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EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
Dated as of July 2, 1999
by and between
JPS CONVERTER AND INDUSTRIAL CORP.
as Seller
and
XXXXXXX XXXXXXX INCORPORATED
as Purchaser
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TABLE OF CONTENTS
Page
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DEFINITIONS.......................................................................................................1
Defined Terms............................................................................................1
Terms Defined Elsewhere in the Agreement.................................................................6
Other Definitional Provisions............................................................................7
PURCHASE AND SALE OF ASSETS.......................................................................................7
Sale of Assets; Assumption of Liabilities................................................................7
Purchase Price...........................................................................................8
Adjustments to Purchase Price............................................................................8
CLOSING..........................................................................................................10
Closing.................................................................................................10
Conveyances at Closing..................................................................................10
Other Deliveries at Closing.............................................................................11
Certain Business Information............................................................................12
REPRESENTATIONS AND WARRANTIES OF SELLER.........................................................................12
Organization............................................................................................12
Corporate Authorization.................................................................................13
Personal Property Leases................................................................................13
Title to Owned Real Property............................................................................13
Title to Owned Personal Property........................................................................13
Contracts and Commitments...............................................................................13
Litigation, Proceedings and Applicable Law..............................................................14
Compliance with Law.....................................................................................14
Taxes...................................................................................................14
No Conflict or Violation................................................................................15
Consents and Approvals..................................................................................15
Insurance...............................................................................................15
Employee Benefit Plans..................................................................................15
Labor Relations.........................................................................................16
Permits.................................................................................................17
Brokers.................................................................................................17
Xxxxxxx Plant...........................................................................................17
Environmental Matters...................................................................................17
Condition of Fixed Assets...............................................................................17
Books and Records.......................................................................................18
Customers...............................................................................................18
Product Warranties......................................................................................18
Absence of Certain Changes..............................................................................18
Certain Payments........................................................................................18
Financial Statements....................................................................................18
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Computer Software.......................................................................................18
REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................................................19
Organization............................................................................................19
Corporate Authorization.................................................................................19
No Conflict or Violation................................................................................19
Consents and Approvals..................................................................................19
Litigation..............................................................................................20
Brokers.................................................................................................20
COVENANTS OF SELLER AND PURCHASER................................................................................20
Employees...............................................................................................20
Further Assurances; Cooperation and Assistance..........................................................22
Nondisclosure...........................................................................................23
Non-Competition.........................................................................................23
Sums Received in Respect of Business....................................................................24
Maintenance of the Business Prior to Closing............................................................24
Consents................................................................................................25
Public Announcements....................................................................................26
Pre-Closing Sales Tax Liabilities.......................................................................26
CONDITIONS TO SELLER'S OBLIGATIONS...............................................................................26
Representations, Warranties and Covenants...............................................................26
Certificates............................................................................................26
Corporate Documents.....................................................................................27
Legal Opinion...........................................................................................27
Consents................................................................................................27
No Governmental Proceedings or Litigation...............................................................27
CONDITIONS TO PURCHASER'S OBLIGATIONS............................................................................27
Representations, Warranties and Covenants...............................................................27
Certificates............................................................................................27
Section 1445 Certificate................................................................................27
Corporate Documents.....................................................................................28
Legal Opinion...........................................................................................28
Consents................................................................................................28
Delivery of Documents...................................................................................28
Good Standing Certificates..............................................................................28
Release of Liens........................................................................................28
No Governmental Proceedings or Litigation...............................................................28
Termination of Supply Agreement.........................................................................28
Transitional Services Agreement.........................................................................29
JPS Agreement...........................................................................................29
Lender Approvals........................................................................................29
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CERTAIN ACTIONS BY SELLER AND PURCHASER AFTER THE CLOSING........................................................29
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Books and Records.......................................................................................29
Indemnification.........................................................................................29
Tax Matters.............................................................................................34
Mail Received After Closing.............................................................................34
MISCELLANEOUS....................................................................................................35
Termination.............................................................................................35
Survival of Representations and Warranties..............................................................35
Assignment..............................................................................................35
Notices.................................................................................................36
Choice of Law...........................................................................................37
Entire Agreement; Amendments and Waivers................................................................37
Multiple Counterparts...................................................................................37
Expenses................................................................................................37
Invalidity..............................................................................................37
Titles..................................................................................................37
Confidential Transaction Information....................................................................37
Third Parties...........................................................................................38
Neutral Construction....................................................................................38
Revisions to Certain Schedules..........................................................................38
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EXHIBITS
Exhibit A -- Form of Xxxx of Sale, Assignment and Assumption Agreement
Exhibit B -- Excluded Assets
Exhibit C -- Financial Statements
Exhibit D -- Reserved
Exhibit E -- Form of Opinion of Xxxxxxx Xxxxxx L.L.P., Counsel to Purchaser
Exhibit F -- Form of Opinion of Xxxxx, Day Xxxxxx & Xxxxx Counsel to Seller
Exhibit G -- Supply Agreement
Exhibit H -- Transitional Services Agreement
SCHEDULES
Schedule 1.1(a) - Fixed Assets
Schedule 1.1(b) - Exceptions to Title
Schedule 3.4(a) - Employees
Schedule 3.4(b) - Backlog
Schedule 4.3 - Person Property Leases
Schedule 4.4 - Owned Real Property
Schedule 4.5 - Exceptions to Title to Owned Person Property
Schedule 4.6 - Contracts
Schedule 4.7 - Seller's Legal Proceedings
Schedule 4.8 - Exceptions to Seller's Legal Compliance
Schedule 4.9 - Taxes
Schedule 4.10 - Seller's Conflicts or Violations
Schedule 4.11 - Seller's Consents and Approvals
Schedule 4.12 - Insurance
Schedule 4.13(a) - Employee Benefit Plans
Schedule 4.14(a) - Compensation
Schedule 4.14(c) - Employee Manuals
Schedule 4.14(d) - Labor Relations
Schedule 4.15 - Permits
Schedule 4.17 - Material Changes
Schedule 4.18 - Environmental Matters
Schedule 4.19 - Inoperable Fixed Assets
Schedule 4.21 - Customers
Schedule 4.22 - Product Warranties
Schedule 4.23 - Certain Changes
Schedule 5.3 - Purchaser's Conflicts or Violations
Schedule 5.4 - Purchaser's Consents and Approvals
Schedule 5.6 - Brokers
Schedule 6.1(c) - Seller's Severance and Layoff Benefits
Schedule 6.1(e) - Vacation Policy
Schedule 6.4(a) - Non-Compete
Schedule 6.4(b) - Key Employees
Schedule 6.6(b) - Employees and Business Relationships
Schedule 7.5 - Seller's Consents
Schedule 8.6 - Purchaser's Consents
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of July 2,
1999, is by and between JPS Converter and Industrial Corp., a Delaware
corporation ("Seller"), and Xxxxxxx Xxxxxxx Incorporated, a Delaware
corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller is engaged in the business of manufacturing a variety
of yarns at Seller's Xxxxxxx Plant (the "Stanley Plant") located in Xxxxxxx,
North Carolina (the "Business"), which yarns are marketed by Seller to other
end users for textile plants; and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
substantially all of the properties, rights and assets used by Seller in the
conduct of the Business upon the terms and subject to the conditions
hereinafter set forth;
WHEREAS, JPS (as defined herein) and Purchaser are simultaneously
herewith executing the JPS Agreement (as defined herein), pursuant to which
JPS, among other matters, shall guarantee the due and punctual performance and
discharge by Seller of all of Seller's obligations under this Agreement; and
WHEREAS, Seller and Purchaser are simultaneously herewith executing
(i) the Supply Agreement (as defined herein), pursuant to which Purchaser shall
sell to Seller Yarn (as defined therein), subject to the terms and conditions
contained therein, which shall be effective only upon Closing and (ii) the
Transitional Services Agreement (as defined herein), pursuant to which Seller
shall provide certain transitional services to Purchaser, subject to the terms
and conditions contained therein, which shall be effective only upon Closing;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
I.1 Defined Terms. Unless otherwise defined herein, the following
terms as used herein shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
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"Agreement" shall have the meaning set forth in the recitals hereto.
"Ancillary Agreements" means the other agreements, instruments and
documents executed or to be executed by Seller or Purchaser or their respective
Affiliates, as the case may be, in connection with this Agreement, including,
without limitation, the special warranty deed, the Xxxx of Sale, Assignment and
Assumption Agreement and the Transitional Services Agreement.
"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;
(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 Xxxxxxx Plant as of the Closing Date (other than the Excluded Assets).
"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 Xxxxxxx 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.
"Xxxx of Sale, Assignment and Assumption Agreement" means the Xxxx of
Sale, Assignment and Assumption Agreement made as of the Closing Date by Seller
in the form of Exhibit A hereto.
"Books and Records" means all books and records relating solely to the
Business or relating solely to the Assets and the customers and suppliers
thereof.
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"Business" shall have the meaning set forth in the recitals hereto.
"Closing Date" means the date which is the business day after all the
conditions to Closing set forth in Articles VII and VIII have been satisfied or
waived, or such other date as Purchaser and Seller shall mutually agree;
provided, however, that the parties shall use their good faith efforts to close
the transactions contemplated hereby by July 15, 1999.
"Closing Statement" means the audited statement which shall set forth
Inventory as of the Closing Date, net of appropriate reserves and allowances,
calculated in accordance with GAAP and on a basis consistent with the Financial
Statements.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract Rights" means all of the rights, duties and obligations of
Seller under the contracts and commitments set forth on Schedule 4.6 hereto and
all of Seller's right, title and interest in and to all contracts, agreements,
leases, notes, purchase orders, sales orders and other commitments of Seller
relating solely to the Business.
"Employees" means all persons who are employed as current employees of
the Business employed at the Xxxxxxx Plant on the Closing Date (or, for
purposes of Section 3.4 only, on the dates specified therein), including but
not limited to, all Employees on vacation, a leave of absence, layoff or
receiving benefits under any disability plan of Seller.
"Encumbrance" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any nature whatsoever or any right or interest
whatsoever of any third party, including, without limitation, a lien, claim or
other interest of a Governmental Agency or municipality for Taxes, assessments
and other such charges.
"Environmental Costs and Liabilities" means any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, fees, disbursements
and expenses of legal counsel, experts, engineers and consultants and the costs
of investigation and feasibility studies, monitoring or other studies or the
costs to cleanup, removal or otherwise treat any Hazardous Material) arising
from or under any Environmental Law or order.
"Environmental Laws" means all applicable federal, state, local or
foreign laws (including common law), statute, rule, regulation or other legal
requirement relating to the environment, natural resources or employee health
and safety including, without limitation, the Comprehensive Environmental
Resource, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.)
("CERCLA"), the Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et
seq.) ("RCRA"), the Clean Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air
Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. ss. 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. ss. 136 et seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), the Safe Drinking
Water Act (42 U.S.C. ss. 201 and ss. 300( et seq.), the Oil Pollution Act (33
U.S.C. ss. 2701 et seq.) and the Occupational Safety and Health Act (29 U.S.
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ss. 651 et seq.), as such laws have been amended or supplemented from time to
time, and all regulations, rules or ordinances duly promulgated pursuant
thereto and any analogous state, local or foreign laws, in each case as in
effect as of the date hereof and as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means the properties and assets of the Business
listed on Exhibit B hereto and which are not being acquired by Purchaser
hereunder.
"Excluded Liabilities" means all liabilities of Seller other than the
Assumed Liabilities.
"Financial Statements" means that certain unaudited statement of
Seller's Yarn Sales Division for the twelve months ending November 3, 1998 and
November 1, 1997 and the seven months ending June 5, 1999 which is attached
hereto as Exhibit C.
"Fixed Assets" means all of the furniture, fixtures, furnishings,
machinery, tools, equipment and other personal property owned by Seller and
used in connection with the Business, and located in, at or upon the Owned Real
Property as of the Closing Date and which are necessary to the Business,
including all warranties and licenses received from manufacturers and sellers
of the aforesaid items to the extent assignable by Seller to Purchaser and any
related claims, credits and rights of recovery with respect to such items, as
set forth on Schedule 1.1(a) attached hereto.
"GAAP" means U.S. generally accepted accounting principles applicable
to financial statements which omit complete footnotes and schedules,
consistently applied throughout the periods involved.
"Governmental Agency" means (a) any international, foreign, federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof, (b) any governmental agency, authority, board,
bureau, commission, department or instrumentality, (c) any court or
administrative tribunal, (d) any non-governmental agency, tribunal or entity
that is vested by a governmental agency with applicable jurisdiction, or (e)
any arbitration tribunal or other non-governmental authority with applicable
jurisdiction.
"Hazardous Material" means any substance, material or waste whether in
a solid, liquid or gaseous state which is classified, regulated or otherwise
characterized by any Governmental Agency as hazardous, toxic, contaminant, or
pollutant or words of similar meaning or regulatory effect, including, but not
limited to, petroleum, petroleum products, asbestos, urea, formaldehyde and
polychlorinated biphenyls.
"Inventory" means all of (i) the inventory relating solely to the
Business held for sale to customers in the ordinary course of the Business as
of the Closing Date, (ii) the raw materials, work in process, finished
products, wrapping, supply and packaging items, and similar items relating
solely to the Business as of the Closing Date and (iii) related claims and
rights of recovery with respect to the items listed in clauses (i) and (ii)
hereto to the extent assignable.
"JPS" means JPS Industries, Inc., a Delaware corporation.
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"JPS Agreement" means that certain letter agreement of even date
herewith, by and between Purchaser and JPS.
"Knowledge of Seller" shall mean the actual knowledge of any of the
following individuals: Xxxxxxx X. Xxxxxxxxx, the Chairman and Chief Executive
Officer, Xxxx Xxxxxxx, the Chief Financial Officer and Xxxxxx X. Xxxxxx, the
Vice President - Human Resources (solely in respect of human resources and
employee benefit matters) of JPS or Xxxx X. XxXxxxxx, the President of JPS
Apparel (a division of Seller), Xxxxxxx X'Xxxxxxx, the Chief Financial Officer
of JPS Apparel (a division of Seller) and Xxxx Xxxxx, the President of
Marketing , Xxxxx Xxxxxx Xxxxx, the Plant Manager of the Xxxxxxx Plant, Xxx
Xxxx, Sales Manager, or Xxxxxx Xxxxxx, the Major Accounts Executive.
"Material Adverse Effect" means any event, change, effect, occurrence
or state of facts that has had or is reasonably expected to have a material
adverse effect on the business, results of operations or the financial
condition of the Business taken as a whole; provided, however, that any adverse
effect arising out of or resulting from (a) an event or series of events or
circumstances affecting (i) the yarn and textile industry generally in the
United States or (ii) the United States economy generally or (b) the entering
into of this Agreement, shall not, in and of itself, constitute a Material
Adverse Effect.
"Owned Real Property" means the real property relating solely to the
Business and owned by Seller, as listed on Schedule 4.4.
"Permissible Liens" means, with respect to any Asset, (i) the
exceptions to title identified on Schedule 1.1(b) hereto, (ii) taxes not yet
due and payable as set forth on Schedule 1.1(b), (iii) such matters as set
forth on the surveys (if any) delivered by Seller to Purchaser with respect to
the Owned Real Property, (iv) laws and governmental regulations that affect the
use and maintenance of the Owned Real Property, provided that they are not
violated by the buildings and improvements constituting the Owned Real
Property, (v) the consents for the erection of any structures on, under or
above any streets on which the Owned Real Property abuts as set forth on
Schedule 1.1(b), (vi) the notices of violation of law or municipal ordinances,
orders or requirements issued by any Governmental Agency as set forth on
Schedule 1.1(b), (vii) liens for Taxes, assessments, water and sewer rents not
yet due and payable as set forth on Schedule 1.1(b) (viii) utility lines, sewer
lines and railroad rights of way affecting the Owned Real Property as set forth
on Schedule 1.1(b); and (ix) minor imperfections of title, if any, none of
which is substantial in amount, materially detracts from the value or impairs
the use of the Owned Real Property or impairs the operations of the Business.
"Permits" means all of Seller's licenses, permits, certificates and
other public, governmental and private third party authorizations and approvals
reasonably necessary to carry on the Business as presently conducted, in each
case relating solely to the Business, as listed on Schedule 4.15.
"Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization or a government or
political subdivision thereof.
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"Personal Property Leases" means all of the leases of personal
property relating solely to the Business listed on Schedule 4.3.
"Purchaser" shall have the meaning set forth in the recitals hereto.
"Release" means any release, spill, emission, leaking, pumping,
emptying, dumping, injection, abandonment, deposit, disposal, discharge,
dispersal, leaching or migration on or into the indoor or outdoor environment
or on, into, above or beneath any property.
"Seller" shall have the meaning set forth in the recitals hereto.
"Seller Credit Agreement" means the Credit Facility Agreement, dated
as of October 9, 1997, as amended, supplemented, modified, restated or
refinanced from time to time, among JPS, Seller, JPS Elastomerics Corp., the
financial institutions party thereto (the "Lenders"), Citibank, N.A,, in its
capacity as agent and collateral agent for the Lenders, and NationsBank, N.A.,
in its capacity as co-agent for the Lenders, and all guarantees, collateral or
security agreements and related agreements entered into in connection therewith
and pursuant thereto.
"Xxxxxxx Plant" shall have the meaning set forth in the recitals
hereto.
"Supply Agreement" means that certain Supply Agreement in the form
attached hereto as Exhibit G by and between Seller and Purchaser.
"Taxes" means all federal, state, local and foreign taxes, charges,
fees, levies, imposts, duties or other assessments, including, without
limitation, income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental (including taxes under Code Section 59A), premium, federal
highway use, commercial rent, customs duties, capital stock, paid up capital,
profits, withholding, Social Security, single business and unemployment,
disability, real property, personal property, registration, ad valorem,
value-added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to be withheld by
the United States or any state, local, foreign government or subdivision or
agency thereof, including any interest penalties or additions thereto.
"Transferred Employees" means all Employees who commence employment
with Purchaser pursuant to Section 6.1(a) hereof.
"Transitional Services Agreement" means that certain Transitional
Services Agreement in the form attached hereto as Exhibit H by and between
Seller and Purchaser.
I.2 Terms Defined Elsewhere in the Agreement. For purposes of
this Agreement, the following terms have the meanings set forth in the sections
indicated:
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Term Section
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Action 9.2 (c)
Asset Transfer Date 6.1 (g)
Arbitrator 2.3 (c)
Cash Compensation 4.14(a)
CIT Agreement 6.6 (g)
Closing 3.1
Collateral Agent 10.3
Consenting Party 3.4 (c)
Contracts 4.6
Damages 9.2 (a)
Dispute Notice 2.3 (c)
Employees Policies and Procedures 4.14(c)
JPS Flex Plan 6.1 (h)
Pension Plan 6.1 (f)
Plans 4.13(a)
Purchase Order Confirmation 4.26
Purchase Price 2.2
Purchaser Flex Plan 6.1 (h)
Purchaser's Savings Plan 6.1 (g)
Seller's Savings Plan 6.1 (g)
I.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
ARTICLE II
PURCHASE AND SALE OF ASSETS
II.1 Sale of Assets; Assumption of Liabilities. On the Closing
Date, in reliance upon the covenants, representations and warranties contained
herein and subject to the terms and conditions hereof:
(a) Seller hereby agrees to sell, convey, transfer, assign, and
deliver to Purchaser, and Purchaser hereby agrees to purchase from Seller, the
Assets.
(b) 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 any Excluded Liabilities including, without limitation,
liabilities relating to (A) the Excluded Assets, (B) income or franchise
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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, and (D) (1) liabilities assumed by
Seller pursuant to Section 6.1 hereof and (2) liabilities incurred or accrued
on or prior to the Closing Date under any employee benefit plan, policy and
arrangement covering or providing benefits to the Employees.
II.2 Purchase Price.
(a) On the Closing Date, as consideration for the sale,
conveyance, transfer, assignment and delivery of the Assets Purchaser shall pay
to Seller in cash an amount equal to $2,000,000 (the "Purchase Price"), subject
to adjustment as provided in Section 2.3 hereof; and (ii) Purchaser shall
assume the Assumed Liabilities.
(b) At the election of Seller, the Purchase Price shall be paid
at the Closing by either (i) wire transfer of immediately available funds to an
account designated in writing by Seller or (ii) federal funds check.
(c) Within fifteen (15) days of the determination of the final
adjustments to Purchase Price described below, Seller shall prepare and deliver
to Purchaser a schedule which shall set forth the allocation of the Purchase
Price among the Assets. Such allocation shall be subject to Purchaser's
approval (which shall not be unreasonably withheld). Subject to the
requirements of any applicable Tax law, all Tax returns filed by Purchaser and
Seller shall be prepared consistently with such allocation and with the
treatment of the transaction pursuant to this Agreement as a purchase and sale
of the Assets. In the event of any Purchase Price adjustment pursuant to
Section 2.3 hereof, Purchaser and Seller agree to adjust such allocation to
reflect such Purchase Price adjustment and, subject to the requirements of any
applicable Tax laws, to file consistently any Tax returns required as a result
of such Purchase Price adjustment. In the event no such agreement is reached,
the parties hereto shall resolve such disagreement pursuant to the provisions
provided for under Section 2.3(c) of this Agreement.
II.3 Adjustments to Purchase Price.
(a) The Purchase Price shall be increased or decreased (on a
dollar for dollar basis, as limited below), 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 and allowances, calculated in accordance with GAAP and on a basis
consistent with the Financial Statements) is: (A) greater than $2,164,000, then
Purchaser shall pay to Seller the amount of such excess up to $800,000; (B)
less than $2,164,000, then Seller shall pay to Purchaser the amount of such
difference; or (C) equal to $2,164,000, 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
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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. 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 and allowances, calculated in accordance with GAAP
and on a basis consistent with the Financial Statements), 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 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.
(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
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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.
ARTICLE III
CLOSING
III.1 Closing. The Closing of the transactions contemplated hereby
(the "Closing") shall be held at 10:00 a.m. local time on the Closing Date at
the offices of Xxxxx, Day, Xxxxxx & Xxxxx, Atlanta, Georgia, or at such other
time, date or place as the parties hereto may otherwise agree; provided,
however, that the conditions to the obligations of Seller and Purchaser to
consummate the transactions contemplated hereby shall have been at such time
satisfied or waived.
III.2 Conveyances at Closing.
(a) Instruments and Possession. To effect the sale referred to in
Section 2.1 hereof, Seller shall, on the Closing Date, execute and deliver to
Purchaser, in such form as to transfer to Purchaser, good title to the Assets,
subject to no Encumbrances, imperfections of title, covenants, restrictions,
easements, encroachments or any state of facts which would be reflected on a
current ALTA survey, other than, in the case of Owned Real Property,
Permissible Liens:
(i) a special warranty deed, in proper form for
recording and mutually and reasonably acceptable to Purchaser and
Seller, conveying good title (other than Permissible Liens) to all
Owned Real Property included in the Assets as such Owned Real Property
is described in a current ALTA survey obtained by Purchaser;
(ii) the Xxxx of Sale, Assignment and Assumption
Agreement conveying all of the owned personal property included in the
Assets, the Personal Property Leases and the Contract Rights;
(iii) such other instruments as shall be reasonably
requested by Purchaser to vest in Purchaser good title (other than, in
the case of Owned Real Property, Permissible Liens) in and to the
Assets in accordance with the provisions hereof;
(iv) such affidavits, certificates or filings as may be
required to convey the Assets to Purchaser or as may be reasonably
requested by Purchaser's title company and agreed to by Seller in
connection with the issuance of the title policies with respect to the
Owned Real Property, all costs, charges and premiums of which, shall
be paid by Purchaser;
(v) an affidavit, in a form reasonably satisfactory to
Purchaser, of Seller stating under penalties of perjury Seller's
United States taxpayer identification number and that Seller is not a
foreign person within the meaning of Section 1445(b)(2) of the Code;
and
(vi) physical possession and control of the Assets.
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(b) Form of Instruments. All of the foregoing instruments shall
be in form and substance, and shall be executed and delivered in a manner,
reasonably satisfactory to Purchaser.
(c) Consents to Assignment. Anything in this Agreement to the
contrary notwithstanding, and subject to the provisions concerning Personal
Property Leases set forth in Section 3.3(b) hereof, this Agreement shall not
constitute an assignment of, or an agreement to assign, Assets, consisting of
any claim, contract, license, lease commitment, sales order, purchase order or
any claim or right or any benefit arising thereunder or resulting therefrom if
an attempted assignment thereof, without the consent of the other party
thereto, would constitute a breach thereof; provided, however, that if Seller
fails to obtain any consent set forth in Part II of Schedule 8.6 on or prior to
the Closing Date, Purchaser shall, in accordance with Article 8 hereof, be
under no obligation to consummate the transactions provided for hereby. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would affect the rights thereunder so that Purchaser would not
receive all such rights, then, in accordance with Section 3.3(b) hereof, Seller
will thereafter take all reasonable actions in order to provide to Purchaser
the benefits under any such claim, contract, license, lease commitment, sales
order or purchase order, including, without limitation, enforcement for the
benefit of Purchaser (at Seller's expense) of any and all rights of Seller
against such other party thereto arising out of the breach or cancellation by
such other party or otherwise; and any transfer or assignment to Purchaser of
any property or property rights or any contract or agreement which shall
require the consent or approval of any such other party shall be made subject
to such consent or approval being obtained; provided, further, however, that if
Seller fails to obtain any consent set forth in Part II of Schedule 8.6 on or
prior to the Closing Date, Purchaser shall, in accordance with Article 8
hereof, be under no obligation to consummate the transactions provided for
hereby. Nothing contained in this Section 3.2(c) shall be deemed to require
Seller to make any payments to obtain a consent or approval from any third
party to the assignment by Seller to Purchaser. In addition, Seller shall not
obtain any consent that will affect Purchaser to its economic detriment unless
Purchaser expressly approves the obtaining of such consent.
(d) Assumption Documents. Upon the terms and subject to the
conditions contained herein, on the Closing Date, Purchaser and Seller shall
execute and deliver the Xxxx of Sale, Assignment and Assumption Agreement.
III.3 Other Deliveries at Closing. In addition to the foregoing
matters, at the Closing:
(a) Certificates; Opinions. Purchaser and Seller shall deliver
the certificates, opinions and other instruments described in Articles VII and
VIII hereof.
(b) Personal Property Leases and Other Third-Party Consents. To
the extent any of the Personal Property Leases or any other Contract Right may
not be assigned by Seller without the written consent of any lender or other
third party (collectively, a "Consenting Party"), Seller shall use its
reasonable efforts to secure and deliver the required consents to Purchaser
within 90 days after the Closing Date; provided, however, that no modification
of any such Personal Property Leases or Contract Right shall be made without
Purchaser's prior written consent, which consent shall not be unreasonably
withheld; provided, further, however, that to the extent such consents are not
obtained within 90 days of the Closing Date then Seller shall have no further
obligations hereunder
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and such Personal Property Leases or Contract Rights shall be deemed to not be
a part of the Assets; provided, further, however, that if Seller fails to
obtain any consent set forth in Part II of Schedule 8.6 on or prior to the
Closing Date, Purchaser shall, in accordance with Article 8 hereof, be under no
obligation to consummate the transactions provided for hereby. Purchaser shall
cooperate as reasonably necessary or desirable to secure the consent of any
Consenting Party, including, without limitation, providing to such Consenting
Party financial information, operating history and information regarding
Purchaser's intended use or disposition of any Asset.
(c) Supply Agreement and the Transitional Services Agreement.
Purchaser and Seller shall deliver the Supply Agreement and the Transitional
Services Agreement.
(d) JPS Agreement. JPS shall deliver the JPS Agreement.
III.4 Certain Business Information. Attached hereto (a) as Schedule
3.4(a) is a true and correct list of the Employees as of the date hereof (which
list shall, in respect of each Employee, contain the information set forth in
Section 4.14(a) hereof) and (b) as Schedule 3.4(b) is a true and correct list
of the backlog of the Business as of the date hereof, derived from Seller's
internal records of backlog of unfilled firm orders for products sold by Seller
in respect of the Business. No earlier than two (2) business days prior to the
Closing, Seller shall provide Purchaser with (x) updated versions of the lists
described in (a) and (b) above and (y) a list of standard prices of the
Business and any applicable discounts by customer name, in each case certified
by an officer of Seller as being true and correct in all material respects as
of the date delivered to Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser (as of the date
hereof and as of the Closing Date as if made on the Closing Date) as follows:
IV.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to carry on its business as it is now being
conducted and to own and lease all of its properties and assets. Seller is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business requires such
qualification, except where the failure so to qualify would not have a Material
Adverse Effect.
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IV.2 Corporate Authorization. Seller has all necessary corporate
power and authority and has taken all corporate action necessary to enter into
this Agreement and the Ancillary Agreements, to consummate the transactions
contemplated on its part hereby and thereby and to perform its obligations
hereunder and thereunder. This Agreement and the Ancillary Agreements have been
duly executed and delivered by Seller and, assuming the due execution and
delivery thereof by Purchaser, each is a valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratoriums or other similar laws now or hereafter in
effect relating to creditors, rights generally and by general principles of
equity (whether considered in an action at law or in equity) and the discretion
of the court before which any proceeding therefor may be brought.
IV.3 Personal Property Leases. Schedule 4.3 hereto contains a
complete and correct list of all Personal Property Leases relating to the
Business. Each Personal Property Lease listed on Schedule 4.3 is in full force
and effect. There are no asserted or unasserted defaults thereunder, except for
(i) defaults which would not, individually or in the aggregate, have a Material
Adverse Effect or (ii) defaults of a party to any such Personal Property Lease
which have been consented to or waived in writing by the other party thereto.
IV.4 Title to Owned Real Property. Schedule 4.4 hereto contains a
complete and correct list of all Owned Real Property. Except as set forth on
Schedule 4.4, Seller has good and insurable fee title to all Owned Real
Property, free and clear of any and all Encumbrances, imperfections of title,
covenants, restrictions, easements or encroachments except for Permissible
Liens. Upon the consummation of the transactions contemplated hereby, Purchaser
shall receive good and insurable title to such Owned Real Property, free and
clear of all Encumbrances except for Permissible Liens.
Other than Permissible Liens or as set forth on Schedule 4.4, Seller
has not granted any purchase options or rights of first refusal or first offer
with respect to the Owned Real Property and the Owned Real Property is not
subject to any such options or rights.
IV.5 Title to Owned Personal Property. Except as set forth on
Schedule 4.5 hereto, Seller has good title to all of the personal property
owned by Seller and included in the Assets, free and clear of any and all
Encumbrances, except for Permissible Liens. Upon the consummation of the
transactions contemplated hereby, Purchaser shall receive good title to such
Owned Personal Property, free and clear of all Encumbrances except for
Permissible Liens.
IV.6 Contracts and Commitments. Schedule 4.6 hereto lists all of
the contracts, commitments, arrangements and understandings, both oral and
written, which pertain or relate primarily to the conduct, operations and
prospects of the Business, except for those contracts included in the Excluded
Assets (collectively, the "Contracts"). To the Knowledge of Seller, there are
no existing defaults, events of default or events, occurrences, acts or
omissions that, with the giving of notice or lapse of time or both, would
constitute defaults by Seller thereunder, and, except as described on Schedule
4.6, no penalties have been incurred nor, to the Knowledge of Seller, are any
amendments pending with respect to the Contracts. Each Contract is in full
force and effect and, assuming the due authorization, execution and delivery
thereof by the other party thereto, each is a
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valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratoriums or
other similar laws now or hereafter in effect relating to creditors' rights
generally and by general principles of equity (whether considered in an action
at law or in equity) and the discretion of the court before which any
proceeding therefor may be brought, and no defenses, off-sets or counterclaims
have been asserted or, to the Knowledge of Seller, may be made by any party
thereto, nor has Seller waived any material rights thereunder, except as
described in Schedule 4.6. Since December 31, 1998, Seller has not received
written notice of any default with respect to any Contract. Except as
contemplated hereby, Seller has not received actual notice of any plan or
intention of any other party to any Contract to exercise any right to cancel or
terminate any Contract, and, to the Knowledge of Seller, no fact that would
justify the exercise of such a right exists. Except as listed in Schedule 4.6,
none of the customers or suppliers of Seller has refused, or communicated that
it will or may refuse, to purchase or supply goods or services, as the case may
be, nor have the suppliers of Seller communicated that they will or may
substantially reduce the amounts of goods or services that they are willing to
purchase from, or sell to, Seller.
IV.7 Litigation, Proceedings and Applicable Law. Except as set
forth on Schedule 4.7 hereto, there are no claims, actions, suits or
proceedings pending or, to the Knowledge of Seller, threatened, against or
affecting the Business which would have, individually or in the aggregate, an
adverse effect on the Business or the Assets or impair Seller's ability to
consummate the transactions contemplated hereby, or which question or challenge
the validity of this Agreement or any actions to be taken by Seller hereunder
or in connection with any of the transactions contemplated hereby. Except as
set forth on Schedule 4.7 hereto, Seller is not subject to any judgment, order,
writ, injunction or decree of any court or Governmental Agency, and there are
no unsatisfied judgments against Seller or the Business.
IV.8 Compliance with Law. Except as set forth on Schedule 4.8
hereto, the Business has been operated in compliance with all applicable laws,
statutes, rules, regulations, ordinances, codes, orders, licenses, permits or
authorizations, as such now apply to the Business.
IV.9 Taxes. Except as set forth on Schedule 4.9 hereto:
(a) None of the Assets is: (1) property which Purchaser or Seller
are or will be required to treat as owned by another person
pursuant to the provisions of Section 168(f) of the Internal Revenue Code of
1954 (as in effect immediately prior to the Tax Reform Act of 1986); (2)
"Tax-exempt use property" within the meaning of Section 168(h)(1) of the Code;
or (3) "Tax-exempt bond financed property" within the meaning of Section
168(g)(5) of the Code.
(b) Seller is not a foreign person within the meaning of Section
1445(b)(2) of the Code.
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IV.10 No Conflict or Violation. Except as set forth on Schedule
4.10 hereto, neither the execution, delivery nor performance of this Agreement
or the Ancillary Agreements or any of the transactions contemplated hereby or
thereby will (a) violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Seller, (b) conflict with or result in a breach of
or default (or an event which, with notice, lapse of time or both, would
constitute a breach or default) under, result in the termination of, accelerate
the performance required by, cause the acceleration of the maturity of any debt
or obligation pursuant to, or result in the creation or imposition of any lien
or encumbrance on any of the Assets under any provision of any contract,
agreement, lease, commitment, license, franchise, permit, authorization or
concession to which Seller is a party or bound and to which the Assets or the
Business is subject, (c) result in a violation by Seller of, or conflict with,
any statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree, or award (or an event which with notice, lapse of time, or
both, would result in any such violation) or (d) result in the creation of a
lien or encumbrance on the Assets other than a Permissible Lien.
IV.11 Consents and Approvals. Except as set forth on Schedule 4.11
hereto and other than real property recording and filing documents normally
required in connection with the conveyance of title, no notice to, consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Agency or any other person or entity, is required to be made or
obtained by Seller in connection with the execution, delivery and performance
of this Agreement or the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby.
IV.12 Insurance.
(a) Schedule 4.12 hereto contains a list of all policies of
title, liability, fire, workers, compensation and other forms of insurance
insuring the products, properties, assets and operations of the Business. At
Purchaser's request, Seller will provide Purchaser with true, correct and
complete copies of all such insurance policies. Except as set forth in Schedule
4.12, all such policies are in full force and effect.
(b) To the Knowledge of Seller, no actual notice of cancellation,
termination or reduction in coverage has been received by Seller with respect
to any policy listed in Schedule 4.12 hereto.
IV.13 Employee Benefit Plans.
(a) Schedule 4.13(a) sets forth a list of each employee benefit
plan, policy and arrangement which covers or provides benefits to the Employees
(the "Plans"), including a summary of the material terms of such Plans.
(b) Seller has complied in all material respects with the terms
of each Plan, and with any applicable provisions of ERISA and the Code.
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(c) With respect to the Amended and Restated Savings, Investment
and Profit Sharing Plan of JPS Industries, Inc., Seller has received a
favorable determination letter from the Internal Revenue Service that such plan
is qualified within the meaning of Section 401(a) of the Code and the trust
related thereto is exempt from tax under Section 501(a) of the Code, and no
proceedings exist or, to the Knowledge of Seller, have been threatened which
could reasonably be expected to result in the revocation of such favorable
determination letter.
IV.14 Labor Relations. (a) Schedule 4.14(a) contains a complete and
accurate list of the names, titles and cash compensation, including without
limitation wages, salaries, bonuses (discretionary and formula) and other cash
compensation (the "Cash Compensation") of all Employees who are currently
compensated at a rate in excess of $40,000 per year. In addition, Schedule
4.14(a) contains a complete and accurate description of (i) all increases in
Cash Compensation of Employees during the current fiscal year of Seller and
(ii) any scheduled increases in Cash Compensation of Employees that have not
yet been effected.
(b) Except as set forth on Schedule 4.14(b), none of the
Employees are covered by or participate in any Seller sponsored deferred
compensation, incentive, bonus or performance awards, and stock ownership or
stock options. There are no employment agreements to which Seller is a party
with respect to the Employees.
(c) Schedule 4.14(c) contains a complete and accurate list of all
employee manuals and all other material policies, procedures and work-related
rules (the "Employee Policies and Procedures") that apply to Employees. Seller
has provided Purchaser with a copy of all such Employee Policies and
Procedures.
(d) With respect to the Employees, except as set forth in
Schedule 4.14(d), (i) Seller has been and is in compliance with all laws,
rules, regulations and ordinances respecting employment and employment
practices, terms and conditions of employment and wages and hours, and Seller
has no liability for any arrears of wages or penalties for failure to comply
with any of the foregoing, and (ii) there are no (A) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age or
handicap discrimination charges or complaints pending or, to the Knowledge of
Seller, threatened against Seller before any federal, state or local court,
board, department, commission or agency nor, to the Knowledge of Seller, does
any basis therefor exist or (B) existing or, to the Knowledge of Seller,
threatened labor strikes, disputes, grievances, controversies or other labor
troubles affecting Seller, nor to the Knowledge of Seller, does any basis
therefor exist, any of which could result in any material liability.
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(e) With respect to the Employees, Seller has never been a party
to any agreement with any union, labor organization or collective bargaining
unit, no employees are represented by any union, labor organization or
collective bargaining unit and, to the Knowledge of Seller, the Employees have
not threatened to organize or join a union, labor organization or collective
bargaining unit.
(f) To the Knowledge of Seller, all Employees are citizens of, or
are authorized to be employed in, the United States.
IV.15 Permits. Schedule 4.15 hereto sets forth a list of all
Permits required to conduct the Business (including, without limitation,
environmental permits required to construct, occupy, operate or use the
Assets), the dates such Permits were obtained, the date of renewals thereof and
the status of each Permit. Except as set forth on Schedule 4.15 there are no
administrative or judicial proceedings pending or, to the Knowledge of Seller,
threatened which seek to revoke, cancel or declare such Permits invalid in any
respect.
IV.16 Brokers. No Person has acted directly or indirectly as a
broker, finder or financial advisor for Seller in connection with the
negotiations relating to or the transactions contemplated by this Agreement and
no Person is entitled to any fee or commission or like payment in respect
thereof based in any way on agreements, arrangements or understanding made by
or on behalf of Seller.
IV.17 Xxxxxxx Plant. Except as set forth on Schedule 4.17 hereof,
there have been no material changes to the plant and equipment at the Xxxxxxx
Plant since October 31, 1998.
IV.18 Environmental Matters. Except as disclosed on Schedule 4.18
or in the environmental reports delivered to Purchaser prior to the Closing,
(a) the Business and the Assets are in compliance with all Environmental Laws
and any historic incidents of non-compliance have been corrected and any
required reports have been submitted by Seller to the appropriate governmental
authority; (b) there are no pending or, to the Knowledge of Seller, threatened,
investigations, inquiries or proceedings against the Assets by any governmental
authority under Environmental Laws; (c) neither the Business nor the Assets are
subject to any obligation to remediate contamination from Hazardous Materials
under any Environmental Laws; and (d) to the Knowledge of Seller, none of the
Assets are included on any federal or state "Superfund" list or subject to any
liens imposed pursuant to Environmental Laws.
IV.19 Condition of Fixed Assets. Except as set forth on Schedule
4.19, to the Knowledge of Seller, all of the plants, structures and equipment
included in the Assets are in good condition and repair for their intended use
in the ordinary course or business, subject to ordinary wear and tear, and
conform in all material respects with all applicable ordinances, regulations
and other laws.
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IV.20 Books and Records. The Books and Records of the Business have
been kept materially accurately by Seller in the ordinary course of business,
the transactions entered therein represent bona fide transactions and the
revenues, expenses, assets and liabilities of the Business have been properly
recorded in such Books and Records.
IV.21 Customers. Schedule 4.21 contains a complete and accurate
list of the 20 largest non-intercompany customers of the Business in terms of
sales for each of the last three fiscal years and the current fiscal year to
date, showing, with respect to each such customer, the name and address of such
customer.
IV.22 Product Warranties. Except as set forth on Schedule 4.22,
there is no claim against or liability of Seller on account of product
warranties or with respect to the manufacture, sale or rental of defective
products of the Business and, to the Knowledge of Seller, there is no basis for
any such claim on account of defective products manufactured, sold or rented by
Seller in respect of the Business since December 31, 1998, that is not fully
covered by insurance.
IV.23 Absence of Certain Changes. Except as set forth on Schedule
4.23, since October 31, 1998, Seller has not, in respect of the Business (a)
suffered any material adverse change, whether or not caused by any deliberate
act or omission of Seller, in the condition (financial or otherwise),
operations, assets or liabilities of the Business, (b) contracted for the
purchase of any capital asset having a cost in excess of $100,000 or paid any
capital expenditures in excess of $100,000, (c) suffered any damage or
destruction to or loss of any Asset (whether or not covered by insurance) that
has materially and adversely affected, or could materially and adversely
affect, the Business, (d) acquired or disposed of any Asset except in the
ordinary course of business, (e) written up or written down the carrying value
of any Asset, (f) changed the costing system or depreciation methods of
accounting for the Assets, (g) increased the compensation of any Employee
except in the ordinary course of business, (h) entered into any other
commitment or transaction or experienced any other event that is materially
adverse to this Agreement or to any of the Ancillary Agreements or the
transactions contemplated hereby or thereby, or that has materially and
adversely affected, or could materially and adversely affect, the condition
(financial or otherwise), operations, assets or liabilities of the Business.
IV.24 Certain Payments. To the Knowledge of Seller, with respect to
the Business, neither Seller nor any director, officer or employee of Seller
has paid or caused to be paid, directly or indirectly, to any government or
agency thereof or any agent of any supplier or customer any bribe, kick-back or
other similar payment.
IV.25 Financial Statements. To the Knowledge of Seller, the
Financial Statements have been prepared in accordance with the books and
records of Seller on a consistent basis with Seller's preparation of the same
information for prior periods.
IV.26 Computer Software. Seller makes no representations or
warranties regarding Year 2000 readiness or system performance regarding the
Assets.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller (as of the date
hereof and as of the Closing Date as if made on the Closing Date) as follows:
V.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
Purchaser has full corporate power and authority to conduct the Business as it
is now being conducted and to own and lease the Assets.
V.2 Corporate Authorization. Purchaser has all necessary
corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party, to consummate the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions described herein and
therein by Purchaser have been duly authorized by all requisite corporate
action. This Agreement and the Ancillary Agreements have been duly executed and
delivered by Purchaser and, assuming the due execution and delivery thereof by
Seller, each is a valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and other similar laws now or hereafter in effect relating to
creditors, rights generally and by general principles of equity (whether
considered in an action at law or in equity) and the discretion of the court
before which any proceeding therefor may be brought.
V.3 No Conflict or Violation. Except as set forth on Schedule 5.3
hereto, neither the execution, delivery nor performance of this Agreement or
any of the transactions contemplated hereby will (a) violate or conflict with
any provision of the Certificate of Incorporation or Bylaws of Purchaser, (b)
result in a breach of or a default under any provision of any contract,
agreement, lease, commitment, license, franchise, permit, authorization or
concession to which either Purchaser is a party or bound or to which any
property or asset of either Purchaser is subject or an event which with notice,
lapse of time, or both, would result in any such breach or default, or (c)
result in a violation by Purchaser of any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree, or award, or an event which
with notice, lapse of time, or both, would result in any such violation, which
breach, default or violation would have a material adverse effect on
Purchaser's ability to consummate the transactions contemplated hereby.
V.4 Consents and Approvals. Except as set forth on Schedule 5.4,
no consent, approval or authorization or declaration, filing or registration
with any Governmental Agency, or any other person or entity, is required to be
made or obtained by Purchaser in connection with the execution, delivery and
performance of this Agreement or the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby.
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V.5 Litigation. There is no claim, action, suit, proceeding or
governmental investigation against Purchaser or any of Purchaser's subsidiaries
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 Purchaser to consummate the
transactions contemplated by this Agreement. Purchaser 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 Purchaser to consummate the transactions contemplated hereby.
V.6 Brokers. Except as set forth on Schedule 5.6, no Person has
acted directly or indirectly as a broker, finder or financial advisor for
Purchaser in connection with the negotiations relating to or the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment in respect thereof based in any way or agreements,
arrangements or understandings made by or on behalf of Purchaser.
ARTICLE VI
COVENANTS OF SELLER AND PURCHASER
Seller and Purchaser each covenant with the other as follows:
VI.1 Employees.
(a) Employment. Effective as of the Closing Date, Purchaser shall
offer employment to the Employees (other than those Employees on layoff, but
subject to any recall rights).
(b) Credited Service. The Transferred Employees shall be given
full credit by Purchaser for their years of service recognized under Seller's
benefit plans and vacation policy for purposes of eligibility and vesting in
all employee benefit plans of Purchaser and for purposes of calculating
benefits under severance and vacation policies of Purchaser.
(c) Severance. For one (1) year from the Closing Date, Purchaser
shall maintain severance or layoff benefits no less favorable in the aggregate
than those severance or layoff benefits maintained by Seller for the salaried
Employees immediately prior to the Closing (the terms of which are set forth on
Schedule 6.1(c)) and Purchaser shall indemnify Seller with respect to any such
severance or layoff liability for any salaried Employee terminated after the
Closing Date. Seller shall not be responsible and shall not pay severance or
layoff or any other similar arrangement with respect to any salaried Employee
terminated after the Closing Date.
(d) Health and Medical Plan Coverage. Effective as of the Closing
Date, Purchaser shall provide Transferred Employees and their beneficiaries
with group
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health and medical coverage that contains no (i) pre-existing condition
exclusions or limitations or (ii) eligibility waiting periods, applicable to
Transferred Employees other than any limitations or waiting periods that are
already in effect and have not been satisfied with respect to such employees.
With respect to such plans, Purchaser shall give each Transferred Employee
credit toward applicable deductibles and annual out-of-pocket limits for
expenses incurred prior to the Closing Date during the applicable plan year. If
an event causing a Transferred Employee to be eligible for health care benefits
under Part 6 of Title I of ERISA, 29 U.S.C. xx.xx. 1161 et. seq., as amended,
occurs after the Closing Date, Purchaser will be obligated to provide such
health care benefits. Purchaser shall not be responsible for any costs or
expenses incurred prior to the Closing with respect to Seller's health and
welfare plans, and Seller shall not be responsible for any costs or expenses
incurred after the Closing with respect to Purchaser's health and welfare
plans.
(e) Vacation. Purchaser shall pay each Transferred Employee the
vacation pay earned by such Transferred Employee in 1999 and payable in 1999
and 2000 in accordance with the terms, including both timing and amount of pay
earned, of Seller's vacation policy, which vacation payments are described in
Schedule 6.1(e); provided, however, that Seller shall reimburse Purchaser for
the cost of such vacation pay upon reasonable notice of actual payment(s) made
to such Transferred Employees. For calendar year 1999, Purchaser shall provide
a vacation policy and entitlement for Transferred Employees (based on such
employees', years of service with Seller), the terms of which are set forth on
Schedule 6.1(e).
(f) Pension Benefits. Seller shall cause the Retirement Pension
Plan for Employees of JPS Industries, Inc. (the "Pension Plan") to be amended
to provide Transferred Employees with full vesting as to any benefits accrued
under the Pension Plan as of the Closing Date.
(g) Savings Plan. Seller shall cause the accounts of the
Transferred Employees who participate in the Amended and Restated Savings,
Investment and Profit Sharing Plan of JPS Industries, Inc. ("Seller's Savings
Plan") to be valued as of a specified valuation date as soon as practicable
following the Closing (the "Asset Transfer Date"). Purchaser shall cause its
qualified 401(k) ("Purchaser's Savings Plan") to be amended to accommodate the
transfer of both before-tax and after-tax accounts from Seller's Savings Plan.
As of the Asset Transfer Date, assets equal in value, including any after-tax
amounts to the amount credited to each such employee's account under Seller's
Savings Plan will be transferred to a trust maintained pursuant to Purchaser's
Savings Plan; provided, however, that Purchaser provide to Seller a
determination letter or an opinion of counsel reasonably acceptable to Seller
that such trust and each plan
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associated therewith is qualified as to form under Sections 401(a) and 501(a)
of the Code. Such asset transfer shall include any outstanding participant
loans. As of the Asset Transfer Date, Purchaser shall be liable for the payment
of the benefits accrued by and transferred in respect of any Transferred
Employee who participated in Seller's Savings Plan and who was effected by such
transfer. Purchaser shall provide Transferred Employees who participate in
Purchaser's Savings Plan with matching contributions and discretionary
contributions at the same rate as Purchaser provides to its other Employees.
(h) Flex Plan. Effective as of the Closing Date, Purchaser shall
recognize salary reduction elections made by Transferred Employees under the
JPS Industries, Inc. Flexible Benefits Program ("JPS Flex Plan") as elections
made under Purchaser's Code Section 125 flexible benefits program ("Purchaser
Flex Plan") and no new benefit elections for 1999 will be allowed to the
Transferred Employees except as otherwise provided by the Purchaser Flex Plan
in the event of a change in family status. Effective as of the Closing Date,
Purchaser shall assume all obligations to pay all unpaid claims incurred in
1999 of the Transferred Employees participating in the Purchaser Flex Plan as
of the Closing Date. As soon as practicable following the Closing, Seller shall
transfer to Purchaser assets equal to the aggregate amount of 1999 salary
reductions related to Transferred Employees, elections under the JPS Flex Plan
withheld through the Closing Date (less the aggregate claims paid under the JPS
Flex Plan to Transferred Employees from January 1, 1999 through the Closing
Date).
(i) Transfer of or Access to Records. Purchaser shall, at
Seller's request, allow Seller reasonable access to all personnel and other
records reasonably related to any Transferred Employee.
(j) W-2 Matters. Pursuant to the alternate procedure prescribed
by Revenue Procedure 96-60, Purchaser shall assume Seller's entire obligation
to furnish Forms W-2 for the calendar year ending December 31, 1999 to
Transferred Employees. Seller shall provide Purchaser any information not
available to Purchaser relating to periods ending on the Closing Date necessary
for Purchaser to prepare and distribute Forms W-2 to Transferred Employees for
the year ending December 31, 1999, which Forms W-2 shall include all
remuneration earned by Transferred Employees from both Seller and Purchaser
during the year ending December 31, 1999, and Purchaser shall prepare and
distribute such Forms.
VI.2 Further Assurances; Cooperation and Assistance. From time to
time from and after the Closing Date, at Purchaser's reasonable request, Seller
will (and will cause its officers, directors, employees, affiliates and agents
to) execute and deliver such other instruments of conveyance and transfer and
take such other actions as Purchaser may reasonably request in order to (i)
perfect and
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record, if necessary, the sale, assignment, conveyance, transfer, and delivery
to Purchaser of the Assets and (ii) convey, transfer to and vest in Purchaser
and to put Purchaser in possession and operating control of all or any part of
the Assets, including, without limitation, cooperating with and assisting
Purchaser in the prosecution of any claims and in the collection or reduction
to possession of all the Assets. Seller hereby agrees that all out-of-pocket
expenses incurred in connection with the matters set forth in clause (ii) above
shall be borne by it, and all other costs incurred in clauses (i) and (ii)
shall be borne by Purchaser.
VI.3 Nondisclosure. (a) From and after the Closing Date, Seller
will not use, divulge, furnish or make accessible to anyone any knowledge or
information with respect to confidential or secret processes, inventions,
discoveries, improvements, formulae, plans, material, devices or ideas or
know-how, whether patentable or not, with respect to any proprietary, material
non-public, confidential or secret aspects of the Business, in each case
relating solely to the Business (including, without limitation, customer lists,
supplier lists and pricing and marketing arrangements with customers or
suppliers) and Seller will cooperate reasonably with Purchaser in preserving
such proprietary, confidential or secret aspects of the Business, in each case
relating solely to the Business; provided, however, that nothing herein shall
prohibit Seller from (i) complying with any order or decree of any court of
competent jurisdiction or governmental authority, but Seller will give
Purchaser timely notice of the receipt of any such order or decree, or (ii)
disclosing such information to the extent necessary to any lenders under any of
their credit documentation, as it relates to the Business, and provided,
further, that the foregoing provision shall not apply to any information which
is or becomes generally available to the public through no breach of this
Agreement.
VI.4 Non-Competition. (a) Seller (on behalf of itself and its
subsidiaries) and JPS agrees that for three (3) years from and after the
Closing Date, it shall not engage, directly or indirectly, or render any
consulting or advisory services to any person, firm or corporation that
engages, in the United States in the yarn sales business or own stock or
otherwise have an interest in or be affiliated with, any person, corporation,
firm, partnership or other entity engaged in such business (except as a
stockholder holding less than lot of the stock of a publicly-owned
corporation); provided, however, that it shall not be a violation of this
Section 6.4(a) for Seller to resell returned goods received from customers of
the Business (whether received by Seller before or after the Closing Date).
(b Seller (on behalf of itself and its subsidiaries) shall not
(i) for a period of three (3) years from the Closing Date with respect to any
Employees listed as "Key Employees" in Schedule 6.4(b) and (ii) for a period of
one (1) year from the Closing Date with respect to any other salaried Employee,
hire any such
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Employee, without the prior written consent of Purchaser, except as otherwise
required by court order or unless as otherwise agreed between the parties.
(c Seller (on behalf of itself and its subsidiaries) agrees that
a violation of Section 6.4(a) or 6.4(b) will cause irreparable injury to
Purchaser, and Purchaser will be entitled, in addition to any other rights and
remedies it may have at law or in equity, to apply for an injunction enjoining
and restraining Seller from doing or continuing to do any such act and any
other violations or threatened violations of this Section 6.4.
(d Seller (on behalf of itself and its subsidiaries)
acknowledges and agree that the covenants set forth in this Section 6.4 are
reasonable and valid in geographical and temporal scope and in all other
respects. If any of such covenants are found to be invalid or unenforceable by
a final determination of a court of competent jurisdiction (i) the remaining
terms and provisions hereof shall be unimpaired and (ii) the invalid or
unenforceable term or provision shall be deemed replaced by a term or provision
that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. In the event that,
notwithstanding the first sentence of this paragraph (d), any of the provisions
of this Section 6.4 relating to the geographic or temporal scope of the
covenants contained therein or the nature of the business restricted thereby
shall be declared by a court of competent jurisdiction to exceed the maximum
restrictiveness such court deems enforceable, such provision shall be deemed to
be replaced herein by the maximum restriction deemed enforceable by such court.
VI.5 Sums Received in Respect of Business. Seller shall pay or
cause to be paid over to Purchaser, promptly after the receipt thereof after
the Closing Date, all sums received in respect or on account of the Assets
relating to the Business and the consideration received by Seller as set forth
in Section 2.2 hereof.
VI.6 Maintenance of the Business Prior to Closing. Unless
otherwise consented to by Purchaser, from the date hereof until the Closing,
Seller shall:
(a carry on the Business in the ordinary course in accordance
with past practice and not take any action inconsistent therewith or with the
consummation of the transactions contemplated hereby;
(b except as set forth on Schedule 6.6(b), use its best efforts
to keep available generally the services of the present employees of the
Business, and
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preserve generally the present relationships with persons having business
dealings with the Business;
(c maintain all of the Assets in good repair, order and
condition (except for ordinary wear and tear and equipment breakdowns of a type
normally occurring which do not materially interfere with the operation of the
Business);
(d maintain the books, accounts and records in the ordinary
course consistent with past practice, and comply, in all material respects,
with all laws applicable to the conduct of the Business;
(e not materially change or enter into any agreement to
materially change the character of the Business;
(f not enter into any employment contract with any employee of
the Business or make any loan to, or enter into any material transaction of any
other nature with, any employee of the Business;
(g other than in accordance with the Seller Credit Agreement
and/or the Loan and Security Agreement, by and between JPS Converter and
Industrial Corp. and The CIT Group/Equipment Financing, Inc., dated as of May
31, 1991, as amended (the "CIT Agreement"), not sell or transfer any of the
Assets, except Inventory and Fixed Assets in the ordinary course of business,
and maintain Inventory at levels consistent with past practice ;
(h not terminate or modify any lease, license, Permit, Contract
or other agreement included in the Assets in a manner materially adverse to the
Business;
(i other than in accordance with the Seller Credit Agreement
and/or the CIT Agreement, not release, waive, sell or assign any debts, claims,
rights or other intangible rights included in the Assets; and
(j maintain insurance coverage in the usual manner consistent
with prior practices.
If, in accordance with the terms of the Seller Credit Agreement or the
CIT Agreement, any of the events described in (g) and (i) above occur, then
Seller shall promptly provide Purchaser with written notice of such occurrence.
VI.7 Consents. Purchaser and Seller, as applicable, will take all
reasonable action required hereunder to obtain all applicable Permits,
consents, approvals and agreements of, and to give all notices and make all
filings with, public and governmental authorities and third parties (at such
time as the parties
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mutually determine) as may be necessary to authorize, approve or permit the
full and complete sale, conveyance, assignment and transfer of the Assets to
Purchaser; provided, however, that nothing contained in this Section 6.7 shall
be deemed to require Seller to make any payments to obtain a consent or
approval from any third party.
VI.8 Public Announcements. Neither Seller (nor any of its
Affiliates) nor Purchaser (nor any of its Affiliates) shall make any public
statement, including, without limitation, any press release, with respect to
this Agreement and the transactions contemplated hereby, without the prior
written consent of the other party (which consent may not be unreasonably
withheld or delayed), except as may be required by law, regulation, legal
process or stock exchange rules, and except that following the issuance of
press releases by the parties hereto with respect to the transactions
contemplated hereby the parties may continue routine communications (including
discussions regarding the transactions contemplated hereby) with investors and
analysts.
VI.9 Pre-Closing Sales Tax Liabilities. Seller shall be
responsible for all sales taxes applicable to sales of merchandise made by the
Business prior to the Closing Date.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions provided for
hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any and all of which may be waived in whole
or in part by Seller:
VII.1 Representations, Warranties and Covenants. All
representations and warranties of Purchaser contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date, except
as affected by the transactions contemplated hereby, and Purchaser shall have
performed in all material respects all covenants and conditions contained in
this Agreement to be performed or complied with by it prior to or on the
Closing Date.
VII.2 Certificates. Purchaser shall have furnished Seller with such
certificates, dated the Closing Date, of Purchaser's officers, directors and
others to evidence compliance with the conditions set forth in this Article VII
as may be reasonably requested by Seller.
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VII.3 Corporate Documents. Seller shall have received from
Purchaser certified copies of the resolutions duly adopted by the board of
directors of Purchaser approving the execution and delivery of this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby, and such resolutions shall be in full force
and effect as of the Closing Date.
VII.4 Legal Opinion. Seller shall have received the opinion of
Xxxxxxx Xxxxxx L.L.P. counsel to Purchaser, in the form of Exhibit E hereto.
VII.5 Consents. All consents listed on Schedule 7.5 hereto shall
have been obtained.
VII.6 No Governmental Proceedings or Litigation. No suit, action,
investigation or other proceeding by any governmental authority or other person
or any other legal or administrative proceeding shall have been instituted or
threatened which would make illegal, or prevent, or question the validity or
legality of, the transactions contemplated hereby or which seeks material
damages in respect thereof.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions provided
for hereby are subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, any or all of which may be waived in whole or
in part by Purchaser:
VIII.1 Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date, and
Seller shall have performed in all material respects all covenants and
conditions contained in this Agreement to be performed or complied with by them
prior to or on the Closing Date.
VIII.2 Certificates. Seller shall have furnished Purchaser with such
certificates, dated the Closing Date, of Seller's officers, directors and
others to evidence compliance with the conditions set forth in this Article
VIII as may be reasonably requested by Purchaser.
VIII.3 Section 1445 Certificate. Seller shall have furnished
Purchaser with a certificate that such Seller is not a foreign person within
the meaning of
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Section 1445 of the Code, which certificate shall set forth all information
required by, and otherwise be executed in accordance with, Treasury Regulation
Section 1.1445-2(b).
VIII.4 Corporate Documents. Purchaser shall have received from
Seller certified copies of the resolutions duly adopted by the boards of
directors of Seller and JPS approving the execution and delivery of this
Agreement and the Ancillary Agreements and the JPS Agreement and the
consummation of the transactions contemplated hereby and thereby.
VIII.5 Legal Opinion. Purchaser shall have received the opinion of
Xxxxx, Day, Xxxxxx & Xxxxx, Atlanta, Georgia, counsel for Seller, in the form
of Exhibit F hereto.
VIII.6 Consents. All consents listed on Schedule 8.6 hereto shall
have been obtained.
VIII.7 Delivery of Documents. Seller shall have executed and
delivered to Purchaser at the Closing the Ancillary Agreements and executed
and/or delivered the other documents listed in Sections 3.2, 3.3 and 3.4
hereof.
VIII.8 Good Standing Certificates. Purchaser shall have received (i)
a certificate of the Secretary of State of the State of Delaware as to Seller's
good standing and legal existence dated as close as practicable to the Closing
Date and a bring-down notice dated as of the Closing Date as to Seller's good
standing and (ii) a certificate of the Secretary of State of the State of North
Carolina as to Seller's authority to do business in such state dated as close
as practicable to the Closing Date.
VIII.9 Release of Liens. Purchaser shall have received evidence
reasonably satisfactory to it that all liens of third parties in respect of the
Assets, other than Permitted Liens, shall have been released as of the Closing
Date.
VIII.10 No Governmental Proceedings or Litigation. No suit, action,
investigation or other proceeding by any governmental authority or other person
or any other legal or administrative proceeding shall have been instituted or
threatened which would make illegal, or prevents, or questions the validity or
legality of, the transactions contemplated hereby or which seeks material
damages in respect thereof.
VIII.11 Termination of Supply Agreement. The parties hereto shall
have terminated the existing Supply Agreement dated January 11, 1999 by and
between the parties.
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VIII.12 Transitional Services Agreement. Seller shall have executed
and delivered to Purchaser the Transitional Services Agreement.
VIII.13 JPS Agreement. JPS shall have executed and delivered to
Purchaser the JPS Agreement
VIII.14 Lender Approvals. Purchaser shall have received the consents
of its lenders to allow Purchaser to consummate the transactions contemplated
by this Agreement.
ARTICLE IX
CERTAIN ACTIONS BY SELLER AND PURCHASER AFTER THE CLOSING
IX.1 Books and Records. Each party agrees that it will cooperate
with and make available to the other party, subject to Section 10.11 hereof,
during normal business hours, all Books and Records, information and employees
(without substantial disruption of employment) retained and remaining in
existence after the Closing Date which are necessary or useful in connection
with any Tax inquiry, investigation or dispute, any litigation or investigation
or any other matter requiring any such Books and Records, information or
employees for any reasonable business purpose. The party requesting any such
Books and Records, information or employees shall bear all of the out-of-pocket
costs and expenses (including, without limitation, attorneys' fees) reasonably
incurred in connection with providing such Books and Records, information or
employees. Seller may require certain financial information relating to the
Business for periods prior to the Closing Date for the purpose of filing
federal, state, local and foreign tax returns and other governmental reports,
and Purchaser agrees to furnish such information to Seller at reasonable
request.
IX.2 Indemnification.
(a By Seller. Seller shall indemnify and hold harmless
Purchaser, its directors, officers, employees and each of their respective
successors and assigns from and against any and all demands, claims, actions or
causes of action, assessments, deficiencies, damages, losses, liabilities and
expenses (including, without limitation, reasonable expenses of investigation
and attorneys' fees and expenses in connection with any action, suit or
proceeding or investigation brought against Purchaser) (herein, the "Damages"),
incurred in connection with or arising out of or resulting from (i) any breach
of or inaccuracy in any representation or warranty made by Seller pursuant to
this Agreement and/or the Ancillary Agreements; (ii) the failure of Seller to
comply with any of the covenants contained in this Agreement or the Ancillary
Agreements which are required to be
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performed by Seller; (iii) any Excluded Liability; (iv) any Taxes which result
in a claim against Purchaser for any taxable period ending on or prior to the
Closing Date (other than taxes assumed by Purchaser hereunder); (v) any product
claim or warranty relating to products sold prior to the Closing and all
general liability claims arising out of events occurring prior to the Closing;
(vi) the non-compliance by Seller with applicable bulk sales statutes; and
(vii) the operation of the Business on or prior to the Closing Date.
(b By Purchaser. Purchaser shall indemnify and hold harmless
Seller, its directors, officers and employees and each of their respective
successors and assigns from and against any and all Damages incurred in
connection with or arising out of or resulting from (i) any breach of or
inaccuracy in any representation or warranty made by Purchaser pursuant to this
Agreement and/or the Ancillary Agreements; (ii) the failure of Purchaser to
comply with any of the covenants contained in this Agreement or in any of the
Ancillary Agreements which are required to be performed by Purchaser; (iii) the
operation of the Business (other than with respect to the Excluded Assets or
any Excluded Liabilities) from and after the Closing Date, including, without
limitation, any claim, liability, obligation or commitment of any nature in
respect of any Permits operated by Seller for the benefit of Purchaser from and
after the Closing Date pursuant to Section 3.2 hereof; and (iv) any liability
arising after the Closing Date relating to violations of the Worker Adjustment
and Retraining Notification Act (29 USC Sections 2101-2109) caused by
Purchaser's termination or layoff of Transferred Employees.
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(c Claims by Third Parties. Promptly after receipt by an
indemnified party of written notice of the commencement of any investigation,
claim, proceeding or other action in respect of which indemnity may be sought
from the indemnitor (an "Action"), such indemnified party shall notify the
indemnitor in writing of the commencement of such Action; but the omission to
so notify the indemnitor shall not relieve it from any liability that it may
otherwise have to such indemnified party, except to the extent that the
indemnitor is materially prejudiced or forfeits substantive rights or defenses
as a result of such failure. In connection with any Action in which indemnitor
and any indemnified party are parties, the indemnitor shall be entitled to
participate therein, and may assume the defense thereof. Notwithstanding the
assumption of the defense of any such Action by the indemnitor, each
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such Action, and the indemnitor shall bear the
reasonable fees, costs and expenses of such separate counsel to such
indemnified party if: (a) the indemnitor shall have agreed to the retention of
such separate counsel, (b) the indemnified party shall have concluded that
representation of such indemnified party and the indemnitor by the same counsel
would be inappropriate due to actual or, as reasonably determined by such
indemnified party's counsel, potential differing interests between them in the
conduct of the defense of such Action, or if there may be legal defenses
available to such indemnified party that are different from or additional to
those available to the other indemnified party or to the indemnitor, or (c) the
indemnitor shall have failed to employ counsel reasonably satisfactory to such
indemnified party within a reasonable period of time after notice of the
institution of such Action. If such indemnified party retains separate counsel
in cases other than as described in clauses (a), (b) or (c) above, such counsel
shall be retained at the expense of such indemnified party. Except as provided
above, it is hereby agreed and understood that the indemnitor shall not, in
connection with any Action in the same jurisdiction, be liable for the fees and
expenses of more than one counsel for all such indemnified parties (together
with appropriate local counsel). The party from whom indemnification is sought
shall not, without the written consent of the party seeking indemnification
(which consent shall not be unreasonably withheld), settle or compromise any
claim or consent to entry of any judgment that involves more than the payment
of money or that does not include an unconditional release of the party seeking
indemnification from all liabilities with respect to such claim.
(d Notwithstanding any other provision of this Agreement, none
of the parties hereto shall be entitled to indemnification pursuant to this
Section 9.2 for any Damages arising out of the breach of any representation or
warranty made by the other party in this Agreement except as follows: (i) with
respect to any Damages resulting from a breach of any of the representations
and warranties by either party, the other party shall be entitled to
indemnification for only those
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Damages which arise out of such breach and are in excess of $200,000 in the
aggregate (it being agreed that such other party shall bear the first $200,000
of Damages arising from such breaches or alleged breaches); and (ii) unless the
party seeking such indemnification shall make its claim therefor on or prior to
the date on which the relevant representation or warranty shall expire pursuant
to Section 10.2, except that if a claim arises under a representation or
warranty and a notice of such claim is given prior to the expiration of the
survival period, then such representation or warranty shall not terminate with
respect to such claim until indemnification thereof (if any is owing) shall
have been made in accordance with the provisions of this Agreement. In no event
will either party be liable under or with respect to this Agreement for any
Damages or any portion of any Damages arising out of the breach of any
representation or warranty in excess of $2,000,000 in the aggregate; provided,
however, that the foregoing limitations on liability for Damages arising out of
the breach of any representation or warranty shall not apply to claims of
Purchaser relating to the Excluded Liabilities or claims of Seller relating to
the Assumed Liabilities or to the representations or warranties set forth in
Section 4.2 or 5.2.
(e Each party hereto acknowledges and agrees that, after the
Closing Date, its sole and exclusive legal remedy with respect to any and all
claims relating to or arising out of a breach of any representation, warranty,
covenant or agreement made by the other party in this Agreement shall be
pursuant to the indemnification provisions set forth in this Section 9.2,
except in the case of actual fraud.
(f In calculating any amounts payable pursuant to this Section
9.2 or Section 9.4 by Seller or Purchaser, as the case may be, such amounts
shall be reduced by (i) any tax benefit actually realized by the Indemnified
Party as a result of the facts giving rise to the claim for indemnification and
(ii) any insurance recoveries received by the Indemnified Party. All amounts
paid pursuant to this Section 9.2 or Section 9.4 by one party to another party
shall be treated by such parties as an adjustment to the Purchase Price for the
Assets.
(g With respect to Remedial Activities (as defined in Section
9.2(g)(vi) below) for which Seller must indemnify Purchaser:
(i Purchaser shall notify Seller of any condition
requiring Remedial Activities for which Seller is responsible within 30
days of becoming aware that Remedial Activities are required. Purchaser
shall identify the conditions and the asserted grounds for
indemnification. Seller shall have 60 days from receipt of such notice
to commence an appropriate response, which may include investigation,
remediation, or response to and negotiation with regulatory
authorities, but need not involve actual Remedial Activities. Seller
shall promptly and diligently, consistent with clause (iii) below,
ascertain and
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complete all Remedial Activities required by Environmental
Laws and the governmental authorities responsible for
implementing those laws.
(ii Claims by third parties alleging personal injury or property
damage arising out of Hazardous Materials which do not arise
out of and will not involve Remedial Activities shall be
governed by subsection 9.2(c) of this section.
(iii Seller and Purchaser shall reasonably cooperate in all
decisions and activities related to Remedial Activities,
including without limitation, the timing, scope of work,
choice of consultant, choice of contractors, and remedy
selected; provided, however, that (a) Seller shall ensure that
all Remedial Activities are undertaken in a manner that does
not prevent or materially impair Purchaser from using the
Xxxxxxx Plant in a reasonable manner, (b) Seller shall comply
with all applicable laws and with all requirements imposed by
governmental authorities with responsibility for implementing
Environmental Laws, and (c) Seller may use the least stringent
criteria applicable to industrial property if such criteria
are acceptable to governmental authorities with jurisdiction
over the Remedial Activities. Seller shall provide Purchaser
with a written scope of work and the anticipated timeframe for
completion not less than 20 days before the commencement of
work. Purchaser shall have the right to review and to consult
with Seller with respect to finalization and implementation of
such plan and Seller, shall where reasonable, incorporate
Purchaser's comments to such plan.
(iv Purchaser shall provide Seller and its agents and
representatives, including its environmental consultants and
contractors, with access to the Xxxxxxx Plant and any portion
thereof on which Remedial Activities are to be performed, and
to water, telephone lines, electricity and other readily
available utilities. Purchaser shall cooperate with and assist
Seller in procuring required environmental permits and
authorizations and making required reports and filings.
Purchaser shall not be required to incur any out-of-pocket
expenses or extraordinary personnel or operating costs in
connection with such cooperation and assistance without
reasonable compensation.
(v If Seller fails for any reason to commence and complete all
required Remedial Activities in accordance with this
Agreement, then Purchaser shall, after reasonable notice, have
the right, but not the obligation, to perform such activities
as Purchaser, in its sole discretion, believes are required to
obtain compliance with Environmental Laws and Seller shall be
responsible under Section 9.2(a) for reimbursing all of
Purchaser's reasonable costs; provided, however, that
Purchaser shall use the least stringent clean-up criteria
applicable to industrial property.
(vi For purposes of this Section 9.2(g), Remedial Activities means
any actions specifically required by Environmental Laws to
cleanup, remove, treat, or in any other way address Hazardous
Materials located in, on or under the soil or groundwater at
the Xxxxxxx Plant at concentrations exceeding those allowed by
Environmental Laws. Remedial Activities shall not include any
action voluntarily undertaken to investigate or remediate
Hazardous Materials.
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(h)(i) Omissions, conduct or conditions that were not violations of
Environmental Laws in effect on the Closing Date, but which subsequently become
violations due to a change in law, shall be Assumed Liabilities, and omissions,
conduct or conditions that would have been violations of Environmental Laws in
effect on the Closing Date (had all of the facts and circumstances been known)
shall be Excluded Liabilities.
(ii) Conditions existing on or before Closing for which Remedial
Activities (as defined in Section 9.2(g)(vi)) were not required under
Environmental Laws in effect on the Closing Date, but which subsequently become
subject to a remedial requirement due to a change in law, shall be Assumed
Liabilities, and all other conditions existing on or before Closing for which
Remedial Activities would have been required under Environmental Laws in effect
on the Closing Date (had all of the facts and circumstances been known) shall
be Excluded Liabilities.
IX.3 Tax Matters. (a) Seller and Purchaser shall cooperate fully
with each other and make available or cause to be made available to each other
in a timely fashion such Tax data, prior Tax returns and filings and other
information as may be reasonably required for the preparation by Purchaser or
Seller of any Tax returns, elections, consents or certificates required to be
prepared and filed by Purchaser or Seller and any audit or other examination by
any taxing authority, or judicial or administrative proceeding relating to
liability for Taxes. Purchaser and Seller will each retain and provide to the
other party all records and other information which may be relevant to any such
Tax return, audit or examination, proceeding or determination, and will each
provide the other party with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to be
shown on any Tax return of the other party for any period. Each of Purchaser
and Seller will retain copies of all Tax returns, supporting work schedules and
other records relating to Tax periods or portions thereof ending prior to or on
the Closing Date.
(b Notwithstanding the provisions of Section 2.3(e) hereof (i)
any recording or other similar Taxes or fees imposed as a result of the sale of
the Owned Real Property to Purchaser pursuant to this Agreement shall be paid
by Purchaser and (ii) any sales, transfer, use or other similar Taxes or fees
imposed as a result of the sale of the Business to Purchaser pursuant to this
Agreement shall be paid by Seller. At the Closing, Seller and Purchaser shall
deliver to each other such properly completed resale exemption certificates and
other similar certificates or instruments as are necessary to claim available
exemptions from the payment of sales, transfer, use or other similar Taxes
under applicable law.
IX.4 Mail Received After Closing. (a) Following the Closing,
Purchaser may receive and open all mail and other communications addressed to
Seller and deal with the contents thereof in its discretion to the extent that
such mail relates to the Business; provided that Purchaser shall have no right
to deal with the contents of any mail or other communication to the extent that
the same are not in respect of the Assets or the Business and Purchaser shall
promptly notify Seller as to the receipt thereof and make appropriate
arrangements to deliver such materials promptly to Seller.
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(b Following the Closing, Seller shall promptly notify Purchaser
of all mail and other communications relating solely to the Business addressed
to Seller and received by Seller, and shall make appropriate arrangements to
deliver such materials promptly to Purchaser.
ARTICLE X
MISCELLANEOUS
X.1 Termination. This Agreement may be terminated: (a) by the
written agreement of Seller and Purchaser; (b) by either Seller or Purchaser if
there shall be in effect a non-appealable order of a court of competent
jurisdiction permanently prohibiting the consummation of the transactions
contemplated hereby; (c) by either Seller or Purchaser if the Closing shall not
have occurred on or before July 31, 1999 (it being understood that the parties
intend to use their reasonable good faith efforts to have the Closing occur by
July 15, 1999); and (d) by Purchaser if there is a material occurrence of an
event described in Sections 6.6 (g) or 6.6 (i) or a material change in any
schedule pursuant to Section 10.14 for which the Purchaser has withheld consent
and such consent was not unreasonably withheld. Upon any termination of this
Agreement pursuant to this Section 10.1, no party hereto shall thereafter have
any further liability or obligation hereunder, other than for liabilities to
the extent arising from a willful breach of this Agreement prior to the date of
such termination.
X.2 Survival of Representations and Warranties. The respective
representations and warranties made by Seller and Purchaser in this Agreement
(including those made in the Exhibits and Schedules hereto) or in any Ancillary
Agreement shall not be deemed waived or otherwise affected by any investigation
made by any party hereto. Each and every such representation and warranty of
Seller and Purchaser shall expire with, and be terminated and extinguished on,
the first anniversary of the Closing Date (other than in respect of the
representations and warranties set forth in (i) Sections 4.9. 4.13 and 4.18,
which shall survive for a period of three (3) years after the Closing Date or
(ii) Sections 4.2, 4.4, 4.5 or 5.2, which shall survive for a period equal to
the applicable statute of limitations) or the termination of this Agreement
pursuant to Section 10.1 hereof or otherwise.
X.3 Assignment. Neither this Agreement nor any right or
obligation hereunder or part hereof may be assigned by any party hereto without
the prior written consent of the other party hereto (and any attempt to do so
will be void). Notwithstanding the foregoing, (i) Purchaser hereby acknowledges
and agrees that Seller may collaterally assign its rights, title and interest
to any payments under this Agreement to Citibank, N.A., as collateral agent
pursuant to the Seller Credit Agreement, or to any successor collateral agent
thereunder (Citibank, N.A., in such capacity, or any such successor being the
"Collateral Agent"), and Purchaser hereby consents to such assignment and (ii)
Seller hereby acknowledges and agrees that Purchaser may collaterally assign
its rights, title and interest to any payments under this Agreement to any
financial institution providing financing to Purchaser in connection with the
transactions contemplated by this Agreement. Furthermore, Purchaser hereby
acknowledges and agrees that upon receipt of written notice from the Collateral
Agent that an "Event of Default" has occurred pursuant to the Seller Credit
Agreement, Purchaser will tender any payments due under this Agreement to the
Collateral Agent in accordance with the instructions set forth in such notice;
provided, however, in the event that
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Purchaser tenders payment to Seller, such payment shall be a complete discharge
of Purchaser's obligation to the Collateral Agent and Purchaser shall
thereafter have no further liability to the Collateral Agent with respect to
such payment.
X.4 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by either party to
the other shall be in writing and shall be deemed to have been duly given if
delivered by hand or sent by facsimile (with confirmation by facsimile answer
back) or mailed by certified or registered mail, postage prepaid, return
receipt requested (such mailed notice to be effective on the date such receipt
is acknowledged), as follows:
If to Seller, addressed to:
JPS Industries, Inc.
000 X. Xxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Chief Financial Officer
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
0000 XxxXxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Purchaser, addressed to:
Xxxxxxx Xxxxxxx Incorporated
00 Xxxx 00xx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, President CEO
Facsimile No: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No: (000) 000-0000
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or to such other place with such other copies as either party may designate as
to itself by written notice to the others.
X.5 Choice of Law. The Agreement 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).
X.6 Entire Agreement; Amendments and Waivers. This Agreement and
the Ancillary Agreements, together with all Exhibits and Schedules hereto and
thereto, constitute the entire Agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to the subject matter hereof. No supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided. No act, delay or omission or course of dealing on
the part of either party in exercising any right, power or remedy under this
Agreement or at law or in equity shall operate as a waiver thereof or otherwise
prejudice any of such party's rights, powers and remedies. All remedies,
whether at law or in equity, shall be cumulative and the election of any one or
more shall not constitute a waiver of the right to pursue other available
remedies.
X.7 Multiple 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.
X.8 Expenses. Except as otherwise specified herein, each party
hereto shall pay its own legal, accounting, out-of-pocket and other expenses
incident to this Agreement; provided, however, with respect to costs, fees or
expenses paid in connection with transferring Permits or obtaining new Permits
to enable Purchaser to operate and continue to operate the Business, such costs
shall be borne solely by Purchaser.
X.9 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument and, in lieu of any such provision held
to be invalid, illegal or unenforceable, the parties shall agree to amend the
Agreement to include a similar provision that is valid, legal and enforceable.
X.10 Titles. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
X.11 Confidential Transaction Information. The parties acknowledge
that the transactions described herein are of a confidential nature and shall
not be disclosed except as provided herein or as required by law, regulations,
legal process or stock exchange rules. Neither
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Seller, Purchaser nor their respective Affiliates shall make any public
disclosure of the specific terms of this Agreement without the prior written
consent of the other parties hereto, except as required by law or stock
exchange rules or to bankers, attorneys, accountants and other professional
advisors. In connection with the performance of obligations hereunder, each
party acknowledges that it will have access to confidential information
relating to the other parties. Each party hereto shall treat such information
as confidential, preserve the confidentiality thereof and not duplicate or
disclose such information in connection with the transactions contemplated
hereby, except to advisors, lenders, consultants and affiliates who also agree
to treat such information as confidential. Seller, at a time and in a manner
which it reasonably determines and after prior notice to and consultation with
Purchaser, may notify employees, unions, bargaining agents and the public at
large of the fact of the subject transaction.
X.12 Third Parties. Except as set forth in Section 10.3 hereof,
nothing expressed or implied herein is intended or shall be construed to confer
upon or give to any person or entity other than the parties hereto, and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement (but in no event shall any of the Employees have any such
rights).
X.13 Neutral Construction. All of the parties to this Agreement
were represented by counsel, or had the opportunity to consult with counsel. No
party may rely on any drafts of this Agreement in any interpretation of this
Agreement. Each party to this Agreement has reviewed this Agreement and has
participated in its drafting and, accordingly, no party shall attempt to invoke
the normal rule of construction to the effect that ambiguities are to be
resolved against the drafting party in any interpretation of this Agreement.
X.14 Revisions to Certain Schedules. Notwithstanding anything to
the contrary in this Agreement, Seller may revise the schedules to this
Agreement (or the schedules to any exhibit to this Agreement) to reflect
operations of the Business in the ordinary course of business, as contemplated
by this Agreement, subject to the consent of Purchaser, which consent may not
be unreasonably withheld. Seller shall deliver to Purchaser any such revised
schedules prior to the Closing Date.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement 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
---------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
XXXXXXX XXXXXXX INCORPORATED
By /s/ Xxxxx Xxxxx
---------------------------------------
Name: Xxxxx Xxxxx
Title: President and CEO
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