withheld or required to be withheld for periods ending on or prior
to the Effective Time. Company also agrees to issue, by the date prescribed by
IRS Regulations, Forms W-2 for wages paid through the Effective Time. Except as
set forth in this Agreement, Buyer shall be responsible for all payroll and
payroll tax obligations after the Effective Time for Affected Employees.
6.4 Termination Benefits.
Buyer shall be solely responsible for, and shall pay or cause
to be paid, severance payments and other termination benefits, if any, to
Affected Employees who may become entitled to such benefits by reason of any
events occurring after Closing. If any action on the part of Company prior to
the Closing, or if the sale to Buyer of the Business and the Purchased Assets
pursuant to this Agreement or the transactions contemplated hereby, or if the
failure by Buyer to hire as a permanent employee of Buyer any employee of
Company (except employees on "lay-off" status will remain in such status
post-Closing with Buyer), shall directly or indirectly result in any Liability
(i) for severance payments or termination benefits or (ii) by virtue of any
state, federal or local "plant-closing" or similar law, such Liability shall be
the sole responsibility of Buyer, and Buyer shall indemnify Company against
such Liability arising out of or resulting from any actions by Buyer for one
(1) year from closing. Notwithstanding the foregoing, Buyer shall have no
liability to pay severance to the two salespeople based in Company's office in
Greenville, South Carolina if the salespeople are offered positions with Buyer
and they decline employment or subsequently voluntarily resign from Buyer.
Company's severance policy is described on Schedule 6.4.
6.5 Employee Benefit Plans.
Within 90 days after the Closing Date, Company shall vest and
make non-forfeitable as of the Closing Date the interest of each Affected
Employee in each employee pension benefit plan or similar defined contribution
plan in accordance with the guidelines and procedures of such plans. The
Company and Shareholder shall remain responsible for, and shall cause to be
paid, all amounts due with respect to such plans.
6.6 Comparable Benefits.
Buyer will maintain benefits comparable in the aggregate to
the existing benefits for Company employees, except Buyer shall not provide
defined pension benefit plan, post-retirement benefit plan or similar plans.
7. OTHER MATTERS
7.1 Title Insurance.
Not less than two (2) days prior to the Closing, Company, at
its expense, shall provide to Buyer title insurance commitments, issued by a
title insurance company or companies
-25-
32
reasonably satisfactory to Buyer, agreeing to issue to Buyer standard form
owner's (or lessee's, as the case may be) policies of title insurance with
respect to all Owned Real Property and Leased Real Property, together with a
copy of each document to which reference is made in such commitments. In the
case of Owned Real Property, such policies shall be standard ALTA Form 1990
owner's policies in the full amount of that portion of the Purchase Price
allocated respectively to each subject parcel of Owned Real Property under
Section 3.7 hereof, insuring good and marketable title thereto (expressly
including all easements and other appurtenances). In the case of Leased Real
Property, such policies shall be upon standard ALTA Form 1990 leasehold owner's
policies and in such amounts as such shall be reasonably acceptable to Buyer.
In either case, all policies shall insure title in full accordance with the
representations and warranties set forth herein and shall be subject only to
such conditions and exceptions as shall be reasonably acceptable to Buyer, and
shall contain such endorsements as Buyer shall reasonably request (including,
but not limited to, an endorsement over rights of creditors, if requested by
Buyer or Buyer's lender).
7.2 Surveys.
Not less than two (2) days prior to the Closing, Company, at
its expense, shall provide to Buyer surveys of all Owned Real Property and all
Leased Real Property prepared in accordance with ALTA/ASCM standards, each
dated no more than ninety (90) days prior to the Closing and each detailing the
legal description, the perimeter boundaries, all improvements located thereon,
all easements and encroachments affecting each such parcel of Owned Real
Property and such other matters as may be reasonably requested by Buyer or the
title insurance companies, each containing a surveyor certificate reasonably
acceptable to Buyer and the title insurance companies, and each prepared by a
registered land surveyor satisfactory to Buyer.
7.3 Environmental Audits.
Buyer will promptly retain a firm engaged in the regular
business of environmental engineering to conduct such environmental audits of
Company's operations and the real estate occupied by Company as Buyer in its
discretion shall consider necessary or appropriate.
7.4 Noncompetition; Confidentiality.
Subject to the Closing, and as an inducement to Buyer to
execute this Agreement and complete the transactions contemplated hereby, and
in order to preserve the goodwill associated with the Business, and in addition
to and not in limitation of any covenants contained in any agreement executed
and delivered pursuant to Section 1.1 hereof, Company hereby covenants and
agrees as follows:
(a) Covenant Not to Compete. For a period of three (3)
years from the Closing Date, Company and Shareholder will not,
directly or indirectly (and Shareholder will prohibit its subsidiaries
or Affiliates from):
(i) engage in, continue in or carry on any business
which competes with the Business or is substantially similar
thereto, including owning or
-26-
33
controlling any financial interest in any corporation,
partnership, firm or other form of business organization
which is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Buyer in any aspect with respect
to the Business or Purchased Assets which Buyer is acquiring
hereunder, including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance (except as may arise from
collection of accounts receivable of the Business) to or
engaging in any form of business transaction on other than an
arms' length basis with any such competitor;
(iii) offer employment to an Affected Employee,
without the prior written consent of Buyer; or
(iv) engage in any practice the purpose of which is
to evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Business,
Purchased Assets or Assumed Liabilities ;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market
in an amount which shall not exceed 5% of the outstanding shares of
any such corporation. The parties agree that the geographic scope of
this covenant not to compete shall extend to the entire United States
of America. The parties agree that Buyer may sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any
person, corporation, firm or entity that purchases all or part of the
Business or the Purchased Assets. In the event a court of competent
jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographical scope or
activity, it is expressly agreed that this covenant not to compete
shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such over
broad provisions shall be deemed, without further action on the part
of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
(b) Covenant of Confidentiality. Company shall not at any
time subsequent to the Closing, except as explicitly requested by
Buyer, (i) use for any purpose, (ii) disclose to any person, or (iii)
keep or make copies of documents, tapes, discs or programs containing,
any confidential information concerning the Business, the Purchased
Assets or the Assumed Liabilities. For purposes hereof, "confidential
information" shall mean and include, without limitation, all Trade
Rights which are Purchased Assets, all customer lists and customer
information of the Business, and all other information concerning the
processes, apparatus, equipment, packaging, products, marketing and
distribution methods of the Business, not previously disclosed to the
public directly by Company.
-27-
34
(c) Equitable Relief for Violations. Company agrees that
the provisions and restrictions contained in this Section 7.4 are
necessary to protect the legitimate continuing interests of Buyer in
acquiring the Business through the purchase of the Purchased Assets
and the assumption of the Assumed Liabilities, and that any violation
or breach of these provisions will result in irreparable injury to
Buyer for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to Buyer for such
violation or breach and regardless of any other provision contained in
this Agreement, Buyer shall be entitled to injunctive and other
equitable relief as a court may grant after considering the intent of
this Section 7.4.
7.5 Use of Name.
Following the Closing, Company grants Buyer the royalty-free
right to use and to permit others to use the name "JPS", but only in connection
with the sale by Buyer of the products of the type previously manufactured and
sold by the Company prior to Closing to use up the packaging on hand at
Closing; provided, however, that Buyer agrees to use "rubber stamps" or
"labels" bearing Buyer's name on all correspondence and other printed material
to differentiate Buyer from Company, and provided further that all such rights
granted to the name "JPS" to Buyer hereunder shall terminate three (3) months
from the Closing Date. Buyer acknowledges that except for the limited right
granted by this Section, it has no right or interest in the name "JPS".
7.6 Sales Tax Matters.
At or prior to the Closing, Company shall obtain a sales tax
clearance certificate from the Tennessee Department of Revenue.
7.7 Unemployment Compensation.
Company shall, upon the request of Buyer, cooperate with
Buyer in any efforts by Buyer to obtain the transfer of Company's portion of
the unemployment compensation fund(s) applicable to Affected Employees, to the
extent Buyer elects to transfer and assume such amounts. In connection
therewith, Company will execute such documents as Buyer may reasonably request
in order to effectuate such transfer.
7.8 Access to Information and Records.
(a) Prior to Closing. During the period prior to the
Closing, Company shall give Buyer, its counsel, accountants and other
representatives (i) access during normal business hours to all of the
properties, books, records, contracts and documents of Company
relating to the Business or the Purchased Assets or Assumed
Liabilities for the purpose of such inspection, investigation and
testing as Buyer deems appropriate (and Company shall furnish or cause
to be furnished to Buyer and its representatives all information with
respect to the Business Buyer may request); (ii) access to employees,
agents and representatives of the Business for the purpose of such
meetings and communications as Buyer reasonably desires; and (iii)
with the prior consent of Company in each instance (which shall not be
unreasonably withheld), access to vendors,
-28-
35
customers, manufacturers of its machinery and equipment, and others
having business dealings with the Business.
(b) After Closing. After the Closing, each party will
afford the other party, its counsel, accountants and other
representatives, during normal business hours, reasonable access to
the books, records and other data in such party's possession relating
directly or indirectly to the properties, liabilities or operations of
the Business, with respect to periods prior to the Closing, and the
right to make copies and extracts therefrom, to the extent that such
access may be reasonably required by the requesting party for any
proper business purpose. Each party agrees for a period extending six
years after the Closing not to destroy or otherwise dispose of any
such records without first offering in writing to surrender such
records to the other party, which party shall have ten (10) days after
such offer to agree in writing to take possession thereof.
7.9 Bulk Sales Compliance.
The parties waive compliance with any Bulk Sales Law. The
Company and the Shareholder will indemnify, defend and hold Buyer harmless
against any and all costs, expenses or Liabilities arising from failure to
comply with any Bulk Sales Law.
7.10 Company's Xxxx and Hold Inventory.
After closing, Buyer will warehouse Company's xxxx and hold
inventories existing at Closing, and service customer releases on a weekly
basis for 12 months.
7.11 General Administrative Services.
Company and Shareholder will provide Buyer with the general
and administrative transition services outlined on Schedule 7.11 at no cost for
a period of nine (9) months following Closing and at a cost of $30,000 per
month for the subsequent three (3) months (months 10-12), if required by Buyer.
The Company and Shareholder shall have no obligation to provide any such
general and administrative transition services following such twelve month
period. Notwithstanding any other provision in this Agreement waiving Company's
responsibility for Year 2000 Compliance and readiness, the Company's and
Shareholder's obligation to provide administrative support services shall
include the obligation to act reasonably and in good faith to provide reports
and compute information after January 1, 2000, and Company and Shareholder
shall make the same efforts to correct any Year 2000 problem as Shareholder
makes in its other business units.
7.12 Software.
Seller agrees to use its reasonable good faith efforts to
make its software available to Buyer at no cost (or payment to Company),
conditioned on Buyer negotiating, funding and making satisfactory arrangements
with software providers on licensing of software. Company and Shareholder make
no representation regarding, and shall have no liability with respect to, Year
2000 Compliance or Year 2000 readiness or system performance.
-29-
36
8. FURTHER COVENANTS OF COMPANY
Company covenants and agrees as follows:
8.1 Conduct of Business Pending the Closing.
From the date hereof until the Closing, except as otherwise
approved in writing by the Buyer:
(a) No Changes. Company will carry on the Business
diligently and in the same manner as heretofore and will not make or
institute any changes in its methods of purchase, sale, management,
accounting or operation.
(b) Maintain Organization. Company will take such action
as may be reasonably necessary to maintain, preserve, renew and keep
in favor and effect the existence, rights and franchises of the
Business and will use its reasonable best efforts to preserve the
Business intact, to keep available to Buyer the present officers and
employees of the Business, and to preserve for Buyer its present
relationships with suppliers and customers and others having business
relationships with the Business.
(c) No Breach. Company will not do or omit any act, or
permit any omission to act, which may cause a breach of any contract,
commitment or obligation material to the Business, or any breach of
any representation, warranty, covenant or agreement made by Company
herein, or which would have required disclosure on Schedule 4.7 had it
occurred after the date of the Recent Business Balance Sheet and prior
to the date of this Agreement.
(d) No Material Contracts. No contract or commitment will
be entered into, and no purchase of raw materials or supplies and no
sale of goods or services (real, personal, or mixed, tangible or
intangible) will be made, by or on behalf of Company in connection
with its operation of the Business, except contracts, commitments,
purchases or sales which are in the ordinary course of business and
consistent with past practice, and are not material to the Business
(individually or in the aggregate) and would not have been required to
be disclosed in the Disclosure Schedule had they been in existence on
the date of this Agreement.
(e) Maintenance of Insurance. Company shall, consistent
with past practices, maintain all of the insurance set forth in
Schedule 4.12 and shall procure such additional insurance with respect
to the Business or the Purchased Assets as shall be reasonably
requested by Buyer.
(f) Maintenance of Property. Company shall use, operate,
maintain and repair all property constituting Purchased Assets
hereunder in a normal business manner.
(g) No Negotiations. Until July 16, 1999, Company will not
directly or indirectly (through a representative or otherwise) solicit
or furnish any information to any prospective buyer, commence, or
conduct presently ongoing, negotiations with any other party or enter
into any agreement with any other party concerning the sale of the
Business
-30-
37
or the Purchased Assets or any part thereof (an "acquisition
proposal"), and Company shall immediately advise Buyer of the receipt
of any acquisition proposal. Notwithstanding the foregoing, if Company
determines in good faith that Buyer is not making reasonably
satisfactory progress towards arranging financing, as of the close of
business on July 7, 1999, Company may negotiate with third parties
without restriction by this subsection.
8.2 Consents.
Company will use its reasonable efforts prior to Closing to
obtain all consents necessary for the consummation of the transactions
contemplated hereby.
8.3 Other Action.
Company shall use its reasonable efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to the
parties' obligations to consummate the transactions contemplated in this
Agreement.
8.4 Disclosure.
Company shall have a continuing obligation to promptly notify
Buyer in writing with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Disclosure, but no such disclosure
shall cure any breach of any representation or warranty which is inaccurate.
9. FURTHER COVENANTS OF THE BUYER
The Buyer covenants and agrees as follows:
9.1 Assistance with Accounts Receivable.
Following the Closing, Buyer shall use reasonable good faith
efforts to assist Company in the collection of accounts receivable related to
the operation of the Business by the Company.
9.2 Financial Records.
In the event Buyer defaults on the Note and/or defaults on
its loan from its primary lender which were made in order to finance the
transaction described in this Agreement following the Closing, Buyer shall
provide to Shareholder interim monthly financial statements relating to its
business and other management reports as and when they are available.
9.3 No Distributions.
For so long as the Note remains unpaid, Buyer shall not make
distributions or dividends to its members or Affiliates, except for
distributions (i) to members in an amount reasonably and in good faith
calculated as necessary to pay income taxes arising as a result of Buyer's
"pass-through" tax status; (ii) reasonable, fair market value salaries for
services actually
-31-
38
rendered; and (iii) with respect to Affiliates which are operating businesses,
the fair market value of goods and services actually provided to Buyer,
provided that such amount shall not exceed the price available from third party
vendors.
10. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of each of the
following conditions:
10.1 Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Company
and Shareholder in this Agreement, and the statements contained in the
Disclosure Schedule or in any instrument, list, certificate or writing
delivered by Company pursuant to this Agreement, shall be true and correct in
all material respects when made and shall be true and correct in all material
respects at and as of the Closing Date as though such representations and
warranties were made or given on and as of the Closing Date, except for any
changes permitted by the terms of this Agreement or consented to in writing by
Buyer.
10.2 Compliance With Agreement.
Company shall have in all material respects performed and
complied with all of its agreements and obligations under this Agreement which
are to be performed or complied with by Company prior to or on the Closing
Date, including the delivery of the closing documents specified in Section
13.1.
10.3 Absence of Litigation.
No Litigation shall have been commenced or threatened, and no
investigation by any Government Entity shall have been commenced, against
Buyer, Company or any of the affiliates, officers or directors of any of them,
with respect to the transactions contemplated hereby.
10.4 Consents and Approvals.
All approvals, consents and waivers that are required to
effect the transactions contemplated hereby shall have been received, and
executed counterparts thereof shall have been delivered to Buyer not less than
two business days prior to the Closing. Notwithstanding the foregoing, receipt
of the consent of any third party to the assignment of a Contract which is not
(and is not required to be) disclosed in the Disclosure Schedule shall not be a
condition to Buyer's obligation to close, provided that the aggregate of all
such Contracts does not represent a material portion of the sales or
expenditures of the Premises. After the Closing, Company will continue to use
its best effects to obtain any such consents or approvals, and Company shall
not hereby be relieved of any liability hereunder for failure to perform any of
its covenants or for the inaccuracy of any representation or warranty.
-32-
39
10.5 Title Insurance.
Buyer shall have obtained good and valid title insurance
policies or, in final form, irrevocable title insurance binders, dated as of
the Effective Time, conforming to the specifications set forth in Section 7.1
hereof.
10.6 Estoppel Certificates.
Company shall have delivered to Buyer on or prior to the
Closing Date an estoppel certificate or status letter from the landlord under
each lease of real property to be assumed pursuant to this Agreement which
estoppel certificate or status letter will certify (i) the lease is valid and
in full force and effect; (ii) the amounts payable by Company under the lease
and the date to which the same have been paid; (iii) whether there are, to the
knowledge of said landlord, any defaults thereunder, and, if so, specifying the
nature thereof; and (iv) that the transactions contemplated by this Agreement
will not constitute default under the lease and that the landlord consents to
the assignment of the lease to Buyer.
10.7 Section 1445 Affidavit.
Company shall have delivered to Buyer an affidavit, in form
satisfactory to Buyer, to the effect that Company is not a "foreign person,"
"foreign corporation," "foreign partnership," "foreign trust," or "foreign
estate" under Section 1445 of the Code and containing all such other
information as is required to comply with the requirements of such Section.
10.8 Environmental Audit.
The results of the environmental audit conducted pursuant to
Section 7.3 shall not have disclosed any past or present condition, process or
practice with respect to the Business or any property owned, occupied or
operated by Company at any time in connection with its operation of the
Business which is not in full compliance with all applicable Environmental
Laws, if a reasonable estimate by Buyer of the cost of remediation, or the
potential liability to third persons (including statutory liability) arising
from such condition, process or practice, or the cost of bringing Company or
such property into full compliance with all applicable Environmental Laws,
would exceed $10,000 in the aggregate with respect to all matters described in
this Section.
10.9 Financing.
Buyer's obligation to close this transaction is contingent
upon Buyer obtaining satisfactory financing for the acquisition and operation
of the Business. Buyer shall use its reasonable, good faith efforts to obtain
satisfactory financing and to close on July 16, 1999 or one day after bank
approval, and to satisfactorily complete due diligence.
10.10 Due Diligence Investigation.
Buyer shall be satisfied, in Buyer's sole discretion, with
the results of Buyer's investigation of the condition and prospects of the
Business and related matters, which shall be
-33-
40
completed on or before July 9, 1999. The Company shall provide Buyer with
reasonable access and assistance in connection with the due diligence
investigation.
11. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following conditions:
11.1 Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Buyer in
this Agreement shall be true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the Closing
Date as though such representations and warranties were made or given on and as
of the Closing Date.
11.2 Compliance With Agreement.
Buyer shall have in all material respects performed and
complied with all of Buyer's agreements and obligations under this Agreement
which are to be performed or complied with by Buyer prior to or on the Closing
Date, including the delivery of the closing documents specified in Section
13.2.
11.3 Absence of Litigation.
No Litigation shall have been commenced or threatened, and no
investigation by any Government Entity shall have been commenced, against
Buyer, Company or any of the affiliates, officers or directors of any of them,
with respect to the transactions contemplated hereby; provided that the
obligations of Company shall not be affected unless there is a reasonable
likelihood that as a result of such action, suit, proceeding or investigation
Company will be unable to retain substantially all the consideration to which
it is entitled under this Agreement.
11.4 RESERVED.
12. INDEMNIFICATION
12.1 By Company and Shareholder.
Subject to the terms and conditions of this Article 12,
Company and Shareholder, jointly and severally, hereby agree to indemnify,
defend and hold harmless Buyer, and its directors, officers, employees and
controlled and controlling persons (hereinafter "Buyer's affiliates"), from and
against all Claims asserted against, resulting to, imposed upon, or incurred by
Buyer, Buyer's affiliates, the Business or the Purchased Assets, directly or
indirectly, by reason of, arising out of or resulting from (a) the inaccuracy
or breach of any representation or warranty of Company contained in or made
pursuant to this Agreement (regardless of whether such breach is deemed
"material"); (b) the breach of any covenant of Company contained in this
Agreement (regardless of whether such breach is deemed "material"); or (c) any
Claim of or against Company, the Purchased Assets or the Business not
specifically assumed by Buyer
-34-
41
pursuant hereto. As used in this Article 12, the term "Claim" shall include (i)
all Liabilities; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, settlements, costs and expenses
(including, without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and attorneys fees and expenses); and
(iii) all demands, claims, actions, costs of investigation, causes of action,
proceedings and assessments, whether or not ultimately determined to be valid.
12.2 By Buyer.
Subject to the terms and conditions of this Article 12, Buyer
hereby agrees to indemnify, defend and hold harmless Company and Shareholder
and their directors, officers, employees and controlling persons, from and
against all Claims asserted against, resulting to, imposed upon or incurred by
any such person, directly or indirectly, by reason of or resulting from (a) the
inaccuracy or breach of any representation or warranty of Buyer contained in or
made pursuant to this Agreement (regardless of whether such breach is deemed
"material"); (b) the breach of any covenant of Buyer contained in this
Agreement (regardless of whether such breach is deemed "material"); or (c) all
Claims of or against Company specifically assumed by Buyer pursuant hereto.
12.3 Indemnification of Third-Party Claims.
The obligations and liabilities of any party to indemnify any
other under this Article 12 with respect to Claims relating to third parties
shall be subject to the following terms and conditions:
(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any such Claim, and the Indemnifying
Party will undertake the defense thereof by representatives chosen by
it. Failure to give such notice shall not affect the Indemnifying
Party's duty or obligations under this Article 12, except to the
extent the Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. The
Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by them
and in the possession or under the control of the Indemnified Party,
for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense. Notwithstanding the foregoing, the
Company and Shareholder shall have the sole right to undertake the
defense of any Claims against Buyer related to the inaccuracy or
breach of the representation and warranty contained in Section
4.10(c).
(b) Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of
the Indemnifying
-35-
42
Party, and the Indemnifying Party shall thereafter have no right to
challenge the Indemnified Party's defense, compromise, settlement or
consent to judgment.
(c) Indemnified Party's Rights. Anything in this Section
12 to the contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from
all Liability in respect of such Claim.
12.4 Payment.
The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this Article 12, which payment may be accomplished
in whole or in part, at the option of the Indemnified Party, by the Indemnified
Party setting off any amount owed to the Indemnifying Party by the Indemnified
Party. To the extent set-off is made by an Indemnified Party in satisfaction or
partial satisfaction of an indemnity obligation under this Article 12 that is
disputed by the Indemnifying Party, upon a subsequent determination by final
judgment not subject to appeal that all or a portion of such indemnity
obligation was not owed to the Indemnified Party, the Indemnified Party shall
pay the Indemnifying Party the amount which was set off and not owed together
with interest from the date of set-off until the date of such payment at an
annual rate equal to the average annual rate in effect as of the date of the
set-off, on those three maturities of United States Treasury obligations having
a remaining life, as of such date, closest to the period from the date of the
set-off to the date of such judgment. Upon judgment, determination, settlement
or compromise of any third party Claim, the Indemnifying Party shall pay
promptly on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount
so determined by judgment, determination, settlement or compromise and all
other Claims of the Indemnified Party with respect thereto, unless in the case
of a judgment an appeal is made from the judgment. If the Indemnifying Party
desires to appeal from an adverse judgment, then the Indemnifying Party shall
post and pay the cost of the security or bond to stay execution of the judgment
pending appeal. Upon the payment in full by the Indemnifying Party of such
amounts, the Indemnifying Party shall succeed to the rights of such Indemnified
Party, to the extent not waived in settlement, against the third party who made
such third party Claim.
12.5 Indemnification for Environmental Matters.
Without limiting the generality of the foregoing, Company
agrees to indemnify, reimburse, hold harmless and defend Buyer for, from, and
against all Claims asserted against, imposed on, or incurred by Buyer, directly
or indirectly, in connection with any pollution, threat to the environment, or
exposure to, or manufacture, processing, distribution, use, treatment,
generation, transport or handling, disposal, emission, discharge, storage or
release of, any pollutant, contaminant, chemical or industrial, petroleum or
petroleum-based, hazardous or toxic substances, that (A) is related in any way
to Company's or any previous owner's or operator's
-36-
43
ownership, operation or occupancy of the Business and Facilities, properties
and assets being transferred to Buyer, and (B) in whole or in part occurred,
existed, arose out of conditions or circumstances that existed, or was caused
on or before the Closing Date.
12.6 Limitations on Indemnification.
Except for any willful or knowing breach or
misrepresentation, as to which claims may be brought without limitation as to
time or amount:
(a) Time Limitation. No claim or action shall be brought
under this Article 12 for breach of a representation or warranty after
the lapse of two (2) years following the Closing. Regardless of the
foregoing, however, or any other provision of this Agreement:
(i) There shall be no time limitation on claims on
actions brought for breach of any representation or warranty
made in or pursuant to Section 4.10(c) and Company hereby
waives all applicable statutory limitation periods with
respect thereto.
(ii) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 4.5
may be brought at any time until the underlying tax
obligation is barred by the applicable period of limitation
under federal and state laws relating thereto (as such period
may be extended by waiver).
(iii) Any claim made by a party hereunder by a
demand for arbitration in accordance with Article 15 hereof
for breach of a representation or warranty prior to the
termination of the survival period for such claim shall be
preserved despite the subsequent termination of such survival
period.
(iv) If any act, omission, disclosure or failure to
disclosure shall form the basis for a claim for breach of
more than one representation or warranty, and such claims
have different periods of survival hereunder, the termination
of the survival period of one claim shall not affect a
party's right to make a claim based on the breach of
representation or warranty still surviving.
(b) Amount Limitation. Except with respect to claims for
breaches of representations or warranties contained in Sections 4.5
(Tax Matters), 4.10(c) (Environmental Matters), and 4.11(a) and (c)
(Title and Condition of Properties), an Indemnified Party shall not be
entitled to indemnification under this Article 12 for breach of a
representation or warranty unless the aggregate of the Indemnifying
Party's indemnification obligations to the Indemnified Party pursuant
to this Article 12 (but for this Section 12.6(b)) exceeds Seventy Five
Thousand Dollars ($75,000); but in such event, the Indemnified Party
shall be entitled to indemnification only to the extent the aggregate
indemnification obligations for all breaches of representations and/or
warranties and other matters exceed such $75,000 deductible threshold.
Notwithstanding any contrary provision in this Agreement, in no event
shall the collective liability of the Company and the Shareholder to
make indemnification payments hereunder exceed
-37-
44
Three Million Dollars ($3,000,000), except there shall be no limit on
claims related to taxes, environmental or the Company's defined
benefit plans.
12.7 No Waiver.
The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing, and regardless of
whether such breach, violation or failure is deemed to be "material".
13. CLOSING
The closing of this transaction ("xxx Xxxxxxx") shall take place at
the offices of JPS Textile Group, Inc., 000 Xxxxx Xxxxxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, at 10 A.M. local time on July 16, 1999,
or at such other time and place as the parties hereto shall agree upon. Such
date is referred to in this Agreement as the "Closing Date".
13.1 Documents to be Delivered by Company.
At the Closing, Company shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
(a) Deeds, Bills of Sale. Warranty deeds to real estate
and bills of sale and such other instruments of assignment, transfer,
conveyance and endorsement as will be sufficient in the opinion of
Buyer and its counsel to transfer, assign, convey and deliver to Buyer
the Purchased Assets as contemplated hereby.
(b) Compliance Certificate. A certificate signed by the
chief executive officer of Company that each of the representations
and warranties made by Company and Shareholder in this Agreement is
true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any changes permitted by the terms of this Agreement or
consented to in writing by Buyer), and that Company has performed and
complied with all of Company's obligations under this Agreement which
are to be performed or complied with on or prior to the Closing Date.
(c) Opinion of Counsel. A written opinion of counsel to
Company, reasonably acceptable to Buyer, dated as of the Closing Date,
addressed to Buyer, in form reasonably acceptable to Buyer.
(d) Employment and Noncompetition Agreements. The
Employment and Noncompetition Agreements referred to in Section 1.1,
duly executed by the persons referred to in such Section.
(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors and the shareholders of Company
authorizing and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
-38-
45
(f) Articles; By-laws. A copy of the By-laws of Company
and Shareholder certified by the secretary of Company and Shareholder,
and a copy of the Certificate of Incorporation of Company and
Shareholder certified by the Secretary of State of the state of
incorporation of Company and Shareholder.
(g) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer pursuant to the terms hereof.
(h) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and such other certificates of authority
and documents as Buyer may reasonably request.
13.2 Documents to be Delivered by Buyer.
At the Closing, Buyer shall deliver to Company the following
documents, in each case duly executed or otherwise in proper form:
(a) Cash Purchase Price. To Company a certified or bank
cashier's check (or wire transfer) as required by Section 3.3(b)
hereof, and the Note as required by Section 3.3(a) hereof.
(b) Compliance Certificate. A certificate signed by the
chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on and
as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the
Closing Date (except for any changes permitted by the terms of this
Agreement or consented to in writing by Company), and that Buyer has
performed and complied with all of Buyer's obligations under this
Agreement which are to be performed or complied with on or prior to
the Closing Date.
(c) Opinion of Counsel. A written opinion of Xxxxx &
Lardner, counsel to Buyer, dated as of the Closing Date, addressed to
Company, in form reasonably acceptable to the Company.
(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
(e) Promissory Note. The Promissory Note duly executed by
Buyer.
(f) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Company by Buyer pursuant to the terms hereof.
(g) Other Documents. All other documents, instruments or
writings required to be delivered to Company at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Company may reasonably request.
-39-
46
14. TERMINATION
14.1 Right of Termination Without Breach.
This Agreement may be terminated without further liability of
any party at any time prior to the Closing:
(a) by mutual written agreement of Buyer and Company, or
(b) by either Buyer or Company if the Closing shall not
have occurred on or before July 16, 1999, provided the terminating
party has not, through breach of a representation, warranty or
covenant, prevented the Closing from occurring on or before such date;
or
(c) by either party if the Buyer has not obtained a
commitment letter in form and content and form a lender all reasonably
acceptable to the parties, by 5:00 p.m. July 9, 1999.
14.2 Termination for Breach.
(a) Termination by Buyer. If (i) there has been a material
violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Buyer, or (ii) there has been a failure
of satisfaction of a condition to the obligations of Buyer which has
not been so waived, or (iii) Company shall have attempted to terminate
this Agreement under this Article 14 or otherwise without grounds to
do so, then Buyer may, by written notice to Company at any time prior
to the Closing that such violation, breach, failure or wrongful
termination attempt is continuing, terminate this Agreement with the
effect set forth in Section 14.2(c) hereof.
(b) Termination by Company. If (i) there has been a
material violation or breach by Buyer of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Company, or (ii) there has been a
failure of satisfaction of a condition to the obligations of Company
which has not been so waived, or (iii) Buyer shall have attempted to
terminate this Agreement under this Article 14 or otherwise without
grounds to do so, then Company may, by written notice to Buyer at any
time prior to the Closing that such violation, breach, failure or
wrongful termination attempt is continuing, terminate this Agreement
with the effect set forth in Section 14.2(c) hereof.
(c) Effect of Termination. Termination of this Agreement
pursuant to this Section 14.2 shall not in any way terminate, limit or
restrict the rights and remedies of any party hereto against any other
party which has violated, breached or failed to satisfy any of the
representations, warranties, covenants, agreements, conditions or
other provisions of this Agreement prior to termination hereof. In
addition to the right of any party under common law to redress for any
such breach or violation, each party whose breach or violation has
occurred prior to termination shall jointly and severally indemnify
each other party for whose benefit such representation, warranty,
covenant, agreement or
-40-
47
other provision was made ("indemnified party") from and against all
losses, damages (including, without limitation, consequential
damages), costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated matter), penalties,
court costs, and attorneys fees and expenses) asserted against,
resulting to, imposed upon, or incurred by the indemnified party,
directly or indirectly, by reason of, arising out of or resulting from
such breach or violation. Subject to the foregoing, the parties'
obligations under Section 16.8 of this Agreement shall survive
termination.
15. RESOLUTION OF DISPUTES
15.1 Arbitration.
Any dispute, controversy or claim arising out of or relating
to this Agreement or any contract or agreement entered into pursuant hereto or
the performance by the parties of its or their terms shall be settled by
binding arbitration held in Greenville, South Carolina in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, except as specifically otherwise provided in this Article 15.
Notwithstanding the foregoing, Buyer may, in its discretion, apply to a court
of competent jurisdiction for equitable relief from any violation or threatened
violation of the covenants of Company and/or any Shareholder under Section 7.4
of this Agreement, or any covenants not to compete contained in any Employment
and Noncompetition Agreement delivered pursuant to Section 1.1 hereof.
15.2 Arbitrators.
If the matter in controversy (exclusive of attorney fees and
expenses) shall appear, as at the time of the demand for arbitration, to exceed
$600,000, then the panel to be appointed shall consist of three neutral
arbitrators; otherwise, one neutral arbitrator.
15.3 Procedures; No Appeal.
The arbitrator(s) shall allow such discovery as the
arbitrator(s) determine appropriate under the circumstances and shall resolve
the dispute as expeditiously as practicable, and if reasonably practicable,
within one hundred twenty (120) days after the selection of the arbitrator(s).
The arbitrator(s) shall give the parties written notice of the decision, with
the reasons therefor set out, and shall have thirty (30) days thereafter to
reconsider and modify such decision if any party so requests within ten (10)
days after the decision. Thereafter, the decision of the arbitrator(s) shall be
final, binding, and nonappealable with respect to all persons, including
(without limitation) persons who have failed or refused to participate in the
arbitration process.
15.4 Authority.
The arbitrator(s) shall have authority to award relief under
legal or equitable principles, including interim or preliminary relief, and to
allocate responsibility for the costs of the arbitration and to award recovery
of attorneys fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
-41-
48
15.5 Entry of Judgment.
Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having in personam and subject matter jurisdiction.
Company, Buyer and each Shareholder hereby submit to the in personam
jurisdiction of the Federal and State courts in South Carolina, for the purpose
of confirming any such award and entering judgment thereon.
15.6 Confidentiality.
All proceedings under this Article 15, and all evidence given
or discovered pursuant hereto, shall be maintained in confidence by all
parties.
15.7 Continued Performance.
The fact that the dispute resolution procedures specified in
this Article 15 shall have been or may be invoked shall not excuse any party
from performing its obligations under this Agreement and during the pendency of
any such procedure all parties shall continue to perform their respective
obligations in good faith, subject to any rights to terminate this Agreement
that may be available to any party and to the right of setoff provided in
Section 12.4 hereof.
15.8 Tolling.
All applicable statutes of limitation shall be tolled while
the procedures specified in this Article 15 are pending. The parties will take
such action, if any, required to effectuate such tolling.
16. MISCELLANEOUS
16.1 Disclosure Schedule.
Information set forth in the Disclosure Schedule specifically
refers to the article and section of this Agreement to which such information
is responsive and such information shall not be deemed to have been disclosed
with respect to any other article or section of this Agreement or for any other
purpose. The Disclosure Schedule shall not vary, change or alter the language
of the representations and warranties contained in this Agreement and, to the
extent the language in the Disclosure Schedule does not conform in every
respect to the language of such representations and warranties, such language
shall be disregarded and be of no force or effect.
16.2 Further Assurance.
From time to time, at Buyer's request and without further
consideration, Company will execute and deliver to Buyer such documents and
take such other action as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated hereby and to vest in Buyer
good, valid and marketable title to the business and assets being transferred
hereunder.
-42-
49
16.3 Disclosures and Announcements.
Both the timing and the content of all disclosure to third
parties and public announcements concerning the transactions provided for in
this Agreement by either Company or Buyer shall be subject to the approval of
the other in all essential respects, except that Buyer's approval shall not be
required as to any statements and other information which Shareholder may
submit to the Securities and Exchange Commission, or be required to make
pursuant to any rule or regulation of the Securities and Exchange Commission or
otherwise required by law.
16.4 Assignment; Parties in Interest.
(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other party. Notwithstanding the foregoing, Buyer may, without consent
of the other party, cause one or more subsidiaries of Buyer to carry
out all or part of the transactions contemplated hereby; provided,
however, that Buyer shall, nevertheless, remain liable for all of its
obligations, and those of any such subsidiary, to Company hereunder.
(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
16.5 Law Governing Agreement.
This Agreement may not be modified or terminated orally, and
shall be construed and interpreted according to the internal laws of the State
of Delaware, excluding any choice of law rules that may direct the application
of the laws of another jurisdiction.
16.6 Amendment and Modification.
Buyer and Company may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in writing.
16.7 Notice.
All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service.
The respective addresses to be used for all such notices, demands or requests
are as follows:
(a) If to Buyer, to:
-43-
50
Chiquola Fabrics, LLC
Xxxx Xxxxxx Xxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxx
Facsimile: (000) 000-0000
(with a copy to)
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
and
Xxxxxx X. Xxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall furnish to Company in
writing.
(b) If to Company, to:
JPS Textile Group, Inc.
000 Xxxxx Xxxxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Xx.
Facsimile: (000) 000-0000
(with a copy to)
Xxxxx, Day, Xxxxxx & Xxxxx
0000 XxxXxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as Company shall furnish to Buyer in
writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business day
after transmission (and sender shall bear the burden of proof of delivery); if
sent by overnight courier pursuant to this paragraph, such communication shall
be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such
-44-
51
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service, or, if the addressee fails
or refuses to accept delivery, as of the date of such failure or refusal. Any
party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this Section.
16.8 Expenses.
Regardless of whether or not the transactions contemplated
hereby are consummated:
(a) Brokerage. Company and Buyer each represent and
warrant to each other that there is no broker involved or in any way
connected with the transfer provided for herein. Buyer agrees to hold
Company harmless from and against all other claims for brokerage
commissions or finder's fees incurred through any act of Buyer in
connection with the execution of this Agreement or the transactions
provided for herein. Company agrees to hold Buyer harmless from and
against all (other) claims for brokerage commissions or finder's fees
incurred through any act of Company in connection with the execution
of this Agreement or the transactions provided for herein.
(b) Expenses to be Paid by Company. Company shall pay, and
shall indemnify, defend and hold Buyer harmless from and against, each
of the following:
(i) Transfer Taxes. Any sales, use, excise,
transfer or other similar tax imposed with respect to the
transactions provided for in this Agreement, and any interest
or penalties related thereto.
(ii) Title Insurance Premiums. Fifty percent of all
premiums for the issuance of the title insurance policies
issued pursuant to Section 10.5 hereof, and fifty percent of
the cost of surveys performed pursuant to Section 7.2 (Buyer
shall the remaining amounts for title insurance policies and
surveys).
(iii) Professional Fees. All fees and expenses of
Company's legal, accounting, investment banking and other
professional counsel in connection with the transactions
contemplated hereby.
(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
(d) Costs of Litigation or Arbitration. The parties agree
that (subject to the discretion, in an arbitration proceeding, of the
arbitrator as set forth in Section 15.4) the prevailing party in any
action brought with respect to or to enforce any right or remedy under
this Agreement shall be entitled to recover from the other party or
parties all reasonable costs and expenses of any nature whatsoever
incurred by the prevailing party in connection with such action,
including without limitation attorneys' fees and prejudgment interest.
-45-
52
16.9 Entire Agreement.
This instrument embodies the entire agreement between the
parties hereto with respect to the transactions contemplated herein, and there
have been and are no agreements, representations or warranties between the
parties other than those set forth or provided for herein.
16.10 Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16.11 Headings.
The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
16.12 Glossary of Terms.
The following sets forth the location of definitions of
capitalized terms defined in the body of this Agreement:
"Affected Employees" - Section 6.1
"Affiliate" - Section 1.3(d)
"Assumed Contracts" - Section 2.1(a)
"Assumed Liabilities" - Section 2.1
"Business" - Section 1.1
"Business Balance Sheet" - Section 1.1(a)
"Business Employees" - Section 4.15(a)
"Business Financial Statements" - Section 4.4(a)
"Buyer's Accountants" - Section 3.4(d)
"Buyer's affiliates" - Section 12.1
"CERCLA" - Section 4.10(c)
"Claim" - Section 12.1
"Closing" - Preamble to Article 13
"Closing Date" - Section 13
"Closing Date Pension Liability" - Section 6.5
"Code" - Section 3.7
"Company's Accountants" - Section 3.4(d)(ii)
"Contracts" - Section 1.1(a)
"Disclosure Schedule" - Section 16.1
"Effective Time" - Section 3.4(c)
"Employee Plans/Agreements" - Section 4.15(a)
"Environmental Laws" - Section 4.10(c)
"ERISA" - Section 4.15(a)
"Estimated Closing Business Balance Sheet" - Section 3.4(c)
"Final Closing Business Balance Sheet" - Section 3.4(d)(iii)
"Government Entities" - Section 2.2(k)
-00-
00
"XXX Xxx" - Section 4.3
"IRS" - Section 3.7
"Indemnified Party" - Section 12.3(a)
"Indemnifying Party" - Section 12.3(a)
"Inventory" - Section 1.2(d)
"Laws" - Section 2.2(k)
"Leased Real Property" - Section 1.2(b)
"Liability" - Section 2.1
"Liens" - Section 4.11(a)
"Litigation" - Section 2.2(e)
"Net Asset Value" - Section 3.4(b)
"Orders" - Section 2.2(k)
"Owned Real Property" - Section 1.2(a)
"PBGC" - Section 4.15(b)(ii)
"Permitted Real Property Liens" - Section 4.11(a)
"Personal Property Leases" - Section 1.2(e)
"Products" - Section 4.19
"Purchased Assets" - Section 1.2
"Purchase Price" - Section 3.1
"Real Property" - Section 4.11(c)
"Real Property Leases" - Section 1.2(b)
"Recent Balance Sheet" - Section 4.4(a)
"Recent Business Balance Sheet" - Section 4.4(a)
"Settlement Date" - Section 3.3(c)
"Third Accounting Firm" - Section 3.4(d)(iii)
"Waste" - Section 4.10(c)
"Year 2000 Compliant" - Section 4.22
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
[The remainder of this page is intentionally left blank.]
-47-
54
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
CHIQUOLA FABRICS, LLC
By: Xxxxxx X. Xxxxxx
--------------------------------------------
Its: CEO
-------------------------------
JPS CONVERTER AND INDUSTRIAL CORP.
By: Xxxx X. Xxxxxxx, Xx.
--------------------------------------------
Its: VP
-------------------------------
JPS TEXTILE GROUP, INC.
By: Xxxx X. Xxxxxxx, Xx.
--------------------------------------------
Its: Executive Vice-President & CFO
-------------------------------
-48-
55
FIRST AMENDMENT
TO
ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this
"Amendment") is made and effective as of August 26, 1999 among CHIQUOLA
FABRICS, LLC, a Delaware limited liability company ("Buyer"), JPS CONVERTER &
INDUSTRIAL CORP., a Delaware corporation ("Company"), and JPS TEXTILE GROUP,
INC., a Delaware corporation ("Shareholder").
FACTUAL BACKGROUND
A. The parties entered into an Asset Purchase Agreement
dated June 24, 1999 (the "Original Agreement") regarding Buyer's purchase of
the business and substantially all the property and assets of the Company's
Cotton Commercial Products Segment and the Facilities.
B. The parties desire to amend certain provisions of the
Original Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, and for other good and valuable consideration, the parties
hereto agree that the Original Agreement is incorporated herein by this
reference and amended and supplemented as set forth herein, effective as of the
date hereof:
1. Definitions. Unless otherwise defined herein, terms
used in this Amendment shall have the meaning ascribed to them in the Original
Agreement.
2. New Excluded Assets Category - ICG Inventory (Section
1.3). Section 1.3 of the Original Agreement is amended to add the following,
additional subcategory at the end of Section 1.3:
(g) ICG Inventory. All inventory produced for ICG.
3. New Category of Liabilities Not to be Assumed - ICG
Contract (Section 2.2(l)). Section 2.2 of the Original Agreement is amended to
add the following, additional subcategory at the end of Section 2.2:
(l) ICG Supply Contracts. Liabilities of Company
under any supply contracts for ICG. However, Buyer agrees to
provide and sell to the Company the product necessary for the
Company to satisfy the Company's contracts with ICG. The
prices for the products sold from Buyer to Company for resale
to ICG shall be at the total of fixed and variable costs for
such products per the Company's cost system at the date of
Closing. Payment terms by Company to Buyer shall be Net 30
Days.
56
4. Promissory Note (Section 3.3(a)). Section 3.3(a) of
the Original Agreement is amended and restated in its entirety as follows:
(a) Promissory Note. At the Closing, Buyer shall
deliver to Seller a promissory note (the "Note") in the
original principal amount of Two Million Dollars
($2,000,000.00), payable interest only, paid quarterly in the
first year; and equal, consecutive quarterly payments of
principal, together with accrued interest thereon in the
second, third and fourth year, bearing interest at the rate
paid to Buyer's primary lender (fixed at closing based on
estimated rate). If the "available to borrow" balance per the
Buyer's banking arrangements with LaSalle Business Credit
exceeds One Million, Four Hundred Thousand Dollars
($1,400,000.00), then Buyer shall pay the sum of One Hundred
Sixty-six Thousand, Six Hundred Sixty-six and 66/100 Dollars
($166,667.00) on each of January 31, 2000, February 29, 2000
and March 31, 2000, reducing the balance of the Promissory
Note in reverse order of future payments due. The Promissory
Note will be further reduced for the following:
(1) If Buyer reduces hourly head count
below 284 employees within 180 days after Closing,
the Company will reduce the Note for the costs of
wage, benefits and severance (including three months
medical insurance and any COBRA per employee)
incurred during the ninety (90) day period
immediately after closing for 40 or less employees
terminated by Buyer. The number of employees to be
reimbursed will be determined by the difference in
the number of employees at the 180th day versus 284.
The Note will be reduced as of the date such claim
for reduction is submitted, in reverse order of
future payments due.
(2) For the 63 days after Closing, until
and through October 30, 1999, to the extent the
Buyer does not attain $213,000 in favorable
manufacturing variances, calculated on a basis
consistent with past practice of the Company, then
the principal balance of the Note shall be reduced
by the shortfall up to the amount of $100,000, in
reverse order of payments due. This adjustment shall
be made as of October 30, 1999, and is subject to
review and audit by the Company. The Note will not
be adjusted if favorable variances for the period
exceed $213,000.
The Note shall be subordinated to the Buyer's debt
to its lender, pursuant to subordination terms reasonably
acceptable to
-2-
57
Company and its lender and shall xxxxx x xxxx (junior to
lender) on such assets as may be agreed.
5. Cash at Closing (Section 3.3(b)). Section 3.3(b) of
the Original Agreement is amended and restated in its entirety as follows:
(b) Cash to Company. At the Closing, Buyer shall
deliver to Company the Purchase Price, less Two Million
Dollars ($2,000,000.00) in cash.
6. Termination Benefits (Section 6.4). Section 6.4 of the
Original Agreement is hereby amended to begin the section with the following
clause: "Except as provided in Section 6.7 hereof".
7. Severance Costs (New Section 6.7). The Original
Agreement is hereby amended to add the following new Section 6.7:
6.7 Company's Reimbursement of Certain Severance
Costs. In the event that the Buyer determines in its absolute
discretion that business conditions require further
reductions in force within 61 days following Closing, the
Company will promptly reimburse the Buyer, in cash, all
severance costs, including fringe benefits (e.g., medical
COBRA, etc.) for employees severed after Closing but before
the 61st day following Closing. The indemnification will be
for no more than 42 employees and will apply only to the
difference between the number of employees at Closing and
284. (This reimbursement obligation is separate and distinct
from the provision in the Note relating to reduction of head
count within 180 days after Closing. The provision in the
Note relates to further potential head count below 284.
8. General Administrative Services (Section 7.11). The
first sentence of Section 7.11 is hereby amended and restated in its entirety
as follows:
7.11 Company and Shareholder will provide Buyer with
the general and administrative transition services outlined
on Schedule 7.11 at no cost for a period of nine (9) months
following Closing and at a cost of $7,500 per week for the
three (3) months or weekly portion thereof (months 10-12), if
required by Buyer, and at the sole discretion of Buyer).
9. Software (Section 7.12). The first sentence of Section
7.12 of the Original Agreement is amended and restated in its entirety as
follows:
Seller agrees to use its reasonable good faith
efforts to make any of its software, either purchased or
developed by the
-3-
58
Company, available to Buyer at no cost (or payments to
Company), whether or not currently used at the Xxxxxx Plant,
conditioned on Buyer negotiating, funding and making
satisfactory arrangements with licensed software providers,
if any).
10. Closing (Article 13). The introductory sentence to
Article 13 is hereby amended and restated as follows:
The closing of this transaction (the "Closing") shall
take place at the offices of Xxxx & Hessen, New York, New
York, at noon on August 26, 1999, or at such other time and
place as the parties hereto shall agree upon).
11. Termination; Extension of Date (Section 14.1(b)).
Section 14.1(b) is hereby amended to substitute "August 31, 1999" for "July 16,
1999."
12. Reaffirmation. Except to the extent modified herein,
all provisions of the Original Agreement shall remain in full force and effect.
In consideration of and as a material inducement to the parties' execution and
delivery of this Agreement, the parties hereby expressly reaffirm each and
every covenant, undertaking, agreement, waiver and consent set forth in the
Original Agreement to the same extent as if each and every of said covenants,
agreements, undertakings, waivers and consents were fully set forth in this
Agreement and made and entered into by the parties as of the date hereof,
except as expressly modified by this Amendment.
13. Counterparts. This Amendment may be executed by the
parties in separate counterparts, no one of which need be executed by all
parties. This Amendment shall be effective when executed and delivered by all
the parties. It may be delivered by telecopy.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-4-
59
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
CHIQUOLA FABRICS, LLC
By: Xxxxxx X. Xxxxxx
-----------------------------------------
Its: CEO
--------------------------------
JPS CONVERTER & INDUSTRIAL CORP.
By: Xxxx X. Xxxxxxx, Xx.
-----------------------------------------
Its: VP
--------------------------------
JPS INDUSTRIES, INC.
f/k/a JPS Textile Group, Inc.
By: Xxxx X. Xxxxxxx, Xx.
-----------------------------------------
Its: EVP & CFO
--------------------------------
-5-
