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EXHIBIT 10.40
AMENDMENT XX. 0
XXXXXXXXX XX. 0 (this "Amendment"), dated as of February 8, 1999, to
the Asset Purchase Agreement (the "Agreement"), dated as of January 11, 1999,
is by and between JPS Converter and Industrial Corp. ("Seller") and Xxxxxxx
Xxxxxxx Incorporated ("Purchaser").
RECITALS
WHEREAS, Seller and Purchaser have agreed to amend the Agreement upon
the terms and conditions contained herein;
WHEREAS, capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Amendment to the Agreement. On and after the date first written
above (the "Effective Date"), the Agreement is hereby amended in its entirety
as follows:
(a) Definitions. Section 1.1 of the Agreement is hereby
amended as follows:
(i) the definition of "Assets" is amended to read in its
entirety as follows:
"Assets" means all of Seller's rights, title and interests in
and to all of the properties, assets and rights constituting the Business
(other than the Excluded Assets) on the Closing Date, consisting of the
following:
(a) all Contract Rights;
(b) all Owned Real Property;
(c) all Fixed Assets;
(d) all of Seller's rights and obligations under the Personal
Property Leases;
(e) all Inventory;
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(f) to the extent transferable, all Permits; and
(g) all Books and Records, including books of account,
records, files, invoices, manuals, sales, marketing and advertising materials,
customer and supplier files, personnel files, equipment maintenance records,
equipment warranty information, material, specifications and drawings,
equipment drawings, customer specifications, sales, distribution and purchase
correspondence, trade association memberships and all other similar data,
manuals and property, in each case relating solely to the Business;
provided, however, that the Assets shall also include all other assets located
at the Xxxxx City Plant as of the Closing Date (other than the Excluded
Assets).
(ii) the definition of "Assumed
Liabilities" is amended in its entirety as follows:
""Assumed Liabilities" shall mean the following
liabilities and obligations of Seller: (i) all
duties and obligations under the contracts and
commitments set forth on Schedule 4.6 to the extent
that such duties and obligations accrue after the
Closing Date, (ii) liabilities described in Section
6.1 hereof in respect of the Transferred Employees
and (iii) all Environmental Costs and Liabilities at
the Xxxxx City Plant not attributable to Seller or
any prior owner or operator of the Business or which
were not violations of Environmental Laws in effect
as of or prior to the Closing."
(iii) the definition of "Closing Statement"
is amended in its entirety as follows:
"Closing Statement" means the audited statement
which shall set forth Inventory as of the Closing
Date, net of appropriate reserves, calculated in
accordance with GAAP and on a basis consistent with
the October 31, 1998 and 1997 Statement.
(b) Section 2.1(b) of the Agreement is hereby amended
in its entirety as follows:
"Purchaser hereby agrees to assume and pay, perform
and discharge as and when due the Assumed
Liabilities. Purchaser expressly shall not assume or
pay for the Excluded Liabilities, including, without
limitation, liabilities relating to (A) the Excluded
Assets, (B) income or franchise Taxes imposed on net
income or sales or real property taxes incurred by
Seller or relating to the Assets for any taxable
period ending on or prior to the Closing Date, (C)
any liability for purchase money debt, debt for
borrowed money or a guaranty in respect thereof,
except to the extent such liabilities are reflected
on the Closing Statement, (D) (1) liabilities assumed
by Seller pursuant to Section 6.1 hereof and (2)
liabilities incurred or accrued prior to the Closing
Date under any employee benefit plan, policy and
arrangement covering or providing benefits to the
Employees and (E) all Accounts Payable."
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(c) Section 2.2(a) of the Agreement is hereby
amended in its entirety as follows:
"(a) On the Closing Date, as consideration
for the sale, conveyance, transfer, assignment and
delivery of the Assets (i) Purchaser shall pay to
Seller in cash an amount equal to $8,391,037 (which
amount includes an amount equal to $900,000 of
Accounts Payable to be paid by Seller) (the
"Purchase Price"), subject to adjustment as provided
in Section 2.3 hereof; and (ii) Purchaser shall
assume the Assumed Liabilities."
(d) Section 2.2 of the Agreement is hereby amended
to add a new Section (d) as follows:
"(d) Within fifteen (15) days after the
Closing, Seller shall deliver to Purchaser (i) an
invoice for an amount equal to the net lost
opportunity cost incurred by (A) Seller on the one
hand, as a result of Seller retaining Accounts
Receivable as of the Closing Date, and (B) Purchaser
on the other hand, as a result of Seller retaining
the Accounts Payable in an amount equal to the lesser
of (i) $900,000, or Accounts payable within 30 days
of invoice date, in each case calculated in
accordance with the methodology set forth in Annex 1
hereto) (the "Net Lost Opportunity Price") and (ii) a
list of Accounts Receivable as of the Closing Date.
Within five (5) business days after receipt of such
invoice, Purchaser shall pay to Seller in cash an
amount equal to the Net Lost Opportunity Price, in
accordance with Section 2.2(b) hereof. Absent
manifest error in Seller's calculation of the Net
Lost Opportunity Price, the Net Lost Opportunity
Price shall be binding upon Purchaser."
(e) Section 2.3 of the Agreement is hereby amended
to read in its entirety as follows:
"(a) The Purchase Price shall be increased
or decreased (on a dollar for dollar basis), as the
case may be, for any increase or decrease in
Inventory as set forth on the Closing Statement, if
the aggregate value of Inventory as of the Closing
Date (net of appropriate reserves, calculated in
accordance with GAAP and on a basis consistent with
the October 31, 1998 and 1997
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Statement) is: (A) greater than $3,629,541 then
Purchaser shall pay to Seller the amount of such
excess; (B) less than $3,629,541 then Seller shall
pay to Purchaser the amount of such difference; or
(C) equal to $3,629,541 then neither Seller nor
Purchaser shall owe any amount to the other pursuant
to this Section 2.3(a).
(b) As soon as is reasonably practicable
following the Closing Date (but no later than 45
days following the Closing Date), Seller shall
prepare and deliver to Purchaser the Closing
Statement which shall set forth the Purchase Price
adjustments to be made, if any, in accordance with
Section 2.3(a). In connection with the preparation
of the Closing Statement, Purchaser shall grant
Seller and its accountants, counsel and other
representatives, full and complete access to all of
the books and records of the Business. The Closing
Statement shall be audited by Seller's accountants
and shall include a schedule reviewed by such
accountants showing the computation of Inventory as
of the Closing Date (net of appropriate reserves,
calculated in accordance with GAAP and on a basis
consistent with the October 31, 1998 and 1997
Statement), computed in accordance with the
definitions of such terms set forth herein.
Concurrently with their delivery of the Closing
Statement to Purchaser, Seller shall cause
reasonable access to be granted to Purchaser to the
work papers, schedules and other documents prepared
or used by Seller and its accountants in connection
with the preparation of the Closing Statement.
Seller shall pay all fees and expenses of its
accountants in connection with the preparation of
the Closing Statement and the computation of
Inventory as of the Closing Date.
(c) Unless Purchaser, within 30 days after
receipt of the Closing Statement, gives Seller a
notice (the "Dispute Notice") (i) objecting in good
faith to the Closing Statement, (ii) setting forth
in reasonable detail the items being disputed and
the reasons therefor, and (iii) specifying that
Purchaser's calculation of Inventory as of the
Closing Date is in an amount which differs from that
reflected in such Closing
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Statement (the entire amount of such difference
being hereinafter referred to as the "Adjusted
Amount"), the Inventory as of the Closing Date as
set forth in the Closing Statement and the Purchase
Price adjustment set forth therein shall be binding
and final upon the parties. If a Dispute Notice is
given by Purchaser, the parties shall negotiate in
good faith with a view to agreeing upon the
Inventory as of the Closing Date and the
corresponding amount of the adjustment required by
paragraph (a) of this Section 2.3. If negotiations
between Purchaser and Seller fail to resolve all
disputed items within 30 days after the Dispute
Notice was given to Seller, the remaining disputed
items shall be submitted to KPMG Peat Marwick LLP
(the "Arbitrator"). After affording each of Seller
and Purchaser and their accountants the opportunity
to present its position as to such determination
(which opportunity shall not extend for more than 30
days from the date the independent public
accountants are retained), the accounting firm
selected pursuant to this paragraph shall determine
the adjustment pursuant to paragraph (a) of this
Section 2.3 and such determination shall be final
and binding. Each party shall pay its own costs and
expenses in connection with the foregoing. The fees,
costs and expenses of the Arbitrator shall be borne
equally by Seller and Purchaser.
(d) The amount of any Purchase Price
adjustment required under this Section 2.3 shall be
delivered to Seller or Purchaser, as the case may
be, with interest thereon (calculated on the basis
of a 360-day year comprised of twelve 30-day
months), from and including the Closing Date until
paid at an annual rate equal to the base rate of
interest of Citibank, N.A. (as such base rate is
publicly announced from time to time as the base
rate of such bank), at such place in the United
States as the party receiving such amount shall
designate in writing to the other party and shall be
paid in immediately available funds within 30 days
after the final determination of such Purchase Price
adjustment.
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(e) At the Closing (or after the Closing,
to the extent the necessary calculations cannot be
made at the Closing), real property taxes, water
charges, sewer rents and other utility charges in
respect of the Business shall be prorated as of the
Closing Date with Seller being responsible for such
items relative to periods prior to the Closing Date
and Purchaser being responsible for such items
relative to periods commencing on or subsequent to
the Closing Date. If the Closing shall occur before
a new tax rate is fixed, the apportionment of real
property taxes shall be upon the basis of the old
tax rate for the preceding period applied to the
latest assessed valuation."
(f) Section 10.1(d) of the Agreement is hereby
amended in its entirety as follows:
"(d) by Seller if Purchaser shall not have
obtained the commitment letter described in Section
6.10(b) hereof by February 10, 1999;"
(g) Exhibit C to the Agreement is hereby amended by
adding the defined term "Accounts Receivable" to Schedule 1
thereto.
(h) The Agreement is hereby amended by adding a new
Annex 1 to the Agreement in the form attached as Exhibit A
hereto.
2. Choice of Law. This Amendment shall be construed
and interpreted, and the rights of the parties determined, in accordance with
the laws of the State of Delaware (without reference to the choice of law
provisions of Delaware law).
3. Multiple Counterparts. This Amendment 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.
4. Effect of Amendment. Except as specifically
amended hereby, the Agreement remains in full force and effect in accordance
with its terms.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, in multiple originals, all as of the day
and year first above written.
JPS CONVERTER AND INDUSTRIAL CORP.
By /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: Vice President and Assistant Secretary
XXXXXXX XXXXXXX INCORPORATED
By /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: President and CEO
ACKNOWLEDGED:
JPS Textile Group, Inc.
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: Executive Vice President - Finance
and Chief Financial Officer
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Exhibit A
ANNEX 1
Calculation of Net Lost Opportunity Price
The Net Lost Opportunity Price shall be calculated in accordance with the
following methodology:
Accounts Receivable:
30/360 x .07 x $3,908,963 = $22,802.28
less
Accounts Payable:
30/360 x .07 x $900,000 = $ 5,250
Net Lost Opportunity Price: $17,552.28
Note that the referenced level of accounts receivable ($3,908,963) is as of
October 31, 1998 and is used in this Annex 1 for illustrative purposes only. The
Net Lost Opportunity Price shall be calculated using accounts receivable as of
the Closing Date. Net Lost Opportunity Price shall be calculated using the
lesser of (x) the referenced level of accounts payable ($900,000) or (y)
accounts payable within 30 days of invoice date as of the Closing Date.
Assumptions:
1. Accounts receivable are 30 days from invoice date.
2. Accounts payable are 30 days from invoice date.
3. The interest rate is 7%.
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