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SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10, 1996
COLLINS & AIKMAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-10218 13-3489233
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
701 McCullough Drive
Charlotte, North Carolina 28262
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 547- 8500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
JPS Automotive Acquisition
(a) On December 11, 1996, Collins & Aikman Products Co., a wholly owned
subsidiary of Collins & Aikman Corporation (the "Company"), acquired JPS
Automotive L.P. ("JPS Automotive") from Foamex International, Inc. ("Foamex")
pursuant to an Equity Purchase Agreement dated August 28, 1996, as amended
December 11, 1996 (the "JPS Automotive Acquisition"). JPS Automotive provides
automotive carpet systems to both domestic and non-U.S. automotive manufacturers
in North America. The purchase price for the JPS Automotive Acquisition was an
aggregate of approximately $220 million (subject to post-closing adjustment),
consisting of approximately $194 million of indebtedness of JPS Automotive and
$26 million in cash to Foamex. The Company also purchased a minority interest in
a JPS Automotive subsidiary for a purchase price of $10 million.
The cash portion of the purchase price of the JPS Automotive Acquisition
and the approximately $14 million of indebtedness of JPS Automotive that was
repaid at the time of closing were funded through the Company's existing
revolving facility with a syndicate of banks arranged by The Chase Manhattan
Bank (the "Revolver"). The Revolver has an aggregate principal amount of $250
million and matures July 13, 2001.
The consideration paid in the JPS Automotive Acquisition was determined
through arms-length negotiations between the Company and Foamex.
The indebtedness of JPS Automotive includes approximately $180 million of
indebtedness related to JPS Automotive's 11-1/8% Senior Notes due 2001 (the "JPS
Automotive Senior Notes")(approximately $64.5 million of which was effectively
contributed to JPS Automotive by the Company on December 11, 1996). As a result
of the JPS Automotive Acquisition, holders of the JPS Automotive Senior Notes
have the right to put their notes to JPS Automotive at a price of 101% of their
principal amount plus accrued interest. The Company entered into a $200 million
delayed draw term loan with a syndicate of banks arranged by The Chase Manhattan
Bank, the proceeds of which will be available to allow the Company or a
subsidiary to finance the purchase of any JPS Automotive Senior Notes that are
put to JPS Automotive as a result of the JPS Automotive Acquisition or otherwise
acquire JPS Automotive Senior Notes.
(b) JPS Automotive provides automotive carpet systems to both domestic and
non-U.S. automotive manufacturers in North America. JPS Automotive is based in
Greenville, South Carolina and has six manufacturing, distribution and sales
facilities in South Carolina, North Carolina and Michigan, as well as a joint
venture in Mexico. The Company intends for JPS Automotive to continue in its
current line of production and has no plans at this time to devote JPS
Automotive's assets to any other purpose.
Perstorp Acquisition
(a) On December 11, 1996, the Company acquired Perstorp AB's automotive
supply and related operations in North America, the United Kingdom and Spain
(the "Perstorp Acquisition") for a purchase price of $108 million, subject to
post-closing adjustment. The Perstorp Acquisition was made pursuant to an
Acquisition Agreement between Collins & Aikman Products Co. and Perstorp A.B.
dated as of December 11, 1996.
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The consideration paid in the Perstorp Acquisition was determined through
arms-length negotiations between the Company and Perstorp A.B. The purchase
price for the Perstorp Acquisition was financed with funds from the Company's
existing Revolver described above.
In addition, the Company and Perstorp A.B. entered into a joint venture
relating to Perstorp's automotive components supply facilities in Sweden,
Belgium and France. See "Item 5. Other Events".
(b) In the Perstorp Acquisition, the Company acquired direct ownership of
three Perstorp Components facilities in the United States, two in Canada, one in
Mexico, three in the United Kingdom and one in Spain. The Company intends for
these facilities to continue in their current line of production and has no
plans at this time to devote their assets to any other purpose.
ITEM 5. OTHER EVENTS
Agreement to Sell Floorcovering Business
On December 10, 1996, the Company entered into a definitive agreement to
sell its floorcoverings business to an entity sponsored by Quad-C, Inc., a
Virginia merchant banking firm, and Paribas Principal Inc., the U.S. private
equity unit of Groupe Paribas. The purchase price, including a payment for the
use of certain trade names in the floorcoverings business, is $197 million,
subject to adjustment. The acquisition, which is subject to a number of
customary conditions to closing, is expected to close in February 1997.
Perstorp Joint Venture Agreement
On December 11, 1996, Perstorp A.B. and the Company entered into a joint
venture agreement relating to Perstorp's automotive components supply facilities
in Sweden, Belgium and France which closed December 17, 1996. Pursuant to the
joint venture, each of the Company and Perstorp will invest $7.5 million in cash
and have a 49.9% interest in the joint venture, which will be managed by the
Company. The joint venture will purchase the Perstorp components business in
Sweden, Belgium and France for $67 million, comprised of the $15 million equity
investment and approximately $52 million of indebtedness. The indebtedness will
initially be held by Perstorp but is expected to be refinanced with new bank
debt, which Perstorp is expected to arrange. The Company will have no liability
for the new bank financing. The joint venture agreement includes an option for
the Company to purchase Perstorp A.B.'s equity interest in the joint venture at
a predetermined multiple of future cash flow for a period of three years, after
which Perstorp will have a two-year purchase right if the Company has not
exercised its purchase right.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) and (b) The financial statements of the businesses acquired in the JPS
Automotive Acquisition and the pro forma financial information relative to
such acquisition are not included in this Report on Form 8-K and will be filed
by amendment not later than February 24, 1997 (which is 60 days after the date
that the initial Report on Form 8-K with respect to such acquisitions was
required to be filed).
The Perstorp Acquisition did not meet the significant subsidiary
requirements of Rule 1.02(w) of Regulation S-X. Accordingly, financial
statements and pro forma financial data for the Perstorp Acquisition
have not been provided.
(c) The exhibits furnished in connection with this Report are as follows:
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Exhibit
Number Description
2.1 Equity Purchase Agreement by and among JPSGP, Inc., Foamex -
JPS Automotive L.P. and Collins & Aikman Products Co. dated
August 28, 1996 is hereby incorporated by reference to Exhibit
2.1 of Collins & Aikman Corporation's Report on Form 10-Q for
the fiscal quarter ended July 27, 1996.
2.2 Amendment No. 1 to Equity Purchase Agreement by and among
JPSGP, Inc., Foamex - JPS Automotive L.P., Foamex
International Inc. and Collins & Aikman Products Co. dated as
of December 11, 1996.
2.3 Equity Purchase Agreement by and among Seiren U.S.A.
Corporation, Seiren Automotive Textile Corporation, Seiren
Co., Ltd. and Collins & Aikman Products Co. dated December 11,
1996.
2.4 Acquisition Agreement between Perstorp A.B. and Collins &
Aikman Products Co. dated December 11, 1996.
2.5 Agreement among Perstorp A.B., Perstorp GmbH, Perstorp Biotec
A.B. and Collins & Aikman Products Co. dated December 11,
1996.
2.6 Shareholders Agreement among Collins & Aikman Products Co.,
Collins & Aikman Europe, Inc., Perstorp GmbH, Perstorp A.B.,
Perstorp Biotec A.B., Perstorp Components N.V. and Perstorp
Components A.B., dated December 11, 1996.
2.7 Acquisition Agreement dated as of December 9, 1996 among
Collins & Aikman Products Co., Collins & Aikman Floor Coverings
Group, Inc., Collins & Aikman Floor Coverings, Inc., CAF
Holdings, Inc. and CAF Acquisition Corp.
4.1 Amended and Restated Credit Agreement, dated as of June 3,
1996, among Collins & Aikman Products Co., as Borrower,
Collins & Aikman Canada Inc., as Canadian Borrower, Collins &
Aikman Corporation, as Guarantor, the lenders named therein,
Bank of America N.T.S.A. and NationsBank, N.A., as Managing
Agents, and Chemical Bank, as Administrative Agent, is hereby
incorporated by Reference to Exhibit 4.1 of Collins & Aikman
Corporation's current Report on Form 8-K dated June 7, 1996.
4.2. Amendment, dated as of December 5, 1996, to the Amended and
Restated Credit Agreement, dated as of June 3, 1996, among
Collins & Aikman Products Co., as Borrower, Collins & Aikman
Canada Inc., as Borrower, Collins & Aikman Corporation, as
Guarantor, the Lenders parties thereto, and The Chase
Manhattan Bank, as Administrative Agent, is hereby
incorporated by reference to Exhibit 4.5 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
October 26, 1996.
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4.3. Credit Agreement, dated as of December 5, 1996, among Collins
& Aikman Products Co., as Borrower, Collins & Aikman
Corporation, as Guarantor, the Lenders named therein and The
Chase Manhattan Bank, as Administrative Agent, is hereby
incorporated by reference to Exhibit 4.6 of Collins & Aikman
Corporation's Report on Form 10-Q for the fiscal quarter ended
October 26, 1996.
4.4 Indenture dated as of June 28, 1994, between JPS Automotive
Products Corp. and Shawmut Bank Connecticut, N.A., as trustee,
is hereby incorporated by reference to Exhibit 4.2 to JPS
Automotive Products Corp.'s Registration Statement on Form
S-1, Registration No. 33-75510.
4.5 First Supplemental Indenture, dated as of October 5, 1994, by
and among JPS Automotive Products Corp., JPS Automotive L.P.,
and Shawmut Bank Connecticut, N.A., is hereby incorporated
herein by reference to Exhibit 4.48A to JPS Automotive L.P.'s
and JPS Automotive Products Corp.'s Report on Form 10-Q for
the fiscal quarter ended October 2, 1994.
99.1 Press Release dated December 10, 1996.
99.2 Press Release dated December 11, 1996.
99.3 Press Release dated December 11, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLLINS & AIKMAN CORPORATION
(Registrant)
Date: December 19, 1996 By: /s/ J. Michael Stepp
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
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EXHIBIT 2.2
JPS AUTOMOTIVE L.P.
AMENDMENT NO.1 TO
EQUITY PURCHASE AGREEMENT
BY AND AMONG
JPSGP INC.,
FOAMEX-JPS AUTOMOTIVE L.P.,
FOAMEX INTERNATIONAL INC.
AND
COLLINS & AIKMAN PRODUCTS CO.
Dated as of December 11, 1996
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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ARTICLE I. AMENDMENT OF AGREEMENT............................................. 1
Section 1.1. Definitions............................................. 1
Section 1.2. Amendment of Section 2.2. .............................. 1
Section 1.3. Amendment of Section 2.3(g)(iii)........................ 2
Section 1.4. Addition of New Section 3.1(c); Authority of FII........ 2
Section 1.5. Amendment of Section 3.3; Partnership Recapitalization.. 2
Section 1.6. Certain Litigation Matters; Schedule 3.20 and Section 10.8. 3
Section 1.7. New Section 3.33........................................ 3
Section 1.8. Correction of Schedule 5.1.............................. 3
Section 1.9. Amendment of Section 6.12. ............................. 3
Section 1.10. Amendment of Sections 8.1 and 8.6; Addition of FII ..... 4
Section 1.11. Amendment of Section 8.7; FIRPTA........................ 4
Section 1.12. Amendment of Section 8.8 ............................... 4
Section 1.13. New Section 8.14; Additional Undertaking ............... 4
Section 1.14. Amendment of Section 10.2; Limitation on Cramerton Damages 4
Section 1.15. Amendment of Article XIII .............................. 5
Section 1.16. Addition of New Article XIV ............................ 5
ARTICLE II. MISCELLANEOUS PROVISIONS ........................................ 5
Section 2.1. Effect of Amendment .................................... 5
Section 2.2. Expenses. .............................................. 5
Section 2.3. Counterparts............................................ 6
Section 2.4. Governing Law .......................................... 6
Section 2.5. Headings .............................................. 6
Section 2.6. Conflict of Terms ...................................... 6
EXHIBIT EXHIBIT NAME
D-1 Indemnity Agreement
E FIRPTA Certificates
SCHEDULE SCHEDULE NAME
I Article XIV
II SMT Pricing
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule omitted herefrom as permitted by Item 601(b)(2) of Regulation
S-K to the Commission upon request.
</TABLE>
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AMENDMENT NO.1 TO EQUITY PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO EQUITY PURCHASE AGREEMENT (the
"Amendment") is made and entered into as of December 11, 1996, by and among
JPSGP INC., a Delaware corporation ("JPSGP"), FOAMEX-JPS AUTOMOTIVE L.P., a
Delaware limited partnership ("FJPS"), FOAMEX INTERNATIONAL INC., a Delaware
corporation ("FII" and, together with JPSGP and FJPS, "Sellers"), and COLLINS &
AIKMAN PRODUCTS CO., a Delaware corporation ("Purchaser").
PRELIMINARY STATEMENT
WHEREAS, JPSGP, FJPS and Purchaser entered into an Equity
Purchase Agreement (the "Agreement") dated as of August 28, 1996 relating to the
purchase and sale of all of the partnership interests in JPS Automotive L.P.
(the "Company"); and
WHEREAS, the parties hereto wish to amend the Agreement in the
manner set forth in this Amendment to add FII as a Seller in the Agreement as
further set out herein and to make such other changes as are specified herein.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE
AMENDMENT OF AGREEMENT
Section 1.1 Definitions.
(a) Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed to them in the Agreement.
(b) The following definition set forth in Section 1.1
of the Agreement is amended and restated in its entirety as follows:
"Sellers" means JPSGP, FJPS, and FII.
(c) The following new definition is added to Section
1.1 of the Agreement as follows:
"FII" means Foamex International Inc.
Section 1.2. Amendment of Section 2.2.
(a) Section 2.2(a) is amended by deleting the
"." at the end of such Section, and replacing it with the following:
"and FII shall deliver to Purchaser or its designees certificates
representing a .9999% limited
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partnership interest in the Company (the "New LP
Interest"), duly endorsed in blank for transfer or accompanied by
appropriate powers duly executed in blank.
(b) In order to reflect the understanding of the
parties in connection with the termination of the Company's swap
agreement, (i) Section 2.2(b) is hereby amended by changing the figure
"220,000,000 to "220,125,000" and (ii) no asset or liability relating
to such swap agreement, including without limitation any receivable
from Purchaser relating to such swap agreement, will be reflected in
either the Base Line Adjusted Net Assets or the Closing Date Adjusted
Net Assets under the Agreement.
(c) Section 2.2(b) is also amended by deleting the
phrase "of which 99% shall be paid by Purchaser to FJPS and 1% shall be
paid by the Affiliate described in Section 2.2(a) hereof to JPSGP." at
the end of such Section, and replacing it with the following: "of which
99% shall be paid by Purchaser to FJPS, .9999% shall be paid by
Purchaser to FII and .0001% shall be paid by the Affiliate described in
Section 2.2(a) hereof to JPSGP."
Section 1.3. Amendment of Section 2.3(g)(iii). The
second sentence of Section 2.3(g)(iii) is amended and restated in its entirety
as follows: "Any net payment to Sellers shall be made 99% to FJPS, 0.9999% to
FII and .0001% to JPSGP."
Section 1.4. Addition of New Section 3.1(c); Authority
of FII. A new Section 3.1(c) is added to the Agreement as follows:
(a) FII is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
FII has full corporate power and authority to execute and deliver this
Agreement, and the execution and delivery by FII of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of
FII, and this Agreement constitutes the legal, valid and binding
obligation of FII enforceable against FII in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect
which affect creditors' rights generally and by legal and equitable
limitations on the enforceability of specific remedies.
Section 1.5. Amendment of Section 3.3; Partnership
Recapitalization. The first two sentences of Section 3.3 are deleted and
replaced with the following:
As of August 28, 1996: (a) the partnership equity of the Company is as
follows: (i) the LP Interest, which, except as set forth on Schedule
3.3, is owned solely by
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FJPS, and (ii) the GP Interest, which is owned
solely by JPSGP, and (b) the Company has no other partners other than
FJPS and JPSGP. As of the Closing Date: (a) the partnership equity of
the Company is as follows: (i) the LP Interest, which, except as set
forth on Schedule 3.3, is owned solely by
FJPS, (ii) the New LP Interest, which is owned solely by FII, and (ii)
the GP Interest, which is owned solely by JPSGP, and (b) the Company
has no other partners other than FJPS, FII and JPSGP. FII will have at
the Closing valid and marketable title to the New LP Interest, free
and clear of any Liens, except those arising under this Agreement and
the Partnership Agreement.
Section 1.6. Certain Litigation Matters;
Schedule 3.20 and Section 10.8.
(a) Schedule 3.20 is amended by adding the following
Item 4: "4. Claim set forth in the letter of Ruff, Bond, Cobb, Wade &
McNair, L.L.P. to Mr. Jerry Burns, dated October 28, 1996 and any other
claim resulting from or arising out of the Rauch Industries fire in
Cramerton, North Carolina which occurred on or about October 19, 1994."
(b) Section 10.8(a) is amended by deleting the
reference to "Item 2" and replacing such reference with a reference to
"Items 2 and 4."
Section 1.7. New Section 3.33. A New Section
3.33 is hereby added to the Agreement which reads in its entirety as
follows: "Section 3.33 Cramerton Claims. As of the Closing Date, to the
actual knowledge of the persons listed on Schedule 1.1, Cramerton has no
claims (including, without limitation, for money owed) against Seiren Co.
Ltd. or any Affiliates or Subsidiaries of Seiren Co. Ltd. other than (x)
as reflected on the Interim Balance Sheet, or (y) for the performance of
contracts to which Seiren is a party listed on the Schedules to the
Agreement."
Section 1.8. Correction of Schedule 5.1. Schedule 5.1 to
the Agreement is hereby amended to delete Item 8 thereof, as of the date of the
Agreement.
Section 1.9. Amendment of Section 6.12. Section
6.12(a)(ii) is amended by adding after the phrase "taking no action" the
following: ", except pursuant to the terms of this Agreement,".
Section 1.10. Amendment of Sections 8.1 and 8.6; Addition
of FII. Sections 8.1 and 8.6 are amended by adding "and FII" after "JPSGP" in
each of such Sections.
Section 1.11. Amendment of Section 8.7; FIRPTA. Section
8.7 of the Agreement is hereby amended to add the following at the end thereof:
"Sellers shall also cause Cramerton
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and Cramerton Management Corporation to deliver a certificate to Purchaser and
to Seiren Co. Ltd., Seiren U.S.A. Corporation and Seiren Automotive Textile
Corporation, dated the Closing Date, pursuant to Section 1445 of the Code
(Foreign Investment in Real Property Tax Act of 1980 affidavit) in substantially
the form of Exhibit E attached hereto."
Section 1.12. Amendment of Section 8.8. Section 8.8 of
the Agreement is hereby amended to add at the end thereof after the words "and
on such other terms as are reasonably satisfactory to Purchaser" the following:
", and such purchase pursuant to such definitive agreements shall have closed
prior to or simultaneously with the Closing."
Section 1.13. New Section 8.14; Additional Undertaking. A
new section 8.14 is hereby added to the Agreement which reads in its entirety as
follows: "Section 8.14. Additional Undertaking. Sellers will provide to Seiren
Co. Ltd., on or prior to the Closing Date, an undertaking in the form of Exhibit
D-1." Exhibit D-1 to the Agreement shall read in its entirety as set forth in
the Exhibit D-1 attached hereto. Purchaser shall cause the Company and its
Subsidiaries and Affiliates to cooperate reasonably with Sellers in connection
with the defense of any claim arising out of the indemnity agreement attached
hereto as Exhibit D-1, including, without limitation, providing access to their
personnel, books and records, and making their personnel reasonably available
for deposition and testimony. Sellers will reimburse the Company and its
Subsidiaries and Affiliates for all reasonable out-of-pocket expenses incurred
in connection with such cooperation.
Section 1.14. Amendment of Section 10.2; Limitation on
Cramerton Damages. The penultimate sentence of Section 10.2(a) of the Agreement
is hereby amended and restated to read in its entirety as follows:
"Notwithstanding anything to the contrary contained in this Agreement, but
subject to the proviso at the end of this sentence, to the extent any Damages
for which Purchaser may claim indemnity (or satisfaction of the Deductible)
pursuant to this Section 10.2 relate to a breach of any of the representations
or warranties contained in Article III (other than Section 3.5) and are due to
Damages suffered by Cramerton (which are not directly suffered by Purchaser or
the Company or any other Subsidiary of the Company other than Cramerton),
Sellers shall only be obligated to indemnify Purchaser and its Affiliates for
(or reduce the remaining portion of the Deductible by) 80% of the total
Damages suffered by Cramerton; provided, however, that if such Damages
relate to a breach which is not also a breach of the representations and
warranties of Seiren U.S.A. Corporation, Seiren Automotive Textile
Corporation and Seiren Co. Ltd. (collectively, "Seiren") in Article III
of that certain Equity Purchase Agreement, dated as of December 11, 1996
between Purchaser and Seiren, then Sellers shall be obligated to indemnify
Purchaser and its Affiliates for (or reduce the
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remaining portion of the Deductible by) 100% of the total Damages
suffered by Cramerton relating to such a breach."
Section 1.15. Amendment of Article XIII. Article XIII is
amended as follows:
(a) All references in Article XIII to "Sellers" shall
be replaced with "JPSGP and FJPS".
(b) Section 13.2 is amended by deleting from the first
sentence the phrase "is the exclusive remedy of Purchaser against
Guarantor and".
(c) Section 13.3 is amending by replacing
"hereunder" with "under this Article XIII."
Section 1.16. Addition of New Article XIV. A new Article
XIV in the form set forth as Schedule I to this Amendment is hereby added to the
Agreement.
ARTICLE II.
MISCELLANEOUS PROVISIONS
Section 2.1. Effect of Amendment. On and after the date
hereof, each reference in the Agreement to "this Agreement", "hereof",
"hereunder" or words of like import referring to the Agreement, shall mean and
be a reference to the Agreement, as amended by this Amendment. The Agreement, as
amended by this Amendment, shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed.
Section 2.2. Expenses. Except as expressly set forth
herein, each party to this Amendment shall bear all of its legal, accounting,
and other expenses incurred by it or on its behalf in connection with the
transactions contemplated by this Amendment.
Section 2.3. Counterparts. This Amendment may be
executed simultaneously 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.
Section 2.4. Governing Law. This Amendment shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to conflicts of law principles.
Section 2.5. Headings. The headings of the several
sections of this Amendment are inserted for convenience only and shall not in
any way affect the meaning or construction of this Amendment.
Section 2.6. Conflict of Terms. In the event of any
inconsistency between the provisions of this Amendment and any
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provision of the Agreement the terms and provisions of this Amendment shall
govern and control.
[The rest of this page is intentionally left blank.]
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IN WITNESS WHEREOF, Sellers and Purchaser have executed and
delivered this Amendment as of the day and year first written above.
SELLERS: FOAMEX-JPS AUTOMOTIVE L.P.
BY: FJGP Inc.
Its: General Partner
BY: (Signature of Philip N. Smith, Jr.)
Name:
Title:
JPSGP INC.
BY: (Signature of Philip N. Smith, Jr.)
Name:
Title:
FOAMEX INTERNATIONAL INC.
BY:(Signature of Philip N. Smith, Jr.)
Name:
Title:
PURCHASER: COLLINS & AIKMAN PRODUCTS CO.
BY:(Signature of J. Michael Stepp)
Name: J. Michael Stepp
Title: Executive Vice President
and Chief Financial Officer
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Schedule I
ARTICLE XIV
ADDITIONAL PURCHASE PRICE ADJUSTMENTS
Notwithstanding anything to the contrary contained in this Agreement,
Sellers agree to pay to Purchaser the additional purchase price adjustment
set forth in this Article XIV.
Section 14.1 Adjustment to Reflect APV Minivan SMT
Part Margin Variance.
(a) As soon as reasonably practical after June 30, 1997, Purchaser
shall prepare a report (the "Production Report") setting forth the average
cost of production (the "Production Cost") from the Closing Date through
June 30, 1997, for the foam carpet backing part (the "Part") for the
General Motors APV Minivan Program for both the long wheel base model
(the "Long Wheel Base Cost") and the short wheel base model (the "Short
Wheel Base Cost"). The Production Cost shall be limited to the net cost of
foam included in the Part and the cost of die cutting and processing the
Part, excluding attaching costs, and shall be calculated in a manner
consistent with the calculation of Production Costs prior to the Closing
Date. The Production Report shall be prepared in accordance with GAAP
applied on a basis consistent with that used by, and in accordance with
the same accounting principles, policies and practices applied by, the
Company prior to the Closing Date, and shall be accompanied by a
certificate of the chief financial officer of Purchaser to that effect.
(b) Within twenty Business Days after receipt of the Production Report,
Sellers may, by written notice to Purchaser, object to the Production
Report or the Production Costs set forth in the Production Report. If
Sellers object in good faith to the Production Report, or the Production
Costs as set forth in the Production Report, they shall within such twenty
Business Day period deliver written notice of their objection (the
"Production Objection Notice") to Purchaser: (i) objecting in good faith
to the Production Report and/or the Production Costs, (ii) setting forth
the items being disputed and the reasons therefor, and (iii) specifying
Sellers' calculation of the Production Costs. In connection with the
preparation of the Production Objection Notice, Purchaser shall grant
Sellers' counsel and other representatives reasonable access to all of
the books and records of the Company.
(c) For 30 Business Days after delivery of the Production Objection
Notice, Purchaser and Sellers shall attempt to resolve all disputes
between them regarding the Production Report and the Production Costs. If
Purchaser and Sellers cannot resolve all such disputes within such 30
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Business Day period, the matters in dispute shall be determined by the
Arbiter pursuant to the procedures set forth in Section 2.3(d) and (e).
(d) Within five Business Days after the final determination of the
Production Costs, Sellers shall pay to Purchaser an amount equal to the
sum of (a) the product of (x) the number of long wheel base Parts sold
from the Closing Date through June 30, 1997, and (y) the excess, if any,
of the final Long Wheel Base Cost over $16.77, and (b) the product of (x)
the number of short wheel base Parts sold from the Closing Date through
June 30, 1997, and (y) the excess, if any, of the final Short Wheel Base
Cost over $14.55. In no event shall the amount payable pursuant to this
Section 14.1 exceed $500,000.
Section 14.2 Adjustment to Reflect APV Minivan Gross Margin Loss.
(a) As soon as reasonably practical after December 31, 1997, Purchaser
shall prepare a report (the "Minivan Report") setting forth the gross
margin less selling, general and administrative expense (which shall be
deemed to be $1,304,345) earned by the Company from the sale of carpet
systems for the General Motors APV Minivan program for calendar year 1997
(the "Minivan Income"); provided, however, that in calculating Minivan
Income: the cost of the Part (which shall be calculated consistent with
the calculation of "Total Est. SMT Cost" under the heading "Revised SMT
COST ESTIMATE - 7/11/96" on the attached Schedule II) shall be deemed to
be the lesser of (i) the actual cost of the Part, or (ii) in the case of
the long wheel base Part $17.80 if Purchaser or its Affiliates are making
the Part and $19.65 if Foamex L.P. is supplying the Part, and in the case
of the short wheel base Part $15.58 if Purchaser or its Affiliates are
making the Part and $17.22 if Foamex L.P. is supplying the Part. The
Minivan Report shall be prepared in accordance with GAAP applied on a
basis consistent with that used in, and in accordance with the same
accounting principles, policies and practices applied in, the 1995 audited
statement of operations of the Company included as Schedule 3.6(a) to the
Agreement, and shall be accompanied by a certificate of the chief
financial officer of Purchaser to that effect.
(b) Within twenty Business Days after receipt of the Minivan Report,
Sellers may, by written notice to Purchaser, object to the Minivan Report
or the Minivan Income set forth in the Minivan Report. If Sellers object
in good faith to the Minivan Report, or the Minivan Income as set forth in
the Minivan Report, they shall within such twenty Business Day period
deliver written notice of their objection (the "Minivan Objection
Notice") to Purchaser: (i) objecting in good faith to the Minivan Report
and/or the Minivan Income,
-9-
<PAGE>
(ii) setting forth the items being disputed and the reasons therefor, and
(iii) specifying Sellers' calculation of the Minivan Income. In connection
with the preparation of the Minivan Objection Notice, Purchaser shall
grant Sellers' counsel and other representatives reasonable access to all
of the books and records of the Company.
(c) For 30 Business Days after delivery of the Minivan Objection
Notice, Purchaser and Sellers shall attempt to resolve all disputes
between them regarding the Minivan Report and the Minivan Income. If
Purchaser and Sellers cannot resolve all such disputes within such 30
Business Day period, the matters in dispute shall be determined by the
Arbiter pursuant to the procedures set forth in Section 2.3(d) and (e).
(d) Within five Business Days after the final determination of the
Minivan Income, Sellers shall pay to Purchaser an amount equal to the
amount, if any, by which the Minivan Income is less than $836,118.45. In
no event shall the amount payable pursuant to this Section 14.2 exceed
$1,200,000.
Section 14.3 Efforts. Purchaser shall cause the Company to use its
commercially reasonable efforts to minimize the Production Costs and maximize
the Minivan Income.
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<PAGE>
CRAMERTON AUTOMOTIVE PRODUCTS L.P.
AND
CRAMERTON MANAGEMENT CORPORATION
EQUITY PURCHASE AGREEMENT
BY AND AMONG
SEIREN U.S.A. CORPORATION,
SEIREN AUTOMOTIVE TEXTILE CORPORATION,
AND
SEIREN CO., LTD.,
as SELLERS,
AND
COLLINS & AIKMAN PRODUCTS CO.,
as PURCHASER
Dated as of December 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms and Determinations . . . . 5
ARTICLE II.
SALE AND PURCHASE
Section 2.1. Agreement to Sell and to Purchase . . . . . 6
Section 2.2. Purchase and Sale of Equity . . . . . . . . 6
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 3.1. Authority of Sellers . . . . . . . . . . . 6
Section 3.2. Title to the LP Interest and the GP Interest 7
Section 3.3. Title to the CMC Equity . . . . . . . . . . 7
Section 3.4. Valid Issuance; No Options . . . . . . . . 7
Section 3.5. No Conflict or Violation; Consents . . . . 7
Section 3.6. Reserved . . . . . . . . . . . . . . . . . 8
Section 3.7. Financial Statements of the Company . . . . 8
Section 3.8. Financial Statements of CMC . . . . . . . . 8
Section 3.9. Undisclosed Liabilities . . . . . . . . . . 9
Section 3.10. Material Adverse Effect . . . . . . . . . . 9
Section 3.11. Disclaimer of Additional Representations and
Warranties; Schedules . . . . . . . . . . 9
Section 3.12. Brokers . . . . . . . . . . . . . . . . . . 9
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1. Authority of Purchaser . . . . . . . . . . 10
Section 4.2. No Conflict or Violation . . . . . . . . . 10
Section 4.3. Litigation . . . . . . . . . . . . . . . . 10
Section 4.4. Brokers . . . . . . . . . . . . . . . . . . 10
Section 4.5. Investment Intent; Status . . . . . . . . . 11
i
<PAGE>
Section 4.6. Disclaimer of Additional Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V.
CERTAIN COVENANTS OF SELLERS
Section 5.1. Conduct of Business . . . . . . . . . . . . 11
Section 5.2. Information and Access . . . . . . . . . . 11
ARTICLE VI.
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1. Filings . . . . . . . . . . . . . . . . . . 11
Section 6.2. Transfer Taxes . . . . . . . . . . . . . . 11
Section 6.3. Certain Provisions Relating to Consents . . 12
Section 6.4. Nondisclosure; Noncompetition . . . . . . . 12
Section 6.5. Efforts . . . . . . . . . . . . . . . . . . 13
Section 6.6. Tax Sharing Agreements and Arrangements . . 13
Section 6.7. Tax Returns . . . . . . . . . . . . . . . . 13
ARTICLE VII.
CONDITIONS TO SELLERS' OBLIGATIONS
Section 7.1. Representations and Warranties . . . . . . 14
Section 7.2. Compliance with Agreement . . . . . . . . . 14
Section 7.3. No Adverse Proceeding . . . . . . . . . . . 14
Section 7.4. Consents . . . . . . . . . . . . . . . . . 14
Section 7.5. Corporate Documents . . . . . . . . . . . . 14
Section 7.6. New Marketing Agreement . . . . . . . . . . 14
Section 7.7. Termination of Agreements . . . . . . . . . 14
Section 7.8. FIRPTA . . . . . . . . . . . . . . . . . . 15
Section 7.9. JPS Automotive Agreement Closing . . . . . 15
Section 7.10. Opinion of Counsel . . . . . . . . . . . . 15
Section 7.11. Company Tax Distribution . . . . . . . . . 15
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 8.1. Representations and Warranties . . . . . . 15
Section 8.2. Compliance with Agreement . . . . . . . . . 16
Section 8.3. No Adverse Proceeding . . . . . . . . . . . 16
Section 8.4. Consents . . . . . . . . . . . . . . . . . 16
ii
<PAGE>
Section 8.5. Corporate Documents . . . . . . . . . . . . 16
Section 8.6. FIRPTA . . . . . . . . . . . . . . . . . . 16
Section 8.7. JPS Automotive Agreement . . . . . . . . . 16
Section 8.8. Purchaser Bank Consent . . . . . . . . . . 16
Section 8.9. Material Adverse Effect . . . . . . . . . . 16
Section 8.10. Clearance Certificates . . . . . . . . . . 17
Section 8.11. Marketing and Consulting Agreements . . . . 17
Section 8.12. Waiver of Any Seiren Right of First Refusal 17
Section 8.13. Release of Claims Against the Company and CMC 17
Section 8.14. Opinions of Counsel . . . . . . . . . . . . 18
ARTICLE IX.
THE CLOSING; TERMINATION
Section 9.1. The Closing . . . . . . . . . . . . . . . . 18
Section 9.2. Deliveries by Sellers at the Closing . . . 18
Section 9.3. Deliveries by Purchaser at the Closing . . 19
Section 9.4. Termination . . . . . . . . . . . . . . . . 19
ARTICLE X.
INDEMNIFICATION
Section 10.1. Survival . . . . . . . . . . . . . . . . . 19
Section 10.2. Indemnification Provisions for Benefit of
Purchaser . . . . . . . . . . . . . . . 20
Section 10.3. Indemnification Provisions for Benefit of
Sellers . . . . . . . . . . . . . . . . 21
Section 10.4. Matters Involving Third Parties . . . . . 21
Section 10.5. Certain Additional Provisions Relating to
Indemnification . . . . . . . . . . . . 22
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.1. Notices . . . . . . . . . . . . . . . . . 23
Section 11.2. Amendments . . . . . . . . . . . . . . . . 23
Section 11.3. Assignment and Parties in Interest . . . . 23
Section 11.4. Announcements . . . . . . . . . . . . . . 24
Section 11.5. Expenses . . . . . . . . . . . . . . . . . 24
Section 11.6. Entire Agreement . . . . . . . . . . . . . 24
Section 11.7. Descriptive Headings . . . . . . . . . . . 24
Section 11.8. Counterparts . . . . . . . . . . . . . . . 24
Section 11.9. Governing Law; Jurisdiction; Waiver of Jury
Trial . . . . . . . . . . . . . . . . . . 24
Section 11.10. Construction . . . . . . . . . . . . . . . 25
iii
<PAGE>
Section 11.11. Severability . . . . . . . . . . . . . . . 25
Section 11.12. Specific Performance . . . . . . . . . . . 25
Signature Page . . . . . . . . . . . . . . . . . . . . . . 26
SCHEDULE
NUMBER SCHEDULE NAME
1.1 Certain Officers
3.5 Conflicts or Violations
3.7(a) Financial Statements of the Company
3.7(b) Interim Financial Statements of the Company
3.8 Financial Statements of CMC
3.9(a) Undisclosed Liabilities of the Company
3.9(b) Undisclosed Liabilities of CMC
3.10 Material Adverse Effect
8.4 Consents, Permits, Authorizations, Approvals, Waivers
and Amendments
EXHIBIT EXHIBIT NAME
A Form of New Marketing Agreement
B Form of FIRPTA Certificates
C Form of Purchaser's Opinion of Counsel
D Form of Sellers' Opinion of Counsel
The Registrant hereby undertakes to furnish supplementally a copy of
any schedule omitted herefrom as permitted by Item 601(b)(2) of Regulation
S-K to the Commission upon request.
iv
<PAGE>
EQUITY PURCHASE AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of December 11, 1996 by and among SEIREN U.S.A.
CORPORATION, a New York corporation ("Seiren Affiliate 1"), SEIREN
AUTOMOTIVE TEXTILE CORPORATION, a Delaware corporation ("Seiren
Affiliate 2"), SEIREN CO., LTD., a Japanese corporation ("Seiren
Shareholder" and together with Seiren Affiliate 1 and Seiren Affiliate
2, "Sellers"), and COLLINS & AIKMAN PRODUCTS CO., a Delaware
corporation ("Purchaser").
RECITALS
A. Seiren Affiliate 1 owns an 18.5% limited
partnership interest (the "LP Interest") in Cramerton Automotive
Products, L.P. (the "Company"); and
B. Seiren Affiliate 2 owns a 1% general partnership
interest in the Company (the "GP Interest"); and
C. Seiren Shareholder owns a 50% common stock interest in
Cramerton Management Corporation ("CMC") (the "CMC Equity" and
together with the LP Interest and the GP Interest, the "Equity"),
which owns a 1% general partnership interest in the Company; and
D. Purchaser desires to purchase the Equity from
Sellers, and Sellers desire to sell the Equity to Purchaser, in
each case upon the terms and subject to the conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined
elsewhere herein, the terms defined in the introductory paragraph and
the recitals to this Agreement shall have the respective meanings
specified therein, and the following terms shall have the meanings
specified below when used herein with initial capital letters:
"Affiliate" means "affiliate" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
<PAGE>
"Agreement" has the meaning set forth in the preamble,
and shall include all Schedules and Exhibits hereto.
"Balance Sheet" has the meaning set forth in
Section 3.7(a).
"Business Day" means a day, other than a Saturday or a
Sunday, on which commercial banks are not required or authorized to
close in the City of New York and Tokyo, Japan.
"Cap" has the meaning set forth in Section 10.2(a).
"Closing" has the meaning set forth in Section 9.1.
"Closing Date" has the meaning set forth in
Section 9.1.
"CMC" has the meaning set forth in the third recital
hereto.
"CMC Balance Sheet" has the meaning set forth in
Section 3.8.
"CMC Balance Sheet Date" means October 26, 1996.
"CMC Equity" has the meaning set forth in the third
recital hereto.
"CMC Stockholders' Agreement" means the Stockholders'
Agreement dated as of December 2, 1991 among CMC, JPS Textile Group,
Inc. and Seiren Shareholder, as amended and supplemented.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" has the meaning set forth in the first recital
hereto and, in Sections 3.9, 3.10 and 3.11, includes the Company and
CMC.
"Consulting Agreement" means the consulting agreement
between the Company and Seiren Shareholder having commenced on January
1, 1996 and ending on December 31, 1996 establishing arrangements
regarding the employment of certain individuals by the Company, as
extended by the New Marketing Agreement.
"Cramerton Consulting Agreement" means the Consulting
Agreement dated as of December 2, 1991 between the Company and Seiren
Affiliate 1.
"Damages" means any losses, amounts paid in settlement,
claims, damages, Liabilities, obligations, judgments, settlements and
reasonable out-of-pocket costs (including, without limitation, costs
of investigation or enforcement), expenses and attorneys' fees,
including, without limitation, (i) any consequential damages or (ii)
any special or punitive damages which are assessed against any
Indemnified Party as a result of a third party action.
2
<PAGE>
"Deductible" has the meaning set forth in Section 10.2.
"Equity" has the meaning set forth in the third recital
hereto.
"Former Marketing Agreement" means the marketing agreement
between the Company and Seiren Shareholder having commenced on January
1, 1995 and ending on December 31, 1997, as evidenced by the Unanimous
Written Consent of the Board of Directors of the Company dated as of
March 31, 1995.
"Governmental Agency" means (a) any international, foreign,
federal, state, county, local or municipal governmental 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.
"GP Interest" has the meaning set forth in the second
recital hereto.
"Indemnified Party" has the meaning set forth in Section
10.4(a) and in the case of Purchaser shall also include the Company
and CMC.
"Indemnifying Party" has the meaning set forth in Section
10.4(a).
"Interim Balance Sheet" has the meaning set forth in Section
3.7(b).
"Interim Balance Sheet Date" means June 30, 1996.
"Interim Financial Statements" has the meaning set forth in
Section 3.7(b).
"IRS" means the Internal Revenue Service of the Department
of the Treasury.
"JPS Automotive" means JPS Automotive L.P., a Delaware
limited partnership.
"JPS Automotive Agreement" means the JPS Automotive L.P.
Equity Purchase Agreement dated as of August 28, 1996 by and among
JPSGP Inc., Foamex-JPS Automotive L.P. and Collins & Aikman Products
Co.
"JPS Automotive Closing" has the meaning set forth in
Section 6.7.
"JPS Automotive Marketing Agreement" means the Marketing
Agreement dated as of December 2, 1991 between JPS Automotive and
Seiren Shareholder.
"Knowledge" as applied to Sellers means the actual knowledge
of any person listed on Schedule 1.1 hereto; it being agreed and
understood that (i) no Seller has participated in the preparation of
any financial statements of the Company or CMC or the day to day
management or operations of the Company or CMC and (ii) no Seller has
undertaken any independent
3
<PAGE>
investigation to determine the accuracy of any of the representations
and warranties herein that are qualified by the term "Knowledge."
"Liability" means any liability or obligation (whether known
or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated and whether due or to become due), including, without
limitation, any liability for Taxes.
"Lien" means any lien, mortgage, pledge or other security
interest.
"LP Interest" has the meaning set forth in the first recital
hereto.
"Material Adverse Effect" means a material adverse change in
or effect with respect to the business, results of operations,
properties or financial condition of either (i) the Company or (ii)
CMC.
"New Marketing Agreement" has the meaning set forth in
Section 7.6.
"Parent Entities" means Sellers and their Affiliates, other
than the Company and CMC and their respective officers and directors.
"Partner Interest Purchase Agreement" means the Partner
Interest Purchase Agreement dated as of December 2, 1991 by and among
JPS Automotive Products Corp., CMC, Seiren Affiliate 1 and Seiren
Affiliate 2, as amended and supplemented.
"Partnership Agreement" means the Company's Amended and
Restated Agreement of Limited Partnership dated as of December 2,
1991, as amended by the First Amendment to Amended and Restated
Agreement of Limited Partnership dated as of June 2, 1994, as amended
by the Second Amendment to Amended and Restated Agreement of Limited
Partnership dated as of October 3, 1994.
"Permit" means any permit, approval, consent, authorization,
license, variance or permission required by a Governmental Agency
under any applicable laws.
"Perpetual Representations" has the meaning set forth in
Section 10.1.
"Person" means any individual, partnership, corporation,
trust, association, limited liability company, Governmental Agency or
any other entity.
"Purchase Price" means $10,000,000.
"Purchaser" has the meaning set forth in the preamble
hereto.
"Purchaser's Opinion of Counsel" has the meaning set forth
in Section 7.10.
"Released Persons" has the meaning set forth in Section
8.13.
4
<PAGE>
"Schedules" or "Disclosure Schedules" means the various
Schedules referred to in this Agreement and attached hereto.
"Second Short Tax Year" has the meaning set forth in
Section 6.7.
"Seiren Affiliate 1" has the meaning set forth in the
preamble hereto.
"Seiren Affiliate 2" has the meaning set forth in the
preamble hereto.
"Seiren Shareholder" has the meaning set forth in the
preamble hereto.
"Seller Entity" means any of the Company and CMC.
"Sellers" has the meaning set forth in the preamble hereto.
"Sellers' Opinion of Counsel" has the meaning set forth in
Section 8.14.
"Subsidiary" means "subsidiary" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"Tax Return" means any report, return, information return,
form, declaration, claim for refund, statement or other information
(including any amendment thereto and including any schedule or
statement thereto) required to be supplied to a Governmental Agency in
connection with Taxes.
"Taxes" means all federal, state, local, foreign and other
taxes, assessments and water and sewer charges and rents, including,
without limitation, income, gross receipts, excise, employment, sales,
use, transfer, license, payroll, franchise, severance, stamp,
withholding, Social Security, unemployment, real property, personal
property, registration, capital stock, value added, single business,
occupation, workers' compensation, alternative or add-on minimum,
estimated or other tax, including, without limitation, any interest,
penalties or additions thereto.
Section 1.2. Accounting Terms and Determinations. All
references in this Agreement to "generally accepted accounting
principles" or "GAAP" shall mean generally accepted accounting
principles in effect in the United States of America at the time of
application thereof, applied on a consistent basis. Unless otherwise
specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all financial statements and certificates
and reports as to financial matters required to be furnished hereunder
shall be prepared, in accordance with generally accepted accounting
principles, applied on a consistent basis.
5
<PAGE>
ARTICLE II.
SALE AND PURCHASE
Section 2.1. Agreement to Sell and to Purchase. On the terms
and subject to the conditions set forth in this Agreement, at the
Closing, Purchaser shall purchase from Sellers, and Sellers shall
sell, transfer, assign, convey and deliver to Purchaser, the Equity.
Section 2.2. Purchase and Sale of Equity. On the terms and
subject to the conditions set forth in this Agreement, at the Closing
(in addition to the transactions referred to in Article IX):
(a) Seiren Affiliate 1 shall deliver to Purchaser or its
designees certificates representing the LP Interest, duly endorsed in
blank for transfer or accompanied by appropriate powers duly executed
in blank. Seiren Affiliate 2 shall deliver to Purchaser or its
designees certificates representing the GP Interest, duly endorsed in
blank for transfer or accompanied by appropriate powers duly executed
in blank. Seiren Shareholder shall deliver to Purchaser or its
designees certificates representing the CMC Equity, duly endorsed in
blank for transfer or accompanied by appropriate powers duly executed
in blank.
(b) Purchaser shall deliver to Sellers by wire transfer of
immediately available funds the Purchase Price to such accounts
specified by Sellers, of which 92.5% shall be paid by Purchaser to
Seiren Affiliate 1, 5% shall be paid by the Affiliate described in
Section 2.2(a) hereof to Seiren Affiliate 2 and 2.5% shall be paid by
Purchaser to Seiren Shareholder.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to Section 3.11, each of Sellers, jointly and
severally, represents and warrants to Purchaser as set forth in this
Article III:
Section 3.1. Authority of Sellers. (a) Each of Seiren
Affiliate 1 and Seiren Affiliate 2 is a corporation duly organized,
validly existing and in good standing under the laws of New York and
Delaware, respectively, and has full corporate power and authority to
execute and deliver this Agreement. The execution and delivery by each
of Seiren Affiliate 1 and Seiren Affiliate 2 of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part
of each of Seiren Affiliate 1 and Seiren Affiliate 2, and this
Agreement constitutes the legal, valid and binding obligation of
Seiren Affiliate 1 and Seiren Affiliate 2 enforceable against each
such entity in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws from time to time in effect which affect creditors'
rights generally and by legal and equitable limitations on the
enforceability of specific remedies.
6
<PAGE>
(b) Seiren Shareholder is a corporation duly organized,
validly existing and in good standing under the laws of Japan and has
full corporate power and authority to execute and deliver this
Agreement. The execution and delivery by Seiren Shareholder of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action on the part of Seiren Shareholder, and this Agreement
constitutes the legal, valid and binding obligation of Seiren
Shareholder enforceable against Seiren Shareholder in accordance with
its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws from time to time
in effect which affect creditors' rights generally and by legal and
equitable limitations on the enforceability of specific remedies.
Section 3.2. Title to the LP Interest and the GP Interest.
Seiren Affiliate 1 will have at the Closing valid and marketable title
to the LP Interest, free and clear of any Liens, except those arising
under this Agreement and the Partnership Agreement. Seiren Affiliate 2
will have at the Closing valid and marketable title to the GP
Interest, free and clear of any Liens, except those arising under this
Agreement and the Partnership Agreement.
Section 3.3. Title to the CMC Equity. Seiren Shareholder
will have at the Closing valid and marketable title to the CMC Equity,
free and clear of any Liens, except those arising under this Agreement
and the CMC Stockholders' Agreement.
Section 3.4. Valid Issuance; No Options. To the Knowledge of
Sellers: (a) all of the outstanding limited or general partnership
interests or shares of capital stock, as the case may be, of the
Company and CMC are duly authorized, validly issued, fully paid and
non-assessable, and (b) except for rights of first refusal of the
Sellers being waived at Closing pursuant to Section 8.12 hereof, there
are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any
character (i) evidencing the right to purchase or subscribe to any
limited or general partnership interests or shares of capital stock,
as the case may be, of the Company or CMC or (ii) obligating the
Company or CMC to issue any additional shares of its respective
limited or general partnership interests or capital stock, as the case
may be.
Section 3.5. No Conflict or Violation; Consents. Except as
set forth on Schedule 3.5, neither the execution and delivery of this
Agreement by Sellers, nor the consummation of the transactions
contemplated hereby, nor the fulfillment of the terms and compliance
with the provisions hereof, will (a) conflict with or result in a
breach of or a default (or in an occurrence which with the lapse of
time or action by a third party, or both, could result in a default)
with respect to any of the terms, conditions or provisions of, (b)
result in the termination of, accelerate the performance required by,
(c) result in the creation of any Lien upon the Equity, or to the
Knowledge of Sellers, the assets of the Company or CMC in connection
with, (d) impair Sellers' ability to consummate the transactions
contemplated hereby, (e) except for such that are required solely as a
result of the regulatory status of the Purchaser or, to the Knowledge
of Sellers, the regulatory status of the Company or CMC, require any
filing with or approval of any Person, including, without limitation,
any Governmental Agency, arising out of, or (f) except as set forth in
Section 3.4(b) above, give rise to any right of termination or
renegotiation, or purchase or offer right, under: (x) any statute,
rule, regulation, code, order,
7
<PAGE>
writ or decree of any Governmental Agency applicable to Sellers or, to
the Knowledge of Sellers, to the Company or CMC, (y) the Partnership
Agreement, the Certificate of Incorporation or By-Laws of CMC or
Sellers' constituent documents, or (z) any contract, lease, Permit or
other instrument to which any of the Sellers is a party or subject or
by which any of Sellers' properties or assets are bound, or, to the
Knowledge of Sellers, to which the Company or CMC is a party or
subject or by which any of their property or assets are bound, except
in the cases of clauses (x) and (z) for those conflicts, breaches,
defaults, terminations or accelerations which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect or materially impair the ability of Sellers to consummate the
transactions contemplated by this Agreement; provided, however, that
no representation or warranty is made hereby by Sellers with respect
to the effect of antitrust laws or regulations. No consent, approval
or authorization of, or registration or filing with, any Governmental
Agency is required to be obtained or made by or with respect to
Sellers in connection with the execution and delivery of this
Agreement by Sellers or the performance by Sellers of the transactions
contemplated hereby to be performed by them, except for such of the
foregoing (i) as are listed or described in Schedule 3.5, (ii) which,
if not so obtained or made, individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect or (iii) that
are required solely as a result of the regulatory status of the
Purchaser, the Company or CMC (of which, to the Knowledge of Sellers,
none are required as a result of the regulatory status of the Company
or CMC).
Section 3.6. Reserved.
Section 3.7. Financial Statements of the Company. (a) To the
Knowledge of Sellers, the audited balance sheet of the Company at
December 31, 1995 (the "Balance Sheet") and related statement of
income, retained earnings and cash flow for the periods then ended and
the notes thereto, (i) are included as Schedule 3.7(a), (ii) were
prepared in accordance with GAAP, consistently applied, and (iii)
present fairly the financial condition and the results of operations
of the Company as of the dates and for the periods indicated thereon.
(b) To the Knowledge of Sellers, the unaudited balance sheet
as of the Interim Balance Sheet Date (the "Interim Balance Sheet") and
the related income statement for the period then ended (collectively,
the "Interim Financial Statements") (i) are included as Schedule
3.7(b), (ii) were prepared in accordance with GAAP, consistently
applied, and (iii) present fairly the financial condition and the
results of operations of the Company as of the dates and for the
periods indicated thereon, subject to normal year-end adjustments. To
the Knowledge of Sellers, the Interim Financial Statements included
all adjustments, consisting solely of normal recurring accruals,
necessary for a fair presentation of the Company's consolidated
financial position and results of operations.
Section 3.8. Financial Statements of CMC. To the Knowledge
of Sellers, the unaudited balance sheet of CMC at October 26, 1996
(the "CMC Balance Sheet") and related statement of income, retained
earnings and cash flow for the periods then ended and the notes
thereto, (i) are included as Schedule 3.8, (ii) were prepared in
accordance with GAAP, consistently applied, and (iii) present fairly
the financial condition and the results of operations of CMC as of the
dates and for the periods indicated thereon.
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Section 3.9. Undisclosed Liabilities. (a) To the Knowledge
of Sellers, as of the Interim Balance Sheet Date, the Company has no
material Liabilities, except for Liabilities: (a) reflected or
reserved for on the Interim Balance Sheet, (b) relating to performance
obligations under leases and contracts in accordance with the terms
and conditions thereof which are not required by GAAP to be reflected
on the Interim Balance sheet, (c) consisting of obligations arising
under environmental laws, (d) arising out of or in connection with any
claim by the ultimate retail purchaser of any of the Company's
products resulting from an alleged defect in the design or manufacture
of any product, or any alleged failure to warn with respect to any
product, (e) constituting Taxes, or (f) as set forth on Schedule
3.9(a).
(b) To the Knowledge of Sellers, as of the CMC Balance Sheet
Date, CMC has no material Liabilities, except for Liabilities: (a)
reflected or reserved for on the CMC Balance Sheet, (b) relating to
performance obligations under leases and contracts in accordance with
the terms and conditions thereof which are not required by GAAP to be
reflected on the CMC Balance Sheet, (c) constituting Taxes or (d) as
set forth on Schedule 3.9(b).
Section 3.10. Material Adverse Effect. To the Knowledge of
Sellers, other than changes resulting from (a) general economic
conditions, (b) conditions affecting the automotive carpet and textile
industry generally, (c) changes in any applicable law, rule,
regulation, statute or interpretation thereof or (d) as set forth on
Schedule 3.10, since the Interim Balance Sheet Date, there has not
been any Material Adverse Effect, nor have any events occurred nor do
any circumstances exist which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. To the
Knowledge of Sellers, since the Interim Balance Sheet Date, except as
set forth on Schedule 3.10, there has not occurred any material
deterioration in the Company's relationships with its employees,
unions, suppliers or customers, and the Company has not lost or been
threatened with the loss of any model or program in each case which,
individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect.
Section 3.11. Disclaimer of Additional Representations and
Warranties; Schedules. (a) Except as expressly set forth in this
Agreement, the Schedules and Exhibits hereto, and any other
certificate or instrument delivered pursuant to the terms hereof or
thereof, Sellers make no representation or warranty, including with
respect to the Company, or its operations, assets, Liabilities or
conditions, including any representation or warranty of
merchantability, suitability or fitness for a particular purpose, or
quality as to the assets of the Company, or any part thereof, or as to
the condition or workmanship thereof, or the absence of any defects
therein, whether latent or patent.
(b) Notwithstanding anything to the contrary contained in
this Agreement, any item disclosed on any one Schedule shall be deemed
to be disclosed on each Schedule, where relevant, provided that a
specific cross-reference is made in the relevant Schedule. Disclosure
of an item in any Schedule shall not be deemed to be an admission that
such item is material.
Section 3.12. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried
on by Sellers without the intervention of any other Person acting on
their behalf in such a manner as to give rise to any valid claim by
any such
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Person against Purchaser or its Affiliates for a finder's fee,
brokerage commission or other similar payment based on an arrangement
with Sellers.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Subject to Section 4.6, Purchaser represents and warrants to
Sellers as follows:
Section 4.1. Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Purchaser has full corporate
power and authority to execute and deliver this Agreement. The
execution and delivery by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part
of Purchaser, and this Agreement constitutes the legal, valid and
binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws from
time to time in effect which affect creditors' rights generally and by
legal and equitable limitations on the enforceability of specific
remedies. Purchaser has the requisite corporate power and authority to
own its properties and to carry on the business presently being
conducted by it.
Section 4.2. No Conflict or Violation. Except as referenced
in Section 8.8, neither the execution and delivery of this Agreement
by Purchaser, nor the consummation of the transactions contemplated
hereby, nor the fulfillment of the terms and compliance with the
provisions hereof, will conflict with or result in a material breach
of or a material default (or in an occurrence which with the lapse of
time or action by a third party, or both, could result in a material
default) with respect to any of the terms, conditions or provisions of
any applicable order, writ or decree of any court or of any
Governmental Agency applicable to Purchaser, or of the Certificate of
Incorporation or By-Laws of Purchaser, or of any indenture, contract,
agreement, lease or other instrument to which Purchaser is a party or
subject or by which Purchaser or any of its properties or assets are
bound, or of any applicable statute, rule or regulation to which
Purchaser or its businesses is subject, except for those conflicts,
breaches, defaults or accelerations which individually or in the
aggregate could not reasonably be expected to have a material adverse
effect on Purchaser or materially impair the ability of Purchaser to
consummate the transactions contemplated by this Agreement; provided,
however, that no representation or warranty is made hereby by
Purchaser with respect to the effect of antitrust laws or regulations.
Section 4.3. Litigation. There are no actions, causes of
action, claims, suits, proceedings, orders, writs, injunctions or
decrees pending or, to the actual knowledge, after reasonable inquiry,
of the executive officers of Purchaser, threatened against Purchaser
at law, in equity, in admiralty or otherwise, or before or by any
Governmental Agency, which restrains or enjoins the consummation of
the transactions contemplated hereby.
Section 4.4. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried
on by Purchaser without the intervention of
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any other Person acting on its behalf in such a manner as to give rise
to any valid claim by any such Person against Sellers or their
Affiliates for a finder's fee, brokerage commission or other similar
payment based on an arrangement with Purchaser.
Section 4.5. Investment Intent; Status. The Equity will be
acquired hereunder solely for the account of Purchaser or its
designees for investment, and not with a view to the resale or
distribution thereof in violation of the Securities Act of 1933, as
amended, subject to the right of Purchaser and any such designee to
sell, assign, transfer or distribute any or all of the Equity to any
corporation which is an Affiliate of Purchaser. Purchaser is an
"accredited investor" within the mean of Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended.
Section 4.6. Disclaimer of Additional Representations and
Warranties. Except as expressly set forth in this Agreement and the
Exhibits hereto, and any other certificates or instruments delivered
pursuant to the terms hereof or thereof, Purchaser makes no
representation or warranty.
ARTICLE V.
CERTAIN COVENANTS OF SELLERS
Each of Sellers covenants with Purchaser that from and after
the date hereof through the Closing Date:
Section 5.1. Conduct of Business. Sellers shall not take any
action to cause the Company or CMC to operate outside the ordinary
course of its business in accordance with past practices.
Section 5.2. Information and Access. Sellers shall not take
any action to cause the Company or CMC to prevent representatives of
Purchaser from having reasonable access during normal business hours,
in a manner so as not to interfere with the normal operations of the
Company and CMC, to all premises, properties, personnel, accountants,
books, records, contracts and documents of the Company and CMC.
Purchaser and each of its representatives shall treat and hold as
confidential all such information until the Closing.
ARTICLE VI.
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1. Filings. As promptly as practicable, Sellers
and Purchaser shall prepare and file any other application, report or
other filing required to be submitted to any Governmental Agency in
connection with the transactions contemplated hereby.
Section 6.2. Transfer Taxes. Any sales, recording, transfer,
stamp, conveyance, value added, use or other similar Taxes, duties,
excise, governmental charges or fees imposed as
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a result of the sale of the Equity to Purchaser pursuant to this
Agreement shall be borne by Sellers. Purchaser shall promptly remit
any refunds of such items to Sellers. Sellers and Purchaser, to the
extent required by law, shall prepare and file all Tax Returns on a
timely basis with respect to any such Taxes or fees.
Section 6.3. Certain Provisions Relating to Consents.
Sellers and Purchaser shall each use commercially reasonable efforts
prior to and after the Closing Date to obtain all consents that are
required in connection with the transactions contemplated by this
Agreement. Sellers shall not obtain any consent that will affect
Purchaser or the Company, and Purchaser shall not obtain any consent
that will affect Sellers or the Company, to any of their economic
detriment, including any modification of any contract, lease or
Permit. Purchaser and Sellers shall cooperate as reasonably necessary
or desirable to secure the third party consents, including, without
limitation, providing to such third party information, including
financial information, provided, however, that none of Purchaser,
Sellers or the Company will be required to incur any Liability or
obligation in connection therewith, other than for the underlying
matter for which such consent was obtained as in effect immediately
prior to such consent.
Section 6.4. Nondisclosure; Noncompetition. (a) From and
after the Closing Date, Sellers shall not use, divulge, furnish or
make accessible to anyone any proprietary, material nonpublic,
confidential or secret information to the extent relating to the
Company or CMC (including, without limitation, customer lists,
supplier lists and pricing and marketing arrangements with customers
or suppliers), and Sellers shall cooperate reasonably with Purchaser
in preserving such proprietary, confidential or secret aspects of the
Company or CMC.
(b) For a period of three years after the Closing Date,
Sellers will not, and will cause each of their Affiliates not to,
directly or indirectly, manufacture or sell in North America any
automotive upholstery fabrics of the general type manufactured or sold
by the Company or CMC as of the Closing, or own stock or otherwise
have an equity interest in or be affiliated with any Person or entity
engaged in such business in North America (except as a stockholder
holding less than 5% of the stock of a publicly held corporation or
less than 5% of the stock of a private company if the investment is
completely passive). None of the Sellers will, for a period of two
years from the Closing Date, solicit for hire any employees of the
Company or CMC without the prior written consent of Purchaser, except
for any such employees that are also employees of any of the Sellers
or their Affiliates on the Closing Date. Sellers agree that a
violation of this Section 6.4 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 an injunction
enjoining and restraining Sellers from doing or continuing to do any
such violation and any other violations or threatened violations of
this Section 6.4.
(c) Sellers acknowledge and agree that the covenants set
forth in this Section 6.4 are reasonable and valid in scope and in all
other respects. If any of such covenants is 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 Section 6.4(c), any
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of the provisions of this Section 6.4 relating to 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.
Section 6.5. Efforts. Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto shall use
commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper
or advisable consistent with applicable law to consummate and make
effective in the most expeditious manner practicable the transactions
contemplated hereby; provided, however, that nothing in this covenant
or any other provision of this Agreement will require Purchaser to
agree to any divestiture, hold-separate or other agreement or
requirement.
Section 6.6. Tax Sharing Agreements and Arrangements.
Sellers will cause any tax sharing agreement or similar arrangement
with respect to Taxes involving the Seller Entities (other than
contracts solely among such Seller Entities) to be terminated, amended
or assigned effective as of the Closing Date, to the extent that any
such agreement or arrangement relates to any Seller Entity, on the one
hand, and any Parent Entity, on the other hand, and after the Closing
Date none of the parties shall have any obligation to a Parent Entity
under any such agreement or arrangement for any past, present or
future period. Notwithstanding the foregoing, the existing tax sharing
arrangement between Seiren Affiliate 1, Seiren Shareholder and the
Company with respect to the tax equalization of compensation paid to
Japanese secondees from Seiren Affiliate 1 and/or Seiren Shareholder
to the Company shall continue between Seiren Affiliate 1, Seiren
Shareholder and the Company after the Closing Date for so long as any
Seller provides the Company with Japanese secondees.
Section 6.7. Tax Returns. The parties acknowledge that the
taxable year of the Company will close as to all its partners as a
result of the closing of the acquisition of JPS Automotive by
Purchaser pursuant to the JPS Automotive Agreement (the "JPS
Automotive Closing") but will not close as to all its partners as a
result of the Closing under this Agreement (if such Closing occurs on
a day after the JPS Automotive Closing), so that Seiren Affiliate 1
and Seiren Affiliate 2 may be partners of the Company for all of the
taxable year closing with the JPS Automotive Closing and for part of
the next taxable year (the "Second Short Tax Year"). The parties agree
that the federal income tax return of the Company with respect to the
Second Short Tax Year (if any) shall be prepared by or at the
direction of Purchaser and its Affiliates, and that the allocation of
income for such taxable year between Seiren Affiliate 1 and Seiren
Affiliate 2 and the purchaser(s) of their interests shall be based on
a daily proration of all items for such taxable year; provided,
however, that in the event there is any material item of non-recurring
income, expense or deduction for such taxable year, prior to filing
the Company tax return for such year, Purchaser and its Affiliates
will consult in good faith with Sellers concerning the proper
treatment of such item in the proration of income.
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ARTICLE VII.
CONDITIONS TO SELLERS' OBLIGATIONS
The obligation of Sellers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless
waived in writing by Sellers) of each of the following conditions on
or prior to the Closing Date:
Section 7.1. Representations and Warranties. The
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, as though such representations and warranties
were made anew on and as of the Closing Date. Purchaser shall have
delivered to Sellers a certificate of its President or a Vice
President, dated the Closing Date, to the foregoing effect.
Section 7.2. Compliance with Agreement. Purchaser shall have
performed and complied in all material respects with the covenants set
forth in Sections 6.1, 6.3 and 6.5, and in all respects with all other
covenants to be performed or complied with by it on or prior to the
Closing Date. Purchaser shall have delivered to Sellers a certificate
of its President or a Vice President, dated the Closing Date, to the
foregoing effect.
Section 7.3. No Adverse Proceeding. As of the Closing Date,
there shall not have been instituted or be pending any suit, action or
other proceeding by any Governmental Agency or other Person in which
it is sought to restrain or prohibit or question the validity or
legality of the transactions contemplated by this Agreement, nor shall
any such suit, action or proceeding under any applicable antitrust
law, rule or regulation be threatened by any Governmental Agency.
Section 7.4. Consents. All consents, Permits,
authorizations, approvals, waivers and amendments which are listed on
Schedule 8.4 hereto shall have been obtained.
Section 7.5. Corporate Documents. Sellers 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 consummation of the
transactions contemplated hereby, and such resolutions shall be in
full force and effect as of the Closing Date.
Section 7.6. New Marketing Agreement. The Company and Seiren
Shareholder shall have entered into a new marketing agreement as of
the Closing Date covering North American bodycloth sales, in the form
of Exhibit A hereto (the "New Marketing Agreement").
Section 7.7. Termination of Agreements. (a) The Partner
Interest Purchase Agreement, the CMC Shareholders' Agreement and the
Amended and Restated Agreement of Limited Partnership of the Company
(including the license of the Seiren Technology (as defined in the
Amended and Restated Agreement of Limited Partnership of the Company)
provided for therein) shall have been terminated as of the Closing
Date on terms and conditions satisfactory to each Seller in its sole
discretion or amended to remove any Seller as a party thereto.
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(b) The JPS Automotive Marketing Agreement (except as
provided in the New Marketing Agreement) and the Former Marketing
Agreement shall have been terminated as of the Closing Date on terms
and conditions satisfactory to Sellers in their sole discretion.
(c) The Cramerton Consulting Agreement and any other
agreement relating to the Company or CMC to which any of the Sellers
or their Affiliates is a party (other than (i) the New Marketing
Agreement and the agreements referred to in Section 7.7(a) hereof,
(ii) to the extent set forth in the New Marketing Agreement, the
Consulting Agreement and (iii) the tax arrangements set forth in
Section 6.6 hereof) are hereby terminated effective as of the Closing
Date.
Section 7.8. FIRPTA. Sellers shall have received
certificates from the Company and CMC, respectively, dated the Closing
Date, pursuant to Section 1445 of the Code (Foreign Investment in Real
Property Tax Act of 1980 Affidavit) in substantially the forms
attached hereto as Exhibit B.
Section 7.9. JPS Automotive Agreement Closing. The closing
contemplated by the JPS Automotive Agreement shall have occurred prior
to, or shall occur simultaneously with, the Closing.
Section 7.10. Opinion of Counsel. Sellers shall have
received an opinion of Jones, Day, Reavis & Pogue, counsel to
Purchaser, in the form of Exhibit C hereto ("Purchaser's Opinion of
Counsel").
Section 7.11. Company Tax Distribution. Prior to the
Closing, the Company shall have distributed to each of its partners
(including Seiren Affiliate 1 and Seiren Affiliate 2) an amount equal
to (a) all distributions declared but not paid to the date hereof, (b)
all distributions declared from the date hereof to the Closing Date,
and (c) to the extent not reflected in (a) or (b), the Company's
reasonable good faith estimate of the amount of taxes paid or to be
paid by such partner on account of the income of the Company through
the Closing Date, net of any prior overpayment of such amounts.
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless
waived in writing by Purchaser) of each of the following conditions on
or prior to the Closing Date:
Section 8.1. Representations and Warranties. The
representations and warranties of Sellers contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date, as though such representations and warranties were made
anew on and as of the Closing Date. Sellers shall have delivered to
Purchaser certificates of the President
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or a Vice President of Seiren Affiliate 1, Seiren Affiliate 2 and
Seiren Shareholder, dated the Closing Date, to the foregoing effect.
Section 8.2. Compliance with Agreement. Sellers shall have
performed and complied in all material respects with the covenants set
forth in Sections 5.1, 5.2, 6.1, 6.3 and 6.5, and in all respects with
all other covenants to be performed or complied with by them on or
prior to the Closing Date. Sellers shall have delivered to Purchaser
certificates of the President or a Vice President of Seiren Affiliate
1, Seiren Affiliate 2 and Seiren Shareholder, dated the Closing Date,
to the foregoing effect.
Section 8.3. No Adverse Proceeding. As of the Closing Date,
there shall not have been instituted or be pending any suit, action or
other proceeding by any Governmental Agency or other Person in which
it is sought to restrain, prohibit or question the validity or
legality of the transactions contemplated by this Agreement, nor shall
any such suit, action or proceeding under any applicable antitrust
law, rule or regulation be threatened by any Governmental Agency.
Section 8.4. Consents. All consents, Permits,
authorizations, approvals, waivers and amendments which are listed on
Schedule 8.4 hereto shall have been obtained.
Section 8.5. Corporate Documents. Purchaser shall have
received from Sellers certified copies of the resolutions duly adopted
by the board of directors of Seiren Affiliate 1, Seiren Affiliate 2
and Seiren Shareholder, approving the execution and delivery of this
Agreement by Seiren Affiliate 1, Seiren Affiliate 2 and Seiren
Shareholder, respectively, and the consummation of the transactions
contemplated hereby, and such resolutions shall be in full force and
effect as of the Closing Date.
Section 8.6. FIRPTA. Purchasers shall have received
certificates from the Company and CMC, respectively, dated the Closing
Date, pursuant to Section 1445 of the Code (Foreign Investment in Real
Property Tax Act of 1980 affidavit) in substantially the forms
attached hereto as Exhibit B.
Section 8.7. JPS Automotive Agreement. All of the conditions
to Purchaser's obligations under Article VIII of the JPS Automotive
Agreement (other than Section 8.8 thereof) shall have been satisfied
or waived by Purchaser in its sole discretion, and the closing
contemplated by the JPS Automotive Agreement shall have occurred prior
to, or shall occur simultaneously with, the Closing.
Section 8.8. Purchaser Bank Consent. Purchaser shall have
obtained, on terms and conditions satisfactory to Purchaser in its
sole discretion, the consent of the requisite lenders under its
existing bank credit facility to the extent necessary to consummate
the transactions contemplated by this Agreement.
Section 8.9. Material Adverse Effect. Since the date hereof,
there shall not have occurred (i) a Material Adverse Effect or (ii)
any event which could reasonably be expected to have a Material
Adverse Effect.
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Section 8.10. Clearance Certificates. Sellers shall have
delivered any clearance certificates or similar documents that may be
required by any state Tax authority in order to relieve Purchaser of
any obligation to withhold any portion of the Purchase Price.
Section 8.11. Marketing and Consulting Agreements. (a) The
Company and Seiren Shareholder shall have entered into the New
Marketing Agreement as of the Closing Date.
(b) The Partner Interest Purchase Agreement, the CMC
Shareholders' Agreement and the Amended and Restated Agreement of
Limited Partnership of the Company (including the license of the
Seiren Technology (as defined in the Amended and Restated Agreement of
Limited Partnership of the Company) provided for therein) shall have
been terminated as of the Closing Date on terms and conditions
satisfactory to Purchaser in its sole discretion or amended to remove
any Seller as a party thereto.
(c) The JPS Automotive Marketing Agreement (except as
provided in the New Marketing Agreement) and the Former Marketing
Agreement shall have been terminated as of the Closing Date on terms
and conditions satisfactory to Purchaser in its sole discretion.
(d) The Cramerton Consulting Agreement and any other
agreement relating to the Company or CMC to which any of the Sellers
or their Affiliates is a party (other than (i) the New Marketing
Agreement and the agreements referred to in Section 8.11(b) hereof,
(ii) to the extent set forth in the New Marketing Agreement, the
Consulting Agreement, and (iii) the tax arrangements set forth in
Section 6.6 hereof) are hereby terminated effective as of the Closing
Date.
Section 8.12. Waiver of Any Seiren Right of First Refusal.
In connection with the consummation of the purchase and sale
contemplated by the JPS Automotive Agreement:
(a) Seiren Affiliate 1 hereby validly waives, conditioned on
the consummation of the closing of the transactions contemplated
by this Agreement and effective as of the date of the Closing,
any right of first refusal pursuant to Section 3.2 of the Partner
Interest Purchase Agreement; and
(b) Seiren Shareholder hereby validly waives, conditioned on
the consummation of the closing of the transactions contemplated
by this Agreement and effective as of the date of the Closing,
any right of first refusal pursuant to the CMC Stockholders'
Agreement.
Section 8.13. Release of Claims Against the Company and CMC.
Each of Sellers and their Affiliates hereby releases and discharges,
as of the date of Closing, the Company and CMC and their respective
Affiliates, successors and assigns and the directors, officers,
employees, stockholders, general partners and limited partners of each
of them (other than JPSGP Inc., Foamex-JPS Automotive L.P., Foamex
International Inc. and their respective Affiliates (excluding JPS
Automotive, the Company and CMC), successors and assigns, directors,
officers, employees, stockholders, general partners and limited
partners) (the "Released Persons") from any and all liabilities,
actions, causes of actions, suits, claims, obligations and demands, of
any
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nature, that any of the Sellers or their Affiliates or their
respective successors or assigns ever had, now have or may hereafter
have, against any of the Released Persons for, upon or by reason of
any matter, cause or thing whatsoever from the beginning of the world
to the date of the Closing. Without limiting the generality of the
foregoing, such release hereby provides, effective as of the date of
the Closing, that each of Sellers and its Affiliates specifically
releases and discharges the Released Persons from any obligation under
the Partnership Agreement or otherwise to make, and hereby waives,
effective as of the date of the Closing, any right under the
Partnership Agreement or otherwise to receive, any distribution for
the payment of Taxes or other payments related to Taxes relating to
the Company or their interests therein.
Section 8.14. Opinions of Counsel. Purchaser shall have
received an opinion of O'Melveny & Myers LLP, counsel to Seiren
Affiliate 1 and Seiren Affiliate 2, and Showa Law Office, counsel to
Seiren Shareholder, in the form of Exhibit D hereto ("Sellers' Opinion
of Counsel").
ARTICLE IX.
THE CLOSING; TERMINATION
Section 9.1. The Closing. The Closing of the transactions
contemplated hereby (the "Closing") shall be held two Business Days
after each of the conditions precedent set forth in Articles VII and
VIII have been satisfied or waived by the party entitled to the
benefit thereof, simultaneously with the closing under the JPS
Automotive Agreement (the "Closing Date"). The Closing shall be held
at the offices of Jones, Day, Reavis & Pogue at 599 Lexington Avenue,
New York, New York 10022 or at such other place as the parties may
mutually agree. At the Closing, all of the transactions provided for
in Article II hereof shall be consummated on a substantially
concurrent basis.
Section 9.2. Deliveries by Sellers at the Closing. At the
Closing, Sellers shall deliver, or cause to be delivered, to
Purchaser, the following items:
(a) The duly executed officer's certificates and
certified resolutions referred to in Sections 8.1, 8.2 and
8.5;
(b) The consents required to be obtained by Sellers
listed on Schedule 8.4;
(c) Documents terminating the agreements listed in
Section 8.11(b), (c) and (d);
(d) New Marketing Agreement;
(e) Sellers' Opinion of Counsel; and
(f) All other previously undelivered documents that Sellers
are required to deliver to Purchaser pursuant to this Agreement.
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Section 9.3. Deliveries by Purchaser at the Closing. At the
Closing, Purchaser shall deliver, or cause to be delivered, to
Sellers, the following items:
(a) The duly executed officer's certificates and
certified resolutions referred to in Sections 7.1, 7.2 and
7.5;
(b) Duly executed and acknowledged transfer tax and other
required Tax forms reasonably required by Sellers to consummate
the transactions contemplated hereby, all in the form required by
applicable law;
(c) The consents required to be obtained by Purchaser
listed on Schedule 8.4;
(d) New Marketing Agreement;
(e) Purchaser's Opinion of Counsel;
(f) All other previously undelivered documents that
Purchaser is required to deliver to Sellers pursuant to this
Agreement; and
(g) The Purchase Price.
Section 9.4. Termination. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions
contemplated hereby may be terminated in any of the following ways at
any time before the Closing and in no other manner:
(a) By mutual written consent of Purchaser and Sellers; or
(b) After December 19, 1996 by Purchaser or Sellers (if such
terminating party is not then in material default of any
obligation hereunder), if the Closing has not occurred on or
before such date, provided, however, that upon consultation
between Purchaser and Sellers, such date may, with the consent of
Sellers, such consent not to be unreasonably withheld, be
extended to any date on or prior to December 31, 1996.
In the event this Agreement is terminated pursuant to this Section
9.4, all further obligations of the parties hereunder shall terminate,
except for the obligations set forth in the last sentence of Section
5.2 and Sections 11.4, 11.5 and 11.9, and except that nothing in this
Section 9.4 shall relieve any party hereto of any liability for breach
of any of the covenants or willful or intentional breach of any of the
representations or warranties contained in this Agreement.
ARTICLE X.
INDEMNIFICATION
Section 10.1. Survival. All of the representations and
warranties of Sellers contained in Article III of this Agreement
(other than the representations and warranties of Sellers
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contained in Sections 3.1, 3.2 and 3.3 (collectively, the "Perpetual
Representations")) or any certificate delivered by Sellers shall
survive the Closing and continue in fully force and effect until April
30, 1998. Notwithstanding the foregoing, any notice given in
accordance with Section 11.1 of this Agreement claiming an alleged
breach of any representation or warranty hereunder will without
further action extend the survival period for the representation or
warranty alleged to have been breached as applied to the circumstances
set forth in such notice until immediately after the final resolution
of the matter. The Perpetual Representations, all of the
representations and warranties of Purchaser, and all of the covenants
of Sellers and Purchaser contained in this Agreement shall survive the
Closing and continue in full force and effect forever thereafter.
Section 10.2. Indemnification Provisions for Benefit of
Purchaser. (a) In the event Sellers breach any of their
representations, warranties or covenants contained in this Agreement
or in any certificate delivered by Sellers pursuant to this Agreement
and provided that, as to any claim for breach of representations or
warranties, Purchaser makes a written claim for indemnification
against Sellers within the applicable survival period, if applicable,
then Sellers agree jointly and severally to indemnify Purchaser and
its Affiliates from and against all Damages Purchaser suffers
resulting from or arising out of such event; provided, however,
Sellers shall not have any obligation to indemnify Purchaser from and
against any Damages resulting from the breach of any representation or
warranty of Sellers (as opposed to any covenant of Sellers) contained
in Article III of this Agreement: (i) (other than Perpetual
Representations) until Purchaser has suffered aggregate Damages, by
reason of all such breaches (excluding breaches or series of related
breaches resulting in Damages of less than $5,000) in excess of
$45,454.50 (the "Deductible") (after which point Sellers will be
obligated only to indemnify the Purchaser from and against further
Damages in excess of the Deductible), or (ii) notwithstanding anything
to the contrary contained in this Agreement, to the extent the
aggregate amount that Sellers have actually indemnified Purchaser for
prior breaches of representations and warranties of Sellers contained
in Article III of this Agreement exceeds $10 million (the "Cap").
Notwithstanding anything to the contrary contained in this Agreement,
to the extent any Damages for which Purchaser may claim indemnity (or
satisfaction of the Deductible) pursuant to this Section 10.2 relate
to a breach of any of the representations or warranties contained in
Article III and are due to Damages suffered by the Company (which are
not directly suffered by Purchaser), Sellers shall only be obligated
to indemnify Purchaser and its Affiliates for (or reduce the remaining
portion of the Deductible by) 20% of the total Damages suffered by the
Company, which 20% shall be subject to the Cap. Notwithstanding
anything to the contrary contained in this Agreement, to the extent
any Damages for which Purchaser may claim indemnity (or satisfaction
of the Deductible) pursuant to this Section 10.2 relate to a breach of
any of the representations or warranties contained in Article III and
are due to Damages suffered by CMC (which are not directly suffered by
Purchaser), Sellers shall only be obligated to indemnify Purchaser and
its Affiliates for (or reduce the remaining portion of the Deductible
by) 50% of the total Damages suffered by CMC, which 50% shall be
subject to the Cap.
(b) The indemnification provided for in Section 10.2(a)
shall survive any investigation at any time made by or on behalf of
Purchaser or any knowledge or information that Purchaser may have.
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Section 10.3. Indemnification Provisions for Benefit of
Sellers. In the event Purchaser breaches any of its representations,
warranties or covenants contained in this Agreement or in any
certificate delivered by Purchaser pursuant to this Agreement and
provided that Sellers make a written claim for indemnification against
Purchaser, then Purchaser agrees to indemnify Sellers from and against
all Damages Sellers suffer resulting from or arising out of such
event.
Section 10.4. Matters Involving Third Parties. (a) If any
third party notifies any party hereto (the "Indemnified Party") with
respect to any matter which may give rise to a claim for
indemnification against the other party hereto (the "Indemnifying
Party") under this Article X, then the Indemnified Party shall use
reasonable efforts to notify the Indemnifying Party thereof promptly
and in any event within 10 calendar days after receiving any written
notice from a third party; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party
after such 10-day period shall relieve the Indemnifying Party from any
obligation hereunder unless, and then solely to the extent that, the
Indemnifying Party is actually prejudiced thereby.
(b) Once the Indemnified Party has given notice of the
matter to the Indemnifying Party, the Indemnified Party may, subject
to the Indemnifying Party's rights to assume the defense of such
matter pursuant to paragraph (c) below, defend against the matter in
any manner it deems appropriate.
(c) The Indemnifying Party may at any point in time choose
to assume the defense of such matter, in which event:
(i) the Indemnifying Party shall defend the Indemnified
Party against the matter with counsel of its choice
reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may retain separate counsel
at its sole cost and expense (except that the Indemnifying
Party shall be responsible for the fees and expenses of one
separate co-counsel to the extent the Indemnified Party is
advised, in writing by its counsel, that either (x) the
counsel the Indemnifying Party has selected has a conflict
of interest or (y) there are legal defenses available to the
Indemnified Party that are different from or additional to
those available to the Indemnifying Party (but only to the
extent of such different or additional defenses)), and
(iii) the Indemnifying Party shall reimburse the
Indemnified Party for the reasonable costs of defense or
investigation for the period prior to the assumption of the
defense.
(d) Assumption of the defense of any matter by the
Indemnifying Party shall without further action constitute an
irrevocable waiver by the Indemnifying Party of its right to claim at
a later date that the portion of such third party action for which the
defense was assumed is not a proper matter for indemnification
pursuant to this Article X.
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(e) The Indemnified Party shall not consent to the entry of
a judgment or enter into any settlement with respect to any matter
which may give rise to a claim for indemnification without the written
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. The Indemnifying Party shall not
consent to the entry of a judgment with respect to any matter which
may give rise to a claim for indemnification, or enter into any
settlement which does not include a provision whereby the plaintiff or
claimant in the matter releases the Indemnified Party from all
liability with respect thereto, without the written consent of the
Indemnified Party (not to be unreasonably withheld or delayed).
Section 10.5. Certain Additional Provisions Relating to
Indemnification.
(a) Notwithstanding Section 11.12, after the Closing Date,
the indemnification provisions set forth in this Article X shall
constitute the sole and exclusive recourse and remedy available to the
parties hereto with respect to the breach of any representation or
warranty contained in this Agreement or in any certificate delivered
pursuant to this Agreement except for actual fraud.
(b) The Indemnifying Party shall have no obligation to
indemnify or hold harmless the Indemnified Party pursuant to this
Article X for any Damages to the extent that the Indemnified Party has
actually recovered such Damages (net of expenses or other costs
(including, without limitation, attorneys fees and expenses) of
recovery and any retroactive or retrospective premium increases
resulting from such recovery) from any Person other than the
Indemnifying Party or any Affiliate thereof.
(c) The Indemnified Party hereby assigns to the Indemnifying
Party any right the Indemnified Party may have against any Person
(other than the Indemnifying Party, the Indemnified Party or any
Affiliate of any of the foregoing), including, without limitation, any
insurance company, to recover any Damages or other amounts that the
Indemnifying Party has paid to the Indemnified Party pursuant to this
Article X. The Indemnified Party agrees to cooperate reasonably with
the Indemnifying Party, at the Indemnifying Party's sole cost and
expense, in connection with the Indemnifying Party's efforts to pursue
such rights, including, without limitation, providing reasonable
access to the Indemnified Party's personnel, books and records, making
its personnel and those of its Affiliates reasonably available for
deposition and testimony and executing such additional instruments of
assignment to evidence the assignment of such rights. In the event
such rights by their terms may not be assigned, the Indemnified Party
agrees to pursue its rights against such other Person, at the sole
cost and expense and direction of the Indemnifying Party, and to remit
to the Indemnifying Party any recovery.
(d) To the extent permitted by applicable law, any payments
by an Indemnifying Party under this Article X shall be treated as an
adjustment to the Purchase Price for all foreign, federal, state and
local income tax purposes.
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ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.1. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and shall be deemed
to have been given (a) when delivered personally to the recipient, (b)
when sent to the recipient by telecopy (receipt electronically
confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day, (c) three
Business Days after the date when sent to the recipient by reputable
express courier service (charges prepaid) or (d) seven Business Days
after the date when mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to Sellers and to
Purchaser at the addresses indicated below:
If to Purchaser: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28232
Attention: Chief Financial Officer
Fax: (704) 548-2208
If to Sellers: Seiren Co., Ltd.
10-1, Keya 1-Chome
Fukui, Japan 910
Attention: Mr. Tatsuo Kawada, President
Fax: 011-81-776-35-2114
or to such other address as either party hereto may, from time to
time, designate in writing delivered pursuant to the terms of this
Section 11.1.
Section 11.2. Amendments. The terms, provisions and
conditions of this Agreement may not be changed, modified or amended
in any manner except by an instrument in writing duly executed by all
of the parties hereto.
Section 11.3. Assignment and Parties in Interest. (a)
Neither this Agreement nor any of the rights, duties or obligations of
any party hereunder may be assigned or delegated (by operation of law
or otherwise) by either party hereto except with the prior written
consent of the other party hereto, provided, however, that (i) prior
to or after the Closing, Purchaser may assign all of its rights
hereunder to any Affiliate of Purchaser, provided that no such
assignment will relieve Purchaser of its obligations hereunder unless
such assignment is made at Closing to Collins & Aikman Corporation,
and provided further that such assignment shall not hinder, delay or
prevent the Closing, and (ii) Purchaser has a one-time right to assign
all of its rights hereunder to any other Person which acquires all or
substantially all of the assets of, or equity interest in, the Company
and CMC.
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(b) Except as provided in Article X, this Agreement shall
not confer any rights or remedies upon any person or entity other than
the parties hereto and their respective permitted successors and
assigns.
Section 11.4. Announcements. All press releases, notices to
customers and suppliers and similar public announcements prior to or
within five days after the Closing Date with respect to this Agreement
and the transactions contemplated by this Agreement shall be approved
by both Purchaser and Sellers prior to the issuance thereof; provided
that either party may make any public disclosure it believes in good
faith is required by law, regulation or rule of any stock exchange on
which its securities are traded (in which case the disclosing party
shall use reasonable efforts to advise the other party prior to making
such disclosure and to provide the other party a reasonable
opportunity to review the proposed disclosure).
Section 11.5. Expenses. Except as expressly set forth in
this Agreement, each party to this Agreement shall bear all of its
legal, accounting, investment banking and other expenses incurred by
it or on its behalf in connection with the transactions contemplated
by this Agreement, whether or not such transactions are consummated.
Section 11.6. Entire Agreement. This Agreement constitutes
the entire agreement among the parties hereto with respect to the
subject matter hereof, supersedes and is in full substitution for any
and all prior agreements and understandings among them relating to
such subject matter, and no party shall be liable or bound to the
other party hereto in any manner with respect to such subject matter
by any warranties, representations, indemnities, covenants or
agreements except as specifically set forth herein. The Exhibits and
Schedules to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
Section 11.7. Descriptive Headings. The descriptive headings
of the several sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 11.8. Counterparts. For the convenience of the
parties, any number of counterparts of this Agreement may be executed
by any one or more parties hereto, and each such executed counterpart
shall be, and shall be deemed to be, an original, but all of which
shall constitute, and shall be deemed to constitute, in the aggregate
but one and the same instrument.
Section 11.9. Governing Law; Jurisdiction; Waiver of Jury
Trial. (a) This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts made and performed
therein.
(b) The parties hereto irrevocably submit to the exclusive
in personam jurisdiction of any New York State or Federal court
sitting in the City of New York over any suit, action or proceeding
arising out of or relating to this Agreement. To the fullest extent it
may effectively do so under applicable law, each of the parties hereto
irrevocably waives and agrees not to assert, by way of motion, as a
defense or otherwise, (i) any claim that (A) any proceeding arising
out of or relating to this Agreement may be brought in another
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jurisdiction (except a proceeding brought by a third party) or (B)
that it is not subject to the in personam jurisdiction of any court
referenced in the first sentence of this clause (b), (ii) any
objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in any such court and
(iii) any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) Purchaser and Sellers each waive all rights to a trial
by jury in any action or proceeding relating to transactions arising
out of or relating to this Agreement.
Section 11.10. Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction will
be applied against any party. Any references to any federal, state,
local or foreign statute or law will also refer to all rules and
regulations promulgated thereunder, unless the context requires
otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) an accounting term not
otherwise defined has the meaning assigned to it by GAAP; (c) "or" is
disjunctive but not exclusive; (d) words in the singular include the
plural, and in the plural include the singular; (e) provisions apply
to successive events and transactions, and (f) "$" means the currency
of the United States of America.
Section 11.11. Severability. In the event that any one or
more of the provisions contained in this Agreement or in any other
instrument referred to herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, then to the maximum
extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any
such invalid or unenforceable term or provision, the parties hereto
intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
Section 11.12. Specific Performance. Without limiting or
waiving in any respect any rights or remedies of Purchaser under this
Agreement now or hereinafter existing at law or in equity or by
statute, each of the parties hereto shall be entitled to seek
performance of the obligations to be performed by the other in
accordance with the provisions of this Agreement.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, Sellers and Purchaser have executed and
delivered this Agreement as of the day and year first written above.
SELLERS: SEIREN U.S.A. CORPORATION
By: /s/ Hideo Okuyama
Name: Hideo Okuyama
Title: President
SEIREN AUTOMOTIVE TEXTILE
CORPORATION
By: Hideo Okuyama
Name: Hideo Okuyama
Title: Chairman
SEIREN CO., LTD.
By: /s/ Tatsuo Kawada
Name: Tatsuo Kawada
Title: President
PURCHASER: COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. Michael Stepp
Name: J. Michael Stepp
Title: Executive Vice President & Chief
Financial Officer
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THIS ACQUISITION AGREEMENT ("Agreement") is made on December 11, 1996.
BETWEEN:
(1) PERSTORP AB, a Swedish company, the principal address of
which is S-284 80, Perstorp, Sweden ("Perstorp");
(2) COLLINS & AIKMAN PRODUCTS CO., a Delaware company, the principal
address of which is 701 McCullough Drive, Charlotte, North
Carolina 28262 (the "Purchaser").
WHEREAS:
(A) Perstorp Components, Inc. (MICH) ("Components Plymouth") and
Perstorp Components, Inc. (TENN) ("Components Springfield") are
corporations incorporated in the States of Delaware and Tennessee,
respectively, and Perstorp Components (Canada) Inc. ("Components
Canada"), is a corporation incorporated in the Province of Ontario,
Canada. All of the issued and outstanding shares of capital stock of
each of these companies is owned by Perstorp Inc, a Delaware company
("Perstorp North America"), all of the issued and outstanding shares
of capital stock of which are owned by Perstorp.
(B) Perstorp Components SA de CV ("Components Mexico") is a Sociedad
Anonima de Capital Variable incorporated in Mexico, 75% of the issued
and outstanding share capital of which is owned by Perstorp North
America.
(C) Perstorp Components S.A. ("Components Spain") is a Sociedad
Anonima incorporated in Spain, all of the issued and outstanding share
capital (other than one share) of which is owned by Perstorp Railite,
S.A., a Spanish Company ("Perstorp Railite"), Perstorp Railite, all of
the issued and outstanding share capital of which is owned by
Perstorp.
(D) Perstorp Components Ltd. ("Components UK") is a private
company incorporated in England, all of the issued and
outstanding share capital of which is owned by Perstorp.
(E) Perstorp, Perstorp North America, Perstorp Railite and the
Purchaser have reached agreement in relation to the sale and purchase
of the Shares of the Acquired Companies and the other transactions
contemplated hereby, in each case upon the terms and subject to the
conditions set forth in this Agreement and the other documents
referred to in this Agreement.
ACCORDINGLY, IT IS AGREED as follows:
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INTERPRETATION
1.1 In addition to the terms defined elsewhere herein, the
following terms will have the following meanings when used in
this Agreement with initial capital letters:
"Accountants" has the meaning set forth in Section 3.4(c);
"Accountants' Determination" has the meaning set forth in Section
3.4(c);
"Accounting Period" has the meaning given to such term in
Paragraph 1.1 of Schedule 9.2;
"Accounts" means, in relation to any Acquired Company:
(a) the balance sheets of the Acquired Company as at each of August
31, 1994, August 31, 1995 and the Last Accounts Date; and
(b) the statements of profit and loss of the Acquired Company for the
years ending on August 31, 1994 and August 31, 1995, and the
eight-month period ending on the Last Accounts Date,
together with any notes, reports or statements included in or annexed
to them, and the Combined Accounts for the Acquired Companies taken as
a whole, in each case as included in Appendix 1 to the Disclosure
Letter;
"Accounts Date" means, in relation to any accounting period of
any Acquired Company, the last day of that period;
"Acquired Companies" means those companies designated as such in Part
A of Schedule 1.1 and their respective subsidiaries, if any;
"Acquired Entity" has the meaning set forth in Section 5.3;
"Adjusted Completion Date Balance Sheet" has the meaning set
forth in Section 3.4(b);
"Affiliate" of a Person means any Person controlling, controlled
by or under common control with the first Person;
"Assets" means all machinery, tools, inventory, Intellectual Property
and other assets, rights, properties, claims and interests, wherever
located, owned or used by any of the Acquired Companies;
"Business" means the manufacture, distribution and sale of
Designated Products by the Acquired Companies as a whole on the
date of this Agreement or such other time as may be referred to
herein;
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"Business Day" means a day (excluding Saturdays and Sundays) on which
banks generally are open for business in Stockholm, New York City and
Charlotte, North Carolina for the transaction of normal banking
business;
"C&A Corp" mean Collins & Aikman Corporation, a Delaware
corporation and the parent company of the Purchaser;
"Change in Control Event" means (i) any issuance of stock, merger,
consolidation, sale of assets or other transaction in which a majority
of the securities ordinarily having voting power in respect of the
election of members of the board of directors (or equivalent body) or
assets of either Perstorp Germany is directly or indirectly
transferred to or becomes beneficially owned by any Person which is
not an Affiliate of Perstorp Germany immediately prior to such
transaction or (ii) any liquidation or dissolution of Perstorp Germany
not involving the transfer of its business to another member of the
Vendor Group.
"Claim" means any claim for a breach of, or indemnity under, this
Agreement;
"Combined Accounts" means the Accounts of the Acquired Companies,
prepared on a combined basis in accordance with GAAP, denominated in
U.S. Dollars and otherwise prepared as described in Appendix 1 to the
Disclosure Letter, together with the related notes, as included in
Appendix 1 to the Disclosure Letter;
"Competing Business" means a business which is engaged in the
manufacture, distribution or sale in North America or any member state
of the European Union ("EU"), the European Economic Area, Central
Europe or Eastern Europe of a Designated Product;
"Completion" means completion of the sale and purchase of the Shares
in accordance with Section 3.1, and the other transactions referred to
in Section 3.2 (such completion being evidenced by the receipt of the
Estimated Purchase Price by Perstorp in accordance with Section 3.3);
"Completion Date" means the date on which Completion occurs (as
described in the definition of "Completion");
"Completion Date Balance Sheet" has the meaning set forth in
Section 3.4(a);
"Components Belgium" means Perstorp Components N.V., a corporation
incorporated under the laws of Belgium, all of the outstanding share
capital of which is owned by Perstorp;
"Components Sweden" means Perstorp Components AB, a corporation
incorporated in Sweden, all of the outstanding share capital of which
is owned by Perstorp;
"Components Sweden JV" means the joint venture company to be owned by
Perstorp GmbH and the Purchaser or an Affiliate of the Purchaser upon
satisfaction of the conditions and completion of the transactions
specified in the Formation Agreement with respect to the joint
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venture involving Perstorp's business of the manufacture, distribution
and sale of automotive components in Sweden, Belgium and France;
"Computer Software Agreement" means the agreement executed and
delivered at Completion in the agreed form attached as Exhibit A;
"Consent" means any consent, waiver, approval, order or authorization
of, or registration, declaration or filing with or notice to, any
Governmental Authority or other Person;
"Contract" means any contract, lease, rental agreement, tenancy,
license, engagement or commitment, written or oral, expressed or
implied;
"Costs" means all reasonable costs and expenses (including without
limitation interest, penalties, attorney's and other professionals'
fees and expenses, accounting fees and expenses and investigation,
remediation, reporting, monitoring or enforcement costs and expenses),
in each case of any nature whatsoever;
"Current Taxes" means the accrual for current Income Taxes (as defined
in Schedule 9.2) payable for an Acquired Company's fiscal year ended
August 31, 1996 and for the pre-Completion portion of the Acquired
Company's fiscal year that includes the Completion Date;
"Deferred Taxes" means the net of deferred tax assets and deferred tax
liabilities, calculated on a separate basis for each Acquired Company
in accordance with Local GAAP (it being understood that, for purposes
of computing Deferred Taxes for Components Springfield and Components
Plymouth, the valuation allowance established in determining deferred
tax assets will be calculated with reference to the actual
circumstances applying to each such Acquired Company);
"Designated Product" means any product set forth on Appendix 22
to the Disclosure Letter;
"Development License Agreement" means the agreement executed and
delivered at Completion in the agreed form attached as Exhibit B;
"Disclosure Letter" means the letter in the agreed form from Perstorp
to the Purchaser signed and exchanged before the signing of this
Agreement; provided, however, that (i) if the Disclosure Letter
references any other document a copy of which has not been provided to
Purchaser during the due diligence process, then the matter
referencing such document will not operate to modify any Warranty and
(ii) each disclosure contained in the Disclosure Letter will operate
to qualify (a) the Warranties specifically referred to in the
Disclosure Letter by number with respect to such disclosure and (b)
except for purposes of (x) the definitions of the terms "Designated
Products", "Pension Schemes", "Properties" and "Stay Bonus
Liabilities" in this Section 1 and (y) the Warranty in paragraph 25 of
Schedule 6.1, other Warranties to the extent that the applicability of
such disclosure to such other Warranties is reasonably apparent on its
face;
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"Employee" means any individual employed as of Completion by an
Acquired Company in the conduct of the Business;
"ESM" means expanding sealing material (such material being a polymer
based material (polyethen) used to stop airborne noise in hollow
sections in a car body and which is engineered to expand in an optimum
way in respect of space, temperature, sealing and the throughflow of
moisture);
"Environmental Laws" means all EU, international, national, state or
provincial or local Laws concerning health, safety or environmental
matters which are applicable to any Acquired Company, any Property,
the Business or any other business conducted by the Acquired Companies
or any predecessor thereto, each as in force and applicable at or
prior to Completion;
"Estimated Purchase Price" means $77,480,000; such amount having
been computed as set forth in Schedule 2.1;
"Event" has the meaning given to such term in Paragraph 1.1 of
Schedule 9.2;
"Exhibits" means the Exhibits to this Agreement in the agreed form;
"Exxon Claims" means the claims by Exxon Corporation or any of its
Affiliates referred to in Item 1 of Schedule 7.1(b);
"Final Completion Date Balance Sheet" has the meaning set forth in
Section 3.4(c);
"Formation Agreement" means an agreement with respect to the
establishment of Components Sweden JV signed and delivered at
Completion;
"Former Employees" means any individual formerly employed by an
Acquired Company or any predecessor to an Acquired Company whose
employment was terminated prior to or at Completion;
"French Branch" has the meaning set forth therefor in the Formation
Agreement;
"GAAP" means generally accepted Swedish accounting principles applied
on a consistent basis;
"Governmental Authority" means any EU, international, federal, state
or provincial, local or foreign government or any subdivision,
authority, department, commission, board, bureau, agency, court or
other instrumentality thereof;
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"Hazardous Material" means any pollutant, toxic substance, hazardous
waste, hazardous material, hazardous substance, petroleum or petroleum
product or derivative as defined in any Environmental Law or any
substance which is reasonably likely to cause harm (whether now or
with the passage of time) to human health, property or to the
environment or to any living organism or ecological system supported
by the environment and (i) is subject to regulation under any
Environmental Law or (ii) may give rise to liability under any
Environmental Law or common law tort concepts;
"Holding Company" means any company which (i) holds a majority of the
voting rights in another company, (ii) has the right to appoint or
remove a majority of such other company's board of directors (or
equivalent governing body), or (iii) controls a majority of the voting
rights in another company pursuant to an agreement with others;
"Indemnified Perstorp Person" has the meaning set forth in
Section 7.1(a);
"Indemnified Purchaser Person" has the meaning set forth in
Section 7.1(b);
"Intellectual Property" means all intellectual property, including
without limitation patents, trade marks, service marks, collective
marks, certification marks, trade names, design rights, copyright
(including rights in computer software and databases) and moral
rights, confidential information, trade secrets, rights in know-how
and other intellectual property rights, in each case whether
registered or unregistered and including applications for the grant of
any of the foregoing and all rights or forms of protection having
equivalent or similar effect to any of the foregoing which may subsist
anywhere in the world, but excluding the name "Perstorp," the Perstorp
logo and all intellectual property rights therein (collectively, the
"Perstorp Mark");
"Intellectual Property Agreement" means the agreement executed and
delivered at Completion in the agreed form attached as Exhibit D;
"Last Accounts" means the Accounts of each Acquired Company as at and
for the eight-month period ending on the Last Accounts Date. The
exchange rates used in preparing the Last Accounts are specified in
Appendix A-1 to the Disclosure Letter;
"Last Accounts Date" means April 30, 1996;
"Laws" means any laws, statutes, rules, regulations, ordinances,
orders, codes, treaties having the force of law in the applicable
jurisdiction, arbitration or other alternative dispute resolution
awards, judgments, decrees, notices, directives or other requirements
of any Governmental Authority and any judicial and administrative
interpretations thereof;
"Legal Opinion" means the legal opinions to be provided pursuant
to Section 3.2 substantially in the form set out in Schedule 3.2;
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"Local GAAP" means, in relation to an Acquired Company, the generally
accepted accounting principles, applied on a consistent basis,
ordinarily used in preparation of that Acquired Company's Accounts;
"Local Transfer Agreements" means those agreements summarily setting
forth the terms and conditions of the transfer of the Shares of
Components UK, Components Spain, Components Mexico, Components
Springfield, Components Plymouth and Components Canada;
"Losses" means any and all actions, suits, demands, assessments,
judgments, losses, liabilities, damages, Costs and, to the extent
recoverable under English Law, lost profits; provided, however, that
for purposes of so determining lost profits, (i) lost profits are
those which are reasonably foreseeable by reference to the Business as
conducted as of Completion and as contemplated to be conducted
thereafter by reference to the projected financial information
furnished by Perstorp to the Purchaser in connection with the
transactions contemplated by this Agreement and attached hereto as
Exhibit E (the "Projections") but not limited to the years set forth
therein and (ii) lost profits will exclude losses of future investment
opportunities not reflected in the Projections;
"Material Adverse Effect" means a material adverse change in or to the
business, financial condition, results of operations, assets,
operations or prospects of the Acquired Companies, taken as a whole,
but excluding any such effect to the extent resulting from the
seasonal or cyclical nature of the industry in which the Acquired
Companies participate which affect the Acquired Companies and their
competitors in substantially the same manner;
"Mexican Obligation Purchase Price" has the meaning set forth in
Section 3.2(g);
"Net Assets" means, as of any date, the aggregate amount, expressed in
U.S. dollars, of the Net Asset Value for all of the Acquired Companies
on a combined basis as determined in accordance with GAAP and shown on
the balance sheet included in the Combined Accounts as at the Last
Accounts Date (which is attached to the Disclosure Letter as Appendix
1 and shows a Net Asset Value of $108,761,000) or the Completion Date
Balance Sheet, as the case may be;
"Net Asset Value" means total assets minus the sum of (i) total
liabilities, except that, as shown on Schedule 2.1, the following
assets or liabilities will be valued at zero for purposes of the Net
Asset Value as of any date: (a) cash, (b) Tax Assets, (c) pension
assets or liabilities, (d) untaxed reserves, and (e) Retained
Liabilities and (ii) with respect to Components Mexico, the minority
shareholder interest;
"Pension Liabilities" means all liabilities and obligations of the
Acquired Companies as of Completion pursuant to the Pension Schemes to
make payments or contributions in respect of Employees or Former
Employees;
"Pension Schemes" means the plans listed in Appendix 11 to the
Disclosure Letter;
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"Permits" means any licenses, permits, consents, approvals,
registrations, certificates (including without limitation certificates
of occupancy) and other evidence of authority, variance or permission
required to be obtained under any Law or by any Governmental Authority
in respect of the conduct of the Business or any part thereof;
"Perstorp's Accountants" has the meaning set forth in Section 3.4(b);
"Perstorp GmbH" means Perstorp GmbH, a corporation incorporated in
Germany, all of the outstanding share capital of which is owned by
Perstorp;
"Perstorp Germany" means Perstorp Components G.m.b.H, a corporation
incorporated in Germany, all of the outstanding share capital of which
is owned by Perstorp GmbH;
"Pre-Completion Actions" means the actions described on Exhibit F,
certain of which have been taken by Perstorp ("Perstorp's Pre-
Completion Actions") and certain of which have been taken by Purchaser
("Purchaser's Pre-Completion Actions");
"Properties" means, in the case of each Acquired Company, the real
properties, particulars of which are specified in relation to such
Acquired Company in Appendix 12 to the Disclosure Letter;
"Purchase Price" means the Estimated Purchase Price, plus or minus, as
the case may be, (i) the difference between (a) $29,117,000, which is
the sum of the estimate of the amount of Retained Liabilities on
Schedule 2.1, and (b) the actual amount thereof as shown on the
Completion Date Balance Sheet, and (ii) the difference between (a) the
actual amount of any change in Net Assets between the Last Accounts
Date and Completion, except to the extent such change arises from
currency gains or losses, determined in accordance with Section 3.4
and (b) $4,735,000 (being the estimate of the change in Net Assets
between the Last Accounts Date and Completion as shown on Schedule
2.1) ;
"Purchaser" means, collectively, the Purchaser and any direct or
indirect wholly owned (except for directors' qualifying shares)
Subsidiaries of the Purchaser designated by the Purchaser pursuant to
Section 2.3 to purchase any one or more of the Acquired Companies;
"Purchaser's Accountants" has the meaning set forth in Section 3.4(b);
"Purchaser's Group" means the Purchaser, any Holding Company of the
Purchaser and any Subsidiary of the Purchaser or any such Holding
Company (including after Completion the Acquired Companies);
"Registered Rights" means in relation to any Acquired Company any
Intellectual Property which is the subject of registration (or
application for registration) with any competent authority whether in
the jurisdiction of incorporation of that Acquired Company or
otherwise having equivalent or similar effect anywhere in the world;
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"Release" means any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, storing, transportation,
escaping, leaching, burying, abandoning or disposing into the
environment;
"Relevant Business" has the meaning set forth in Section 5.3;
"Relevant Perstorp Executives" means the personnel of Perstorp listed
in Part A to Schedule 1.2;
"Relevant Vendor" means that one of the Vendors set out opposite the
Acquired Company in question in Part B of Schedule 1.1;
"Retained Liabilities" means any (i) intercompany obligations not
constituting normal trade payables incurred in the ordinary course of
business which are owing from an Acquired Company to Perstorp or an
Affiliate of Perstorp, (ii) liabilities for borrowed money, Deferred
Taxes or Current Taxes, (iii) fees or penalties arising prior to
Completion or as a result of Completion in connection with any of the
Acquired Companies' or Perstorp's bank accounts or overdraft
facilities, (iv) other liability (including without limitation capital
lease obligations and obligations under interest rate or currency
fluctuation instruments) which, in the case of clause (iv), is
required to be reflected as indebtedness on a combined balance sheet
for the Acquired Companies prepared in accordance with GAAP as of
immediately prior to the Last Accounts Date or Completion, as the case
may be, and (v) $3,000,000 relating to the calculation of the Mexican
Obligation Purchase Price as provided in Section 3.2(g);
"Schedules" means the Schedules and Appendices to this Agreement, the
Warranties or the Disclosure Letter, as the case may be, and
"Schedule" will be construed accordingly;
"Security Interest" means any security interest of any nature
whatsoever, including without limitation any mortgage, charge, pledge,
lien, assignment by way of security or other encumbrance and includes
the legal concept of any security interest (of any nature whatsoever)
in any jurisdiction;
"Shareholders Agreement" means an agreement between Perstorp GmbH, the
Purchaser and the other parties thereto with respect to Components
Sweden JV signed and delivered at Completion;
"Shares" means in relation to each of the Acquired Companies the
shares of capital stock specified opposite its name in Part A of
Schedule 1.1;
"Stay Bonus Liabilities" means the aggregate amount of the bonus
payments to be made to Employees as described in Appendix 6 to the
Disclosure Letter;
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"Subsidiary" and "Subsidiaries" means any corporation or other legal
entity in relation to which another Person owns more than 50% of the
shares of capital stock which have ordinary voting power to elect the
board of directors (or equivalent governing body);
"Tax" and "Tax Authority" have the meanings given to them in the Tax
Covenant;
"Tax Asset" means a right to repayment in respect of Tax to which any
of the Acquired Companies is entitled in respect of an Event occurring
or Accounting Period (or portion thereof) prior to Completion;
"Tax Covenant" means the provisions relating to taxes set out in
Schedule 9.2;
"Tax Return" has the meaning given to such term in Paragraph 1.1 of
Schedule 9.2;
"Termination Agreement" means the agreement executed and delivered at
Completion in the agreed form of Exhibit G;
"Transfer" has the meaning set forth in Section 2.1;
"Vendor Group" means Perstorp and any Subsidiary of Perstorp (but
excluding any Acquired Company);
"Vendors" means the Subsidiaries of Perstorp (and, in the case of
Perstorp Railite solely for purposes of Section 2.1, Carlos Haya)
designated as Vendors in Part B of Schedule 1.1;
"Warranties" means the representations and warranties of Perstorp
contained in this Agreement or any document delivered pursuant to this
Agreement, including without limitation the Warranties set out in
Schedule 6.1.
1.2 In this Agreement, unless the context otherwise requires:
(a) references to "Persons" will include individuals, bodies
corporate (wherever incorporated), unincorporated associations,
joint ventures, partnerships and other legal entities, including
without limitation Governmental Authorities;
(b) the headings are inserted for convenience only and will not
affect the construction of this Agreement;
(c) any reference to a Law or an enactment is a reference to it as
from time to time amended, consolidated or re-enacted (with or
without modification) and includes all instruments or orders made
under such Law or enactment; provided, however, that references
to "Environmental Laws" are references to such Laws as in force
and applicable at or prior to Completion;
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(d) any reference to a document in or substantially in the agreed
form is to the form of the relevant document agreed between the
parties and for the purpose of identification initialed by each
of them or on their behalf (in each case with such amendments as
may be agreed by or on behalf of Perstorp and the Purchaser);
(e) references to any legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court,
official or any other legal concept will, in respect of any
jurisdiction other than England, be deemed to include the legal
concept which in that jurisdiction most nearly corresponds to the
English legal term;
(f) references to $ are to United States dollars;
(g) references to Sections, Schedules or Exhibits are to
Sections, Schedules or Exhibits of or to this Agreement, the
Warranties or the Disclosure Letter, as the case may be;
(h) each term defined in this Agreement has the meaning assigned
to it;
(i) "or" is disjunctive but not necessarily exclusive;
(j) words in the singular include the plural and vice versa;
(k) no provision of this Agreement will be interpreted in favor of,
or against, any of the parties hereto by reason of the extent to
which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof;
(l) any reference to "share of capital stock," "share capital" or
"loan stock" will be deemed to include the term most closely
approximating such terms in the applicable jurisdiction;
(m) any reference to any word, term of art or legal concept
recognized under English law will be deemed to include the word,
term of art or legal concept most closely approximating the legal
meaning or effect of the same in the applicable jurisdiction;
(n) the Recitals, the Schedules, Exhibits and documents in the agreed
form are part of the operative provisions of this Agreement and
references to this Agreement will, unless otherwise expressly
stated, include references to such Recitals, Schedules, Exhibits
and documents;
(o) each of the Warranties expressed to be given "to Perstorp's
knowledge" or "so far as Perstorp is aware" or otherwise
qualified by reference to the knowledge or awareness of Perstorp
or any Vendor will be deemed to include a further warranty that
Perstorp has made reasonable enquiries of the Relevant Perstorp
Executives; and
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(p) as used herein, where the context requires, the term "Perstorp"
shall include any Vendor and the term "Purchaser" shall include
any subsidiary of the Purchaser listed on Schedule 2.1 to
purchase the Shares, it being understood that this clause (p)
will not be interpreted to limit the obligations of Perstorp or
the Purchaser.
PURCHASE AND SALE
2.1 Immediately following the execution and delivery of this
Agreement, Perstorp will or will cause the Relevant Vendors to
sell, transfer, assign and deliver (collectively, "Transfer") all
of the Shares to the Purchaser free from all Security Interests,
options, equities, claims or other third-party rights (including
rights of pre-emption) of any nature whatsoever, together with
all rights attaching to them, and otherwise in accordance with
Schedule 2.1. The Purchase Price will be allocated among the
Shares and other transactions herein contemplated in accordance
with Schedule 2.1 and the actions specified in Schedule 2.1 will
be taken or deemed to be taken as of Completion or as otherwise
provided in Schedule 2.1. If any payment is made by Perstorp to
the Purchaser in respect of any breach of this Agreement
(including without limitation any payment pursuant to any Claim),
the payment will, to the extent permitted under applicable Law,
be treated for tax purposes as a reduction in the price paid for
the Shares of the Acquired Company in respect of which the
payment is made.
2.2 At Completion, the Purchaser will pay to Perstorp, on behalf of
the Relevant Vendors, the Estimated Purchase Price in accordance with
Section 3.3.
2.3 Perstorp hereby consents to the Purchaser's nomination of one or
more wholly owned (except for directors' qualifying shares)
Subsidiaries of Purchaser listed on Schedule 2.1 to purchase the
Shares designated thereon.
COMPLETION
3.1 A meeting will be held to consummate the sale and purchase of the
Shares and other actions to be taken at Completion, at the offices of
Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York
immediately following the execution and delivery of this Agreement.
Completion shall be deemed to take place following the receipt by
Perstorp, on behalf of the Relevant Vendors as provided in Section
2.2, of the Estimated Purchase Price and Transfer of the Shares in
accordance with Sections 2.1, 2.2 and 3.3.
3.2 In connection with Completion:
(a) Perstorp will deliver to the Purchaser the evidence of authority
of Perstorp to perform its obligations under this Agreement and each
of the other documents to be executed by Perstorp in connection with
the transactions contemplated hereby, the authority of the signatories
thereof and matters pertaining to the Transfer of the Shares, all as
set forth in Schedule 3.1.
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(b) The Purchaser will deliver to Perstorp a copy of a resolution of
its board of directors (certified by a duly appointed officer as true
and correct) authorizing the execution of and performance by the
Purchaser of its obligations under this Agreement and each of the
other documents to be executed by it in connection with the
transactions contemplated hereby and the authority of the signatories
thereof, all as set forth in Schedule 3.1.
(c) Perstorp will deliver to the Purchaser letters of resignation
signed in the agreed form by each Person described in Schedule 3.1 and
terminations of the powers of attorney described in Schedule 3.1.
(d) Perstorp will procure that each Vendor delivers (or causes to
deliver) to the Purchaser evidence that all necessary corporate action
has been taken by the respective Vendors for the purpose of
authorizing the execution of and the performance by each Vendor of its
respective obligations under this Agreement and each of the other
documents (if any) to be executed by the Relevant Vendor and in each
case the authorization of the signatories thereof all as set forth in
Schedule 3.1.
(e) The Purchaser will deliver to Perstorp in relation to the
Purchaser and Perstorp will deliver to the Purchaser and the
Purchaser's financing sources in relation to Perstorp and each of
the Vendors, the Legal Opinions from counsel in the jurisdictions
specified in Schedule 3.2 substantially in the agreed form
attached to Schedule 3.2.
(f) The parties hereto will, and will procure that their relevant
Affiliates, duly execute and deliver counterparts of the Computer
License Agreement, Development Licensing Agreement, Formation
Agreement, Intellectual Property Agreement, Local Transfer
Agreements, Shareholders Agreement and Termination Agreement.
(g) The Purchaser or its nominees will purchase the outstanding
obligation of Components Mexico (which had a principal amount of
$14,082,000 as of April 30, 1996), from Perstorp North America
for a price equal to the principal amount of such obligation as
of Completion minus $3,000,000 (the "Mexican Obligation Purchase
Price").
3.3 At Completion, the Purchaser will pay or cause to be paid the
Estimated Purchase Price to Perstorp (for itself and on behalf of each
other Vendor) by electronic transfer in immediately available funds to
such accounts of Perstorp as Perstorp shall have, not later than five
Business Days prior to Completion, notified to the Purchaser. The
payments made in accordance with this Section 3.3 will constitute a
good discharge for the Purchaser of its obligations under Section 2.2
and the Purchaser will not be responsible for seeing that the funds
are applied in payment to the Vendors or any particular Vendor.
3.4
(a) As used herein, the "Completion Date Balance Sheet" means a
balance sheet which fairly presents the Net Assets on a
combined basis immediately prior to Completion, prepared in
accordance with GAAP, in a manner consistent with the
preparation of the
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Accounts as of the Last Accounts Date, combined on the same bases
as used in preparing the Combined Accounts and otherwise in
accordance with Schedule 3.4; provided, however, that such
Completion Date Balance Sheet will in all events (i) reflect the
amount of all Stay Bonus Liabilities and (ii) be prepared using
the same currency translation rates used in preparing the
Combined Accounts as of the Last Accounts Date.
(b) The Purchaser and Perstorp will cooperate with the objective of
agreeing upon a Completion Date Balance Sheet which sets forth
their agreed upon determination of Net Assets as of Completion
and a computation of the Purchase Price derived therefrom in
accordance with Section 3.4(a) and the amount of the
post-Completion adjustment payable by Perstorp or the Purchaser,
as the case may be, to the other pursuant to this Section 3.4,
all in accordance with Schedules 2.1 and 3.4. Without limiting
the generality or effect of the foregoing, Purchaser will permit
Perstorp's auditing and accounting representatives to be present
at any physical inventory counting carried on in connection with
the preparation of the Completion Date Balance Sheet. If the
Purchaser and Perstorp have been unable so to agree within 60
calendar days after Completion, then on or prior to the 70th
calendar day after Completion the Purchaser will deliver to
Perstorp a draft Completion Date Balance Sheet setting forth the
Purchaser's determination of the Net Assets as of Completion and
a computation of the Purchase Price derived therefrom in
accordance with Section 3.4(d) and the amount of the post-
Completion adjustment payable by Perstorp or the Purchaser, as
the case may be, to the other pursuant to this Section 3.4.
Perstorp will then review such draft Completion Date Balance
Sheet during the 45 calendar day period immediately following
such delivery by the Purchaser. During all such periods,
Perstorp, the Purchaser and their respective authorized
representatives (including without limitation Ernst & Young, or
such other internationally recognized independent public
accounting firm (other than Arthur Andersen & Co. ("AA") or
Deloitte & Touche ("DT")) as Perstorp shall designate in writing
to the Purchaser ("Perstorp's Accountants"), and AA, or such
other internationally recognized independent public accounting
firm (other than Perstorp's Accountants or DT) as the Purchaser
shall designate in writing to Perstorp ("Purchaser's
Accountants"), will be entitled to review, during normal business
hours, the books, records and work papers of the Purchaser,
Perstorp and the Acquired Companies (to the extent such books,
records and work papers relate to the Business) to prepare or
review the draft Completion Date Balance Sheet and the Purchaser
and Perstorp will otherwise cooperate with each other and with
each other's authorized representatives in connection with such
preparation or review. Without limiting the generality or effect
of any other provision hereof, each of Perstorp and the Purchaser
will (i) provide the other parties hereto and their authorized
representatives access during normal business hours to their
respective facilities, personnel and books and records to the
extent relating to the Business and determined in good faith by
such party to be necessary to permit, in the case of the
Purchaser, the Purchaser and its authorized representatives to
prepare the draft Completion Date Balance Sheet as herein
provided and to permit, in the case of Perstorp, Perstorp and its
authorized representatives to review the information upon which
the draft Completion Date
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Balance Sheet is based, and in each case to ask reasonable
questions and receive answers thereto with respect to the
Completion Date Balance Sheet; provided, however, that Perstorp
and the Purchaser will conduct any such review and questioning in
a manner that does not unreasonably interfere with the other
party's conduct of its businesses after Completion, (ii) take
such actions as may be reasonably requested by the other party to
close, or to assist in closing, as of Completion, the books and
accounting records relating to the Business, and (iii) otherwise
reasonably cooperate with each other and the representatives of
the other party hereto in the preparation or review of the draft
Completion Date Balance Sheet. Following the completion of
Perstorp's review of the draft Completion Date Balance Sheet
furnished to it by the Purchaser, Perstorp will notify the
Purchaser in writing whether Perstorp accepts the Purchaser's
computation of Net Assets as of Completion or disagrees
therewith, such notification to be made no later than the last
day of Perstorp's 45-day review period described above. If
Perstorp disagrees therewith by a notice timely made as
aforesaid, it will furnish to the Purchaser as part of such
notice a draft adjusted Completion Date Balance Sheet and
computation of Net Assets as of Completion which (i) sets forth
in reasonable detail the adjustments to the draft Completion Date
Balance Sheet furnished to Perstorp by the Purchaser and (ii)
specifies in reasonable detail Perstorp's basis for its
disagreement with the Purchaser's computation (such draft
adjusted Completion Date Balance Sheet the "Adjusted Completion
Date Balance Sheet"). If Perstorp fails so to express its
disagreement within such 45-day period, then the draft Completion
Date Balance Sheet will constitute the Completion Date Balance
Sheet for purposes of this Agreement and Perstorp will be deemed
to have accepted the Purchaser's computation of Net Assets as of
Completion and the Purchase Price derived therefrom in accordance
with Section 3.4(d).
(c) If, within 45 calendar days after the date of Perstorp's
delivery of the draft Adjusted Completion Date Balance
Sheet, the Purchaser determines in good faith that such
computation is inaccurate, the Purchaser will give notice to
Perstorp within such 45-day period (i) setting forth the
Purchaser's determination of Net Assets as of Completion and
(ii) specifying in reasonable detail the Purchaser's basis
for its disagreement with Perstorp's computation. If the
Purchaser fails so to express its disagreement within such
45-day period, then the Adjusted Completion Date Balance
Sheet will constitute the Completion Date Balance Sheet for
purposes of this Agreement and the Purchaser will be deemed
to have accepted Perstorp's computation of Net Assets as of
Completion and the Purchase Price relating thereto. Any
amount that is not in dispute will be promptly paid by the
party obligated to make such payment hereunder to the party
entitled to receive such payment hereunder. If the
Purchaser and Perstorp are unable to resolve any
disagreement between them within 10 calendar days after the
giving of notice of such disagreement, the items in dispute
will be referred for determination to the principal dispute
resolution unit of DT (the "Accountants") as promptly as
practicable. The Accountants will make a determination (the
"Accountants' Determination") as to each of the items in
dispute, which determination will be (i) in writing, (ii)
furnished to each of the parties hereto as promptly as
practicable after the items in dispute have been referred to
the Accountants, (iii) made
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in accordance with GAAP and this Agreement, and (iv) conclusive
and binding upon each of the parties hereto. Each of the parties
hereto will use reasonable efforts to cause the Accountants to
render their decision as soon as practicable, including without
limitation by promptly complying with all reasonable requests by
the Accountants for information, books, records and similar
items. Neither party will disclose to the Accountants, and the
Accountants will not consider for any purpose, any settlement
offer made by either party. After the resolution of all
outstanding disputes, the parties will cause to be prepared a
calculation of Net Assets as of Completion and the Purchase Price
that reflects the final resolution of all outstanding issues (the
"Final Completion Date Balance Sheet"). The Final Completion Date
Balance Sheet will supersede all prior versions thereof for
purposes of this Agreement. All Costs and expenses of the
Accountants will be shared equally by the Purchaser and Perstorp.
(d) To the extent that the Estimated Purchase Price is more or less
than the Purchase Price determined or accepted, as the case may
be, as provided in this Section 3.4, Perstorp or the Purchaser,
as applicable, will, within 10 calendar days after the final
determination or acceptance, as the case may be, of the actual
Net Assets as of Completion pursuant to this Section 3.4, make
payment by wire transfer in immediately available funds of the
amount of such difference, together with interest thereon, from
Completion to the date of payment (at a rate equal to LIBOR plus
0.5%, calculated on the basis of the actual number of days
elapsed over 365), to such account as has been designated by the
Purchaser or Perstorp, as applicable, to the other.
(e) Intercompany obligations not constituting normal trade payables
incurred in the ordinary course of business which are owing from
Perstorp or any Affiliate of Perstorp to an Acquired Company, or
owing from an Acquired Company to Perstorp or an Affiliate of
Perstorp, will be settled as specified in Schedule 2.1.
(f) As part of the process contemplated by this Section 3.4, the
amount of the Retained Liabilities as of Completion will be
verified. Any disagreement with respect thereto will be settled
in the manner described above. Any net changes in the amount of
the Retained Liabilities at Completion compared to the estimate
thereof in Schedule 2.1 (aggregating $29,117,000) will be
verified in connection with the preparation of the Completion
Date Balance Sheet and paid by Perstorp or the Purchaser, as the
case may be, as provided in Section 3.4(d).
PURCHASER'S UNDERTAKINGS
4.1 The Purchaser warrants to Perstorp that the execution and delivery
of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby by Purchaser have, where required,
been duly and validly authorized and no other corporate proceeding or
corporate action on the part of the Purchaser is necessary to
authorize this Agreement or to consummate the transactions so
contemplated. Prior to this Agreement, the Purchaser took, or caused
to be taken, Purchaser's Pre-Completion Actions.
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4.2 The Purchaser agrees that, notwithstanding any breach of the
Warranties or of this Agreement, following Completion it will have no
right of termination or rescission in respect of any claims arising
under or in connection with the Warranties or this Agreement except
for fraudulent misrepresentation and will not be entitled to treat
Perstorp as having repudiated this Agreement except for fraudulent
misrepresentation. The sole remedies for any breach of any of the
Warranties, any other breach of this Agreement by Perstorp or any
event giving rise to liability under the Tax Covenant will be
indemnification as herein provided or an action for damages, specific
performance or injunctive relief, and the Purchaser will not be
entitled to rescind this Agreement, except for fraudulent
misrepresentation.
4.3 Insofar as any Acquired Company uses the word "Perstorp" (the
"Perstorp Mark") in its corporate name or on its notepaper,
stationery, vehicles, promotional material or products manufactured or
distributed by it, the Purchaser undertakes to Perstorp (on its own
behalf and as trustee for all members of the Vendor Group) to procure
that each Acquired Company shall (i) cease such use from and at all
times after the date being six months after Completion and (ii)
notwithstanding any other provision of this Agreement, not take any
action reasonably identified to such Acquired Company by Perstorp
which would result in the invalidation of the Perstorp Mark (or any
intellectual property rights therein) or materially impair Perstorp's
rights in and to the Perstorp Mark; provided, however, that until the
sixth-month anniversary of Completion, the Purchaser and any Acquired
Company will have a royalty-free, non-exclusive license to use and
consume inventory and supplies and otherwise to use the Perstorp Mark
in the conduct of the Business substantially as conducted as of
Completion. If six months after Completion there continues to be
inventory or supplies of the Business which include any Perstorp Mark,
the parties will use reasonable endeavors to agree to a reasonable
extension of the period in relation to such inventory or supplies. The
Purchaser will indemnify, defend and hold harmless the Vendor (for
itself and the Vendor Group) from and against any and all Losses
suffered or incurred by the Vendor and the Vendor Group relating to,
resulting from or arising out of any third-party claim arising in
whole or in part out of the use of any Perstorp Mark by the Acquired
Companies (or any of them) after Completion pursuant to this Section
4.3. As promptly as practicable after Completion, the Purchaser will
use reasonable efforts to cause each Acquired Company to adopt a new
corporate name which does not include the name "Perstorp" therein,
such adoption to have taken place no later than 60 days after
Completion.
4.4 The Purchaser will make available to Perstorp Germany, upon
reasonable notice and subject to the terms and conditions of this
Section 4.4, the services of Lars Leijon, Sven Ake Berglie and Graham
Tompson or any of them (collectively, the "Consultants") for an
aggregate of two days per Consultant per month for a period of 12
months, in the cases of Messrs. Leijon and Berglie, and six months, in
the case of Mr. Tompson, after Completion; provided, however, that the
Purchaser will have no obligation to make any Consultant available to
Perstorp Germany on any day on which the Purchaser, in its sole
discretion, deems such Consultant's services to be necessary in
connection with the business of the Purchaser or any of its
Affiliates. Perstorp Germany will pay the Purchaser, or the Affiliate
of the Purchaser which directly employs the Consultant, promptly after
submission of an invoice therefor, a fee for the services of such
Consultant equal to a daily rate of DEM750 (plus any VAT
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attributable thereto), such fee to accrue on an hourly basis (based on
an 8 hour working day). Perstorp Germany will also reimburse the
Purchaser, or the Affiliate of the Purchaser which directly employs
the Consultant, promptly after submission of an invoice therefor, for
all reasonable out-of-pocket expenses incurred by the Consultant in
connection with performance of the Consultant's services for Perstorp
Germany pursuant to this Section 4.4.
RESTRICTIONS ON THE VENDOR GROUP
5.1 Subject to the provisions of Sections 5.3 and 5.4, Perstorp agrees
that the Vendor Group (excluding for this purpose Components Sweden
JV, Components Belgium, Components Sweden and Perstorp Germany) will
not (whether alone or jointly with another and whether directly or
indirectly) carry on or be engaged or (except as the owner for
investment of securities dealt in on a stock exchange and not
exceeding 5% in nominal value of the securities of that class) be
interested in any Competing Business during a period of four years
after Completion; provided, however, that the Vendor Group will be
permitted to fill up excess capacity on an occasional basis by
operating as a so called "Tier II" supplier to original equipment
manufacturers provided that:
(a) the Vendor Group does not obtain in any manner, or bid on or
otherwise seek to obtain in any manner, any programs that have
been awarded to the Acquired Companies prior to or after
Completion, without the prior consent of the Purchaser; and
(b) the facilities and equipment so utilized must be operated by the
Vendor Group primarily for purposes other than conducting any
Competing Business.
5.2 Subject to the provisions of Sections 5.3 and 5.4, Perstorp agrees
to procure that while Perstorp Germany is a member of or controlled by
the Vendor Group, Perstorp Germany will not (whether alone or jointly
with another, and whether directly or indirectly) during a period of
four years after Completion:
(i) obtain in any manner, or bid on or otherwise seek to obtain
in any manner, any programs for Designated Products that
have been be awarded to any Acquired Company prior to or
after Completion, without the prior consent of the
Purchaser; and
(ii) establish or attempt to establish or be interested in any
manufacturing facility for the production of Designated
Products either outside Germany or, for purposes of
expansion at any new location within Germany unless such
expansion in Germany relates to the relocation of existing
operations or is pursuant to the express written request of
any material customer of Perstorp Germany as of Completion.
5.3 The Purchaser hereby agrees that the restrictions placed on the
Vendor Group pursuant to Sections 5.1 and 5.2 will not prevent the
Vendor Group from acquiring another company, group of companies or
business (the "Acquired Entity") whose business includes any
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Competing Business (the "Relevant Business"), provided that the annual
turnover of the Relevant Business as shown in the most recently
audited annual accounts of the Acquired Entity prior to the
acquisition did not account for more than 25% of the aggregate
turnover of the Acquired Entity as shown by such accounts. If,
however, any member of the Vendor Group acquires any Relevant
Business, Perstorp will promptly notify the Purchaser and will procure
that the Relevant Business is offered for sale to the Purchaser at not
more than that part of the purchase price paid by the Vendor's Group
for the Acquired Entity allocated in accordance with GAAP to the
Relevant Business of such Acquired Entity and the Purchaser will be
given three months to decide whether to accept such offer and to
negotiate appropriate terms. If the Purchaser shall decide not to
accept such offer, Perstorp will cause the member of the Vendor Group
that has acquired such Relevant Business to dispose of such Relevant
Business within 18 months of the date such offer is declined.
5.4 Except insofar as may be required by Law and in any event only
after prior consultation with the Purchaser (to the extent reasonably
practicable), no member of the Vendor Group will at any time disclose
to any Person or use to the detriment of the Purchaser or any Acquired
Company any trade secret or other confidential information which it
holds in relation to any Acquired Company or its affairs. The Vendor
Group will require its employees not to disclose to any Person, or use
to the detriment of the Purchaser or any Acquired Company, any trade
secrets or other confidential information which any such employee
holds in relation to any Acquired Company or its affairs, and the
Purchaser will have a right to enforce such prohibition directly. In
addition, no entity in the Vendor Group will, during the period of
four years after Completion, solicit or entice away from Purchaser or
any Acquired Company any Employee who at any time was in possession of
confidential information relating to, or able to influence the
customer connection of, the Purchaser or any Acquired Company in
relation to the Business, or attempt or knowingly assist or procure
any Person to do any of the foregoing things.
5.5 Perstorp acknowledges and agrees that each of Sections 5.1, 5.2,
5.3 and 5.4 constitutes an entirely separate and independent
restriction and that the duration, extent and application of each
restriction are no greater than is reasonable and necessary for the
protection of the interests of the Purchaser but that, if any such
restriction were to be adjudged by any court or authority of competent
jurisdiction to be void or unenforceable but would be valid if part of
the wording thereof were to be deleted and/or the period thereof were
to be reduced and/or the area dealt with thereby were to be reduced,
the said restriction will apply within the jurisdiction of that court
or competent authority with such modifications as are necessary to
make it valid and effective.
5.6 Perstorp and the Purchaser acknowledge that any breach of any of
the covenants contained in Sections 5.1 through 5.4 would cause an
irreparable injury to the Purchaser and that damages and remedies at
law for any breach of such would be inadequate. Perstorp and the
Purchaser acknowledge that, in addition to any other remedies
available to the Purchaser, the Purchaser will be entitled to
injunctive relief and other equitable relief to prevent an actual,
intended, likely or probable breach of such covenant.
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5.7 At the request and expense of the Purchaser, Perstorp will take
all actions reasonably requested by the Purchaser to enforce for the
benefit of the Purchaser all confidentiality agreements entered into
by Perstorp, its Affiliates or any representative relating to the
possible sale of the Acquired Companies or any of them.
5.8 Perstorp will give the Purchaser at least six months' notice in
writing prior to (a) closing or materially curtailing the business or
operations of Perstorp Germany with respect to any Designated Products
supplied to any Acquired Company or to any Affiliate of Components
Sweden JV or (b) selling or otherwise disposing of a material portion
of the capital stock or assets used with respect to Designated
Products of Perstorp Germany supplied to any Acquired Company or to
any Affiliate of Components Sweden JV; provided, however, that with
respect to any event described in clause (b), if the purchaser of such
stock or assets agrees in writing to assume and perform, without
variation, all of the supply arrangements described in Section 9.4(b)
between or among Perstorp Germany and each Acquired Company or each
company which is an Affiliate of Components Sweden JV on the same
terms and conditions as exist with respect to such agreements
immediately prior to such notice, then Perstorp will only be required
to give the Purchaser notice in writing when in Perstorp's reasonable
determination such notice will not materially prejudice or otherwise
materially and adversely affect its negotiations with the purchaser of
the stock or assets of Perstorp Germany. If requested by either
Perstorp or the Purchaser, such parties will, and will cause any of
their Affiliates to, use reasonable efforts to enter into formal
written agreements which set forth to the extent practicable, such
agreements and arrangements as then in operation.
5.9 During the period from Completion until the fourth anniversary of
Completion, the Purchaser will procure that none of C&A Corp or any of
its Subsidiaries will obtain in any manner, bid on or otherwise seek
to obtain in any manner any programs for Designated Products that have
been awarded to Perstorp Germany prior to Completion, without the
prior consent of Perstorp. The Purchaser acknowledges and agrees that
the duration, extent and application of the restriction set forth in
this Section 5.9 are no greater than is reasonable and necessary for
the protection of the interests of Perstorp but that, if any such
restriction were to be adjudged by any court or authority of competent
jurisdiction to be void or unenforceable but would be valid if part of
the wording thereof were to be deleted and/or the period thereof were
to be reduced and/or the area dealt with thereby were to be reduced,
the said restriction will apply within the jurisdiction of that court
or competent authority with such modifications as are necessary to
make it valid and effective. Until the fourth anniversary of
Completion, the Purchaser will not, and will cause the Acquired
Companies not to, solicit or entice away from Perstorp Germany any
employee of Perstorp Germany who at any time was in possession of
confidential information relating to, or able to influence the
customer connection of, Perstorp Germany in relations to its business,
or attempt or knowingly assist or procure any Person to do any of the
foregoing. Perstorp and the Purchaser acknowledge that any breach of
any of the covenants contained in this Section 5.9 would cause an
irreparable injury to Perstorp and that damages and remedies at law
for any breach of such would be inadequate. Perstorp and the Purchaser
acknowledge that, in addition to any other remedies available to
Perstorp, Perstorp will be entitled to injunctive relief and other
equitable relief to prevent an actual, intended, likely or probable
breach of such covenant.
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5.10 During the period from Completion until the fourth anniversary of
Completion:
(a) Perstorp will procure that Perstorp Germany does not
cease to be an Affiliate of Perstorp until it has
undertaken (in a form reasonably satisfactory to the
Purchaser) to be bound by the terms of the covenants in
Sections 5.1 to 5.8 above; and
(b) the Purchaser will procure that none of the Acquired
Companies ceases to be an Affiliate of the Purchaser
until it has undertaken (in a form reasonably
satisfactory to Perstorp) to be bound by the terms of
the covenants in Section 5.9 above.
5.11 No provision of this Agreement, by virtue of which this Agreement
is subject to registration (if such be the case) under the Restrictive
Trade Practices Act 1976 and which is not a non- notifiable agreement
pursuant to Section 27A of that Act, will take effect until the day
after particulars of this Agreement have been furnished to the
Director General of Fair Trading pursuant to Section 24 of that Act.
For this purpose, the expression "this Agreement" includes any
agreement or arrangement of which this Agreement forms a part and
which is so registrable or by virtue of which this Agreement is
registrable. The parties will furnish such particulars as soon as
practicable after Completion.
WARRANTIES
6.1 Perstorp represents and warrants, for itself and on behalf of each
Vendor, to the Purchaser as to each matter set forth in Schedule 6.1,
including without limitation as to each matter set forth in Annex 1 to
Schedule 6.1 (which sets forth particular representations relating to
some or all of the Acquired Companies). Perstorp acknowledges that the
Purchaser has entered into this Agreement in reliance upon the
Warranties. The Warranties (a) are given as of Completion and (b) are
subject to the limitations of Section 7 to the extent set forth in
Section 7.
6.2 Each of the Warranties will be construed as a separate warranty
and (save as expressly provided to the contrary) will not be limited
or restricted by reference to or inference from the terms of any other
Warranty or any other term of this Agreement or any document entered
into pursuant to this Agreement.
6.3 The rights and remedies of the Purchaser in respect of the
Warranties will not be affected by (i) Completion (except as provided
in Section 4.2), (ii) any due diligence or other review conducted by
or on behalf of the Purchaser or any information furnished to or
obtained by it (other than as provided in the Schedules or the
Disclosure Letter), or (iii) any other event or matter whatsoever,
other than a specific and duly authorized written waiver or release
executed by the Purchaser.
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INDEMNIFICATION; LIMITATIONS ON CLAIMS
7.1 Indemnification Covenant
(a) From and after Completion, the Purchaser and (except to the
extent prohibited by restrictions on financial assistance
under any applicable Laws) the Acquired Companies will
jointly and severally indemnify, defend and hold harmless
Perstorp, the Vendors and their respective officers,
directors, employees and representatives and any Affiliate
of any of the foregoing (collectively, the "Indemnified
Perstorp Persons") from and against any and all Losses
suffered or incurred by any such Person, directly or
indirectly, relating to, resulting from or arising out of
any breach of, or misrepresentation in, the representations,
warranties and covenants by the Purchaser contained in this
Agreement.
(b) From and after Completion, Perstorp and the Vendors will,
jointly and severally, indemnify, defend and hold harmless
the Purchaser, each Acquired Company and their respective
officers, directors, employees and representatives and any
Affiliate of any of the foregoing (collectively the
"Indemnified Purchaser Persons") from and against any and
all Losses suffered or incurred by any such Person, directly
or indirectly, relating to, resulting from or arising out of
(i) the failure of Perstorp or any Vendor to perform any of
their respective covenants, obligations or agreements
contained in this Agreement, (ii) any breach by Perstorp or
any Vendor of any of the Warranties, (iii) any of the
Retained Liabilities to the extent such Retained Liabilities
were not reflected on the Completion Date Balance Sheet or
the subject of any adjustment pursuant to Section 3.4,
(iv) any product manufactured or sold by any Acquired
Company, or any Affiliate (not being a member of the
Purchaser's Group) or predecessor thereof, that is not a
Designated Product, (v) any liability to third parties
arising out of any business that was sold or otherwise
disposed of, or dissolved, liquidated or otherwise
terminated, by any Acquired Company, or any Affiliate (not
being a member of the Purchaser's Group) or predecessor
thereof, prior to Completion, including without limitation
liabilities arising under the contract relating to the sale
of the Fort Wayne, Indiana assets and liabilities arising
under law in connection with such sale, (vi) any property
(including without limitation any land, plant, equipment or
other facility and any operations or Releases thereon or
therefrom) (A) owned, leased or operated by any Acquired
Company, or any Affiliate or predecessor thereof, prior to
but not as of Completion, or (B) owned or leased by any such
Person as of Completion, but no longer used in the Business
by any Acquired Company, including without limitation the
Fort Wayne, Indiana leasehold properties, (vii) any
liability arising under any indemnification or other
provision under any Contract pursuant to which any business
or property described in clauses (v) or (vi) above was
acquired, sold, dissolved, liquidated or otherwise disposed
of or terminated or arising under Law in connection with any
such acquisition, sale, dissolution, liquidation or other
disposition or termination, (viii) any matter described on
Schedule 7.1(b), (ix) any Stay Bonus Liability not reflected
on the Completion Date Balance Sheet and (x) any Claims of
Pablo Sidaoui in respect of any amounts owed or alleged to
be owed under loans
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made or alleged to be made by him to Components Mexico on or
prior to Completion. The provisions of Section 7.1(b)(i) through
7.1(b)(x) are independent and not exclusive and any limitation
herein applicable to a Claim under one such provision and not to
another such provision will not apply to the latter provision,
except as otherwise provided herein. The Purchaser is taking the
benefit of the Warranties and the indemnities set forth above for
itself and as trustee for and on behalf of the Acquired
Companies.
7.2 Operation and Limitations on Indemnification
(a) The provisions of Sections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9,
7.10(a), 7.11 and 7.12 will, to the exclusion of the remaining
provisions of Section 7 of this Agreement, operate to limit or
reduce any Claim for a breach of the Warranties (other than
Paragraphs 4, 14 and 17 of the Warranties (the "Perpetual
Warranties")) and any Claim relating thereto pursuant to Section
7.1(b)(ii).
(b) The provisions of Sections 7.3, 7.4, 7.6, 7.7(a), 7.9, 7.10(a),
7.11 and 7.12 will, to the exclusion of the remaining provisions
of Section 7 of this Agreement, operate to limit or reduce the
liability of Perstorp and the Vendors in respect of all Claims
for breach of the Perpetual Warranties and any Claim relating
thereto under Section 7.1(b)(ii).
(c) The provisions of Sections 7.9 and 7.11 will, to the exclusion of
the remaining provisions of Section 7 of this Agreement, operate
to limit or reduce the liability of Perstorp and the Vendors in
respect of Claims pursuant to Section 7.1(b)(i) and 7.1(b)(iii).
(d) The provisions of Sections 7.8 (to the extent that the Claim
under Sections 7.1(b)(iv), (v), (vi) or (vii) arises out of a
matter which is within the scope of Paragraphs 19, 20 or 20.1 of
the Warranties), 7.9, 7.10(a), 7.11 and 7.13 will, to the
exclusion of the remaining provisions of Section 7 of this
Agreement, operate to limit or reduce the liability of Perstorp
and the Vendors in respect of Claims pursuant to Sections
7.1(b)(iv), (v), (vi), (vii) and (x).
(e) The provisions of Sections 7.3(b), 7.6, 7.7(b) and (c), 7.8 (to
the extent that the Claim under Section 7.1(b)(viii) arises out
of a matter which is within the scope of Paragraphs 19, 20 or
20.1 of the Warranties or any of the matters listed in Item 9 of
Schedule 7.1(b) (an "Environmental Claim")), 7.9, 7.10(a), 7.11,
7.14 (except where the Claim is an Environmental Claim) and 7.15
will, to the exclusion of the remaining provisions of Section 7
of this Agreement, operate to limit or reduce the liability of
Perstorp and the Vendors in respect of Claims pursuant to Section
7.1(b)(viii).
(f) The provisions of the Tax Covenant will not operate to limit or
reduce the liability of Perstorp and the Vendors in respect of
any breach of the Warranties relating to Taxes
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and, as to all matters subject to the Tax Covenant, the
provisions of the Tax Covenant will be applied without regard to
this Section 7.
7.3 Specific Disclosure; Reserves. Perstorp and the Vendors
will not be liable for any Claim for breach of Warranty in
respect of any fact, matter, event or circumstance to the extent:
(a) except in relation to any breach of the Warranties relating
to Taxes, such fact, matter, event or circumstance has been
disclosed in the Disclosure Letter, the Schedules or the
Exhibits so long as a copy of any document referenced in
such disclosure has been provided to Purchaser prior to the
date hereof and the matter disclosed refers by number to the
specific Warranty at issue or the applicability of such
disclosure to the specific Warranty at issue is reasonably
apparent on its face; or
(b) a specific reserve or specific accrual for such fact, matter,
event or circumstance has been made in the Completion Date
Balance Sheet to the extent that such specific reserve or
specific accrual was not made in the Last Accounts.
Nothing herein will limit any covenant of the parties hereunder,
including without limitation the Tax Covenant and any covenant
providing for indemnity (other than indemnity for breach of Warranty).
7.4 Survival of Warranties. Except for the Perpetual Warranties,
neither Perstorp nor the Vendors will be liable for any Claim in
respect of a breach of any of the Warranties unless an Indemnified
Purchaser Person has given written notice of such Claim in reasonable
detail, including such Person's estimate, to the extent then
reasonably practicable, of the amount thereof, on or before April 30,
1998. The Perpetual Warranties will survive Completion for the period
of the respective statute of limitations applicable thereto.
7.5 Hurdle and Basket. Perstorp and the Vendors will not be liable for
any Claim for breach of any of the Warranties (other than the
Perpetual Warranties), (a) in respect of any individual Claim or
series of related Claims arising from similar facts or circumstances,
unless the amount thereof exceeds $10,000, and (b) unless the
aggregate amount of such Claims exceeds $1,000,000, in which event
Perstorp and the Vendors will be liable only for the amount of such
excess. For the avoidance of any doubt, amounts claimed for which
Perstorp and the Vendors have no liability by virtue of clause (a)
above will not be capable of being aggregated with other claims for
the purposes of clause (b), and the foregoing limitations will not
apply to any Claim for indemnification other than a Claim under
Section 7.1(b)(ii).
7.6 Cap. The aggregate liability of Perstorp and the Vendors in
respect of all Claims for breaches of Warranties under Sections
7.1(b)(ii) and 7.1(b)(viii) (but not any other provision of Section
7.1(b)) will not in any event exceed $106,597,000, increased or
decreased, as the case may be, by the net amount of any changes
referred to in clause (ii) of the definition of the term "Purchase
Price" in Section 1.1; provided, however, that the aggregate liability
of
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Perstorp and the Vendors for all Claims in respect of the matters
listed in Item 9 of Schedule 7.1(b) will not exceed $5,000,000.
7.7 Other Limitations. Perstorp and the Vendors will not be liable in
respect of any Claim:
(a) to the extent (but only to the extent) that any such Claim arises
or is increased as a result of:
(i) any change in Law made after Completion; or
(ii) any change after Completion in any accounting
policy of any Acquired Company;
(b) to the extent of the proceeds of any recovery actually
received by any Indemnified Purchaser Person under any
policy of insurance procured on or after Completion and
applicable to the relevant Acquired Company in respect of
the subject matter of such Claim or any part thereof
(reduced by the costs of collection, including without
limitation all attorneys' and other professionals' fees and
expenses, any deductible, self-retention, captive retention,
co-pay or similar arrangements and any retrospective or
other premium adjustments resulting therefrom (collectively,
"Costs of Recovery" save where such costs are borne by
Perstorp pursuant to clause (ii) in the proviso to this
sentence)), Perstorp hereby acknowledging that all decisions
as to whether to pursue any such insurance recovery are to
be made by the Indemnified Purchaser Person in the sole
discretion of the Indemnified Purchaser Person and that,
subject only to clause (ii) in the proviso to this sentence,
all decisions as to the processing of insurance claims are
to be handled in accordance with Schedule 9.3 and otherwise
in the ordinary course of business of the Indemnified
Purchaser Person; provided, however, that (i) following the
giving of a notice of a Claim, at the request of Perstorp,
the Purchaser will furnish Perstorp information in
reasonable detail as to the scope of insurance maintained
applicable to the Indemnified Purchaser Person to whom such
Claim relates, and (ii) if Perstorp determines in good faith
that any such insurance applies to reduce the Loss to which
such Claim relates, then the Purchaser will, or will cause
the relevant Indemnified Purchaser Person to, take such
actions as Perstorp may reasonably request, including
without limitation executing appropriate powers of attorney
and instruments of subrogation, to allow Perstorp to recover
under any such insurance in respect of such Loss or portion
thereof, provided, that all Costs of Recovery are reimbursed by
Perstorp to the Purchaser or, at the Purchaser's option, paid to
the relevant Indemnified Purchaser Person by Perstorp five days
before such Costs of Recovery become due and payable to any third
party. Nothing in the immediately preceding proviso will,
however, diminish or otherwise affect Perstorp's obligation to
indemnify any Indemnified Purchaser Person pursuant to any
provision of this Agreement without prejudice to any rights of
Perstorp under this Section 7.7(b).
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(c) based upon a liability which is contingent until such
contingent liability becomes an actual liability or an
Indemnified Purchaser Person incurs any Loss as a result
thereof; provided, however, that if any Indemnified
Purchaser Person gives notice of the contingent liability
describing such contingent liability in reasonable detail
based on the information then reasonably available to the
Purchaser before the expiration of the relevant period
("Survival Period") within which Claims may be notified to
Perstorp pursuant to Sections 7.4, 7.13 or 7.15 (as the case
may be), the Indemnified Purchaser Person may thereafter
make a Claim or initiate proceedings in respect thereof, so
long as such Claim is initiated within 18 months of the
later of (i) the giving of such notice and (ii) the
expiration of the applicable Survival Period, provided
further, however, that for all purposes of this Agreement,
any Loss relating to, resulting from or arising out of the
subject matter of any Claim or proceedings so initiated will
constitute a Loss whether arising prior to or after notice
thereof is given as aforesaid or the initiation of such
Claim or proceedings.
7.8 Remediation
(a) To the extent that a breach of Paragraphs 19, 20 or 20.1 of the
Warranties or any Environmental Claim is capable of remedy in
whole or in part, no Indemnified Purchaser Person will be
entitled to indemnification under Section 7.1(b)(ii) as to any
portion thereof which is so capable of remedy until Purchaser has
given written notice of such breach in accordance with Section
7.8(b) and (i) Perstorp has not elected to remedy such breach in
accordance with Section 7.8(c)(ii) or (ii) if Perstorp has
elected to remedy such breach in accordance with Section
7.8(c)(ii), such breach is not remedied by Perstorp following
such election as soon as reasonably possible. To the extent a
breach of Paragraphs 19, 20 or 20.1 or any Environmental Claim is
not capable of remedy in whole or in part, the Indemnified
Purchaser Persons will be entitled to indemnification in
accordance with Section 7.1 without regard to the provisions of
this Section 7.8.
(b) Following Completion, the Purchaser will procure that notice
of a breach of Paragraphs 19, 20 or 20.1 of the Warranties
or any Environmental Claim (which notice must be in
reasonable detail to the extent then reasonably practicable)
is given to Perstorp as promptly as practicable after any of
the executive officers of the Purchaser (which for this
purpose means solely Collins & Aikman Products Co.) or
Managing Director of any Acquired Company, but only as to
the Acquired Company as to which he or she is a Managing
Director (such executive officers and Managing Directors,
collectively, "Responsible C&A Executives") has actual
knowledge of facts which a reasonable person (having
knowledge of this Agreement) would believe reasonably likely
to impose liability on Perstorp pursuant to the
indemnification provisions of this Agreement; provided,
however that (i) any failure so to notify Perstorp will not
relieve Perstorp or any Vendor of any liability in respect
of the matter except to the extent that Perstorp is actually
prejudiced, and (ii) that the burden of proving the
existence and extent (if any) of such prejudice shall be
borne by Perstorp.
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(c) Following receipt by Perstorp of a notice from the Purchaser in
accordance with Section 7.8(b):
(i) the Purchaser will on Perstorp's reasonable request allow,
and will cause the relevant Acquired Company reasonably to
allow, Perstorp and its advisors to investigate the fact,
matter or circumstance alleged to give rise to the Claim
and, subject to the Purchaser and relevant Acquired Company
being paid all reasonable costs and out-of-pocket expenses,
to have such copies as Perstorp may reasonably request of
any documents or other information in the possession of
Purchaser or the relevant Acquired Company (other than
documents and information which are confidential,
privileged, subject to the attorney's work product doctrine
or otherwise protected against disclosure, unless Perstorp
and the Purchaser agree in writing to joint defense
privilege protection) which relate to the alleged Claim; and
(ii) Perstorp will be entitled to elect by written notice within
30 calendar days of receipt of the Purchaser's notice in
accordance with Section 7.8(b) to remedy the fact, matter or
circumstance referred to in the Purchaser's notice, provided
that Perstorp shall have given to each Indemnified Purchaser
Person an undertaking reasonably acceptable to the Purchaser
in which Perstorp unconditionally confirms its obligations
(subject to the limitations on liability hereunder) to
indemnify and hold harmless each Indemnified Purchaser
Person from and against any and all Losses suffered or
incurred by any such Person, directly or indirectly,
relating to, resulting from or arising out of such fact,
matter or circumstance and such remediation.
(d) Following receipt by the Purchaser of a notice from Perstorp in
accordance with Section 7.8(c)(ii), the Purchaser will, and each
Indemnified Purchaser Person, will use reasonable efforts to:
(i) allow, and cause the relevant Acquired Company to allow,
Perstorp and its advisors reasonable access to the Assets
for the purposes of remedying the fact, matter or
circumstance in respect of which a notice has been given to
the Purchaser in accordance with Section 7.8(c)(ii);
(ii) provide Perstorp all material information in the possession
or control of the Purchaser's Group which reasonably relates
to the relevant fact, matter or circumstance (other than
information which is confidential, privileged, subject to
the attorney's work-product doctrine or otherwise protected
against disclosure, unless Perstorp and the Purchaser agree
in writing to joint defense privilege protection) and
material information which subsequently comes into the
possession or control of the Purchaser's Group which
reasonably relates to such fact, matter or circumstances
(except as aforesaid); and
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(iii) subject to Perstorp paying all reasonable costs and
out-of-pocket expenses of any Indemnified Purchaser Person,
take all such actions as Perstorp may reasonably request to
assist Perstorp and its advisors in relation to the
remediation undertaken by Perstorp pursuant to Section
7.8(c)(ii).
(e) To the extent a matter constituting a breach of Paragraphs
19, 20 or 20.1 of Schedule 6.1 also constitutes a breach of
another Warranty in Schedule 6.1 or gives rise to a Claim
pursuant to Section 7.1(b)(iv), (v), (vi) or (vii), and the
Purchaser makes a Claim in respect of such matter pursuant
to Section 7.1(b)(ii) with respect to such other Warranty or
pursuant to Section 7.1(b)(iv), (v), (vi) or (vii), Section
7.8 will be applicable to such Claim solely in respect of
such matter.
7.9 Subsequent Recoveries. Following Completion, if any amount is paid
by Perstorp in discharge of all or part of any Claim and such amount
(or part thereof) is subsequently recovered (whether by payment,
discount, credit, set-off or otherwise) by the Purchaser or any
Acquired Company from an unrelated third party in respect of the
matter in relation to which the Claim was made, the Purchaser will, or
will procure that the relevant Acquired Company will, to the full
extent permitted by Law, forthwith repay to Perstorp (for the account
of the Relevant Vendor) a sum corresponding to such amount recovered
from the third party less all obligations, retrospective or other
premium adjustments, costs and expenses (including without limitation
attorney's and other fees and expenses) of such recovery and less the
net tax cost to the Purchaser or the relevant Acquired Company of such
recovery.
7.10 Third-Party Claims; Exxon Claims. (a) Following Completion, if
the Purchaser receives notice of any third-party claims against the
Purchaser or any Acquired Company as to which the Purchaser intends to
submit a request for indemnity hereunder, the Purchaser will procure
that notice of that fact is given to Perstorp as soon as reasonably
practicable after a Responsible C&A Executive has received actual
knowledge of facts which a reasonable person (having knowledge of this
Agreement) would believe reasonably likely to impose liability on
Perstorp pursuant to the indemnification provisions of this Agreement
(but any failure to notify in accordance with this Section will not
relieve Perstorp of liability in respect of such Claim to the extent
that Perstorp is not actually prejudiced thereby) and, as regards any
such claim, will not compromise or settle any such claim without the
consent of Perstorp (such consent not to be unreasonably withheld or
delayed). Following Completion, the Purchaser will take or procure the
taking of (subject to Perstorp paying all reasonable costs and
out-of-pocket expenses and confirming without qualification its
obligations fully to indemnify in respect of such Claim) all such
actions as Perstorp may reasonably request to contest, or otherwise in
connection with, the claim or liability and will make available to
Perstorp all such information (other than information which is
confidential, privileged, subject to the attorney's work-product
doctrine or otherwise protected against disclosure, unless Perstorp
and the Purchaser agree in writing to joint defense privilege
protection or Perstorp otherwise agrees to maintain the
confidentiality of such information in a manner reasonably sufficient
to protect it against disclosure) and assistance as may reasonably be
requested by Perstorp in respect of such claim or liability, all at
Perstorp's sole cost and expense. If so required by Perstorp in
writing, Perstorp will have the right if it wishes (and has confirmed
without qualification its obligation
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fully to indemnify each Indemnified Purchaser Person hereunder) to
control any relevant proceedings and the Purchaser will retain counsel and/or
accountants chosen by Perstorp and reasonably satisfactory to the Purchaser to
proceed on behalf of each Indemnified Purchaser Person (at the expense of
Perstorp) in relation to any such Claim in accordance with the instructions of
Perstorp and give to such counsel and/or accountants all and every assistance
and information as they may require except as aforesaid. Perstorp will not be
liable in respect of any Claim to the extent it is settled or compromised in
breach of this Section 7.10, provided that Perstorp has confirmed without
qualification its obligation fully to indemnify each Indemnified Purchaser
Person and is actually prejudiced by such settlement or compromise.
(b) The provisions of this Section 7.10(b) shall apply in relation to
the Exxon Claims in substitution for those set out in Section
7.10(a).
(i) Perstorp will have the right (at its sole expense) to
full conduct of each Exxon Claim, in the name of the
relevant Indemnified Purchaser Person, and will be
entitled to compromise or agree to settle such Exxon
Claim without the consent of such Indemnified Purchaser
Person, provided the compromise or settlement imposes
no obligation on, nor results in the waiver of any
rights of, any Indemnified Purchaser Person and
provided further that nothing herein will diminish or
otherwise affect the rights of any Indemnified
Purchaser Person to indemnity under Section 7.1(b) in
respect of any Loss arising therefrom or any other
Exxon Claim;
(ii) the Purchaser will:
(A) procure that Perstorp is notified of each new Exxon Claim as
soon as reasonably practicable after any Responsible C&A
Executive obtains actual knowledge thereof;
(B) procure that Perstorp receives, as soon as reasonably
practicable, copies of all written communications and the
substance of all material oral communications pertaining to
each Exxon Claim (other than information which is
confidential, privileged, subject to the attorney's
work-product doctrine or otherwise protected against
disclosure, unless Perstorp and the Purchaser agree in writing
to joint defense privilege protection or Perstorp otherwise
agrees to maintain the confidentiality of such information in
a manner reasonably sufficient to protect it against
disclosure);
(C) procure that Perstorp is provided with all such assistance as
Perstorp may reasonably request in connection with the Exxon
Claims including reasonable access to employees of any of the
Acquired Companies having direct knowledge of the underlying
facts relating thereto and copies of any documents or other
information in their possession (other than information which
is confidential, privileged, subject to the
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attorney's work-product doctrine or otherwise protected
against disclosure, unless Perstorp and the Purchaser agree
in writing to joint defense privilege protection or Perstorp
otherwise agrees to maintain the confidentiality of such
information in a manner reasonably sufficient to protect it
against disclosure);
(D) procure that no Indemnified Purchaser Person accepts,
settles, compromises or otherwise binds Perstorp in respect
of any Exxon Claim without the prior written consent of
Perstorp (to be given or withheld in its sole discretion);
and
(iii) the obligations of the Purchaser under (ii) above are subject to
each Indemnified Purchaser Person being indemnified by Perstorp
in respect of all Losses incurred by such Person in connection
therewith and such obligation shall not apply to the extent any
such Indemnified Purchaser Person is required to act otherwise by
any Governmental Authority or court of competent jurisdiction or
other tribunal. Breach of the obligations under Section
7.10(b)(ii) will not relieve Perstorp of any liability under this
Agreement save to the extent that Perstorp is able to demonstrate
that Perstorp is actually prejudiced thereby it being understood
that the burden of proving the existence and extent (if any) of
such prejudice shall be borne by Perstorp.
7.11 No Double Recovery. The Indemnified Purchaser Persons will not be
entitled to recover in respect of (a) any Claim more than once in
respect of any matter to the extent that to do so would constitute
double recovery or (b) any Retained Liability to the extent that the
Purchase Price has been reduced thereby.
7.12 Prior Writeoffs. In calculating the liability of Perstorp in
respect of any Claim relating to the accounts receivable or inventory
of any Acquired Company, applying the accounting policies, principles
and practices adopted in relation to preparation of the Last Accounts
(and ignoring the effect of any change in Law made after Completion),
such Claim will be reduced to the extent that any account receivable
or inventory specifically written off in the Completion Date Balance
Sheet has been actually recovered (net of any related costs) prior to
the payment of such Claim and not previously credited (pursuant to
this sentence) against a Claim relating to the accounts receivable or
inventory of any Acquired Company. For purposes of the preceding
sentence, (a) recoveries of accounts receivable may not be credited
against claims relating to inventories or recoveries of inventories
credited against claims relating to accounts receivable, and (b)
write-ups of accounts receivable or inventories shall not constitute
actual recoveries of such assets.
7.13 General Ten Year Limit. Perstorp and the Vendors will not be
liable for any Claim with respect to a matter described in clauses
(iv), (v), (vi) or (vii) of Section 7.1(b) unless an Indemnified
Purchaser Person shall have given written notice of such Claim in
reasonable detail, including such Indemnified Purchaser Person's
estimate, to the extent reasonably practicable, of the amount thereof,
on or before November 30, 2006.
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7.14 Specific Indemnity Basket. With respect to any Claims for
indemnity under Section 7.1(b)(viii), other than Claims in respect of
matters listed in Item 9 of Schedule 7.1(b), Perstorp and the Vendors
will be liable for:
(i) 50% of the first $1,000,000 of Losses to which such Claims
relate; and
(ii) 100% of all other Losses to which such Claims relate; it
being understood that in no event will the aggregate
exposure of all Indemnified Purchaser Persons with respect
to Losses to which Claims for indemnification under Section
7.1(b)(viii) relate exceed $500,000 and that nothing herein
affects the limitation on liability under Section 7.6.
7.15 Specific Indemnity Time Limits. Perstorp and the Vendors will not
be liable for any Claim under Section 7.1(b)(viii) unless an
Indemnified Purchaser Person has given written notice of the Claim in
reasonable detail, including such Indemnified Purchaser Person's
estimate, to the extent reasonably practicable, of the amount thereof,
(x) on or before February 28, 2010 in respect of any Claim under
Section 7.1(b)(viii) in respect of such matter described in Item 1 of
Schedule 7.1(b) and (y) on or before November 30, 2006 in respect of
any other Claim under Section 7.1(b)(viii).
7.16 Notification of Certain Claims. Purchaser will give written
notice to Perstorp of any matter of which it becomes aware as to which
it intends to make a Claim in respect of the Perpetual Warranties or
any matter described in clauses (iv), (v), (vi), (vii) or (viii) of
Section 7.1(b) as promptly as practicable after a Responsible C&A
Executive has actual knowledge of facts which a reasonable person
(having knowledge of this Agreement) would believe reasonably likely
to impose liability on Perstorp pursuant to the indemnification
provisions of this Agreement; provided, however, that (i) any failure
so to notify Perstorp will not relieve Perstorp or any Vendor of any
liability in respect of the matter except to the extent that Perstorp
is actually prejudiced in obtaining any recovery with respect to such
Claim from a third party, and (ii) that the burden of proving the
existence and extent (if any) of such prejudice shall be borne by
Perstorp.
VENDORS' ACCESS TO INFORMATION
8.1 Following Completion, the Purchaser will allow, and will cause the
relevant Acquired Company to allow, Perstorp and its accountants and
other professional advisers to investigate the matter or circumstances
alleged to give rise to any Claim and whether and to what extent any
amount is payable in respect of such Claim pursuant to the terms of
this Agreement and, subject to their being paid all reasonable
out-of-pocket costs and expenses, to have such copies as Perstorp may
reasonably request of any documents or other information in the
possession of the Purchaser or the relevant Acquired Company (other
than documents and information which are confidential, privileged,
subject to the attorney's work-product doctrine or otherwise protected
against disclosure, unless the parties have agreed in writing to joint
defense privilege protection, the terms of which the parties will
negotiate in good faith or Perstorp otherwise
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agrees to maintain the confidentiality of such information in a manner
reasonably sufficient to protect it against disclosure).
8.2 Following Completion, as soon as reasonably practicable after
making a Claim, the Purchaser will provide to Perstorp all material
information in the possession or control of the Purchaser's Group
which relates or may relate to the Claim (other than information which
is confidential, privileged, subject to the attorney's work-product
doctrine or otherwise protected against disclosure, unless the parties
have agreed in writing to joint defense privilege protection or
Perstorp otherwise agrees to maintain the confidentiality of such
information in a manner reasonably sufficient to protect it against
disclosure) and as soon as reasonably practicable thereafter will
provide (a) any material information which subsequently comes into the
possession or control of the Purchaser's Group which relates or may
relate to the Claim (except as aforesaid), and (b) any material
information in the possession or control of the Purchaser's Group
which subsequently becomes relevant to the Claim (except as
aforesaid).
8.3 Following Completion, after making a Claim, the Purchaser will
provide reasonable access to such employees of the Purchaser's Group
as Perstorp may reasonably request to discuss the Claim until such
Claim is withdrawn, settled or determined (Perstorp to pay or promptly
reimburse the Purchaser for the actual out-of-pocket expenses incurred
by any such employees in so doing).
OTHER COVENANTS
9.1 The provisions of Schedule 9.1 relating to the Pension Schemes and
other pension arrangements will have effect on and from Completion.
9.2 The provisions of Schedule 9.2 relating to the Tax Covenant will
have effect on and from Completion.
9.3 The provisions of Schedule 9.3 relating to Insurances will have
effect on and from Completion.
9.4 Effective as of Completion, (a) except as set forth in clause (b)
below and in the agreements specified in Section 3.2(f), Perstorp will
procure that all existing agreements, arrangements and understandings
between members of the Vendor Group and any of the Acquired Companies
will terminate, and (b) for a period of twelve months after
Completion, each member of the Vendor Group and each Acquired Company
will continue the supply arrangements described in Appendix 28 to the
Disclosure Letter (including the executory Contracts listed thereon)
on the same financial terms (without pass through of any manufacturing
or raw material cost increases except to the extent such cost
increases are traditionally passed through in accordance with standard
industry practice (which exception shall not apply to the change in
materials required to be made by Perstorp Germany to remedy the
problem with front floor mats disclosed in paragraph 24 of the
Disclosure Letter)) as are in effect at Completion (i) so long as the
products and/or services supplied pursuant to such arrangements
satisfy all relevant customer quality standards and other requirements
and
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(ii) provided that all such terms are consistent in all material
respects with the Warranty set forth in Paragraph 28 of the Warranties
(provided, however, that the financial terms will only be deemed to be
changed in a material respect for the purposes hereof if they have
been changed in a manner adverse to the relevant Acquired Company
since September 1, 1995) and the parties will take all reasonable
steps to provide that such supply arrangements are formalized as soon
as practicable after Completion on non-financial terms and conditions
mutually acceptable to the parties, (c) C&A will procure that each
relevant Acquired Company, and Perstorp will procure that each
Relevant Vendor, will, commencing as promptly as reasonably
practicable after completion, negotiate in respect of the possible
extension of the supply arrangements between Perstorp Germany and
Components Spain on mutually acceptable commercially reasonable terms
beyond the 12-month period referred to above (provided, however, that
no party will have any liability to any other Person in the event that
such agreements are not so extended, regardless of the reason
therefor); subject to the foregoing, it is the intent of the parties
to adopt the existing terms if such terms are commercially reasonable
and to continue the term thereof for the remainder of the existing
program, assuming satisfactory performance, and (d) each member of the
Vendor Group will be deemed without further action to have waived all
claims, rights and causes of action whatsoever against all directors,
officers, employees and agents of any of the Acquired Companies in
respect of any act or failure to act prior to Completion, including
without limitation any misrepresentation, inaccuracy or omission in or
from any information or advice supplied by such persons or other
action taken or omitted to be taken in connection with this Agreement
or the preparation of the Disclosure Letter, provided that nothing in
this Section 9.4(c) will exclude, or constitute a waiver of any
liability for, (i) embezzlement or theft of assets, (ii) collusion by
any such person with the Purchaser to defraud Perstorp or any of the
Acquired Companies in connection with this Agreement or the
transactions contemplated by this Agreement, or (iii) any rights of
any Acquired Company against any such Person. Notwithstanding any
other provision hereof, any such person will not be an Indemnified
Purchaser Person for purposes of Section 7.1(b) in respect of any
matter described in clauses (c)(i) and (ii) of the immediately
preceding sentence (but nothing in this sentence will limit the rights
of any other Indemnified Purchaser Person). Nothing herein will affect
the claim of Components Spain referred to in Paragraph 15(a) of the
Disclosure Letter.
9.5 Perstorp consents to the hiring of Johann Vinberg and Lars Leijon
by the Purchaser or any Affiliate thereof, including without
limitation, Collins & Aikman Europe Limited.
9.6 Perstorp, on behalf of itself and each other member of the Vendor
Group, hereby agrees that any restriction in favor of Perstorp or such
other member of the Vendor Group prohibiting or restricting any third
party from supplying any inventory, supplies, service or other
Property or right (including without limitation intellectual property
rights) used in the Business post-Completion, including without
limitation the restriction applicable to any third party with respect
to the manufacture or sale of products (or components thereof) using
ESM Technology, is hereby irrevocably waived as to Purchaser and its
Affiliates, including without limitation the Acquired Companies.
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9.7 In the event that any item that would constitute Intellectual
Property Rights, as that term is defined in the Intellectual Property
Agreement, is owned, or the right to use thereof is held, by Perstorp
or any other member of the Vendor Group other than Perstorp Germany,
Perstorp will, or will cause such other member of the Vendor Group to,
take such action as Purchaser may request in order to vest in each C&A
Company (as that term is defined in the Intellectual Property
Agreement) such rights, if any, in respect of such Intellectual
Property Rights as the C&A Companies would have had had Perstorp or
such other member of the Vendor Group been a party to the Intellectual
Property Agreement from the date thereof and such item constituted
Intellectual Property Rights thereunder provided that each C&A Company
agrees to be bound by such conditions in relation to such rights as
would have applied in such circumstances.
ENTIRE AGREEMENT
10. This Agreement and the documents referred to herein set out the
entire agreement and understanding among the parties in respect of the
issuance, sale and purchase of the Shares. No party has entered into
this Agreement in reliance upon any representation, warranty or
undertaking of any other party which is not expressly set out in this
Agreement or any other document referred to herein. Notwithstanding
the foregoing, nothing in this Agreement will exclude any liability
for fraudulent misrepresentation.
VARIATION AND ASSIGNMENT
11.1 No variation of this Agreement (or of any of the documents
referred to herein) will be valid unless it is in writing and signed
by or on behalf of each of the parties hereto. The expression
"variation" will include any amendment, variation, supplement,
deletion or replacement however effected. In the event of any conflict
between the provisions of this Agreement and any of the provisions of
the Local Transfer Agreements, the provisions of this Agreement will
be controlling (and, in particular, the parties acknowledge that no
party to any Local Transfer Agreement will have any claim against the
other party other than under the terms of this Agreement). The
capitalized terms Net Assets and Retained Liabilities when used in the
Local Transfer Agreements will have the same meaning as in this
Agreement, but with reference to the particular Acquired Company.
11.2 No party may assign or delegate all or any of its rights or
obligations hereunder without the prior written consent of the other
party, except that as contemplated by Section 2.3 the Purchaser may
assign or delegate any of its rights or obligations hereunder to any
wholly owned (except for directors' qualifying shares) Subsidiary of
the Purchaser; provided, however, that no such delegation will relieve
the Purchaser of any of its obligations hereunder to Perstorp.
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ANNOUNCEMENTS
12. The initial press releases announcing this Agreement will be in
substantially such forms as each of the parties previously furnished
to the other.
COSTS
13. Each of the parties hereto will pay its own Costs incurred in
connection with the negotiation, preparation and, subject to Sections
7.1 and 7.2, implementation of this Agreement. The Purchaser will pay
all stamp duty and stamp duty reserve tax (if any) and other tax on
the transfer of any Shares except that Perstorp will pay, or cause the
Relevant Vendor to pay, all amounts due in respect of the Michigan
Single Business Tax. This Section 13 will not affect any Warranties
regarding Taxes or the Tax Covenant.
INVALIDITY
14. If any provision of this Agreement is held to be invalid or
unenforceable, then such provision will (so far as it is invalid or
unenforceable) be given no effect and will be deemed not to be
included in this Agreement but without invalidating any of the
remaining provisions of this Agreement. The parties will then use all
reasonable endeavors to replace the invalid or unenforceable
provisions by a valid provision the effect of which is as close as
possible to the intended effect of the invalid or unenforceable
provision.
COUNTERPARTS
15. This Agreement may be entered into in any number of counterparts
and by the parties to it on separate counterparts, each of which, when
executed and delivered, will be an original, but all the counterparts
will together constitute one and the same instrument.
REGISTRATION
16. No provision of this Agreement (or of any agreement or arrangement
of which this Agreement forms part) which is subject to registration
under the provisions of any legislation in any jurisdiction will take
effect until particulars of this Agreement (or such other agreement or
arrangement) have been registered in accordance with the terms of such
legislation.
NOTICES
17.1 Any notice or other communication required or permitted to be
given under this Agreement will be in writing and signed by or on
behalf of the party giving it and may be served by hand delivery,
delivery by a recognized multinational courier service such as UPS,
DHL or Federal Express or transmission by facsimile to the address and
for the attention of the relevant party set out in Section 17.2 (or as
otherwise notified from time to time hereunder). Any notice so
delivered will be deemed to have been received:
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(a) in the case of fax, 12 hours after the time of dispatch; and
(b) in the case of hand delivery or delivery by courier service, upon
such delivery.
17.2 The addresses of the parties for the purpose of Section 17.1 are
as follows:
Perstorp:
Name: Perstorp AB
Address: S-284 80
Perstorp, Sweden
For the attention of: Mr. Mats Tuner
Fax: 0046 43 53 88 13
With copies to: 1. Mannheimer Swartling
Box 1384
S-251 13 Helsingborg
Sweden
For the attention of: Ragnar Lindqvist
Fax: 0046 42 18 42 71
2. Freshfields
65 Fleet Street
London EC4Y 1HS
For the attention of: Jonathan Rees
Fax: 011 44 171 832 7001
Purchaser:
Name: Collins & Aikman Products Co.
Address: 701 McCullough Drive
Charlotte, North Carolina 28262
For the attention of: Mr. J. Michael Stepp
Fax: (704) 548-2330
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With copies to: Collins & Aikman Products Co.
Address: 210 Madison Avenue, 6th Floor
New York, New York 10016
For the attention of: Elizabeth R. Philipp, Esq.
Fax: (212) 578-1269
And to: Jones, Day, Reavis & Pogue
Address: 599 Lexington Avenue
New York, New York 10022
For the attention of: Robert A. Profusek, Esq.
Fax: (212) 755-7306
17.3 In proving such notice, it will be sufficient to prove that the
envelope containing such notice was properly addressed and delivered
to the address shown thereon or that the facsimile transmission was
made; provided, however, that, in the case of facsimile transmission,
hand delivery or delivery by a recognized multinational courier
service such as UPS, DHL or Federal Express is made on the parties
hereto (but not the lawyers contemplated to receive copies) within
five Business Days thereof.
GOVERNING LAW AND JURISDICTION
18.1 This Agreement will be governed by and construed in accordance
with the laws of England, without giving effect to the principles of
conflict of laws thereof.
18.2 Except as specifically provided in Sections 3.4, all disputes
arising in connection with the Agreement will be finally and
exclusively settled under the Rules of Arbitration of the
International Chamber of Commerce, by three Arbitrators appointed in
accordance with those Rules. The place of arbitration will be in
London, England. The language of the arbitration will be English.
FURTHER ASSURANCE
19.1 Perstorp and the Purchaser will each do, or procure to be done,
all such further acts and things and execute, and procure the
execution of, all such documents as may from time to time reasonably
be required, whether on or after Completion, for the purpose of giving
effect to the provisions of this Agreement and each hereto agrees to
use reasonable efforts to take, or cause to be taken, to do, or cause
to be done, all things necessary, proper or advisable to consummate
the transaction contemplated hereby, including obtaining all necessary
waivers, consents and approvals.
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19.2 At any time following Completion, either Perstorp or the
Purchaser may require the other as promptly as practicable to cause
each Vendor and Perstorp Germany or each buyer listed as such on
Schedule 2.1, as applicable, to execute and deliver to the requiring
party a legally binding undertaking satisfactory to the requiring
party, in its reasonable judgment, to perform all of its obligations
under this Agreement as if it were a party hereto as of Completion,
provided, however, that any such undertaking will terminate as to any
Vendor, Perstorp Germany, or any such buyer at such time as such
company is no longer a Subsidiary of Perstorp or the Purchaser, as the
case may be; provided further, however, that no such undertaking or
termination thereof will in any way diminish or limit any liability or
obligation of Perstorp or the Purchaser hereunder.
PARENT COMPANY GUARANTEES
20.1 Perstorp guarantees the performance by each Vendor of all its
obligations under or pursuant to this Agreement (including any
documents of transfer or otherwise entered into pursuant to the terms
of this Agreement).
20.2 The Purchaser guarantees the performance by each buyer listed as
such on Schedule 2.1 of all its respective obligations under or
pursuant to this Agreement (including any documents of transfer or
otherwise entered into pursuant to the terms of this Agreement).
20.3 The liability of Perstorp and the Purchaser under their
respective guarantees under Sections 20.1 and 20.2 respectively shall
not be discharged or impaired by any amendment to or variation of this
Agreement, any release of or granting of time or other indulgence to
the Vendor or any third party or any other act, event or omission
which but for this Section would operate to impair or discharge the
liability of Perstorp or the Purchaser under their respective
guarantees.
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AS WITNESS this Agreement has been signed on behalf of the parties the
day and year first before written.
PERSTORP AB
By: /s/ Mats Tuner
--------------------------------
Name:
-----------------------------
Title:
----------------------------
in the presence of:
Witness Signature:
-----------------
Full Name:
-------------------------
Address:
---------------------------
Occupation:
------------------------
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. Michael Stepp
--------------------------------
Name:
-----------------------------
Title:
----------------------------
in the presence of:
Witness Signature:
-----------------
Full Name:
-------------------------
Address:
---------------------------
Occupation:
------------------------
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SCHEDULE 6.1
The Warranties
Accounts
1. (a) Attached to the Disclosure Letter as Appendix 1 are the
Accounts and a reconciliation of Local GAAP to be used in preparing
the Accounts to GAAP used in preparing the Combined Accounts (where
applicable), and showing all matters referred to in Appendix 1 to the
Disclosure Letter. The Accounts have been prepared in accordance with
GAAP or, where indicated, Local GAAP, consistently applied throughout
the periods indicated, except as otherwise noted therein, and present
fairly, in all material respects, the financial position of the
Acquired Companies and the Business, at the dates indicated and the
results of operations of the Acquired Companies and the Business for
the periods stated therein. The Accounts as of and for the fiscal
years ending August 31, 1994 and August 31, 1995 (other than the
supplemental consolidating information and the Accounts of Components
Plymouth and Components Springfield described as unaudited therein)
have been audited by the independent accountants whose reports are
included in Schedule 6.1.1. The results of Components Plymouth and
Components Springfield have been included in the audited financial
statements of Perstorp North America for such fiscal years, and the
auditors have rendered an unqualified opinion thereon. The Accounts as
of and for the eight months ended the Last Accounts Date include
statements approving their use and confirming that the accounting
principles followed were the same as for the audited Combined Accounts
and Accounts. The Combined Accounts include a schedule setting forth
exchange rates used for translating all non-U.S. Dollar denominated
accounts.
(b) There are no liabilities, fixed or contingent, relating to,
resulting from or arising out of the Business except for (i)
liabilities reflected in, or for which reserves are reflected in, the
balance sheet included within the Combined Accounts as of the Last
Accounts Date (which reserves are adequate under GAAP or, as applied
to Accounts of a particular Acquired Company, Local GAAP, if
applicable), (ii) liabilities incurred in the ordinary course of
business of the Business since the Last Accounts Date, none of which,
individually or in the aggregate, is material in amount or to the
continued conduct of the Business as presently conducted, and all of
which will be discharged prior to Completion or reflected in the
Completion Date Balance Sheet, and (iii) Retained Liabilities listed
on Schedule 2.1.
(c) Set forth in the independent accountants' reports included in
Schedule 6.1.1 and, in respect of the Accounts of Components Plymouth
and Components Springfield, in Appendix 1 to the Disclosure Letter, is
a description of the accounting policies, procedures and practices
with respect to reserves relating to inventory and receivables which
were used in the preparation of the Accounts, and such reserves are
adequate under GAAP or, as applied to Accounts of a particular
Acquired Company, Local GAAP, if applicable.
(d) The Combined Accounts have been accurately extracted from the
Accounts.
<PAGE>
(e) Set forth in Appendix 1 to the Disclosure Letter is a list as of
the Last Accounts Date of (i) all intercompany obligations not
constituting normal trade payables incurred in the ordinary course of
business which are owing from Perstorp or any Affiliate of Perstorp to
an Acquired Company, or owing from an Acquired Company to Perstorp or
any Affiliate of Perstorp and, separately, (ii) all intercompany
obligations constituting normal trade payables incurred in the
ordinary course of business which are owing from Perstorp or any
Affiliate of Perstorp to an Acquired Company, or owing from an
Acquired Company to Perstorp or any Affiliate of Perstorp.
Books and Records
2. The books and records of the Acquired Companies are up to date and
in all material respects accurately reflect, in accordance with Local
GAAP, their assets and liabilities and material transactions entered
into by them. There are no additional sets of books, duplicate sets,
"second sets" or other documents or records of the Acquired Companies
kept by or for the Acquired Companies which purport to show the
financial condition of the Business. The stock records and stock
ledgers of each of the Acquired Companies are complete and up to date
and all books and records of the proceedings of the stockholders,
directors and committees of each of the Acquired Companies reflect all
material proceedings to date of the respective stockholders, directors
and committees thereof.
Position since Last Accounts Date
3. Since the Last Accounts Date, (a) the Business has been conducted
only in the ordinary course thereof, consistent with past practice,
and (b) there has been no Material Adverse Effect, nor to the best
knowledge of Perstorp have any events occurred, nor to the best
knowledge of Perstorp do there exist any circumstances, which might
reasonably be expected to result, either before or after Completion,
in any such Material Adverse Effect. Between the Last Accounts Date
and the date of this Agreement, there has not occurred any material
deterioration in any Acquired Company's relations with Employees,
Former Employees, unions, suppliers, customers, joint venture partners
or licensors of Intellectual Property. Since the Last Accounts Date,
no Acquired Company has taken any action:
(a) to declare, pay or make any dividend or other distribution
(whether in cash or otherwise);
(b) except as expressly contemplated by this Agreement, to allot,
issue, purchase or redeem, or agree to allot, issue, purchase or
redeem, any share capital or capital stock, any option, right or
warrant relating to share capital or capital stock or any loan
capital;
(c) to increase or agree to increase the remuneration, fees or
compensation payable to any of its directors, officers, employees
or agents (except for increases to non-executive personnel in the
ordinary course of business or non- discretionary increases
pursuant to Contracts listed on Appendix 6 to the Disclosure
Letter) or enter into any employment Contract with respect to the
performance of personal services (other than the Acquired
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Companies' standard terms of employment) which is not terminable
at will without any Acquired Company incurring any liability as a
result of such Contract or termination;
(d) to create or suffer to exist any Security Interest on any assets
other than Permitted Security Interests;
(e) to transfer, license or otherwise dispose of any Assets, or agree
to Transfer, license or otherwise dispose of any Assets, except
for sales of inventory and dispositions of obsolete equipment, in
each case, in the ordinary course of business;
(f) to make (or agree to make) any payment other than routine
payments in the ordinary and usual course of trading; or
(g) to enter into any foreign exchange or interest rate contracts or
other speculative instruments, other than in the ordinary course
of business consistent with past practice.
The Shares
4.
(a) The Shares represent all of the issued and outstanding shares of
capital stock or share capital of the Acquired Companies. The
Shares are duly authorized, validly issued and outstanding, fully
paid or credited as fully paid and nonassessable and are owned
beneficially and of record by the Relevant Vendor free and clear
of any and all Security Interests, shareholder agreements, voting
trusts or other rights of any third party in respect thereof.
(b) There are no outstanding subscriptions, options, warrants, calls,
rights, agreements or commitments relating to the issuance, sale,
purchase or redemption of any Shares. None of the Shares has been
issued in violation of, or is subject to, any preemptive rights
or other Contract except for this Agreement, and there are no
outstanding convertible or exchangeable securities, calls or
options relating to any Shares or that may require any Acquired
Company to issue to any person or entity any shares of its
capital stock. There are no voting trust agreements or other
Contracts restricting the voting, dividend rights or disposition
of any Shares.
(c) Immediately prior to Completion, each Relevant Vendor will own
the Shares free and clear of all Security Interests, or other
rights in or to any Shares, and will transfer their entire right,
title and interest in and to the Shares to Purchaser.
(d) None of the Acquired Companies, directly or indirectly, owns
(beneficially or of record) any stock or other ownership
interests in, or controls, any other legal entity.
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The Acquired Companies' Assets
5. Prior to the date hereof, Perstorp has made available to the
Purchaser copies of the most recent asset registers of the Acquired
Companies prepared in the ordinary course of business. Except as
listed or described in Appendix 5 to the Disclosure Letter, the Assets
include all the tangible and intangible personal property owned or
used by the Acquired Companies in the conduct of the Business as
presently conducted, and the Acquired Companies have, and immediately
after Completion will have, a contractual right or title to the Assets
constituting tangible and intangible personal property free and clear
of all Security Interests or other rights in and to such Assets, other
than (a) Security Interests that are listed or described on Appendix 5
to the Disclosure Letter, (b) mechanics', carriers', workmen's,
repairmen's or other like Security Interests arising by operation of
Law, incurred in the ordinary course of business and reflected in the
Completion Date Balance Sheet, (c) Security Interests for taxes,
assessments and other governmental charges (1) which are not due and
payable or which may thereafter be paid without penalty or (2) which
are being contested in good faith and are reflected in the Last
Accounts, (d) Security Interests arising under worker's compensation,
unemployment insurance and similar laws, and (e) other minor
imperfections of title or encumbrances, if any, which (i) do not in
any material respect affect the marketability or value of the property
subject thereto and (ii) in all events do not impair the use of the
property subject thereto in the Business as presently conducted. (The
items referred to in clauses (a) through (e) of the immediately
preceding sentence are herein referred to as "Permitted Security
Interests".) Except as set forth on Appendix 5 to the Disclosure
Letter, the Assets constituting tangible personal property used by the
Acquired Companies in the conduct of the Business as presently
conducted are, in all material respects having regard to their age and
usage, in good condition, normal wear and tear excepted, are regularly
maintained in good order, are capable of being used for their intended
purpose for the duration of their expected life, and are adequate to
satisfy all customer quality standards in all material respects and
comply with all safety requirements imposed under applicable Law in
all material respects.
Contractual Matters
6.1 Except as listed or described in Appendix 6 to the Disclosure
Letter, no Acquired Company is a party or bound to any Contract that
is of a type described below:
(a) any purchase or supply Contract under which any Acquired Company
has an obligation exceeding $50,000 or any sales Contract which
will, by virtue of the acquisition of the Shares by the
Purchaser, result in such third party being relieved of any
obligation or becoming entitled to exercise any right of
termination or any right of payment, pre- emption or other option
thereunder (whether with or without notice);
(b) any Contract which requires or may require, or confers any right
to require, the issue of any share capital or shares of its
capital stock now or at any time in the future;
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(c) any guarantee, indemnity or suretyship by it in respect of the
obligations of any third party (including Perstorp and Affiliates
of Perstorp), except for guarantees of obligations of Employees
listed on Appendix 6 to the Disclosure Letter;
(d) any employment, severance, consulting or other Contract with an
Employee or Former Employee whose annual remuneration exceeds
$100,000;
(e) any Contract with any Employee or Former Employee providing for
any bonus, stock option, stock ownership, stock purchase, stock
appreciation right or similar benefit;
(f) any Contract for the installment or other deferred purchase or
sale of any real or personal property which requires aggregate
future payments in excess of $50,000;
(g) any collective bargaining Contract with any labor union;
(h) any Contract for capital expenditures or the acquisition or
construction of fixed assets which requires aggregate future
payments thereunder in excess of $50,000;
(i) any Contract relating to cleanup, abatement, investigation,
monitoring or other actions in connection with liabilities,
actions or procedures under Environmental Laws;
(j) any Contract granting to any person a first-refusal, first- offer
or similar preferential right to purchase or acquire any material
Asset other than inventory having an aggregate value of less than
$50,000;
(k) any license or royalty Contract or other Contract with respect to
Intellectual Property, other than licenses granted or received in
the ordinary course of business, which pursuant to the terms
thereof requires future payments to or by any Acquired Company;
(l) any indenture, mortgage, loan or credit Contract under which
it has borrowed any money or issued any note, bond,
indenture or other evidence of indebtedness for borrowed
money, guaranteed indebtedness for money borrowed by others
which has not been repaid on or prior to the date hereof,
granted or agreed to grant any Security Interest other than
a Permitted Security Interest on any of its assets which has
not been paid or otherwise discharged on or prior to the
date hereof or incurred, primarily or secondarily, actually
or contingently, any liability or obligation in respect of
any item that would constitute indebtedness of the relevant
person on a balance sheet of such person prepared in
accordance with GAAP;
(m) any Contract with any manufacturer's representative or other
sales agent or relating to distribution or commission
arrangements which is not terminable without cost on 90 calendar
days' or less notice;
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(n) any Contract under which it is (i) a lessee of, or holds or uses,
any machinery, equipment, vehicle or other tangible personal
property owned by a third party or (ii) a lessor of, or makes
available for use by any third party, any tangible personal
property owned by it, in any such case which requires aggregate
annual payments in excess of $50,000;
(o) any other Contract which involves aggregate future payment by or
to it in excess of $50,000 other than a purchase or sales order
or other Contract entered into in the ordinary course of the
conduct of the Business;
(p) any Contract with respect to a joint venture or partnership
arrangement;
(q) any Contract granting a power of attorney, agency or proxy
other than such of the foregoing granted pursuant to
standard forms executed by any Acquired Company in the
ordinary course of the conduct of the Business;
(r) any Contract with respect to letters of credit, surety or other
bonds or pursuant to which any of its assets or properties are or
are to be subjected to a Security Interest other than a Permitted
Security Interest;
(s) any confidentiality Contract or Contract limiting or restricting
the ability of any of the Acquired Companies to enter into or
engage in any market or line of business in or related to the
Business;
(t) any retroactive or retrospective premium adjustment or similar
Contract pursuant to which it could (whether or not subject to
contingencies) be required to make payments with respect to or as
a result of losses, costs or expenses paid or incurred by another
Person providing insurance coverage;
(u) any Contract to which (i) such Acquired Company and
(ii) Perstorp or any Affiliate of Perstorp are parties;
(v) any Contract regarding the filing of Tax returns or relating in
whole or in part to the sharing of Tax benefits or liabilities
(including Tax indemnities);
(w) any Contract under which any of the Acquired Companies is a
lessee of real property or a lessor of real property; or
(x) any other Contract that (i) is reasonably likely to result in a
Material Adverse Effect or (ii) is outside the ordinary course of
business of the Acquired Companies, consistent with past
practice, and is otherwise material to the conduct of the
Business, the operation or use of the Assets by the Business or
the financial position or results of operations of the Acquired
Companies, taken as a whole.
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7.
(a) Except as set forth in Appendix 6 to the Disclosure Letter,
each Contract listed or described or required to be listed
or described in Appendix 6 to the Disclosure Letter is a
valid and binding obligation of the Acquired Company party
thereto, is in full force and effect and, insofar as
Perstorp or any of the Acquired Companies or Vendors is
aware, is a valid and binding obligation of the party or
parties thereto other than the Acquired Company party
thereto. Perstorp has made available to the Purchaser
copies of each Contract listed in Appendix 6 to the
Disclosure Letter, and no Contract so listed or required to
be listed has been terminated, amended or otherwise varied
since such copies were so made available.
(b) No Acquired Company has received notification of any claim
for breach of contract in respect of any Contract listed or
required to be listed in Appendix 6 to the Disclosure
Letter, each Acquired Company has performed all material
obligations required to be performed by it through the date
hereof under each Contract to which it is a party and is not
(with or without the lapse of time or the giving of notice
or both) in breach or default in any material respect
thereunder, and insofar as Perstorp is aware no event has
occurred resulting in a right of acceleration, termination
or similar right, and no litigation or similar proceedings
have been instituted, in relation to any such Contract.
Debts
8. Except for borrowings or loans to third parties disclosed in the
Last Accounts and apart from any intra-company borrowings to be
terminated pursuant to the Agreement, the Acquired Companies have no
outstanding loans to third parties which have arisen otherwise than in
the normal course of its business or liabilities for borrowed money.
No Acquired Company has any (i) liability or obligation of any nature
or kind (absolute, accrued, contingent or otherwise) that may have a
Material Adverse Effect on the use or operation of the Business after
Completion or (ii) any indebtedness for borrowed money or any Retained
Liability of any kind that is not shown or that are in excess of
amounts shown in the balance sheet included in the Last Accounts.
Good Standing
9. Each of the Acquired Companies (i) is duly organized, validly
existing and, to the extent such concept exists, in good standing
under the laws of the jurisdiction specified in relation to it in
Appendix 9 to the Disclosure Letter, and (ii) has full corporate power
and authority to own, lease or otherwise hold the Assets relating to
the Business owned, leased or otherwise held by it and to carry on its
respective business as it is now being or proposed to be conducted.
Each Acquired Company is duly qualified to conduct business as a
foreign corporation, to the extent such concept exists, in the
jurisdictions listed with respect to such Acquired Company in Appendix
9 to the Disclosure Letter, which are the only jurisdictions in which
its ownership or lease of property or conduct of the Business makes
such qualification necessary, except for such jurisdictions in which
the failure to be so qualified would not,
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individually and when considered with any other such failure,
constitute a Material Adverse Effect. Perstorp has provided to the
Purchaser complete and correct copies of the certificate of
incorporation or by-laws (or similar constituent instruments) of each
Acquired Company as in effect immediately prior to Completion.
Directors and Employees
10.
(a) Perstorp has made available to the Purchaser a list of all
the Employees whose annual salary exceeds $100,000 or who
have a fixed term of service of one year or longer than one
year, together with details of their remuneration, and a
copy of each Acquired Company's employee handbook and
standard form letter of employment, if any, and conditions
of employment. Such documents have not been terminated or
varied since such copies were made available. Perstorp has
also made available a list and details of the remuneration
of the members of the board of directors and officers of
each Acquired Company.
(b) Appendix 10 to the Disclosure Letter sets forth a list of all
country club memberships, cars and other perquisites made
available to Employees.
(c) The Acquired Companies, in relation to each of their
respective Employees and so far as relevant to each of their
Former Employees, have complied in all material respects
with their Contracts of employment, any relevant collective
bargaining Contracts or codes of conduct, all relevant Laws
relating to their conditions of service or to the relations
between them (or their recognized trade union or other
representatives) and their respective employees.
(d) Except as set forth in Appendix 10 to the Disclosure Letter, the
terms of employment of all Employees are such that their
employment may be terminated by not more than four weeks' notice
(or such longer periods as may be required by law) given at any
time without liability for any payment including by way of
compensation or damages (except for unfair dismissal or a
statutory redundancy payment).
(e) The Acquired Companies have not made, announced or proposed any
changes to the emoluments or benefits of or any bonus to any
Employee and are under no obligation to make any such changes
with or without retrospective operation.
(f) The Acquired Companies have not within the three-year period
preceding the date hereof acquired or entered into any Contract
which involved or may involve it acquiring any undertaking or
part of one such that the Transfer of Undertakings (Protection of
Employment) Regulations 1981 (the "Regulations") applied or may
apply thereto.
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(g) The Acquired Companies have maintained adequate and suitable
records regarding the service of their Employees.
(h) There are no amounts owing or agreed to be loaned or
advanced by any Acquired Company to any Employee.
(i) As of September 30, 1996 no Employee had given or received notice
to terminate his or her employment.
(j) As of September 30, 1996 there were no Employees who were on
secondment, maternity leave or absent on grounds of disability or
other leave of absence.
(k) The salaries and wages and other benefits of all Employees have
been paid or discharged in full in respect of the period up to
Completion.
(l) There are no unfair labor practice complaints,
discrimination charges or other employment related claims
(other than routine claims for benefits under employee
benefit plans) pending before any Governmental Authority or,
to the knowledge of Perstorp, any member of the Vendor Group
or the Acquired Companies threatened against any of the
Acquired Companies which, alone or with any series of
related or similar matters, seeks damages in any amount in
excess of $50,000, and there are no existing, and, so far as
Perstorp is aware, have been no past, patterns or practices
of discrimination upon which any such complaints, charges or
claims could be successfully asserted.
Employee Benefits
11.1 The Pension Schemes are the only arrangements, whether
established under trust or by Contract or applicable Laws or
Acquired Company policy, custom or practice, under which any
Acquired Company is or may become liable to pay, contribute to or
provide retirement, severance, deferred compensation, death,
disability, life insurance, medical benefits, or benefits in
respect of past service in respect of any of its past or present
officers, Employees or Former Employees and no Acquired Company
has participated in any such arrangements at any time other than
the Pension Schemes or arrangement which have been fully wound
up. There is no proposal to establish any other arrangements to
provide such benefits in respect of such individuals. No
contributions to, or other payments in respect of, any Pension
Scheme in relation to any Employee or Former Employee of any
Acquired Company has become due and remains outstanding. No
Employee or Former Employee has any right to any payment or other
benefit, whether under any Law, Contract or Pension Scheme, or by
reason of the Completion or any other transaction contemplated by
the Agreement.
11.2 Full details of the Pension Schemes have been supplied to the
Purchaser or its legal advisers and (without limitation to the
foregoing) complete up to date and accurate copies of the following
are annexed as Appendix 11 to the Disclosure Letter:
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(a) all trusts, deeds, rules and other documents which have at any
time governed each Pension Scheme (including any which have now
been superseded or consolidated);
(b) any announcements to members of the Pension Schemes which are not
yet the subject of formal amendment to the documentation of the
Pension Schemes (including any individual or group announcements
made to or in respect of any Employee or Former Employee or past
or present officer of any Acquired Company);
(c) the current explanatory booklets and other explanatory
literature issued to Persons who are (or are entitled to
become) members of the Pension Schemes;
(d) the name and address of the actuary to each of the Pension
Schemes which is a funded scheme (by way of assets
(including insurance policies or contracts being held for
the purposes of the provision of benefits under the scheme))
("Funded Scheme") and the actuary's reports on the last two
actuarial valuations of each of the Pension Schemes,
together with the accounts and so far as reasonably
available accountants' reports dealing with accounting
provisions for the provision of benefits under any Pension
Scheme for the last two complete financial years;
(e) the audited accounts of each of the Pension Schemes (including
the auditors' report) for the last two scheme years and any draft
scheme accounts for the current scheme year received by any
Acquired Company or trustees or any principal employer of each of
the Pension Schemes for such of the Pension Schemes as are
required by applicable Laws to prepare audited accounts;
(f) a list of each Pension Scheme's active members, pensioners,
deferred pensioners and all other persons with an interest in
each Pension Scheme with full particulars of them relevant to
their membership therein or interest in any Pension Scheme and
necessary to establish their entitlements to benefits, including
full particulars of any benefit augmentations granted to them
under the Pension Schemes;
(g) the identity of any employers participating in each Pension
Scheme and full particulars of the terms of the participation
including copies of all deeds of adherence and deeds of
participation;
(h) a statement of the basis on which the participating companies and
the members of any Pension Scheme contribute thereto, and make
payments in respect of the expenses of administration, management
and trusteeship thereof and the rate and amount of such
contributions and payments made in the three years prior to the
date of this Agreement, and of the period for which the rate and
amount of such contributions have remained at their present
level;
(i) details of any discretionary benefits provided under, and
discretionary arrangements relating to, the Pension Schemes,
including any discretionary increases of deferred pensions or
pensions in payment;
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(j) any regulatory or fiscal certificates, authorities,
registrations, filings or approvals in relation to any
Pension Scheme given by any regulatory or fiscal authority
or body and the latest confirmation such certificate
authority or approval is not affected or withdrawn or
invalidated, and any undertakings and indemnities given to
any regulatory or fiscal authority or body in relation to
any Pension Scheme;
(k) full particulars of the assets of each of the Pension Schemes
which are Funded Schemes where the whole of the Funded Scheme
will transfer to the Purchaser or remain with the relevant
Acquired Company;
(l) each Contract of current effect with any Person providing
services of any nature in connection with any of the Pension
Schemes, including without limitation investment management or
advisory services, administration and data processing services;
(m) each contract of insurance and any managed fund or other
investment contract with any insurance company relating to any
Pension Scheme which is of current effect and full particulars of
the premiums or other contributions payable under those
contracts.
11.3 Appendix 11 to the Disclosure Letter accurately lists all Pension
Schemes applicable to Employees or Former Employees. Except as set
forth in Appendix 11 to the Disclosure Letter, each Pension Scheme
covering any United States Employees or Former Employees of Components
North America, Components Plymouth or Components Springfield (a "U.S.
Pension Scheme") complies and has been operated and administered in
all material respects in accordance with the Employment Retirement
Income Security Act of 1974, as amended ("ERISA"), to the extent that
ERISA is applicable, and all other applicable Laws, and no "reportable
event", "prohibited transaction" (as such terms are defined in ERISA
and the United States Internal Revenue Code (the "Code"), as
applicable) or termination has occurred with respect to any U.S.
Pension Scheme. No amendment has been made reducing the rate of future
benefit accruals under any plan subject to Section 204(h) of ERISA,
except after all notices required by that provision have been given.
The Pension Schemes covering solely Employees and former Employees of
Components Canada are exempt from coverage under ERISA pursuant to
Section 4(b)(4) of ERISA. Except as set forth on Appendix 11 to the
Disclosure Letter, neither any Employee or Former Employee of
Components North America, Components Plymouth, Components Springfield
or Components Canada nor any beneficiary or dependent of any such
Employee or Former Employee is or may become entitled to post-
employment benefits of any kind by reason of their employment with any
Acquired Company including without limitation death or medical
benefits (whether or not insured), other than (i) coverage mandated by
section 4980B of the Code or (ii) deferred compensation fully accrued
as a Liability on the Completion Date Balance Sheet. No Employee or
Former Employee of Components North America, Components Plymouth,
Components Springfield or Components Canada will have rights to any
severance payment or any other benefits by reason of the execution or
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
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11.4 No Acquired Company has made or proposed any voluntary or ex
gratia payments to any person in respect of any benefit (as described
in Paragraph 11.1 above).
11.5 No undertaking or assurance (whether legally binding or not) has
been given by any Acquired Company to any person as to the
continuance, introduction, increase or improvement of any such benefit
or arrangement as is referred to in Paragraph 11.1 (including, for the
avoidance of doubt, the Pension Schemes).
11.6 Each Acquired Company has fulfilled in all material respects all
of its obligations under the Pension Schemes. Since the date of the
last actuarial valuation, no increase or decrease in the rate of
contributions to any Pension Scheme which is a Funded Scheme has
occurred or been recommended and so far as Perstorp is aware none will
foreseeably be required.
11.7 All death benefits which may be payable under the Pension Schemes
(other than a refund of members' contributions with interest where
appropriate) are fully insured with an insurance company. All policies
and contracts under which such benefits are insured are enforceable
and there is no ground on which the insurance company concerned might
avoid liability under any such policy or contract.
11.8 The Pension Schemes have at all times been administered in all
material respects in accordance with the trust powers and provisions
of their governing documentation and have been administered in all
material respects in accordance with and comply with all applicable
Laws.
11.9 No claim has been made or threatened against any Acquired Company
or against any other company participating in any Pension Scheme,
insofar as Perstorp is aware, against the trustees or administrator of
any Pension Scheme or any person whom any Acquired Company is or may
be liable to indemnify or compensate (including any complaint to any
tribunal or ombudsman) in respect of any act event omission or other
matter arising out of or in connection with any Pension Scheme (other
than routine claims for benefits) and so far as Perstorp is aware
there are no circumstances which may give rise to any such claim. No
Acquired Company has given any indemnity to any person in connection
with any Pension Scheme.
11.10 Since the date of the last actuarial valuation of any Pension
Scheme which is a Funded Scheme no power or discretion has been
exercised to augment or improve any benefit under that Pension Scheme
nor any promise or announcement made to do so.
11.11 The liability of each Acquired Company to contribute to each of
the Pension Schemes may be terminated by that Acquired Company without
notice, without the consent of any person and without further payment
(except in respect of contributions due up to the date of termination,
or as required by law).
11.12 Every Person who is entitled to membership in any Pension Scheme
has been invited to join as of the date on which he became so
entitled.
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11.13 No Acquired Company has any contractual liability to make any
contributions to any personal pension scheme or arrangement or any
retirement annuity contract of any Employee or officer or to make any
payment or remuneration specifically referable to contributions
payable by any Employee or officer of any Acquired Company under such
scheme or contact.
11.14 In addition to lump sum death in service benefits, the schemes
listed as Money Purchase Schemes in Appendix 11 of the Disclosure
Letter provide only benefits the rate or amount of which is calculated
by reference to a payment or payments made by a member or by any other
person in respect of the member and no promise or assurance (oral or
written) has been given to any beneficiary that his or her benefits
under those schemes (other than lump sum death in service benefits)
will be calculated by reference to any person's remuneration or equate
(approximately or exactly) to any particular amount.
11.15 All taxation of any nature for which the trustees or
administrators of the Pension Schemes are liable or liable to
account has been duly paid.
11.16 The records of the Pension Schemes, including without prejudice
to the generality of the foregoing all books of account and trustees'
minutes, have in all material respects been properly and accurately
maintained and all such records are in the possession of or under the
control of the trustees or administrators of the Pension Schemes.
11.17 There are no material omissions from or inaccuracies in the data
supplied to the relevant Acquired Company's actuary for the purpose of
the last actuarial valuation of each of the Pension Schemes which is a
Funded Scheme.
11.18 The trustees of each Pension Scheme which is established under
trust have legal title to all the assets of that Pension Scheme. There
are no encumbrances or charges over any of the assets of the Pension
Schemes.
11.19 All Pension Schemes which are required to or for which it is
advantageous to obtain any regulatory or fiscal certificates,
authorities, registrations, filings and/or approvals have obtained
such certificates, authorities, registrations, filings and/or
approvals with effect from their dates of commencement and Perstorp
knows of no reason why such certificates, authorities, registrations,
filings or approvals might be withdrawn or cease to apply.
11.20 No event has occurred (nor will Completion be such an event)
which would or could result in or entitle any Person (without the
consent of the relevant Acquired Company) to wind up, terminate or
close any of the Pension Schemes to new members, in whole or in part,
or which would otherwise trigger any liabilities relating to any
Pension Scheme, whether immediate or prospective, on any Acquired
Company, and which would not have arisen had the event not occurred.
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UK Specific Warranties
11.21 A contracting-out certificate under the Pension Schemes Act 1993
is in force covering the employments of all employees or officers of
all participating members of the Perstorp Components Pension Scheme
and the Perstorp Group Pension Plan (the "UK Schemes") and Perstorp
knows of no circumstance which might cause such certificate to be
withdrawn or cease to apply.
11.22 No payment has been or is proposed to be made from any
of the UK Schemes to any participating company.
11.23 None of the assets of the UK Schemes constitute
"employer-related investments" for the purposes of Section 112 of
the Pension Schemes Act 1993.
11.24 For each UK Scheme which is established under trust, all assets
of that UK Scheme are held either directly by the trustees of that UK
Scheme or by investment managers (or their nominees) properly
appointed by such trustees and are not subject to any stock lending
arrangements.
Properties
12. Appendix 12 to the Disclosure Letter accurately sets forth, or
provides accurate references to, (a) legal descriptions of each of the
real properties owned by each Acquired Company and to the real estate
subject to leases held by any Acquired Company and (b) legal
descriptions of all real estate used, held, owned or leased by any of
the Acquired Companies that is used or held for use in the Business.
The Acquired Companies have good and marketable title to the Assets
constituting real property, free and clear of all Security Interests
other than (a) Permitted Security Interests, (b) easements, covenants,
rights-of-way and other encumbrances or restrictions of record or
referred to in an applicable lease, (c) restrictions arising as a
matter of Law, and (d) unrecorded easements, covenants, rights-of-way
or other encumbrances or restrictions, which (in the case of (b), (c)
or (d)) do not materially impair the continued use of the property
subject thereto in the Business as presently conducted or materially
impair the value of the property subject thereto if used for purposes
similar to those for which it is presently used. The structures
located on the Assets constituting owned real property or on any other
real property described in Appendix 12 to the Disclosure Letter and
the machinery and equipment situated therein are in all material
respects having regard to their age and usage, in good condition,
normal wear and tear excepted, are regularly maintained in good order,
are capable of being used for their intended purpose for the duration
of their expected life and comply with all safety requirements imposed
under applicable Law in all material respects and otherwise have been
maintained in all material respects in accordance with the Acquired
Companies' policies related thereto.
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Recitals
13. The Recitals to this Agreement are true and accurate.
Taxation
14. 14.1 In Paragraphs 14.2 to 14.15:
(a) the terms "Event", "Tax", "Tax Return" and "Tax Authority"
will have the same meanings as they have for the purposes of
the Tax Covenant, and
(b) notwithstanding anything to the contrary contained herein,
the statements will be treated as unqualified except as
provided in the Disclosure Letter as to Taxes (the parties
acknowledging that any reference to any matter that does not
refer to the specific Tax effect or aspect thereof will not
limit any Warranty in Paragraph 14.1 to 14.15, inclusive,
hereof).
14.2 Each Acquired Company has duly and fully paid in a timely manner
all Taxes that have become due on or prior to Completion, made or
filed all Tax Returns that are required to be filed on or before
Completion, and given all notices and supplied all other material
information required by law to be supplied to all relevant Tax
Authorities on or prior to Completion. All such information, Tax
Returns and notices were and remain accurate and complete in all
material respects. All Taxes relating to the Acquired Companies, the
Business or the Assets not due on or before Completion but properly
accruable on or before Completion or allocable to a period ending on
or before Completion or to a portion of a period beginning before and
ending after Completion have been properly reserved for in the
aggregate on the books of the Acquired Companies.
14.3 No Acquired Company is involved in any current audit or dispute
with any Tax Authority. No Acquired Company has executed or filed with
any Tax Authority any agreement extending the period for filing any
Tax Return which is currently in force. No Acquired Company is a party
to any pending action, proceeding or investigation by any Tax
Authority or other Governmental Authority for the assessment or
collection of Taxes nor does any Acquired Company know of any reason
for any such action, proceeding or investigation. No notice of any
claim has ever been made by a Tax Authority or Governmental Authority
in a jurisdiction where any Acquired Company does not currently file
Tax Returns that such Acquired Company is or may currently be subject
to taxation by that jurisdiction, nor is any Acquired Company aware
that any such assertion of jurisdiction is threatened. No waivers of
statutes of limitation in respect of any Tax Returns have been given
or requested by any Acquired Company nor has any Acquired Company
agreed to any extension of time with respect to a Tax assessment or
deficiency which is currently outstanding. To the best knowledge of
Perstorp, the Vendors and the Acquired Companies, no security
interests have been imposed upon or asserted against any assets of any
Acquired Company as a result of or in connection with any failure or
alleged failure, to pay any Tax. No Acquired Company has entered into
any agreement, oral or written, which is or will at Completion remain
in force
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providing for the payment of Tax Liabilities or entitlement to refunds
and related matters with any other party.
14.4 No transaction in respect of which any consent or clearance was
required or sought from any Tax Authority has been entered into or
carried out by any Acquired Company without such consent or clearance
having first been properly obtained.
14.5 No Tax Authority has made or agreed to make any special
arrangement (being an arrangement which is not based on relevant
legislation or any published practice) in relation to any Acquired
Company's affairs which is currently in force.
14.6 No claim has been made for the depreciation of any asset of a
Acquired Company for Tax purposes in circumstances in which the claim
is likely to be disallowed. No Acquired Company has since the Last
Accounts Date been involved in any transaction which has given or may
give rise to a Tax Liability other than Tax Liabilities in respect of
normal trading income or receipts arising from transactions entered
into in the ordinary course of business. No Acquired Company is or may
be liable to pay Tax in respect of any hidden distributions of profit
in any jurisdiction.
14.7 All documents in the enforcement of which any Acquired Company is
interested have been duly stamped and all related duties, interest and
penalties have been duly paid.
14.8 No event, transaction, act or omission has occurred (including
without limitation the execution or implementation of this Agreement)
which has resulted or could result in any Acquired Company becoming
liable to pay or to bear any Tax which is primarily or directly
chargeable against or attributable to any person other than a Acquired
Company. No Acquired Company is party to or bound by, nor to the best
knowledge of Perstorp, the Vendors and the Acquired Companies, will
any Acquired Company become a party to or bound by, any Tax indemnity,
Tax sharing or Tax allocation agreement in respect of which claims
would not be time barred.
14.9 All transactions entered into by any Acquired Company have been
entered into on an arm's-length basis and the consideration (if any)
charged or received or paid by any Acquired Company on all
transactions entered into by it has been equal to the consideration
which might have been expected to be charged, received or paid (as
appropriate) between independent persons dealing at arm's-length. No
Acquired Company has disposed of or acquired any assets in
circumstances such that the consideration deemed to be given on such
disposal or acquisition for purposes of computing the Tax Liability of
the Acquired Company with respect to such disposition or acquisition,
might be adjusted by any Tax Authority. The book value of any asset of
a Acquired Company as shown in or adopted for the purposes of the
Accounts is such that if an asset were disposed of at Completion at
its book value (or if acquired after the Accounts Date at cost) no Tax
Liability would be incurred nor would any Tax previously deferred be
taken into account, except to the extent such Tax Liability is
attributable to accelerated depreciation for Tax purposes in
accordance with applicable Laws.
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14.10 No Acquired Company has entered into or been a party to nor
otherwise been involved in any plan or arrangement designed wholly or
mainly for the purpose of avoiding or deferring Tax.
14.11 To the best knowledge of Perstorp, the Vendors and the Acquired
Companies, no Acquired Company is an agent of another company for the
purposes of assessing the latter to Tax in the country of residence of
the first Acquired Company.
14.12 Each Acquired Company:
(a) is registered for the purposes of value added tax
legislation (or the equivalent Tax legislation in each
jurisdiction in which it carries on business) ("VAT
Legislation"); and
(b) is neither an agent nor a fiscal representative of any other
Person (other than an Acquired Company) for the purposes of
the VAT Legislation.
Separate Provisions
Paragraphs 14.13 through 14.15 will apply to the separate transactions
to Transfer the Shares at Completion in accordance with the Agreement.
In the event of any conflict or inconsistency between such Paragraphs
and either the balance of Paragraph 14 or the Agreement, the
provisions of Paragraphs 14.13 through 14.15 will be the governing
provisions.
14.13 Perstorp Railite
(a) Components Spain is and has been eligible for the benefits
stated by Art. 14 of the Local Law 18/1993, of July 5, of
the Historic Land of Alava (Norma Foral 18/1993, de 5 de
julio, del Territorio Hist(cent)rico de Alava de medidas
fiscales urgentes de apoyo a la inversi(cent)n e impulso de
la actividad econ(cent)mica ("Local Law 18/1993")).
Components Spain has duly obtained the exemption from
Corporate Tax stated by Art. 14 of the Local Law 18/1993
(the "Exemption"), has fulfilled at all times the
requirements set forth in order to be entitled to such
Exemption and is fulfilling such requirements at Completion.
Specifically, Components Spain has not obtained any other
tax benefit which is not compatible with the Exemption.
(b) Components Spain has duly obtained a grant
("Subvencion") from the Basque Government for the
amount of 432 million pesetas. Components Spain has
fulfilled and is fulfilling all the requirements, terms and
conditions set forth by the Basque Government in order to
obtain 289 million pesetas pursuant to such Subvencion
and Components Spain has delivered to the Basque Government
the necessary documentation to entitle Components Spain to
obtain such payment of such Subvencion. The
Subvencion is duly recorded in the books of Components
Spain in accordance with Local GAAP.
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(c) Paragraph 14.12(a) will be applied by including, in
addition to VAT Legislation, the following:
corporation tax legislation ("Corporation Tax
Legislation") and income tax on individuals legislation
("Income Tax on Individuals Legislation"), and
Paragraph 14.12(b) will be applied by including, in
addition to VAT Legislation, the following:
Corporation Tax Legislation and Income Tax on
Individuals Legislation.
14.14 Perstorp UK
(a) The Disclosure Letter contains details of all arrangements
relating to the surrender of tax refunds under Section 102
Finance Act 1989 to which Components
UK is or has been a party and:
(i) all notices given by Components UK for any such
surrender were when made and are now valid, and
Perstorp knows of no reason why such notices should not
be allowed; and
(ii) Components UK is not liable to make any payment which
is not provided for in the Accounts or in the
Completion Date Balance Sheet and has received all
payments due to it under any arrangement or agreement
for the surrender of a tax refund and no such payment
exceeds or could exceed the amount permitted by Section
102(7) Finance Act 1989.
(b) The Disclosure Letter contains details of all arrangements
relating to group relief under Sections 402-413 Taxes Act
1988 to which Components UK is or has been a party and:
(i) all claims by Components UK for group relief were when
made and are now valid and either have been allowed by
way of relief from corporation tax or Perstorp knows of
no reason why such claims shall not be allowed;
(ii) Components UK has not made nor is liable to make any
payment for group relief otherwise than in
consideration for the surrender of group relief
allowable to Components UK by way of relief from
corporation tax;
(iii) no such payment exceeds or could exceed the
amount permitted by Section 402(6) Taxes Act
1988; and
(v) there exist or existed for any period of account
in respect of which a surrender has been made or
purports to have been made to Components UK no
arrangements such as are specified in Section
410(1)-(6) Taxes Act 1988.
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(c) The Disclosure Letter contains details of all arrangements
for the surrender under Section 240 Taxes Act 1988 of any
amount of advance corporation tax and in respect of receipts
and surrenders disclosed:
(i) Components UK has not paid nor is liable to pay
for the benefit of any advance corporation tax
which is or may become incapable of set off
against its liability to corporation tax otherwise
than by reason of anything done by Components UK
or the Purchaser after Completion or any
insufficiency of profits liable to corporation tax
after Completion.
(ii) no such payment exceeds or could exceed the amount
permitted by Section 240(8) Taxes Act 1988; and
(iii) there exist or existed for any period in
respect of which a claim under Section 240
Taxes Act 1988 for surrender of advance
corporation tax to Components UK has been or
is to be made no arrangements such as are
specified in sub-section (11) of that section
whereby any person could obtain control of
Components UK.
(d) All dividends paid by Components UK have been paid under a
group income election pursuant to Section 247 Taxes Act
1988, such election was valid when made and when such
dividends were paid and Components UK is not required to
account for advance corporation tax in respect of any such
dividends.
14.15 Perstorp North America
(a) No Acquired Company incorporated in a State of the United
States of America has been a United States real property
holding corporation within the meaning of Section 897(c)(2)
of the Code, during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
Litigation and Regulatory Matters
15.
(a) No Acquired Company is engaged in nor, so far as Perstorp is
aware, has any Vendor or any Acquired Company been threatened
with, any litigation, arbitration, claims or
administrative or other proceedings, which (i) alone or with any
series of related or similar matters, seeks damages in an amount
in excess of $50,000 or (ii) seeks to make any Acquired Company
subject to any order, writ, injunction or decree of any
Governmental Authority or other restriction on the conduct of its
business. No Acquired Company is subject to any order, writ,
injunction or decree or any unsatisfied award or judgment.
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(b) The Acquired Companies conduct and have conducted their Business
and corporate affairs in accordance with all applicable Laws in
all material respects.
(c) The Acquired Companies have obtained all Permits which are
required for and are material to the carrying on of their
Business in the places and the manner in which such Business is
now carried on.
Insurance
16. Appendix 16 to the Disclosure Letter lists all material insurance
policies providing coverage for the Acquired Companies or the Business
or the businesses previously carried on by the Acquired Companies (the
"Insurances"). Perstorp is not aware of any material outstanding
claims under, or in respect of the validity of, the Insurances and the
Insurances are in full force and effect in accordance with the terms
and conditions and all premiums thereunder have been paid when due.
Except as set forth in Appendix 16, no claim is currently reserved or,
to the knowledge of Perstorp or any of the Acquired Companies, or any
other member of the Vendor Group, should be reserved under the
Insurances involving an amount in excess of $50,000.
Ability to Enter Agreement
17. Perstorp has necessary power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have, where
required, been duly and validly authorized and no other proceedings or
action on the part of Perstorp is, or on behalf of any Relevant
Vendor, will be, necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been
duly executed and delivered by Perstorp and constitutes a valid and
binding agreement of Perstorp, enforceable against Perstorp in
accordance with its terms. Perstorp has taken, or caused to be taken,
each of Perstorp's Pre-Completion Actions.
18. The execution and delivery of this Agreement by Perstorp does not,
and the performance by each of Perstorp and each Relevant Vendor of
the transactions contemplated hereby and thereby to be performed by
each of them will not, in any material
respect, conflict with, or result in any material violation of, or
constitute a material default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or the loss of
a material benefit under, any provision of the certificate of
incorporation or by-laws (or similar constituent instruments) of
Perstorp or each such Relevant Vendor, any Contract listed or
described or required to be listed or described on Appendix 6 to the
Disclosure Letter (except to the extent disclosed on Appendix 6 to the
Disclosure Letter), or any Law or Permit necessary for the continued
conduct of the Business after Completion in all material respects in
the same manner as it is being conducted as of the date of this
Agreement or as of the Completion or results or will result in the
imposition of a Security Interest with respect to any of the Shares or
the Assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, any
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Governmental Authority is required to be obtained or made by or with
respect to Perstorp or any Vendor under any Law in connection with the
execution and delivery of this Agreement by Perstorp or the
performance by Perstorp of the transactions contemplated hereby to be
performed by it, except (i) for such of the foregoing as are listed or
described on Schedule 6.1.18, and (ii) for such Permits, which if not
obtained or made, (A) will not impair the ability of any Acquired
Company to continue to operate its respective business as operated
immediately prior to Completion and (B) will not subject any Acquired
Company to any criminal prosecution or penalty.
Environmental Matters
19. The Acquired Companies are in all material respects in full
compliance with all Environmental Laws which are or previously have
been applicable to any Acquired Company, the ownership, use,
operation, maintenance or management of the Properties, or properties
previously owned, operated or leased by the Acquired Companies or
their predecessors, or the Business and all Permits that are required
to be issued by a Governmental Authority under any Environmental Laws
in respect of any Acquired Company, the Properties or the Business
are, subject to the conditions and limitations contained therein,
being complied with in all material respects, are valid and are in
full force and effect, and Perstorp is not aware of circumstances
which are reasonably likely to result in a breach of Environmental
Laws or, so far as Perstorp is aware, future Environmental Laws now
under consideration that would affect any Acquired Company directly.
20. Neither the Properties, the Acquired Companies nor properties
previously owned, operated or leased by the Acquired Companies or
their predecessors are involved in any civil, criminal or other
proceedings or governmental or other quasi-governmental claim or
investigation pursuant to any Environmental Laws and Perstorp has no
knowledge of the intended commencement of any such proceedings, claims
or investigation or facts (including without limitation those
concerning adjacent properties), that could support any such
proceedings, claims or investigations.
20.1 The Acquired Companies have not and, to the knowledge of
Perstorp, no other Person has caused a Release or threatened Release
of any Hazardous Material at, in, on, under, about or from the
Properties or properties previously owned, operated or leased by an
Acquired Company or any predecessor. There are no underground storage
tanks or asbestos which, in either case, is reasonably likely to be
dangerous to human life or is in breach of any Environmental Law at
the Properties and, to the knowledge of Perstorp, at properties
previously owned, operated or leased by the Acquired Companies or any
predecessors.
Intellectual Property
21.1 Appendix 21 to the Disclosure Letter lists and sets forth a
summary description of all Perstorp marks, all Registered Rights
and all licenses of intellectual property of third parties owned,
held or used by any Acquired Company. All Registered Rights
owned or used by any Acquired Company in, or in connection with,
its business are subsisting and not subject to any
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notice of opposition or application for cancellation or amendment, and
are owned by an Acquired Company or licensed from a third party that
is not a member of the Vendor Group. All steps have been taken to
maintain the Registered Rights used in the conduct of the Business,
including paying any renewal or other fees where appropriate. None of
the Acquired Companies has transferred any Registered Rights, by
assignment or license, which are relevant to the Business, to any
member of the Vendor Group or any third party within the last two
years and no member of the Vendor Group owns or has any other rights
to any Intellectual Property that is necessary for the manufacture or
sale of any Designated Product that is not assigned or licensed
pursuant to the Intellectual Property Agreement or the Computer
Software Agreement without infringement on the Intellectual Property
rights of others.
21.2 No Intellectual Property (including without limitation any
computer software) is required for carrying on the business of any
Acquired Company in the places and manner in which such business is
carried on at the date hereof, other than Intellectual Property
beneficially owned by one or more Acquired Companies or members of the
Vendor Group or any Intellectual Property owned by any third party
which is the subject of licenses to an Acquired Company. The
Intellectual Property and Registered Rights which are owned or used by
any Acquired Company in, or in connection with, the Business are not
subject to any Security Interest other than a Permitted Security
Interest. All Intellectual Property which is relevant to the
manufacture or sale of Designated Products by any Acquired Company is
owned by an Acquired Company, is licensed from a third party that is
not a member of the Vendor Group or is the subject of the Intellectual
Property Agreement.
21.3 So far as Perstorp is aware:
(a) no Intellectual Property which is material to any Acquired
Company is the subject of any claim or opposition from any person
as to title, validity, enforceability or otherwise; and
(b) the operations of the Business, including without limitation the
activities, processes and methods employed or used (including
without limitation any Intellectual Property described in Section
21.2), and the products and services manufactured and supplied,
by the Acquired Companies, do not conflict with or infringe upon
any Intellectual Property of any third party.
21.4 All software necessary to enable each Acquired Company to
continue to use the computerized records and tools used in the
business of that Acquired Company for programs awarded to such
Acquired Company is either listed on the schedule to the Computer
Software Agreement or is licensed to such Acquired Company on
substantially the same terms and conditions on which such software has
have been used during the two-year period prior to the date of this
Agreement and so far as Perstorp is aware the transactions
contemplated by this Agreement will not result in the termination of,
or any change in the terms and conditions of, any such software
license.
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21.5 In the 12 months prior to the date hereof, the Acquired Companies
have not suffered and, so far as Perstorp is aware, no other Person
has suffered any failures or bugs in or breakdowns of any computer
hardware or software used in connection with the Business which has
caused any substantial disruption or interruption in or to its use,
and the Vendor does not know nor is it aware of any fact or matter
which may so disrupt or interrupt or affect the use of such equipment
following the acquisition by the Purchaser of the Business pursuant to
this Agreement on the same basis as it is presently used.
21.6 The Computer Software Agreement will not violate the terms of any
license or other Contract to which any member of the Vendor Group is a
party.
Product Liability
22. Since September 1, 1993, no claim has been asserted against an
Acquired Company or any predecessor of any of them for death, personal
injury, other injury to persons or property damage relating to,
resulting from or arising out of, directly or indirectly, use or
exposure to any products (or any part or component thereof)
manufactured, sold or used or serviced by an
Acquired Company or any predecessor of any of them. Appendix 22 to the
Disclosure Letter lists all Designated Products.
23. With respect to each of the Designated Products, there is no and
has not been any (i) material defect in any manufacturing process used
in connection with the manufacture thereof, (ii) failure by any of the
Acquired Companies to comply in any material respect with any
applicable Law relating to product specifications, including without
limitation flammability specifications, which defect or failure
described in the foregoing clauses (i) and (ii) has not been rectified
or cured, as the case may be, and no such defect or failure to comply
resulted in any legal or contractual requirement to notify any
customer thereof or to recall any products sold, (iii) product
specifications or quality standards provided to or requested or
required by any customer of the Business that has not been complied
with, except for any such noncompliance with customer specifications
or standards which is not reasonably likely to result in a material
amount of product returns, or (iv) material breach by any of the
Acquired Companies or Vendors or any predecessor of express or implied
warranties of merchantability or fitness for any purpose or use or any
other express warranties of the Acquired Companies or Vendors in
respect of which a third party would be entitled to make a claim
against any Acquired Company or any member of the Vendor Group.
Customers and Suppliers
24. To the knowledge of Perstorp, the Acquired Companies are able to
continue to supply Designated Products to customers which to a degree
reasonably satisfactory to such customers meet all product
specifications and quality standards applicable to any current program
in which any Acquired Company participates or to any Contract without
any additional capital expenditure. Except as set forth in the capital
expenditure plan attached as Appendix 24 to the Disclosure Letter, to
the knowledge of Perstorp, no capital expenditures or software
expenditures aggregating in excess of $50,000 are required for the
Acquired Companies to
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continue to conduct the Business as presently conducted and forecast
(in Perstorp's current business plan for the Acquired Companies
attached at Appendix 24 to the Disclosure Letter) to be conducted
during the periods covered by such attached capital expenditure plan.
25. Except as described on Appendix 25 to the Disclosure Letter, since
September 1, 1993 (a) there has not been any adverse change in the
business relationship of any of the Acquired Companies with any of the
5 largest customers of the Business or suppliers of the Business and
(b) there has not been any loss or, to the knowledge of Perstorp,
threatened loss of any model or program or Contract set forth on
Appendix 25. Notwithstanding any other provision of this Agreement,
the Disclosure Letter or any other document, no disclosure whatsoever
by Perstorp shall be deemed to qualify this paragraph unless such
disclosure is specifically set forth in Appendix 25.
Labor Relations
26. No Acquired Company is a party to or subject to any collective
bargaining Contract. Except as set forth on Appendix 26 to the
Disclosure Letter, there are, and since September 1, 1993 have been,
no organized labor walkouts, strikes or work stoppages or slowdowns
pending or, to the knowledge of Perstorp, threatened, against or
affecting the Business, and, to the knowledge of Perstorp, no event
has occurred which could reasonably be expected to give rise to any
such dispute. No union organizational campaign or effort to
collectively bargain is currently, or has been, pending with respect
to the Employees or Former Employees of the Business.
Brokers
27. Neither Perstorp nor any of its Affiliates has made any Contract
or taken any action as a result of which Purchaser or an Acquired
Company would become obligated to pay any Person a fee or commission
as a result of this Agreement or the transactions contemplated hereby
or thereby.
Intercompany Matters
28. Appendix 28 to the Disclosure Letter sets forth (a) a list of the
material support services provided to the Acquired Companies since
September 1, 1994 by Perstorp or any Affiliate of Perstorp (other than
an Acquired Company) ("Support Services"), (b) the amount charged for
each of the Support Services so provided for the fiscal year ended
August 31, 1995 and the eight-month period ended on the Last Accounts
Date, which charges were expended in the related Accounts, and (c) all
executory Contracts between or among, as the case may be, any Acquired
Company, on the one hand, and any member of the Vendor Group or any
Affiliate thereof, on the other hand and the terms under which
products or inventory have been sold or furnished to any Acquired
Company by any member of the Vendor Group other than an Acquired
Company since September 1, 1994. Appendix 28 (excluding the
attachments thereto) describes all changes in the terms under which
such products or inventory have been
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so sold or furnished (where such change is adverse in any manner to
the relevant Acquired Company) that have occurred during the period
from September 1, 1994 to Completion.
Bank Accounts
29. Appendix 29 to the Disclosure Letter lists and describes all bank
and similar accounts maintained by or on behalf of any Acquired
Company and the authorized signatories in respect thereof.
Powers of Attorney
30. Appendix 30 of the Disclosure Letter lists and describes all
outstanding powers of attorney granted by or on behalf of any Acquired
Company to any Person.
Solvency
31. Neither Perstorp nor any of the Acquired Companies has commenced
any case, proceeding or other action under any Law relating to
bankruptcy, insolvency, reorganization or relief of debtors and no
proceedings have been commenced against Perstorp or any of the
Acquired Companies which seeks to adjudicate any of them as bankrupt
or insolvent or which seeks the appointment of any receiver,
liquidator or similar officer for any of them.
Competition and Trade Regulation
32.1 Without limiting the generality or effect of any other Warranty
or provision of the Agreement, so far as Perstorp is aware, neither
Perstorp (as relates to the Business) nor any Acquired Company is
party to any material agreement or arrangement which: (a) infringes
Article 85 or 86 of the Treaty establishing the European Economic
Community or any other antitrust or similar Law in any jurisdiction in
which Perstorp or any Acquired Company has assets or conducts business
or (b) is registrable, unenforceable or void or renders Perstorp or
any Acquired Company liable to civil, criminal or administrative
proceedings by virtue of any anti-trust or similar Law in any
jurisdiction in which Perstorp or any Acquired Company has assets or
conducts business.
32.2 None of the Acquired Companies is subject to any outstanding
order or decree of any Governmental Authority under any anti- dumping
or other trade regulation Law.
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EXHIBITS AND SCHEDULES
Exhibit A Computer Software Agreement
Exhibit B Development License Agreement
Exhibit C (Intentionally omitted)
Exhibit D Intellectual Property Agreement
Exhibit E Projections
Exhibit F Pre-Completion Items
Exhibit G Termination of Agreement
Schedule 1.1 List of Acquired Companies
Relevant Vendors; Shares; Vendors
Schedule 1.2 List of Relevant Perstorp Executives
Schedule 2.1 Share Transfer Procedures;
Settlement of Intercompany Balances;
Net Asset Value; Change in Net Assets;
Estimated Purchase Price; List of Purchasers;
Allocation of Purchase Price; Estimated
Retained Liabilities
Schedule 3.1 List of Closing Documents; Form of Letter of
Resignation
Schedule 3.2 Form of Legal Opinions
Schedule 3.4 Completion Date Balance Sheet Methodology
Schedule 6.1 Warranties
Schedule 6.1.1 Auditor's Reports
Schedule 6.1.18 Consents, Approvals, and Permits
Schedule 7.1(b) Certain Indemnities
Schedule 9.1 Pension Schemes
Schedule 9.2 Tax Covenant
Schedule 9.3 Insurances
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule herefrom as permitted by Item 601(b)(2) of Regulation S-K to the
Commission upon request.
<PAGE>
<PAGE>
THIS AGREEMENT ("Agreement") is made on December 11, 1996
AMONG:
(1) PERSTORP AB, a Swedish company, the principal address of which is S-284 80,
Perstorp, Sweden ("Perstorp");
(2) PERSTORP GMBH, a German corporation, the principal address of which is
Industriestrasse 14, Postfach 1258, D-686 37 Burstradt, Germany
("Perstorp GmbH");
(3) PERSTORP BIOTEC AB, a Swedish company, the principal address of which is
S-284 80, Perstorp, Sweden ("JV Holdings"). and
(4) COLLINS & AIKMAN PRODUCTS CO., a Delaware company, the principal address of
which is 701 McCullough Drive, Charlotte, North Carolina 28262 (the
"Purchaser").
WHEREAS:
(A) JV Holdings is a corporation incorporated in Sweden, all of the issued and
outstanding share capital of which is owned by Perstorp.
(B) Perstorp GmbH is a corporation incorporated in Germany, all of the issued
and outstanding share capital of which is owned by Perstorp.
(C) Perstorp France is a company organized in France, all of the issued and
outstanding share capital of which is owned by Perstorp France, S.A., a wholly
owned subsidiary of Perstorp.
(D) Perstorp Components N.V. ("Components Belgium") is a corporation
incorporated in Belgium, all of the issued and outstanding share capital of
which is owned by Perstorp GmbH.
(E) Perstorp Components AB ("Components Sweden") is a corporation incorporated
in Sweden, all of the issued and outstanding share capital of which is owned by
Perstorp GmbH.
(F) Perstorp, Perstorp GmbH, Perstorp S.A., a French company ("Perstorp
France"), JV Holdings and Purchaser have reached agreement in relation to the
sale and purchase of the Purchaser Shares, the sale and purchase of the Acquired
Companies Shares , the sale and purchase of the French Branch Assets and the
other transactions contemplated hereby, in each case upon the terms and subject
to the conditions set forth in this Agreement and the other documents referred
to in this Agreement.
<PAGE>
ACCORDINGLY, IT IS AGREED as follows:
1. INTERPRETATION
1.1 In addition to the terms defined elsewhere herein, the following terms
will have the following meanings when used in this Agreement with initial
capital letters:
"Accountants" has the meaning set forth in Section 3.5(c);
"Accountants' Determination" has the meaning set forth in Section 3.5(c);
"Accounts" means, in relation to any Acquired Company:
(a) the balance sheets of the Acquired Company as at each of August 31, 1994,
August 31, 1995 and the Last Accounts Date; and
(b) the statements of profit and loss of the Acquired Company for the years
ending on August 31, 1994 and August 31, 1995, and the eight-month period
ending on the Last Accounts Date,
together with any notes, reports or statements included in or annexed to them,
and the Combined Accounts for the Acquired Companies taken as a whole, in each
case as included in Appendix 1 to the Disclosure Letter;
"Accounts Date" means, in relation to any accounting period of any Acquired
Company, the last day of that period;
"Accounting Period" has the meaning given to such terms in Paragraph 1.1 of
Schedule 9.1;
"Acquired Companies" means Components Belgium and Components Sweden;
"Acquired Companies Shares" means in relation to each of Components Belgium and
Components Sweden the shares of capital stock specified opposite its name in
Part A of Schedule 1.1;
"Acquired Shares Purchase Price" means the Estimated Acquired Shares Purchase
Price, plus or minus, as the case may be (i) the difference between (a)
$18,921,000, which is the sum of the estimated amount of Retained Liabilities on
Schedule 2.1 and (b) the actual amount as shown on the Completion Date Balance
Sheet, and (ii) the difference between (a) the actual amount of any change (in
U.S. Dollars) in the Net Assets between the Last Accounts Date and Completion at
Completion (except to the extent that such change arises from currency gains or
losses, determined in accordance with Section 3.5) and (b) $5,655,000 (being the
estimate of change in Net Assets between the Last Accounts Date and Completion
as shown on Schedule 2.1).
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<PAGE>
"Acquisition Agreement" means that certain acquisition agreement, dated the date
hereof, between Perstorp and Purchaser relating to the sale by Perstorp to
Purchaser of other Perstorp Subsidiaries;
"Adjusted Completion Date Balance Sheet" has the meaning set forth in Section
3.5(b);
"Affiliate" of a Person means any Person controlling, controlled by or under
common control with the first Person;
"Assets" means all machinery, tools, inventory, Intellectual Property and other
assets, rights, properties, claims and interests, wherever located, owned or
used by any of the Acquired Companies and the French Branch Assets;
"Business" means the manufacture, distribution and sale of Designated Products
by the Acquired Companies and the French Branch as a whole on the date of this
Agreement or such other time as may be referred to herein;
"Business Day" means a day (excluding Saturdays and Sundays) on which banks
generally are open for business in Stockholm, New York City and Charlotte, North
Carolina for the transaction of normal banking business;
"Claim" means any claim for a breach of, or indemnity under, this Agreement;
"Combined Accounts" means the Accounts, if any, of the Acquired Companies,
prepared on a combined basis in accordance with GAAP, denominated in U.S.
Dollars and otherwise prepared as described in Appendix 1 to the Disclosure
Letter, together with the related notes, as included in Appendix 1 to the
Disclosure Letter;
"Competing Business" means a business which is engaged in the manufacture,
distribution or sale in North America or any member state of the European Union
("EU"), the European Economic Area, Central Europe or Eastern Europe of a
Designated Product;
"Completion" means completion of the sale and purchase of the Purchaser Shares,
the Acquired Companies Shares and the French Branch Assets, in accordance with
Sections 2.1 and 3.1, and with respect to the French Branch Assets, the French
Asset Agreement, and the other transactions referred to in Section 3.2 (such
completion being evidenced by the payment by the Purchaser of the Purchaser
Share Purchase Price, and the repayment of the note by JV Holdings and the
intercompany obligations by the Acquired Companies in accordance with Section
2.1(f)).
"Completion Date" means the date on which Completion occurs (as described in the
definition of "Completion");
"Completion Date Balance Sheet" has the meaning set forth in Section 3.5(a);
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<PAGE>
"Computer Software Agreement" means the agreement executed and delivered at
Completion in the agreed form attached as Exhibit A;
"Consent" means any consent, waiver, approval, order or authorization of, or
registration, declaration or filing with or notice to, any Governmental
Authority or other Person;
"Contract" means any contract, lease, rental agreement, tenancy, license,
engagement or commitment, written or oral, expressed or implied;
"Costs" means all reasonable costs and expenses (including without limitation
interest, penalties, attorney's and other professionals' fees and expenses,
accounting fees and expenses and investigation, remediation, reporting,
monitoring or enforcement costs and expenses), in each case of any nature
whatsoever;
"Current Taxes" means the accrual for current Income Taxes (as defined in
Schedule 9.1) for an Acquired Company's fiscal year ended August 31, 1996 and
for the pre-Completion portion of the Acquired Company's fiscal year that
includes the Completion Date;
"Deferred Taxes" means the net of deferred tax assets and deferred tax
liabilities, calculated on a separate basis for each Acquired Company in
accordance with Local GAAP;
"Designated Product" means any product set forth on Appendix 22 to the
Disclosure Letter;
"Disclosure Letter" means the letter in the agreed form from Perstorp to the
Purchaser signed and exchanged before the signing of this Agreement; provided,
however, that (i) if the Disclosure Letter references any other document a copy
of which has not been provided to Purchaser during the due diligence process,
then the matter referencing such document will not operate to modify any
Warranty and (ii) each disclosure contained in the Disclosure Letter will
operate to qualify (a) the Warranties specifically referred to in the Disclosure
Letter by number with respect to such disclosure and (b) except for purposes of
(x) the definitions of the terms "Designated Products", "Pension Schemes",
"Properties" and "Stay Bonus Liabilities" in this Section 1 and (y) the Warranty
in paragraph 25 of Schedule 6.1, other Warranties to the extent that the
applicability of such disclosure to such other Warranties is reasonably apparent
on its face;
"EASPP Notes" means the note in the principal amount of SEK 100,000,000 (the
"First Note") and the note in the principal amount of SEK 252,497,000 (the
"Second Note") and the note referred to in Section 3.5(e) (if any) (the "Third
Note"), each in the agreed form attached as Exhibit I;
"Employee" means any individual employed as of Completion by an Acquired Company
or the French Branch in the conduct of the Business;
"Environmental Laws" means all EU, international, national, state or provincial
or local Laws concerning health, safety or environmental matters which are
applicable to any Acquired
4
<PAGE>
Company, any Property, the Business or any other business conducted by
the Acquired Companies or any predecessor thereto, each as in force and
applicable at or prior to Completion;
"ESM" means the intellectual property rights described in Exhibit B;
"Estimated Acquired Shares Purchase Price" means the sum of $51,952,000, which,
as provided in Section 2.1(e), will be paid by delivery of the EASPP Notes in
substantially the form of Exhibit C;
"Estimated Net Assets" means $50,858,000.
"Event" has the meaning given to such term in Paragraph 1.1 of Schedule 9.1;
"Exhibits" means the Exhibits to this Agreement in the agreed form;
"Exxon Claims" means the claims by Exxon Corporation or any of its Affiliates
referred to in Item 1 of Schedule 7.1(c);
"Final Completion Date Balance Sheet" has the meaning set forth in Section
3.5(c);
"French Asset Agreement" means the agreement in substantially the form of
Exhibit D to be executed and delivered at Completion;
"French Branch" means the sales office of the Business operated out of the
offices of Perstorp France;
"French Branch Assets" means those assets of Perstorp France listed on Schedule
2.1(g);
"French Branch Purchase Price" means the estimated French net assets ($302,000)
plus or minus any difference between this amount and the book value of the
French net assets as of Completion;
"French Branch Service Agreement" means the agreement in substantially the form
of Exhibit J to be executed and delivered at Completion;
"Former Employees" means any individual formerly employed by an Acquired Company
or the French Branch or any predecessor to an Acquired Company or by a company
of which the French Branch was a part whose employment was terminated prior to
or at Completion;
"GAAP" means generally accepted Swedish accounting principles applied on a
consistent basis;
5
<PAGE>
"Governmental Authority" means any EU, international, federal, state or
provincial, local or foreign government or any subdivision, authority,
department, commission, board, bureau, agency, court or other instrumentality
thereof;
"Hazardous Material" means any pollutant, toxic substance, hazardous waste,
hazardous material, hazardous substance, petroleum or petroleum product or
derivative as defined in any Environmental Law or any substance which is
reasonably likely to cause harm (whether now or with the passage of time) to
human health, property or to the environment or to any living organism or
ecological system supported by the environment and (i) is subject to regulation
under any Environmental Law or (ii) may give rise to liability under any
Environmental Law or common law tort concepts;
"Holding Company" means any company which (i) holds a majority of the voting
rights in another company, (ii) has the right to appoint or remove a majority of
such other company s board of directors (or equivalent governing body), or (iii)
controls a majority of the voting rights in another company pursuant to an
agreement with others;
"Indemnified JV Person" has the meaning set forth in Section 7.1(c);
"Indemnified Perstorp Person" has the meaning set forth in Section 7.1(a);
"Indemnified Purchaser Person" has the meaning set forth in Section 7.1(b);
"Individual Shareholders Agreement" means an agreement substantially in the form
of Exhibit E hereto pursuant to which certain individuals will become
shareholders of JV Holdings;
"Intellectual Property" means all intellectual property, including without
limitation patents, trade marks, service marks, collective marks, certification
marks, trade names, design rights, copyright (including rights in computer
software and databases) and moral rights, confidential information, trade
secrets, rights in know-how and other intellectual property rights, in each case
whether registered or unregistered and including applications for the grant of
any of the foregoing and all rights or forms of protection having equivalent or
similar effect to any of the foregoing which may subsist anywhere in the world,
but excluding the name "Perstorp," the Perstorp logo and all intellectual
property rights therein (collectively, the "Perstorp Mark");
"Intellectual Property Agreement" means the agreement executed and delivered at
Completion in the agreed form attached as Exhibit F;
"Last Accounts Date" means April 30, 1996;
"Laws" means any laws, statutes, rules, regulations, ordinances, orders, codes,
treaties having the force of law in the applicable jurisdiction, arbitration or
other alternative dispute resolution awards, judgments, decrees, notices,
directives or other requirements of any Governmental Authority and any judicial
and administrative interpretations thereof;
6
<PAGE>
"Legal Opinion" means the legal opinions to be provided pursuant to Section 3.3
substantially in the form set out in Schedule 3.3;
"Local GAAP" means, in relation to an Acquired Company, the generally accepted
accounting principles, applied on a consistent basis, ordinarily used in
preparation of that Acquired Company's Accounts;
"Losses" means any and all actions, suits, demands, assessments, judgments,
losses, liabilities, damages, Costs and, to the extent recoverable under English
Law, lost profits; provided, however, that for purposes of so determining lost
profits, (i) lost profits are those which are reasonably foreseeable by
reference to the Business as conducted as of Completion and as contemplated to
be conducted thereafter by reference to the projected financial information
furnished by Perstorp to the Purchaser in connection with the transactions
contemplated by this Agreement and attached hereto as Exhibit G to the (the
"Projections") but not limited to the years set forth therein and (ii) lost
profits will exclude losses of future investment opportunities not reflected in
the Projections;
"Material Adverse Effect" means a material adverse change in or to the business,
financial condition, results of operations, assets, operations or prospects of
the Acquired Companies, taken as a whole, but excluding any such effect to the
extent resulting from the seasonal or cyclical nature of the industry in which
the Acquired Companies participate which affect the Acquired Companies and their
competitors in substantially the same manner;
"Net Asset Value" means total assets minus total liabilities, except that, as
shown on Schedule 2.1, the following assets or liabilities will be valued at
zero for purposes of the Net Asset Value as of any date: (i) cash, (ii) Tax
assets, (iii) pension assets or liabilities, (iv) untaxed reserves and (v)
Retained Liabilities;
"Net Assets" means, as of any date, the aggregate amount, expressed in U.S.
dollars, of the Net Asset Value for all of the Acquired Companies on a combined
basis as determined in accordance with GAAP and shown on the balance sheet
included in the Combined Accounts as at the Last Accounts Date (which is
attached to the Disclosure Letter as Appendix 1 and shows a Net Asset Value of
$45,203,000) or the Completion Date Balance Sheet, as the case may be;
"Perstorp Germany" means Perstorp Components GmbH, a corporation incorporated in
Germany, all of the outstanding share capital of which is owned by Perstorp
GmbH, a wholly-owned subsidiary of Perstorp;
"Perstorp Shares" means a number of the shares of JV Holdings equal to the
number of Purchaser Shares, which will be issued to Perstorp GmbH in accordance
with Section 2.1(e);
"Perstorp Shares Purchase Price" means SEK 50,000,000;
"Perstorp Vendor Group" means Perstorp and Perstorp GmbH;
7
<PAGE>
"Perstorp's Accountants" has the meaning set forth in Section 3.5(b);
"Pension Liabilities" means all liabilities and obligations of the Acquired
Companies as of Completion pursuant to the Pension Schemes to make payments or
contributions in respect of Employees or Former Employees;
"Pension Schemes" means the plans listed in Appendix 11 to the Disclosure
Letter;
"Permits" means any licenses, permits, consents, approvals, registrations,
certificates (including without limitation certificates of occupancy) and other
evidence of authority, variance or permission required to be obtained under any
Law or by any Governmental Authority in respect of the conduct of the Business
or any part thereof;
"Pre-Completion Actions" means the actions described on Exhibit H, certain of
which have been taken by Perstorp ("Perstorp's Pre- Completion Actions") and
certain of which have been taken by Purchaser ("Purchaser's Pre-Completion
Actions");
"Properties" means, in the case of each Acquired Company, the real properties,
particulars of which are specified in relation to such Acquired Company in
Appendix 12 to the Disclosure Letter;
"Purchaser" means, collectively, the Purchaser and any direct or indirect wholly
owned (except for directors' qualifying shares) Subsidiaries of the Purchaser
designated by the Purchaser pursuant to Section 2.2 to purchase the Purchaser
Shares;
"Purchaser's Accountants" has the meaning set forth in Section 3.5(b);
"Purchaser Group" means the Purchaser, any Holding Company of the Purchaser and
any Subsidiary of the Purchaser or any such Holding Company (but not including
JV Holdings or any of the Acquired Companies);
"Purchaser Shares" means all of the shares of capital stock of JV Holdings owned
of record and beneficially by Perstorp prior to Completion, which will be
transferred to the Purchaser at Completion pursuant to Section 2.1(a);
"Purchaser Shares Purchase Price" means SEK 50,000,000;
"Registered Rights" means in relation to any Acquired Company any Intellectual
Property which is the subject of registration (or application for registration)
with any competent authority whether in the jurisdiction of incorporation of
that Acquired Company or otherwise having equivalent or similar effect anywhere
in the world;
"Release" means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, storing, transportation, escaping, leaching,
burying, abandoning or disposing into the environment;
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"Relevant Perstorp Executives" means the personnel of Perstorp listed in Part A
to Schedule 1.2;
"Retained Liabilities" means any (i) intercompany obligations not constituting
normal trade payables incurred in the ordinary course of business which are
owing from an Acquired Company to Perstorp or an Affiliate of Perstorp, (ii)
liabilities for borrowed money, Deferred Taxes or Current Taxes, (iii) fees or
penalties arising prior to Completion or as a result of Completion in connection
with any of the Acquired Companies' or Perstorp's bank accounts or overdraft
facilities, and (iv) other liability (including without limitation capital lease
obligations and obligations under interest rate or currency fluctuation
instruments) which, in the case of clause (iv), is required to be reflected as
indebtedness on a combined balance sheet for the Acquired Companies prepared in
accordance with GAAP as of immediately prior to the Last Accounts Date or
Completion, as the case may be;
"Schedules" means the Schedules and Appendices to this Agreement, the Warranties
or the Disclosure Letter, as the case may be, and "Schedule" will be construed
accordingly;
"Security Interest" means any security interest of any nature whatsoever,
including without limitation any mortgage, charge, pledge, lien, assignment by
way of security or other encumbrance and includes the legal concept of any
security interest (of any nature whatsoever) in any jurisdiction;
"Shareholders Agreement" means an agreement between Perstorp GmbH, the Purchaser
and the other parties thereto with respect to JV Holdings and the Acquired
Companies;
"Shares" means the Purchaser Shares, the Perstorp Shares and the Acquired
Companies Shares;
"Stay Bonus Liabilities" means the aggregate amount of the bonus payments to be
made to Employees as described in Appendix 6 to the Disclosure Letter;
"Subsidiary" and "Subsidiaries" means any corporation or other legal entity in
relation to which another Person owns more than 50% of the shares of capital
stock which have ordinary voting power to elect the board of directors (or
equivalent governing body);
"Tax" and "Tax Authority" have the meanings given to them in the Tax Covenant;
"Tax Asset" means a right to repayment in respect of Tax to which any of the
Acquired Companies is entitled in respect of an Event occurring or Accounting
Period (or portion thereof) prior to Completion;
"Tax Covenant" means the provisions relating to taxes set out in Schedule 9.1;
"Tax Return" has the meaning given to such term in Paragraph 1.1 of Schedule
9.1;
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"Termination Agreement" means the agreement executed and delivered at Completion
in the agreed form of Exhibit K;
"Transfer" has the meaning set forth in Section 2.1;
"Vendor Group" means Perstorp and any Subsidiary of Perstorp (but excluding JV
Holdings and any Acquired Company); and
"Warranties" means the representations and warranties of the Perstorp Vendor
Group contained in this Agreement or any document delivered pursuant to this
Agreement, including without limitation the Warranties set out in Schedule 6.1.
1.2 In this Agreement, unless the context otherwise requires:
(a) references to "Persons" will include individuals, bodies corporate (wherever
incorporated), unincorporated associations, joint ventures, partnerships and
other legal entities, including without limitation Governmental Authorities;
(b) the headings are inserted for convenience only and will not affect the
construction of this Agreement;
(c) any reference to a Law or an enactment is a reference to it as from time to
time amended, consolidated or re-enacted (with or without modification) and
includes all instruments or orders made under such Law or enactment;
provided, however, that references to "Environmental Laws" are referenced to
such Laws as in force and applicable at or prior to Completion;
(d) any reference to a document in or substantially in the agreed form is to the
form of the relevant document agreed between the parties and for the purpose
of identification initialed by each of them or on their behalf (in each case
with such amendments as may be agreed by or on behalf of Perstorp and the
Purchaser);
(e) references to any legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any other legal
concept will, in respect of any jurisdiction other than England, be deemed
to include the legal concept which in that jurisdiction most nearly
corresponds to the English legal term;
(f) references to $ are to United States dollars;
(g) references to Sections, Schedules or Exhibits are to Sections, Schedules or
Exhibits of or to this Agreement, the Warranties or the Disclosure Letter,
as the case may be;
(h) each term defined in this Agreement has the meaning assigned to it;
(i) "or" is disjunctive but not necessarily exclusive;
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(j) words in the singular include the plural and vice versa;
(k) no provision of this Agreement will be interpreted in favor of, or against,
any of the parties hereto by reason of the extent to which any such party or
its counsel participated in the drafting thereof or by reason of the extent
to which any such provision is inconsistent with any prior draft hereof;
(l) any reference to "share of capital stock," "share capital" or "loan stock"
will be deemed to include the term most closely approximating such terms in
the applicable jurisdiction;
(m) any reference to any word, term of art or legal concept recognized under
English law will be deemed to include the word, term of art or legal concept
most closely approximating the legal meaning or effect of the same in the
applicable jurisdiction;
(n) the Recitals, the Schedules, Exhibits and documents in the agreed form are
part of the operative provisions of this Agreement and references to this
Agreement will, unless otherwise expressly stated, include references to
such Recitals, Schedules, Exhibits and documents;
(o) each of the Warranties expressed to be given "to Perstorp's knowledge" or
"so far as Perstorp is aware" or otherwise qualified by reference to the
knowledge or awareness of Perstorp or the Perstorp Vendor Group will be
deemed to include a further warranty that Perstorp or the Perstorp Vendor
Group have made reasonable enquiries of the Relevant Perstorp Executives;
and
(p) as used herein, where the context requires, the term "Perstorp" shall
include any member of the Perstorp Vendor Group and the term "Purchaser"
shall include any Subsidiary of the Purchaser listed on Schedule 2.1, it
being understood that this clause (p) will not be interpreted to limit the
obligations of Perstorp or the Purchaser.
2. PURCHASE AND SALE
2.1 In connection with Completion:
(a) Immediately following the execution and delivery of this Agreement, Perstorp
will sell, transfer, assign and deliver (collectively, "Transfer") all of
the Purchaser Shares to the Purchaser free from all Security Interests,
options, equities, claims or other third-party rights (including rights of
pre-emption) of any nature whatsoever, together with all rights attaching to
them, except as otherwise provided for in the Shareholders Agreement.
(b) The Purchaser will pay to Perstorp, in respect of the Purchaser Shares, the
Purchaser Shares Purchase Price.
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(c) Perstorp GmbH will (i) Transfer all of the Acquired Companies Shares to JV
Holdings free from all Security Interests, options, equities, claims or
other third-party rights (including rights of pre-emption) of any nature
whatsoever, together with all rights attaching to them, and otherwise in
accordance with Schedule 2.1, and (ii) pay to JV Holdings, in respect of the
Perstorp Shares, the Perstorp Shares Purchase Price.
(d) JV Holdings will (i), in consideration for the Transfer of the Acquired
Companies Shares, pay to Perstorp GmbH the Estimated Acquired Companies
Purchase Price by the delivery of the EASPP Notes, and (ii), in
consideration of the payment of the Perstorp Shares Purchase Price, issue
and deliver the Perstorp Shares to Perstorp GmbH free from all Security
Interests, options, equities, claims or other third-party rights (including
rights of pre-emption) of any nature whatsoever, together with all rights
attaching to them, except as otherwise provided for in the Shareholders
Agreement.
(e) Perstorp will deliver the Computer Software Agreement and the other
documents required to be delivered by it pursuant to Section 3.3 and the
Purchaser will deliver the documents required to be delivered by it pursuant
to Section 3.3.
(f) The Purchaser and Perstorp, respectively, will each sell to the respective
individuals named on Schedule 2.1(h) a number of shares of JV Holdings equal
to 0.1% of the issued shares, in accordance with Schedule 2.1(h) and each
such individual will enter into an Individual Shareholders Agreement.
(g) Perstorp France will transfer the French Branch Assets to Components Belgium
pursuant to the French Asset Agreement.
(h) JV Holdings will cause Components Belgium to pay to Perstorp France pursuant
to the French Asset Agreement the French Branch Purchase Price.
2.2 Perstorp hereby consents to the Purchaser's nomination of one or more wholly
owned (except for directors' qualifying shares) Subsidiaries of Purchaser listed
on Schedule 2.2 to purchase the Purchaser Shares.
2.3 The Acquired Companies Shares Purchase Price (including any payment required
under Section 3.5) will be allocated among the Shares in accordance with
Schedule 2.1 and the actions specified on Schedule 2.1 will be taken as of
Completion or as otherwise specified in Schedule 2.1. If any payment is made by
Perstorp to the Purchaser in respect of any breach of this Agreement (including
without limitation any payment pursuant to any Claim), the payment will be
treated for tax purposes as set forth in Paragraph 2.4 of the Tax Covenant.
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3. COMPLETION
3.1 A meeting will be held to consummate the transactions contemplated by
Section 2.1 and other actions to be taken at Completion at the offices of Jones,
Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York immediately
following the execution and delivery of this Agreement.
3.2 Completion shall be deemed to take place following the receipt by Perstorp
of the Estimated Acquired Shares Purchase Price in accordance with Section 3.3.
3.3 In connection with Completion:
(a) Perstorp will deliver to the Purchaser the evidence of authority of
Perstorp, Perstorp GmbH, Perstorp France and Components Belgium to perform
its respective obligations under this Agreement and each of the other
documents to be executed by such party in connection with the transactions
contemplated hereby, the authority of the signatories thereof, and matters
pertaining to the Transfer of the Purchaser Shares and Acquired Companies
Shares and French Branch Assets, all as set forth in Schedule 3.3.
(b) The Purchaser will deliver to Perstorp a copy of a resolution of its board
of directors (certified by a duly appointed officer as true and correct)
authorizing the execution of and performance by the Purchaser of its
obligations under this Agreement and each of the other documents to be
executed by it in connection with the transactions contemplated hereby and
the authority of the signatories thereof.
(c) Perstorp will deliver to the Purchaser letters of resignation signed in the
agreed form by each Person described in Schedule 3.3.
(d) The Purchaser will deliver to Perstorp in relation to the Purchaser, and
Perstorp will deliver to the Purchaser in relation to the Perstorp Vendor
Group, the Legal Opinions from counsel in the jurisdictions specified in
Schedule 3.3 substantially in the agreed form attached to Schedule 3.3.
(e) Perstorp, the Purchaser or the other parties thereto will execute and
deliver the Computer Software Agreement, the Intellectual Property
Agreement, the French Asset Agreement, the French Branch Service Agreement
and the Termination Agreement.
(f) The parties thereto will complete the transactions contemplated to be
completed under the French Asset Agreement.
3.4 At Completion, the payments contemplated by Section 2.1 shall be made by
electronic transfer in immediately available funds to such accounts as the payee
shall have, not later than five Business Days prior to Completion, notified to
the payor. The payments made in accordance with this Section 3.4 will constitute
a good discharge for the Purchaser, JV Holdings and Components Belgium of their
respective cash payment obligations under Section
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2.1 and the Purchaser, JV Holdings and Components Belgium will not be
responsible for seeing that the funds are applied in payment to any particular
Affiliate of Perstorp.
3.5(a) As used herein, the "Completion Date Balance Sheet" means a balance
sheet which fairly presents the Net Assets on a combined basis
immediately prior to Completion, prepared in accordance with GAAP, in a
manner consistent with the preparation of the Accounts as of the Last
Accounts Date, combined on the same bases as used in preparing the
Combined Accounts and otherwise in accordance with Schedule 3.5;
provided, however, that such Completion Date Balance Sheet will in all
events (i) reflect the amount of all Stay Bonus Liabilities and (ii) be
prepared using the same currency translation rates used in preparing the
Combined Accounts as of the Last Accounts Date.
(b) The Purchaser and Perstorp will cooperate with the objective of agreeing
upon a Completion Date Balance Sheet which sets forth their agreed upon
determination of Net Assets as of Completion and the amount of the
post-Completion adjustment payable by Perstorp or JV Holdings, as the
case may be, all in accordance with Schedule 3.5(c). Without limiting
the generality or effect of the foregoing, Purchaser will permit
Perstorp's auditing and accounting representatives to be present at any
physical inventory counting carried on in connection with the
preparation of the Completion Date Balance Sheet. If the Purchaser and
Perstorp have been unable so to agree within 60 calendar days after
Completion, then on or prior to the 70th calendar day after Completion
the Purchaser will deliver to Perstorp a draft Completion Date Balance
Sheet setting forth the Purchaser's determination of the Net Assets as
of Completion and the amount of the post-Completion adjustment payable
pursuant to this Section 3.5. Perstorp will then review such draft
Completion Date Balance Sheet during the 45 calendar day period
immediately following such delivery by the Purchaser. During all such
periods, Perstorp, the Purchaser and their respective authorized
representatives (including without limitation Ernst & Young, or such
other internationally recognized independent public accounting firm
(other than Arthur Andersen & Co. ("AA") or Deloitte & Touche ("DT")) as
Perstorp shall designate in writing to the Purchaser ("Perstorp's
Accountants"), and AA, or such other internationally recognized
independent public accounting firm (other than Perstorp's Accountants or
DT) as the Purchaser shall designate in writing to Perstorp
("Purchaser's Accountants"), will be entitled to review, during normal
business hours, the books, records and work papers of the Purchaser,
Perstorp and the Acquired Companies (to the extent such books, records
and work papers relate to the Business) to prepare or review the draft
Completion Date Balance Sheet and the Purchaser and Perstorp will
otherwise cooperate with each other and with each other's authorized
representatives in connection with such preparation or review. Without
limiting the generality or effect of any other provision hereof, each of
Perstorp and the Purchaser will (i) provide the other parties hereto and
their authorized representatives access during normal business hours to
their respective facilities, personnel and books and records to the
extent relating to the Business and determined in good faith by such
party to be necessary to permit, in the case of the Purchaser, the
Purchaser and its authorized representatives to
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prepare the draft Completion Date Balance Sheet as herein provided and
to permit, in the case of Perstorp, Perstorp and its authorized
representatives to review the information upon which the draft
Completion Date Balance Sheet is based, and in each case to ask
reasonable questions and receive answers thereto with respect to the
Completion Date Balance Sheet; provided, however, that Perstorp and the
Purchaser will conduct any such review and questioning in a manner that
does not unreasonably interfere with the other party's conduct of its
businesses after Completion, (ii) take such actions as may be reasonably
requested by the other party to close, or to assist in closing, as of
Completion, the books and accounting records relating to the Business,
and (iii) otherwise reasonably cooperate with each other and the
representatives of the other party hereto in the preparation or review
of the draft Completion Date Balance Sheet. Following the completion of
Perstorp's review of the draft Completion Date Balance Sheet furnished
to it by the Purchaser, Perstorp will notify the Purchaser in writing
whether Perstorp accepts the Purchaser's computation of Net Assets as of
Completion or disagrees therewith, such notification to be made no later
than the last day of Perstorp's 45-day review period described above. If
Perstorp disagrees therewith by a notice timely made as aforesaid, it
will furnish to the Purchaser as part of such notice a draft adjusted
Completion Date Balance Sheet and computation of Net Assets as of
Completion which (i) sets forth in reasonable detail the adjustments to
the draft Completion Date Balance Sheet furnished to Perstorp by the
Purchaser and (ii) specifies in reasonable detail Perstorp's basis for
its disagreement with the Purchaser's computation (such draft adjusted
Completion Date Balance Sheet the "Adjusted Completion Date Balance
Sheet"). If Perstorp fails so to express its disagreement within such
45-day period, then the draft Completion Date Balance Sheet will
constitute the Completion Date Balance Sheet for purposes of this
Agreement and Perstorp will be deemed to have accepted the Purchaser's
computation of Net Assets as of Completion and the post-Completion
adjustment derived therefrom in accordance with Section 3.5(d).
(c) If, within 45 calendar days after the date of Perstorp's delivery of the
draft Adjusted Completion Date Balance Sheet, the Purchaser determines
in good faith that such computation is inaccurate, the Purchaser will
give notice to Perstorp within such 45-day period (i) setting forth the
Purchaser's determination of Net Assets as of Completion and (ii)
specifying in reasonable detail the Purchaser's basis for its
disagreement with Perstorp's computation. If the Purchaser fails so to
express its disagreement within such 45-day period, then the Adjusted
Completion Date Balance Sheet will constitute the Completion Date
Balance Sheet for purposes of this Agreement and the Purchaser will be
deemed to have accepted Perstorp's computation of Net Assets as of
Completion. Any amount that is not in dispute will be promptly paid by
the party obligated to make such payment hereunder to the party entitled
to receive such payment hereunder. If the Purchaser and Perstorp are
unable to resolve any disagreement between them within 10 calendar days
after the giving of notice of such disagreement, the items in dispute
will be referred for determination to the principal dispute resolution
unit of DT (the "Accountants") as promptly as practicable. The
Accountants will make a determination (the "Accountants' Determination")
as to each of the items in
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dispute, which determination will be (i) in writing, (ii) furnished to
each of the parties hereto as promptly as practicable after the items in
dispute have been referred to the Accountants, (iii) made in accordance
with GAAP and this Agreement, and (iv) conclusive and binding upon each
of the parties hereto. Each of the parties hereto will use reasonable
efforts to cause the Accountants to render their decision as soon as
practicable, including without limitation by promptly complying with all
reasonable requests by the Accountants for information, books, records
and similar items. Neither party will disclose to the Accountants, and
the Accountants will not consider for any purpose, any settlement offer
made by either party. After the resolution of all outstanding disputes,
the parties will cause to be prepared a calculation of Net Assets as of
Completion that reflects the final resolution of all outstanding issues
(the "Final Completion Date Balance Sheet"). The Final Completion Date
Balance Sheet will supersede all prior versions thereof for purposes of
this Agreement. All Costs and expenses of the Accountants will be shared
equally by JV Holdings and Perstorp.
(d) To the extent that the Estimated Net Assets is less than the Net Assets
determined or accepted, as the case may be, as provided in this Section
3.5, the Acquired Shares Purchase Price will be reduced by the amount of
such difference, and Perstorp will, within 10 calendar days after the
final determination or acceptance, as the case may be, of the actual Net
Assets as of Completion pursuant to this Section 3.5, make payment to JV
Holdings by wire transfer in immediately available funds of the amount
of such difference, together with interest thereon, from Completion to
the date of payment (at a rate equal to LIBOR plus 0.5%, calculated on
the basis of the actual number of days elapsed over 365), to such
account as has been designated by the Purchaser.
(e) To the extent that the Estimated Net Assets is more than the Net Assets
determined or accepted, as the case may be, as provided in this Section
3.5, (i) the Acquired Shares Purchase Price will be increased by the
amount of such difference and (ii) JV Holdings will, within 10 calendar
days after the final determination or acceptance, as the case may be, of
the actual Net Assets as of Completion (x) to the extent such payment is
permitted by the terms of JV Holdings' indebtedness for borrowed money,
make payment to Perstorp GmbH by wire transfer in immediately available
funds of the amount of such difference and (y) to the extent such
payment is not so permitted, a note substantially in the form of Exhibit
__ (the "Third Note") will be issued by JV Holdings to Perstorp GmbH in
the principal amount of such difference not paid as provided herein. The
Third Note will be subordinated to the extent necessary to obtain the
bank financing contemplated in Schedule 3.6 to the Shareholders
Agreement.
(f) Intercompany obligations not constituting normal trade payables incurred
in the ordinary course of business which are owing from Perstorp or any
Affiliate of Perstorp to an Acquired Company, or owing from an Acquired
Company to Perstorp or an Affiliate of Perstorp, will be settled as
specified in Schedule 2.1.
(g) As part of the process contemplated by this Section 3.5, the amount of
the Retained Liabilities as of Completion will be verified. Any
disagreement with respect thereto
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will be settled in the manner described above. Any net changes in the
amount of the Retained Liabilities at Completion compared to the
estimate thereof in Schedule 2.1 (aggregating $18,921,000) will be
verified in connection with the preparation of the Completion date
Balance Sheet and paid by Perstorp or JV Holdings, as the case may be,
as provided in Section 3.5 (d) or (e).
4. PURCHASER'S UNDERTAKINGS
4.1 The Purchaser warrants to the Perstorp Vendor Group that the execution and
delivery of this Agreement by Purchaser and the consummation of the transactions
contemplated hereby by Purchaser have, where required, been duly and validly
authorized and no other corporate proceeding or corporate action on the part of
the Purchaser is necessary to authorize this Agreement or to consummate the
transactions so contemplated. Prior to this Agreement, the Purchaser took, or
caused to be taken, Purchaser's Pre-Completion Actions.
4.2 The Purchaser agrees that, notwithstanding any breach of the Warranties or
of this Agreement, following Completion it will have no right of termination or
rescission in respect of any claims arising under or in connection with the
Warranties or this Agreement except for fraudulent misrepresentation and will
not be entitled to treat Perstorp as having repudiated this Agreement except for
fraudulent misrepresentation. The sole remedies for any breach of any of the
Warranties, any other breach of this Agreement by the Perstorp Vendor Group or
any event giving rise to liability under the Tax Covenant will be
indemnification as herein provided or an action for damages, specific
performance or injunctive relief, and the Purchaser will not be entitled to
rescind this Agreement, except for fraudulent misrepresentation.
5. OTHER UNDERTAKINGS
Insofar as any Acquired Company uses the word "Perstorp" (the "Perstorp Mark")
in its corporate name or on its notepaper, stationery, vehicles, promotional
material or products manufactured or distributed by it, JV Holdings undertakes
to Perstorp (on its own behalf and as trustee for all members of the Vendor
Group) to procure that each Acquired Company shall (i) cease such use from and
at all times after the date being six months after Completion and (ii)
notwithstanding any other provisions of this Agreement, not take any action
reasonably identified to such Acquired Company by Perstorp which would result in
the invalidation of the Perstorp Mark (or any intellectual property rights
therein) or materially impair Perstorp's rights in and to the Perstorp Mark;
provided, however, that until the sixth-month anniversary of Completion, JV
Holdings and any Acquired Company will have a royalty-free, non-exclusive
license to use and consume inventory and supplies and otherwise to use the
Perstorp Mark in the conduct of the Business substantially as conducted as of
Completion. If six months after Completion there continues to be inventory or
supplies of the Business which include any Perstorp Mark, the parties will use
reasonable endeavors to agree to a reasonable extension of the period in
relation to such inventory or supplies. JV Holdings will indemnify, defend and
hold harmless Perstorp (for itself and the Perstorp Vendor Group) from and
against any and all Losses suffered or incurred by Perstorp and the Perstorp
Vendor Group relating to, resulting from or arising out of any third-party claim
arising in whole or in part out of the use
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of any Perstorp Mark by the Acquired Companies (or any of them) after Completion
pursuant to this Section 5.1. As promptly as practicable after Completion, JV
Holdings will, by action of its shareholders, use reasonable efforts to adopt
and cause each Acquired Company to adopt a new corporate name which does not
include the name "Perstorp" therein, such adoption to have taken place no later
than 60 days after Completion.
6. WARRANTIES
6.1 Perstorp represents and warrants, for itself and on behalf of the Perstorp
Vendor Group, (a) to JV Holdings as to each matter set forth in Schedule 6.1
(other than in paragraphs 34 through 39, including without limitation as to each
matter set forth in Annex 1 to Schedule 6.1 which sets forth particular
representations relating to some or all of the Acquired Companies) and (b) to
the Purchaser as to each matter set forth in paragraphs 34 through 39 in
Schedule 6.1. Perstorp acknowledges that JV Holdings and the Purchaser have
entered into this Agreement in reliance upon the respective Warranties given to
each of them. The Warranties (a) are given as of Completion and (b) are subject
to the limitations of Section 7 to the extent set forth in Section 7.
6.2 Each of the Warranties will be construed as a separate warranty and (save as
expressly provided to the contrary) will not be limited or restricted by
reference to or inference from the terms of any other Warranty or any other term
of this Agreement or any document entered into pursuant to this Agreement.
6.3 The rights and remedies of the Purchaser and JV Holdings in respect of the
Warranties will not be affected by (i) Completion (except as provided in Section
4.2), (ii) any due diligence or other review conducted by or on behalf of the
Purchaser or JV Holdings or any information furnished to or obtained by it
(other than as provided in the Schedules or the Disclosure Letter), or (iii) any
other event or matter whatsoever, other than a specific and duly authorized
written waiver or release executed by the Purchaser or JV Holdings, as the case
may be.
7. INDEMNIFICATION; LIMITATIONS ON CLAIMS
7.1 Indemnification Covenant
(a) From and after Completion, the Purchaser will indemnify, defend and hold
harmless the Perstorp Vendor Group and their respective officers, directors,
employees and representatives and any Affiliate of any of the foregoing
(collectively, the "Indemnified Perstorp Persons") from and against any and
all Losses suffered or incurred by any such Person, directly or indirectly,
relating to, resulting from or arising out of any breach of, or
misrepresentation in, the representations, warranties and covenants by the
Purchaser contained in this Agreement.
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(b) From and after Completion, the Perstorp Vendor Group will, jointly and
severally indemnify, defend and hold harmless the Purchaser, other members
of the Purchaser Group and their respective officers, directors, employees
and representatives (collectively the "Indemnified Purchaser Persons") from
and against any and all Losses suffered or incurred by any such Person,
directly or indirectly, relating to, resulting from or arising out of (i)
any and all liabilities and obligations of JV Holdings relating to
pre-Completion activities of JV Holdings which are asserted against any
Indemnified Purchaser Person, (ii) on the terms of Section 7.1(c) (subject
to Section 7.2) mutatis mutandis to the extent that any third party claim in
respect of which an Indemnified JV Person would be entitled to recover
pursuant to Section 7.1(c) is asserted successfully against such Indemnified
Purchaser Person, (iii) from and against any failure by the Perstorp Vendor
Group to perform any of their respective covenants or obligations to the
Purchaser or agreements with the Purchaser contained in this Agreement, and
(iv) any breach by the Perstorp Vendor Group of any of the Warranties set
forth in paragraphs 34 through 39.
(c) From and after Completion, the Perstorp Vendor Group will, jointly and
severally indemnify, defend and hold harmless JV Holdings, each Acquired
Company, and their respective officers, directors, employees and
representatives and any Affiliate of the foregoing, but excluding any
Indemnified Purchaser Person (collectively, the "Indemnified JV Persons")
from and against any and all Losses suffered or incurred by any such Person,
directly or indirectly, relating to, resulting from or arising out of (i)
the failure of the Perstorp Vendor Group to perform any of their respective
covenants, obligations or agreements contained in this Agreement, (ii) any
breach by the Perstorp Vendor Group of any of the Warranties, other than the
Warranties set out in paragraphs 34 through 39, (iii) any of the Retained
Liabilities to the extent such Retained Liabilities were not reflected on
the Completion Date Balance Sheet or the subject of any adjustment pursuant
to Section 3.5, (iv) any product manufactured or sold by any Acquired
Company, the French Branch, or any Affiliate (not being a member of the
Purchaser's Group) or predecessor of any of the foregoing, that is not a
Designated Product, (v) any liability to third parties arising out of any
business that was sold or otherwise disposed of, or dissolved, liquidated or
otherwise terminated, by JV Holdings or any Acquired Company, or any
Affiliate (not being a member of the Purchaser's Group) or predecessor
thereof, prior to Completion, (vi) any property (including without
limitation any land, plant, equipment or other facility and any operations
or Releases thereon or therefrom) (A) owned, leased or operated by any
Acquired Company, the French Branch, or any Affiliate or predecessor of any
of the foregoing prior to but not as of Completion, or (B) owned or leased
by such Person as of Completion, but no longer used in the Business by any
Acquired Company, (vii) any liability arising under any indemnification or
other provision under any Contract pursuant to which any business or
property described in clauses (v) or (vi) above was acquired, sold,
dissolved, liquidated or otherwise disposed of or terminated or arising
under any Law in connection with any such acquisition, sale, dissolution,
liquidation or other disposition or termination, (viii) any matter described
on Schedule 7.1(c), (ix) any claim arising out of the sale of shares of
Tanum Komponent AB, including,
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without limitation, any breach of any covenant not to compete or similar
obligation or (x) the employment of Mr. Daenen by Components Belgium, and
(xi) any Stay Bonus Liabilities not reflected on the Completion Date Balance
Sheet. The provisions of Section 7.1(c)(i) through 7.1(c)(xi) are
independent and not exclusive and any limitation herein applicable to a
Claim under one such provision and not to another such provision will not
apply to the latter provision, except as otherwise provided herein. JV
Holdings is taking the benefit of the Warranties and the indemnities set
forth above for itself and as trustee for and on behalf of the Acquired
Companies.
7.2 Operation and Limitations on Indemnification
(a) The provisions of Sections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10(a), 7.11
and 7.12 will, to the exclusion of the remaining provisions of Section 7 of
this Agreement, operate to limit or reduce any Claim for a breach of the
Warranties (other than Paragraphs 4, 14 and 17 of the Warranties (the
"Perpetual Warranties") and any Claim relating thereto pursuant to Section
7.1(c)(ii)).
(b) The provisions of Sections 7.3, 7.4, 7.6, 7.7(a), 7.9, 7.10(a), 7.11 and
7.12 will, to the exclusion of the remaining provisions of Section 7 of this
Agreement, operate to limit or reduce the liability of the Perstorp Vendor
Group in respect of all Claims for breach of the Perpetual Warranties and
any Claim relating thereto under Section 7.1(c)(ii).
(c) The provisions of Sections 7.9 and 7.11 will, to the exclusion of the
remaining provisions of Section 7 of this Agreement, operate to limit or
reduce the liability of the Perstorp Vendor Group in respect of Claims
pursuant to Section 7.1(b)(i) and 7.1(c)(iii).
(d) The provisions of Sections 7.8 (to the extent that the Claim under Sections
7.1(b)(iv), (v), (vi) or (vii) arises out of a matter which is within the
scope of Paragraphs 19, 20 or 20.1 of the Warranties), 7.9, 7.10(a), 7.11
and 7.13 will, to the exclusion of the remaining provisions of Section 7 of
this Agreement, operate to limit or reduce the liability of the Perstorp
Vendor Group in respect of Claims pursuant to Sections 7.1(b)(iv), (v), (vi)
and (vii).
(e) The provisions of Sections 7.3(b), 7.6, 7.7(b) and (c), 7.8 (to the extent
that the Claim under Section 7.1(c)(viii) arises out of a matter which is
within the scope of Paragraphs 19, 20 or 20.1 of the Warranties) or any
matters listed in item 3 of Schedule 7.1(c) (an "Environmental Claim"), 7.9,
7.10(a), 7.11, 7.14 (except where the Claim is an Environmental Claim) and
7.15 will, to the exclusion of the remaining provisions of Section 7 of this
Agreement, operate to limit or reduce the liability of the Perstorp Vendor
Group in respect of Claims pursuant to Section 7.1(c)(viii).
(f) The provisions of the Tax Covenant will not operate to limit or reduce the
liability of the Perstorp Vendor Group in respect of any breach of the
Warranties relating to
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Taxes, and as to all matters subject to the Tax Covenant, the provisions of
the Tax Covenant will be applied without regard to this Section 7.
(g) The Perstorp Vendor Group will not be liable to any Indemnified Purchaser
Person for any Losses which consist solely of diminution in the value of the
shares of JV Holdings or any Acquired Company or loss of investment
opportunity.
7.3 Specific Disclosure; Reserves. The Perstorp Vendor Group will not be liable
for any Claim for breach of Warranty in respect of any fact, matter, event or
circumstance to the extent:
(a) except in relation to any breach of the Warranties relating to Taxes, such
fact, matter, event or circumstance has been disclosed in the Disclosure
Letter, the Schedules or the Exhibits so long as a copy of any document
referenced in such disclosure has been provided to Purchaser prior to the
date hereof and the matter disclosed refers by number to the specific
Warranty at issue or the applicability of such disclosure to the specific
Warranty at issue is reasonably apparent on its face; or
(b) a specific reserve or specific accrual for such fact, matter, event or
circumstance has been made in the Completion Date Balance Sheet to the
extent that such specific reserve or specific accrual was not made in the
Last Accounts.
Nothing herein will limit any covenant of the parties hereunder, including
without limitation the Tax Covenant and any covenant providing for indemnity
(other than indemnity for breach of Warranty).
7.4 Survival of Warranties. Except for the Perpetual Warranties, the Perstorp
Vendor Group will not be liable for any Claim in respect of a breach of any of
the Warranties unless an Indemnified Purchaser Person or Indemnified JV Person
has given written notice of such Claim in reasonable detail, including such
Person's estimate, to the extent then reasonably practicable, of the amount
thereof, on or before April 30, 1998. The Perpetual Warranties will survive
Completion for the period of the respective statute of limitations applicable
thereto.
7.5 Hurdle and Basket. The Perstorp Vendor Group will not be liable for any
Claim for breach of any of the Warranties (other than the Perpetual Warranties),
(a) in respect of any individual Claim or series of related Claims arising from
similar facts or circumstances, unless the amount thereof exceeds $10,000, and
(b) unless the aggregate amount of such Claims exceeds $600,000, in which event
the Perstorp Vendor Group will be liable only for the amount of such excess. For
the avoidance of any doubt, amounts claimed for which the Perstorp Vendor Group
has no liability by virtue of clause (a) above will not be capable of being
aggregated with other claims for the purposes of clause (b), and the foregoing
limitations will not apply to any Claim for indemnification other than a Claim
under Section 7.1(b)(ii).
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7.6 Cap. The aggregate liability of the Perstorp Vendor Group in respect of all
Claims for breaches of Warranties under Sections 7.1(c)(ii) and 7.1(c)(viii)
(but not any other provision of Section 7.1(c)) will not in any event exceed
$65,218,000, increased or decreased, as the case may be, by the amount of any
change in the Net Assets determined in accordance with Section 3.5; provided,
however, that the aggregate liability of Perstorp and the Vendors for all Claims
in respect of the matters listed on Item 3 of Schedule 7.1(c) will not exceed
$3,000,000.
7.7 Other Limitations. The Perstorp Vendor Group will not be liable in respect
of any Claim:
(a) to the extent (but only to the extent) that any such Claim arises or is
increased as a result of:
(i) any change in Law made after Completion; or
(ii) any change after Completion in any accounting policy of any
Acquired Company;
(b) to the extent of the proceeds of any recovery actually received by any
Indemnified JV Person under any policy of insurance procured on or after
Completion and applicable to JV Holdings or the relevant Acquired Company in
respect of the subject matter of such Claim or any part thereof (reduced by
the costs of collection, including without limitation all attorneys' and
other professionals' fees and expenses, any deductible, self-retention,
captive retention, co-pay or similar arrangements and any retrospective or
other premium adjustments resulting therefrom (collectively, "Costs of
Recovery" save where such costs are borne by Perstorp pursuant to clause
(ii) in the proviso to this sentence)), Perstorp hereby acknowledging,
subject to clause (ii) in the proviso of this sentence, that all decisions
as to whether to pursue any such insurance recovery are to be made by any
Indemnified JV Person in the sole discretion of the Indemnified JV Person
and that all decisions as to the processing of insurance claims are to be
handled in accordance with Schedule 9.2 and otherwise in the ordinary course
of business of the Indemnified JV Person; provided, however, that (i)
following the giving of a notice of a Claim, at the request of Perstorp, JV
Holdings will furnish Perstorp information in reasonable detail as to the
scope of insurance maintained applicable to the Indemnified JV Person to
whom such Claim relates, and (ii) if Perstorp determines in good faith that
any such insurance applies to reduce the Loss to which such Claim relates,
then JV Holdings will, or will cause the relevant Indemnified JV Person to,
take such actions as Perstorp may reasonably request, including without
limitation executing appropriate powers of attorney and instruments of
subrogation, to allow Perstorp to recover under any such insurance in
respect of such Loss or portion thereof, provided, that all Costs of
Recovery are reimbursed by Perstorp to JV Holdings or, at JV Holdings'
option, paid to the relevant Indemnified JV Person by Perstorp five days
before such Costs of recovery becomes due and payable to any third party.
Nothing in the immediately preceding proviso will, however, diminish or
otherwise affect Perstorp's obligation to
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indemnify any Indemnified JV Person pursuant to any provision of this
Agreement without prejudice to any rights of Perstorp under this Section
7.7(b).
(c) based upon a liability which is contingent until such contingent liability
becomes an actual liability or an Indemnified Purchaser Person incurs any
Loss as a result thereof; provided, however, that if any Indemnified
Purchaser Person gives notice of the contingent liability describing such
contingent liability in reasonable detail based on the information then
reasonably available to the Purchaser before the expiration of the relevant
period ("Survival Period") within which Claims may be notified to Perstorp
pursuant to Sections 7.4, 7.13 or 7.15 (as the case may be), the Indemnified
Purchaser Person may thereafter make a Claim or initiate proceedings in
respect thereof, so long as such Claim is initiated within 18 months of the
later of (i) the giving of such notice and (ii) the expiration of the
applicable Survival Period, provided further, however, that for all purposes
of this Agreement, any Loss relating to, resulting from or arising out of
the subject matter of any Claim or proceedings so initiated will constitute
a Loss whether arising prior to or after notice thereof is given as
aforesaid or the initiation of such Claim or proceedings.
7.8 Remediation
(a) To the extent that a breach of Paragraphs 19, 20 or 20.1 of the Warranties
or any Environmental Claim is capable of remedy in whole or in part, no
Indemnified JV Person or Indemnified Purchaser Person will be entitled to
indemnification under Section 7.1(c)(ii) as to any portion thereof which is
so capable of remedy until an Indemnified JV Person or Indemnified Purchaser
Person has given written notice of such breach in accordance with Section
7.8(b) and (i) Perstorp has not elected to remedy such breach in accordance
with Section 7.8(c)(ii) or (ii) if Perstorp has elected to remedy such
breach in accordance with Section 7.8(c)(ii), such breach is not remedied by
Perstorp following such election as soon as reasonably possible. To the
extent a breach of Paragraphs 19, 20 or 20.1 or any Environmental Claim is
not capable of remedy in whole or in part, the Indemnified JV Persons and
Indemnified Purchaser Person will be entitled to indemnification in
accordance with Section 7.1 without regard to the provisions of this Section
7.8.
(b) Following Completion, JV Holdings will procure that notice of a breach of
Paragraphs 19, 20 or 20.1 of the Warranties or any Environmental Claim
(which notice must be in reasonable detail to the extent then reasonably
practicable) is given to Perstorp as promptly as practicable after any
managing director of any Acquired Company, but only as to the Acquired
Company as to which he or she is a Managing Director (such Managing
Directors, collectively, "Responsible JV Executives") has actual knowledge
of facts which a reasonable person (having knowledge of this Agreement)
would believe reasonably likely to impose liability on Perstorp pursuant to
the indemnification provisions of this Agreement; provided, however that (i)
any failure so to notify Perstorp will not relieve the Perstorp Vendor Group
of any liability in respect of the matter except to the extent that the
Perstorp Vendor Group is actually prejudiced, and
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(ii) that the burden of proving the existence and extent (if any) of such
prejudice shall be borne by the Perstorp Vendor Group.
(c) Following receipt by Perstorp of a notice from JV Holdings in accordance
with Section 7.8(b):
(i) the Purchaser and JV Holdings will on Perstorp's reasonable request
allow, and will cause the relevant Acquired Company reasonably to
allow, Perstorp and its advisors to investigate the fact, matter or
circumstance alleged to give rise to the Claim and, subject to the
Purchaser, JV Holdings and the relevant Acquired Company being paid all
reasonable costs and out-of-pocket expenses, to have such copies as
Perstorp may reasonably request of any documents or other information
in the possession of the Purchaser, JV Holdings or the relevant
Acquired Company (other than documents and information which are
confidential, privileged, subject to the attorney's work product
doctrine or otherwise protected against disclosure, unless Perstorp and
the Purchaser agree in writing to joint defense privilege protection)
which relate to the alleged Claim; and
(ii) Perstorp will be entitled to elect by written notice within 30 calendar
days of receipt of the Purchaser's notice in accordance with Section
7.8(b) to remedy the fact, matter or circumstance referred to in JV
Holdings' notice, provided that Perstorp shall have given to each
Indemnified JV Person or Indemnified Purchaser Person an undertaking
reasonably acceptable to the Purchaser in which Perstorp
unconditionally confirms its obligations (subject to the limitations on
liability hereunder) to indemnify and hold harmless each Indemnified JV
Person or Indemnified Purchaser Person from and against any and all
Losses suffered or incurred by any such Person, directly or indirectly,
relating to, resulting from or arising out of such fact, matter or
circumstance and such remediation.
(d) Following receipt by the Purchaser of a notice from Perstorp in accordance
with Section 7.8(c)(ii), the Purchaser and JV Holdings will, and each
Indemnified JV Person and Indemnified Purchaser Person, will use reasonable
efforts to:
(i) allow, and cause the relevant Acquired Company to allow, Perstorp and
its advisors reasonable access to the Assets for the purposes of
remedying the fact, matter or circumstance in respect of which a notice
has been given to the Purchaser in accordance with Section 7.8(c)(ii);
(ii) provide Perstorp all material information in the possession or control
of the Purchaser Group or JV Holdings which reasonably relates to the
relevant fact, matter or circumstance (other than information which is
confidential, privileged, subject to the attorney's work-product
doctrine or otherwise protected against disclosure, unless Perstorp, JV
Holdings and the Purchaser agree in writing to
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joint defense privilege protection) and material information which
subsequently comes into the possession or control of the Purchaser
Group which reasonably relates to such fact, matter or circumstances
(except as aforesaid); and
(iii) subject to Perstorp paying all reasonable costs and out-of-pocket
expenses of any Indemnified JV Person or Indemnified Purchaser Person,
as the case may be, take all such actions as Perstorp may reasonably
request to assist Perstorp and its advisors in relation to the
remediation undertaken by Perstorp pursuant to Section 7.8(c)(ii).
(e) To the extent a matter constituting a breach of Paragraphs 19, 20 or 20.1 of
Schedule 6.1 also constitutes a breach of another Warranty in Schedule 6.1
or gives rise to a Claim pursuant to Section 7.1(c)(iv), (v), (vi) or (vii),
and an Indemnified JV Person or Indemnified Purchaser Person makes a Claim
in respect of such matter pursuant to Section 7.1(c)(ii) with respect to
such other Warranty or pursuant to Section 7.1(c)(iv), (v), (vi) or (vii),
Section 7.8 will be applicable to such Claim solely in respect of such
matter.
7.9 Subsequent Recoveries. Following Completion, if any amount is paid in
discharge of all or part of any Claim and such amount (or part thereof) is
subsequently recovered by the Purchaser, JV Holdings or any Acquired Company
(whether by payment, discount, credit, set-off or otherwise) from an unrelated
third party in respect of the matter in relation to which the Claim was made,
the Purchaser will, or will procure that the relevant Acquired Company will, to
the full extent permitted by Law, forthwith repay to Perstorp a sum
corresponding to such amount recovered from the third party less all
obligations, retrospective or other premium adjustments, costs and expenses
(including without limitation attorney's and other fees and expenses) of such
recovery and less the net tax cost to the Purchaser or the relevant Acquired
Company of such recovery.
7.10 Third-Party Claims; Exxon Claims. (a) Following Completion, if the
Purchaser receives notice of any third-party claims against any Indemnified
JV Person or any Indemnified Purchaser Person as to which such Indemnified
JV Person or any Indemnified Purchaser Person intends to submit a request
for indemnity hereunder, the Purchaser will procure that notice of that fact
is given to Perstorp as soon as reasonably practicable after a Responsible
JV Executive has received actual knowledge of facts which a reasonable
person (having knowledge of this Agreement) would believe reasonably likely
to impose liability on Perstorp pursuant to the indemnification provisions
of this Agreement (but any failure to notify in accordance with this Section
will not relieve the Perstorp Vendor Group of liability in respect of such
Claim to the extent that the Perstorp Vendor Group is not actually
prejudiced thereby) and, as regards any such claim, will not compromise or
settle any such claim without the consent of Perstorp (such consent not to
be unreasonably withheld or delayed). Following Completion, the Purchaser
and JV Holdings will take or procure the taking of (subject to Perstorp
paying all reasonable costs and out-of-pocket expenses and confirming
without qualification its obligations fully to indemnify in respect of such
Claim) all such actions as Perstorp may reasonably request to contest, or
otherwise in connection with, the claim or
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liability and will make available to Perstorp all such information (other
than information which is confidential, privileged, subject to the
attorney's work-product doctrine or otherwise protected against disclosure,
unless Perstorp, JV Holdings and the Purchaser agree in writing to joint
defense privilege protection or Perstorp otherwise agrees to maintain the
confidentiality of such information in a manner reasonably sufficient to
protect it against disclosure) and assistance as may reasonably be requested
by Perstorp in respect of such claim or liability, all at Perstorp's sole
cost and expense. If so required by Perstorp in writing, Perstorp will have
the right, if it wishes (and has confirmed without qualification its
obligation fully to indemnify each Indemnified JV Person or any Indemnified
Purchaser Person hereunder) to control any relevant proceedings and the
Purchaser and JV Holdings will retain counsel and/or accountants chosen by
Perstorp and reasonably satisfactory to the Purchaser to proceed on behalf
of each Indemnified JV Person or Indemnified Purchaser Person (at the
expense of Perstorp) in relation to any such Claim in accordance with the
instructions of Perstorp and give to such counsel and/or accountants all and
every assistance and information as they may require except as aforesaid.
Perstorp will not be liable in respect of any Claim to the extent it is
settled or compromised in breach of this Section 7.10, provided that
Perstorp has confirmed without qualification its obligation fully to
indemnify each Indemnified JV Person or any Indemnified Purchaser Person and
is actually prejudiced by such settlement or compromise.
(b) The provisions of this Section 7.10(b) shall apply in relation to the Exxon
Claims in substitution for those set out in Section 7.10(a).
(i) Perstorp will have the right (at its sole expense) to full conduct of
each Exxon Claim, in the name of the relevant Indemnified Purchaser
Person, and will be entitled to compromise or agree to settle such
Exxon Claim without the consent of such Indemnified Purchaser Person,
provided the compromise or settlement imposes no obligation on, nor
results in the waiver of any rights of, any Indemnified Purchaser
Person and provided further that nothing herein will diminish or
otherwise affect the rights of any Indemnified Purchaser Person to
indemnity under Section 7.1(c) in respect of any Loss arising therefrom
or any other Exxon Claim;
(ii) the Purchaser will:
(A) procure that Perstorp is notified of each new Exxon Claim as soon
as reasonably practicable after any Responsible JV Executive
obtains actual knowledge thereof;
(B) procure that Perstorp receives, as soon as reasonably practicable,
copies of all written communications and the substance of all
material oral communications pertaining to each Exxon Claim (other
than information which is confidential, privileged, subject to the
attorney's work-product doctrine or otherwise protected against
disclosure, unless Perstorp, JV Holdings and the Purchaser agree
in writing to joint defense privilege protection or Perstorp
otherwise agrees to maintain the confidentiality of
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such information in a manner reasonably sufficient to protect it
against disclosure);
(C) procure that Perstorp is provided with all such assistance as
Perstorp may reasonably request in connection with the Exxon
Claims including reasonable access to employees of any of the
Acquired Companies having direct knowledge of the underlying facts
relating thereto and copies of any documents or other information
in their possession (other than information which is confidential,
privileged, subject to the attorney's work-product doctrine or
otherwise protected against disclosure, unless Perstorp, JV
Holdings and the Purchaser agree in writing to joint defense
privilege protection (or Perstorp otherwise agrees to maintain the
confidentiality of such information in a manner reasonably
sufficient to protect it against disclosure);
(D) procure that no Indemnified Purchaser Person accepts, settles,
compromises or otherwise binds Perstorp in respect of any Exxon
Claim without the prior written consent of Perstorp to be given or
withheld in its sole discretion); and
(iii) the obligations of the Purchaser under 7.10(b)(ii) above are subject
to each Indemnified Purchaser Person being indemnified by Perstorp in
respect of all Losses incurred by such Person in connection therewith
and such obligation shall not apply to the extent any such Indemnified
Purchaser Person is required to act otherwise by any Governmental
Authority or court of competent jurisdiction or other tribunal. Breach
of the obligations under Section 7.10(b)(ii) will not relieve Perstorp
of any liability under this Agreement save to the extent that Perstorp
is able to demonstrate that Perstorp is actually prejudiced thereby it
being understood that the burden of proving the existence and extent
(if any) of such prejudice shall be borne by Perstorp.
7.11 No Double Recovery. The Indemnified JV Persons and Indemnified Purchaser
Persons will not be entitled to recover in respect of (i) any Claim more than
once in respect of any matter to the extent that to do so would constitute
double recovery, or (ii) any Retained Liability to the extent that the Acquired
Shares Purchase Price has been reduced thereby.
7.12 Prior Writeoffs. In calculating the liability of Perstorp in respect of any
Claim relating to the accounts receivable or inventory of any Acquired Company,
applying the accounting policies, principles and practices adopted in relation
to preparation of the Last Accounts (and ignoring the effect of any change in
Law made after Completion), such Claim will be reduced to the extent that any
account receivable or inventory specifically written off in the Completion Date
Balance Sheet has been actually recovered (net of any related costs) prior to
the payment of such Claim and not previously credited (pursuant to this
sentence) against a Claim relating to the accounts receivable or inventory of
any Acquired Company. For purposes of the preceding sentence, (a) recoveries of
accounts receivable may not be credited
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against claims relating to inventories or recoveries of inventories credited
against claims relating to accounts receivable, and (b) write-ups of accounts
receivable or inventories shall not constitute actual recoveries of such assets.
7.13 General Ten Year Limit. The Perstorp Vendor Group will not be liable for
any Claim with respect to a matter described in clauses (iii), (iv) or (v) of
Section 7.1(c) or in Schedule 7.1(c) unless an Indemnified JV Person shall have
given written notice of such Claim in reasonable detail, including such Person's
estimate, to the extent reasonably practicable, of the amount thereof, on or
before November 30, 2006.
7.14 Specific Indemnity Basket. With respect to any Claims for indemnity under
Section 7.1(c)(viii), other than Claims in respect of matters listed in Item 3
of Schedule 7.1(c), the Perstorp Vendor Group will be liable for:
(i) 50% of the first $600,000 of Losses to which such Claims relate; and
(ii) 100% of all other Losses to which such Claims relate; it being
understood that in no event will the aggregate exposure of all Indemnified JV
Persons with respect to Losses to which Claims for indemnification under Section
7.1(c)(viii) relate exceed $300,000 and that nothing herein affects the
limitations on liability under Section 7.6.
7.15 Specific Indemnity Time Limits. The Perstorp Vendor Group will not be
liable for any Claim under Section 7.1(c)(viii) unless an Indemnified Purchaser
Person has given written notice of the Claim in reasonable detail, including
such Indemnified Purchaser Person's estimate, to the extent reasonably
practicable, of the amount thereof, (x) on or before February 28, 2010 in
respect of any Claim under Section 7.1(c)(viii) in respect of such matter
described in Item 1 of Schedule 7.1(c) and (y) on or before November 30, 2006 in
respect of any other Claim under Section 7.1(c)(viii).
7.16 Notification of Certain Claims. Purchaser and JV Holdings, respectively,
will each give written notice to Perstorp of any matter of which it becomes
aware as to which it intends to make a Claim in respect of the Perpetual
Warranties or any matter described in clauses (iv), (v), (vi), (vii) or (viii)
of Section 7.1(c) as promptly as practicable after an executive officer of the
Purchaser (which for this purpose means solely Collins & Aikman Products Co.) or
a Responsible JV Executive which a reasonable person (having knowledge of this
Agreement) would believe, reasonably likely to impose liability on the Perstorp
Vendor Group pursuant to the indemnification provisions of this Agreement;
provided, however, that (i) any failure so to notify the Perstorp Vendor Group
will not relieve the Perstorp Vendor Group of any liability in respect of the
matter except to the extent that Perstorp is actually prejudiced in obtaining
any recovery with respect to such Claim from a third party and (ii) that the
burden of proving the existence and extent (if any) of such prejudice shall be
borne by Perstorp.
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8. PERSTORP'S ACCESS TO INFORMATION
8.1 Following Completion, the Purchaser and JV Holdings will allow, and will
cause the relevant Acquired Company to allow, Perstorp and its accountants and
other professional advisers to investigate the matter or circumstances alleged
to give rise to any Claim and whether and to what extent any amount is payable
in respect of such Claim pursuant to the terms of this Agreement and, subject to
their being paid all reasonable out-of-pocket costs and expenses, to have such
copies as Perstorp may reasonably request of any documents or other information
in the possession of the Purchaser, JV Holdings or the relevant Acquired Company
(other than documents and information which are confidential, privileged,
subject to the attorney's work-product doctrine or otherwise protected against
disclosure, unless the parties have agreed in writing to joint defense privilege
protection, the terms of which the parties will negotiate in good faith or
Perstorp otherwise agrees to maintain the confidentiality of such information in
a manner reasonably sufficient to protect it against disclosure).
8.2 Following Completion, as soon as reasonably practicable after making a
Claim, the Purchaser or JV Holdings will provide to Perstorp all material
information in the possession or control of the Purchaser Group, JV Holdings or
any Acquired Company which relates or may relate to the Claim (other than
information which is confidential, privileged, subject to the attorney's work-
product doctrine or otherwise protected against disclosure, unless the parties
have agreed in writing to joint defense privilege protection or Perstorp
otherwise agrees to maintain the confidentiality of such information in a manner
reasonably sufficient to protect it against disclosure) and as soon as
reasonably practicable thereafter will provide (a) any material information
which subsequently comes into the possession or control of the Purchaser Group,
JV Holdings or any Acquired Company which relates or may relate to the Claim
(except as aforesaid) and (b) any material information in the possession or
control of the Purchaser Group which subsequently becomes relevant to the Claim
(except as aforesaid).
8.3 Following Completion, after making a Claim, the Purchaser or JV Holdings
will provide reasonable access to such employees of the Purchaser Group, JV
Holdings or any Acquired Company as Perstorp may reasonably request to discuss
the Claim until such Claim is withdrawn, settled or determined (Perstorp to pay
or promptly reimburse the Purchaser, JV Holdings or any Acquired Company, as the
case may be, for the actual out-of-pocket expenses incurred by any such
employees in so doing).
9. OTHER COVENANTS
9.1 The provisions of Schedule 9.1 relating to the Tax Covenant will have effect
on and from Completion.
9.2 The provisions of Schedule 9.2 relating to Insurances will have effect on
and from Completion.
9.3 Effective as of Completion, (a) except as set forth in clauses (b) and (c)
below and in the agreements specified in Section 3.3(e), Perstorp will procure
that all existing agreements,
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arrangements and understandings between members of the Perstorp Vendor Group and
any of the Acquired Companies will terminate, (b) for a period of twelve months
after Completion, each member of the Perstorp Vendor Group and each Acquired
Company will continue the supply arrangements described in Appendix 28 to the
Disclosure Letter (including the executory Contracts listed thereon) on the same
financial terms (without pass through of any manufacturing or raw material cost
increases except to the extent such cost increases are traditionally passed
through in accordance with standard industry practice (which exception shall not
apply to the change in materials required to be made by Perstorp Germany to
remedy the problem with front floor mats disclosed in paragraph 24 of the
Disclosure Letter)) as are in effect at Completion (i) so long as the product
and/or service supplied pursuant to such arrangements satisfy all customer
relevant quality standards and other requirements and (ii) provided that all
such terms are consistent in all material respects with the Warranty set forth
in Paragraph 28 of the Warranties (provided, however, that the financial terms
will only be deemed to be changed in a material respect for the purposes hereof
if they have been changed in a manner adverse to the relevant Acquired Company
since September 1, 1995) and the parties will take all reasonable steps to
provide that such supply arrangements are formalized as soon as practicable
after Completion on non-financial terms and conditions mutually acceptable to
the parties, (c) the existing Nedcar collaboration/arrangement between
Components Sweden and Perstorp Germany will continue indefinitely so long as it
does not result in any detrimental economic or business impact on any of the
Acquired Companies, it being acknowledged that the continuation of such Nedcar
collaboration/arrangement shall not constitute any such detrimental economic or
business impact unless (i) the quality of the products supplied thereto or the
services provided by Perstorp Germany fail in any material respect to meet
current or future quality or service standards, (ii) Perstorp Germany fails to
perform in any material respects its obligations to supply such products in a
timely manner or (iii) Components Sweden incurs costs and expenses (other than
minor incidental costs and expenses) in maintaining such arrangement not
consistent with prior practices and Perstorp does not reimburse Components
Sweden for such costs and expenses within a reasonable period of time after
being requested to make such reimbursement, and (d) each member of the Vendor
Group will be deemed without further action to have waived all claims, rights
and causes of action whatsoever against all directors, officers, employees and
agents of any of the Acquired Companies, in respect of any act or failure to act
prior to Completion, including without limitation, any misrepresentation,
inaccuracy or omission in or from any information or advice supplied by such
persons or other action taken or omitted to be taken in connection with this
Agreement or the preparation of the Disclosure Letter, provided that nothing in
this Section 9.3(d) will exclude, or constitute a waiver of any liability for
embezzlement or theft of assets, (ii) collusion by any such person with the
Purchaser to defraud Perstorp or any of the Acquired Companies in connection
with this Agreement or the transactions contemplated by this Agreement, or (iii)
any rights of any Acquired Company against any such person. Notwithstanding any
other provision hereof, any such Person will not be an Indemnified JV Person for
purposes of Section 7.1(c) in respect of any matter described in clauses (d)(i)
and (ii) of the immediately preceding sentence (but nothing in this sentence
will limit the rights of any other Indemnified JV Person).
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9.4 Perstorp, on behalf of itself and each other member of the Vendor Group,
hereby agrees that any restriction in favor of Perstorp or such other member of
the Vendor Group prohibiting or restricting any third party from supplying any
inventory, supplies, service or other Property or right (including without
limitation intellectual property rights) used in the Business post-Completion,
including without limitation the restriction applicable to any third party with
respect to the manufacture or sale of products (or components thereof) using ESM
Technology, is hereby irrevocably waived as to Purchaser and its Affiliates,
including without limitation the Acquired Companies.
9.5 In the event that any item that would constitute Intellectual Property
Rights, as that term is defined in the Intellectual Property License Agreement,
is owned, or the right to use thereof is held, by Perstorp or any other member
of the Vendor Group other than Perstorp Germany, Perstorp will, or will cause
such other member of the Vendor Group to, take such action as Purchaser may
request in order to vest in each C&A Company (as that term is defined in the
Intellectual Property License Agreement) such rights, if any, in respect of such
Intellectual Property Rights as the C&A Companies would have had had Perstorp or
such other member of the Vendor Group been a party to the Intellectual Property
Rights Agreement from the date thereof and such item constituted Intellectual
Property thereunder provided that each C&A Company will agree to be bound by
such conditions in relation to such rights as would have applied in such
circumstances.
10. ENTIRE AGREEMENT
10. This Agreement and the documents referred to herein set out the entire
agreement and understanding among the parties in respect of the issuance, sale
and purchase of the Shares and the French Branch Assets. No party has entered
into this Agreement in reliance upon any representation, warranty or undertaking
of any other party which is not expressly set out in this Agreement or any other
document referred to herein. Notwithstanding the foregoing, nothing in this
Agreement will exclude any liability for fraudulent misrepresentation.
11. VARIATION AND ASSIGNMENT
11.1 No variation of this Agreement (or of any of the documents referred to
herein) will be valid unless it is in writing and signed by or on behalf of each
of the parties hereto. The expression "variation" will include any amendment,
variation, supplement, deletion or replacement however effected.
11.2 No party may assign or delegate all or any of its rights or obligations
hereunder without the prior written consent of the other party, except that, as
contemplated by Section 2.2, the Purchaser may assign or delegate any of its
rights or obligations hereunder to any wholly owned (except for directors'
qualifying shares) Subsidiary of the Purchaser; provided, however, that no such
delegation will relieve the Purchaser of any of its obligations hereunder to
Perstorp.
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12. ANNOUNCEMENTS
12. The initial press releases announcing this Agreement will be in
substantially such forms as each of the parties previously furnished to the
other.
13. COSTS
13. Each of the parties hereto will pay its own Costs incurred in connection
with the negotiation, preparation and, subject to Sections 7.1 and 7.2,
implementation of this Agreement. The Purchaser will pay all stamp duty and
stamp duty reserve tax (if any) and other tax on the transfer of the Purchaser
Shares and Perstorp will pay all stamp duty and stamp duty reserve tax (if any)
and any other tax on the transfer of the Perstorp Shares and the Acquired
Companies Shares. This Section 13 will not affect any Warranties regarding Taxes
or the Tax Covenant. Perstorp France will pay and be responsible for, or will
reimburse Components Belgium for the payment of, any and all Taxes (as defined
in Schedule 9.1), transfer duties, excises or charges imposed by any
Governmental Authority, and all recording or filing fees, notarial fees and
other similar costs, incurred or imposed with respect to the Transfer of the
French Branch Assets.
14. INVALIDITY
14. If any provision of this Agreement is held to be invalid or unenforceable,
then such provision will (so far as it is invalid or unenforceable) be given no
effect and will be deemed not to be included in this Agreement but without
invalidating any of the remaining provisions of this Agreement. The parties will
then use all reasonable endeavors to replace the invalid or unenforceable
provisions by a valid provision the effect of which is as close as possible to
the intended effect of the invalid or unenforceable provision.
15. COUNTERPARTS
15. This Agreement may be entered into in any number of counterparts and by the
parties to it on separate counterparts, each of which, when executed and
delivered, will be an original, but all the counterparts will together
constitute one and the same instrument.
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16. REGISTRATION
16. No provision of this Agreement (or of any agreement or arrangement of which
this Agreement forms part) which is subject to registration under the provisions
of any legislation in any jurisdiction will take effect until particulars of
this Agreement (or such other agreement or arrangement) have been registered in
accordance with the terms of such legislation.
17. NOTICES
17.1 Any notice or other communication required or permitted to be given under
this Agreement will be in writing and signed by or on behalf of the party giving
it and may be served by hand delivery, delivery by a recognized multinational
courier service such as UPS, DHL or Federal Express, or transmission by
facsimile to the address and for the attention of the relevant party set out in
Section 17.2 (or as otherwise notified from time to time hereunder). Any notice
so delivered will be deemed to have been received:
(a) in the case of fax, 12 hours after the time of dispatch; and
(b) in the case of hand delivery or delivery by courier service, upon such
delivery.
17.2 The addresses of the parties for the purpose of Section 17.1 are as
follows:
Perstorp or Perstorp GmbH:
Name: Perstorp AB
Address: S-284 80
Perstorp, Sweden
For the attention of: Mr. Mats Tuner
Fax: 0046 43 53 88 13
With copies to: 1. Mannheimer Swartling
Box 1384
S-251 13 Helsingborg
Sweden
For the attention of: Ragnar Lindqvist
Fax: 0046 42 18 42 71
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2. Freshfields
65 Fleet Street
London EC4Y 1HS
For the attention of: Jonathan Rees
Fax: 011 44 171 832 7001
The Purchaser or, following Completion, JV Holdings:
Name: Collins & Aikman Products Co.
Address: 701 McCullough Drive
Charlotte, North Carolina 28262
For the attention of: Mr. J. Michael Stepp
Fax: (704) 548-2330
With copies to: Collins & Aikman Products Co.
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Address: 210 Madison Avenue, 6th Floor
New York, New York 10016
For the attention of: Elizabeth R. Philipp, Esq.
Fax: (212) 578-1269
And to: Jones, Day, Reavis & Pogue
Address: 599 Lexington Avenue
New York, New York 10022
For the attention of: Robert A. Profusek, Esq.
Fax: (212) 755-7306
17.3 In proving such notice, it will be sufficient to prove that the envelope
containing such notice was properly addressed and delivered to the address shown
thereon or that the facsimile transmission was made; provided, however, that, in
the case of facsimile transmission, hand delivery or delivery by a recognized
multinational courier service such as UPS, DHL or Federal Express is made on the
parties hereto (but not the lawyers contemplated to receive copies) within five
Business Days thereof.
18. GOVERNING LAW AND JURISDICTION
18.1 This Agreement will be governed by and construed in accordance with the
laws of England, without giving effect to the principles of conflict of laws
thereof.
18.2 Except as specifically provided in Section 3.5, all disputes arising in
connection with the Agreement will be finally and exclusively settled under the
Rules of Arbitration of the International Chamber of Commerce, by three
Arbitrators appointed in accordance with those Rules. The place of arbitration
will be in London, England. The language of the arbitration will be English.
19. FURTHER ASSURANCE
19.1 The Perstorp Vendor Group, the Purchaser and JV Holdings will each do, or
procure to be done, all such further acts and things and execute, and procure
the execution of, all such documents as may from time to time reasonably be
required, whether on or after Completion, for the purpose of giving effect to
the provisions of this Agreement and each hereto agrees to use reasonable
efforts to take, or cause to be taken, to do, or cause to be done, all things
necessary, proper or advisable to consummate the transaction contemplated
hereby, including obtaining all necessary waivers, consents and approvals.
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19.2 At any time following Completion, either Perstorp or the Purchaser may
require the other as promptly as practicable to cause the Perstorp Vendor Group
and Perstorp Germany or each buyer listed as such on Schedule 2.2, as
applicable, to execute and deliver to the requiring party a legally binding
undertaking satisfactory to the requiring party, in its reasonable judgment, to
perform all of its obligations under this Agreement as if it were a party hereto
as of Completion, provided, however, that any such undertaking will terminate as
to any member of the Perstorp Vendor Group, Perstorp Germany, or any such buyer
at such time as such company is no longer a Subsidiary of Perstorp or the
Purchaser, as the case may be; provided further, however, that no such
undertaking or termination thereof will in any way diminish or limit any
liability or obligation of Perstorp or the Purchaser hereunder.
20. PARENT COMPANY GUARANTEES
20.1 Perstorp guarantees the performance by JV Holdings prior to Completion and
Perstorp GmbH, Perstorp France and Components Belgium of all of their respective
obligations under or pursuant to this Agreement and the Shareholders Agreement
(including any documents of transfer or otherwise entered into pursuant to the
terms of this Agreement and the Shareholders Agreement).
20.2 The Purchaser guarantees the performance by any Subsidiary of Purchaser to
whom Purchaser assigns or delegates any of its rights or obligations under or
pursuant to this Agreement and the Shareholders Agreement (including any
documents of transfer or otherwise entered into pursuant to the terms of this
Agreement and the Shareholders Agreement).
20.3 The liability of Perstorp and the Purchaser under their respective
guarantees under Sections 20.1 and 20.2 respectively shall not be discharged or
impaired by any amendment to or variation of this Agreement, any release of or
granting of time or other indulgence to any party hereto or any third party or
any other act, event or omission which but for this Section would operate to
impair or discharge the liability of Perstorp or the Purchaser under their
respective guarantees.
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AS WITNESS this Agreement has been signed on behalf of the parties the day and
year first before written.
PERSTORP AB
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature:
Full Name:
Address:
Occupation:
PERSTORP GMBH
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature:
Full Name:
Address:
Occupation:
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. Michael Stepp
Name:
Title:
in the presence of:
Witness Signature:
Full Name:
Address:
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Occupation:
PERSTORP BIOTEC AB
By:
Name:
Title:
in the presence of:
Witness Signature:
Full Name:
Address:
Occupation:
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SCHEDULE 6.1
The Warranties
Accounts
1. (a) Attached to the Disclosure Letter as Appendix 1 are the Accounts and a
reconciliation of Local GAAP to be used in preparing the Accounts to GAAP used
in preparing the Combined Accounts (where applicable), and showing all matters
referred to in Appendix 1 to the Disclosure Letter. The Accounts have been
prepared in accordance with GAAP, or, where indicated, Local GAAP, consistently
applied throughout the periods indicated, except as otherwise noted therein, and
present fairly, in all material respects, the financial position of the Acquired
Companies and the Business, at the dates indicated and the results of operations
of the Acquired Companies and the Business for the periods stated therein. The
Accounts as of and for the fiscal years ending August 31, 1994 and August 31,
1995 (other than the supplemental consolidating information described as
unaudited therein) have been audited by the independent accountants whose
reports are included in Schedule 6.1.1. The Accounts as of and for the eight
months ended the Last Accounts Date include statements approving their use and
confirming that the accounting principles followed were the same as for the
audited Combined Accounts and Accounts. The Combined Accounts include a schedule
setting forth exchange rates used for translating all non-U.S. Dollar
denominated accounts.
(b) There are no liabilities, fixed or contingent, relating to, resulting
from or arising out of the Business except for (i) liabilities reflected in, or
for which reserves are reflected in, the balance sheet included within the
Combined Accounts as of the Last Accounts Date (which reserves are adequate
under GAAP or, as applied to Accounts of a particular Acquired Company, Local
GAAP, if applicable), (ii) liabilities incurred in the ordinary course of
business of the Business since the Last Accounts Date, none of which,
individually or in the aggregate, is material in amount or to the continued
conduct of the Business as presently conducted, and all of which will be
discharged prior to Completion or will be reflected in the Completion Date
Balance Sheet and (iii) Retained Liabilities listed in Schedule 2.1.
(c) Set forth in the independent accountants' reports included in Schedule
6.1.1 and Appendix 1 to the Disclosure Letter is a description of the accounting
policies, procedures and practices with respect to reserves relating to
inventory and receivables which were used in the preparation of the Accounts,
and such reserves are adequate under GAAP or, as applied to Accounts of a
particular Acquired Company, Local GAAP, if applicable.
(d) The Combined Accounts have been accurately extracted from the Accounts.
(e) Set forth in Appendix 1 to the Disclosure Letter is a list as of the
Last Accounts Date of (i) all intercompany obligations not constituting normal
trade payables incurred in the ordinary course of business which are owing from
Perstorp or any Affiliate of Perstorp to an Acquired Company, or owing from an
Acquired Company to Perstorp or any Affiliate of
<PAGE>
Perstorp and, separately, (ii) all intercompany obligations constituting normal
trade payables incurred in the ordinary course of business which are owing from
Perstorp or any Affiliate of Perstorp to an Acquired Company, or owing from an
Acquired Company to Perstorp or any Affiliate of Perstorp.
Books and Records
2. The books and records of the Acquired Companies are up to date and in all
material respects accurately reflect, in accordance with Local GAAP, their
assets and liabilities and material transactions entered into by them. There are
no additional sets of books, duplicate sets, "second sets" or other documents or
records of the Acquired Companies kept by or for the Acquired Companies which
purport to show the financial condition of the Business. The stock records and
stock ledgers of each of the Acquired Companies are complete and up to date and
all books and records of the proceedings of the stockholders, directors and
committees of each of the Acquired Companies reflect all material proceedings to
date of the respective stockholders, directors and committees thereof.
Position since Last Accounts Date
3. Since the Last Accounts Date, (a) the Business has been conducted only in the
ordinary course thereof, consistent with past practice, and (b) there has been
no Material Adverse Effect, nor to the best knowledge of Perstorp have any
events occurred nor to the best knowledge of Perstorp do there exist any
circumstances which might reasonably be expected to result, either before or
after Completion, in any such Material Adverse Effect. Between the Last Accounts
Date and the date of this Agreement, there has not occurred any material
deterioration in any Acquired Company's relations with Employees, Former
Employees, unions, suppliers, customers, joint venture partners or licensors of
Intellectual Property. Since the Last Accounts Date, no Acquired Company has
taken any action:
(a) to declare, pay or make any dividend or other distribution (whether in cash
or otherwise);
(b) except as expressly contemplated by this Agreement, to allot, issue,
purchase or redeem, or agree to allot, issue, purchase or redeem, any share
capital or capital stock, any option, right or warrant relating to share
capital or capital stock or any loan capital;
(c) to increase or agree to increase the remuneration, fees or compensation
payable to any of its directors, officers, employees or agents (except for
increases to non-executive personnel in the ordinary course of business or
non- discretionary increases pursuant to Contracts listed on Appendix 6 to
the Disclosure Letter) or enter into any employment Contract with respect to
the performance of personal services (other than the Acquired Companies'
standard terms of employment) which is not terminable at will without any
Acquired Company incurring any liability as a result of such Contract or
termination;
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(d) to create or suffer to exist any Security Interest on any assets other than
Permitted Security Interests;
(e) to transfer, license or otherwise dispose of any Assets, or agree to
Transfer, license or otherwise dispose of any Assets, except for sales of
inventory and dispositions of obsolete equipment, in each case, in the
ordinary course of business;
(f) to make (or agree to make) any payment other than routine payments in the
ordinary and usual course of trading; or
(g) to enter into any foreign exchange or interest rate contracts or other
speculative instruments, other than in the ordinary course of business
consistent with past practice.
The Acquired Companies Shares/Purchaser Shares
4.
(a) The Acquired Companies Shares and the Purchaser Shares listed on Appendix 4
to the Disclosure Letter represent all of the issued and outstanding shares
of capital stock or share capital of the Acquired Companies and JV Holdings,
respectively. The Acquired Companies Shares are duly authorized, validly
issued and outstanding, fully paid or credited as fully paid and
nonassessable and are owned beneficially and of record by Perstorp GmbH free
and clear of any and all Security Interests, shareholder agreements, voting
trusts or other rights of any third party in respect thereof. The Purchaser
Shares are duly authorized, validly issued and outstanding, fully paid or
credited as fully paid and nonassessable and are owned beneficially and of
record by Perstorp free and clear of any and all Security Interests,
shareholder agreements, voting trusts or other rights of any third party in
respect thereof.
(b) There are no outstanding subscriptions, options, warrants, calls, rights,
agreements or commitments relating to the issuance, sale, purchase or
redemption of any shares of capital stock of any Acquired Company. None of
the Acquired Companies Shares or the Purchaser Shares has been issued in
violation of, or is subject to, any preemptive rights or other Contract
except for this Agreement, and there are no outstanding convertible or
exchangeable securities, calls or options relating to any Acquired Companies
Shares or the Purchaser Shares or that may require any Acquired Company or
JV Holdings to issue to any person or entity any shares of its capital
stock. There are no voting trust agreements or other Contracts restricting
the voting, dividend rights or disposition of any Acquired Companies Shares
or of the Purchaser Shares.
(c) Immediately prior to Completion, Perstorp GmbH will own the Acquired
Companies Shares free and clear of all Security Interests, or other rights
in or to any Acquired Companies Shares, and will transfer its entire right,
title and interest in and to the Acquired Companies Shares to JV Holdings.
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(d) Immediately prior to Completion, Perstorp will own the Purchaser Shares free
and clear of all Security Interests, or other rights in or to any Purchaser
Shares, and will transfer its entire right, title and interest in and to the
Purchaser Shares to the Purchaser.
(e) Except as set forth on Appendix 4 to the Disclosure Letter, no Acquired
Company, directly or indirectly, owns (beneficially or of record) any stock
or other ownership interests in, or controls, any other legal entity.
The Acquired Companies' Assets
5. Prior to the date hereof, Perstorp has made available to the Purchaser
copies of the most recent asset registers of the Acquired Companies and the
French Branch Assets prepared in the ordinary course of business. Except as
listed or described in Appendix 5 to the Disclosure Letter, the Assets
include all the tangible and intangible personal property owned or used by
the Acquired Companies or by Perstorp France with respect to the French
Branch, in the conduct of the Business as presently conducted and the
Acquired Companies have (except with respect to the French Branch Assets, as
to which Perstorp France has), and immediately after Completion will have, a
contractual right or title to the Assets constituting tangible and
intangible personal property free and clear of all Security Interests or
other rights in and to such Assets, other than (a) Security Interests that
are listed or described on Appendix 5 to the Disclosure Letter, (b)
mechanics', carriers', workmen's, repairmen's or other like Security
Interests arising by operation of Law, incurred in the ordinary course of
business and reflected in the Completion Date Balance Sheet, (c) Security
Interests for taxes, assessments and other governmental charges (1) which
are not due and payable or which may thereafter be paid without penalty or
(2) which are being contested in good faith and are reflected in the Last
Accounts, (d) Security Interests arising under worker's compensation,
unemployment insurance and similar laws, and (e) other minor imperfections
of title or encumbrances, if any, which (i) do not in any material respect
affect the marketability or value of the property subject thereto and (ii)
in all events do not impair the use of the property subject thereto in the
Business as presently conducted. (The items referred to in clauses (a)
through (e) of the immediately preceding sentence are herein referred to as
"Permitted Security Interests".) Except as set forth on Appendix 5 to the
Disclosure Letter, the Assets constituting tangible personal property used
by the Acquired Companies and the French Branch in the conduct of the
Business as presently conducted are, in all material respects having regard
to their age and usage, in good condition, normal wear and tear excepted,
are regularly maintained in good order, are capable of being used for their
intended purpose for the duration of their expected life, and are adequate
to satisfy all customer quality standards in all material respects and
comply with all safety requirements imposed under applicable Law in all
material respects.
Contractual Matters
6.1 Except as listed or described in Appendix 6 to the Disclosure Letter, no
Acquired Company is a party or bound to any Contract that is of a type described
below:
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(a) any purchase or supply Contract under which any Acquired Company has an
obligation exceeding $50,000 or any sales Contract which will, by virtue of
the acquisition of the Shares by the Purchaser, result in such third party
being relieved of any obligation or becoming entitled to exercise any right
of termination or any right of payment, pre- emption or other option
thereunder (whether with or without notice);
(b) any Contract which requires or may require, or confers any right to require,
the issue of any share capital or shares of its capital stock now or at any
time in the future;
(c) any guarantee, indemnity or suretyship by it in respect of the obligations
of any third party (including Perstorp and Affiliates of Perstorp), except
for guarantees of obligations of Employees listed on Appendix 6 to the
Disclosure Letter;
(d) any employment, severance, consulting or other Contract with an Employee or
Former Employee whose annual remuneration exceeds $100,000;
(e) any Contract with any Employee or Former Employee providing for any bonus,
stock option, stock ownership, stock purchase, stock appreciation right or
similar benefit;
(f) any Contract for the installment or other deferred purchase or sale of any
real or personal property which requires aggregate future payments in excess
of $50,000;
(g) any collective bargaining Contract with any labor union;
(h) any Contract for capital expenditures or the acquisition or construction of
fixed assets which requires aggregate future payments thereunder in excess
of $50,000;
(i) any Contract relating to cleanup, abatement, investigation, monitoring or
other actions in connection with liabilities, actions or procedures under
Environmental Laws;
(j) any Contract granting to any person a first-refusal, first- offer or similar
preferential right to purchase or acquire any material Asset other than
inventory having an aggregate value of less than $50,000;
(k) any license or royalty Contract or other Contract with respect to
Intellectual Property, other than licenses granted or received in the
ordinary course of business, which pursuant to the terms thereof requires
future payments to or by any Acquired Company;
(l) any indenture, mortgage, loan or credit Contract under which it has borrowed
any money or issued any note, bond, indenture or other evidence of
indebtedness for borrowed money, guaranteed indebtedness for money borrowed
by others which has not been repaid on or prior to the date hereof, granted
or agreed to grant any Security Interest other than a Permitted Security
Interest on any of its assets which has not been paid or otherwise
discharged on or prior to the date hereof or incurred, primarily or
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secondarily, actually or contingently, any liability or obligation in
respect of any item that would constitute indebtedness of the relevant
person on a balance sheet of such person prepared in accordance with GAAP;
(m) any Contract with any manufacturer's representative or other sales agent or
relating to distribution or commission arrangements which is not terminable
without cost on 90 calendar days' or less notice;
(n) any Contract under which it is (i) a lessee of, or holds or uses, any
machinery, equipment, vehicle or other tangible personal property owned by a
third party or (ii) a lessor of, or makes available for use by any third
party, any tangible personal property owned by it, in any such case which
requires aggregate annual payments in excess of $50,000;
(o) any other Contract which involves aggregate future payment by or to it in
excess of $50,000 other than a purchase or sales order or other Contract
entered into in the ordinary course of the conduct of the Business;
(p) any Contract with respect to a joint venture or partnership arrangement;
(q) any Contract granting a power of attorney, agency or proxy other than such
of the foregoing granted pursuant to standard forms executed by any Acquired
Company in the ordinary course of the conduct of the Business;
(r) any Contract with respect to letters of credit, surety or other bonds or
pursuant to which any of its assets or properties are or are to be subjected
to a Security Interest other than a Permitted Security Interest;
(s) any confidentiality Contract or Contract limiting or restricting the ability
of any of the Acquired Companies to enter into or engage in any market or
line of business in or related to the Business;
(t) any retroactive or retrospective premium adjustment or similar Contract
pursuant to which it could (whether or not subject to contingencies) be
required to make payments with respect to or as a result of losses, costs or
expenses paid or incurred by another Person providing insurance coverage;
(u) any Contract to which (i) such Acquired Company and (ii) Perstorp or any
Affiliate of Perstorp are parties.
(v) any Contract regarding the filing of Tax returns or relating in whole or in
part to the sharing of Tax benefits or liabilities (including Tax
indemnities);
(w) any Contract under which any of the Acquired Companies is a lessee of real
property or a lessor of real property; or
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(x) any other Contract that (i) is reasonably likely to result in a Material
Adverse Effect or (ii) is outside the ordinary course of business of the
Acquired Companies, consistent with past practice, and is otherwise material
to the conduct of the Business, the operation or use of the Assets by the
Business or the financial position or results of operations of the Acquired
Companies, taken as a whole.
6.2 Perstorp France is not a party to or bound by any Contract granting to any
person a first refusal, first offer or similar preferential right to
purchase or acquire any French Branch Assets.
7.
(a) Except as set forth in Appendix 6 to the Disclosure Letter, each Contract
listed or described or required to be listed or described in Appendix 6 to
the Disclosure Letter is a valid and binding obligation of the Acquired
Company party thereto, is in full force and effect and, insofar as Perstorp
or any of the Acquired Companies is aware, is a valid and binding obligation
of the party or parties thereto other than the Acquired Company party
thereto. Perstorp has made available to the Purchaser copies of each
Contract listed in Appendix 6 to the Disclosure Letter, and no Contract so
listed or required to be listed has been terminated, amended or otherwise
varied since such copies were so made available.
(b) No Acquired Company has received notification of any claim for breach of
contract in respect of any Contract listed or required to be listed in
Appendix 6 to the Disclosure Letter, each Acquired Company has performed all
material obligations required to be performed by it through the date hereof
under each Contract to which it is a party and is not (with or without the
lapse of time or the giving of notice or both) in breach or default in any
material respect thereunder, and insofar as Perstorp is aware no event has
occurred resulting in a right of acceleration, termination or similar right,
and no litigation or similar proceedings have been instituted, in relation
to any such Contract.
Debts
8. Except for borrowings or loans to third parties disclosed in the Last
Accounts and apart from any intra-company borrowings to be terminated pursuant
to the Agreement, the Acquired Companies have no outstanding loans to third
parties which have arisen otherwise than in the normal course of its business or
liabilities for borrowed money. No Acquired Company has any (i) liability or
obligation of any nature or kind (absolute, accrued, contingent or otherwise)
that may have a Material Adverse Effect on the use or operation of the Business
after Completion or (ii) any indebtedness for borrowed money or any Retained
Liability of any kind that is not shown or that are in excess of amounts shown
in the balance sheet included in the Last Accounts.
Good Standing
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9. Each of the Acquired Companies (i) is duly organized, validly existing and,
to the extent such concept exists, in good standing under the laws of the
jurisdiction specified in relation to it in Appendix 9 to the Disclosure Letter,
and (ii) has full corporate power and authority to own, lease or otherwise hold
the Assets relating to the Business owned, leased or otherwise held by it and to
carry on its respective business as it is now being or proposed to be conducted.
Each Acquired Company is duly qualified to conduct business as a foreign
corporation, to the extent such concept exists, in the jurisdictions listed with
respect to them in Appendix 9 to the Disclosure Letter, which are the only
jurisdictions in which its ownership or lease of property or conduct of the
Business makes such qualification necessary, except for such jurisdictions in
which the failure to be so qualified would not, individually and when considered
with any other such failure, constitute a Material Adverse Effect. Perstorp has
provided to the Purchaser complete and correct copies of the certificate of
incorporation or by-laws (or similar constituent instruments) of JV Holdings and
each Acquired Company as in effect immediately prior to Completion.
Directors and Employees
10.
(a) Perstorp has made available to the Purchaser a list of all the Employees
whose annual salary exceeds $100,000 or who have a fixed term of service of
one year or longer than one year, together with details of their
remuneration, and a copy of each Acquired Company's employee handbook and
standard form letter of employment, if any, and conditions of employment.
Such documents have not been terminated or varied since such copies were
made available. Perstorp has also made available a list and details of the
remuneration of the members of the board of directors and officers of each
Acquired Company.
(b) Appendix 10 to the Disclosure Letter sets forth a list of all country club
memberships, cars and other perquisites made available to Employees.
(c) The Acquired Companies and Perstorp France, in relation to each of their
respective Employees and so far as relevant to each of their Former
Employees, have complied in all material respects with their Contracts of
employment, any relevant collective bargaining Contracts or codes of
conduct, all relevant Laws relating to their conditions of service or to the
relations between them (or their recognized trade union or other
representatives) and their respective employees.
(d) Except as set forth in Appendix 10 to the Disclosure Letter, the terms of
employment of all Employees are such that their employment may be terminated
by not more than four weeks' notice (or such longer periods as may be
required by law) given at any time without liability for any payment
including by way of compensation or damages (except for unfair dismissal or
a statutory redundancy payment).
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(e) Neither the Acquired Companies nor Perstorp France in relation to the
Business have made, announced or proposed any changes to the emoluments or
benefits of or any bonus to any Employee and are under no obligation to make
any such changes with or without retrospective operation.
(f) The Acquired Companies have not within the three-year period preceding the
date hereof acquired or entered into any Contract which involved or may
involve it acquiring any undertaking or part of one such that the Transfer
of Undertakings (Protection of Employment) Regulations 1981 (the
"Regulations") applied or may apply thereto.
(g) The Acquired Companies, and in relation to the Business, Perstorp France
have maintained adequate and suitable records regarding the service of their
Employees.
(h) There are no amounts owing or agreed to be loaned or advanced by any
Acquired Company or, in relation to the Business, Perstorp France to any
Employee.
(i) As of September 30, 1996, no Employee had given or received notice to
terminate his or her employment.
(j) As of September 30, 1996, there were no Employees who were on secondment,
maternity leave or absent on grounds of disability or other leave of
absence.
(k) The salaries and wages and other benefits of all Employees have been paid or
discharged in full in respect of the period up to Completion.
(l) There are no unfair labor practice complaints, discrimination charges or
other employment related claims (other than routine claims for benefits
under employee benefit plans) pending before any Governmental Authority or,
to the knowledge of Perstorp, Perstorp GmbH, the Acquired Companies or
Perstorp France threatened against any of the Acquired Companies or Perstorp
France (with respect to the Employees of the French Branch) which, alone or
with any series of related or similar matters, seeks damages in any amount
in excess of $50,000, and there are no existing, so far as Perstorp is
aware, and have been no past, patterns or practices of discrimination upon
which any such complaints, charges or claims could be successfully asserted.
Employee Benefits
11. 11.1 The Pension Schemes are the only arrangements, whether established
under trust or by Contract or applicable Laws or Acquired Company or Perstorp
France policy, custom or practice, under which any Acquired Company or Perstorp
France is or may become liable to pay, contribute to or provide retirement,
severance, deferred compensation, death, disability, life insurance, medical
benefits, or benefits in respect of past service in respect of any of its past
or present officers, Employees or Former Employees and no Acquired Company or
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Perstorp France has participated in any such arrangements at any time other than
the Pension Schemes or arrangement which have been fully wound up. There is no
proposal to establish any other arrangements to provide such benefits in respect
of such individuals. No contributions to, or other payments in respect of, any
Pension Scheme or Perstorp France or the French Branch in relation to any
Employee or Former Employee of any Acquired Company or the French Branch has
become due and remains outstanding. No Employee or Former Employee has any right
to any payment or other benefit, whether under any Law, Contract or Pension
Scheme, or by reason of the Completion or any other transaction contemplated by
the Agreement.
11.2 Appendix 11 to the Disclosure Letter accurately lists all Pension Schemes
applicable to Employees or Former Employees.
11.3 Neither any Acquired Company nor Perstorp France has made or proposed any
voluntary or ex gratia payments to any person in respect of any benefit (as
described in Paragraph 11.1 above).
11.4 No undertaking or assurance (whether legally binding or not) has been given
by any Acquired Company or Perstorp France to any person as to the continuance,
introduction, increase or improvement of any such benefit or arrangement as is
referred to in Paragraph 11.1 (including, for the avoidance of doubt, the
Pension Schemes).
11.5 Each Acquired Company and Perstorp France has fulfilled in all material
respects all of its obligations under the Pension Schemes.
11.6 All death benefits which may be payable under the Pension Schemes (other
than a refund of members' contributions with interest where appropriate) are
fully insured with an insurance company of good repute. All policies and
contracts under which such benefits are insured are enforceable and there is no
ground on which the insurance company concerned might avoid liability under any
such policy or contract.
11.7 Neither any Acquired Company nor Perstorp France has any contractual
liability to make any contributions to any personal pension scheme or
arrangement or any retirement annuity contract of any Employee or officer or to
make any payment or remuneration specifically referable to contributions payable
by any Employee or officer of any Acquired Company under such scheme or contact.
Properties
12. Appendix 12 to the Disclosure Letter accurately sets forth, or provides
accurate references to, (a) legal descriptions of each of the real properties
owned by each Acquired Company and to the real estate subject to leases held by
any Acquired Company and (b) legal descriptions of all real estate used, held,
owned or leased by any of the Acquired Companies that is used or held for use in
the Business. The Acquired Companies have good and marketable title to the
Assets constituting real property, free and clear of all Security Interests
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other than (a) Permitted Security Interests, (b) easements, covenants,
rights-of-way and other encumbrances or restrictions of record or referred to in
an applicable lease, (c) restrictions arising as a matter of Law, and (d)
unrecorded easements, covenants, rights-of-way or other encumbrances or
restrictions which (in the case of (b), (c) or (d)) do not materially impair the
continued use of the property subject thereto in the Business as presently
conducted or materially impair the value of the property subject thereto if used
for purposes similar to those for which it is presently used. The structures
located on the Assets constituting owned real property or on any other real
property described in Appendix 12 to the Disclosure Letter and the machinery and
equipment situated therein are in all material respects having regard to their
age and usage in good condition, normal wear and tear excepted, are regularly
maintained in good order, are capable of being used for their intended purpose
for the duration of their expected life and comply with all safety requirements
imposed under applicable Law in all material respects and otherwise have been
maintained in all material respects in accordance with the Acquired Companies'
policies related thereto. The French Branch Assets do not include any real
property.
Recitals
13. The Recitals to this Agreement are true and accurate.
Taxation
14.
14.1 In Paragraphs 14.2 to 14.13:
(a) the terms "Event", "Tax", "Tax Return" and "Tax Authority" will have the
same meanings as they have for the purposes of the Tax Covenant,
(b) the term "Acquired Company" will include JV Holdings, and
(c) notwithstanding anything to the contrary contained herein, the statements
will be treated as unqualified except as provided in the Disclosure Letter
as to Taxes (the parties acknowledging that any reference to any matter that
does not refer to the specific Tax effect or aspect thereof will not limit
any Warranty in Paragraph 14.1 to 14.13 inclusive hereof).
14.2 Each Acquired Company has duly and fully paid in a timely manner all Taxes
that have become due on or prior to Completion, made or filed all Tax Returns
that are required to be filed on or before Completion, and given all notices and
supplied all other material information required by law to be supplied to all
relevant Tax Authorities prior to Completion. All such information, Tax Returns
and notices were and remain accurate and complete in all material respects. All
Taxes relating to the Acquired Companies, the Business, the Assets or the French
Branch Assets not due on or before Completion but properly accruable on or
before Completion or allocable to a period ending on or before Completion or to
a portion of a period
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beginning before and ending after Completion have been properly reserved for in
the aggregate on the books of the Acquired Companies.
14.3 No Acquired Company is involved in any current audit or dispute with any
Tax Authority. No Acquired Company has executed or filed with any Tax Authority
any agreement extending the period for filing any Tax Return which is currently
in force. No Acquired Company is a party to any pending action, proceeding or
investigation by any Tax Authority or other Governmental Authority for the
assessment or collection of Taxes nor does any Acquired Company know of any
reason for any such action, proceeding or investigation. No notice of any claim
has ever been made by a Tax Authority or Governmental Authority in a
jurisdiction where any Acquired Company does not currently file Tax Returns that
such Acquired Company is or may currently be subject to taxation by that
jurisdiction, nor is any Acquired Company aware that any such assertion of
jurisdiction is threatened. No waivers of statutes of limitation in respect of
any Tax Returns have been given or requested by any Acquired Company nor has any
Acquired Company agreed to any extension of time with respect to a Tax
assessment or deficiency which is currently outstanding. To the best knowledge
of Perstorp, the Perstorp Vendor Group and the Acquired Companies, no security
interests have been imposed upon or asserted against any assets of any Acquired
Company or the French Branch Assets as a result of or in connection with any
failure or alleged failure, to pay any Tax. No Acquired Company has entered into
any agreement, oral or written, which is or will at Completion remain in force
providing for the payment of Tax Liabilities or entitlement to refunds and
related matters with any other party.
14.4 No transaction in respect of which any consent or clearance was required or
sought from any Tax Authority has been entered into or carried out by any
Acquired Company without such consent or clearance having first been properly
obtained.
14.5 No Tax Authority has made or agreed to make any special arrangement (being
an arrangement which is not based on relevant legislation or any published
practice) in relation to any Acquired Company's affairs which is currently in
force.
14.6 No claim has been made for the depreciation of any asset of any Acquired
Company for Tax purposes in circumstances in which the claim is likely to be
disallowed. No Acquired Company has since the Last Accounts Date been involved
in any transaction which has given or may give rise to a Tax Liability other
than Tax Liabilities in respect of normal trading income or receipts arising
from transactions entered into in the ordinary course of business. No Acquired
Company is or may be liable to pay Tax in respect of any hidden distributions of
profit in any jurisdiction.
14.7 All documents in the enforcement of which any Acquired Company is
interested have been duly stamped and all related duties, interest and penalties
have been duly paid.
14.8 No event, transaction, act or omission has occurred (including without
limitation the execution or implementation of this Agreement) which has resulted
or could result in any Acquired Company becoming liable to pay or to bear any
Tax which is primarily or directly
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chargeable against or attributable to any person other than any
Acquired Company. No Acquired Company is party to or bound by nor to the best
knowledge of Perstorp, Perstorp GmbH, Perstorp France and the Acquired
Companies, will any Acquired Company become a party to or bound by, any Tax
indemnity, Tax sharing or Tax allocation agreement in respect of which claims
would not be time barred.
14.9 All transactions entered into by any Acquired Company have been entered
into on an arm's-length basis and the consideration (if any) charged or received
or paid by any Acquired Company on all transactions entered into by it has been
equal to the consideration which might have been expected to be charged,
received or paid (as appropriate) between independent persons dealing at
arm's-length. No Acquired Company has disposed of or acquired any assets in
circumstances such that the consideration deemed to be given on such disposal or
acquisition for purposes of computing the Tax Liability of the Acquired Company
with respect to such disposition or acquisition, might be adjusted by any Tax
Authority. The book value of any asset of any Acquired Company as shown in or
adopted for the purposes of the Accounts is such that if an asset were disposed
of at Completion at its book value (or if acquired after the Accounts Date at
cost) no Tax Liability would be incurred nor would any Tax previously deferred
be taken into account, except to the extent such Tax Liability is attributable
to accelerated depreciation for Tax purposes in accordance with applicable Laws.
14.10 No Acquired Company has entered into or been a party to nor otherwise been
involved in any plan or arrangement designed wholly or mainly for the purpose of
avoiding or deferring Tax.
14.11 To the best knowledge of the Perstorp Vendor Group and the Acquired
Companies, no Acquired Company is an agent of another company for the purposes
of assessing the latter to Tax in the country of residence of the first Acquired
Company.
14.12 Each Acquired Company:
(a) is registered for the purposes of value added tax legislation (or the
equivalent Tax legislation in each jurisdiction in which it carries on
business) ("VAT Legislation"); and
(b) is neither an agent nor a fiscal representative of any other Person (other
than an Acquired Company) for the purposes of the VAT Legislation.
Separate Provisions
Paragraph 14.13 will apply to the separate transactions to Transfer the Shares
and the French Branch Assets at Completion in accordance with the Agreement. In
the event of any conflict or inconsistency between such paragraph and either the
balance of Paragraph 14 or the Agreement, the provisions of Paragraph 14.13 will
be the governing provisions.
14.13 Components Belgium:
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(a) Components Belgium has satisfied, and continues to satisfy, all requirements
of any kind applicable to the eligibility for, the retention of, and the
amount of, all subsidies and/or grants of which it is a beneficiary as a
result of any investment and/or employment program or otherwise. The
eligibility for, the retention of, and the amounts of, such subsidies and/or
grants will not be adversely affected by any of the transactions
contemplated by the Agreement.
Litigation and Regulatory Matters
15.
(a) No Acquired Company is engaged in nor, so far as any of the Perstorp Vendor
Group is aware, has any Acquired Company been threatened with, any
litigation, arbitration, claims or administrative or other proceedings,
which (i) alone or with any series of related or similar matters, seeks
damages in an amount in excess of $50,000 or (ii) seeks to make any Acquired
Company subject to any order, writ, injunction or decree of any Governmental
Authority or other restriction on the conduct of its business. No Acquired
Company is subject to any order, writ, injunction or decree or any
unsatisfied award or judgment.
(b) The Acquired Companies and Perstorp France (in respect of the French Branch)
conduct and have conducted their Business and corporate affairs in
accordance with all applicable Laws in all material respects.
(c) The Acquired Companies and Perstorp France (in respect of the French Branch)
have obtained all Permits which are required for and are material to the
carrying on of their Business in the places and the manner in which such
Business is now carried on.
Insurance
16. Appendix 16 to the Disclosure Letter lists all material insurance policies
providing coverage for the Acquired Companies or the Business or the businesses
previously carried on by the Acquired Companies or Perstorp France (in respect
of the French Branch) (the "Insurances"). Perstorp is not aware of any material
outstanding claims under, or in respect of the validity of the Insurances and
the Insurances are in full force and effect in accordance with their terms and
conditions and all premiums thereunder have been paid when due. Except as set
forth in Appendix 16, no claim is currently reserved or, to the knowledge of
Perstorp or any of the Acquired Companies, should be reserved under the
Insurances involving an amount in excess of $50,000.
Ability to Enter Agreement
17. Each of Perstorp, Perstorp GmbH, Perstorp France and JV Holdings has
necessary power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the
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consummation of the transactions contemplated hereby have, where required, been
duly and validly authorized and no other proceedings or action on the part of
Perstorp, Perstorp GmbH, Perstorp France or JV Holdings is necessary to
authorize this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly executed and delivered by Perstorp, Perstorp GmbH,
Perstorp France and JV Holdings and constitutes a valid and binding agreement of
Perstorp, Perstorp GmbH, Perstorp France and JV Holdings, enforceable against
them in accordance with its terms. Perstorp has taken, or caused to be taken,
each of Perstorp's Pre-Completion Actions.
18. The execution and delivery of this Agreement by any of the Perstorp Vendor
Group and JV Holdings does not, and the performance by each of Perstorp,
Perstorp GmbH, Perstorp France and JV Holdings of the transactions contemplated
hereby and thereby to be performed by each of them will not, in any material
respect, conflict with, or result in any material violation of, or constitute a
material default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
material obligation or the loss of a material benefit under, any provision of
the certificate of incorporation or by-laws (or similar constituent instruments)
of any of the Perstorp Vendor Group or JV Holdings, any Contract listed or
described or required to be listed or described on Appendix 6 to the Disclosure
Letter (except to the extent disclosed on Appendix 6 to the Disclosure Letter),
or any Law or Permit necessary for the continued conduct of the Business after
Completion in all material respects in the same manner as it is being conducted
as of the date of this Agreement or as of the Completion or results or will
result in the imposition of a Security Interest with respect to any of the
Shares, the Acquired Companies Shares or the Assets. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect to
any of the Perstorp Vendor Group or JV Holdings under any Law in connection with
the execution and delivery of this Agreement by any of the Perstorp Vendor Group
and JV Holdings or the performance by any of the Perstorp Vendor Group and JV
Holdings of the transactions contemplated hereby to be performed by it, except
(i) for such of the foregoing as are listed or described on Schedule 6.1.18, and
(ii) for such Permits, which if not obtained or made (A) will not impair the
ability of JV Holdings or any Acquired Company to continue to operate its
respective business as operated immediately prior to Completion and (B) will not
subject JV Holdings or any Acquired Company to any criminal prosecution or
penalty.
Environmental Matters
19. (a) The Acquired Companies are in all material respects in full compliance
with all Environmental Laws which are or previously have been applicable to any
Acquired Company the ownership, use, operation, maintenance or management of the
Properties or properties previously owned, operated or leased by the Acquired
Companies or their predecessors, or the Business and all Permits that are
required to be issued by a Governmental Authority under any Environmental Laws
in respect of any Acquired Company, the Properties or the Business are, subject
to the conditions and limitations contained therein, being complied with in all
material respects, are valid and are in full force and effect, and Perstorp is
not aware of circumstances which are reasonably likely to result in a breach of
Environmental Laws or so far as Perstorp
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is aware, future Environmental Laws now under consideration that would affect
any Acquired Company directly.
(b) Perstorp France is in all material respects in full compliance with all
Environmental Laws which are or previously have been applicable to the
ownership, use, operation, maintenance or management of the French Branch and
all Permits that are required to be issued by a Governmental Authority under any
Environmental Laws in respect of the French Branch are, subject to the
conditions and limitations contained therein, being complied with in all
material respects, are valid and are in full force and effect, and Perstorp
France is not aware of circumstances which are reasonably likely to result in a
breach of Environmental Laws or future Environmental Laws now under
consideration with respect to the French Branch.
20. Neither the Properties, the French Branch, the Acquired Companies nor
properties previously owned, operated or leased by the Acquired Companies, the
French Branch or their predecessors are involved in any civil, criminal or other
proceedings or governmental or other quasi-governmental claim or investigation
pursuant to any Environmental Laws and Perstorp has no knowledge of the intended
commencement of any such proceedings, claims or investigation or facts
(including without limitation those concerning adjacent properties) that could
support any such proceedings, claims or investigations.
20.1 None of the Acquired Companies and Perstorp France with respect to the
French Branch have and, to the knowledge of Perstorp, no other Person has caused
a Release or threatened Release of any Hazardous Material at, in, on, under,
about or from the Properties, the French Branch or properties previously owned,
operated or leased by an Acquired Company or any predecessor. There are no
underground storage tanks or asbestos which, in either case, is reasonably
likely to be dangerous to human life or is in breach of any Environmental Law at
the Properties or the French Branch and, to the knowledge of Perstorp, at
properties previously owned, operated or leased by the Acquired Companies or any
predecessors.
Intellectual Property
21.1 Appendix 21 to the Disclosure Letter lists and sets forth a summary
description of all Perstorp marks, all Registered Rights and all licenses of any
intellectual property of third parties owned, held or used by any Acquired
Company or Perstorp France. All Registered Rights owned or used by any Acquired
Company or the French Branch in, or in connection with, its business are
subsisting and not subject to any notice of opposition or application for
cancellation or amendment and are owned by an Acquired Company or licensed from
a third party that is not a member of the Vendor Group. All steps have been
taken to maintain the Registered Rights used in the conduct of the Business,
including paying any renewal or other fees where appropriate. None of the
Acquired Companies have transferred any Registered Rights, by assignment or
license, which are relevant to the Business, to any member of the Vendor Group
or any third party within the last two years and no member of the Vendor Group
owns or has any other rights to any Intellectual Property that is necessary for
the
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manufacturer or sale of any Designated Product that is not assigned or licensed
pursuant to the Intellectual Property Agreement or the Computer Software
Agreement without infringement on the intellectual property rights of others.
21.2 No Intellectual Property (including without limitation any computer
software) is required for carrying on the business of any Acquired Company or
the French Branch in the places and manner in which such business is carried on
at the date hereof, other than Intellectual Property beneficially owned by one
or more Acquired Companies or members of the Vendor Group or Perstorp France or
any Intellectual Property owned by any third party which is the subject of
licenses to an Acquired Company or Perstorp France. The Intellectual Property
and Registered Rights which are owned or used by any Acquired Company or
Perstorp France in, or in connection with, the Business are not subject to any
Security Interest other than a Permitted Security Interest. All Intellectual
Property which is relevant to the manufacture or sale of Designated Products by
any Acquired Company is owned by an Acquired Company, is licensed from a third
party that is not a member of the Perstorp Vendor Group or is subject to the
Intellectual Property Agreement.
21.3 So far as Perstorp is aware:
(a) no Intellectual Property which is material to any Acquired Company or the
French Branch is the subject of any claim or opposition from any person as
to title, validity, enforceability or otherwise; and
(b) the operations of the Business, including without limitation the activities,
processes and methods employed or used (including without limitation any
Intellectual Property described in Section 21.2), and the products and
services manufactured and supplied, by the Acquired Companies, do not
conflict with or infringe upon any Intellectual Property of any third party.
21.4 All software necessary to enable each Acquired Company to continue to use
the computerized records and tools used in the business of that Acquired Company
for programs awarded to such Acquired Company is either listed on the Schedule
to the Computer Software Agreement or is licensed to such Acquired Company on
substantially the same terms and conditions on which such software has been used
during the two-year period prior to the date of this Agreement and so far as
Perstorp is aware the transactions contemplated by this Agreement will not
result in the termination of, or any change in the terms and conditions of, any
such software license.
21.5 In the 12 months prior to the date hereof, the Acquired Companies have not
suffered and, so far as Perstorp is aware, no other Person has suffered any
failures or bugs in or breakdowns of any computer hardware or software used in
connection with the Business which has caused any substantial disruption or
interruption in or to its use, and Perstorp does not know nor is it aware of any
fact or matter which may so disrupt or interrupt or affect the use of such
equipment following the acquisition by the Purchaser of the Business pursuant to
this Agreement on the same basis as it is presently used.
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21.6 The Computer Software Agreement will not violate the terms of any license
or other Contract to which any member of the Perstorp Vendor Group is a party.
Product Liability
22. Since September 1, 1993, no claim has been asserted against an Acquired
Company or any predecessor of any of them for death, personal injury, other
injury to persons or property damage relating to, resulting from or arising out
of, directly or indirectly, use or exposure to any products (or any part or
component thereof) manufactured, sold or used or serviced by an Acquired Company
or any predecessor of any of them. Appendix 22 to the Disclosure Letter lists
all Designated Products.
23. With respect to each of the Designated Products, there is no and has not
been any (i) material defect in any manufacturing process used in connection
with the manufacture thereof, (ii) failure by any of the Acquired Companies to
comply in any material respect with any applicable Law relating to product
specifications, including without limitation flammability specifications, which
defect or failure described in the foregoing clauses (i) and (ii) has not been
rectified or cured, as the case may be, and no such defect or failure to comply
resulted in any legal or contractual requirement to notify any customer thereof
or to recall any products sold, (iii) product specifications or quality
standards provided to or requested or required by any customer of the Business
that has not been complied with, except for any such noncompliance with customer
specifications or standards which is not reasonably likely to result in a
material amount of product returns, or (iv) material breach by any of the
Acquired Companies or any member of the Perstorp Vendor Group or any predecessor
of express or implied warranties of merchantability or fitness for any purpose
or use or any other express warranties of the Acquired Companies or the Perstorp
Vendor Group in respect of which a third party would be entitled to make a claim
against any Acquired Company or any member of the Perstorp Vendor Group.
Customers and Suppliers
24. To the knowledge of Perstorp, the Acquired Companies and the French Branch
are able to continue to supply Designated Products to customers which to a
degree reasonably satisfactory to such customers meet all product specifications
and quality standards applicable to any current program in which any Acquired
Company or the French Branch participates or to any Contract without any
additional capital expenditure. Except as set forth in the capital expenditure
plan attached as Appendix 24 to the Disclosure Letter, to the knowledge of the
Perstorp Vendor Group and the Acquired Companies, no capital expenditures or
software expenditures aggregating in excess of $50,000 are required for the
Acquired Companies to continue to conduct the Business as presently conducted
and forecast (in Perstorp's current business plan for the Acquired Companies
attached at Appendix 24 to the Disclosure Letter) to be conducted during the
periods covered by such attached capital expenditure plan.
25. Except as described on Appendix 25 to the Disclosure Letter, since September
1, 1993 (a) there has not been any adverse change in the business relationship
of any of the Acquired
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Companies or the French Branch with any of the 5 largest customers of the
Business or suppliers of the Business and (b) there has not been any loss or, to
the knowledge of Perstorp, threatened loss of any model or program or Contract
set forth on Appendix 25. Notwithstanding any other provision of this Agreement,
the Disclosure Letter or any other document, no disclosure whatsoever by
Perstorp shall be deemed to qualify this paragraph unless such disclosure is
specifically set forth in Appendix 25.
Labor Relations
26. Neither any Acquired Company nor Perstorp France (with respect to the French
Branch) is a party to or subject to any collective bargaining Contract. Except
as set forth on Appendix 26 to the Disclosure Letter, there are, and since
September 1, 1993 have been, no organized labor walkouts, strikes or work
stoppages or slowdowns pending or, to the knowledge of Perstorp or the Acquired
Companies, threatened, against or affecting the Business, and, to the knowledge
of Perstorp, no event has occurred which could reasonably be expected to give
rise to any such dispute. No union organizational campaign or effort to
collectively bargain is currently, or has been, pending with respect to the
Employees or Former Employees of the Business.
Brokers
27. Neither Perstorp nor any of its Affiliates has made any Contract or taken
any action as a result of which Purchaser or an Acquired Company would become
obligated to pay any Person a fee or commission as a result of this Agreement or
the transactions contemplated hereby or thereby.
Intercompany Matters
28. Appendix 28 to the Disclosure Letter sets forth (a) a list of the material
support services provided to the Acquired Companies and the French Branch since
September 1, 1994 by Perstorp or any Affiliate of Perstorp (other than an
Acquired Company) ("Support Services"), (b) the amount charged for each of the
Support Services so provided for the fiscal year ended August 31, 1995 and the
eight-month period ended on the Last Accounts Date, which charges were expended
in the related Accounts, and (c) all executory Contracts between or among, as
the case may be, any Acquired Company, on the one hand, and any member of the
Vendor Group or any Affiliate thereof, on the other hand and the terms under
which products or inventory have been sold or furnished to any Acquired Company
by any member of the Perstorp Vendor Group other than an Acquired Company since
September 1, 1994. Appendix 28 (excluding the attachments thereto) describes all
changes in the terms under which such products or inventory have been so sold or
furnished (where such changes are adverse in any manner to the relevant Acquired
Company) that have occurred during the period from September 1, 1994 to
Completion.
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Bank Accounts
29. Appendix 29 to the Disclosure Letter lists and describes all bank and
similar accounts maintained by or on behalf of any Acquired Company and the
French Branch and the authorized signatories in respect thereof.
30. Appendix 30 of the Disclosure Letter lists and describes all outstanding
powers of attorney granted by or on behalf of any Acquired Company and the
French Branch to any Person.
Solvency
31. No member of the Perstorp Vendor Group nor any of the Acquired Companies has
commenced any case, proceeding or other action under any Law relating to
bankruptcy, insolvency, reorganization or relief of debtors and no proceedings
have been commenced against any member of the Perstorp Vendor Group or any of
the Acquired Companies which seeks to adjudicate any of them as bankrupt or
insolvent or which seeks the appointment of any receiver, liquidator or similar
officer for any of them.
Competition and Trade Regulation
32. Without limiting the generality or effect of any other Warranty or
provisions of the Agreement, so far as Perstorp is aware, neither any member of
the Perstorp Vendor Group (as related to the Business) nor any Acquired Company
is party to any material agreement or arrangement which: (a) infringes Article
85 or 86 of the Treaty establishing the European Economic Community or any other
anti-trust or similar Law in any jurisdiction in which any member of the
Perstorp Vendor Group or any Acquired Company has assets or conducts business or
(b) is registrable, unenforceable or void or renders any member of the Perstorp
Vendor Group or any Acquired Company liable to civil, criminal or administrative
proceedings by virtue of any anti-trust or similar Law in any jurisdiction in
which any member of the Perstorp Vendor Group or any Acquired Company has assets
or conducts business.
33. None of the Acquired Companies is subject to any outstanding order or decree
of any Governmental Authority under any anti- dumping or other trade regulation
Law.
JV Holdings
34. JV Holdings has no predecessors or subsidiaries and is not party to or bound
by any Contracts of any type or nature.
35. Other than cash or cash equivalents, JV Holdings has no assets of any nature
or kind indebtedness or any other liability or obligation of any nature or kind
(absolute, accrued, contingent or otherwise).
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36. JV Holdings is not presently engaged in, nor in the past has it, engaged in
any trade or business.
37. JV Holdings does not presently have, nor in the past has it had, any
employees. JV Holdings does not participate in nor is bound by or subject to any
arrangement, whether established by Contract, or applicable Law, custom or
practice, under which JV Holdings is or may become liable to pay, contribute to
or provide retirement, severance, deferred compensation, death, disability, life
assurance, medical benefits or benefits in respect of any past services in
respect of any person.
38. JV Holdings does not presently hold, own or lease, nor in the past has it
held, owned or leased, any real property.
39. None of the Warranties set forth in Sections 2, 3, 5, 6, 7, 8, 9, 10, 11,
12, 13, 15, 16, 19, 20, 20.1, 21.1, 21.2, 21.3, 21.4, 21.5, 22, 23, 24, 25, 26,
27, 28, 29, 30, 31, 32 and 33 if made as to JV Holdings by the Perstorp Vendor
Group would be false or incorrect as applicable to JV Holdings if it were an
Acquired Company.
Perstorp France
40. Warranties relating to Perstorp France in this Schedule 6.1 are given only
in relation to matters concerning the French Branch.
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EXHIBITS AND SCHEDULES
Exhibit A Form of Computer Software Agreement
Exhibit B (Intentionally omitted)
Exhibit C First and Second EASPP Notes
Exhibit D Form of French Branch Asset Agreement
Exhibit E Form of Individual Shareholder Agreement
Exhibit F Form of Intellectual Property Agreement
Exhibit G Projections
Exhibit H Description of Pre-Completion Actions
Exhibit I Form of Third EASPP Note
Exhibit J Form of French Branch Services Agreement
Exhibit K Termination Agreement
Schedule 1.1 List of Acquired Companies
Schedule 1.2 List of relevant Perstorp Executives
Schedule 2.1 Allocation of Acquired Companies Purchase Price and
French Branch Purchase Price; Net Asset Value; Change in
Net Assets; Completion Actions; Settlement of Intercompany
Balances; Estimate of Retained Liabilities
Schedule 2.1(h) List of Individual Shareholders
Schedule 2.2 List of Purchasers
Schedule 3.3 List of Closing Documents; Form of Resignation Letters;
Form of Legal Opinions
Schedule 3.5(c) Completion Date Balance Methodology
Schedule 6.1 Warranties
Schedule 6.1.1 Auditors Reports
Schedule 6.1.18 Consents, Approvals, and Permits
Schedule 7.1(c) Certain Indemnities
Schedule 9.1 Tax Covenant
Schedule 9.2 Insurances
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule omitted herefrom as permitted by Item 601(b)(2) of Regulation S-K to
the Commission upon request.
<PAGE>
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is dated as of December 11, 1996
among
Collins & Aikman Products Co., a Delaware corporation ("C&A Products"),
Collins & Aikman Europe, Inc., a Delaware corporation, ("C&A"),
Perstorp G.m.b.H, a German company, ("Pelican"),
Perstorp A.B., a Swedish company ("Pelican Corp"),
Perstorp Biotec A.B., a Swedish company (the "Company"),
Perstorp Components N.V., a Belgium company ("Components Belgium"), and
Perstorp Components A.B., a Swedish company ("Components Sweden").
WHEREAS:
(A) Pelican, Pelican Corp., C&A Products and the Company are parties to an
agreement, dated the date hereof (the "Formation Agreement"), providing for
the acquisition by the Company of all of the issued share capital of
Components Sweden and Components Belgium which will simultaneously acquire
certain assets constituting the components business of Pelican France and
establish a branch in France.
(B) Pursuant to the Formation Agreement, Pelican will own shares representing
49.9% of the share capital (including the voting rights) of the Company and
may in the future acquire further shares in the Company (the "Pelican
Shares").
(C) Pursuant to the Formation Agreement, C&A will own shares representing 49.9%
of the share capital (including the voting rights) of the Company and may in
the future acquire further shares in the Company (the "C&A Shares").
(D) The parties believe it would be in their and the Company's interest to
ensure a degree of continuity of management and ownership of the Company by
imposing certain restrictions and obligations on the ownership, retention
and disposition of the Shares and management of the Company and its
subsidiaries.
ACCORDINGLY, IT IS AGREED as follows:
<PAGE>
1. INTERPRETATION
1.1 Capitalized terms used herein and not otherwise defined herein have the
meanings given such terms in the Formation Agreement, except that the term
"Companies" means the Company, Components Sweden and Components Belgium.
For the avoidance of any doubt, C&A Products will be deemed to be an
Affiliate of C&A and Pelican will be deemed to be an Affiliate of Pelican
Corp.
1.2 In this Agreement, unless the context otherwise requires:
a. references to "Persons" include individuals, bodies corporate
(wherever incorporated), unincorporated associations, joint ventures,
partnerships and other legal entities, including without limitation
Governmental Authorities;
b. the headings are inserted for convenience only and will not affect the
construction of this Agreement;
c. any reference to a Law or an enactment is a reference to it as from
time to time amended, consolidated or re-enacted (with or without
modification) and includes all instruments or orders made under such
Law or enactment;
d. except as to matters involving the internal corporate governance of
the Company which are specifically provided for in the Swedish
Companies Act (Aktiebolagslagen) (the "Swedish Companies Act"), which
will be governed by the Swedish Companies Act, references to any legal
term for any action, remedy, method of judicial proceeding, legal
document, legal status, court, official or any other legal concept
will, in respect of any jurisdiction other than England, be deemed to
include the legal concept which in that jurisdiction most nearly
corresponds to the English legal term;
e. references to a $ are to United States dollars;
f. references to Sections, Articles, Exhibits or Schedules are to
Sections, Articles, Exhibits or Schedules of this Agreement;
g. each term defined in this Agreement has the meaning assigned to it;
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h. "or" is disjunctive but not necessarily exclusive;
i. words in the singular include the plural and vice versa;
j. no provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to which
any such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent
with any prior draft hereof;
k. any reference to any word, term of art or legal concept recognized
under English law will be deemed to include the word, term of art or
legal concept which most closely approximates the legal meaning or
effect of the same in the applicable jurisdiction;
l. the Schedules, Exhibits and documents in the agreed form are part of
the operative provisions of this Agreement and references to this
Agreement will, unless otherwise expressly stated, include references
to such Schedules, Exhibits and documents; and
m. the covenants set forth in Sections 3.4, 3.5, 6.2 and 6.3 will be
deemed to be covenants of each of the Companies, as to which no other
party will have any liability except to the extent any such other
party causes a Company to breach such a covenant.
2. CONDITIONS PRECEDENT, EFFECTIVE DATE
2.1 This Agreement will come automatically into full force and effect on the
date when the share transfers contemplated in Section 2.1 of the Formation
Agreement have been duly completed (the "Effective Date").
2.2 This Agreement will be null and void without further action if the
Formation Agreement is terminated.
3. BUSINESS OF THE COMPANY
3.1 Pelican and C&A will cause the Company to amend its Articles of
Association so that from the Effective Date they read in their entirety as
set forth in Exhibit 3.1. To the extent permissible under applicable Law,
the provisions of Sections 4.6, 7.1, 7.2 and 7.6 shall be included in the
Articles of Association of each of the Companies.
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3.2 The Companies' initial business plan is attached hereto as Schedule 3.2
(as amended from time to time in accordance with this Agreement, the
"Business Plan").
3.3 Except to the extent otherwise specified herein, neither C&A nor Pelican
will cause, or permit any of their respective subsidiaries to cause, any
of the Companies to enter into any business transaction between any of the
Companies, on the one side, and Pelican or C&A or their respective
Affiliates, on the other side, to be carried out other than on terms that
are comparable in all material respects to those which would otherwise be
available to the relevant Company from an independent third party dealing
on an arm's length basis.
3.4 Except to the extent otherwise specified herein, any debt financing
required by the Companies from time to time will be raised in such manner
as the Board of Directors of the Company ("Board") may from time to time
determine. None of Pelican, C&A or their respective Affiliates will be
obligated to furnish any security, guarantees or other assurance
(collectively, "Assurance") in order to secure financing for the
Companies.
3.5 The Companies will maintain insurance coverages in such amounts and
covering such risks as may be determined by the Board from time to time.
3.6 The parties agree to cooperate with one another to procure that the
following events occur as soon as reasonably practicable after the
Effective Date:
(a) the First Note will be paid in full using the Company's cash balances;
(b) Pelican will negotiate and finalize the detailed terms and conditions
(the "Terms") of legally binding loan agreements with one or more
banks in respect of loans in one or more currencies of approximately
US$ 50 million in aggregate (the "Bank Debt"). The Terms will be
substantially in line with the terms described in the term sheets set
out in Schedule 3.6 and be reasonably acceptable to C&A, such Terms to
be deemed reasonably acceptable if they comply with Schedule 3.6;
(c) upon finalization of the Terms in accordance with paragraph (b) above,
the Companies will execute all necessary documents and take all other
necessary steps (including the giving of security and the payment of
bank fees) to give effect to the Terms and will draw down the Bank
Debt in full;
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(d) upon the draw down of the Bank Debt, the Companies will immediately
apply the funds drawn down:
(i) to repay in full the intercompany obligations (the "Intercompany
Debt") described in (i) of the definition of Retained Liabilities
in the Formation Agreement (including interest accruing on the
Intercompany Debt up to the date of repayment); and
(ii) to repay to the fullest extent possible the EASPP Notes not
already repaid.
3.7 Pelican and C&A will procure that all resolutions needed to give effect to
clause 3.6 are duly passed and to this end (and without limitation) will
instruct their respective Board nominees to vote in favor of any necessary
Board resolutions. The provisions of clause 7.6 will not apply to any such
Board resolutions.
3.8 The parties agree that at the end of each fiscal quarter of the Companies
all Free Cashflow earned by the Companies will be applied towards reducing
the principal amounts outstanding in respect of Principal Debt. For this
purpose "Free Cashflow" means in relation to any fiscal period the EBITDA
of the Companies for such period as adjusted for changes in working
capital employed in the business of the Companies and after deducting
interest, taxes and capital expenditure and reserves deemed necessary by
the Board for the business or as otherwise approved by the Board and
anticipated capital and working capital requirements. "Principal Debt"
means prior to the drawdown of the Bank Debt, the Inter-Company Debt and
EASPP Notes and thereafter the Bank Debt.
4. BOARD OF DIRECTORS AND MANAGEMENT
4.1 The Board will consist of eight Directors, in addition (in the case of the
Company or Components Sweden) to any employee representatives required by
Swedish law. Employee representatives will not have any of the powers
which Directors have (including without limitation the power to vote)
except and only to the extent required by law. Pelican and C&A will each
be entitled to nominate four Directors and four deputy Directors. Subject
to the foregoing limitation on number, the parties will ensure that the
Directors and deputy Directors nominated by Pelican and C&A, including
without limitation pursuant to Section 4.4, are elected to the Board at
each election of Directors.
4.2 A deputy Director nominated by Pelican or C&A as herein provided may
exercise the powers of a Director nominated by the same party when, but
only when such
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Director is not in attendance at a meeting of the Board or is otherwise
not available to exercise his powers as a Director. Deputy Directors will
be entitled to be present and speak at all meetings of the Board, but not
to vote except as provided in the first sentence of this Section 4.2.
4.3 Pelican will have the right to designate one of the Directors nominated by
Pelican as the Chairman of the Board, and C&A will have the right to
designate one of the Directors nominated by C&A as the Deputy Chairman of
the Board. A Deputy Director may act as Chairman or Deputy Chairman, as
the case may be, when entitled to exercise the powers of the Director
holding such office in accordance with the first sentence of Section 4.2.
4.4 Pelican and C&A will each have the right, exercisable in such party's sole
discretion, to remove from office (a) any Director or deputy Director
designated by such party (but not by any other party) and to nominate a
person to replace any Director or deputy Director designated by such party
(but not by any other party) who has resigned, been removed or ceased to
hold office for any other reason and (b) the Chairman and Deputy Chairman
elected in accordance with Section 4.3 (regardless of which party
nominated such removed individual); in which event the party who had the
right to nominate the removed individual under Section 4.3 will have the
right to appoint a successor thereto.
4.5 Meetings of the Board will be convened by the Chairman of the Board at
least once each fiscal quarter of the Company, unless otherwise agreed by
Pelican and C&A. At the written request of either Pelican or C&A (a copy
of which shall be sent simultaneously to the other party), the Chairman or
Deputy Chairman will, upon at least five Business Days' prior notice to
each of Pelican and C&A, convene a meeting of the Board at any time within
five Business Days of such notice. Except as otherwise required by
applicable law, all meetings of the Board will be held as agreed by
Pelican and C&A, or, absent such agreement, at Components Belgium's
offices. Any Director or deputy Director may participate in any Board
meeting by conference telephone or similar means by which all participants
may communicate with each other and all meetings of the Board will be held
in locations in which such means of participation is available. The
Chairman of the Board or Deputy Chairman of the Board will produce and
circulate to each member of the Board at least three Business Days in
advance of any Board meeting an agenda for each Board meeting and such
additional supporting materials as such person may determine in good faith
to be reasonably appropriate in the circumstances. No
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action may be taken by the Board which is not identified in any such
agenda.
4.6 No meetings of the Board will be valid, and no action taken at a meeting
by the Board will be valid, unless at least seven Directors (including any
deputy Director properly replacing a Director for such meeting) are
present or otherwise participating; provided, however, that if, at any
meeting of the Board, there is not present or otherwise participating a
sufficient number of Directors to hold a valid meeting, either Pelican or
C&A may request (either directly or indirectly) the Chairman or Deputy
Chairman to adjourn the meeting and, upon not less than five Business
Days' prior written notice to all Directors and Deputy Directors,
reconvene such meeting in accordance with Section 4.5 and such reconvened
meeting will be valid, and all actions properly taken at such meeting will
be valid, even if less than seven Directors are present, provided that the
only matters which may be considered by the Directors at such reconvened
meeting are those of which notice was given for the prior meeting.
4.7 Notwithstanding any other provision of this Agreement, C&A will have the
right at all times to designate and remove the Managing Director of each
of the Companies after prior consultation with Pelican for any reason and,
in accordance with C&A's request, the Board shall appoint or remove any
Managing Director. Notwithstanding any other provision of this Agreement,
Pelican will, in its discretion, have the right at all times to remove the
Managing Director of any of the Companies for bad faith, malfeasance or
fraud and for such other reason as in Pelican's reasonable opinion
prejudices its interests as a shareholder of the Company.
4.8 The Board will direct the Managing Directors to submit to the Board (a)
monthly statements of operations not more than 15 calendar days after the
end of each month and such other periodic reports as may be required by
the Board, and (b) at least 30 calendar days prior to each fiscal year, a
proposed annual budget which includes projected revenues, expenses,
capital expenditures and cash flows for the ensuing year.
4.9 The Managing Director of each of the Companies (other than JV Holdings)
will be a full time employee and will, subject to the terms of this
Agreement and such limitations as may from time to time be imposed by the
Board,
(a) have the authority to manage the day-to-day business and affairs of
his or her company;
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(b) be responsible to and report to the Board;
(c) have the authority to implement determinations of the Board; and
(d) have such other authority as is provided by applicable law.
4.10 Whenever this Agreement requires an action to be taken by the Board of any
of the Companies, Pelican, C&A and each of the Companies will use all
reasonable efforts to cause such action to be taken.
4.11 The members of the Board will also constitute members of the board of
directors of each of Components Sweden and Components Belgium
(collectively, the "Subsidiary Boards"), except that members of the Board
who are elected by employees rather than Pelican or C&A will not be
members of the Subsidiary Boards unless required by Law and may, if
requested by the Chairman of the Board or Deputy Chairman of the Board, be
excused from any deliberations or actions by a Subsidiary Board of which
they are not a member. Each meeting of the Board will also constitute a
meeting of the Subsidiary Boards and no action may be taken by any
Subsidiary Board that is not approved by the Board as herein provided.
5. GENERAL AND SPECIAL MEETINGS OF SHAREHOLDERS
5.1 General or special meetings of shareholders of the Company will be
convened when required by law or the Articles of Association of the
Company and will be held in Brussels, Belgium, unless otherwise agreed by
Pelican and C&A or the Board or otherwise required by law.
5.2 No general or special meeting of shareholders of the Company will be
valid, and no resolution may be passed at a general or special meeting of
shareholders, unless both Pelican and C&A are each represented at such
meeting by a duly authorized representative; provided, however, that if
either Pelican or C&A is not represented at a general or special meeting
of shareholders of the Company, such meeting shall be adjourned and the
other shareholder may direct the Company to reconvene such meeting, upon
at least fourteen days' prior written notice (or such longer period as may
be required by law or the Company's Articles of Association), which
reconvened meeting will be valid, and all resolutions adopted at such
meeting by the holders of a simple majority of the shares represented at
such meeting, unless otherwise provided by Swedish Law, will be binding,
even if either Pelican or C&A is not represented at such special meeting;
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provided further however, that the only matters which may be considered by
the shareholders at such reconvened meeting are those of which notice was
given for the prior meeting.
5.3 The Chairman of the Board (or any Deputy Director properly replacing him),
or in his absence, the Deputy Chairman, shall act as chairman at any
general or special meeting of shareholders, but shall have no voting
rights at any such meeting.
6. AUDITORS, ACCOUNTING AND ACCESS
6.1 Unless otherwise determined by the Board, the Companies' auditor will be
Ernst & Young.
6.2 The Companies will keep records of their assets and liabilities and their
results of operations according to applicable generally accepted
accounting principles and legal requests.
6.3 The Companies will each allow the representatives of Pelican and C&A
(including representatives who are authorized public accountants) access
to such of their buildings and other properties, employees, books and
records, and other data and information as such party may reasonably
request. The Companies will cause their respective auditors to give
Pelican and C&A access to their records and personnel, upon reasonable
request.
6.4 Unless otherwise approved by the Board as herein provided and subject to
the requirements of applicable law, the fiscal year of the Companies will
end on the last Saturday in December of each year.
7. BOARD AND SHAREHOLDER RESOLUTIONS
7.1 Unless otherwise required by applicable law, the Articles of Association
or Section 5.2 or 7.6 of this Agreement, all resolutions at general and
special meetings of shareholders and meetings of the Board of the Company,
Components Belgium and Components Sweden will be adopted only if approved
(a) in the case of a shareholders meeting, by the holders of a majority of
the issued and outstanding voting shares and (b) in the case of a Board
meeting, except as expressly provided in Section 4.6, by at least 75% of
the members of the Board and at least one Director nominated by Pelican
and one Director nominated by C&A.
7.2 Except to the extent otherwise provided in Section 7.6 of this Agreement,
the following actions shall not be taken by the Company, Components
Belgium or Components Sweden, until a resolution providing therefor has
been
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approved (a) at a meeting of the Board of such Company or (b) at a general
or special meeting of shareholders of the Company, by both Pelican and
C&A:
(a) any amendment to the Articles of Association of any of the Companies;
(b) any change in the share capital and any issuance of new shares or any
convertible bonds, convertible notes, convertible debentures, share
options or other similar rights which are convertible into or
exchangeable or exercisable for shares of any of the Companies;
(c) any termination, dissolution or liquidation of any of the Companies
(other than a compulsory liquidation according to law) or any merger
with, or purchase of all or substantially all of the assets or shares
of, another company by any of the Companies, or any sale or other
transfer of all or substantially all of the assets or shares of any of
the Companies;
(d) any loan or credit to or from any shareholder of the Company or its
officers or Affiliates, and any guarantee or indemnity for the benefit
of any such shareholder, officer or Affiliate (other than loans,
credits, guarantees or indemnities among the Companies), by any of the
Companies;
(e) any incurrence of any indebtedness for borrowed money by any of the
Companies (including the giving of any guarantee, security or
indemnity) other than (i) indebtedness incurred by any Company in
accordance with either the Business Plan or annual budget (including
any Interim Budget) then in effect; (ii) indebtedness incurred by any
Company in accordance with any revolving credit facility, line of
credit or other unused credit facility approved by the Board; (iii)
indebtedness in an additional amount aggregating for all Companies not
more than $5,000,000 principal amount outstanding at any time in
addition to the aggregate amount of the Intercompany Debt and the
EASPP Notes ("Starting Debt"); and (iv) intra-company indebtedness;
(f) any imposition of any lien, mortgage, charge, security interest or
other encumbrance on the assets of any of the Companies to secure an
obligation of any of the Companies other than such as are a "Permitted
Security Interest" under Section 5 of Schedule 6.1 to the Formation
Agreement or are first imposed prior to the
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Effective Date (in respect of Starting Debt or otherwise);
(g) any capital expenditures by any of the Companies in excess of $100,000
in any fiscal year for any land, building or other capital asset other
than those in accordance with the Business Plan or annual budget
(including any Interim Budget) then in effect or otherwise approved in
advance by the Board;
(h) any fee, remuneration or other benefit to any Director of any of the
Companies, except for disbursements incurred by such Director in the
performance of his duties and supported by reasonable substantiating
documentation;
(i) any declaration, payment or making of any dividend or other similar
distribution of any of the Companies' assets;
(j) any appointment of any person with signing authority for any of the
Companies other than authorities reasonably necessary to enable the
business of any of the Companies to be carried out in the ordinary
course thereof;
(k) any change in the material terms of any employment agreement with the
Managing Director of any of the Companies (it being understood that a
Managing Director appointed in accordance with Section 4.7 may be
given an employment agreement having the same material terms as were
applicable to such person's predecessor without further action by the
Board);
(l) the approval of the annual financial statements;
(m) any approval of any annual budget or any material modification of the
strategic direction set forth in the Business Plan; provided, however,
that, (i) notwithstanding the provisions of this Section 7.2 or
Section 7.5, in the event that the Board is unable to agree upon the
annual budget for the Companies for any year, the budget in effect for
the year prior to such year shall be the Companies' budget for such
year (the "Interim Budget") until the Board is able to agree upon a
new budget, except that in no such event shall the Companies' capital
expenditures in any fiscal year to which any such Interim Budget
applies exceed the amount of depreciation and amortization (calculated
in accordance with the principles used in preparing the Companies'
financial statements)
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for such year and (ii) any debt incurred for a specific purpose not in
the ordinary course of business will not be deemed to authorize any
additional incurrence of such debt under the Interim Budget;
(n) any agreement by any of the Companies which by its terms (i) provides
for the payment by such Company of more than $100,000 in the aggregate
or such other amount as may from time to time be approved by the Board
in accordance with this Section 7.2 or (ii) has an initial term of
longer than 24 months and is outside the ordinary course of business;
(o) any change in the fiscal year of any of the Companies; and
(p) any change in the name of any of the Companies.
7.3 All minutes of meetings of the Board and shareholders of each of the
Companies will be written in the English language (which version will be
governing in the event of any dispute) and, at the request of Pelican,
translated into Swedish whenever required by law.
7.4 Except to the extent such authority has been delegated in accordance with
applicable law, the authority to execute any document or otherwise act to
bind any of the Companies may only be exercised by the Managing Director
in accordance with the Swedish Companies Act or the Belgium Companies Act,
as the case may be, or by joint signature of any two members of the Board
provided that one such Director has been appointed by Pelican and the
other has been designated by C&A.
7.5 If the required director vote for a decision on a matter described in
Section 7.2 cannot be obtained at a meeting of the Board and/or a general
or special meeting of shareholders (a "Meeting"), the following procedure
will apply:
first:
the matter may be removed from the agenda of such Meeting;
second:
if said matter is not so removed, then the parties will try to resolve
the matter after consultation with their lawyers and auditors;
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third:
if said matter is not so resolved within one month of such Meeting,
then the Chief Executive Officers ("CEO") of each of Pelican and C&A
or any other person assigned by such CEO (excluding Directors and
deputy Directors of the Company) will meet within two months of the
Meeting at which the matter was removed from the agenda to discuss in
good faith whether there is a mutually acceptable solution to the
matter.
7.6 Notwithstanding any other provision of this Agreement, except to the
extent prohibited by the Swedish Companies Act, matters relating to the
subject matter of this Section 7.6 shall be determined at a meeting of the
Board and whenever the Board is taking any action with respect to (a) a
proposed transaction between any of the Companies, on the one side, and
Pelican, C&A or any of their respective Affiliates, on the other side, (b)
the assertion of any rights by any of the Companies against Pelican, C&A
or any of their respective Affiliates, or (c) any other matter in which
the interests of any of the Companies on the one side, and Pelican, C&A or
any of their respective Affiliates, on the other side, are adverse, no
Director nominated by the party whose (or whose Affiliates') interests are
adverse to those of any of the Companies may vote upon any resolution of
the Board relating to such matter, and any such resolution may be adopted
solely by a majority of the Directors voting upon such resolution;
provided, however, that these provisions shall not require Board approval
of the continuation of the current Nedcar collaboration arrangement
described in Section 9.3(c) of the Formation Agreement during the term of
the current Nedcar arrangement (the parties acknowledging, however, that
any other issues relating to the Nedcar arrangement (including without
limitation issues relating to Pelican Germany's compliance with its
obligations thereunder and the remedies to be pursued in the event of
noncompliance) or to Section 9.3(c) of the Formation Agreement will be
determined by the Board on behalf of the Companies solely by the members
of the Board not nominated by Pelican without prejudice to Pelican's
rights under the Formation Agreement to dispute any termination of the
Nedcar arrangement pursuant to Section 9.3(c) thereof). For purposes of
this Section 7.6, none of the Companies shall be deemed to be an Affiliate
of Pelican or C&A.
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8. ROLE OF C&A
8.1 Until expiration of the C&A Call Option (as defined below), C&A will
provide to the Companies such general and advisory services as C&A
generally provides to its subsidiaries in the ordinary course of business
and are necessary or appropriate to manage the business and affairs of the
Companies if and to the extent such management is not provided by their
boards of directors, Managing Directors or other officers or employees of
the Companies (such services, the "C&A Services"). A list of the services
initially expected to be so provided is set forth as Schedule 8.1.
Notwithstanding any other provision hereof, the parties hereby acknowledge
and agree that such services will only be provided on an as-needed basis
and as contemplated by the first sentence of this Section 8.1 and that in
all events C&A will not be obligated hereunder or otherwise to provide any
service to any of the Companies if or to the extent that C&A or any of its
Subsidiaries would be required to incur any capital expense or hire any
personnel that or whom C&A did not intend to incur or hire (or cause or
permit an Affiliate to incur or hire) for any business or purpose
unrelated to the businesses or affairs of the Companies. C&A agrees that
the salaries of C&A's internal personnel who perform the C&A Services (but
not the salaries and other employee costs of employees of the Company)
will be included in the Service Fee provided for in Section 8.3. Such
internal personnel will include Messrs. L. Leijon and J. Vinberg so long
as they are employed by C&A or their replacements.
8.2 Notwithstanding any other provision hereof or of any applicable law, the
parties hereto hereby expressly acknowledges that, except as expressly
provided in Section 10, C&A and its Affiliates are engaged in, and may in
the future be engaged in, businesses and activities that are or may be
directly competitive with the business of the Companies and that, except
as provided in Section 10, (a) C&A and its Affiliates will be free to own
or otherwise participate directly or indirectly in the ownership or
operation of any business or activity of any Person, whether or not such
business or activity competes with or is enhanced by any business or
activity of the Companies and (b) C&A and its Affiliates will have no
liability to the Companies, Pelican or any other Person by reason of such
activities or the failure to submit any opportunity to the Companies.
Although it is C&A's intention to provide the C&A Services in good faith,
with due regard to the interests of the Companies and C&A in substantially
the same manner as C&A provides similar services to its other
Subsidiaries, the parties
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hereto hereby expressly acknowledge and agree that C&A or any Affiliate or
designee thereof will have no liability to the Companies, Pelican or any
other Person by reason of any act or omission, including negligence, in
providing the C&A Services except (x) for actual fraud intentionally
committed by an employee of C&A or such Affiliate or (y) in respect of any
transaction between any of the Companies on the one hand, and C&A or any
Affiliate thereof, on the other hand, unless such transaction was (1)
approved or ratified by the members of the Board designated by Pelican,
(2) permitted or required hereunder, or (3) effected on terms that are not
materially more favorable to C&A or its Affiliate party thereto than would
be available to an unrelated third party.
8.3 For the provision of C&A Services pursuant to Section 8.1, C&A will be
paid a quarterly fee (the "Service Fee") (payable at the time of delivery
of the Companies' quarterly financial statements to the Board) equal to
the lesser of (a) 1% of the quarterly consolidated total revenues of the
Companies as reflected in their then most recent consolidated quarterly
financial statements or (b) such fee as would have been charged for such
quarter in accordance with C&A Product's then-current method for
calculating the charge for similar services to its Affiliates. In
addition, promptly after the incurrence thereof, C&A will be reimbursed
for its actual and reasonable out-of-pocket costs and expenses incurred in
respect of the provision of C&A Services, including without limitation
travel and other expenses incurred by C&A internal personnel in providing
the C&A Services. The Company will reimburse C&A and Pelican for their
respective actual and reasonable travel and other out-of-pocket costs and
expenses incurred in attending Board and Shareholder meetings of the
Company. To the extent that any employees of JV Holdings or its Affiliates
are assigned to C&A Europe, JV Holdings and its Affiliates will invoice
C&A Europe all personnel related costs including but not limited to
salaries, social charges, company cars and travel expenses. As of
Completion there are two persons on the payroll of Components Sweden that
will be assigned to C&A Europe, namely Johann Vinberg and Lars Leijon and
on a proportional basis Sven-Ake Berglie and Inger Nielsen.
8.4 (a) To the fullest extent permitted by applicable law, each Company will
indemnify and hold harmless Pelican, C&A and each of their respective
Affiliates and any shareholder, director, officer, employee, agent,
Affiliate and professional or other advisor of Pelican, C&A or such
Affiliates (collectively, the "Indemnified
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Persons") from and against any and all loss, cost, damage, expense
(including without limitation fees and expenses of attorneys and other
advisors and any court costs incurred by any Indemnified Person) or
liability incurred by reason of any claim against such Indemnified
Person by any person or entity, which claim is asserted by reason of
the ownership of any of the Companies' share capital or the
participation in the business or affairs of any of the Companies, by
such Indemnified Person. Notwithstanding the foregoing, no Indemnified
Person shall be indemnified pursuant to the terms of the preceding
sentence, (i) to the extent that it is finally judicially determined
by a court of competent jurisdiction that the loss, cost, damage,
expense or liability resulted from the Indemnified Person's actual
fraud intentionally committed or willful misconduct, (ii) in the case
of Pelican and its Affiliates and any shareholder, director, officer,
employee, agent and professional or other advisor of Pelican or its
Affiliates, for any loss, cost, damage, expense or liability incurred
as a result of (x) Pelican's indemnification obligations pursuant to
the Formation Agreement or (y) the ownership of the Companies and
their assets, or the conduct of their businesses, prior to the
Effective Date, or (iii) in the case of C&A and its Affiliates and any
shareholder, director, officer, employee, agent and professional or
other advisor of C&A or its Affiliates, for any loss, cost, damage,
expense or liability incurred as a result of C&A's indemnification
obligations pursuant to the Formation Agreement. The Company will pay
in advance or reimburse reasonable expenses (including without
limitation advancing costs of defense) incurred by any Indemnified
Person who is or is threatened to be named or made a defendant,
respondent or witness in a proceeding concerning the business and
affairs of any of the Companies if the Indemnified Person delivers a
written undertaking to repay those amounts if it is finally judicially
determined by a court of competent jurisdiction, that the Indemnified
Person is not entitled to indemnification hereunder.
(b) The rights to indemnification under this Section 8.4 are not exclusive
of other rights which any Indemnified Person may otherwise have at law
or in equity, including without limitation rights to indemnification
or contribution, and nothing in this Section 8.4 will affect the
rights or obligations of any Indemnified Person (or the limitations on
those rights or obligations) under any other agreement or instrument
to which that Indemnified Person is a party (it being understood that
no Indemnified Person shall be entitled to recover in respect of any
claim under this Agreement
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more than once in respect of any matter to the extent that to do so
would constitute double recovery).
(c) Notwithstanding any other provision of this Agreement, if any
Indemnified Person receives notice of any action or proceeding to
enforce any third party claim under circumstances in which such
Indemnified Person believes that such Person is entitled to
indemnification pursuant to this Section 8.4, such Indemnified Person
may commence an action or proceeding against the Company in the same
court in which the action or proceeding was commenced by such third
party and, for such purpose, the Company hereby consents to personal
jurisdiction and waives all objections to venue. The Company agrees
that in any such action or proceeding process may be served upon it by
any means authorized by applicable statutes, rules, treaties or
conventions. If such service of process shall be made by any means as
aforesaid, no party shall contest in any court the same or the
personal jurisdiction of the court in which such action or proceeding
was commenced.
8.5 Subsequent Recoveries. Following the Effective Date, if any amount is paid
by any indemnifying party hereunder in discharge of all or part of any
claim for indemnity hereunder and such amount (or part thereof) is
subsequently recovered (whether by payment, discount, credit, set-off or
otherwise) by the indemnified party from an unrelated third party in
respect of the matter in relation to which the claim was made, the
indemnified party will, to the full extent permitted by Law, forthwith
repay to the indemnifying party a sum corresponding to such amount
recovered from the third party less all obligations, retrospective or
other premium adjustments, costs and expenses (including without
limitation attorney's and other fees and expenses) of such recovery and
less the net tax cost to the indemnified party of such recovery.
9. RESTRICTIONS ON TRANSFERS
9.1 During the term of this Agreement, neither Pelican nor C&A may offer,
sell, assign, grant a participation in, pledge or otherwise transfer or
dispose of ("Transfer") any interest in any of the Pelican Shares or the
C&A Shares, as the case may be, other than in an Unrestricted Transfer (as
defined below) or pursuant to the provisions of Sections 9.4, 9.5, 9.6 and
9.7. The Pelican Shares and the C&A Shares are both referred to herein as
"Shares".
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9.2 Each certificate representing Shares will include the following legend:
"The shares represented by this share certificate are subject to, and may
be transferred only in accordance with, a Shareholders Agreement dated
(date of signing of this Agreement), among Collins & Aikman Products Co.,
Collins & Aikman Europe, Inc., Perstorp G.m.b.H., Perstorp A.B., Perstorp
Biotec A.B., Perstorp Components N.V. and Perstorp Components A.B., a copy
of which is filed with the Company. Any such transfer in violation of such
Agreement is void."
9.3 (a) Any Transfer of Shares made in accordance with this Section 9.3 by
Pelican or C&A will constitute an "Unrestricted Transfer" for purposes
of this Agreement.
(b) Pelican or C&A may from time to time Transfer all or any portion of
its Shares to any Person which is either a direct or indirect wholly
owned Subsidiary or Holding Company of such party or a direct or
indirect wholly owned Subsidiary of any such Holding Company;
provided, however, that, notwithstanding anything to the contrary in
this Agreement, Pelican and C&A may not Transfer any Shares to any
such Person unless (i) such Person executes a written instrument
reasonably satisfactory to the other party agreeing to be bound by the
terms and provisions of this Agreement as if such Person had been an
original party to this Agreement and that such Shares so Transferred
will be automatically Transferred back to the Transferring party no
later than immediately prior to such Person ceasing to be its
Subsidiary and (ii) the Transferring party irrevocably and
unconditionally (jointly and severally with such other Person)
guarantees the due compliance by such Person of all of the obligations
pursuant to this Agreement.
9.4 C&A Call Option
(a) C&A will have the right (the "C&A Call Option") to purchase all, but
not less than all, of the Pelican Shares and an additional 0.01% of
the share capital of the Company (the sole ownership of which Pelican
hereby covenants to obtain prior to the C&A Call Option Closing) (such
share capital, collectively, the "Pelican Called Shares") at the
Exercise Price (as defined in Section 9.6) for a period (the "C&A Call
Option Term") commencing on the Effective Date and terminating 30 days
after the date of delivery of consolidated financial statements of the
Company for the 12th full fiscal quarter completed after the Effective
Date. C&A may exercise the C&A Call Option at any time during the C&A
Call Option Term by delivering a written notice (the "C&A Call Option
Notice") to Pelican not more than 30 calendar days
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after any date during the C&A Call Option Term on which consolidated
financial statements of the Company are delivered to shareholders
following the completion of any fiscal quarter during the C&A Call
Option Term.
(b) The consummation of the purchase of the Pelican Called Shares pursuant
to the C&A Call Option (the "C&A Call Option Closing") will be held as
soon as practicable, but not later than 30 days after, the delivery of
the C&A Call Option Notice. At the C&A Call Option Closing, (i)
Pelican will deliver to C&A one or more certificates evidencing all of
the Pelican Called Shares duly endorsed for transfer to C&A, together
with such other duly executed instruments or documents as may be
reasonably required to permit C&A to acquire the Pelican Called Shares
free and clear of any and all claims, liens, pledges, charges,
encumbrances, security interests, options, trusts, commitments and
voting and other restrictions of any kind (collectively,
"Encumbrances"), except for Encumbrances created by this Agreement,
any applicable securities laws or C&A; (ii) C&A will deliver to
Pelican, by certified or official bank check or wire transfer to such
accounts as are designated by Pelican, an amount in immediately
available funds equal to the Exercise Price; and (iii) Pelican will be
deemed without further action (A) to represent and warrant to C&A
that, upon the C&A Call Option Closing, Pelican will convey and C&A
will acquire the entire record and beneficial ownership of, and good
and valid title to, the Pelican Called Shares, free and clear of any
and all Encumbrances, except for Encumbrances created by this
Agreement, any applicable securities laws or C&A and (B) to agree that
for a period of three years from the C&A Call Option closing neither
it nor any of its Affiliates will (x) establish or seek to establish
any manufacturing or assembly facility in Sweden, Belgium, Holland or
Luxembourg that manufactures any products for sale in the automotive
industry that are of a type also manufactured or sold by any of the
Companies on the date of the C&A Call Option Closing, (y) obtain in
any manner, or bid on or otherwise seek to obtain in any manner, any
of the automotive original equipment programs that have been awarded
to any of the Companies prior to or after Completion or (z) solicit
for hire any officer or employee of any Company who at any time during
the period of six months prior to the date of such solicitation was in
possession of confidential information relating to the Business. The
restrictions placed on Pelican and its Affiliates pursuant to clause
(B) of the preceding sentence will not prevent any of them from
acquiring another company, group of companies or business (the
"Acquired Entity") which was already engaged in such activity (the
"Relevant Business")
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prior to such acquisition, provided that the annual turnover of the
Relevant Business as shown in the most recently audited annual
accounts of the Acquired Entity prior to the acquisition did not
account for more than 25% of the aggregate turnover of the Acquired
Entity as shown by such accounts. If, however, Pelican or any of its
Affiliates acquires any Relevant Business, such entity will promptly
notify C&A and will procure that the Relevant Business is offered for
sale to C&A at not more than that part of the purchase price paid by
such entity for the Acquired Entity allocated in accordance with GAAP
to the Relevant Business of such Acquired Entity, and C&A will be
given three months to decide whether to accept such offer and to
negotiate appropriate terms. The principles set forth in Sections 10.6
and 10.7 shall be applied in interpreting and enforcing the preceding
sentence and clause (B) of the second preceding sentence.
9.5 Pelican Call Option
(a) Upon termination and expiration of the C&A Call Option without such
option having been exercised (the "C&A Expiration"), Pelican will have
the right (the "Pelican Call Option") to purchase all, but not less
than all, of the C&A Shares and an additional 0.01% of the share
capital of the Company (the sole ownership of which C&A hereby
covenants to obtain prior to the Pelican Call Option Closing) (such
share capital, collectively, the "C&A Called Shares") at the Exercise
Price during the period (the "Pelican Call Option Term") commencing on
the date of the C&A Expiration and ending on the first anniversary
thereof. Pelican may exercise the Pelican Call Option by delivering a
written notice (the "Pelican Call Option Notice") to C&A not more than
30 days after each date during the Pelican Call Option Term on which
consolidated financial statements of the Company are delivered to
shareholders following the completion of any fiscal quarter during the
Pelican Call Option Term.
(b) The consummation of the purchase of the C&A Called Shares pursuant to
the Pelican Call Option (the "Pelican Call Option Closing") will be
held as soon as practicable, but not later than 30 days, after the
delivery of the Pelican Call Option Notice. At the Pelican Call Option
Closing, (i) C&A will deliver to Pelican one or more certificates
evidencing all of the C&A Called Shares duly endorsed for transfer to
Pelican, together with such other duly executed instruments or
documents as may be reasonably required to permit Pelican to acquire
the C&A Called Shares free and clear of any and all Encumbrances,
except for Encumbrances created by this Agreement, by any
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applicable securities laws or by Pelican; (ii) Pelican will deliver to
C&A by certified or official bank check or wire transfer to such
accounts as are designated by C&A an amount in immediately available
funds equal to the Exercise Price; and (iii) C&A will be deemed
without further action (A) to represent and warrant to Pelican that,
upon the Pelican Call Option Closing, C&A will convey and Pelican will
acquire the entire record and beneficial ownership of, and good and
valid title to, the C&A Called Shares, free and clear of any and all
Encumbrances, except for Encumbrances created by this Agreement, any
applicable securities laws or Pelican, and (B) to agree that for a
period of three years from the Pelican Call Option Closing neither it
nor any of its Affiliates will (x) establish or seek to establish any
manufacturing or assembly facility in Sweden, Belgium, Holland or
Luxembourg that manufactures any products for sale in the automotive
industry that are of a type also manufactured or sold by any of the
Companies on the date of the Pelican Call Option Closing, (y) obtain
in any manner, or bid on or otherwise seek to obtain in any manner,
any of the automotive original equipment programs that have been
awarded to any of the Companies prior to or after Completion or (z)
solicit for hire any officer or employee of any Company who at any
time during the period of six months prior to the date of such
solicitation was in possession of confidential information relating to
the Business. The restrictions placed on C&A and its Affiliates
pursuant to clause (B) of the preceding sentence will not prevent any
of them from acquiring another company, group of companies or business
(the "Acquired Entity") which was already engaged in such activity
(the "Relevant Business") prior to such acquisition, provided that the
annual turnover of the Relevant Business as shown in the most recently
audited annual accounts of the Acquired Entity prior to the
acquisition did not account for more than 25% of the aggregate
turnover of the Acquired Entity as shown by such accounts. If,
however, C&A or any of its Affiliates acquires any Relevant Business,
such entity will promptly notify Pelican and will procure that the
Relevant Business is offered for sale to Pelican at not more than that
part of the purchase price paid by such entity for the Acquired Entity
allocated in accordance with GAAP to the Relevant Business of such
Acquired Entity and Pelican will be given three months to decide
whether to accept such offer and to negotiate appropriate terms. The
principles set forth in Section 10.6 and 10.7 shall be applied in
interpreting and enforcing the preceding sentence and clause (B) of
the second preceding sentence.
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9.6 Exercise Price
(a) The "Exercise Price" will be an amount equal to:
0.50 x [(EBITDA x M) - I]
Where: (i) "EBITDA" means the consolidated net income of the Companies
before interest, taxes, depreciation, amortization and service fees,
as adjusted for extraordinary items (non-recurring items and other
items not related to the operations of the Business), as shown on the
consolidated income statement for the Companies for the 12 month
period ended on the last day of the most recent fiscal quarter prior
to the date on which the C&A Call Option Notice or Pelican Call Option
Notice, as the case may be, is given, prepared in accordance with
generally accepted accounting principles and in accordance with
consistent methods and principles, (ii) "M" means the Agreed Multiple
determined in accordance with Schedule 9.6(b) hereto and (iii) "I"
means all indebtedness for borrowed money and other obligations which
would constitute indebtedness as shown on a consolidated balance sheet
of the companies as of the date of completion of the transaction to
which the computation relates and any obligation or liability referred
to in clauses (i) through (iii), inclusive, of the definition of
"Retained Liabilities" in the Formation Agreement, such indebtedness
to be reduced by the amount of Free Cashflow as of the date of the
immediately preceding fiscal quarter determined in accordance with the
example set forth on Schedule 9.6(b), not previously applied to reduce
such indebtedness.
(b) "Agreed Multiple" means the ratio determined in accordance with
Schedule 9.6(b) attached hereto.
(c) The Exercise Price will be paid in United States dollars based upon
the currency exchange rate between United States dollars and Swedish
Krona, prevailing on the last day of the most recent fiscal quarter
prior to the date on which the C&A Call Option Notice or Pelican Call
Option Notice, as the case may be, is given, as indicated in the Wall
Street Journal, New York edition, on the first Business Day subsequent
to such date.
9.7 Rights of First Offer
(a) Subject to compliance with the remaining provisions of this Section
9.7, each party may Transfer any Shares after the termination and
expiration of the Pelican Call Option.
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(b) Prior to consummating any Transfer subject to this Section 9.7 (a
"Third-Party Sale"), the Party proposing to effect the Third-Party
Sale (the "Offering Party") will deliver to other party (the
"Non-Offering Party") a written notice (an "Offer Notice") specifying
(i) the number of shares proposed to be sold in such Third- Party Sale
(the "Offered Shares"), (ii) the aggregate amount of cash
consideration (the "Offer Price") for which the Offering Party
proposes to sell the Offered Shares, (iii) the identity of the
purchaser in such Third-Party Sale, and (iv) all other material terms
of such proposed Third-Party Sale. If the Non-Offering Party delivers
to the Offering Party a written notice (an "Acceptance Notice") within
20 Business Days following the delivery of the Offer Notice (such 20
Business Day period being referred to herein as the "ROFO Acceptance
Period") stating that such Non- Offering Party irrevocably and
unconditionally agrees to purchase all (but not less than all) of the
Offered Shares for the Offer Price and on the other terms set forth in
the Offer Notice, the Offering Party will sell all (but not less than
all) of the Offered Shares to such Non-Offering Party, and such
Non-Offering Party will purchase all such Offered Shares from the
Offering Party, on the terms and subject to the conditions set forth
below.
(c) The consummation of any purchase of Offered Shares by the Non-Offering
Party pursuant to this Section 9.7 (the "ROFO Closing") will occur not
earlier than 30 Business Days nor later than 60 Business Days
following the delivery of the Acceptance Notice (the intervening
period being referred to herein as the "ROFO Closing Period") at such
time and place as may be agreed upon by the Offering Party and the
Non-Offering Party or, if such parties fail to agree to such place, at
the principal office of the Company at 10:00 a.m. (local time) on the
last day of the ROFO Closing Period. At the ROFO Closing, (i) the
Offering Party will deliver to the Non-Offering Party one or more
certificates evidencing all of the Offered Shares duly endorsed for
transfer to the Non-Offering Party, together with such other duly
executed instruments or documents as may be reasonably required to
permit the Non-Offering Party to acquire the Offered Shares free and
clear of any and all Encumbrances, except for Encumbrances created by
this Agreement, any applicable securities laws or the Non-Offering
Party, (ii) the Non-Offering Party will deliver to the Offering Party
by certified or official bank check or wire transfer to an account
designated by the Offering Party an amount in immediately available
funds equal to the Offer Price, and (iii) the Offering Party will be
deemed to represent and warrant to the Non-Offering Party that, upon
the ROFO Closing, the
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Offering Party will convey and the Non-Offering Party will acquire the
entire record and beneficial ownership of, and good and valid title
to, the Offered Shares, free and clear of any and all Encumbrances,
except for Encumbrances created by this Agreement, any applicable
securities laws or the Non-Offering Party.
(d) If no Acceptance Notice relating to a proposed Third- Party Sale is
delivered to the Offering Party prior to the expiration of the ROFO
Acceptance Period, or an Acceptance Notice is so delivered to the
Offering Party but the ROFO Closing fails to occur prior to the
expiration of the ROFO Closing Period, the Offering Party may
consummate the proposed Third-Party Sale in accordance with Section
9.7(e); provided, however, that no such Third Party Sale may be
consummated if the ROFO Closing failed to occur due to the fault of
the Offering Party (in which case, in addition to the Non- Offering
Party's right to damages or to injunctive or other equitable relief,
the last sentence of Section 9.7(e) shall be applicable).
(e) The Offering Party may consummate a Third-Party Sale that it is
otherwise entitled to consummate pursuant to Section 9.7(d) only (i)
during the 60 Business Day period immediately following the expiration
of the ROFO Acceptance Period (in the event that no Acceptance Notice
was timely delivered to the Offering Party) or the ROFO Closing Period
(in the event an Acceptance Notice was timely delivered to the
Offering Party but the ROFO Closing failed timely to occur) and (ii)
to the purchaser and on the terms set forth in the Offer Notice. If
any Third Party Sale is not consummated in accordance with the
provisions of this Section 9.7(e), the Offering Party may not Transfer
its Shares to any third party without again complying with the
provisions of this Section 9.7.
9.8 No party will enter into any transaction or series of transactions for the
purpose or with the effect of, directly or indirectly, denying or
impairing in any material respect the rights or obligations of any party
under Sections 9.4, 9.5 or 9.7 and any attempt to Transfer any Shares not
in compliance with this Agreement will be null and void.
9.9 Notwithstanding any other provision hereof, the Company will not issue any
shares of capital stock to a shareholder without offering to C&A and
Pelican, by notice given to the other shareholders at least 15 Business
Days prior to the date of such issuance, the right to purchase its pro
rata share of such capital stock on the same terms as such capital stock
is to be issued to the other shareholders. The procedures for
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the acceptance of any such offer and the closing of any such issuance will
be as determined by the Board.
9.10 Individual Shareholders Agreements
(a) On the Effective Date, C&A will enter into an agreement with a Person
designated by C&A and reasonably acceptable to Pelican substantially
in the form of Schedule 9.10(a)(i) attached hereto (the "C&A
Individual Shareholder Agreement") and on the Effective Date Pelican
will enter into an agreement with a Person designated by Pelican and
reasonably acceptable to C&A substantially in the form of Schedule
9.10(a)(ii) attached hereto (the "Pelican Individual Shareholder
Agreement" and, together with the C&A Individual Shareholder
Agreement, the "Individual Shareholder Agreements"). Neither Pelican
nor C&A will make any amendment or alteration of any of the Individual
Shareholder Agreements without the prior written consent of the other
party.
(b) Upon C&A's exercise of the C&A Call Option or delivery of a ROFO
Acceptance Notice, Pelican will at the C&A Call Option Closing or the
ROFO Closing, as the case may be, assign to C&A all its rights and
obligations pursuant to the Pelican Individual Shareholder Agreement.
Upon Pelican's exercise of the Pelican Call Option or delivery of a
ROFO Acceptance Notice, C&A will at the Pelican Call Option Closing or
ROFO Closing, as the case may be, assign to Pelican all its rights and
obligations pursuant to the C&A Individual Shareholder Agreement.
(c) In the event any party hereto exercises its option right pursuant to
any of the Individual Shareholder Agreements, such party shall
promptly inform the other party in writing of such exercise.
9.11 Pre-Emptive rights
The parties hereby waive any pre-emptive rights they may have according to
the Articles of Association of the Company in connection with any transfer
of shares made under the provisions of this Article 9 or any of the
Individual Shareholder Agreements.
9.12 Indemnity for Assurances
If either C&A or Pelican exercises its rights hereunder to purchase from
the other the Pelican Shares or the C&A Shares, respectively, without
further action, it will be a condition to the consummation of the
transaction that the purchasing shareholder shall have
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either (i) arranged for the refinancing of all bank debt of the Companies
as to which the selling shareholder or any of its Affiliates (other than
the Companies) has either given its guarantee or other assurance of
payment (an "Assurance") which refinancing will include a release of the
selling Shareholder from all liability under any such Assurance or (ii)
otherwise obtained the release of the selling Shareholder or any of its
Affiliates (other than the Companies) from all liability under any
Assurance previously given by the selling shareholder; provided, however,
that such release will not be required in respect of any breach of any
such Assurance to the extent occurring in whole or in part prior to the
completion of such purchase.
10. RESTRICTIONS ON THE PARTIES
10.1 During the period (the "Noncompetition Term") commencing on the Effective
Date and ending on the date on which the C&A Call Option or the Pelican
Call Option is exercised or, if earlier, December 31, 2000, Pelican and
C&A will not, and each of C&A Products and Pelican Corp will cause their
respective Affiliates not to, directly or indirectly, establish or seek to
establish or be interested in any manufacturing or assembly facility in
Sweden, Belgium, Holland or Luxembourg that manufactures any of the
products for sale in the automotive industry that are of a type also
manufactured or sold by any of the Companies and the Companies will not,
directly or indirectly, establish any manufacturing facility at any
location other than their current locations (and any adjacent properties)
unless approved by the Board.
10.2 During the Noncompetition Term, C&A and its Affiliates, on the one hand,
and the Companies, on the other hand, will not obtain in any manner, or
bid on or otherwise seek to obtain in any manner, any of the automotive
original equipment programs that have been awarded to the other prior to
or after the Effective Date.
10.3 During the Noncompetition Term, Pelican and its Affiliates, on the one
hand, and the Companies, on the other hand, will not obtain in any manner,
or bid on or otherwise seek to obtain in any manner, any of the automotive
original equipment programs that have been awarded to the other prior to
or after the Effective Date.
10.4 During the Noncompetition Term, Pelican and C&A and their Affiliates, on
the one hand, and the Companies, on the other hand, will not solicit for
hire any officer or employee of any Company who at any time
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during the period of six months prior to the date of such solicitation was
in possession of confidential information relating to the Business.
10.5 Except insofar as may be required by law and in any event only after prior
consultation with the other parties hereto (to the extent reasonably
practicable), and except as contemplated by this Agreement, (a) neither
Pelican and its Affiliates nor C&A or its Affiliates will at any time
disclose to any Person not a party to this Agreement or a director,
officer or employee thereof any trade secret or other confidential
information which it holds in relation to any of the Companies or its
affairs and (b) each party hereto will cause its directors, officers and
employees not to disclose to any Person not a party to this Agreement or a
director, officer or employee thereof any trade secrets or other
confidential information which such director, officer or employee holds in
relation to any of the Companies or its affairs. C&A and its Affiliates
may disclose to their directors, officers, employees, agents and advisers
such information as is necessary or appropriate to perform the services
contemplated by Section 8.
10.6 Each party acknowledges and agrees that each of Sections 10.1 through 10.5
constitutes an entirely separate and independent restriction and that the
duration, extent and application of each restriction are no greater than
is reasonable and necessary for the protection of the interests of the
other party and each of the Companies but that, if any such restriction
were to be adjudged by any court or authority of competent jurisdiction to
be void or unenforceable but would be valid if part of the wording thereof
were to be deleted and/or the period thereof were to be reduced and/or the
area dealt with thereby were to be reduced, such restriction will apply
within the jurisdiction of that court or competent authority with such
modifications as are necessary to make it valid and effective.
10.7 Each party acknowledges that any breach of any of the covenants contained
in Sections 10.1 through 10.5 would cause an irreparable injury to the
other parties and that damages and remedies at law for any breach of such
would be inadequate. The parties acknowledge that, in addition to any
other remedies available to the other party, it will be entitled to
injunctive relief and other equitable relief to prevent an actual,
intended, likely or probable breach of such covenant.
10.8 During the Noncompetition Term, each of C&A Products and Pelican AB will
procure that no company which is one of its respective Subsidiaries and
which is a party
27
<PAGE>
to the Intellectual Property Agreement will cease to be such a Subsidiary
until such company has undertaken (in a form reasonably satisfactory to
the Companies) to be bound by the covenants set out in this Section 10.
11. TERM OF AGREEMENT
11.1 This Agreement will become effective upon the Effective Date and continue
in full force and effect for a period of six years thereafter. If not
terminated by written notice given by either party at least six months
before the six-year anniversary date, it will be automatically extended
for additional periods of two years unless and until terminated by written
notice at least six months prior to the expiration of any such additional
period.
11.2 Notwithstanding the foregoing, this Agreement will terminate automatically
upon the occurrence of any of the following events:
(a) any reorganization, merger, consolidation or sale of shares in the
Company approved in advance by Pelican and C&A if following such
reorganization, merger, consolidation or sale, Pelican and C&A do not
beneficially own, directly or indirectly, 75% or more of the combined
voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors of the corporation or
corporations resulting from such reorganization, merger, consolidation
or sale; or
(b) the consummation of the C&A Call Option Closing, the Pelican Call
Option Closing or any ROFO Closing; provided, however, that (i) in the
event that C&A exercises the C&A Call Option or otherwise purchases
the Pelican Shares, the provisions of Sections 9.4(b) and 10.1 through
10.5, as applied to Pelican and its Affiliates, will continue in full
force and effect for three years after the consummation of any such
event and (ii) in the event that Pelican exercises the Pelican Call
Option or otherwise purchases the C&A Shares, the provisions of
Sections 9.5(b) and 10.1 through 10.5, as applied to C&A and its
Affiliates, will continue in full force and effect for three years
after the consummation of any such event.
12. MISCELLANEOUS
12.1 Prior to any Affiliate of Pelican or C&A which is the owner of Shares
ceasing to be an Affiliate of Pelican or C&A, respectively, Pelican or
C&A, as the case may be, will cause such Affiliate to Transfer all Shares
owned by it to another Affiliate of Pelican or C&A.
28
<PAGE>
12.2 No variation of this Agreement will be valid unless it is in writing and
signed by or on behalf of each of the parties hereto. The expression
"variation" will include any amendment, variation, supplement, deletion or
replacement however effected.
12.3 Each of the parties hereto will pay its own Costs incurred in connection
with the negotiation, preparation and implementation of this Agreement.
12.4 Without limiting the generality or effect of Section 10.6, if any
provision of this Agreement is held to be invalid or unenforceable, then
such provision will (so far as it is invalid or unenforceable) be given no
effect and will be deemed not to be included in this Agreement but without
invalidating any of the remaining provisions of this Agreement. The
parties will use all reasonable endeavors to replace the invalid or
unenforceable provisions by a valid provision the effect of which is as
close as possible to the intended effect of the invalid or unenforceable
provision.
12.5 This Agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which, when executed
and delivered, will be an original, but all the counterparts will together
constitute one and the same instrument.
12.6 (a) Any notice or other communication required or permitted to be given
under this Agreement will be in writing and signed by or on behalf of
the party giving it and may be served by hand delivery, delivery by a
recognized international courier service (such as UPS, DHL or Federal
Express) or transmission by facsimile to the address and for the
attention of the relevant party set out in Section 17.2 of the
Formation Agreement (or as otherwise notified from time to time
thereunder). Any notice so delivered will be deemed to have been
received (i) in the case of facsimile transmission, 12 hours after the
time of dispatch, and (ii) in the case of hand delivery (whether or
not by courier service), upon such delivery.
(b) In proving such notice, it will be sufficient to prove that the
envelope containing such notice was properly addressed and delivered
to the address shown thereon or that the facsimile transmission was
made, provided, however, that, in the case of facsimile transmission,
it must also be proven that hand delivery or delivery by a recognized
international courier service (such as UPS, DHL or Federal Express)
was made on the parties hereto (but not the lawyers contemplated to
receive copies) within five Business Days thereof.
29
<PAGE>
12.7 Each of the parties hereto hereby represents to the others that the
execution and delivery of this Agreement and the performance thereof does
not and will not contravene or constitute a default under its
constitution, by-laws or any other agreement, instrument or other form of
commitment to which a party hereto is also bound.
12.8 Failure by any party to this Agreement to assert its rights in respect of
any violation of this Agreement shall not be deemed a waiver of such
rights nor shall any waiver be implied from any act or omission. No waiver
in writing by a party with respect to any right shall extend its effect to
any subsequent violation either of whatsoever kind.
12.9 Save as expressly provided herein, neither this Agreement nor any rights,
benefits or obligations hereunder shall be assignable or transferable in
whole or in part, whether by operation of law or otherwise, by any of the
parties hereto without the prior written consent of the other parties;
provided, however, that either Pelican or C&A may assign its rights
immediately prior to and in connection with exercising the Pelican Call
Option or the C&A Call Option, as the case may be.
12.10 Pelican and C&A each agree that in all matters concerning the Companies
for which it is called upon to exercise its rights to vote, either as a
shareholder or through a Director, such rights must be exercised in good
faith and in conformity with the requirements of this Agreement, to the
extent applicable thereto.
12.11 In the event of any conflict between the terms of this Agreement and its
Exhibits and Schedules, the terms of this Agreement will, as among the
parties hereto, prevail and the parties will forthwith cause such
necessary alterations to be made to the Exhibits and Schedules so as to
resolve such conflict.
12.12 This Agreement does not render, and nothing herein contained will be
construed to render, C&A or Pelican an agent for the other party or liable
for any debt, obligations or liabilities of the other party now existing
or incurred in the performance of this Agreement. Nothing in this
Agreement will be deemed or construed to constitute or create between the
parties hereto a partnership pursuant to lag (1980:1102) om handelsbolag
och enkla bolag.
12.13 Each of the parties will do, or procure to be done, all such further acts
and things and execute, and procure the execution of, all such documents
as may from time
30
<PAGE>
to time be required for the purpose of giving effect to all of the
provisions of this Agreement.
13. GOVERNING LAW AND JURISDICTION
13.1 This Agreement will be governed by and construed in accordance with the
laws of England, without giving effect to the principles of conflict of
laws thereof. If any provision of this Agreement conflicts with any
applicable law (including without limitation the Swedish Companies Act and
the Belgium Companies Act), such provision of this Agreement shall be
controlling except to the extent prohibited by such law.
13.2 Except as specifically provided in Section 7.5 hereof, all disputes
arising in connection with this Agreement will be finally settled under
the Rules of Arbitration of the International Chamber of Commerce, by
three Arbitrators appointed in accordance with those Rules. The place of
arbitration will be in London, England. The language of the arbitration
will be English.
14. PARENT COMPANY GUARANTEES
14.1 Pelican Corp. guarantees the performance by Pelican or any of its
Affiliates (to whom any of its obligations hereunder have been
transferred) of all of its obligations under or pursuant to this
Agreement.
14.2 C&A Products guarantees the performance by C&A or any of its Affiliates
(to whom any of its obligations hereunder have been transferred); of all
of its obligations under or pursuant to this Agreement.
14.3 The liability of Pelican Corp. and C&A Products under their respective
guarantees under Sections 14.1 and 14.2 respectively shall not be
discharged or impaired by any amendment to or variation of this Agreement,
any release of or granting of time or other indulgence to Pelican or C&A,
as the case may be, or any third party or any other act, event or omission
which but for this Section would operate to impair or discharge the
liability of Pelican Corp. or C&A Products under their respective
guarantees.
31
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed on behalf of the parties the
day and year first before written.
PERSTORP G.m.b.H.
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
PERSTORP A.B.
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
COLLINS & AIKMAN EUROPE, INC.
By: /s/ J. Michael Stepp
Name:
Title:
in the presence of:
Witness Signature
Full Name: /s/ Elizabeth Philipp
Address:
Occupation:
32
<PAGE>
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. Michael Stepp
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
PERSTORP BIOTEC A.B.
By: /s/ Mats Tuner
/s/ Max Granander
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
PERSTORP COMPONENTS N.V.
By: /s/ Mats Tuner
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
33
<PAGE>
PERSTORP COMPONENTS A.B.
By:
Name:
Title:
in the presence of:
Witness Signature
Full Name:
Address:
Occupation:
<PAGE>
EXHIBITS AND SCHEDULES
Exhibit 3.1 Articles of Association
Schedule 3.2 Business Plan
Schedule 3.6 Financing Arrangements
Schedule 8.1 C&A Services
Schedule 9.6(b) Agreed Multiple
Schedule 9.10(a)(i) C&A Individual Shareholder Agreement
Schedule 9.10(a)(ii) Perstorp Individual Shareholder Agreement
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule omitted herefrom as permitted by Item 601(b)(2) of Regulation S-K to
the Commission upon request.
34
ACQUISITION AGREEMENT,
dated as of December 9, 1996,
among
COLLINS & AIKMAN PRODUCTS CO.,
COLLINS & AIKMAN FLOOR COVERINGS GROUP, INC.,
COLLINS & AIKMAN FLOOR COVERINGS, INC.,
CAF HOLDINGS, INC.
and
CAF ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
(Not a part of the Agreement)
I. PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . 1
1.1. Purchase and Sale of Shares . . . . . . . . . . . 1
1.2. Unadjusted Purchase Price . . . . . . . . . . . . 1
1.3. Purchase Price Adjustment . . . . . . . . . . . . 3
1.4. Intercompany Obligations . . . . . . . . . . . . . 5
II. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 5
2.1. Representations and Warranties of Seller . . . . . 5
2.1.1. Corporate Matters . . . . . . . . . . . . 5
2.1.2. The Shares . . . . . . . . . . . . . . . 6
2.1.3. Officers and Directors . . . . . . . . . 7
2.1.4. Authorization and Effect of Agreement . . 7
2.1.5. No Restrictions . . . . . . . . . . . . . 7
2.1.6. Financial Statements . . . . . . . . . . 8
2.1.7. Conduct of the Business Since the
Balance Sheet Date . . . . . . . . . . . 8
2.1.8. Compliance with Laws . . . . . . . . . . 9
2.1.9. Tangible Personal Property; Title to
Assets . . . . . . . . . . . . . . . . . 9
2.1.10. Real Property . . . . . . . . . . . . . . 10
2.1.11. Insurance . . . . . . . . . . . . . . . . 10
2.1.12. Intellectual Property . . . . . . . . . . 10
2.1.13. Litigation; Decrees . . . . . . . . . . . 11
2.1.14. Contract Rights . . . . . . . . . . . . . 11
2.1.15. Employee Plans . . . . . . . . . . . . . 12
2.1.16. Taxes . . . . . . . . . . . . . . . . . . 14
2.1.17. Environmental Matters . . . . . . . . . . 16
2.1.18. No Undisclosed Liabilities . . . . . . . 17
2.1.19. Assets . . . . . . . . . . . . . . . . . 17
2.1.20. Affiliate Interests . . . . . . . . . . . 17
2.1.21. Brokers . . . . . . . . . . . . . . . . . 18
2.1.22. Warranty Claims and Liabilities . . . . . 18
2.1.23. Labor Matters . . . . . . . . . . . . . . 18
2.1.24. Supplier Relationships . . . . . . . . . 18
2.2. Representations and Warranties of Purchaser . . . 18
2.2.1. Corporate Organization . . . . . . . . . 18
2.2.2. Authorization and Effect of Agreement . . 18
2.2.3. No Restrictions. . . . . . . . . . . . . 19
2.2.4. Financial Capacity . . . . . . . . . . . 19
2.3. Certain Limitations on Representations and
Warranties . . . . . . . . . . . . . . . . . . . . 20
III. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 20
3.1. Investigation by Purchaser . . . . . . . . . . . . 20
3.2. Press Releases . . . . . . . . . . . . . . . . . . 21
3.3. Regulatory Filings . . . . . . . . . . . . . . . . 22
3.4. Injunctions . . . . . . . . . . . . . . . . . . . 22
3.5. Operation of the Business . . . . . . . . . . . . 23
<PAGE>
3.6. Satisfaction of Conditions . . . . . . . . . . . . 24
3.7. Negotiations With Others . . . . . . . . . . . . . 24
3.8. Certain Additional Covenants . . . . . . . . . . . 24
3.9. Efforts to Consummate . . . . . . . . . . . . . . 25
3.10. Resignations . . . . . . . . . . . . . . . . . . . 25
IV. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . 26
4.1. Conditions Precedent to Obligations of Purchaser,
Parent and Seller . . . . . . . . . . . . . . . . . . . 26
4.2. Additional Conditions Precedent to Obligations of
Purchaser and Parent . . . . . . . . . . . . . . . 26
4.2.1. No Material Misrepresentation or Breach . 26
4.2.2. Transfer Documents, Etc . . . . . . . . . 26
4.2.3. No Material Adverse Change . . . . . . . 27
4.2.4. No Market Change . . . . . . . . . . . . 27
4.2.5. Other Documents . . . . . . . . . . . . . 27
4.3. Additional Conditions Precedent to Obligations of
Seller . . . . . . . . . . . . . . . . . . . . . . 27
4.3.1. No Material Misrepresentation or Breach . 27
4.3.2. Estimated Purchase Price . . . . . . . . 28
4.3.3. Other Documents . . . . . . . . . . . . . 28
4.4. The Closing . . . . . . . . . . . . . . . . . . . 28
4.5. Termination . . . . . . . . . . . . . . . . . . . 28
V. SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . 29
5.1. Survival of Representations, Warranties and
Covenants . . . . . . . . . . . . . . . . . . . . 29
5.2. Limitations on Liability . . . . . . . . . . . . . 30
5.3. Indemnification . . . . . . . . . . . . . . . . . 31
5.4. Defense of Claims . . . . . . . . . . . . . . . . 33
VI. OTHER POST-CLOSING COVENANTS . . . . . . . . . . . . . . 35
6.1. Personnel Matters . . . . . . . . . . . . . . . . 35
6.1.1. Employees and Employee Benefit Plans . . 35
6.1.2. Assumption of Obligations . . . . . . . . 36
6.1.4. Employment and Plan Amendments or
Terminations . . . . . . . . . . . . . . 37
6.1.5. Transitional Matters . . . . . . . . . . 38
6.1.6. Employee Information . . . . . . . . . . 38
6.2. General Post-Closing Matters . . . . . . . . . . . 38
6.2.1. Post-Closing Notifications . . . . . . . 38
6.2.2. Company Name . . . . . . . . . . . . . . 38
6.2.3. Access . . . . . . . . . . . . . . . . . 38
6.2.4. Certain Tax Matters . . . . . . . . . . . 40
6.2.5. Insurance . . . . . . . . . . . . . . . . 45
6.2.6. Receivables . . . . . . . . . . . . . . . 46
6.2.7. Master Contracts, Etc. . . . . . . . . . 46
VII. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . 47
7.1. Notices . . . . . . . . . . . . . . . . . . . . . 47
7.2. Expenses . . . . . . . . . . . . . . . . . . . . . 48
7.3. Successors and Assigns . . . . . . . . . . . . . . 49
ii
<PAGE>
7.4. Waiver . . . . . . . . . . . . . . . . . . . . . . 49
7.5. Entire Agreement . . . . . . . . . . . . . . . . . 49
7.6. Amendments, Supplements, Etc . . . . . . . . . . . 50
7.7. Rights of the Parties . . . . . . . . . . . . . . 50
7.8. Further Assurances . . . . . . . . . . . . . . . . 50
7.9. Applicable Law; Jurisdiction . . . . . . . . . . . 50
7.10. Titles and Headings . . . . . . . . . . . . . . . 50
7.11. Certain Interpretive Matters and Definitions . . . 50
iii
<PAGE>
Table of Defined Terms
(Not a Part of the Agreement)
Section
Accountants . . . . . . . . . . . . . . . . . . . . . . . 1.3(c)
Actual Purchase Price Adjustment Amount . . . . . . . . . 1.3(a)
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 7.11(a)
Agreement . . . . . . . . . . . . . . . . . . . . . Introduction
Assets . . . . . . . . . . . . . . . . . . . . . . . . . 3.5(b)
Balance Sheet Date . . . . . . . . . . . . . . . . . . . . 2.1.6
BASF . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3(e)
BASF Claims . . . . . . . . . . . . . . . . . . . . . . . 5.3(e)
Business . . . . . . . . . . . . . . . . . . . . . . . Recitals
C&A . . . . . . . . . . . . . . . . . . . . . . . . Introduction
C&A Corp . . . . . . . . . . . . . . . . . . . . . . . 2.1.16(i)
Closing Price . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Closing Date Balance Sheet . . . . . . . . . . . . . . . 1.3(a)
Closing Date . . . . . . . . . . . . . . . . . . . . . . 4.4(a)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4.4(a)
Code . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.15(b)
Company . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Confidentiality Agreement . . . . . . . . . . . . . . . . . . 7.5
Contracts . . . . . . . . . . . . . . . . . . . . . . . . 2.1.14
Direct Claim . . . . . . . . . . . . . . . . . . . . . . 5.4(c)
Employee Plan . . . . . . . . . . . . . . . . . . . . . 2.1.15(a)
Employee . . . . . . . . . . . . . . . . . . . . . . . 2.1.15(a)
Environment . . . . . . . . . . . . . . . . . . . . . . . 2.1.17
Environmental Condition . . . . . . . . . . . . . . . . . 2.1.17
Environmental Law . . . . . . . . . . . . . . . . . . . . 2.1.17
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.15(a)
Estimated Purchase Price Adjustment Amount . . . . . . . 1.2(b)
Estimated Purchase Price . . . . . . . . . . . . . . . . 1.2(b)
Financial Statements . . . . . . . . . . . . . . . . . . . 2.1.6
Floorcoverings UK . . . . . . . . . . . . . . . . . . . Recitals
Floorcoverings US . . . . . . . . . . . . . . . . . . . Recitals
Form 8023 . . . . . . . . . . . . . . . . . . . . . . . 6.2.4(i)
Former Employee . . . . . . . . . . . . . . . . . . . . 2.1.15(a)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.6
Governmental Entity . . . . . . . . . . . . . . . . . . . . 2.1.5
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . 2.1.6
Historical Financial Statements . . . . . . . . . . . . . . 2.1.6
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.5
Indebtedness . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Indemnifiable Losses . . . . . . . . . . . . . . . . . . 5.2(a)
Indemnifying Party . . . . . . . . . . . . . . . . . . . 5.2(a)
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
Indemnity Payment . . . . . . . . . . . . . . . . . . . . 5.2(a)
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.5
iv
<PAGE>
Insurance Policies . . . . . . . . . . . . . . . . . . . 6.1.11
Intellectual Property . . . . . . . . . . . . . . . . . 2.1.12
Knowledge of Seller . . . . . . . . . . . . . . . . . . . . 7.11
Last Offer . . . . . . . . . . . . . . . . . . . . . . . 1.3(c)
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.5
Leased Real Property . . . . . . . . . . . . . . . . . . 2.1.10
Legal Proceedings . . . . . . . . . . . . . . . . . . . . 2.1.13
Liens . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2(a)
Master Contracts . . . . . . . . . . . . . . . . . . . . . 6.2.7
Material Adverse Effect . . . . . . . . . . . . . . . . 2.1.1(b)
Maximum APD Liability Amount . . . . . . . . . . . . . . . 6.2.8
MSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.4
NCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.4
Net Working Capital Amount . . . . . . . . . . . . . . . 1.2(a)
Non-Prevailing Party . . . . . . . . . . . . . . . . . . 1.3(c)
NWC Over/Under Amount . . . . . . . . . . . . . . . . . . 1.2(a)
Owned Real Property . . . . . . . . . . . . . . . . . . . 2.1.10
Orders . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.13
Parent . . . . . . . . . . . . . . . . . . . . . . Introduction
Permit . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.5
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . 2.1.9
Post-Closing Affiliates . . . . . . . . . . . . . . . . . . . 1.4
Post-Closing Covenants . . . . . . . . . . . . . . . . . 5.1(b)
Pre-Closing Tax Period . . . . . . . . . . . . . . . . 6.2.4(b)
Prevailing Party . . . . . . . . . . . . . . . . . . . . 1.3(c)
Products . . . . . . . . . . . . . . . . . . . . . . . Recitals
Purchase Price . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Purchaser . . . . . . . . . . . . . . . . . . . . . Introduction
Purchaser Companies . . . . . . . . . . . . . . . . . . . 5.2(e)
Push-Down Liabilities . . . . . . . . . . . . . . . . . . 1.2(a)
Records . . . . . . . . . . . . . . . . . . . . . . . . 6.2.3(a)
Retirement Plans . . . . . . . . . . . . . . . . . . . . . 6.1.3
Section 338(h)(10) Election . . . . . . . . . . . . . . 6.2.4(h)
Seller . . . . . . . . . . . . . . . . . . . . . . Introduction
Seller Trade Name . . . . . . . . . . . . . . . . . . . . 6.2.2
Shares . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Surety Obligations . . . . . . . . . . . . . . . . . . 6.2.7(a)
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.16(j)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 2.1.16
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . 2.1.16(d)
Third Party Claim . . . . . . . . . . . . . . . . . . . . 5.2(a)
TNA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.5
Transaction Documents . . . . . . . . . . . . . . . . . . . 2.1.4
Transfer . . . . . . . . . . . . . . . . . . . . . . . Recitals
UST's . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.17
Workpapers . . . . . . . . . . . . . . . . . . . . . . . 1.3(b)
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ACQUISITION AGREEMENT
This Acquisition Agreement (this "Agreement") is made and entered
into as of the 9th day of December, 1996, among Collins & Aikman
Products Co., a Delaware corporation ("C&A"), Collins & Aikman Floor
Coverings Group, Inc., a Delaware corporation ("Seller"), Collins &
Aikman Floor Coverings, Inc., a Delaware corporation ("Floorcoverings
US"), CAF Holdings, Inc., a Virginia corporation ("Parent"), and CAF
Acquisition Corporation, a Virginia corporation ("Purchaser").
RECITALS:
A. Floorcoverings US and its subsidiary Collins & Aikman
United Kingdom Limited, a company incorporated in England
("Floorcoverings UK") (together with Floorcoverings US, the
"Company"), are presently engaged in the business (the "Business") of
designing, manufacturing and marketing commercial carpets and related
products ("Products") and performing certain related services;
B. Seller is the record and beneficial owner of all
of the issued and outstanding shares of Common Stock, par value
$0.01 per share, of Floorcoverings US (the "Shares");
C. Seller desires to sell, assign and deliver
("Transfer") to Purchaser, and Purchaser desires to purchase and
accept from Seller, the Shares on the terms and subject to the
conditions set forth in this Agreement; and
D. C&A, as the sole shareholder of Seller, and Parent, as
the sole shareholder of Purchaser, each desire that such transaction
be consummated on such terms and subject to such conditions.
NOW, THEREFORE, the parties hereto agree as follows:
I. PURCHASE AND SALE OF SHARES
1.1. Purchase and Sale of Shares. On the terms and subject to the
conditions hereof, at the Closing, Seller will Transfer to Purchaser,
and Purchaser will purchase and accept from Seller, the Shares, free
and clear of all Liens, for the Purchase Price.
1.2. Unadjusted Purchase Price. (a) The purchase price for
the purchase and sale of the Shares will be U.S. $197,000,000
(the "Closing Price") (including $27,000,000 paid in
consideration of the execution and delivery of the TNA), less the
amount of any Indebtedness outstanding as of the Closing
(calculated after giving effect to any payments or prepayments of
any such Indebtedness at or immediately prior to or after the
<PAGE>
Closing (provided, however, that nothing in this Section 1.2 will be
deemed to constitute an authorization for the incurrence or
maintenance of any such Indebtedness by the Company)), and increased
or decreased, as the case may be, by the amount by which the Net
Working Capital Amount (determined as herein provided) as of the
opening of business on Closing Date exceeds or is less than, as the
case may be, $28,033,000 as such number may be adjusted, however, to
exclude the average of month end balances of all assets and
liabilities in respect of Retained Claims from November 1995 to
October 1996) (such amount, the "NWC Over/Under Amount") (the Closing
Price, as so adjusted, being hereafter referred to as the "Purchase
Price"). For purposes of this Agreement, (x) "Indebtedness" means the
principal amount of indebtedness for borrowed money and capitalized
lease obligations that in accordance with GAAP are required to be
reflected as indebtedness on a consolidated balance sheet of the
Company, (y) the term "Net Working Capital Amount" means an amount,
calculated in accordance with the accounting principles set forth in
Schedule 1.3(a), equal to (1) the sum of cash and cash equivalents,
accounts receivable, other receivables, inventory and prepaid and
other current assets, less (2) the amount of all accounts payable,
accrued expenses and other current liabilities, all as determined in
accordance with the principles, policies and procedures used in
preparing the Balance Sheet and Schedule 1.3(a), but in all events
excluding all liabilities relating to Taxes to be paid by C&A or
Seller, or for which C&A or Seller is responsible, pursuant to this
Agreement, Push Down Liabilities and all assets and liabilities in
respect of Retained Claims and (z) the term "Push Down" Liabilities"
means the categories of liabilities listed as such on Schedule 1.2(a).
(b) Not less than two business days prior to the Closing Date,
Seller and Purchaser will jointly prepare a consolidated balance sheet
which will set forth their estimates of the Indebtedness and the NWC
Over/Under Amount (collectively, the "Estimated Purchase Price
Adjustment Amounts"), determined in accordance with Section 1.2(a) as
if they were the Actual Purchase Price Adjustment Amounts, but based
upon their review of monthly financial information then available to
Seller and Purchaser and their respective inquiries of personnel
responsible for the preparation of financial information relating to
the Company in the ordinary course thereof. If the parties are unable
so to agree on the Estimated Purchase Price Adjustment Amounts, then
the amounts thereof as determined by Seller in good faith will be the
Estimated Purchase Price Adjustment Amounts for all purposes of this
Agreement, provided, however, that nothing herein will limit the
relative rights and obligations of the parties under Section 1.3. The
Closing Price will be reduced or increased dollar-for-dollar, as the
case may be (as so adjusted, the "Estimated Purchase Price"), to
reflect the Estimated Purchase Price Adjustment Amounts as calculated
on the basis set forth in the second sentence of Section 1.3(a).
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(c) On the Closing Date, Purchaser will pay by wire transfer of
immediately available funds to such account as Seller has theretofore
designated an amount equal to the Estimated Purchase Price.
1.3. Purchase Price Adjustment. (a) In order to determine the
Purchase Price, the Estimated Purchase Price will be (i) increased by
the amount, if any, by which the NWC Over/Under Amount as finally
determined in accordance with this Section 1.3 exceeds the
corresponding amount thereof used in determining the Estimated
Purchase Price Adjustment Amounts, (ii) increased by the amount, if
any, by which the Indebtedness used in determining the Estimated
Purchase Price Adjustment Amounts exceeds the amount of Indebtedness
as finally determined in accordance with this Section 1.3, (iii)
decreased by the amount, if any, by which the NWC Over/Under Amount as
finally determined in accordance with this Section 1.3 is less than
the corresponding amount thereof used in so determining the Estimated
Purchase Price Adjustment Amounts, and (iv) decreased by the amount,
if any, by which the amount of Indebtedness as finally determined in
accordance with this Section 1.3 exceeds the corresponding amount
thereof used in determining the Estimated Purchase Price Adjustment
Amounts. For purposes of this Agreement, (x) the adjustment referred
to in the immediately preceding sentence will be finally calculated on
a net basis and (y) all determinations of the actual amounts thereof
(the "Actual Purchase Price Adjustment Amounts") will be determined by
the amounts thereof required to be shown on a consolidated balance
sheet of the Company prepared in accordance with this Section 1.3 as
of the opening of business on the Closing Date (the "Closing Date
Balance Sheet") on a basis consistent with, and using the same
accounting principles, policies, practices and procedures used in
preparing, the Balance Sheet and otherwise in accordance with the
principles set forth in Schedule 1.3(a) and Section 1.2(a).
(b) Within 60 calendar days after the Closing Date, Seller will
in good faith prepare and deliver, or cause to be prepared and
delivered, to Purchaser an unaudited Closing Date Balance Sheet
setting forth the Actual Purchase Price Adjustment Amounts. Seller and
its authorized representatives will be entitled to review, during
normal business hours, the books, records and work papers of the
Company to prepare the Closing Date Balance Sheet and to determine the
Actual Purchase Price Adjustment Amounts. Without limiting the
generality or effect of any other provision hereof, Purchaser will (i)
provide Seller and its representatives access, during normal business
hours, to the facilities, personnel and accounting and other records
of the Company to the extent reasonably determined by Seller to be
necessary to permit Seller to prepare or have prepared the Closing
Date Balance Sheet and to compute the Actual Purchase Price Adjustment
Amounts as herein provided; provided, however, that Seller will
conduct any such review in a manner that does not unreasonably
interfere with the conduct of the Business by the Company after the
Closing, and (ii) take such actions as may be reasonably requested by
Seller
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<PAGE>
to close, or to assist Seller in closing, as of the opening of
business on the Closing Date, the books and accounting records of the
Company and otherwise reasonably to cooperate with Seller and its
representatives in the preparation of the Closing Date Balance Sheet.
Concurrently with the delivery of the Closing Date Balance Sheet,
Seller will use its reasonable efforts to cause Arthur Andersen L.L.P.
to provide Purchaser access to any of such firm's workpapers, trial
balances and similar materials prepared in connection with such firm's
audits or reviews of any of the Financial Statements (the
"Workpapers").
(c) If, within 30 calendar days after the date of Seller's
delivery of its computation of the Actual Purchase Price Adjustment
Amounts, Purchaser determines in good faith that such computations are
inaccurate, Purchaser will give written notice to Seller within such
30 calendar day period (i) setting forth Purchaser's computation of
Actual Purchase Price Adjustment Amounts and (ii) specifying in
reasonable detail Purchaser's basis for its disagreement with Seller's
computations. The failure by Purchaser so to express its disagreement
or provide such specification within such 30 calendar day period will
constitute Purchaser's acceptance of Seller's computation of the
Actual Purchase Price Adjustment Amounts. If Purchaser and Seller are
unable to resolve any disagreement between them within ten calendar
days after the giving of notice of such disagreement, the items in
dispute will be referred for determination to the Charlotte, North
Carolina office of KPMG Peat Marwick LLP (the "Accountants") as
promptly as practicable. The Accountants will make a determination as
to each of the items in dispute, which determination will be (A) in
writing, (B) furnished to each of the parties hereto as promptly as
practicable after the items in dispute have been referred to the
Accountants, (C) made in accordance with this Agreement, and (D)
conclusive and binding upon each of the parties hereto. In connection
with their determination of the disputed items, the Accountants will
be entitled to rely on the Workpapers and the Company's or C&A's, as
the case may be, books and records, and the fees and expenses of the
Accountants will be shared equally by Purchaser and Seller (except as
provided below). Purchaser and Seller will use reasonable efforts to
cause the Accountants to render their decision as soon as practicable,
including without limitation by promptly complying with all reasonable
requests by the Accountants for information, books, records and
similar items. If the determination of the Accountants represents an
outcome more favorable to either Purchaser or Seller than the midpoint
of such parties' last written settlement offers related to all items
in dispute, in the aggregate, submitted to the other party at least
two calendar days before the referral of the matter to the Accountants
(each a "Last Offer"), then the party obtaining such favorable result
will be deemed the "Prevailing Party" and the other party will be
deemed the "Non-Prevailing Party". For purposes hereof, all of the
fees and expenses of the Accountants, will be borne by the
Non-Prevailing Party. No party will disclose to the Accountants,
4
<PAGE>
and the Accountants will not consider for any purpose, any
settlement offer (other than the Last Offer) made by any party.
(d) To the extent that the Actual Purchase Price Adjustment
Amounts, calculated on a net basis, determined as provided in this
Section 1.3 is more or less than the Estimated Net Purchase Price
Adjustment Amounts, Seller or Purchaser, as applicable, will, within
ten calendar days after the final determination of the Actual Purchase
Price Adjustment Amounts, calculated on a net basis, pursuant to this
Section 1.3, make payment by wire transfer of immediately available
funds of the amount of such difference, together with interest thereon
from the Closing Date to the date of payment (at a rate equal to Chase
Manhattan Bank's prime rate, as publicly announced and in effect from
time to time during such period, plus 2.0%, calculated on the basis of
the actual number of days elapsed over 365), to such account as has
been designated by Purchaser or Seller, as applicable.
1.4. Intercompany Obligations. Notwithstanding any other
provision hereof, any amount paid or accrued by Seller or any of its
Affiliates other than the Company (collectively, "Post- Closing
Affiliates") in respect of liabilities or obligations of the Company
of a type that would be shown on a consolidated balance sheet of the
Company as "Accounts Receivable-Intercompany" or "Accounts
Payable-Intercompany" will be settled at or prior to the Closing and
will not be reflected in the Closing Date Balance Sheet. Effective
immediately after the Closing, all intercompany liabilities and
obligations owing from Seller or any Post-Closing Affiliate to the
Company or owing from the Company to Seller or any Post-Closing
Affiliate that is not settled as contemplated by the immediately
preceding sentence will be netted against each other and the net
balance thereof will be discharged and deemed forgiven without further
action or payment and all such amounts will be excluded from the
determination of the Net Working Capital Amount or Indebtedness under
Sections 1.2 and 1.3. As a result, immediately following the Closing,
there will be no further liability or obligation in respect of any
such matters between Seller or any Post-Closing Affiliate, on the one
hand, and the Company on the other hand, except as expressly provided
herein. Any holder of a note or other evidence of indebtedness deemed
settled pursuant to this Section 1.4 will surrender such note or other
evidence of indebtedness to the obligor thereon.
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Seller and C&A.
Subject to Section 2.3, Seller and C&A, jointly and severally,
represent and warrant to Purchaser as follows:
2.1.1. Corporate Matters. (a) Each of C&A and Seller is a
corporation duly organized, validly existing and in good standing
under the Law of the State of Delaware and Seller
5
<PAGE>
has the requisite corporate power to own and hold the Shares.
Each of Floorcoverings US and Floorcoverings UK is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation.
(b) Each of Floorcoverings US and Floorcoverings UK has the
requisite corporate power and authority to own, lease or otherwise
hold the assets owned, leased or otherwise held by it and to carry on
its business as presently conducted, and is duly qualified to conduct
business as a foreign corporation in each jurisdiction listed on
Schedule 2.1.1. The jurisdictions listed in Schedule 2.1.1 constitute
all jurisdictions in which Floorcoverings US's or Floorcoverings UK's
ownership, leasing or holding of property or the nature or conduct of
the Business makes qualification to conduct business as a foreign
corporation necessary, except for such jurisdictions in which its
failure to be so qualified, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. For
purposes of this Agreement, the term "Material Adverse Effect" means
an event, circumstance or occurrence that has a material adverse
effect on the Business or the consolidated financial condition or
results of operations of the Company.
2.1.2. The Shares. (a) Except as set forth on
Schedule 2.1.5, Seller owns free and clear of any mortgages,
liens, security interests or other encumbrances (collectively,
"Liens") the number of Shares listed in Schedule 2.1.2, which
Shares represent all of the issued and outstanding shares of
capital stock of the Company.
(b) The Shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable. The Shares have not been
issued in violation of, and are not subject to, any preemptive rights,
and there are no outstanding convertible or exchangeable securities,
calls, options or similar Contracts relating to the Shares or that may
require the Company to issue to any person or entity any shares of any
of its capital stock. Except as listed or described on Schedule 2.1.5,
there are no voting trust or other Contracts restricting the voting,
dividend rights or disposition of the Shares.
(c) Except as set forth in Schedule 2.1.2(c), Seller owns the
Shares beneficially and of record free and clear of all Liens and at
the Closing will Transfer its entire right, title and interest in and
to the Shares to Purchaser.
(d) The Company does not own, beneficially or of record, any
stock or other ownership interests in, or control, any other entity,
other than Floorcoverings UK, all of the issued and outstanding share
capital of which is owned by Floorcoverings US free and clear of all
Liens (except as set forth on Schedule 2.1.2(d)); and, except as set
forth on Schedule 2.1.2(d), there are no outstanding convertible or
exchangeable securities or agreements giving any person or entity any
right to acquire
6
<PAGE>
shares of capital stock of Floorcoverings UK and no voting trusts or
other Contracts restricting the voting, dividend rights or disposition
of shares of Floorcoverings UK.
2.1.3. Officers and Directors. Schedule 2.1.3 lists
all officers and directors of Floorcoverings US and
Floorcoverings UK as of the date hereof. Seller will promptly
notify Purchaser of any change in the information set forth in
Schedule 2.1.3 prior to the Closing.
2.1.4. Authorization and Effect of Agreement. Each of C&A
and Seller has the requisite corporate power to execute and deliver
this Agreement and the other agreements or instruments referred to
herein (collectively, the "Transaction Documents") and to perform the
transactions contemplated hereby to be performed by it. All necessary
corporate action required to be taken under the Delaware General
Corporation Law for the due authorization of the execution and
delivery by each of C&A and Seller of the Transaction Documents to be
executed by either of them and the performance by each of C&A and
Seller of the transactions contemplated thereby to be performed by
either of them has been duly taken by C&A or Seller, as the case may
be. The Transaction Documents have been, or will be, as the case may
be, duly executed and delivered by Seller or C&A, as the case may be,
and, assuming the due execution and delivery of the Transaction
Documents by Parent and Purchaser, constitute, or will constitute, as
the case may be, valid and binding obligations of each of C&A and
Seller, as applicable, enforceable in accordance with their terms.
2.1.5. No Restrictions. The execution and delivery of the
Transaction Documents by C&A and Seller to which they are parties does
not, and the performance by C&A and Seller of the transactions
contemplated thereby to be performed by them will not conflict with,
or result in any violation of, or constitute a default (with or
without notice or lapse of time or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation
or the loss of a benefit under, any provision of the Certificate of
Incorporation or By-laws of Seller or C&A or the Company, or any
Contract listed or described or required to be listed or described on
Schedule 2.1.14, or any permit or approval ("Permit") issued under any
domestic, foreign or other statute, law, ordinance, rule, regulation,
judgment, order, injunction, decree or ruling or common law obligation
("Law") of any domestic, foreign or other court, government,
governmental agency, authority, entity or instrumentality
("Governmental Entity"), other than any such conflicts, violations or
defaults as are listed or described on Schedule 2.1.5 or which,
individually or in the aggregate, could not
reasonably be expected to result in a material undisclosed liability
of the Company. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to Seller or the
Company in connection with the
7
<PAGE>
execution and delivery of the Transaction Documents by C&A and Seller
or the performance by C&A and Seller of the transactions contemplated
thereby to be performed by them, except (i) for the filing of a
premerger notification report by an Affiliate of Seller under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), if applicable in the circumstances, (ii) for such of the
foregoing as are listed or described on Schedule 2.1.5, and (iii) for
such consents, approvals, orders, authorizations of, or registrations,
declarations or filings with, any Governmental Entity, which,
individually or in the aggregate, if not obtained or made, could not
reasonably be expected to result in a material undisclosed liability
of the Company.
2.1.6. Financial Statements. (a) Attached as Schedule
2.1.6(a) are the audited combined balance sheets of the Company as of
January 28, 1995 and January 27, 1996, the related audited combined
statements of operations and cash flows for the fiscal years then
ended, accompanied by the accountant's reports thereon, the unaudited
combined balance sheet of the Company as of October 26, 1996 (the
"Balance Sheet") and the unaudited combined statements of operations
for the nine month periods ended October 28, 1995 and October 26,
1996, respectively (collectively, with the related notes, the
"Financial Statements"). The Financial Statements present fairly, in
all material respects, the consolidated financial position of the
Company as of the dates thereof and the results of its operations and
cash flows for the periods specified in conformity with United States
generally accepted accounting principles, consistently applied
("GAAP"), except for the Push-Down Liabilities, except as set forth in
Schedule 1.3(a) and except, in the case of the unaudited statements,
for normal year-end adjustments. (For purposes of this Agreement,
"Balance Sheet Date" means October 26, 1996.)
(b) Attached as Schedule 2.1.6(b) are the audited
consolidated balance sheets of the Company as of January 28, 1995 and
January 27, 1996, the related audited consolidated statements of
operations and cash flows for the fiscal years then ended, accompanied
by the accountant's reports thereon, the unaudited consolidated
balance sheet of the Company as of October 26, 1996 and the related
unaudited consolidated statements of operations and cash flows for the
nine month period ended October 28, 1995 and October 26, 1996
(collectively, with the related notes, the "144A Financial
Statements"). The 144A Financial Statements present fairly, in all
material respects, the consolidated financial position of the Company
as of the date thereof and the results of its operations and cash
flows for the periods specified in conformity with GAAP, except, in
the case of the unaudited statements, for normal year-end adjustments.
2.1.7. Conduct of the Business Since the Balance Sheet Date.
Except as listed or described on Schedule 2.1.7, since the Balance
Sheet Date, (a) the Company has conducted the
8
<PAGE>
Business only in the ordinary course, consistent with past
practice, (b) the Company has not taken any action which would have
constituted a violation of Section 3.5 if Section 3.5 had applied
since the Balance Sheet Date, and (c) there has not been any Material
Adverse Effect, including any damage, destruction, loss or abandonment
(whether or not covered by insurance) which, individually or in the
aggregate, has or, to the Knowledge of Seller, could reasonably be
expected to have, a Material Adverse Effect, other than, as applied to
the accuracy of this representation in respect of the period between
the date hereof and the Closing Date, changes or effects after the
date hereof that result from general economic conditions or
competitive circumstances in the markets in which the Business is
conducted.
2.1.8. Compliance with Laws. Except as listed or described
on Schedule 2.1.8, the Company is not in violation of any Law
applicable to the Company or the conduct of the Business, or to the
Owned Real Property, and has not committed any such violation since
January 1, 1995, other than such violations which, individually or in
the aggregate, could not reasonably be expected to result in a
material undisclosed liability of the Company or give rise to criminal
liability. Since January 1, 1995, neither Seller nor the Company has
received notice of any alleged violation of Law which could reasonably
be expected to either result in a material undisclosed liability of
the Company or give rise to criminal liability. The Company has all
Permits (including without limitation Permits under Environmental
Laws) necessary to conduct the Business substantially as presently
conducted and all such Permits are in full force and effect, except
where the failure to have such Permits or the failure of such Permits
to be in full force and effect could not reasonably be expected to
have a Material Adverse Effect.
2.1.9. Tangible Personal Property; Title to Assets. Except
(a) with respect to the Owned Real Property and the Leased Real
Property which are the subject of Section 2.1.10 and (b) as listed or
described on Schedule 2.1.9, the tangible assets owned by the Company
as of the date hereof or hereafter purchased or acquired by the
Company are owned by the Company free and clear of all Liens except
for (i) Liens that are listed or described on Schedule 2.1.9, (ii)
mechanics', carriers', workers', repairmen's or other similar Liens
arising or incurred in the ordinary course of business of the Business
relating to liabilities of the Company that are not overdue, (iii)
Liens for taxes, assessments and other similar governmental charges
which are not due and payable or which may thereafter be paid without
penalty, and (iv) Liens that arise under zoning, land use and other
similar Laws and other imperfections of title or encumbrances, if any,
which could not be reasonably expected, individually or in the
aggregate, materially to affect the marketability of the property
subject thereto or to impair the continued use of the property subject
thereto in the Business as presently conducted. (The items referred to
in clauses (i) through (iv) of the immediately preceding sentence are
hereafter referred to as "Permitted
9
<PAGE>
Liens".) Since January 1, 1995, the tangible personal property has
been maintained in all material respects in good repair in accordance
with C&A's general maintenance policies.
2.1.10. Real Property. Schedule 2.1.10 lists all real
property owned in fee by the Company (the "Owned Real Property") or
leased by the Company (the "Leased Real Property"). The Company has
good and marketable fee simple title to the Owned Real Property and
valid and subsisting leasehold interests in the Leased Real Property
(subject to the terms of the applicable leases, subleases and related
instruments governing the Company's interests therein, as listed on
Schedule 2.1.10), free and clear of all Liens other than (a) Liens
listed or described on Schedule 2.1.10, (b) Permitted Liens, and (c)
easements, covenants, rights-of-way and other encumbrances or
restrictions, whether recorded or referred to in an applicable lease
which could not reasonably be expected to materially impair the
marketability or continued occupancy or use of the property subject
thereto in the Business as presently conducted. The leases and
subleases related to the Leased Real Property are valid and subsisting
leases or subleases which are in full force and effect.
2.1.11. Insurance. Schedule 2.1.11 lists (i) all material
policies of fire, liability and other forms of insurance covering
occurrences as of, or claims made on, the date hereof and maintained
by the Company, or by Seller or any Post-Closing Affiliate to the
extent applicable to the Company or the Business ("Insurance
Policies") and (ii) to the knowledge of Seller, all claims made by the
Company or the Seller or any Post-Closing Affiliate with respect to
the Company under any such Insurance Policy from February 1, 1991 to
October 31, 1996, and the disposition or status thereof. All premiums
due under such policies have been paid, and none of C&A, Seller or the
Company is in default in any material respect under any provision of
any such policy nor has it failed to give notice or present any
material claim thereunder in a timely manner so as to bar recovery of
any valid claim. Neither Seller nor any of its Affiliates has received
any written notice of cancellation or non-renewal of any such
insurance policy or that any such insurance premiums (if such policies
are continued by Seller and its Affiliates) will be increased
materially.
2.1.12. Intellectual Property. Schedule 2.1.12 lists
or describes all patents and trademarks and all material trade
names, service marks and registered copyrights, and registrations
and applications therefor, used or held for use in the conduct of
or otherwise material to the Business as of the date hereof (the
"Intellectual Property"). Except as set forth on Schedule 2.1.12, the
Company owns or has the right to use (as shown on Schedule 2.1.12) all
of the Intellectual Property and neither Seller, any Post-Closing
Affiliate nor the Company has received any written notice (that has
not been subsequently satisfied or withdrawn) of any material conflict
with, or assertion that the Company is or may be infringing, the
asserted rights of others in
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connection with the use by the Company of any of the Intellectual
Property in the conduct of the Business.
2.1.13. Litigation; Decrees. Except (a) as listed or
described on Schedule 2.1.13, there are no lawsuits or administrative
or other adjudicative proceedings ("Legal Proceedings") pending or, to
the Knowledge of Seller, threatened in writing against the Company or
any Employee Plan, including without limitation in respect of
Intellectual Property, except for Legal Proceedings which, if
determined adversely, could not reasonably be expected to have a
Material Adverse Effect. To the Knowledge of Seller, the Company is
not in default under the terms of any judgment, order or decree of any
Governmental Entity (collectively, "Orders").
2.1.14. Contract Rights. Except as listed or described on
Schedule 2.1.14, as of the date hereof, the Company is not a party to
or bound by any lease, agreement or other contract or legally binding
contractual right or obligation (collectively, "Contracts") that is of
a type described below:
(a) Any employment, severance or consulting Contract with an
Employee or Former Employee that is not terminable at will by the
Company (other than, as to any Employee or Former Employee of
Floorcoverings UK, any Contract for the employment of any such
Employee or Former Employee implied in Law);
(b) Any collective bargaining Contract with any labor
union;
(c) Any Contract for capital expenditures or the acquisition
or construction of fixed assets which requires aggregate future
payments in excess of $500,000;
(d) Any Contract relating to cleanup, abatement or other
actions (other than monitoring or reporting in the ordinary
course of business) in connection with environmental liabilities;
(e) Any Contract granting to any person or entity a
first-refusal, first-offer or other right to purchase or acquire
any of the Shares or any other capital stock or other securities
of Floorcoverings US or Floorcoverings UK;
(f) Any license, royalty Contract or other Contract with
respect to Intellectual Property which pursuant to the terms
thereof requires future payments by the Company (other than
software, on-line or similar service Contracts in the ordinary
course of business of the Business);
(g) Any indenture, mortgage, loan or credit Contract under
which the Company has borrowed any money or issued any note,
bond, indenture or other evidence of indebtedness for
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or guaranteed indebtedness for money borrowed by others or under
which any Person has issued a letter of credit with respect to
which the Company has any liability;
(h) Any Contract with any manufacturer's representative or
other sales agent having a remaining term in excess of one year
and which is not terminable without penalty on 90 calendar days'
or less notice;
(i) Any Contract under which the Company is (i) a lessee of
real property, (ii) a lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by a
third person or entity, (iii) a lessor of real property, or (iv)
a lessor of any tangible personal property owned by the Company,
in the case of any of (ii), (iii) and (iv) which requires annual
payments in excess of $100,000;
(j) Any Contract which involves aggregate future payments by
or to the Company in excess of $500,000 other than a purchase or
sales order entered into in the ordinary course of the conduct of
the Business;
(k) Any Contract obligating the Company to make any
"parachute payment" (as that term is used in Section 280G of the
Code) to any Employee or any other payment which is contingent
upon a change in control of Floorcoverings US or Floorcoverings
UK;
(l) Any Contract which prohibits or restricts the
Company from engaging in the manufacture or sale of any
Products; or
(m) Any Surety Obligation within the meaning of Section
6.2.7(a) or (b) and any Master Contract within the meaning of
Section 6.2.7(c).
Except as set forth on Schedule 2.1.14, each Contract listed or
described on Schedule 2.1.14 is a valid and binding obligation of the
Company and to the Knowledge of Seller is a valid and binding
obligations of the other party thereto. Except as set forth on
Schedule 2.1.14, to the Knowledge of Seller, the Company has performed
in all material respects the obligations required to be performed by
it through the date hereof under each of such Contracts and the
Company is not (with or without the lapse of time or the giving of
notice, or both) in material breach or default thereunder.
2.1.15. Employee Plans. (a) For purposes of this Agreement,
the term "Employee Plan" means each employee benefit plan as defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and each other material plan, program,
agreement or arrangement, whether or not subject to ERISA, that (i)
provides benefits for Employees or
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Former Employees and (ii) is maintained by Seller, any Post- Closing
Affiliate or the Company or to which Seller, any Post- Closing
Affiliate or the Company contributes or is obligated to contribute, or
under which Seller, any Post-Closing Affiliate or the Company is
liable in respect of Employees or Former Employees. As used in this
Agreement, (A) the term "Employee" means each person (if any) listed
or described as such on Schedule 2.1.15 and each person who is
presently employed by the Company primarily in the conduct of the
Business and (B) the term "Former Employee" means any person formerly
so employed by the Company. The terms "Employee" and "Former Employee"
will include, where an Employee Plan provides benefits for
beneficiaries or dependents, the beneficiaries and dependents of an
Employee or Former Employee. Schedule 2.1.15 lists or describes all
Employee Plans other than Employee Plans listed or described on
Schedule 2.1.14 or mandated or implied by Law. None of the Employee
Plans is a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) With respect to each Employee Plan, Seller has delivered
to Purchaser, to the extent applicable, a true, correct and complete
copy of (i) the plan document for each Employee Plan as currently in
effect (or a description of any Employee Plan for which there is no
plan document), including any agreements entered into in connection
with such Employee Plan, (ii) the three most recent annual reports
(Form 5500 Series) filed with the Internal Revenue Service, (iii) the
most recent annual financial report and actuarial report, and (iv) the
most recent summary plan description, together with each summary of
material modifications. Except as set forth on Schedule 2.1.15, each
Employee Plan which is intended to be a "qualified plan" under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
is so identified on Schedule 2.1.15, and the trust (if any) forming a
part thereof, has received a favorable determination from the Internal
Revenue Service as to the qualification under the Code of each such
Employee Plan. Seller has delivered to Purchaser a copy of the most
recent determination letter with respect to each such Employee Plan,
and nothing has occurred since the date of such determination letter
that would adversely affect such qualification which is not identified
in Schedule 2.1.15 and cannot be corrected within the remedial
amendment period provided under Section 401(b) of the Code.
(c) Neither Seller, any Post-Closing Affiliate, nor the
Company has engaged in a transaction with respect to any Employee Plan
which could subject any Employee Plan, Purchaser or the Company to a
material civil penalty under ERISA or a material tax under the Code.
Each of the Employee Plans has been operated and administered in all
material respects in accordance with applicable Laws, including
without limitation, to the extent applicable, the Code and ERISA.
Neither Seller, any Post-Closing Affiliate nor the Company has
incurred, and no condition exists that could reasonably be expected to
cause Seller, any Post-
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Closing Affiliate or the Company to incur any liability under Title IV
of ERISA that could reasonably be expected to result in liability to
Purchaser or the Company. Each Employee Plan that is a group health
plan within the meaning of Section 5000(b)(1) of the Code is in
compliance in all material respects with the provisions of Section
4980B(f) of the Code. There is not any pending or, to the Knowledge of
Seller, threatened material claim by or on behalf of any Employee
Plan, by any Employee or Former Employee covered under any Employee
Plan or otherwise involving any Employee Plan (other than routine
claims for benefits). Except as set forth in Schedule 2.1.15 and
Section 6.1.3, neither the execution and delivery of this Agreement
nor the consummation of the transaction contemplated hereby will
(either alone or in conjunction with any subsequent or related event,
including termination of employment) (i) result in any material
payment (including severance, unemployment compensation, golden
parachute or otherwise) under any Employee Plan, (ii) materially
increase any compensation or benefits otherwise payable under any
Employee Plan, or (iii) accelerate any material liability under any
Employee Plan.
(d) All contributions required to be made to each Employee
Plan under the terms of such Plan, ERISA or the Code for all periods
of time prior to the Closing Date have been or, as applicable, will by
the Closing Date be timely made or paid in full or, to the extent not
required to be made before the Closing Date, will be fully reflected
on the Closing Date Balance Sheet as either a current liability or a
Push Down Liability.
(e) Neither the Seller nor Seller's Affiliates has made any
legally binding commitment to establish any new Employee Plan, to
modify any Employee Plan or to increase benefits or compensation of
Employees or Former Employees (except for normal increases in
compensation consistent with past practices or as disclosed in
Schedule 2.1.15), nor has any intention to do so been communicated by
C&A or Seller to Employees or Former Employees.
(f) Except as set forth on Schedule 2.1.15 or in Section
6.1.2, none of the Seller, any Post-Closing Affiliate or the Company
has any liability for life, health, medical or other welfare benefits
to Former Employees, except for health continuation coverage under
Section 4980B(f) of the Code.
2.1.16. Taxes. (a) The Company has timely filed (or has had
filed on its behalf) or caused to be timely filed with the appropriate
United States, state, local and foreign taxing authorities all
returns, reports or information returns or statements relating to
Taxes (including amendments thereto) (collectively, "Tax Returns")
required to be filed by it with respect to the Company on or prior to
the Closing Date (taking into account all extensions of due dates).
All such Tax Returns were correct and complete in all material
respects.
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(b) The Company has timely paid all Taxes owed with respect
to the Company. No penalties or other charges are due with respect to
the late filing of any Tax Return of the Company required to be filed
on or before the Closing Date (taking into account all extensions of
due dates). The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor or other third
party. The unpaid Taxes of the Company will not exceed the reserves
for Taxes (other than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) that are
reflected in the Closing Date Balance Sheet.
(c) Schedule 2.1.16 sets forth the jurisdictions (other than
the United States) in which the Company files Tax Returns, indicates
the Tax Returns in such states that have been audited and indicates
those Tax Returns in such jurisdictions that currently are the subject
of an audit. Except as set forth on Schedule 2.1.16, there are no
waivers or extensions of any applicable statute of limitations, or
agreements to any extension of time for the assessment or collection
of such Taxes with respect to any such Tax Returns, which waivers,
extensions or agreements currently are in effect. Except as set forth
on Schedule 2.1.16, since January 1, 1995, no claim has been made by
an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction
and no such claim exists as of the date hereof.
(d) Except as set forth on Schedule 2.1.16, the Company has
not requested or received a Tax Ruling or entered into a Tax Closing
Agreement with any taxing authority that would have a continuing
effect after the Closing Date. For purposes of the preceding sentence,
the term "Tax Ruling" means a written ruling of a taxing authority
relating to Taxes, and the term "Tax Closing Agreement" means a
written Contract with a taxing authority relating to Taxes. Except as
set forth on Schedule 2.1.16, the Company is not a party to any Tax
allocation or sharing Contract.
(e) Except as set forth on Schedule 2.1.16, no action, suit,
proceeding, investigation, audit, claim or assessment is presently
pending or, to the Knowledge of Seller, has been proposed to the
Company or Seller or C&A with regard to any Taxes that relates to the
Company for which the Company would be liable.
(f) Except as set forth on Schedule 2.1.16, the Company is
not required to make any adjustment pursuant to Section 481 of the
Code by reason of a change in accounting method or otherwise.
(g) Except as set forth on Schedule 2.1.16, the Company has
not filed (nor will it file prior to the Closing Date) a consent
pursuant to Section 341(f) of the Code or agreed
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to have Section 341(f)(2) of the Code apply to any disposition of a
"subsection (f) asset" (as that term is defined in Section 341(f)(4)
of the Code) owned by the Company.
(h) Purchaser will not be required to deduct and withhold
any amount pursuant to Section 1445 of the Code upon the consummation
of the transactions contemplated by this Agreement.
(i) The Company has filed a consolidated federal income tax
return with Seller and Collins & Aikman Corporation, a Delaware
corporation ("C&A Corp."), for each of the Company's taxable years
preceding the Company's taxable year that includes the Closing Date,
and the Company will file a consolidated federal income tax return
with Seller and C&A Corp. for the Company's taxable year that includes
the Closing Date. Seller is a member of a consolidated group that is
eligible to make an election under Section 338(h)(10) of the Code (and
any comparable election under state or local law that would be
applicable to a material portion of the taxable income resulting from
such election).
(j) For purposes of this Agreement, "Taxes" means all
federal, state, local, foreign and other taxes (including without
limitation income, profits, premium, estimated, excise, sales, use,
occupancy, gross receipts, franchise, ad valorem, severance, capital
levy, production, transfer, withholding, social security, employment,
unemployment compensation, payroll-related and property taxes,
alternative minimum, estimated stamp, value added, windfall profits,
import duties and other governmental charges and assessments), whether
or not measured in whole or in part by net income, and including
deficiencies, interest, additions to tax or additional amounts,
interest and penalties with respect thereto. Such term shall also
include any "Taxes" as to which the Company is liable as a successor
or transferee or pursuant to a contractual obligation.
2.1.17. Environmental Matters. Except as listed or described
on Schedule 2.1.17, (i) the Company does not have any liability under
any Environmental Law (including without limitation any obligation to
remediate any Environmental Condition whether caused by the Company or
a third Person) applicable to the Owned Real Property or the Leased
Real Property, (ii) the Company is not in violation of any
Environmental Law, (iii) there exists no Environmental Condition with
respect to the Owned Real Property or the Leased Real Property, (iv)
there have not been any discharges originating from the Owned Real
Property or the Leased Real Property to the environment or any public
treatment facility except in compliance with applicable Environmental
requirements, and (v) there are not located under any of the Owned
Real Property or the Leased Real Property any underground storage
tanks ("UST's"), which liability, violation, Environmental Condition,
discharge or UST's specified in (i), (ii), (iii), (iv) or (v) could
reasonably be expected to have a Material Adverse Effect.
"Environment" means
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soil, surface waters, groundwaters, land, surface or subsurface
strata, ambient air or any other environmental medium. "Environmental
Condition" means a condition with respect to the Environment which has
resulted, or is reasonably likely to result, in a material loss,
liability, cost or expense to the Company. "Environmental Law" means
any Law for the protection of the Environment, including without
limitation, the Laws listed on Schedule 2.1.17.
2.1.18. No Undisclosed Liabilities. The Company does not
have any liabilities (defined for this purpose as liabilities
involving the payment of money rather than general, contractual or
other obligations), whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, including
any uninsured liabilities, except (i) as and to the extent set forth
in the Balance Sheet or specifically disclosed in the notes thereto,
(ii) liabilities incurred in the ordinary course of business
consistent with past practice and not prohibited by this Agreement,
which could not reasonably be expected to have a Material Adverse
Effect, (iii) as set forth in Schedule 2.1.18, (iv) current
liabilities reflected in the Closing Date Balance Sheet, (v) Push-Down
Liabilities, and (vi) liabilities relating to Taxes, Retained Claims
and other liabilities for which C&A or Seller is responsible pursuant
to this Agreement. Schedule 1.2(a) sets forth the Assumed Push-Down
Liabilities by category and the amounts thereof as shown on the books
of C&A as of October 26, 1996.
2.1.19. Assets. Except as described on Schedule
2.1.19, the Real Property and the personal property that will be
owned or leased by the Company on the Closing Date constitute all
of the properties and assets used or held for use primarily in
connection with the Business.
2.1.20. Affiliate Interests. Except as disclosed in Schedule
2.1.20, none of C&A, Seller, any Affiliate of C&A or Seller (other
than the Company) or to the Knowledge of C&A any officer or director
of the Company, or any member of their immediate family, (i) has a
controlling interest or other material financial interest (other than
a noncontrolling investment in a public company) in any business
entity which competes with the Business, (ii) has any personal
financial interest, direct or indirect, in any property, real or
personal, tangible or intangible, including Intellectual Property,
owned or used by the Company in the Business, or (iii) provides or
causes to be provided to, or receives from, the Company any assets,
loans, advances, services or facilities, provided, however, that the
representation and warranty set forth in clause (i) above, insofar as
it relates to Affiliates of Seller or C&A, will apply only to
Affiliates controlled by C&A, Seller or C&A Corp. Except for the
Transaction Documents, the only Contracts between the Company and C&A
or any Affiliate of C&A that will remain in effect after the Closing
under which Purchaser, the Company or any of their Affiliates will
have any ongoing obligation or duty,
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are those items (and only with respect to such obligations or duties)
which are identified in Schedule 2.1.20 as remaining in place and
having obligations or duties.
2.1.21. Brokers. No broker, investment banker, financial
advisor or other person (other than The Blackstone Group and
Wasserstein, Perella & Co., Inc., the fees and expenses of which will
be paid by the Seller) is entitled to any broker's finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement.
2.1.22. Warranty Claims and Liabilities. As of the Closing
Date, the Company will not have any liability for breach of any
express or implied product warranty arising out of the installation of
Products at an individual location, or arising out of a Product
design, manufacturing or process defect or series of related Product
design, manufacturing or process defects, which in either case could
reasonably be expected to have a Material Adverse Effect.
2.1.23. Labor Matters. The Company is not a party to any
union contract in respect of any Employees. Since January 1, 1995, (a)
no organized work stoppage or other organized labor dispute has been
or is pending or, to the Knowledge of Seller, threatened and (b) no
organized effort has been or is pending or, to the Knowledge of
Seller, threatened by any labor union seeking to represent any group
of Employees in the United States.
2.1.24. Supplier Relationships. To the Knowledge of Seller,
the Company has access to raw materials and other supplies sufficient
to continue to conduct the Business on a competitive basis and has not
experienced any material supply shortage since January 1, 1995. To the
knowledge of Seller, the transactions contemplated by this Agreement
could not reasonably be expected to have a Material Adverse Effect on
the Company's relationship with any supplier of such raw materials and
other supplies taken as a whole.
2.2. Representations and Warranties of Purchaser. Subject
to Section 2.3, each of Purchaser and Parent jointly and
severally represents and warrants to Seller as follows:
2.2.1. Corporate Organization. Each of Purchaser and Parent
is a corporation duly organized, validly existing and in good standing
under the Laws of their respective jurisdiction of incorporation and
has the requisite corporate power to own, lease or otherwise hold its
properties and assets and to carry on its business as presently
conducted.
2.2.2. Authorization and Effect of Agreement. Each of Parent
and Purchaser has the requisite corporate power to execute and deliver
this Agreement and to perform the transactions contemplated hereby to
be performed by it. All
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necessary corporate action required to be taken under the Virginia
Stock Corporation Act for the due authorization of the execution and
delivery by each of Parent and Purchaser of this Agreement and the
performance by each of Parent and Purchaser of the transactions
contemplated hereby to be performed by each of them has been duly
taken by each of Parent and Purchaser. This Agreement has been duly
executed and delivered by each of Parent and Purchaser and, assuming
the due execution and delivery of this Agreement by Seller and C&A
constitutes a valid and binding obligation of each of Parent and
Purchaser, enforceable in accordance with its terms.
2.2.3. No Restrictions. The execution and delivery of this
Agreement by each of Parent and Purchaser does not, and the
performance by Parent and Purchaser of the transactions contemplated
hereby to be performed by each of them will not conflict with, or
result in any material violation of, or constitute a material default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit under, any provision of
the charter or bylaws or comparable governing documents of Parent or
Purchaser, or any material Contract or Permit applicable to Purchaser
other than any such conflicts, violations or defaults which,
individually or in the aggregate, could not reasonably be expected to
result in a material undisclosed liability of Parent or Purchaser. No
material consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to Parent or
Purchaser in connection with the execution and delivery of this
Agreement by Parent or Purchaser or the performance by Parent or
Purchaser of the transactions contemplated hereby to be performed by
either of them, except (i) for such of the foregoing as are listed or
described on Schedule 2.2.3 and (ii) for such consents, approvals,
orders, authorizations of, or registrations, declarations or filings
with, any Governmental Entity, which, individually or in the aggregate
if not obtained or made, could not reasonably be expected to result in
a material undisclosed liability of Parent or Purchaser.
2.2.4. Financial Capacity. Parent has obtained commitment
letters (copies of which have been provided to Seller), subject to
certain conditions set forth therein, for an aggregate of $51 million
equity financing, an aggregate of $85 million senior debt financing
and an aggregate of $100 million bridge subordinated debt financing.
Assuming the accuracy of the representations and warranties of Seller
and C&A herein and compliance by Seller and C&A with their covenants
contained herein, Parent believes that the conditions to the
availability of all such financing will be satisfied prior to the
Closing and Parent will use reasonable efforts so to obtain such
financing.
2.3. Certain Limitations on Representations and Warranties. (a)
Each of the parties is a sophisticated legal entity that was
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advised by experienced counsel and, to the extent it deemed
necessary, other advisors in connection with this Agreement.
Accordingly, each of the parties hereby acknowledges that (i) there
are no representations or warranties by or on behalf of any party
hereto or any of its respective Affiliates or representatives other
than those expressly set forth in this Agreement and (ii) the parties'
respective rights, obligations and remedies with respect to this
Agreement and the events giving rise thereto will be solely and
exclusively as set forth in the Transaction Documents and the
Confidentiality Agreement.
(b) Any representation and warranty made in this Agreement
by Seller will be deemed for all purposes to be qualified by the
disclosures made in any Schedule specifically referred to in such
representation or warranty and by the information disclosed in any
other Schedule if the relevance of such information to such
representation and warranty is reasonably apparent on its face.
References in this Article to matters "primarily" relating to the
Business are to matters which predominantly relate to the Business
rather than predominantly to one of either Seller's or any
Post-Closing Affiliate's other businesses or to the businesses or
operations of Seller or any Post-Closing Affiliate generally.
III. COVENANTS
3.1. Investigation by Purchaser. (a) Prior to the Closing, upon
reasonable notice from Parent (on behalf of itself and Purchaser) to
Seller given in accordance with this Agreement, Seller will, and will
cause the Company to, afford to the officers, attorneys, accountants
or other authorized representatives of Purchaser and Parent reasonable
access during normal business hours to the facilities and the books
and records of the Company so as to afford Purchaser and Parent a
reasonable opportunity to make, at their sole cost and expense, such
review, examination and investigation of the Company as Purchaser and
Parent may reasonably desire to make, including without limitation a
so-called "Phase I" (i.e., documentary review and walk-through site
inspection) preliminary environmental evaluation; provided, however,
that no borings or other so-called "Phase II" environmental
examinations will be performed without Seller's prior written consent,
which consent may be given or withheld in Seller's sole discretion.
Purchaser and Parent will be permitted to make extracts from or to
make copies of such books and records as may be reasonably necessary.
Prior to the Closing, Seller will furnish to Parent or Purchaser, or
cause to be furnished to Parent or Purchaser, such financial and
operating data and other information pertaining to the Company as
Parent or Purchaser may reasonably request; provided, however, that
nothing in this Agreement will obligate Seller to take actions that
would unreasonably disrupt the normal course of business of itself,
any Post-Closing Affiliate or the Company, violate the terms of any
applicable Law or rules of any national stock exchange applicable to
it or its Affiliates or any Contract to which any of them is a
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party or to which any of them or any of their assets are subject (to
the extent described in reasonable detail in response to any request
for information specified above) or grant access to any of their
proprietary or confidential information not related to the Business.
(b) Subject to Section 3.2, whether or not the Closing occurs,
Parent and Purchaser will, and will cause each of their Affiliates to,
treat in confidence all documents, materials and other information
(including without limitation information relating to supply and sales
agreements and relationships with third persons or entities) disclosed
by any other party that is not its Affiliate, whether before, during
or after the course of the negotiations leading to the execution of
this Agreement or thereafter, including without limitation in its
investigation of the other parties and in the preparation of
agreements, schedules and other documents relating to the consummation
of the transactions contemplated hereby. Prior to the Closing, and in
the event that this Agreement is terminated, neither Purchaser, Parent
nor any of their Affiliates will, and if the Closing occurs C&A will
not and will cause its Affiliates not to, disclose to any third party
any confidential information, except as required by Law or rules of
any national stock exchange or any Governmental Authority applicable
to it or its Affiliates or as Parent or Purchaser determines is
required to be disclosed in connection with the financing described in
Section 2.2.4, subject to Seller's right to review and reasonably
object to such disclosure. If this Agreement is terminated, Purchaser,
Parent and each of their Affiliates will return to Seller all
originals and copies of all non-public documents and materials of the
type provided for in this Section 3.1 which have been furnished or
made available in connection with this Agreement, and Purchaser and
Parent will destroy all notes, analyses, compilations, studies or
other documents which contain or otherwise reflect such information.
3.2. Press Releases. Prior to the Closing, no party will issue or
cause the publication of any press release or other public
announcement with respect to this Agreement or the transactions
contemplated hereby without the prior consent of Parent (in the case
of Seller) or Seller (in the case of Purchaser or Parent), which
consent will not be unreasonably withheld; provided, however, that
nothing herein will prohibit any party from issuing or causing
publication of any such press release or public announcement to the
extent that such party determines such action to be required by Law or
the rules of any national stock exchange applicable to it or its
Affiliates, in which event the party making such determination will,
if practicable in the circumstances, use reasonable efforts to allow
the other parties reasonable time to comment on such release or
announcement in advance of its issuance.
3.3. Regulatory Filings. (a) Within two business days after the
date hereof, Parent will, and Seller will cause the ultimate
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parent entity of Seller to, make such filings, if any, as may be
required by the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement. Thereafter, Parent will,
and Seller will cause the ultimate parent entity of Seller to, file or
cause to be filed as promptly as practicable with the United States
Federal Trade Commission (the "FTC") and the United States Department
of Justice (the "DOJ") supplemental information, if any, which may be
required or requested by the FTC or the DOJ pursuant to the HSR Act.
To the extent required by Law, Seller will make, or cause any of its
Affiliates to make, such filings and use its reasonable efforts to
obtain the governmental approvals and the other consents (if any)
referred to in Section 2.1.5, and Purchaser and Parent will each make
such filings and use their respective reasonable efforts to obtain the
governmental approvals and the other consents (if any) referred to in
Section 2.2.3. All filings referred to in this Section 3.3(a) will
comply in all material respects with the requirements of the
respective Laws pursuant to which they are made.
(b) Without limiting the generality or effect of Section 3.3(a),
each of the parties will (i) use their respective reasonable efforts
to comply as expeditiously as possible with all lawful requests of
Governmental Entities for additional information and documents
pursuant to the HSR Act, if applicable, (ii) not (A) extend any
waiting period under the HSR Act or (B) enter into any agreement with
any Governmental Entity not to consummate the transactions
contemplated by this Agreement, except with the prior consent of each
of the other parties hereto, and (iii) cooperate with each other and
use reasonable efforts to cause the lifting or removal of any
temporary restraining order, preliminary injunction or other judicial
or administrative order which may be entered into in connection with
the transactions contemplated by this Agreement, including without
limitation the execution, delivery and performance by the appropriate
entity of such divestiture agreements or other actions, as the case
may be, as may be necessary to secure the expiration or termination of
the applicable waiting periods under the HSR Act or the removal,
dissolution, stay or dismissal of any temporary restraining order,
preliminary injunction or other judicial or administrative order which
prevents the consummation of the transactions contemplated hereby or
requires as a condition thereto that all or any part of the Business
be held separate and, prior to or after the Closing, pursue the
underlying litigation or administrative proceeding diligently and in
good faith.
3.4. Injunctions. Without limiting the generality or effect of
any provision of Section 3.3 or Article IV, if any Governmental Entity
having jurisdiction over any party issues or otherwise promulgates any
injunction, decree or similar order prior to the Closing which
prohibits the consummation of the transactions contemplated hereby,
the parties will use their respective reasonable efforts to have such
injunction dissolved or otherwise eliminated as promptly as possible
and, prior to or
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after the Closing, to pursue the underlying litigation diligently
and in good faith.
3.5. Operation of the Business. Except in connection with or as a
result of any matter listed or described on Schedule 3.5, as expressly
contemplated herein or as otherwise consented to by Parent (on behalf
of itself and Purchaser) in writing, prior to the Closing, Seller will
cause the Company to:
(a) Use reasonable efforts to keep the Business intact
(including without limitation relationships with customers,
employees, suppliers and others) and not take or permit to be
taken or do or suffer to be done anything other than in the
ordinary course of business of the Business as presently
conducted, and use reasonable efforts to maintain the goodwill
associated with the Business; provided, however, that nothing in
this Agreement or otherwise will prohibit or restrict the Company
from (i) paying or prepaying any indebtedness for borrowed money
or any intercompany obligation, (ii) paying any cash dividend or
other distribution of cash or cash equivalent items, or (iii)
repurchasing for cash any capital stock;
(b) Continue existing practices relating to maintenance of
the assets owned, leased or otherwise held by the Company for use
in the Business ("Assets") in good repair, ordinary wear and tear
excepted, and continue to make capital expenditures substantially
in accordance with budgets delivered to Purchaser;
(c) Authorize and approve the capital expenditures to
be made by the Company described on Schedule 3.5(c);
(d) Not purchase, sell, lease or dispose of, or enter into
any Contract for the purchase, sale, lease or disposition of, or
subject to Lien, any of the Assets other than (i) Products or
(ii) in the ordinary course of business of the Business;
(e) Not adopt or make any amendment to any Employee Plan or
increase the general rates of compensation of Employees, except
(i) as required by Law or (ii) pursuant to any Contract listed on
Schedule 2.1.14;
(f) Not enter into, amend, modify or cancel any Contract
listed or required to be listed on Schedule 2.1.14, except in the
ordinary course of business consistent with past practice;
(g) Not incur indebtedness for borrowed money, or assume,
guarantee, endorse or otherwise become responsible for the
obligations of any other person or entity, or make loans or
advances to any person or entity (other than advances to
Employees in the ordinary course of business
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consistent with past practice reflected on the Company's books
and records);
(h) Not enter into any joint venture, partnership or
similar arrangement;
(i) Not amend its Certificate of Incorporation or By-
Laws;
(j) Not dispose of, permit to lapse or otherwise fail to
preserve any of its Intellectual Property or other similar
rights, dispose of or permit to lapse any material Permit, or
dispose of or disclose to any person or entity other than an
authorized representative of Purchaser, any trade secret (except
for such of the foregoing as may occur by operation of Law or the
terms of any of the foregoing); or
(k) Not enter into a Contract to do any of the foregoing
(other than as may be required by Sections 3.5(a), (b) or (c)).
3.6. Satisfaction of Conditions. Without limiting the generality
or effect of any provision of Article IV, prior to the Closing, each
of the parties hereto will use its respective reasonable efforts with
due diligence and in good faith to satisfy promptly all conditions
required hereby to be satisfied by such party in order to expedite the
consummation of the transactions contemplated hereby.
3.7. Negotiations With Others. From the date hereof until
the termination of this Agreement in accordance with its terms or
the Closing, C&A and its Affiliates will not, and will cause its and
their respective officers, directors, investment bankers, attorneys,
accountants and other agents not to: (i) initiate, solicit (including
by way of furnishing information) or accept, any offer or proposal
which constitutes, an Alternative Proposal or (ii) in the event of an
unsolicited Alternative Proposal, engage in substantive discussions or
negotiations, or enter into any Contract, with, or furnish information
to, any Person relating to any Alternative Proposal. All such
negotiations prior to the date hereof have been terminated. For
purposes of this Agreement, "Alternative Proposal" means any proposal
or offer from any Person relating to any acquisition or purchase of
all or substantially all of the assets or common stock of the Company
or any merger, consolidation, business combination or similar
transaction involving the Company, other than the transactions
contemplated by this Agreement.
3.8. Certain Additional Covenants. (a) Seller will, and will
cause the management of the Company to, upon reasonable request, meet
with Purchaser during normal business hours at C&A's or the Company's
principal executive offices to discuss the general status of the
ongoing operations of the Company, and
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Seller will notify Purchaser (i) of any emergency or change in
the normal conduct of the Business and (ii) of any event, occurrence,
fact, condition, change or effect that constitutes a breach of any
representation, warranty or covenant of C&A or Seller hereunder of
which, to the Knowledge of Seller, Purchaser or Parent does not also
have Knowledge (other than any of the foregoing occurring after the
date hereof and not constituting a breach of Seller's or C&A's
covenants in this Agreement); provided, however, that for purposes of
the rights and obligations of the parties, any supplemental or amended
disclosure by Seller will not be deemed to have been disclosed unless
so agreed in writing by Purchaser, or to preclude Purchaser from (i)
seeking a remedy in damages for losses incurred as a result of the
omission of such supplemented or amended disclosure, subject to the
limitations set forth in Section 5.2 or (ii) terminating this
Agreement if such supplemented or amended disclosure causes or reveals
the failure of any condition to Purchaser's obligation to close.
(b) Purchaser will notify Seller prior to the Closing if
Purchaser obtains Knowledge of any breach of any representation,
warranty or covenant of Seller or C&A hereunder of which, to the
Knowledge of Purchaser, Seller or C&A does not also have Knowledge.
(c) C&A and Seller will use reasonable efforts to have
Arthur Andersen, L.L.P. consent to Purchaser's use of the audited
financial statements included in the Financial Statements as may be
required by applicable Law in the disclosure documents relating to
Purchaser's contemplated financing.
3.9. Efforts to Consummate. Subject to the terms and conditions
herein provided, each of C&A and Seller, on the one hand, and Parent
and Purchaser, on the other hand, will use reasonable efforts to take
or cause to be taken, all actions and to do, or cause to be done, all
things necessary to consummate and make effective the transactions
contemplated by this Agreement and to cooperate with the other in
connection with the foregoing. C&A and Seller will, at their sole
expense, cause to be included in the assets and properties of the
Company prior to the Closing all assets, properties, permits,
authorizations, rights and related obligations which are being used or
held for use primarily or exclusively by the Company (whether or not
such assets, properties, permits, authorizations, rights and related
obligations are presently owned or held by the Company), all on terms
and conditions, and pursuant to documentation, reasonably acceptable
to Purchaser.
3.10. Resignations. Prior to the Closing, upon
Purchaser's specific request, Seller will cause to resign or to
be removed from office such officers and directors of
Floorcoverings US or Floorcoverings UK whose full-time employment
is not in the Business.
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IV. THE CLOSING
4.1. Conditions Precedent to Obligations of Purchaser, Parent and
Seller. The obligations of each of Purchaser, Parent and Seller under
this Agreement to consummate the transactions contemplated hereby will
be subject to the satisfaction, at or prior to the Closing, of the
conditions that there shall not have been entered a preliminary or
permanent injunction, temporary restraining order or other judicial or
administrative order or decree in any jurisdiction, the effect of
which prohibits the Closing. The foregoing conditions may be waived
(i) insofar as it is a condition to the obligations of Purchaser or
Parent, by Parent (without the joinder of Purchaser) at its option and
(ii) insofar as it is a condition to the obligations of Seller, by
Seller at its option.
4.2. Additional Conditions Precedent to Obligations of Purchaser
and Parent. The obligations of Purchaser and Parent under this
Agreement to consummate the transactions contemplated hereby will be
subject to the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which may be waived at the
option of Parent (without the joinder of Purchaser):
4.2.1. No Material Misrepresentation or Breach. There shall have
been no material breach by Seller in the performance of any of the
covenants herein to be performed by it in whole or in part prior to
the Closing, and the representations and warranties of Seller
contained in this Agreement shall be true and correct in all material
respects as of the Closing Date, except for representations or
warranties made as of a specified date, which shall be true and
correct in all material respects as of the specified date, and C&A
shall have delivered to Purchaser a certificate certifying each of the
foregoing, dated the Closing Date and signed by one of its executive
officers to the foregoing effect (it being understood that where any
such representation or warranty already includes a Material Adverse
Effect or other materiality exception, no further materiality
exception is to be permitted by this Section);
4.2.2. Transfer Documents, Etc. Seller shall have delivered or
caused to be delivered to Purchaser the certificates representing the
Shares, and certificates representing all shares of capital stock of
Floorcoverings UK not owned by Floorcoverings US, which certificates
shall have been duly endorsed for transfer or accompanied by duly
executed stock powers, with (if applicable) any required tax stamps
affixed thereto. In addition, at the Closing, Seller shall have
delivered to Purchaser duly signed resignations, effective immediately
after the Closing, of all officers and directors of Floorcoverings US
and Floorcoverings UK whose full-time employment is not in the
Business, or shall have taken such other action as is necessary
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to remove such persons as officers or directors of Floorcoverings US
and Floorcoverings UK after the Closing;
4.2.3. No Material Adverse Change. Since January 27, 1996,
nothing shall have occurred (and the Purchaser or Parent shall have
become aware of no facts or conditions not previously known),
including as a result of any Legal Proceedings commenced after the
date hereof (and not disclosed on any Schedule hereto), which the
Purchaser or Parent shall reasonably determine could have a material
adverse effect on the business, property, assets, nature of assets,
liabilities, condition (financial or otherwise), results of operations
or prospects of the Company or the Business, after giving effect to
the transactions contemplated hereby;
4.2.4. No Market Change. (i) Trading in securities generally on
the New York or American Stock Exchange shall not have been suspended;
minimum or maximum prices shall not have been established on any such
exchange; (ii) a banking moratorium shall not have been declared by
New York or United States authorities; and (iii) there shall not have
been (x) an outbreak or escalation of hostilities between the United
States and any foreign power, or (y) an outbreak or escalation of any
other insurrection or armed conflict involving the United States or
any other national or international calamity or emergency, or (z) any
material change in the general financial markets of the United States
which, in each case, in the reasonable judgment of the Parent or
Purchaser, would materially and adversely affect the ability to sell
or syndicate loans of a nature similar to the financing contemplated
by Section 2.2.4; and
4.2.5. Other Documents. C&A shall have duly executed and
delivered to Purchaser a Management Services Agreement in
substantially the form of Schedule 4.2.5(a) (the "MSA"), a Tradename
Agreement in substantially the form of Schedule 4.2.5(b) (the "TNA"),
a Noncompetition Agreement in substantially the form of Schedule
4.2.5(c) (the "NCA") and shall have delivered an opinion of Jones,
Day, Reavis & Pogue, counsel to C&A and Seller, substantially to the
effect set forth in Schedule 4.2.5(e).
4.3. Additional Conditions Precedent to Obligations of Seller and
C&A. The obligations of Seller and C&A under this Agreement to
consummate the transactions contemplated hereby will be subject to the
satisfaction, at or prior to the Closing, of all the following
conditions, any one or more of which may be waived at the option of
Seller.
4.3.1. No Material Misrepresentation or Breach. There shall have
been no material breach by either Purchaser or Parent in the
performance of any of the covenants herein to be performed by either
of them in whole or in part prior to the Closing, and the
representations and warranties of Parent and Purchaser contained in
this Agreement shall be true and correct in all material respects as
of the Closing Date, except for representations or warranties made as
of a specified date, which shall be true and correct in all
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<PAGE>
material respects as of the specified date, and each of Purchaser and
Parent shall have delivered to Seller a certificate certifying each of
the foregoing, dated the Closing Date and signed by one of its
executive officers to the foregoing effect (it being understood that
where any such representation or warranty already includes a Material
Adverse Effect or other materiality exception, no further materiality
exception is to be permitted by this Section);
4.3.2. Estimated Purchase Price. Purchaser shall have
delivered to Seller in the manner specified in Section 1.2 an
amount equal to the Estimated Purchase Price; and
4.3.3. Other Documents. Purchaser shall have caused the Company
to have duly executed and delivered to C&A the MSA, the TNA and the
NCA and shall have delivered an opinion of McGuire, Woods, Battle &
Boothe, L.L.P., counsel to Parent and Purchaser, substantially to the
effect set forth in Schedule 4.3.3.
4.4. The Closing. (a) Subject to the fulfillment or waiver of the
conditions precedent specified in Sections 4.1, 4.2 and 4.3, the
consummation of the purchase and sale of the Shares contemplated
hereby (the "Closing") will take place on January 31, 1997 or such
other date as provided herein (the "Closing Date"). The Closing will
take place at 10:00 A.M., Eastern Time, at the offices of Jones, Day,
Reavis & Pogue at 599 Lexington Avenue, New York, New York 10022.
(b) Subject to Section 4.5(b), if the Closing has not occurred by
the date specified in Section 4.4(a), then the Closing Date will be
extended to the earlier of (a) the second business day after the
conditions set forth in Section 4.1 have been satisfied and (b) such
other date, on or prior to the Drop Dead Date, to which Parent (on
behalf of itself and Purchaser) and Seller mutually agree.
4.5. Termination. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated
at any time prior to the Closing:
(a) By the mutual written consent of Parent (without
the joinder of Purchaser) and Seller;
(b) By either Parent (without the joinder of Purchaser) or
Seller if the Closing shall not have occurred on or before the
later of the following dates (the "Drop Dead Date"): (i) January
31, 1997 and (ii) if Purchaser certifies that it is continuing to
pursue the consummation of the Closing in good faith, such other
date not later than February 17, 1997 as Purchaser may designate;
provided that the failure to consummate the transactions
contemplated
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hereby on or before such date did not result from the failure by
the party seeking termination of this Agreement to fulfill any
undertaking or commitment provided for herein that is required to
be fulfilled before Closing; or
(c) By either Parent (without the joinder of Purchaser) or
Seller if there shall have been entered a final, nonappealable
order or injunction of any Governmental Entity restraining or
prohibiting the consummation of the transactions contemplated
hereby or any material part thereof.
In the event of the termination of this Agreement under this Section
4.5, each party hereto will pay all of its own fees and expenses.
There will be no further liability hereunder on the part of any party
hereto if this Agreement is so terminated, except under Section 3.1(b)
or by reason of a breach of any covenant or representation contained
in this Agreement, including without limitation the covenants
contained in Sections 3.3, 3.4 and 3.7.
V. SURVIVAL AND INDEMNIFICATION
5.1. Survival of Representations, Warranties and Covenants. (a)
Each of the representations and warranties contained in Article II
will survive the Closing and remain in full force and effect until the
last day of the fifteenth full month after the Closing Date, except
that (i) the representations and warranties set forth in Section
2.1.17 will survive the Closing and remain in full force and effect
until the third anniversary of the Closing Date, (ii) the
representation and warranty in Section 2.1.22 will survive the Closing
and remain in full force and effect until the second anniversary of
the Closing Date, and (iii) the representations and warranties set
forth in Sections 2.1.1(a), 2.1.2, 2.1.4, 2.1.15, 2.1.16, 2.1.21,
2.2.1 and 2.2.2 will survive the Closing and remain in full force and
effect until the expiration of the statute of limitations, if any. Any
claim for indemnification with respect to any of such matters which is
not asserted by a notice given as herein provided specifically
identifying the particular breach underlying such claim (whether or
not the Indemnifiable Loss has been actually incurred as of the date
of such notice) and the facts and Indemnifiable Loss relating thereto
(to the extent reasonably determinable as of the date of such notice),
within such specified periods of survival may not be pursued and is
hereby irrevocably waived.
(b) The covenants contained in Sections 3.1(b), 3.3(b) 3.4 and
3.8(c), in this Article V and in Articles I, VI and VII (the
"Post-Closing Covenants") will survive the Closing and remain in
effect indefinitely unless a specified period is otherwise set forth
in this Agreement (in which event such specified period will control).
All other covenants contained in this Agreement will terminate,
without further action, upon the occurrence of
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<PAGE>
the Closing, with the result that any claim for an alleged breach of
any such covenant may not be pursued and is hereby irrevocably waived.
5.2. Limitations on Liability. (a) For purposes of this
Agreement, (i) "Indemnity Payment" means any amount of Indemnifiable
Losses required to be paid pursuant to this Agreement, (ii)
"Indemnitee" means any person or entity entitled to indemnification
under this Agreement, (iii) "Indemnifying Party" means any person or
entity required to provide indemnification under this Agreement, (iv)
"Indemnifiable Losses" means any and all claims, demands, actions,
suits or proceedings (by any person or entity, including without
limitation any Governmental Entity), settlements and compromises
relating thereto and reasonable attorneys' fees and expenses in
connection therewith or in enforcing the Indemnifying Party's
obligations hereunder, losses, liabilities, costs and expenses,
reduced by the amount of insurance proceeds actually received from any
person or entity that is not an Affiliate of the Indemnitee, and (v)
"Third Party Claim" means any claim, demand, action, suit or
proceeding made or brought by any person or entity who or which is not
a party to this Agreement or an Affiliate of a party to this
Agreement.
(b) Notwithstanding any other provision in this Agreement
or of any applicable Law:
(i) No Indemnitee will be entitled to indemnification
by an Indemnifying Party under Section 5.3(a)(i) or
otherwise in respect of any breach or alleged breach of any
representation or warranty contained in Sections 2.1.1(b) (second
sentence only), 2.1.5 (as applied to filing or approval
requirements under Laws only), 2.1.8, 2.1.17 or 2.1.13 (but with
respect to Section 2.1.13, only as to Legal Proceedings commenced
during the period from the date of this Agreement to and
including the Closing Date and insofar as the Indemnifiable
Losses relating to, resulting from or arising out of such Legal
Proceeding relate to, result from or arise out of non-compliance
with any Law (including without limitation any Environmental Law)
and the existence of which proceedings do not constitute a breach
of this Agreement as of the date hereof), unless the aggregate
amount of Indemnifiable Losses incurred by the Indemnitee in
respect of any individual event or occurrence or series of events
or occurrences arising out of a common nucleus of operative
facts, giving rise to such Indemnifiable Losses exceeds $100,000,
in which event the Indemnitee will be entitled to pursue such
claim to the full amount of its Indemnifiable Losses relating
thereto.
(ii) No Indemnitee will be entitled to indemnification by an
Indemnifying Party under Section 5.3(a)(i) or 5.3(b)(i) or
otherwise in respect of any breach or alleged breach of any
representation or warranty contained in
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Article II insofar as such representation or warranty is
qualified by a Material Adverse Effect or other materiality
exception unless the aggregate amount of Indemnifiable Losses
incurred by the Indemnitee in respect of any individual event or
occurrence or series of related events or occurrences arising out
of a common nucleus of operative facts, giving rise to such
Indemnifiable Losses exceeds $25,000, in which event the
Indemnitee will be entitled to pursue such claim to the full
amount of its Indemnifiable Losses relating thereto.
Notwithstanding the foregoing, any claim which arises out of a
matter which is within the scope of the representations and
warranties referred to in Section 5.2(b)(i) is subject to the
limitations set forth in Section 5.2(b)(i) and not in this
Section 5.2(b)(ii).
(iii) No Indemnitee will be entitled to indemnification by an
Indemnifying Party under Sections 5.3(a)(i) (except for a claim
for breach of Sections 2.1.1(a), 2.1.2, 2.1.4 or 2.1.21) or
Section 5.3(b)(i) unless and until the aggregate amount of claims
which may be asserted for Indemnifiable Losses under Section
5.3(a)(i) or Section 5.3(b)(i), as the case may be, exceeds
$2,000,000, and then only to the extent of the excess.
(c) Notwithstanding any other provision of this Agreement, the
indemnification obligations of C&A and Seller, collectively, under
Section 5.3(a)(i) (except for a claim for breach of Sections 2.1.1(a),
2.1.2 or 2.1.4) or of Purchaser, Parent and the Company, collectively,
under Section 5.3(b)(i) will not exceed $66.7 million.
(d) As between any Seller and any Seller Affiliate, on the one
hand, and Purchaser, Parent or any Affiliate thereof, on the other
hand, the rights and obligations set forth in this Article V will be
the sole and exclusive remedies for breach of this Agreement.
5.3. Indemnification. (a) Subject to Sections 5.1, 5.2 and 5.4,
each of C&A and Seller will jointly and severally indemnify, defend
and hold harmless Parent, Purchaser and their respective Affiliates
and their respective directors, officers, partners, shareholders,
employees, agents and representatives (including, without limitation,
any predecessor or successor to any of the foregoing) from and against
any and all Indemnifiable Losses relating to, resulting from or
arising out of:
(i) Any breach by C&A or Seller of any of the
representations or warranties of C&A or Seller contained in this
Agreement (without giving effect to any Material Adverse Effect
or other materiality limitations therein or exception thereto
other than the Material Adverse Effect or other materiality
limitations or exceptions in Section 2.1.22 and, to the extent
relating to, resulting from or
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arising out of any matter which is the subject of Section 2.1.22,
Section 2.1.18);
(ii) Any breach by C&A or Seller of any Post-Closing
Covenant of C&A or Seller contained in this Agreement;
(iii) Any controlled group liability under (A) Title IV of
ERISA, (B) Section 302 of ERISA, (C) Sections 412 and 4971 of the
Code, (D) continuation coverage requirements of Sections 601, et
seq. of ERISA and Section 4980B of the Code, and (E)
corresponding or similar provisions of foreign Laws, other than
such liabilities that arise solely out of, or relate solely to,
Employees or Former Employees; and
(iv) The ownership, conduct, condition or Transfer (including
without limitation any Taxes associated therewith, related
thereto or arising therefrom) of the entity previously owned by
Floorcoverings UK that was engaged in the wallcoverings business,
or the business conducted by such entity.
(b) Subject to Sections 5.1, 5.2 and 5.4, each of Purchaser and
Parent will, and, if the Closing occurs, will cause the Company to,
jointly and severally indemnify, defend and hold harmless C&A, Seller
and each Post-Closing Affiliate and their respective directors,
officers, partners, shareholders, employees, agents and
representatives (including, without limitation, any predecessor or
successor to any of the foregoing) from and against any and all
Indemnifiable Losses relating to, resulting from or arising out of:
(i) Any breach by Purchaser or Parent of any of the
representations or warranties of Purchaser or Parent contained in
this Agreement (without giving effect to any Material Adverse
Effect or other materiality limitation therein or exception
thereto);
(ii) Any breach by Purchaser or Parent of any
Post-Closing Covenant of Purchaser or Parent contained in
this Agreement;
(iii) Any Assumed Push-Down Liabilities (provided, however,
that Purchaser and Parent's liability hereunder will not exceed
the Maximum APD Liability Amount).
(c) Certain Litigation. Notwithstanding any other provision of
this Agreement, C&A and Seller will jointly and severally indemnify,
defend and hold harmless Parent, Purchaser and their respective
Affiliates and their respective directors, officers, partners,
shareholders, employees, agents and representatives (including without
limitation any predecessor or successor to any of the foregoing) from
and against, all Indemnifiable Losses relating to, resulting from or
arising out of the claims set forth in Schedule 5.3(c) (the "Retained
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Claims"). Seller will retain or assume the defense of all Retained
Claims, which shall be treated by all parties hereto as Third Party
Claims under Section 5.4, provided that the last two sentences of
Section 5.4(b) will not be applicable to any Retained Claims.
Purchaser will cause the Company to deliver to Seller at the Closing a
power of attorney to enable C&A to prosecute, defend, compromise or
settle any Retained Claim in such form as C&A or Seller may reasonably
request, subject to the terms hereof. Without limiting the generality
of Section 5.4(c), Seller will be entitled to any recovery,
settlement, rebate or other payment relating to, resulting from or
arising out of the Retained Claims. Purchaser will, and will cause the
Company and its employees to, cooperate in the defense and prosecution
of Third Party Claims, so long as such cooperation does not
unreasonably disrupt or interfere with its requirements or any of its
or its Affiliates' operations or services.
5.4. Defense of Claims. (a) If any Indemnitee receives notice of
the assertion or commencement of any Third Party Claim against such
Indemnitee with respect to which an Indemnifying Party is obligated to
provide indemnification under this Agreement, the Indemnitee will give
such Indemnifying Party reasonably prompt written notice thereof, but
in any event not later than 30 calendar days after receipt of such
written notice of such Third Party Claim. Such notice by the
Indemnitee will describe the Third Party Claim in reasonable detail,
will include copies of all material written evidence thereof and will
indicate the estimated amount, if reasonably practicable, of the
Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate
in, or, by giving written notice to the Indemnitee, to assume, the
defense of any Third Party Claim at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (reasonably
satisfactory to the Indemnitee), and the Indemnitee will cooperate in
good faith in such defense.
(b) If, within ten calendar days after giving notice of a Third
Party Claim to an Indemnifying Party pursuant to Section 5.4(a), an
Indemnitee receives written notice from the Indemnifying Party that
the Indemnifying Party has elected to assume the defense of such Third
Party Claim as provided in the last sentence of Section 5.4(a), the
Indemnifying Party will not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the defense
thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party
Claim within ten calendar days after receiving written notice from the
Indemnitee that the Indemnitee believes the Indemnifying Party has
failed to take such steps or if the Indemnifying Party has not
undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, the Indemnitee may assume
its own defense, and the Indemnifying Party will be liable for all
reasonable costs or expenses paid or incurred in connection therewith.
Without the prior written consent of the
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Indemnitee, the Indemnifying Party will not enter into any settlement
of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which
the Indemnitee is not entitled to indemnification hereunder, or which
provides for injunctive or other non-monetary relief applicable to the
Indemnitee or does not include an unconditional release of all
Indemnified Parties. If a firm offer is made to settle a Third Party
Claim without leading to liability or the creation of a financial or
other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder and the
Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnitee to that
effect. If the Indemnitee fails to consent to such firm offer within
ten calendar days after its receipt of such notice, the Indemnitee may
continue to contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party as to such
Third Party Claim will not exceed the amount of such settlement offer.
(c) Any claim by an Indemnitee on account of an Indemnifiable
Loss which does not result from a Third Party Claim (a "Direct Claim")
will be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 calendar
days after the Indemnitee becomes aware of such Direct Claim. Such
notice by the Indemnitee will describe the Direct Claim in reasonable
detail, will include copies of all material written evidence thereof
and will indicate the estimated amount, if reasonably practicable, of
the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have a period of 30 calendar
days within which to respond in writing to such Direct Claim. If the
Indemnifying Party does not so respond within such 30 calendar day
period, the Indemnifying Party will be deemed to have rejected such
claim, in which event the Indemnitee will be free to pursue such
remedies as may be available to the Indemnitee on the terms and
subject to the provisions of this Agreement.
(d) A failure to give timely notice or to include any specified
information in any notice as provided in Sections 5.4(a), 5.4(b) or
5.4(c) will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of such
failure, any party which was entitled to receive such notice was
deprived of its right to recover any payment under its applicable
insurance coverage or was otherwise prejudiced as a result of such
failure.
(e) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment to the Indemnitee, is
reduced by recovery, settlement or otherwise under or pursuant to any
insurance coverage, or pursuant to any claim, recovery, settlement,
rebate or other payment by or against any other person or entity, the
amount of such reduction, less any
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costs, expenses, premiums or taxes incurred in connection therewith,
will promptly be repaid by the Indemnitee to the Indemnifying Party.
Upon making any Indemnity Payment the Indemnifying Party will, to the
extent of such Indemnity Payment, be subrogated to all rights of the
Indemnitee against any third person or entity that is not an Affiliate
of the Indemnitee in respect of the Indemnifiable Loss to which the
Indemnity Payment relates; provided, however, that (i) the
Indemnifying Party shall then be in compliance with its obligations
under this Agreement in respect of such Indemnifiable Loss and (ii)
until the Indemnitee recovers full payment of its Indemnifiable Loss,
any and all claims of the Indemnifying Party against any such third
person or entity on account of said Indemnity Payment will be
subrogated and subordinated in right of payment to the Indemnitee's
rights against such third person or entity. Without limiting the
generality or effect of any other provision hereof, each such
Indemnitee and Indemnifying Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
VI. OTHER POST-CLOSING COVENANTS
6.1. Personnel Matters.
6.1.1. Employees and Employee Benefit Plans. (a) Purchaser will,
and will cause the Company to, indemnify C&A and each of its
Affiliates for any Indemnifiable Loss relating to, resulting from or
arising out of any change in employee plan benefits or levels of
compensation following the Closing Date from those existing on the
date hereof, or any liability or obligation to any Employee in the
event that Purchaser or the Company terminates the employment of any
person who is an Employee as of the Closing Date. Notwithstanding the
foregoing, in the event that the employment with the Company of any of
the Employees listed on Schedule 6.1.1(a) is terminated by the Company
not later than 90 calendar days after the Closing, Seller will
reimburse the Company for severance payments due to such Employees and
made by the Company, provided that such obligation will not, as to any
such Employee, exceed the maximum amount due to any such Employee
pursuant to the terms of any Contract or Employee Plan applicable
thereto as in effect immediately prior to the Closing.
(b) Purchaser agrees that, under any employee benefit plan made
available or established after the Closing, Employees will receive
credit for their years of service with Seller, any Post-Closing
Affiliate or the Company prior to the Closing in determining
eligibility and vesting thereunder, and in determining the amount of
benefits under any applicable sick leave, vacation or severance plan.
Purchaser will, or will cause one of its Affiliates to, cover
Employees and Former Employees as of the Closing under a group health
plan and waive any preexisting condition limitations applicable to
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Employees or Former Employees under any group health plan made
available to Employees or Former Employees to the extent that an
Employee's or Former Employee's condition would not have operated as a
preexisting condition limitation under any applicable group health
plan, and Purchaser will, or will cause one of its Affiliates to, take
all action necessary to ensure that Employees and Former Employees are
given full credit for all co-payments and deductibles incurred under
any group health plan for the plan year that includes the Closing
Date.
6.1.2. Assumption of Obligations. (a) Effective as of the
Closing, Purchaser will, or will cause one of its Affiliates to,
assume and be solely responsible for all liabilities and obligations
of any of Seller, each Post-Closing Affiliate or the Company arising
at any time and relating to the employment or termination of
employment of any Employee or Former Employee, except to the extent
that any of such liabilities or obligations are expressly retained by
any Seller or any Post-Closing Affiliate pursuant to this Section 6.1.
(b) Except as provided in Section 6.1.3 and in clause (z) in the
next sentence, effective as of the Closing, Purchaser will, or will
cause one of its Affiliates to, assume and be solely responsible for
all liabilities and obligations of either Seller or any Post-Closing
Affiliate with respect to Employees and Former Employees under any
Employee Plan and Seller and each Post-Closing Affiliate will be
relieved of all liabilities and obligations with respect to such
Employee Plans (except for claims for medical or dental, or accident
and sickness benefits that in either case are incurred but not
reported or paid as of the Closing). The liabilities and obligations
assumed by Purchaser and all of its Affiliates pursuant to this
Section 6.1.2(b) include without limitation (i) any liability or
obligation relating to (x) short-term and long-term disability
benefits, (y) group medical benefits, and (z) retiree health and life
insurance benefits (but in the case of such retireee benefits only for
the Former Employees identified in Schedule 6.1.2(a) and for Employees
and Former Employees who retire from the Company after July 30, 1996
who are eligible for such benefits); including in each case any claims
for disability, medical, health and life insurance benefits incurred
prior to the Closing (but excluding claims for medical or dental, or
accident and sickness benefits that in either case are incurred but
not reported or paid as of the Closing); and (ii) any liability or
obligation to provide such Employees and Former Employees and their
qualified beneficiaries with continuation coverage (within the meaning
of Section 4980B(f)(2) of the Code) under each Employee Plan that is a
group health plan, and any liability or obligation relating to such
coverage, including without limitation any liability or obligation to
provide such Employees and Former Employees with the notice required
under Section 4980B(f)(6) of the Code with respect to qualifying
events that occur as a result of the Transfer of the Assets.
Notwithstanding the foregoing, neither Purchaser nor any of its
Affiliates will assume any liabilities or obligations with respect to
Seller's
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cafeteria plan arrangement arising out of any failure of Seller to set
forth the terms of such plan in a written plan document.
6.1.3. Retirement Plans. As of the Closing, Seller will cause
Employees to fully vest in their accrued benefits under the Collins &
Aikman Corporation Employees' Profit Sharing and Personal Savings
Plan, the Collins & Aikman Corporation Salaried Employees' Pension
Account Plan and the Collins & Aikman Corporation Hourly Employees'
Pension Account Plan (the "Retirement Plans"). Neither Purchaser nor
any of its Affiliates will assume any liabilities or obligations with
respect to the Retirement Plans, which will be retained by Seller. As
soon as practicable after the Closing, to the extent permitted by Law
and the terms of the Retirement Plans, Seller will permit
distributions to Employees of their vested benefits under the
Retirement Plans. With respect to Retirement Plans from which
distributions may be made, Purchaser will, or will cause one of its
Affiliates to, take all action necessary to cause one or more
qualified retirement plans maintained by Purchaser or any one of its
Affiliates to accept an eligible rollover distribution (within the
meaning of Section 402(f)(2) of the Code) of the amounts distributed
from the Retirement Plans to each Employee who shall become an
employee of Purchaser's affiliated group and a rollover contribution
(within the meaning of Section 408(d)(3) of the Code) with respect to
such amounts. To the extent distributions are not permitted under Law,
the Purchaser and Seller will take such mutually agreed upon action
with respect to Employees' plan accounts, whether that be a spin-off,
trustee-to-trustee transfer to a plan maintained by Purchaser or any
of its Affiliates, or retention in the Retirement Plans for eventual
distribution pursuant to the terms of such plan.
6.1.4. Employment and Plan Amendments or Terminations. Except as
provided in Section 6.1.1, no provision of this Section 6.1 will limit
Purchaser's or any of its Affiliates' right and authority to
discontinue, suspend or modify the employment of any Employee or
benefits provided to any or all Employees or Former Employees after
the Closing; provided, however, that in the event of any such
discontinuance, suspension or modification Purchaser will, or will
cause one of its Affiliates to, remain liable for all Employee Plan
and other employee benefit liabilities or obligations assumed pursuant
to this Agreement and will indemnify, defend and hold harmless Seller,
each Post-Closing Affiliate and their respective directors, officers,
partners, employees, agents and representatives (including without
limitation any predecessor or successor to any of the foregoing) from
and against any and all Indemnifiable Losses they may suffer or incur
as a result thereof. Neither Seller nor any Post-Closing Affiliate
will be liable for any liability or obligation that may arise from the
amendment or termination by Purchaser or any of its Affiliates of any
employee benefit plan assumed, established or continued by Purchaser
or any of its Affiliates under this Section 6.1.
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6.1.5. Transitional Matters. Each of Seller and Purchaser will
use its respective reasonable efforts to cooperate to (a) transfer to
Purchaser or any of its Affiliates any insurance and administrative
services contracts that Purchaser wishes to continue with respect to
any Employee Plan that Purchaser or any of its Affiliates is assuming
or continuing pursuant to this Agreement and (b) cause any insurance
carrier administering workers' compensation and other employee benefit
liabilities or obligations assumed by Purchaser or any of its
Affiliates to deal directly with Purchaser or such Affiliate.
6.1.6. Employee Information. Each of Seller and Purchaser will
provide the other, in a timely manner, any information with respect to
any Employee's or Former Employee's employment with and compensation
from Seller, any Post-Closing Affiliate or Purchaser or any of its
Affiliates, as the case may be, or rights or benefits under any
employee benefit plan which the other party hereto may reasonably
request.
6.2. General Post-Closing Matters.
6.2.1. Post-Closing Notifications. Purchaser and Seller will, and
each will cause its respective Affiliates to, comply with any
post-Closing notification or other requirements, to the extent then
applicable to such party, of any antitrust, trade competition,
investment, control or other Law of any Governmental Entity having
jurisdiction over the Business.
6.2.2. Company Name. C&A will cause Seller to change its
corporate name after the Closing to delete therefrom the words
"Floor Coverings."
6.2.3. Access. (a) On the Closing Date, or as soon thereafter as
practicable, and in no event later than 30 calendar days after the
Closing Date, Seller will deliver or cause to be delivered to
Purchaser all original agreements, documents, books, records,
including without limitation Employee records and records relating to
obligations of the Company to Employees under Employee Plans retained
or assumed by the Purchaser or the Company hereunder, and files
primarily relating to the Business or the Company (collectively,
"Records") in the possession of Seller or any Post-Closing Affiliate
to the extent not in the possession of the Company or Purchaser,
subject to the following exceptions:
(i) Purchaser recognizes that certain Records may contain
only incidental information relating to the Company or may
primarily relate to the Seller or any Post-Closing Affiliate, or
the businesses of the Seller or any
Post-Closing Affiliate other
than the Business, and Seller and its Post-Closing Affiliates may
retain such Records and Seller may deliver appropriately excised
copies of such Records;
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(ii) Seller and each Post-Closing Affiliate may retain any
Tax Returns so long as true and complete copies of the portions
thereof relating to the Business are delivered to Purchaser at or
before the Closing or made available to the Purchaser following
the Closing; and
(iii) Seller and each Post-Closing Affiliate may retain
privileged Records and Records relating to the Retained Claims.
After the Closing, each party will, and will cause its Affiliates to,
retain all Records (except those Records referred to in Section
6.2.3(a)(i) and (ii)) required to be retained pursuant to obligations
imposed by any applicable Law. Except as provided in the immediately
preceding sentence, each party will, and will
cause its Affiliates to, retain all Records for a period of seven
years after the Closing Date. After the end of such seven-year period,
before disposing, or permitting its Affiliates to dispose, of any such
Records, each party will, and will cause its Affiliates to, give
notice to such effect to the other party and give the other party at
its cost and expense an opportunity to remove and retain all or any
part of such Records as the other party may elect.
(b) After the Closing, upon reasonable notice, each party hereto
will give, or cause to be given, to the representatives, employees,
counsel and accountants of the other parties hereto access, during
normal business hours, to Records relating to periods prior to or
including the Closing, and will permit such persons to examine and
copy such Records to the extent reasonably requested by the other
party in connection with tax and financial reporting matters
(including, without limitation, any Tax Return relating to state or
local real property transfer or gains taxes), audits, legal
proceedings (including without limitation those pertaining to Retained
Claims), governmental investigations and other business purposes and
to make inquiries relating thereto of the relevant personnel;
provided, however, that nothing herein will obligate any party to take
actions that would unreasonably disrupt the normal course of its
business, violate the terms of any contract to which it is a party or
to which it or any of its assets is subject or grant access to any of
its proprietary, confidential or classified information (except to the
extent required for purposes of defending or prosecuting any third
party Legal Proceedings). Each party will, and will cause its
respective Affiliates controlled by it to, provide or make available
to the other and the other's respective Affiliates access to employees
of Purchaser and the Company for the purposes of, and with the
limitations described in, the preceding sentence (including without
limitation for the purpose of providing, and preparing to provide,
testimony in connection with third party Legal Proceedings).
6.2.4. Certain Tax Matters. (a) Seller will prepare and file or
cause to be prepared and filed all foreign, federal,
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state and local Income Tax Returns for the Company required to be
filed with the appropriate foreign, United States, state and local
taxing authorities for any taxable period that ends on or before the
Closing Date (each a "Pre-Closing Tax Period"). Seller will prepare
and, if required to do so by applicable Law, deliver to Purchaser for
signing and filing any Income Tax Returns of the Company with respect
to any Pre-Closing Tax Period (including any short period) that have
not been filed prior to the Closing Date. Seller will pay all Taxes
required to be paid with respect to such Tax Returns.
(b) Except as otherwise provided in Section 6.2.4(a) or Section
6.2.4(c), Purchaser will prepare and file or cause to be prepared and
filed all Tax Returns for the Company that are required to be filed
with the appropriate United States, state, local and foreign taxing
authorities for all periods as to which such Tax Returns are due after
the Closing Date (taking into account all extensions of due dates).
Subject to Section 6.2.4(r), Purchaser will pay or cause to be paid
all Taxes required to be paid with respect to such Tax Returns.
(c) With respect to any taxable period that would otherwise
include but not end on the Closing Date, to the extent permissible
pursuant to applicable Law, Seller will, and Purchaser will cause the
Company to, (i) take all steps as are or may be reasonably necessary,
including without limitation the filing of elections or returns with
applicable taxing authorities, to cause such period to end on the
Closing Date or (ii) if clause (i) is inapplicable, report the
operations of the Company only for the portion of such period ending
on the Closing Date in a combined, consolidated or unitary Tax Return
filed by Seller or a Post-Closing Affiliate, notwithstanding that such
taxable period does not end on the Closing Date. If clause (ii)
applies to a taxable period of the Company, the portion of such
taxable period included in such return filed by Seller will be treated
as a Pre-Closing Tax Period described in Section 6.2.4(a) and
Purchaser will not be responsible for filing such return for such
portion of such year pursuant to Section 6.2.4(b), provided that the
foregoing will not relieve Purchaser of its obligation under Section
6.2.4(b) to file a Tax Return reporting the operations of the Company
for the portion of such taxable period beginning after the Closing
Date.
(d) Purchaser will prepare and deliver, or will cause to be
prepared and delivered, within 60 calendar days of receipt of Seller's
request therefor, to Seller, Seller's standard international, federal
and state Tax Return data gathering packages relating to the Company.
Such packages will be prepared on a basis consistent with the prior
year's Tax Returns. In addition to providing such packages to Seller,
Purchaser will promptly provide or cause to be provided to Seller such
other information as Seller may reasonably request in order for the
operations of the Company to be properly reported in such Tax Returns.
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(e) C&A and Seller will, jointly and severally, indemnify, defend
and hold harmless Purchaser and each Purchaser Affiliate from and
against any and all liability for any taxable period as a result of
Treasury Regulation Section 1.1502-6 (or any comparable provision of
state, local or foreign law) for Taxes of any corporation, other than
the Company, which is or has been affiliated with the Seller or C&A
Corp.
(f) Purchaser is eligible to and will make a timely and
effective election under Section 338(g) of the Code (and any
comparable provision of state or local law) with respect to the
purchase of the Shares hereunder. Both Seller and Purchaser are
eligible to, and Purchaser will make and Seller will cause C&A Corp.
to make, a timely and effective election under Section 338(h)(10) of
the Code (and any comparable provision of state or local law) with
respect to such purchase (the "Section 338(h)(10) Election").
(g) At the Closing, Purchaser will deliver to Seller a completed
Internal Revenue Service Form 8023A, and the required schedules
thereto ("Form 8023A"), providing for the Section 338(h)(10) Election.
Provided that the information on such Form 8023A is, in the reasonable
determination of Seller, correct and complete in all material
respects, Seller will, at the Closing, execute and deliver such Form
8023A to Purchaser. If any changes or supplements are required to the
Form 8023A as a result of information that is first available after
the Closing, Seller and Purchaser will promptly agree upon and make
such changes. Purchaser and Seller (or C&A Corp.) will timely file the
Form 8023A, and any required supplements thereto, and will provide
written evidence to the other that it has done so.
(h) Purchaser and Seller agree that neither of them will take, or
permit their Affiliates to take, any action to modify or revoke the
elections contained in or the content of any Form 8023A without the
express written consent of the other party.
(i) Seller will cause any tax sharing agreements between the
Company and Seller or any other Post-Closing Affiliate to be
terminated, effective as of the Closing Date, to the extent that any
such agreement relates to the Company.
(j) Seller will pay and indemnify and hold Purchaser and the
Company harmless from (i) any and all Taxes arising from the Section
338(h)(10) Election and (ii) any Tax liability, cost, or expense
arising out of the failure to pay such Tax. Seller will also pay any
state or local Tax (and indemnify and hold Purchaser and the Company
harmless against any Tax liability, cost, or expense arising out of
any failure to pay such Tax) attributable to any election under state
or local law comparable to the election available under Section 338(g)
of the Code (or which results from the making of an election under
Section 338(g) of the Code) with respect to Purchaser's acquisition of
the Company.
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(k) Purchaser and Seller agree to report transactions under this
Agreement consistent with the Section 338(h)(10) Election and will
take no position contrary thereto unless required to do so pursuant to
a final determination by any Taxing authority or judicial proceeding.
(l) Purchaser and Seller agree that the Purchase Price and the
liabilities of the Company (plus other relevant items) will be
allocated to the assets of the Company for purposes of all Tax Returns
and other appropriate documents in a manner consistent with the
purchase price allocation to be determined by the parties on or before
the Closing Date (if such determination is agreed to prior to the
Closing Date) and in accordance with Treasury Regulation Section
1.338(h)(10)-1.
(m) On or before the Closing Date, Seller agrees to provide
Purchaser and the Company with all required clearance certificates or
similar documents that may be required by any state, local or other
Taxing authority in order, to the extent allowed, to relieve Purchaser
of any obligation to withhold any portion of the Purchase Price. If
necessary to avoid sales or use Taxes, Seller will, to the extent
allowed, provide Purchaser with all appropriate state and local resale
certificates.
(n) Seller will furnish to Purchaser on or before the Closing
Date a certification of Seller's non-foreign status as set forth in
Treasury Regulation Section 1.1445-2(b).
(o) Seller, Purchaser and the Company will reasonably cooperate
with each other in connection with the preparation and filing of all
Tax Returns or any audit examinations for any period, including
without limitation the timely furnishing or making available of
records, books of account and any other information necessary for the
preparation of the Tax Returns.
(p) (i) With respect to any Tax Return for a Pre-Closing Tax
Period, Seller and its duly appointed representatives will have the
sole right, at its or their expense, to supervise or otherwise
coordinate any examination process and to negotiate, resolve, settle
or contest any asserted Tax deficiencies or assert and prosecute any
claims for refund; notwithstanding the foregoing, without the express
written consent of Purchaser or the Company, which consent will not be
unreasonably withheld or delayed, Seller will not file any amended Tax
Return, settle any Tax claim or assessment, or surrender any right to
claim a refund of Tax, if such action could have the effect of
increasing the Tax liabilities of the Company or Purchaser.
(ii) With respect to any other Tax Return of the Company,
Purchaser, the Company and their duly appointed representatives will
have the sole right, at the expense of Purchaser or the Company, to
supervise or otherwise coordinate any examination process and to
negotiate, resolve, settle or contest any asserted Tax deficiencies or
assert and prosecute any
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claims for refund; notwithstanding the foregoing, without the express
written consent of Seller, which consent will not be unreasonably
withheld or delayed, neither Purchaser nor the Company will file any
amended Tax Return, settle any Tax claim or assessment, or surrender
any right to claim a refund of Tax, if such action could have the
effect of increasing the Tax liabilities of Seller or any Post-Closing
Affiliate.
(iii) Each party hereto will notify the other within 30
calendar days (unless action is required sooner, then as soon
as practicable) of the assertion of any claim or the commencement of
any suit, action, proceeding, investigation or audit with respect to
the operations of the Company that is the subject of this Section
6.2.4(p), and will provide the other copies (subject to deletion of
nonrelevant information) of all correspondence relating to such
contest.
(q) "Income Tax" or "Income Taxes" means all Taxes imposed on,
measured by or which require reference to, net or taxable income
(including any income, franchise, estimated, alternative, minimum,
add-on minimum or other Tax imposed on, measured by or which require
reference to, net or taxable income), together with interest and
penalties thereon and estimated payments thereof.
(r) The Seller and C&A will, jointly and severally defend,
indemnify and hold harmless the Parent, Purchaser and the Company and
their respective directors, officers, employees, agents and
representatives (including, without limitation, any predecessor or
successor to any of the foregoing) from and against any breach of a
covenant contained in this Section 6.2.4 and against the following
Taxes and, except as otherwise provided in Section 6.2.4(p), against
any loss, damage, liability, or expense, including reasonable fees for
attorneys and consultants, incurred in contesting or otherwise in
connection with any such Taxes and in enforcing their rights under
this Section 6.2.4: (i) all Taxes imposed on the Company with respect
to taxable periods ending before or on the Closing Date and (ii) with
respect to taxable periods beginning before the Closing Date and
ending after the Closing Date, Taxes imposed on the Company that are
allocable, pursuant to Section 6.2.4(t), to the portion of such period
ending on the Closing Date.
(s) Purchaser and Parent will, and, if the Closing occurs, will
cause the Company to, jointly and severally indemnify, defend and hold
harmless C& A and Seller and each Post-Closing Affiliate and their
respective directors, officers, partners, employees, agents and
representatives (including, without limitation, any predecessor to any
of the foregoing) from and against (i) all Taxes imposed on the
Company with respect to taxable periods beginning after the Closing
Date and, with respect to taxable periods beginning before the Closing
Date and ending after the Closing Date, Taxes imposed on the Company
that are allocable, pursuant to Section 6.2.4(t), to the portion of
such period beginning after the Closing Date, and (ii) any loss,
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damage, liability, or expense, including reasonable fees for attorneys
and consultants, incurred in contesting or otherwise in connection
with any such Taxes and in enforcing their rights under this Section
6.2.4.
(t) In the case of Taxes that are payable with respect to a
taxable period that begins before the Closing Date and ends after the
Closing Date, the portion of any such Tax that is allocable to the
portion of the period ending on the Closing Date will be:
(i) in the case of Taxes that are either (x) Income Taxes,
or (y) imposed in connection with any sale or other transfer or
assignment of property, real or personal, tangible or intangible
(other than conveyances pursuant to this Agreement, as provided
under Section 7.2), deemed equal to the amount that would be
payable if the taxable year ended immediately prior to the
Closing Date (including the taxable years of organizations in
which the Company owns a partnership interest or equity interest)
(except that, solely for purposes of determining the marginal tax
rate applicable to income or receipts during such period in a
jurisdiction in which such tax rate depends upon the level of
income or receipts, annualized income or receipts may be taken
into account if appropriate for an equitable sharing of such
Taxes); and
(ii) in the case of Taxes not described in subparagraph (i)
that are imposed on a periodic basis and measured by the level of
any item, deemed to be the amount of such Taxes for the entire
period (or, in the case of such Taxes being determined on an
arrears basis, the amount of such Taxes for the immediately
preceding period) multiplied by a fraction the numerator of which
is the number of calendar days in the period ending immediately
prior to the Closing Date and the denominator of which is the
number of calendar days in the entire period.
(u) Any Tax refund (or comparable benefit resulting from a
reduction in Tax liability) for a period ending on or before the
Closing Date arising out of the carryback of a loss or credit incurred
by the Company in a taxable period (or allocable portion thereof)
ending after the Closing Date will be the property of the Purchaser
and, if received by the Seller or any Post-Closing Affiliate, will be
paid over promptly to the Purchaser (including any interest received
from or credited thereon by the applicable taxing authority). Any
other Tax refund for a period ending on or before the Closing Date or
for the allocable portion of a period including the Closing Date will
be the property of the Seller. Purchaser will pay or cause the Company
to pay to Seller all refunds or credits of Taxes (including any
interest received from or credited thereon by the applicable taxing
authority) received by Purchaser or any of its Affiliates after the
Closing Date and attributable to Taxes paid by Seller, any
Post-Closing Affiliate, or the Company. Such payment will be made to
Seller
44
<PAGE>
promptly after receipt of any such refund from, or allowance of such
credit by, the relevant taxing authority. In all other events, any Tax
refund will be the property of the Company and paid to the Company.
(v) For purposes of this Section 6.2.4, Purchaser and Seller will
allocate all income, gain, loss, deductions and credits of the Company
properly attributable to the Closing Date, but not attributable to the
Section 338(h)(10) Election, to the day after the Closing Date for all
federal, state, local and foreign Tax purposes.
6.2.5. Insurance. With respect to any loss, liability or damage
suffered by the Company after the Closing Date relating to, resulting
from or arising out of the conduct of the Business prior to the
Closing Date for which Seller or any Post-Closing Affiliate would be
entitled to assert, or cause any other person or entity to assert, a
claim for recovery under any policy of insurance maintained by Seller
or a Post-Closing Affiliate or for the benefit of Seller or the
Company, in respect of the Business, products, employees or the
Company ("Insurance"), at the request of Purchaser, Seller will use
its reasonable efforts to assert, or to assist Purchaser or the
Company to assert, one or more claims under such Insurance covering
such loss, liability or damage if Purchaser or the Company is not
itself entitled to assert such claim, provided that all of Seller's
and any Post- Closing Affiliate's out-of-pocket costs and expenses
incurred in connection with the foregoing, including without
limitation any liability, obligation or expense referred to in the
last sentence of this Section 6.2.5, are promptly reimbursed by
Purchaser. Seller will be deemed, solely for the purpose of asserting
claims for Insurance pursuant to the immediately preceding sentence,
to have assumed or retained liability for such loss, liability or
damage to the extent of the policy limits of the applicable policy of
Insurance; provided, however, that (a) Purchaser's and Parent's
obligations under Section 5.3(b) will not be affected by the
provisions of this Section 6.2.5 and (b) with respect to any claim
made at the request of Purchaser or the Company by Seller or any
Seller Affiliate under any Insurance pursuant to this Section 6.2.5,
each of Purchaser and Parent will jointly and severally indemnify,
defend and hold harmless Seller and each Post-Closing Affiliate and
their respective directors, officers, partners, employees, agents and
representatives (including without limitation any predecessor or
successor of any of the foregoing) from and against any Indemnifiable
Loss relating to, resulting from or arising out of any deductible,
policy limit, obligation, indemnity, reinsurance due to the
liquidation or insolvency of the reinsurer, self-insurance retention,
premium adjustments resulting from claims made at the request of
Purchaser or the Company under this Section 6.2.5 or other like
arrangement by which any such entity retains any liability or
obligation under any such policy of Insurance or otherwise.
45
<PAGE>
6.2.6. Receivables. As of the Closing, C&A and Seller will
terminate the participation of the Company in the accounts receivables
facility operated by a finance subsidiary of C&A for C&A and its
affiliates and C&A and Seller will, jointly and severally, indemnify,
defend and hold harmless the Company or Purchaser for any
Indemnifiable Loss arising out of the Company's participation, or
termination of participation, in this facility, provided, however,
that the foregoing indemnity obligation will not apply to any loss on
the sale of receivables prior to the Closing Date or the collection
(or failure to collect) the receivables. C&A and Seller hereby agree
that all monies (regardless of any prior discount or loss on sale)
collected after the Closing by Seller or any Post-Closing Affiliate of
the Seller with respect to receivables attributable to the Company
will be paid to the Company within three business days of Seller's or
Post-Closing Affiliate's receipt thereof.
6.2.7. Surety Obligations; Master Contracts. (a) From and after
the Closing, Parent and Purchaser will, and will cause the Company to,
use reasonable efforts to obtain and have issued replacements for any
guarantee, performance bond, letter of credit or other agreement
guaranteeing or securing liabilities and obligations (including
without limitation in respect of operating or other leases and the
surety bonds listed on Schedule 2.1.14) (collectively, "Surety
Obligations") relating to the Business or the Company under which the
Seller or any Post-Closing Affiliate has any liability to a third
party and to obtain any amendments, novations, releases, waivers,
consents or approvals necessary to release Seller and each
Post-Closing Affiliate party to such Surety Obligations from all
liability thereunder relating to the Business or the Company, in each
case as promptly as practicable. In the event and for the period that
Purchaser and the Company fail to obtain any such replacement,
amendment, novation, release, waiver, consent or approval, without
limiting the generality of Section 5.3(b), Parent and Purchaser will
jointly and severally indemnify, defend, and hold harmless each of
Seller and each Post-Closing Affiliate and their respective
Affiliates, directors, officers, partners, employees, agents and
representatives (including without limitation the predecessors or
successors of any of the foregoing) from and against any Indemnifiable
Loss relating to, resulting from or arising out of any such failure by
Purchaser or the Company.
(b) From and after the Closing, C&A will, and will cause
Seller to, use reasonable efforts to obtain and have issued
replacements for any Surety Obligations relating to any business other
than the Business or any Post-Closing Affiliate of C&A under which the
Company has any liability to a third party and to obtain any
amendments, novations, releases, waivers, consents or approvals
necessary to release the Company from all liability thereunder
relating to any business other than the Business or any Post-Closing
Affiliate of C&A, in each case as promptly as practicable. In the
event and for the period that C&A or Seller fails to obtain any such
replacement, amendment, novation,
46
<PAGE>
release, waiver, consent or approval, without limiting the generality
of Section 5.3(c), C&A and Seller will jointly and severally
indemnify, defend, and hold harmless the Company and its respective
Affiliates, directors, officers, partners, employees, agents and
representatives (including without limitation the predecessors or
successors of any of the foregoing) from and against any Indemnifiable
Loss relating to, resulting from or arising out of any such failure by
C&A or Seller.
(c) To the extent permissible under the terms thereof, C&A
will continue to make available to the Company the equipment listed on
Schedule 6.2.7(c) in accordance with the terms of the related
contracts listed thereon (the "Master Contracts"). Purchaser will, and
will cause the Company to, reimburse C&A for the Company's
proportionate share of C&A's lease and other payments required to be
made (other than payments attributable to a default by C&A under a
Master Contract unless such default relates to, results from or arises
out of any action or failure to take action by a Company under the
applicable Master Contract) under any such Master Contracts.
6.2.8. Assumed Push-Down Liabilities. Without further
action, effective as of the Closing, Floorcoverings US will assume the
liabilities of C&A and each of its Post-Closing Affiliates in respect
of only the amounts of all Push-Down Liabilities identified as
"Assumed Push-Down Liabilities" on Schedule 1.2(a) as of the Closing
(the "Assumed Push-Down Liabilities"), provided, however, that the
aggregate amount of such Assumed Push-Down Liabilities as of the
opening of business on the Closing Date will not exceed the "Maximum
Amount of Assumed Push-Down Liabilities" as shown on Schedule 1.2(a)
(the "Maximum APD Liability Amount").
VII. MISCELLANEOUS PROVISIONS
7.1. Notices. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided
in this Agreement, will be deemed to have been duly given when
delivered in person or by a nationally recognized overnight courier
service or when dispatched during normal business hours by electronic
facsimile transfer (confirmed in writing by mail simultaneously
dispatched) to the appropriate party at the address specified below:
(a) If to Parent or Purchaser, to:
CAF Holdings, Inc.
230 East High Street
Charlottesville, Virginia 22902
Facsimile No.: (804) 979-1145
Attention: Stephen M. Burns
47
<PAGE>
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
Facsimile No.: (804) 775-1061
Attention: Leslie A. Grandis
(b) If to Seller, to:
Collins & Aikman Floor Coverings Group, Inc.
701 McCullough Drive
Charlotte, North Carolina 28262
Facsimile No.: (704) 548-2010
Attention: Corporate Counsel
with a copy to:
Collins & Aikman Products Co.
210 Madison Avenue, 6th Floor
New York, New York 10016
Facsimile No.: (212) 578-1269
Attention: Elizabeth R. Philipp, Esq.
Executive Vice President - Law
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Facsimile No.: (212) 755-7306
Attention: Robert A. Profusek, Esq.
or to such other address or addresses as any such party may from time
to time designate as to itself by like notice.
7.2. Expenses. Except as otherwise expressly provided herein, (a)
each of Seller and C&A will pay or cause to be paid all expenses
incurred by Seller or C&A incident to this Agreement and in preparing
to consummate and consummating the transactions provided for herein
and (b) each of Parent and Purchaser will pay any expenses incurred by
it incident to this Agreement and in preparing to consummate and
consummating the transactions provided for herein, including without
limitation the fees and expenses of any broker, finder, financial
advisor or similar person engaged by such party.
7.3. Successors and Assigns. (a) Subject to Section 7.3(b), this
Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but will
not be assignable or delegatable by any party without the prior
written consent of the other parties hereto. Notwithstanding the
foregoing sentence, Purchaser may assign this Agreement to any lender
to Purchaser or any
48
<PAGE>
subsidiary of Purchaser as security for obligations to such lender in
respect of the financing arrangements entered into in connection with
the transactions contemplated hereby and any refinancings, extensions,
refundings or renewals thereof, provided however, that no assignment
hereunder shall in any way affect Purchaser's or the Company's
obligations or liabilities under this Agreement.
(b) Nothing in this Agreement is intended to limit Purchaser's
ability to sell or to Transfer the Shares following the Closing Date
provided that such sale or Transfer will not result in a termination
of any of Parent's or Purchaser's covenants, duties, responsibilities,
obligations or liabilities hereunder, including without limitation
under Sections 3.1(b) and Articles V and VI, unless the person or
entity acquiring the Shares pursuant to such sale or Transfer assumes
all of such covenants, duties, responsibilities, obligations and
liabilities in a written instrument reasonably satisfactory to Seller.
7.4. Waiver. Either Parent (on behalf of itself and Purchaser) or
Seller by written notice to the other may (a) extend the time for
performance of any of the obligations or other actions of the other
under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this
Agreement, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive or
modify performance of any of the obligations of the other under this
Agreement; provided, however, that neither Parent (on behalf of itself
and Purchaser) nor Seller may, without the prior written consent of
the other, make or grant such extension of time, waiver of
inaccuracies or compliance or waiver or modification of performance
with respect to its (or any of its Affiliates') representations,
warranties, conditions or covenants hereunder. Except as provided in
the immediately preceding sentence, no action taken pursuant to this
Agreement will be deemed to constitute a waiver of compliance with any
representations, warranties or covenants contained in this Agreement
and will not operate or be construed as a waiver of any subsequent
breach, whether of a similar or dissimilar nature.
7.5. Entire Agreement. This Agreement (including the Schedules
hereto) supersedes any other agreement, whether written or oral, that
may have been made or entered into by any party or any of their
respective Affiliates (or by any director, officer or representative
thereof) prior to the date hereof relating to the matters contemplated
hereby, other than the confidentiality agreement (the "Confidentiality
Agreement"), between Seller or one of its Affiliates and Parent or one
of its Affiliates, which will survive the execution, delivery or
termination of this Agreement and to which Purchaser agrees to be
bound as if it was an original party thereto. This Agreement (together
with the Schedules hereto) constitutes the entire agreement by and
among the parties hereto and there are no agreements or commitments by
49
<PAGE>
or among such parties or their Affiliates except as expressly set
forth herein.
7.6. Amendments, Supplements, Etc. This Agreement may be
amended or supplemented at any time by additional written
agreements as may mutually be determined by Parent (without the
joinder of Purchaser) and Seller to be necessary, desirable or
expedient to further the purposes of this Agreement, or to
clarify the intention of the parties hereto.
7.7. Rights of the Parties. Except as provided in Article V or in
Sections 6.2.4 and 7.3, nothing expressed or implied in this Agreement
is intended or will be construed to confer upon or give any person or
entity other than the parties hereto and their respective Affiliates
any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.
7.8. Further Assurances. From time to time, whether at or after
the Closing as and when requested by either Parent (on behalf of
itself and Purchaser) or C&A on behalf of itself and Seller, the other
will execute and deliver, or cause to be executed and delivered, all
such documents and instruments as may be reasonably necessary or
otherwise reasonably requested by Purchaser or C&A to consummate the
transactions contemplated by this Agreement or otherwise to carry out
the intent and purpose of this Agreement and to assure that the
Company holds all of the assets, properties, permits, authorizations,
rights and related obligations used or held for use primarily or
exclusively in the Business, including without limitation the proper
filing, registration or recordation of such documents and instruments.
7.9. Applicable Law; Jurisdiction. This Agreement and the legal
relations among the parties hereto will be governed by and construed
in accordance with the substantive Laws of the State of New York,
without giving effect to the principles of conflict of laws thereof.
7.10. Titles and Headings. Titles and headings to 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.
7.11. Certain Interpretive Matters and Definitions. (a) Unless
the context otherwise requires, (i) all references to Sections or
Schedules are to Sections or Schedules of or to this Agreement, (ii)
each term defined in this Agreement has the meaning assigned to it,
(iii) each accounting term not otherwise defined in this Agreement has
the meaning assigned to it in accordance with GAAP, (iv) "or" is
disjunctive but not necessarily exclusive, (v) words in the singular
include the plural and vice versa, (vi) the terms "subsidiary" and
"Affiliate" have the meanings given to those terms in Rule 12b-2 of
Regulation 12B under the Securities Exchange Act of 1934, as amended,
(vii) all references to "$" or dollar amounts will be to
50
<PAGE>
lawful currency of the United States of America, and (viii) "Knowledge
of Seller" means solely to the actual knowledge of the persons listed
on Schedule 7.11(a), and (ix) "Knowledge of Purchaser" means solely to
the actual Knowledge of the persons is listed on Schedule 7.11(b).
(b) No provision of this Agreement will be interpreted in favor
of, or against, any of the parties hereto by reason of the extent to
which any such party or its counsel participated in the drafting
thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
(c) Seller's obligations to Employees and other third parties
(other than Parent, Purchaser and the Company) will be deemed closed
out for purposes of calculating any amounts owed by C&A or any of its
Affiliates to any such third party as of the date of the final
determination of the Actual Net Working Capital Amount pursuant to
Section 1.3
51
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
COLLINS & AIKMAN PRODUCTS CO.
By: /s/ J. Michael Stepp
---------------------------------
Name:
----------------------------
Title:
---------------------------
COLLINS & AIKMAN FLOOR
COVERINGS GROUP, INC.
By: /s/ Neoraj Mital
---------------------------------
Name:
----------------------------
Title:
---------------------------
COLLINS & AIKMAN
FLOOR COVERINGS, INC.
By: /s/ J. Michael Stepp
---------------------------------
Name:
----------------------------
Title:
---------------------------
CAF HOLDINGS, INC.
By: /s/ Stephen M. Burns
---------------------------------
Name: Stephen M. Burns
----------------------------
Title: President
---------------------------
CAF ACQUISITION CORPORATION
By: /s/ Stephen M. Burns
---------------------------------
Name: Stephen M. Burns
----------------------------
Title: President
---------------------------
52
<PAGE>
IRREVOCABLE UNDERTAKING
In order to induce Collins & Aikman Products Co. ("C&A") and
Collins & Aikman Floor Coverings Group, Inc. ("Seller") to enter into
the Acquisition Agreement, dated the date hereof, among such entities
and certain other entities, including Affiliates of the undersigned
(the "Agreement"), each of Quad-C Partners II, L.P., Quad-C Partners
III, L.P., Quad-C Partners IV, LP and Paribas Principal Inc., jointly
and severally irrevocably guarantees to Seller and C&A that it will
cause Purchaser to be capitalized so that Purchaser has on hand at all
times cash or cash equivalents not less than $2,100,000 less any
amounts paid to C&A or Seller in excess of the Purchaser's
liabilities, not funded by other sources, for out-of-pocket
transaction expenses incurred by Parent or Purchaser in pursuing
the Agreement and the transactions contemplated thereby ("Deal
Expenses"), the undersigned covenanting that the Purchaser
will not voluntarily incur any liabilities or obligations other
than Deal Expenses (excluding for all purposes of this Irrevocable
Undertaking liabilities for damages to C&A or Seller arising under
the Agreement).
Each of the undersigned hereby represents and warrants to
the Seller and C&A that it is duly organized and validly existing
under the laws of its jurisdiction of organization and has the
requisite partnership or corporate authority, as the case may be, to
execute this Irrevocable Undertaking and this Irrevocable Undertaking
has been duly executed and delivered by each of the Undersigned, and,
assuming the due execution and delivery of this Irrevocable
Undertaking by Seller and C&A, constitutes a valid and binding
obligation of each of the Undersigned enforceable against it in
accordance with its terms.
Each of the undersigned (i) acknowledges that it has duly
executed and delivered this Irrevocable Undertaking in order to induce
C&A and Seller to enter into the Agreement and (ii) agrees that its
obligations hereunder will not be diminished or otherwise affected by
any amendment to or waiver of or other action by the party under the
Agreement and waives all suretyship defenses which might otherwise
arise as a result thereof.
This Irrevocable Undertaking will terminate and be of no
further force and effect upon the earlier of (i) consummation of the
acquisition, (ii) contribution to a separate account for the sole
benefit of Seller and C&A of an amount equal to $2.1 million in
respect of this Irrevocable Undertaking, less any amounts theretofore
paid to Seller or C&A, and (iii) the termination of the Agreement in
accordance with the terms thereof unless Purchaser or Parent had
previously breached in any material respect any representation,
warranty or covenant of Purchaser or Parent therein.
Terms used herein with initial capital letters which are
defined in the Agreement are used herein as so defined.
53
<PAGE>
EXECUTED on the 9th day of December, 1996.
Quad-C Partners II, L.P.
By: Quad-C, Inc. General Partner
---------------------------------
By: /s/ Stephen M. Burns
---------------------------------
Name: Stephen M. Burns
-------------------------------
Title: V.P.
------------------------------
Quad-C Partners III, L.P.
By: Quad-C II, L.C. General Partner
---------------------------------
By: /s/ Stephen M. Burns
---------------------------------
Name: Stephen M. Burns
-------------------------------
Title: V.P.
------------------------------
Quad-C Partners IV, L.P.
By: Quad-C IV, L.C., General Partner
---------------------------------
By: /s/ Stephen M. Burns
---------------------------------
Name: Stephen M. Burns
-------------------------------
Title: V.P.
------------------------------
Paribas Principal Inc.
By: /s/ Gary A. Binning
---------------------------------
Name: Gary A. Binning
-------------------------------
Title: V.P.
------------------------------
54
<PAGE>
LIST OF SCHEDULES
Schedule 1.2(a) Push-Down Liabilities
Schedule 1.3(a) Accounting Policies - Divisional Basis
Schedule 2.1.1 Qualifications
Schedule 2.1.2 Shares
Schedule 2.1.2(c) Liens on Shares
Schedule 2.1.2(d) Liens and other Rights to Shares
Schedule 2.1.3 Officers & Directors
Schedule 2.1.5 Liens, Conflicts, Violations or Defaults
Schedule 2.1.6(a) Combined Financial Statements
Schedule 2.1.6(b) Consolidated Financial Statements
Schedule 2.1.7 Conduct of the Business Since the Balance Sheet Date
Schedule 2.1.8 Compliance with Laws
Schedule 2.1.9 Tangible Personal Property; Title to Assets
Schedule 2.1.10 Leased Real Property
Schedule 2.1.11 Insurance
Schedule 2.1.12 Intellectual Property
Schedule 2.1.13 Litigation; Decrees
Schedule 2.1.14 Contract Rights
Schedule 2.1.15 Current Employee Benefits
Schedule 2.1.l6 Taxes
Schedule 2.1.17 Environmental Matters
Schedule 2.1.18 No Undisclosed Liabilities
Schedule 2.1.19 Certain Property
Schedule 2.1.20 Affiliate Interests
Schedule 2.2.3 Consents, Approvals, etc.
Schedule 3.5 Exceptions to Operating Covenants
Schedule 3.5(c) Capital Expenditures
Schedule 4.2.5(a) Management Services Agreement
Schedule 4.2.5(b) Tradename License Agreement
Schedule 4.2.5(c) Non-Competition Agreement
Schedule 4.2.5(e) Jones Day Opinion
Schedule 4.3.3 McGuire, Woods, Battle & Boothe, L.L.P. Opinion
Schedule 5.3(c) Retained Claims
Schedule 6.1.1(a) Certain Employees
Schedule 6.1.2(a) Retiree Medical Benefits
Schedule 6.2.7(c) Master Contracts
Schedule 7.11(a) Knowledge of Seller
Schedule 7.11(b) Knowledge of Purchaser
The Registrant hereby undertakes to furnish supplementally a copy of any
schedule omitted herefrom as permitted by Item 601(b)(2) of Regulation S-K to
the Commission upon request.
Collins & Aikman
Collins & Aikman Corporation
701 McCullough Drive
P.O. Box 32665
Charlotte, NC 28232
A. Dennis Mahedy NEWS RELEASE (704) 548-2072
Treasurer Fax: (704) 548-2330
Contact: A. Dennis Mahedy
Treasurer
(704) 548-2072
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
(704) 548-2395
COLLINS & AIKMAN ANNOUNCES SALE OF
FLOORCOVERINGS BUSINESS
Charlotte, North Carolina--December 10, 1996--Collins & Aikman
Corporation (NYSE: CKC) announced today that it entered into a definitive
agreement to sell its floorcoverings business to an entity sponsored by Quad-C,
Inc., a Virginia merchant banking firm, and Paribas Principal Inc., the U.S.
private equity unit of Groupe Paribas. The purchase price, including a payment
for the use of certain trade names in the floorcoverings business, is $197.0
million, subject to adjustment. The transaction is expected to close in
approximately sixty days, subject to customary closing conditions.
"The Floorcoverings sale better positions Collins & Aikman to pursue
more aggressively its automotive growth strategy and enables the Company to
focus on its core automotive business," said Thomas E. Hannah, chief executive
officer of Collins & Aikman.
Collins & Aikman is a major supplier of textile and plastic trim
products and convertible top systems to the automotive industry. Floorcoverings
is the leading manufacturer of six-foot wide commercial carpet and the third
largest supplier of modular carpeting tiles in the United States.
Floorcoverings' sales for the thirty-nine weeks ended October 26, 1996 were
$103.4 million.
Collins & Aikman
Collins & Aikman Corporation
701 McCullough Drive
P.O. Box 32665
Charlotte, NC 28232
A. Dennis Mahedy NEWS RELEASE (704) 548-2072
Treasurer Fax: (704) 548-2330
Contact: A. Dennis Mahedy
Treasurer
(704) 548-2072
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
(704) 548-2395
COLLINS & AIKMAN COMPLETES
JPS AUTOMOTIVE TRANSACTION
LEADERSHIP POSITION STRENGTHENED IN NORTH AMERICAN
AUTOMOTIVE INTERIOR TRIM MARKET
Charlotte, North Carolina--December 11, 1996--Collins & Aikman
Corporation (NYSE:CKC) announced today that Collins & Aikman has completed the
previously-announced acquisition of the business of JPS Automotive L.P., a
subsidiary of Foamex International, Inc. (NASDAQ:FMXI). JPS Automotive, which
reported 1995 revenues of $312.1 million, provides automotive carpet trim and
textiles to both domestic and non-U.S. Automotive manufacturers in North
America.
The purchase price is a total of approximately $220 million (subject to
adjustment), consisting of $194 million of indebtedness of JPS Automotive and
$26 million in cash to Foamex. Collins & Aikman also purchased a minority
interest in a JPS Automotive subsidiary for $10 million.
"As a major supplier of quality products to such manufacturers as
General
(More)
<PAGE>
Motors, Ford, Chrysler, Honda, Nissan and Toyota, JPS Automotive is a welcome
addition to our automotive interiors business," said Thomas E. Hannah, chief
executive officer of Collins & Aikman. "This acquisition is an important
building block in our strategy to grow our automotive business and to become a
full system supplier of automotive interior trim on a global basis."
"JPS Automotive enables us to expand on our number one positions in
North America in automotive bodycloth and carpet," Hannah continued. "Equally
important, JPS Automotive headliner fabrics will provide important synergies
with our existing product lines, opening up additional opportunities for
supplying interior systems."
In connection with the JPS Automotive purchase, Collins & Aikman and
Foamex are entering into certain supply agreements wherein Foamex will supply
Collins & Aikman with certain products utilizing Foamex's proprietary
foam-backed SMT(TM) automotive carpet system technology.
JPS Automotive is based in Greenville, South Carolina and has six
manufacturing, distribution and sales facilities in South Carolina, North
Carolina and Michigan, as well as a joint venture in Mexico.
Foamex is the largest manufacturer and marketer of flexible polyurethane
foam and foam products in North America.
Collins & Aikman Corporation is a major supplier of textile and plastic
trim products and convertible top systems to the North American automotive
industry.
Collins & Aikman
Collins & Aikman Corporation
701 McCullough Drive
P.O. Box 32665
Charlotte, NC 28232
A. Dennis Mahedy NEWS RELEASE (704) 548-2072
Treasurer Fax: (704) 548-2330
Contact: A. Dennis Mahedy
Treasurer
(704) 548-2072
J. Michael Stepp
Executive Vice President
& Chief Financial Officer
(704) 548-2395
COLLINS & AIKMAN ACQUIRES GLOBAL AUTOMOTIVE
FLOOR ACOUSTICS/INSULATION BUSINESS FROM PERSTORP
-----------------------------------
Adding Facilities of Automotive Acoustics
Manufacturer Is Major Step in C&A's Drive To Be Global
Systems Supplier of Automotive Interior Trim
Charlotte, North Carolina--December 11, 1996--Collins & Aikman
Corporation (NYSE:CKC) today acquired Perstorp AB's automotive supply and
related operations in North America, the United Kingdom and Spain for $108.0
million, subject to post-closing adjustment. In addition, Collins & Aikman and
Perstorp AB entered into a joint venture agreement relating to Perstorp's
automotive components supply facilities in Sweden, Belgium and France. The joint
venture, which is subject to Swedish regulatory clearance, is expected to close
by year-end.
In the purchase closed today, Collins & Aikman acquired direct ownership
of
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three Perstorp Components facilities in the United States, two in Canada, one in
Mexico, three in the United Kingdom and one in Spain.
In addition, each of Collins & Aikman and Perstorp will invest $7.5
million in cash and have a 49.9 percent interest in the joint venture, which
will be managed by Collins & Aikman. The joint venture will purchase the
Perstorp components business in Sweden, Belgium and France for $67 million,
comprised of the $15 million equity investment and approximately $52 million of
indebtedness. The indebtedness will initially be held by Perstorp but is
expected to be refinanced with new bank debt, which Perstorp is arranging.
Collins & Aikman will not have any liability for the new bank financing.
The joint venture agreement includes an option for Collins & Aikman to
purchase Perstorp AB's equity interest in the joint venture at a predetermined
multiple of future cash flow for a period of three years, after which Perstorp
would have a two-year purchase right if Collins & Aikman had not exercised its
purchase right.
Funds for the acquisition completed today were provided by Collins &
Aikman's existing revolving credit facility.
"This transaction is another major step for Collins & Aikman in
executing our strategy to become a global systems supplier of automotive
interior trim," said Thomas E. Hannah, chief executive officer of Collins &
Aikman.
"Increasingly, auto manufacturers are sourcing floor carpet and
acoustical products as a package," Hannah said. "They are also requiring
suppliers to provide parts and render engineering support on a global basis.
With our top position in automotive carpets in North America and our growing
presence in Europe, adding the operations of Perstorp Components will enable us
to capitalize powerfully on this sourcing trend, both domestically and
internationally."
Hannah noted that combining Perstorp Components with Collins & Aikman
will raise C&A's content per vehicle by $8 in North America and by $18 in
Europe.
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Total content will be $90 and $21 respectively. The company's goals are to reach
$100 content per vehicle in the U.S. and $40 in Europe.
The Perstorp Components operations include three technical centers
devoted to automotive acoustics--often called noise, vibration and harshness
(NVH). They are located in Plymouth, Michigan, St. Neots, UK and Vastra
Frolunda, Sweden. The Plymouth facility is considered one of the most advanced
facilities of its kind in the world.
The Perstorp Components ten facilities in North America, UK and Spain
had estimated combined sales of US $170 million for the fiscal year ended August
31, 1996. The joint venture's facilities in Sweden, Belgium and France had
estimated fiscal 1996 sales of $140 million. Perstorp Components' main customers
include Chrysler, Ford, General Motors, Mercedes, Nissan, Rover and Volvo.
In its current European operations, Collins & Aikman maintains a molded
carpet plant in Kapfenberg, Austria, which primarily supplies Chrysler's
European Minivan and Jeep operations. In May 1995, the company acquired the
business of BTR Fatati Limited (now renamed Collins & Aikman Automotive Carpet
Products (UK) Ltd.), a UK-based manufacturer of tufted and needle punch
carpeting for the European auto market. C&A (UK) supplies the Kapfenberg plant,
as well as Toyota, Saab and IBC, a General Motors and Isuzu joint venture.
Collins & Aikman Corporation is a major supplier of textile and plastic
interior trim products and convertible top systems to the North American
automotive industry.
