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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): July 18, 1997 (July 15, 1997)
DYERSBURG CORPORATION
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(Exact name of registrant as specified in its charter)
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Tennessee 1-11126 62-1363247
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(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
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1315 Phillips Street, Dyersburg, Tennessee 38024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 285-2323
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On July 15, 1997, Dyersburg Corporation (the "Company") entered into a
Stock Purchase Agreement with each of Alamac Sub Holdings Inc. ("Seller"), AIH
Inc. ("Alamac") and Westpoint Stevens Inc. pursuant to which the Company will
acquire all of the outstanding capital stock of Alamac (the "Acquisition").
Through its four remaining manufacturing facilities located in North Carolina,
Alamac manufactures and sells knitted fabrics primarily to manufacturers of
men's, women's and children's apparel. Prior to consummation of the Acquisition,
Alamac will transfer all of its cash and accounts receivable at the closing and
assets related to its Whitmire spinning plant to Westpoint Stevens or one of its
affiliates and, accordingly, such assets will not be owned by Alamac following
the Acquisition. The aggregate consideration to be paid by the Company in the
Acquisition will be $126.0 million, subject to adjustment for changes in working
capital and certain other items related to pension assets and liabilities
subsequent to December 31, 1996. The closing of the Acquisition is required to
occur on or before September 15, 1997.
The respective obligations of the Company, Seller and Westpoint Stevens
Inc. to effect the Acquisition are subject to the satisfaction of certain
conditions, including (i) the termination or expiration of the relevant waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (ii)
obtaining all necessary consents and approvals, and (iii) the absence of any law
or order which restrains, enjoins or otherwise prohibits the Acquisition. The
obligations of the Company to effect the Acquisition are further conditioned on,
among others (i) the absence of any material adverse change in Alamac's
business, results of operations or financial condition prior to the closing and
(ii) the Company having received sufficient funds to effect the closing.
Upon the closing of the Acquisition, the Company will enter into an
interim services agreement pursuant to which Westpoint Stevens will provide
certain information, credit, accounts receivable, accounts payable, purchasing
and other corporate services for a period of up to nine months following the
closing.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
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(c) Exhibits:
2.1 Stock Purchase Agreement dated as of July 15, 1997 by and among
Dyersburg Corporation, Alamac Sub Holdings Inc., AIH Inc. and
Westpoint Stevens Inc.
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SIGNATURES
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 hereunto duly authorized.
DYERSBURG CORPORATION
Date: July 18, 1997 By: /s/ William S. Shropshire, Jr.
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William S. Shropshire, Jr.
Chief Financial Officer
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EXHIBIT INDEX
NO. EXHIBIT
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2.1 Stock Purchase Agreement dated as of July 15,
1997 by and among Dyersburg Corporation,
Alamac Sub Holdings Inc., AIH Inc. and
Westpoint Stevens Inc.
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===============================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
DYERSBURG CORPORATION,
AS PURCHASER,
ALAMAC SUB HOLDINGS INC.,
AS SELLER,
AIH INC.
AND
WESTPOINT STEVENS INC.
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Dated as of July 15, 1997
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===============================================================================
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TABLE OF CONTENTS
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Section Page
ARTICLE I
SALE AND PURCHASE OF SHARES
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1.1 Sale and Purchase of Shares.............................................................. 2
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price........................................................................... 2
2.2 Payment of Estimated Purchase Price...................................................... 2
2.3 Post-Closing Adjustment of Estimated Purchase
Price.................................................................................... 2
2.4 Post Closing Adjustment of Changes In Pension
Liability................................................................................ 5
2.5 Purchase of Cotton Inventory............................................................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
WPS AND SELLER AS TO SHARES
3.1 Ownership and Transfer of Shares......................................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WPS, SELLER AND THE COMPANY
4.1 Organization and Good Standing........................................................... 8
4.2 Authorization of Agreement............................................................... 9
4.3 Subsidiaries............................................................................. 9
4.4 Capitalization........................................................................... 10
4.5 Corporate Records........................................................................ 10
4.6 Consents of Third Parties; Non-Contravention............................................. 11
4.7 Financial Statements..................................................................... 12
4.8 No Undisclosed Liabilities............................................................... 13
4.9 Absence of Certain Changes............................................................... 13
4.10 Taxes.................................................................................... 15
4.11 Intangible Property...................................................................... 17
4.12 Material Contracts....................................................................... 17
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Section Page
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4.13 Employee Benefits........................................................................ 19
4.14 Labor.................................................................................... 23
4.15 Litigation............................................................................... 23
4.16 Compliance with Laws..................................................................... 23
4.17 Environmental Matters.................................................................... 23
4.18 Real Property............................................................................ 25
4.19 Title to Assets.......................................................................... 26
4.20 Brokers, Etc............................................................................. 27
4.21 No Material Adverse Change............................................................... 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization and Good Standing........................................................... 27
5.2 Authorization of Agreement............................................................... 27
5.3 Consents of Third Parties; Non-Contravention............................................. 28
5.4 Litigation............................................................................... 29
5.5 Financing................................................................................ 29
5.6 Investment Representation................................................................ 29
5.7 Investment Company Act................................................................... 29
5.8 Financial Advisors....................................................................... 30
5.9 No Material Adverse Change............................................................... 30
ARTICLE VI
FURTHER AGREEMENTS OF THE PARTIES
6.1 Access to Information; Confidentiality................................................... 30
6.2 Conduct of the Business Pending the Closing.............................................. 33
6.3 Reasonable Commercial Efforts............................................................ 36
6.4 Further Assurances....................................................................... 37
6.5 Preservation of Records.................................................................. 37
6.6 Publicity................................................................................ 37
6.7 Notice Regarding Regulatory Proceedings.................................................. 38
6.8 Employee Matters......................................................................... 38
6.9 Financial Advisors....................................................................... 38
6.10 Permitted Transactions................................................................... 38
6.11 Repayment of Loans....................................................................... 39
6.12 Notification............................................................................. 39
6.13 No Negotiation........................................................................... 39
6.14 June 30 Company Interim Financial Statements............................................. 39
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Section Page
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6.15 Non-Compete.............................................................................. 40
6.16 Financing................................................................................ 40
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of
Purchaser................................................................................ 41
7.2 Conditions Precedent to Obligations of Seller............................................ 42
ARTICLE VIII
CLOSING; DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 Closing Date............................................................................. 43
8.2 Documents to Be Delivered by Seller, WPS
and/or the Company....................................................................... 43
8.3 Documents to Be Delivered by Purchaser................................................... 44
8.4 Documents to be Delivered by the Parties................................................. 44
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination of Agreement................................................................. 44
9.2 Survival After Termination............................................................... 45
ARTICLE X
SURVIVAL; GENERAL INDEMNIFICATION
10.1 Survival................................................................................. 46
10.2 Indemnification by WPS and Seller........................................................ 46
10.3 Indemnification by Purchaser............................................................. 47
10.4 Indemnification Procedures............................................................... 48
10.5 Environmental Indemnity.................................................................. 50
10.6 Characterization of Indemnification and Other
Payments................................................................................. 53
10.7 Computation of Losses Subject to Indemnifi-
cation................................................................................... 53
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Section Page
ARTICLE XI
TAX MATTERS
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11.1 Section 338(h)(10) Election.............................................................. 54
11.2 Preparation of Tax Returns; Payment of Taxes............................................. 55
11.3 Cooperation with Respect to Tax Returns.................................................. 57
11.4 Tax Audits............................................................................... 57
11.5 Refund Claims............................................................................ 58
11.6 Preparation and Filing of Documents...................................................... 58
11.7 Termination of Tax Sharing Agreements.................................................... 58
11.8 Tax Indemnification...................................................................... 59
ARTICLE XII
MISCELLANEOUS
12.1 Certain Definitions; Rules of Construction............................................... 60
12.2 Expenses................................................................................. 69
12.3 Specific Performance..................................................................... 69
12.4 GOVERNING LAW............................................................................ 70
12.5 Entire Agreement; Amendments and Waivers................................................. 70
12.6 Table of Contents and Headings........................................................... 70
12.7 Notices.................................................................................. 70
12.8 Severability............................................................................. 71
12.9 Binding Effect; Assignment............................................................... 71
12.10 Disclosure Schedules..................................................................... 72
12.11 Counterparts............................................................................. 72
Exhibit A-1 Pre-Closing Date Statement of Working Capital
Exhibit A-2 Valuation Methods
Exhibit B Human Resources Agreement
Exhibit C Plants
Exhibit D Interim Services
Schedules
Company
Purchaser
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of July 15, 1997 by and among
ALAMAC SUB HOLDINGS INC., a Delaware corporation ("Seller"), AIH INC., a
Delaware corporation and a wholly owned subsidiary of Seller (the "Company"),
WESTPOINT STEVENS INC., a Delaware corporation and the indirect 100%
stockholder of Seller ("WPS"), and Dyersburg Corporation, a Tennessee
corporation ("Purchaser"). Section 12.1(a) hereof sets forth the definitions of
certain capitalized terms used herein that are not defined where used and the
locations herein of the definitions of certain capitalized terms not defined
therein.
W I T N E S S E T H :
WHEREAS, Seller is the record and beneficial owner of one hundred
(100) shares of common stock, par value $1.00 per share (collectively, the
"Shares"), of the Company, which Shares constitute all of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, the Company is engaged, indirectly through its Subsidiaries,
in the business of manufacturing and selling knitted apparel fabrics (the
"Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, the Shares, for the purchase price and upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
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ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares. Upon and subject to the terms and
conditions of this Agreement, on the Closing Date, Seller shall sell, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase from Seller,
the Shares.
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The aggregate purchase price for the Shares (the
"Purchase Price") shall be an amount equal to the Estimated Purchase Price, as
adjusted in accordance with Sections 2.3 and 2.4 hereof. The Purchase Price and
any adjustments thereto shall be payable as provided in Sections 2.2, 2.3 and
2.4 hereof.
2.2 Payment of Estimated Purchase Price. On the Closing Date,
Purchaser shall pay to Seller an amount in cash equal to One Hundred Twenty-Six
Million Dollars ($126,000,000) (the "Estimated Purchase Price"), by wire
transfer of immediately available funds to an account designated in writing by
Seller to Purchaser prior to Closing.
2.3 Post-Closing Adjustment of Estimated Purchase Price.
(a) On the Closing Date, representatives of Seller, Purchaser and
Ernst & Young LLP ("Seller's Auditors") shall conduct and complete a physical
count of the Inventory. As soon as practicable (and in any event within 60
days) following the completion of the physical count of the Inventory, Seller
shall prepare and deliver to Purchaser a statement of working capital of the
Company and its Subsidiaries as of the close of business on the Closing Date,
which statement shall have been audited by Seller's Auditors (the "Closing Date
Statement of Working Capital"), together with a certificate (the "Adjustment
Certificate") of WPS's chief accounting officer setting forth the positive or
negative difference, if any, between the working capital of the Company and its
Subsidiaries as reflected in the Closing Date Statement of Working Capital and
the working capital of the Company and its Subsidiaries as reflected in the
Pre- Closing Date Statement of Working Capital (the
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"Adjustment Amount"). The Closing Date Statement of Working Capital shall be
prepared in accordance with the same accounting principles applicable to the
Pre-Closing Date Statement of Working Capital as described in Exhibit A-2
hereof (it being understood that only assets that are owned by the Company on
the Closing Date and liabilities that remain the responsibility of the Company
after the Closing Date will be reflected on the Closing Date Statement of
Working Capital. Notwithstanding the foregoing, the Closing Date Statement of
Working Capital will reflect (i) an inventory reserve of not less than $3.5
million, representing the balance for such reserves as of the Closing Date, and
(ii) an accrual for bonuses payable of $1.2 million.
(b) During the preparation of the Closing Date Statement of Working
Capital, Purchaser and the Company shall provide WPS, WPS's authorized
representatives, Seller and Seller's authorized representatives (including,
without limitation, Seller's Auditors) with reasonable access to the books,
records, facilities and employees of the Company and its Subsidiaries during
normal business hours, and shall cooperate fully and cause their respective
representatives to cooperate fully with WPS, WPS's authorized representatives,
Seller and Seller's authorized representatives, including the provision on a
timely basis of all information, work papers, schedules and other documents to
be used by Seller in preparing the Closing Date Statement of Working Capital
and the Adjustment Certificate.
(c) During the preparation of the Closing Date Statement of Working
Capital, WPS shall provide Purchaser and Purchaser's authorized representatives
with reasonable access to the books, records, facilities and employees of WPS
and its affiliates, as such books, records, facilities and employees relate to
the Company, during normal business hours, and shall cooperate fully and cause
their respective representatives to cooperate fully with Purchaser and
Purchaser's authorized representatives, including the provision on a timely
basis of all information, work papers, schedules and other documents to be used
by Seller in preparing the Closing Date Statement of Working Capital and the
Adjustment Certificate.
(d) Purchaser shall have a period of fifteen (15) Business Days after
the delivery by Seller of the Closing Date Statement of Working Capital and
Adjustment Certificate to present in writing to Seller any objections to the
calcu-
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lation of the Adjustment Amount, which objections shall be set forth in
reasonable detail. If no such objections are raised within such fifteen (15)
Business Day period, the Closing Date Statement of Working Capital and
Adjustment Certificate shall be deemed to be accepted and approved by Purchaser
and a supplemental closing (the "Supplemental Closing") shall be held on the
fifth (5th) Business Day following the expiration of such fifteen (15) Business
Day period, or on such other date as may be mutually agreed upon in writing by
Purchaser and Seller.
(e) If Purchaser shall raise any objections within the aforesaid
fifteen (15) Business Day period, Seller and Purchaser together shall attempt
to resolve the matter or matters in dispute, and if resolved, the parties shall
prepare a new Adjustment Certificate setting forth the original Adjustment
Amount or a revised Adjustment Amount based upon such resolution, whereupon the
confirmed or revised Adjustment Amount shall be final and binding on the
parties hereto. The Supplemental Closing shall then take place five (5)
Business Days following the preparation by the parties of such new Adjustment
Certificate, or on such other date as may be mutually agreed upon in writing by
Purchaser and Seller.
(f) If any such dispute cannot be resolved by Purchaser and Seller
within twenty (20) Business Days after the delivery by Purchaser of its
objections to the calculation of the Adjustment Amount in accordance with
Section 2.3(c), then the specific matters in dispute shall be submitted to an
agreed upon independent accounting firm, mutually acceptable to Purchaser and
Seller (the "Final Arbiter"), which firm shall make a final and binding
determination as to such matter or matters. The Final Arbiter shall send its
written determination to Purchaser and Seller, together with a new Adjustment
Certificate setting forth the original Adjustment Amount or, if necessary, a
revised Adjustment Amount based upon such determination, whereupon the
confirmed or revised Adjustment Amount shall be binding on the parties hereto.
The Supplemental Closing shall then take place five (5) Business Days following
the delivery of such written determination to Purchaser and Seller, or on such
other date as may be mutually agreed upon in writing by Purchaser and Seller.
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(g) The parties hereto agree to cooperate with each other and each
other's authorized representatives and with the Final Arbiter in order that any
and all matters in dispute shall be resolved as soon as practicable and that
final determination of the Adjustment Amount shall be made.
(h) At the Supplemental Closing, any positive Adjustment Amount shall
be paid by Purchaser to Seller, and any negative Adjustment Amount shall be
paid by Seller to Purchaser, in cash by wire transfer of immediately available
funds to an account of the party entitled to payment of same designated in
writing by such party to the other party prior to the Supplemental Closing.
(i) All fees and expenses incurred in connection with the
determination of the Purchase Price shall be borne by the party or parties that
incurred such fees and expenses, except that the fees and expenses hereunder of
the Final Arbiter shall be paid one-half by Purchaser and one-half by Seller.
2.4 Post Closing Adjustment of Changes In Pension Liability.
(a) Seller shall cause Seller's actuaries to prepare a Closing Date
statement of pension assets and liabilities (the "Closing Date Pension
Statement"). There shall be reflected on the Closing Date Pension Statement the
value of the assets spun off or to be spun off from the WPS Pension Plans to
the Company Pension Plan (as such terms are defined in the Human Resources
Agreement, a copy of which is attached hereto as Exhibit B) and any
contributions made or agreed to be made by WPS to the Company Pension Plan, all
valued as of the Closing Date (so that assets transferred prior to the Closing
Date will reflect expenses and gains or losses to the Closing Date) and the
pension liabilities of the Company Pension Plan determined as of the Closing
Date on an accumulated benefit obligation basis utilizing the assumptions,
described in Section 2.4(a) of the Company Disclosure Schedule, utilized by WPS
in determining its December 31, 1996 FAS 87 liability for the WPS Pension
Plans. For purposes of the Closing Date Pension Statement, the assets of the
Company Pension Plan shall include any amounts transferred from the WPS Pension
Plans after the Closing Date under Section 6.2(d) of Exhibit B, excluding any
such amounts that represent interest credited under Section 6.2(e) of Exhibit B
in respect of periods after the Closing Date.
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(b) No later than 120 days after the Closing Date, Seller shall
deliver to the Purchaser the Closing Date Pension Statement together with a
certificate of WPS' chief accounting officer (the "Pension Adjustment
Certificate") setting forth the positive or negative difference between the
pension assets and liabilities reflected on the Closing Date Pension Statement
and a net unfunded pension obligation as of December 31, 1996 equal, in the
aggregate, to $2.2 million (the "Pension Adjustment") (e.g., if the net
unfunded obligation on the Closing Date is $1 million, there would be a
positive Pension Adjustment of $1.2 million).
(c) Purchaser shall have a period of fifteen (15) Business Days after
the delivery by WPS of the Closing Date Pension Statement and the Pension
Adjustment Certificate, to present in writing to Seller any objections to the
calculations in the Pension Adjustment Certificate, which objections shall be
set forth in reasonable detail. If no such objections are raised within such
fifteen (15) Business Day period, the Pension Adjustment Certificate shall be
deemed to be accepted and approved by Purchaser and a second supplemental
closing (the "Second Supplemental Closing") shall be held on the fifth (5th)
Business Day following the expiration of such fifteen (15) Business Day period,
or on such other date as may be mutually agreed upon in writing by Purchaser
and Seller.
(d) If Purchaser shall raise any objections within the aforesaid
fifteen (15) Business Day period to the Pension Adjustment Certificate, WPS and
Purchaser together shall attempt to resolve the matter or matters in dispute
and if resolved the parties shall prepare a new Pension Adjustment Certificate
setting forth the original Pension Adjustment or a revised Pension Adjustment
based upon such resolution whereupon the confirmed or revised Pension
Adjustment shall be final and binding on the parties hereto. The Second
Supplemental Closing shall then take place five (5) Business Days following the
preparation by the parties of such new Pension Adjustment Certificate or on
such other date as may be mutually agreed upon in writing by Purchaser and WPS.
(e) If any such dispute cannot be resolved by Purchaser and Seller
within twenty (20) Business Days after delivery by Purchaser of its objections
to the calculation of the Pension Adjustment in accordance with this Section
2.4, then the specific matters in dispute shall be submitted to an actuarial
firm mutually agreed upon by
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Purchaser and Seller (the "Pension Arbiter"), which firm shall make a final and
binding determination as to such matter or matters. The Pension Arbiter shall
send its written determination to Purchaser and Seller together with a new
Pension Adjustment Certificate setting forth the original Pension Adjustment or
if necessary a revised Pension Adjustment based upon such determination,
whereupon the confirmed or revised Pension Adjustment shall be binding on the
parties hereto. The Second Supplemental Closing shall then take place five (5)
Business Days following the delivery of such written determination to Purchaser
and Seller or on such other date as mutually agreed upon in writing by
Purchaser and Seller.
(f) The parties hereto agree to cooperate with each other and each
other's authorized representatives and with the Pension Arbiter in order that
any and all matters and disputes under this Section 2.4 shall be resolved as
soon as practicable and that the final determination of the Pension Adjustment
shall be made.
(g) At the Second Supplemental Closing, any positive Pension
Adjustment (an increase in the net pension assets (assets less liabilities) at
the Closing Date versus an unfunded obligation of $2.2 million) shall be paid
by Purchaser to Seller in cash and any negative Pension Adjustment (a decrease
in the net pension assets (assets less liabilities) at the Closing Date versus
an unfunded obligation of $2.2 million) shall be paid by Seller to Purchaser in
cash. Any payments to be made in cash shall be made by wire transfer, of
immediately available funds to an account of the party entitled to payment of
same designated in writing by such party to the other party prior to the Second
Supplemental Closing.
(h) All fees and expenses incurred in connection with the
determination of the Pension Adjustment shall be borne by the party or parties
that incur such fees and expenses, except that the fees and expenses hereunder
of the Pension Arbiter shall be paid one-half by Purchaser and one-half by
Seller.
2.5 Purchase of Cotton Inventory. On the Closing Date, Seller shall
conduct, and Purchaser shall have a right to participate in, a physical
inventory count of the unopened bales of cotton owned by WPS located at the
Clinton, North Carolina facility of the Company. Upon completion of such
physical inventory count, Seller shall
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deliver to Purchaser a statement setting forth the inventory count and the
aggregate purchase price thereof, based upon WPS's actual costs (the "Cotton
Inventory Amount"), along with appropriate back-up documentation. Within three
(3) Business Days after the delivery of such statement, Purchaser shall pay to
WPS, by wire transfer to an account designated by Seller, as the full and
complete purchase price for such cotton inventory, the Cotton Inventory Amount
and WPS shall execute appropriate documentation evidencing the transfer of the
cotton inventory to Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
WPS AND SELLER AS TO SHARES
3.1 Ownership and Transfer of Shares. WPS and Seller jointly and
severally represent and warrant to Purchaser that Seller is the record and
beneficial owner of the Shares, free and clear of any Liens except as set forth
in Section 3.1 of the Company Disclosure Schedule (and except for any Liens in
favor of Purchaser under this Agreement). Upon transfer of the Shares to
Purchaser at the Closing, Purchaser will receive valid title to the Shares,
free and clear of any Liens.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WPS, SELLER AND THE COMPANY
Each of WPS, Seller and the Company jointly and severally represents
and warrants to Purchaser as follows:
4.1 Organization and Good Standing. It is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. The
Company is duly qualified or authorized to do business as a foreign corporation
and in good standing under the laws of each jurisdiction in which the conduct
of its business or the ownership of its properties requires such qualification
or authorization, except where the failure to so qualify or be in good standing
would not be material.
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4.2 Authorization of Agreement. It has all requisite corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement to be
executed by it in connection with the consummation of the transactions
contemplated by this Agreement (collectively, the "Company Documents"), and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance by it of this Agreement and the Company Documents to which it is a
party have been duly authorized by all necessary corporate action on its part.
This Agreement has been, and at or prior to the Closing each Company Document
to which it is a party will be, duly and validly executed and delivered by it
and (assuming the due authorization, execution and delivery by Purchaser), this
Agreement constitutes, and each Company Document to which it is a party when so
executed and delivered will constitute, legal, valid and binding obligations of
it enforceable against it in accordance with their respective terms.
4.3 Subsidiaries.
(a) Section 4.3(a) of the Company Disclosure Schedule sets forth the
name of each Subsidiary and, with respect to each such Subsidiary, the
jurisdiction in which it is incorporated, each class and number of shares of
its authorized capital stock, the number of shares of each such class issued
and outstanding.
(b) Each Subsidiary is a corporation validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Each Subsidiary is
duly qualified or authorized to do business as a foreign corporation and in
good standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to so qualify or be in good standing
would not be material.
(c) Except as set forth in Section 4.3(c) of the Company Disclosure
Schedule, neither the Company nor any of the Subsidiaries (i) owns beneficially
or of record, or has any agreement to acquire, any shares of capital stock or
any other security of any other Person or (ii) has any other direct or indirect
equity investment in any other Person.
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(d) The outstanding shares of capital stock of each Subsidiary were
duly authorized for issuance and are validly issued, fully paid and
non-assessable and the Company is the record and beneficial owner of all such
outstanding shares of each Subsidiary, free and clear of any Liens except as
set forth in Section 4.3(d) of the Company Disclosure Schedule (and except for
any Liens in favor of Purchaser under this Agreement). Upon transfer of the
Shares to Purchaser at the Closing, the Company shall be the record and
beneficial owner of all such outstanding shares of each Subsidiary, free and
clear of any Liens.
(e) There are no agreements, arrangements or understandings with
respect to the voting, sale, issuance or transfer of shares of the capital
stock or other equity security of any Subsidiary to which the Company or any
Subsidiary (or WPS or any of its other Affiliates) is a party, other than as
set forth in Section 4.3(e) of the Company Disclosure Schedule.
4.4 Capitalization.
(a) The authorized, issued and outstanding capital stock of the
Company consists of the Shares, which Shares shall be delivered to Seller at
the Closing free and clear of all Liens. All of the Shares were duly authorized
for issuance and are validly issued, fully paid and non-assessable.
(b) There are no outstanding options or rights of any kind to which
the Company or any Subsidiary (or WPS or any of its other Affiliates) is a
party to acquire any shares of any class of securities or any securities
convertible into any shares of any class of securities of the Company or any of
the Subsidiaries, nor are there any obligations of the Company or any
Subsidiary to issue any such options, rights or securities.
4.5 Corporate Records.
(a) The copies of the certificate of incorporation, by-laws and books
of account of the Company and each of the Subsidiaries, all of which have
previously been delivered or otherwise made available to Purchaser, are
complete and correct as of the date of this Agreement.
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(b) The minute books of the Company and each Subsidiary, all of which
have previously been made available to Purchaser contain complete and accurate
records of all meetings and accurately reflect all other corporate action of
the stockholders and boards of directors and committees of the boards of
directors of the Company and its Subsidiaries.
(c) At the Closing, all of the books and records referred to in this
Section 4.5 will be in the possession of the Company and its Subsidiaries.
4.6 Consents of Third Parties; Non-Contravention.
(a) No consent, waiver, approval or authorization of, or material
declaration or filing with, or notification to, any Governmental Body or other
Person (collectively, "Consents") that has not been previously obtained, made
or filed is required on the part of WPS, Seller or the Company or any of its
Subsidiaries in connection with the execution, delivery and performance by WPS,
Seller or the Company of this Agreement or any Company Document to which it is
a party, except (i) for compliance with the applicable requirements of the HSR
Act; (ii) other non-material contractual assignments; or (iii) as set forth in
Section 4.6(a) of the Company Disclosure Schedule.
(b) Except as set forth in Section 4.6(b) of the Company Disclosure
Schedule, the execution, delivery and performance by WPS, Seller or the Company
of this Agreement and each Company Document to which any of them is a party,
and the consummation by any of them of the transactions contemplated hereby and
thereby, do not and will not (i) violate any provision of their respective
certificate of incorporation or by-laws, or the certificates of incorporation
or by-laws of any Subsidiary, each as currently in effect; (ii) subject to
obtaining the Consents referred to in Section 4.6(a) hereof, conflict with, or
result in the breach of, or constitute a default under, or result in the
termination, cancellation or acceleration of any right or obligation of WPS,
Seller, the Company or any Subsidiary under, any material lease, agreement,
commitment or other instrument to which WPS, Seller, the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
respective properties is bound (except for the Excluded Assets); (iii) assuming
compliance with the matters set forth in Section 4.6(a) hereof, violate, or
result in a breach of or constitute a default
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under, any Law applicable to WPS, Seller, the Company or any Subsidiary; or
(iv) result in the creation of any Lien upon the properties or assets of the
Company or any Subsidiary (except for the Excluded Assets).
4.7 Financial Statements. The Company has heretofore provided to
Purchaser the following financial statements:
(a) audited consolidated balance sheets of WPS and its consolidated
subsidiaries, including the notes thereto, at December 31, 1995 and 1996,
respectively, and consolidated statements of income and cash flows of WPS and
its consolidated subsidiaries for the years ended December 31, 1994, 1995, and
1996, respectively, accompanied by the reports of Seller's Auditors
(collectively, the "WPS Financial Statements"), which WPS Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated in the notes thereto) and present fairly, in all
material respects, the consolidated financial position and the consolidated
results of operations and cash flows of WPS and its consolidated subsidiaries
as at the dates and for the periods indicated therein;
(b) audited consolidated balance sheets, including the notes thereto,
of the Company and its Subsidiaries at December 31, 1995 and 1996,
respectively, and consolidated statements of income and cash flows of the
Company and its Subsidiaries for the years ended December 31, 1994, 1995 and
1996, respectively, accompanied by the reports of Seller's Auditors
(collectively, the "Company Financial Statements"), which Company Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis with the WPS Financial Statements (except as may be indicated in the
notes thereto) and present fairly, in all material respects, the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its Subsidiaries as at the dates and for the periods indicated
therein;
(c) an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of May 31, 1997 and consolidated statements of income and cash
flows of the Company and its Subsidiaries for the five months then ended (the
"Company Interim Financial Statements"), which Company Interim Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis with the
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Company Financial Statements (subject to normal recurring year-end adjustments
and the absence of notes that, if presented, would not differ materially from
those included in the Company Financial Statements), and present fairly in all
material respects the consolidated financial position and results of operations
and cash flows of the Company and its Subsidiaries as at the date and for the
period indicated therein;
(d) (i) an unaudited pro forma consolidated balance sheet of the
Company and its Subsidiaries at December 31, 1996 (the "December 31, 1996
Balance Sheet"), (ii) an unaudited pro forma consolidated balance sheet of the
Company and its Subsidiaries at May 31, 1997 and (iii) an unaudited pro forma
statement of working capital of the Company and its Subsidiaries at December
31, 1996 (the "Pre-Closing Date Statement of Working Capital"), each adjusted
to reflect the exclusion of the Excluded Assets) and each of which are true,
correct and complete in all material respects; and
(e) The Pre-Closing Date Statement of Working Capital, a copy of
which is attached hereto as Exhibit A-1, has been prepared by WPS based on the
December 31, 1996 Balance Sheet and in accordance with the accounting
principles described in Exhibit A-2 hereto.
4.8 No Undisclosed Liabilities. As of the date of this Agreement,
none of the Company or its Subsidiaries has any material liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
whether due or to become due or asserted or unasserted, which would be required
by GAAP to be reflected in, reserved against or otherwise described in the
balance sheet of the Company and its Subsidiaries included in the Company
Interim Financial Statements, except as set forth therein and except for
liabilities and obligations incurred in the ordinary course of business since
May 31, 1997.
4.9 Absence of Certain Changes. Except as set forth in Section 4.9 of
the Company Disclosure Schedule and except for the Permitted Transactions, the
Company and its Subsidiaries have conducted the Business only in the ordinary
course from December 31, 1996 to and including the date of this Agreement and
there has not been since December 31, 1996 and on or prior to the date of this
Agreement:
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(a) any change in the Company's or any Subsidiary's authorized or
issued capital stock; any grant of any stock option or right to purchase shares
of capital stock of the Company or any Subsidiary; any issuance of any security
convertible into such capital stock; any grant of any registration rights; any
purchase, redemption, retirement or other acquisition by the Company or any
Subsidiary or any shares of any such capital stock;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company or any
Subsidiary (other than any dividend or other distribution in cash);
(c) any incurrence, assumption or guaranty by the Company or any
Subsidiary of any indebtedness for borrowed money other than (A) in the
ordinary course of business consistent with past practice, (B) borrowings under
existing lines of credit in the ordinary course of business, or (C) guarantees
by the Company or any Subsidiary of indebtedness of the Company or any
Subsidiary;
(d) other than in the ordinary course of business consistent with
past practice, (i) any increase above normal and usual merit or cost-of-living
increases in the compensation payable or to become payable by the Company or
any Subsidiary to any of its respective directors, officers or employees or
(ii) any increase in the coverage or benefits available under, or any adoption
of, any severance pay, termination pay, vacation pay, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any of the directors, officers or employees of
the Company or any Subsidiary;
(e) any creation or assumption by the Company or any Subsidiary of
any Lien (other than Liens set forth in any section of the Company Disclosure
Schedule and Permitted Encumbrances) on any of the properties or assets
(whether tangible or intangible) of the Company or any Subsidiary;
(f) any making of any loan or advance to any Person (other than in
the ordinary course of business consistent with past practice and other than to
wholly owned Subsidiaries of the Company);
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(g) any damage, destruction or other casualty or loss (whether or not
covered by insurance) affecting the Business or assets of the Company or any
Subsidiary which has had or would have a Material Adverse Effect;
(h) any termination of or receipt of notice of termination of any
material license, distributorship, dealer, sales representative, joint venture,
credit or similar agreement;
(i) any sale (other than sales of inventory in the ordinary course of
business and other than the Permitted Transactions), lease or other material
disposition of any asset or property of the Company or any Subsidiary;
(j) any material change in the accounting methods used by the Company
or any Subsidiary; or
(k) any commitment or agreement to do any of the foregoing, except as
otherwise permitted by this Agreement.
4.10 Taxes.
(a) Except as set forth in Section 4.10(a) of the Company Disclosure
Schedule, (i) all material Tax Returns required to be filed by or on behalf of
the Company and its Subsidiaries have been timely filed in all jurisdictions in
which such Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), and all such Tax
Returns are true and complete in all material respects, (ii) all amounts shown
on such Tax Returns (including interest and penalties) as due from the Company
and its Subsidiaries have been fully and timely paid, (iii) no waivers of
statutes of limitation have been given or requested with respect to the Company
and its Subsidiaries in connection with any Tax Returns covering the Company
and its Subsidiaries with respect to any Taxes payable by it, and (iv) the
Company and its Subsidiaries have or have caused to be duly and timely withheld
from employee salaries, wages and other compensation and have paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over for all periods under all applicable laws.
(b) The United States federal income Tax Returns filed by or on
behalf of the Company and its Subsidiaries for the taxable years ended on the
respective dates set forth in Section 4.10(b) of the Company Disclosure
Schedule
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have been examined by the Internal Revenue Service or the statute of
limitations with respect to such returns has expired.
(c) Section 4.10(c) of the Company Disclosure Schedule lists each
jurisdiction in which the Company and each Subsidiary file all income and other
material Tax Returns for each period or portion thereof ending on or before the
Closing Date. No claim is outstanding against the Company or any Subsidiary by
any taxing authority in a jurisdiction where the Company or any Subsidiary does
not file any such Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(d) Except as set forth in Section 4.10(d) of the Company Disclosure
Schedule, all material deficiencies asserted or assessments made as a result of
any examinations by the Internal Revenue Service or any other taxing authority
of the Tax Returns of or covering or including the Company and its Subsidiaries
have been fully paid or duly provided for in the Company Financial Statements,
and there are no other audits or investigations by any taxing authority in
progress.
(e) Seller is not a foreign person within the meaning of Section 1445
of the Code.
(f) Except as set forth in Section 4.10(f) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is a party to or bound by any
agreement providing for the allocation or sharing of Taxes.
(g) Neither the Company nor any Subsidiary nor any corporation to
which the Company or any Subsidiary is a successor, directly or indirectly, by
merger or otherwise (i) has been a member of an affiliated group of
corporations (as defined in Section 1504(a) of the Code) other than the group
in which WPS (or any predecessor thereof) has been the common parent or (ii)
has filed or been included in a combined, consolidated or unitary income tax
return other than with WPS (or any predecessor thereof) or a member of WPS'
affiliated group (or any predecessor of any such member).
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4.11 Intangible Property. The Company has delivered or otherwise made
available to Purchaser a complete and accurate list of all of its patents,
patent applications, trademarks, trade names, copyrights, service marks and
applications for trademarks and for service marks, such list as set forth in
Section 4.11(a) of the Company Disclosure Schedule. Except as set forth in
Section 4.11(b) of the Company Disclosure Schedule, the Company, directly or
indirectly through its Subsidiaries, owns or possesses adequate licenses or
other rights to use all intellectual property and other proprietary rights used
in the Business as presently conducted. The parties hereto agree that, except
as set forth in Section 4.11(c) of the Company Disclosure Schedule, Purchaser
does not have and none of Purchaser, the Company or its Subsidiaries shall have
subsequent to the Closing the right to use any patent, trademark, trade name,
copyright or symbol owned by WPS or any Affiliate of WPS, other than the
trademarks, trade names, copyrights and symbols owned by the Company and the
Subsidiaries. Except as set forth in Section 4.11(d) of the Company Disclosure
Schedule, (a) there is no pending assertion or claim challenging the validity
of the Company's or any Subsidiary's material patents, trademarks, trade names,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other material proprietary rights and information
used or held for use in connection with the Business as presently conducted
(the "Intellectual Property Assets"), (b) the Company has not received any
written notice that the conduct of the Business conflicts in any way with any
patent, trademark, trade name, copyright, service mark or trade secret of any
third party and (c) to the knowledge of WPS, Seller and the Company there are
no infringements of any proprietary rights owned or licensed by or to the
Company or any Subsidiary.
4.12 Material Contracts.
(a) The Company has delivered or otherwise made available to
Purchaser true, correct and complete copies of all contracts and agreements
(and all amendments, modifications and supplements thereto) to which the
Company or any of its Subsidiaries is a party or by which any of their
respective properties or assets are bound that are in effect on the date of
this Agreement and are material to the Business, including, without limitation:
(i) employment, consulting (in which a Person is acting as a consultant to the
Company or any of its Subsidiaries), non-competition,
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severance, golden parachute or indemnification contracts involving employees of
the Company or any of its Subsidiaries; (ii) license agreements; (iii)
partnership or joint venture agreements; (iv) leases of Company Property
relating to the Business and all assignments relating thereto; (v) contracts or
agreements with any Governmental Body; (vi) other contracts and agreements; and
(vii) commitments and agreements to enter into any of the foregoing
(collectively, and together with any such contracts entered into in accordance
with Section 6.2 hereof, the "Contracts"). Section 4.12(a) of the Company
Disclosure Schedule sets forth a list of the Contracts.
(b) Except as set forth in Section 4.12(b) of the Company Disclosure
Schedule:
(i) each of the Contracts is valid and enforceable against the
Company or the applicable Subsidiary in accordance with its terms;
(ii) there is no material default under any Contract either by
the Company or any Subsidiary or, to the Knowledge of WPS, Seller and the
Company, by any other party thereto. The Company or such Subsidiary is in full
compliance in all material respects with the terms and conditions of each
Contract, and no event has occurred that, with the giving of notice or the
lapse of time or both, would constitute a material default thereunder by the
Company or any Subsidiary or, to the Knowledge of WPS, Seller and the Company,
any other party;
(iii) no party to any such Contract has given notice to the
Company of, or made, a claim against the Company with respect to any material
breach or default thereunder; and
(iv) the Contracts relating to the sale, design, manufacture
or provision of products or services by the Company or any Subsidiary have been
entered into in the ordinary course of business and have been entered into
without the commission of any act alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in
violation of any Law.
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4.13 Employee Benefits.
(a) Section 4.13(a) of the Company Disclosure Schedule refers to a
preliminary list of all the employees of the Company, including employees on
vacation, sickness and short-term and long-term disability leave heretofore
provided by Seller to Purchaser. Within five (5) business days prior to the
Closing Date, Seller shall deliver to Purchaser (i) a final list of such
employees (the "Transferred Employees"); (ii) a list of all "employee benefit
plans," as defined in Section 3(3) of ERISA, which are maintained or
contributed to by the Company for the benefit of the Transferred Employees (the
"Company Employee Benefit Plans"); and (iii) all material employment
agreements, and all material bonus and other incentive compensation, deferred
compensation, disability, severance, stock award, stock option or stock
purchase agreements, collective bargaining agreements, workers' compensation,
and other material policies and arrangements with respect to the employment and
termination of employment of the Transferred Employees (the "Company Employee
Arrangements").
(b) With respect to each Company Employee Benefit Plan and Company
Employee Arrangement, to the extent applicable, a complete and correct copy of
each of the following documents has been provided or made available to
Purchaser: (i) the most recent plan document or agreement, and all amendments
thereto and all related trust documents; (ii) the most recent summary plan
description, and all related summaries of material modifications; (iii) the
most recent annual actuarial valuation report; (iv) the last three filed Form
5500 series, including applicable schedules; (v) the last three filed Forms
PBGC-1; (vi) the most recent auditor's report; (vii) copies of any private
letter rulings, requests and applications for determination and determination
letters issued within the past five years; and (viii) the most recent annual
and periodic accounting of related plan assets.
(c) None of the Company Employee Benefit Plans is subject to Section
4063, 4064 or 4202 of ERISA. Neither Seller, WPS, the Company, nor any entity
required to be aggregated with the Seller, WPS or the Company under Section
414(b), (c), (m) or (o) of the Code has incurred any liability under Sections
4063, 4064 or 4202 of ERISA for which Purchaser, the Company or any of their
Affiliates may become liable.
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(d) With respect to each Company Employee Benefit Plan that is
subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code,
there does not exist any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, whether or not waived.
(e) All contributions required to have been made by WPS, Seller or
the Company under any Company Employee Benefit Plan or Company Employee
Arrangement have been made by the due date thereof (including any valid
extensions), except where any failure to contribute would not, individually or
in the aggregate, have a Material Adverse Effect.
(f) To the Knowledge of WPS and Seller, the Company Employee Benefit
Plans and Company Employee Arrangements have been maintained, in all material
respects, in accordance with their terms and applicable provisions of ERISA and
the Code.
(g) With respect to each Company Employee Benefit Plan that is
intended to be a "qualified plan" within the meaning of Section 401(a) of the
Code (a "Qualified Plan"), either the Internal Revenue Service has issued a
favorable determination letter that has not been revoked, or an application for
a favorable determination letter was or will be timely submitted to the
Internal Revenue Service for which no final action has been taken by the
Internal Revenue Service, and, to the Knowledge of WPS, Seller and the Company,
there are no existing circumstances or any events, including any form or
operational plan qualification defects, that have occurred that could adversely
affect the qualified status of any Qualified Plan or its related trust.
(h) Neither Seller, WPS, the Company, nor any entity required to be
aggregated with the Seller, WPS, or the Company under Section 414(b), (c), (m)
or (o) of the Code currently is a party to any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, and neither Seller, WPS or the Company nor any of
such other entities (i) currently has any liability to make any withdrawal
liability payment to any multiemployer plan; (ii) will incur any such liability
for which the Company or Purchaser or any of their affiliates may become
liable; (iii) are delinquent in making any contributions required to be paid to
any multiemployer plan; or (iv) are involved in any pending dispute with any
multiemployer plan.
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(i) To the Knowledge of WPS, Seller and the Company, neither Seller,
its affiliates, nor any administrator or fiduciary of any Company Employee
Benefit Plan (or agent or delegate of any of the foregoing) has engaged in any
transaction or acted or failed to act in any manner that could subject
Purchaser or the Company to any liability for a breach of any fiduciary or
co-fiduciary duty under ERISA. No party in interest (as defined in ERISA) or
disqualified person (as defined in the Code) of any Company Employee Benefit
Plan has engaged in any prohibited transaction (within the meaning of ERISA
Section 406 or Code Section 4975) that could subject the Purchaser or the
Company to any liability under such provisions.
(j) Neither Seller, WPS, the Company, nor any entity required to be
aggregated with Seller, WPS or the Company under Section 414(b), (c), (m) or
(o) of the Code has incurred any liability under Section 4062 of ERISA for
which Purchaser, the Company or any of their Affiliates may become liable.
(k) No condition exists which would constitute grounds of involuntary
termination for any of the Company Employee Benefit Plans under Section 4042 of
ERISA, and there have been no reportable events as defined in Section 4043(b)
of ERISA (other than events for which the thirty-day notice period has been
waived by the Pension Benefit Guaranty Corporation (the "PBGC")) with respect
to any of the Company Employee Benefit Plans.
(l) No proceeding or other action has been initiated by the PBGC to
terminate any of the Company Employee Benefit Plans, no notice has been
received of any intention by the PBGC to commence or seek commencement of any
such proceeding or actions, and, other than as described in Section 4.13(l) of
the Company Disclosure Schedule, no agreement or understanding has been entered
into between the PBGC and the Seller, WPS, or the Company regarding any of the
Company Employee Benefit Plans that would result in any liability to the
Purchaser or the Company on or after the Closing Date or adversely affect in
any way the Company Pension Plan (as defined in Section 6.2 of the Human
Resources Agreement).
(m) Neither of the WPS Pension Plans nor the Savings Plan (as defined
in Sections 6.1 and 6.2 of the Human Resources Agreement), nor any trust which
serves as a funding medium for the WPS Pension Plans or the Savings
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<PAGE> 27
Plan, is currently under examination by or involved in any action pending
before the IRS (including, but not limited to, the IRS Closing Agreement
Program or Voluntary Compliance Resolution Program), the Department of Labor,
the PBGC, or any court, other than any applications for determinations pending
before the IRS.
(n) No claims are currently pending against any of the Company
Employee Benefit Plans and Company Employee Arrangements (except those
submitted in the ordinary course of administration of such plan or
arrangement).
(o) As of the Closing Date, the Company has no post employment
obligations (other than pensions) with respect to any Transferred Employee,
except for any liability attributable to the postretirement welfare benefits
specified in Footnote 4 to the letter dated June 25, 1997 from Paul A. Gewirtz,
FSA to Mr. Morgan M. Schuessler as more particularly described in Section
4.13(o) of the Company Disclosure Statement, and the present value (based on
actuarial assumptions and methods determined by Purchaser's actuary to be
reasonable) of such liability determined in accordance with FAS 106 will not
exceed $100,000 as of the Closing Date.
(p) The consummation of the transactions contemplated by this
Agreement will not (i) result in the payment or series of payments by the
Company to any Transferred Employee or other person of an "excess parachute
payment" within the meaning of Section 280G of the Code, (ii) entitle any
Transferred Employee or other person to severance pay or other compensation or
benefit entitlements by reason of any Transferred Employee's or other person's
deemed termination of employment as a result of the transaction contemplated
hereby (except as provided in Section 3.1 of the Human Resources Agreement), or
(iii) accelerate the time of payment for vesting of any stock option, stock
appreciation right, deferred compensation, or other employee benefits under any
of the Company Employee Benefit Plans or Company Employee Arrangements
(including vacation and sick pay) that would constitute an obligation of the
Company.
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4.14 Labor. Since December 31, 1991, neither the Company nor any
Subsidiary has been or is a party to any collective bargaining or other labor
agreement. Since December 31, 1993, there has not been, there is not presently
pending or existing, and there is not threatened, (a) any strike, slowdown,
picketing, work stoppage or employee grievance process; or (b) any application
for certification of a collective bargaining agent. The Company and each
Subsidiary have complied in all material respects with all Laws relating to
employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, the payment of social security
and similar taxes, occupational safety and health and plant closing. Neither
the Company nor any Subsidiary is liable for the payment of any compensation,
damages, taxes, fines, penalties or other amounts, however designated, for
failure to comply with any of the foregoing Laws.
4.15 Litigation. Except as set forth in Section 4.15 of the Company
Disclosure Schedule, there are no Legal Proceedings pending or, to the
Knowledge of WPS, Seller or the Company, threatened (a) against WPS, Seller,
the Company or any Subsidiary that question any action taken or to be taken by
WPS, Seller, the Company or any Subsidiary in connection with the consummation
of the transactions contemplated hereby or by any Company Document or (b)
against or affecting the Company or any Subsidiary or the Business, at law or
in equity. Except as set forth in Section 4.15 of the Company Disclosure
Schedule, none of the Company or any of the Subsidiaries is subject to any
outstanding Order applicable to the Company or any of its Subsidiaries or any
of the assets owned or used by the Company or any Subsidiary.
4.16 Compliance with Laws. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, the Company and its Subsidiaries are in compliance
with all Laws applicable to the Company or any of its Subsidiaries, except
where the failure so to comply, individually or in the aggregate, would not
have a Material Adverse Effect.
4.17 Environmental Matters. Except as disclosed in Section 4.17 of
the Company Disclosure Schedule, to the Knowledge of WPS, Seller or the
Company:
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(a) the operations of the Company and its Subsidiaries are in
compliance with applicable Environmental Laws and with the terms of all
Environmental Permits, excluding instances of non-compliance that cannot
reasonably be expected to result in a Significant Adverse Consequence;
(b) the Company and its Subsidiaries have all necessary or required
Environmental Permits, except where failure to have such Environmental Permits
could not reasonably be expected to result in a Significant Adverse
Consequence;
(c) there are no past, pending or, threatened Environmental Claims
against the Company or any of its Subsidiaries, nor is there a basis for any
Environmental Claim against the Company or any of its Subsidiaries, excluding
Environmental Claims that cannot reasonably be expected to result in a
Significant Adverse Consequence;
(d) neither the Company nor its Subsidiaries are subject to any
outstanding agreements, decrees, consent orders, or judgments respecting the
environment or any Environmental Law that could reasonably be expected to
result in a Significant Adverse Consequence; and
(e) no actions, suits, claims or other proceedings are pending,
threatened or alleged, against the Company or any of its Subsidiaries either
regarding the disposal, discharge or release of Hazardous Materials by the
Company or its Subsidiaries, alleging a violation or noncompliance with or
seeking to impose liability under any Environmental Law, which, if adversely
determined, could reasonably be expected to result in a Significant Adverse
Consequence.
Neither the Company nor its Subsidiaries have received any notice
under any applicable Environmental Laws that any of them is a potentially
responsible party for the costs of investigating or remediating contamination
which could reasonably be expected to result in a Significant Adverse
Consequence and, to the Knowledge of WPS, Seller and the Company, neither the
Company nor any of its Subsidiaries have arranged for the disposal of Hazardous
Materials at any property that is listed on the National Priorities List, the
CERCLIS or any other list of a Governmental Body that identifies sites for
investigation and/or remediation due to the presence of Hazardous Materials,
which could reasonably be expected to result in a Significant Adverse
Consequence.
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As used in this Section 4.17, the term "Significant Adverse
Consequence" means (i) any criminal enforcement action brought against the
Company, (ii) any administrative or civil action reasonably likely to result in
penalties in excess of $25,000 for a single violation or group of violations
relating to the same transaction or event, (iii) any other liability or expense
actually incurred by the Company (e.g., investigation actually incurred by the
Company, remediation, removal, and/or other cleanup costs) in excess of a total
of $25,000 in the aggregate for a single claim or group of claims relating to
the same transaction, or that materially impairs the ability of the Company and
its Subsidiaries to operate any of the Plants.
4.18 Real Property.
(a) Section 4.18(a) of the Company Disclosure Schedule sets forth a
complete list of (i) all real property and interests in real property owned in
fee by the Company and its Subsidiaries (individually, an "Owned Property" and
collectively, the "Owned Properties") and (ii) all real property and interests
in real property leased by the Company and its Subsidiaries (individually, a
"Real Property Lease" and the real properties specified in such leases,
together with the Owned Properties, being referred to herein as "Company
Property") as lessee or lessor. The Company and its Subsidiaries have good and
marketable fee title to all Owned Property, free and clear of all Liens except
(A) Liens set forth in Section 4.18(a) of the Company Disclosure Schedule and
(B) Permitted Encumbrances. Except as set forth in Section 4.18(a) of the
Company Disclosure Schedule (i) the Company Property constitutes all interests
in real property presently used or currently held for use in the Business and
which are necessary for the conduct of the Business as presently conducted, and
(ii) the Company and its Subsidiaries have a valid and enforceable leasehold
interest under each of the Real Property Leases, and none of WPS, Seller, the
Company nor any Subsidiary has received any written notice of any default or
event that with notice or lapse of time, or both, would constitute a default by
the Company or any Subsidiary under any of the Real Property Leases. All of the
Company Property and the buildings, fixtures and improvements thereon owned or
leased by the Company and its Subsidiaries are suitable for the uses they are
currently put to with respect to the Business. Seller has delivered or
otherwise made available to Purchaser true, correct and complete copies of (i)
all deeds, title reports
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and surveys for the Owned Properties and (ii) the Real Property Leases,
together with all amendments, modifications or supplements, if any, thereto.
(b) The Company and its Subsidiaries have all material certificates
of occupancy and Permits of any Governmental Body necessary or useful for the
current use and operation of each Company Property, and the Company and its
Subsidiaries have fully complied with all material conditions of the Permits
applicable to them. No default or violation, or event which, with the lapse of
time or giving of notice or both, would become a default or violation, has
occurred in the due observance of any Permit.
(c) There do not exist any actual or, to the Knowledge of WPS, Seller
and the Company, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and none of
Seller, WPS, the Company or any Subsidiary has received any written notice of
the intention of any Governmental Body or other Person to take or use all or
any part thereof.
(d) Neither the Company nor any Subsidiary owns or holds, or is
obligated under or a party to any option, right of first refusal or other
contractual right to purchase, acquire, sell, assign or dispose of any real
estate or any portion thereof or interest therein, except as provided in this
Agreement.
4.19 Title to Assets. Except as set forth in Section 4.19 of the
Company Disclosure Schedule, the Company or its Subsidiaries own outright and
have good and valid title to all of the property and assets included in the
Business, free and clear of any Liens, except for (i) immaterial assets and
properties; (ii) assets and properties disposed of or subject to purchase or
sales orders in the ordinary course of business; and (iii) Liens set forth in
Section 4.19 of the Company Disclosure Schedule (which shall be released at the
Closing) and Permitted Encumbrances; provided, however, that the representation
and warranty contained in this Section 4.19 does not apply to the Excluded
Assets and does not include or relate to the Real Property, which is addressed
by the representations and warranties contained in Section 4.18.
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4.20 Brokers, Etc. No Person has acted directly or indirectly as a
broker, finder or financial advisor for WPS, Seller or the Company in
connection with the transactions contemplated by this Agreement, except that
Goldman, Sachs & Co. and Lazard Freres & Co. LLC (together, "Seller's
Advisors") each have acted as financial advisors to WPS and Seller, and no
Person other than Seller's Advisors are entitled to any fees or commissions or
like payments in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of WPS, Seller or the Company.
4.21 No Material Adverse Change. Since December 31, 1996 there has
not been any Material Adverse Change, and no event has occurred or circumstance
exists that may result in such a Material Adverse Change.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants as follows:
5.1 Organization and Good Standing. Purchaser is a corporation
validly existing and in good standing under the laws of the State of Tennessee
and has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted.
5.2 Authorization of Agreement. Purchaser has all requisite corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement
to be executed by Purchaser in connection with the consummation of the
transactions contemplated by this Agreement (collectively, the "Purchaser
Documents"), and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Purchaser of this Agreement and the
Purchaser Documents have been duly authorized by all necessary corporate action
on behalf of Purchaser. This Agreement has been, and at or prior to the Closing
each Purchaser Document will be, duly and validly executed and delivered by
Purchaser and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each
Purchaser Document when so executed and delivered will constitute, legal, valid
and binding obligations of Purchaser.
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5.3 Consents of Third Parties; Non-Contravention.
(a) No consent, waiver, approval or authorization of, or declaration
or filing with, or notification to, any Governmental Body that has not been
previously obtained, made or filed is required on the part of Purchaser in
connection with the execution, delivery and performance by Purchaser of this
Agreement or the Purchaser Documents, or the consummation by Purchaser of the
transactions contemplated hereby or thereby except (i) for compliance with the
applicable requirements of the HSR Act; and (ii) as set forth in Section 5.3(a)
of the Purchaser Disclosure Schedule and (iii) where the failure to obtain such
consent, waiver, approval or authorization would not materially impair or delay
the ability of Purchaser to perform its obligations hereunder.
(b) Except as set forth in Section 5.3(b) of the Purchaser Disclosure
Schedule, the execution, delivery and performance by Purchaser of this
Agreement and each of the Purchaser Documents, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) violate
any provision of the certificate of incorporation or by-laws (or comparable
organizational documents) of Purchaser, each as currently in effect; (ii)
subject to obtaining the consents referred to in Section 5.3(a) above, conflict
with, or result in the breach of, or constitute a default under, or result in
the termination, cancellation or acceleration of any right or obligation of
Purchaser under, any lease, agreement, commitment or other instrument to which
Purchaser is a party or by which Purchaser or any of its properties is bound,
except where such conflict, breach or default would not materially impair or
delay the ability of Purchaser to perform its obligations hereunder; or (iii)
assuming compliance with the matters set forth in Section 5.3(a) hereof,
violate, or result in a breach of or constitute a default under, any Law
applicable to Purchaser, other than in the cases of clauses (ii) and (iii)
above any violation, conflict, breach, termination, default, cancellation or
acceleration which, individually or in the aggregate, would not materially
impair or delay the ability of Purchaser to consummate the transactions
contemplated hereby.
5.4 Litigation. As of the date hereof, there are no Legal Proceedings
pending or, to the Knowledge of Purchaser, threatened against Purchaser that
question the validity of this Agreement or any action taken or to be
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taken by Purchaser in connection with the consummation of the transactions
contemplated hereby or that would impair or delay the ability of Purchaser to
consummate the transactions contemplated hereby.
5.5 Financing. Purchaser has, as of the date hereof, provided to
Seller copies of executed commitments between Purchaser and each of The Bear
Stearns Companies, Inc., Prudential Securities Credit Corp., SunTrust Bank,
Atlanta and Suntrust Capital Markets, Inc. (the "Financing Commitments"),
providing for sufficient funds to effect the Closing and all other transactions
contemplated by this Agreement.
5.6 Investment Representation.
(a) Purchaser is acquiring the Shares for its own account, for
investment purposes only and not with a view to the resale or distribution (as
such term is used in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act")) thereof. Purchaser understands and acknowledges that
the Shares have not been registered under the Securities Act and cannot be
sold, transferred, pledged, hypothecated or otherwise disposed of unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
(b) Purchaser possesses such knowledge and experience in financial
and business matters so that it is capable of evaluating the merits and risks
of its investment hereunder. Purchaser acknowledges that it has conducted its
own investigation of the business and affairs of the Company and the
Subsidiaries and it has received all the information that it requested from,
and has had an opportunity to ask questions of and receive answers from
officers and representatives of, Seller, WPS and the Company concerning the
Company and the Subsidiaries.
5.7 Investment Company Act. Purchaser is not, nor is Purchaser
directly or indirectly controlled by any Person that is, an investment company
within the meaning of the Investment Company Act of 1940, as amended (an
"Investment Company"), and, immediately following the consummation of the
transactions contemplated by this Agreement, Purchaser will not be, nor will
Purchaser be directly or indirectly controlled by any Person that will be, an
Investment Company.
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5.8 Financial Advisors. No Person has acted directly or indirectly as
a broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement except for Bear, Stearns & Co.,
Inc. and Prudential Securities, Inc. ("Purchaser's Advisor") and no Person
other than Purchaser's Advisor is entitled to any fee or commission or like
payment in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Purchaser.
5.9 No Material Adverse Change. Since September 30, 1996, there has
not been any material adverse change in the business, results of operations or
financial condition of Purchaser, and no event has occurred or circumstance
exists that may result in such a material adverse change.
ARTICLE VI
FURTHER AGREEMENTS OF THE PARTIES
6.1 Access to Information; Confidentiality.
(a) Seller, WPS and the Company agree that, prior to the Closing
Date, Purchaser shall be entitled, through its authorized officers, employees
and representatives (including, without limitation, its legal counsel and
accountants), to make such reasonable investigation of the properties, business
and operations of the Company and the Subsidiaries and such examination of the
books, records and financial condition of the Company and the Subsidiaries as
it reasonably requests, and to make extracts and copies to the extent necessary
of such books and records; provided, however, that (i) the Company shall not be
obligated to provide Purchaser with any information that may be prohibited by
Law or contractual obligation from being so provided and (ii) all requests for
information, to visit facilities or to interview officers or employees of the
Company shall be directed to and coordinated with Goldman Sachs & Co. and shall
take place during regular business hours and upon reasonable advance notice.
(b) All information (whether in written, oral or other form and
whether or not displaying proprietary or restrictive markings) furnished
(whether before or after the date hereof) by the Company or its directors,
officers,
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employees or Affiliates (including, without limitation, Seller, WPS or any of
the Subsidiaries) or their respective representatives (including, without
limitation, financial advisors (including, without limitation, Seller's
Advisors), attorneys and accountants) (collectively, the "Company's
Representatives") or agents to Purchaser or Purchaser's directors, officers,
employees, affiliates, representatives (including, without limitation,
financial advisors (including, without limitation, Purchaser's Advisor),
attorneys and accountants) or agents or Purchaser's potential sources of
financing for the transactions contemplated hereby (collectively, "Purchaser's
Representatives") and all analyses, compilations, forecasts, studies or other
documents prepared by Purchaser or Purchaser's Representatives in connection
with this Agreement or the transactions contemplated hereby (including, without
limitation, in connection with Purchaser's or Purchaser's Representatives'
review of the Company and its Subsidiaries) which contain or reflect any such
information is hereinafter referred to as the "Information." The term
Information shall not, however, include information which (i) is or becomes
publicly available, without restriction on use or disclosure, other than as a
result of a disclosure by Purchaser or Purchaser's Representatives or (ii) is
or becomes available to Purchaser on a nonconfidential basis and without
restriction on use or disclosure from a source (other than the Company or the
Company's Representatives) which, to the best of Purchaser's knowledge after
due inquiry, is not prohibited from using or disclosing such information to
Purchaser by a legal, contractual or fiduciary obligation to the Company or any
of the Company's Representatives.
(c) Purchaser and Purchaser's Representatives (i) will keep the
Information confidential and will not (except as required by applicable law,
regulation or legal process, and only after compliance with Section 6.1(d)
below), without the prior written consent of WPS, directly or indirectly
disclose any Information in any manner whatsoever or reproduce any Information,
in any form, in whole or in part, and (ii) will not use any Information other
than in connection with the consummation of the transactions contemplated
hereby; provided, however, that Purchaser may reveal the Information only to
those of Purchaser's Representatives who (A) need to know the Information for
the purpose of consummating the transactions contemplated hereby, (B) are
informed by Purchaser of the confidential nature of and the obligations
relating to the Information and (C) agree to comply with the obligations and
restric-
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tions of this Section 6.1(c). Purchaser further agrees that, except as required
by applicable Law or legal process and after compliance with paragraph (d)
below, neither Purchaser nor any of Purchaser's Representatives will use any
Information in any litigation or legislative or regulatory proceeding.
Purchaser will cause Purchaser's Representatives to comply with the terms of
this Section 6.1, and Purchaser will be responsible for any breach of this
Section 6.1 by any of Purchaser's Representatives.
(d) If Purchaser or any of Purchaser's Representatives are requested
pursuant to, or required by, applicable Law or legal process to disclose any of
the Information, Purchaser will notify WPS (Attention: General Counsel)
promptly prior to any such disclosure so that a protective order or other
appropriate remedy may be sought or, in the sole discretion WPS, compliance
with the terms of this Section 6.1 may be waived. In the event that no such
protective order or other remedy is obtained, or that compliance with the terms
of this Section 6.1 is waived as provided above, Purchaser and Purchaser's
Representatives will furnish only that portion of the Information which
Purchaser is advised by counsel is legally required and will exercise all
reasonable efforts to obtain reliable assurance that confidential treatment
will be accorded the Information.
(e) If this Agreement is terminated prior to the Closing pursuant to
Section 9.1 hereof, Purchaser (i) shall, at WPS's option and written request,
promptly destroy or return and cause Purchaser's Representatives to destroy or
return to the Company, at Purchaser's expense, all Information (including all
copies, if any, thereof), and thereafter the Information shall be subject to
the provisions of the Confidentiality Agreement, dated May 28, 1997, between
Goldman, Sachs & Co., on behalf of the Company, and Purchaser (the
"Confidentiality Agreement") and (ii) shall not use or disclose the Information
for any purpose or make the Information available to any other entity or
person.
(f) Purchaser acknowledges and agrees that a remedy at law for any
breach, or threatened breach, of the provisions of this Section 6.1 would be
inadequate and, accordingly, Purchaser covenants and agrees that Seller shall,
in addition to any other rights and remedies that
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Seller may have, be entitled to equitable relief, including injunctive relief,
and to the remedy of specific performance with respect to any breach of such
covenant, as may be available from any court of competent jurisdiction. Such
right to obtain equitable relief may be exercised, at the option of Seller,
concurrently with, prior to, after or in lieu of, the exercise of any other
rights or remedies that Seller may have as a result of any such breach or
threatened breach.
6.2 Conduct of the Business Pending the Closing. Except as otherwise
contemplated by this Agreement, as set forth in Section 6.2 of the Company
Disclosure Schedule and except for the Permitted Transactions, or with the
prior written consent of Purchaser, which consent shall not be unreasonably
withheld, from the date hereof until the Closing Date:
(a) the Company shall, and shall cause each Subsidiary to:
(i) conduct the Business only in the ordinary course
consistent with past practice;
(ii) use reasonable commercial efforts to (A) preserve the
present business operations, organization (including, without limitation,
management and the sales force) and goodwill of the Business and (B) preserve
the present relationships with suppliers, customers and other Persons having
material business dealings with the Company and the Subsidiaries relating to
the Business; and
(iii) confer with Purchaser concerning operational matters
of a material nature;
(b) the Company shall not, and shall not cause or permit any
Subsidiary to:
(i) declare, set aside, make or pay any dividend or other
distribution (other than any dividend or distribution in cash) in respect of
the capital stock of the Company or repurchase, redeem or otherwise acquire any
outstanding shares of the capital stock or other securities of, or other
ownership interests in, the Company or effect any recapitalization, split or
like change in the capitalization of the Company or any Subsidiary;
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(ii) transfer, authorize for issuance, issue, sell or
dispose of any shares of capital stock or other securities of the Company or
any Subsidiary or grant options or other rights to purchase or otherwise
acquire shares of the Company's or any Subsidiary's capital stock or other
securities;
(iii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Subsidiary;
(iv) incur, assume or guarantee any indebtedness for
borrowed money, other than (A) in the ordinary course of its business
consistent with past practice, (B) borrowings under existing lines of credit in
the ordinary course of business, or (C) guarantees by the Company or any
Subsidiary of indebtedness of the Company or any Subsidiary;
(v) amend the certificate of incorporation or by-laws of
the Company or any Subsidiary;
(vi) other than in the ordinary course of business
consistent with past practice, (A) increase the compensation payable or to
become payable by the Company or any Subsidiary to any of its respective
directors, officers or employees; (B) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay,
vacation pay, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any of
the directors, officers or employees of the Company or any Subsidiary; or (C)
enter into any employment, deferred compensation, severance, consulting (in
which a Person is acting as a consultant to the Company or any of its
Subsidiaries), non-competition or similar agreement (or amend any such existing
agreement to which the Company or a Subsidiary is a party) involving a
director, officer or employee of the Company or a Subsidiary;
(vii) subject to any Lien (other than Liens set forth in
any section of the Company Disclosure Schedule and other than Permitted
Encumbrances) any of the material properties or assets (whether tangible or
intangible) of the Company or any Subsidiary, other than the Excluded Assets;
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(viii) (i) acquire (except for purchases of inventory and
supplies in the ordinary course of business) any material properties or
material assets or (ii) sell, assign, transfer, convey, lease, license or
otherwise dispose of any of the material properties or material assets of the
Company or any Subsidiary (except for the transfer of the Excluded Assets);
(ix) other than as required by GAAP or by Law, make any
material alteration with respect to accounting policies, procedures and
practices;
(x) enter into any contract or agreement with Seller, WPS
or any Affiliate of WPS, other than in the ordinary course of business,
consistent with past practice, and on terms that are, in all material respects,
no less favorable, in the aggregate, to the Company or any Subsidiary party
thereto than could be obtained in arm's-length negotiations with an
unaffiliated third party;
(xi) other than in the ordinary course of business
consistent with past practice, compromise or settle, or enter into any
agreement which has the effect of compromising or settling, any material Legal
Proceeding listed in (or which, if such Legal Proceeding had been pending or
threatened as of the date of this Agreement, would have been required to be
listed in) Section 4.15 of the Company Disclosure Schedule;
(xii) enter into any labor or collective bargaining
agreement or, through negotiation or otherwise, make any commitment or incur
any liability to any labor organization with respect to the Company or the
Subsidiaries;
(xiii) make any loan or advance (other than in the ordinary
course of business consistent with past practice) or capital contribution to,
or invest in, any Person (other than to or in wholly owned Subsidiaries of the
Company);
(xiv) amend in any material respect any Contract, other
than in the ordinary course of business;
(xv) make any new election with respect to Taxes, or make
any changes in any current election with respect to Taxes that can reasonably
be expected to have a Material Adverse Effect on the Company or any Subsidiary;
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(xvi) commit or agree to do anything prohibited by this
Section 6.2(b), except as otherwise permitted by this Agreement.
6.3 Reasonable Commercial Efforts. Each party will cooperate and use
its reasonable commercial efforts to fulfill the conditions precedent to the
parties' obligations hereunder, including, without limitation, (i) using
reasonable commercial efforts to secure as promptly as practicable all
consents, approvals, waivers and authorizations required in connection with the
transactions contemplated hereby (collectively, "Required Consents"), (ii)
providing to the other parties such information as may be necessary in
connection with obtaining such Required Consents (including, without
limitation, updating and/or correcting if specifically requested by Purchaser,
information previously provided) or in connection with Purchaser's obtaining
financing for the transactions contemplated hereby (including, without
limitation, making available reasonably requested financial information
concerning the Business), and (iii) making available such officers or other
employees of such party as may be necessary or desirable to participate in any
regulatory proceedings required to obtain such Required Consents. Each of WPS
and Purchaser will promptly file documentary materials required by the HSR Act
and promptly file any additional information requested as soon as practicable
after receipt of request therefor. Furthermore, each party will cooperate and
use its reasonable commercial efforts to obtain for Purchaser the benefits
(subject to the obligations set forth therein) under the Real Property Leases,
including the New York Lease (as defined inSection 4.18(a) of the Company
Disclosure Schedule) and the Equipment Leases (as defined in Section 4.6(a) of
the Company Disclosure Schedule).
6.4 Further Assurances. At any time after the Closing Date, Seller
and Purchaser shall promptly execute, acknowledge and deliver any other
assurances or documents reasonably requested by the other and necessary for it
to satisfy its obligations hereunder or obtain the benefits contemplated
hereby.
6.5 Preservation of Records. Purchaser and the Company each shall
preserve and keep the Tax and other material records held by it relating to the
Business and the Company and the Subsidiaries for a period of five (5) years
from the Closing Date or such longer period as may be required by applicable
Law and shall make such records and
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personnel available to WPS or its Affiliates as may be reasonably required by
WPS in connection with, among other things, any Legal Proceedings against or
governmental investigations of WPS, Seller or any of their Affiliates or in
order to enable Seller, WPS or the Company to comply with its obligations under
this Agreement. If the Company wishes to destroy such records after that time,
the Company shall first give 90 days' prior written notice to WPS and WPS shall
have the right, at its option and expense, upon prior written notice given to
the Company within that 90-day period, to take possession of the records within
180 days after the date of the initial notice.
6.6 Publicity. Prior to the Closing, none of the parties or their
respective Affiliates shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval, in the cases of Seller, WPS and the
Company, of Purchaser, and in Purchaser's case, of WPS, which approval will not
be unreasonably withheld or delayed, unless such release or announcement
otherwise is required by applicable Law or by the applicable rules of any stock
exchange on which WPS, Purchaser or their respective Affiliates list
securities. Prior to making any public disclosure at any time prior to the
Closing that is required by applicable Law or the rules and regulations of any
such stock exchange, the disclosing party or parties shall, to the extent
practicable under the circumstances, give the other parties a copy of the
proposed disclosure and reasonable opportunity to comment thereon.
6.7 Notice Regarding Regulatory Proceedings.
(a) Each party shall notify the other parties hereto of the status of
any pending filing with any Governmental Body required pursuant to Section
4.6(a) or 5.3(a) hereof promptly upon (i) receipt of any material notice or
other material communication from such Governmental Body relating to, or (ii)
upon any material change in the status of, any such filing and at such other
times as the other party may reasonably request, such notice to specify in
reasonable detail the nature of such communication or change or the status of
such filing, as applicable.
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(b) Each party shall notify the other parties hereto promptly upon
the receipt of any notice from any Governmental Body to the effect that such
Governmental Body has determined that a consent, waiver, approval or
authorization that is not listed in Section 4.6(a) of the Company Disclosure
Schedule or Section 5.3(a) of the Purchaser Disclosure Schedule, as applicable,
is or may be required.
6.8 Employee Matters. Effective on the Closing Date, WPS, Seller, the
Company and Purchaser shall enter into the Human Resources Agreement
substantially in the form attached as Exhibit B hereto and incorporated by this
reference herein.
6.9 Financial Advisors.
(a) The fees and expenses of Seller's Advisors shall be paid by
Seller in accordance with Seller's agreements with such advisor.
(b) The fees and expenses of Purchaser's Advisor shall be paid by
Purchaser in accordance with Purchaser's agreement with such advisor.
6.10 Permitted Transactions. Prior to the Closing, the Company shall
transfer and convey (the "Permitted Transactions") (i) to WPS or its designated
Affiliate any and all cash or cash equivalents and accounts receivable of the
Company and its Subsidiaries in existence up to the time of the Closing (a
listing of which shall be provided to Purchaser at the Closing) and (ii) to
WPS, its designated Affiliate or a third party the business and assets related
to the Whitmire spinning plant including inventory, pre-paid leases and fixed
assets, as such fixed assets are set forth on a schedule thereof, a copy of
which has been delivered to Purchaser and described in Section 6.10 of the
Company Disclosure Schedule (collectively, the "Excluded Assets").
Notwithstanding anything to the contrary in this Agreement, Purchaser expressly
understands and agrees that the Excluded Assets will not be included in the
Business at the time of consummation of the transactions contemplated by this
Agreement, and at no time will Purchaser have any interest or rights of any
kind therein.
6.11 Repayment of Loans. On or as of the Closing, all loans or
advances to the Company or any Subsidiary from, or amounts due by the Company
or any Subsidiary to, WPS or any of its Affiliates (including
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Seller) listed in Section 6.11 of the Company Disclosure Schedule, including,
without limitation, any accrued and unpaid interest thereon, shall be repaid in
full by the Company or such Subsidiary to the payee thereof. Such amounts shall
be repaid out of the proceeds of the Estimated Purchase Price paid by Purchaser
to Seller at the Closing.
6.12 Notification. Between the date of this Agreement and the Closing
Date, Seller will promptly notify Purchaser of the occurrence of any event that
would or may make the satisfaction of the conditions in Article VII impossible
or unlikely to be fulfilled.
6.13 No Negotiation. Until such time, if any, as this Agreement is
terminated in accordance with Article IX, none of Seller, WPS or the Company
will, and will cause the Company's Representatives not to, directly or
indirectly solicit, initiate or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any inquiries or proposals from, any Person (other than
Purchaser) relating to any transaction involving the sale of the business or
assets (other than sales of inventory in the ordinary course of business and
the Permitted Transactions) of the Company or any of its Subsidiaries, or any
of the capital stock of the Company or any of its Subsidiaries, or any merger,
consolidation, business combination or similar transaction involving the
Company or any of its Subsidiaries.
6.14 June 30 Company Interim Financial Statements. As soon as
reasonably practicable after the date of this Agreement, the Company shall
provide an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of June 30, 1997 and consolidated statements of income and cash
flows of the Company and its Subsidiaries for the six months then ended (the
"June 30 Company Interim Financial Statements"), which shall be prepared in
accordance with GAAP applied on a consistent basis with the Company Financial
Statements (subject to normal recurring year-end adjustments and the absence of
notes that, if presented, would not differ materially from those included in
the Company Financial Statements), and present fairly in all material respects
the consolidated financial position and results of operations and cash flows of
the Company and its Subsidiaries as at the date and for the period indicated
therein.
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6.15 Non-Compete. WPS and Seller agree that for a period of five (5)
years following the Closing Date, neither WPS nor Seller nor any of their
respective Affiliates shall (i) engage in the Business, or (ii) directly or
indirectly acquire any company which is substantially engaged in the Business,
which is in any market in which the Company conducts Business as the Company's
Business is conducted at that time; provided, however, that this provision
shall not apply to any transaction in which WPS or Seller is acquired by, or
merges with, a third party. Each of Seller and WPS acknowledges and agrees that
this Section 6.15 is reasonable in duration and scope and geographic area and
is reasonably necessary for the protection of Purchaser's interests under this
Agreement. In the event that in any proceeding it is determined that the
duration or scope or geographic area of the provisions of this Section 6.15 are
unenforceable, the parties intend and agree that the foregoing agreements shall
remain in full force and effect to the greatest extent that would not render
them unenforceable.
6.16 Financing. Purchaser shall use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable (i) so that there is in effect, as promptly as
practicable but in no event later than September 15, 1997, definitive
agreements (collectively the "Financing Agreements") from one or more financial
institutions pursuant to which Purchaser shall have received commitments to
provide the Financing, and (ii) to satisfy all conditions contained in each of
the Financing Commitments and Financing Agreements to be performed by it.
Purchaser shall provide to the Seller copies of any such commitment letters and
Financing Agreements and shall keep the Seller reasonably informed of the
status of the financing process contemplated by the Commitment Letters.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The obligation
of Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, at or prior to the Closing, of each of the
following conditions (any or all of which may be waived by Purchaser in whole
or in part to the extent permitted by applicable Law):
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<PAGE> 46
(a) the representations and warranties of each of Seller, WPS and the
Company to Purchaser contained herein shall be true and correct in all material
respects as of the date of this Agreement and at and as of the Closing Date
with the same effect as though those representations and warranties had been
made again at and as of that date;
(b) each of Seller, WPS and the Company shall have performed and
complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date;
(c) the waiting period under the HSR Act shall have expired or been
earlier terminated;
(d) no Law shall have been enacted, and no Order of any Governmental
Body shall be in effect, which restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby;
(e) the consents, waivers, approvals or other authorizations of
Governmental Bodies required to have been obtained by Purchaser in connection
with the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, shall have been obtained;
(f) Purchaser shall have received an opinion of counsel to Seller,
WPS and the Company, dated the Closing Date, in form and content reasonably
acceptable to Purchaser; and
(g) Purchaser shall have received sufficient funds to effect the
Closing and all other transactions contemplated by this Agreement.
7.2 Conditions Precedent to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions (any or all of which may be waived by Seller):
(a) the representations and warranties of Purchaser to Seller and WPS
contained herein shall be true and correct in all material respects as of the
date of this Agreement and at and as of the Closing Date with the same
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<PAGE> 47
effect as though those representations and warranties had been made again at
and as of that date;
(b) Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) the waiting period under the HSR Act shall have expired or been
earlier terminated;
(d) no Law shall have been enacted, and no Order of any Governmental
Body shall be in effect, which restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby;
(e) all material consents, waivers, approvals or other authorizations
of any Governmental Body required to be obtained by Seller in connection with
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, shall have been obtained;
(f) no Legal Proceeding shall have been instituted or threatened by
any Governmental Body against Seller seeking to restrain or prohibit the
consummation by Seller of the transactions contemplated by this Agreement;
(g) Seller shall have received an opinion of counsel to Purchaser,
dated the Closing Date, in form and content reasonably acceptable to Seller;
(h) the Permitted Transactions shall have been
consummated; and
(i) all amounts owed by the Company and its Subsidiaries to WPS or any
of its Affiliates as listed in Section 6.11 of the Company Disclosure Schedule
shall have been, contemporaneously with the Closing, repaid from the proceeds
of the Purchase Price.
ARTICLE VIII
CLOSING; DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 Closing Date. The closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take place at 9:00
a.m. (New York City
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<PAGE> 48
time) at the offices of Weil, Gotshal & Manges LLP, New York, New York (or at
such other time and/or place as Seller and Purchaser may designate in writing)
on September 15, 1997 or such earlier date to which the parties shall mutually
agree. The date on which the Closing occurs is referred to in this Agreement as
the "Closing Date." At the Closing, the parties shall execute and deliver the
documents referred to in Sections 8.2 and 8.3 hereof.
8.2 Documents to Be Delivered by Seller, WPS and/or the Company. At
the Closing, Seller, WPS and/or the Company, as applicable, shall deliver, or
cause to be delivered, to Purchaser the following:
(a) stock certificates representing all the Shares, as well as all of
the issued and outstanding shares of each Subsidiary, duly endorsed in blank or
accompanied by stock transfer powers duly endorsed in blank; and
(b) a certificate dated the Closing Date executed on behalf of
Seller, WPS and the Company by the Chief Executive Officer or Chief Financial
Officer of WPS, certifying as to the fulfillment of the conditions specified in
Sections 7.1(a) and 7.1(b) hereof applicable to Seller, WPS or the Company, as
the case may be.
8.3 Documents to Be Delivered by Purchaser. At the Closing, Purchaser
shall deliver to Seller the following:
(a) the Estimated Purchase Price as provided in Section 2.2 hereof;
and
(b) a certificate dated the Closing Date executed by the Chief
Executive Officer or Chief Financial Officer of Purchaser certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b) hereof.
8.4 Documents to be Delivered by the Parties. At the Closing, Seller,
WPS, the Company and the Purchaser shall execute and deliver (i) an Interim
Services Agreement, dated the Closing Date (the "Interim Services Agreement"),
in substantially the form of Exhibit D attached hereto, such Interim Services
Agreement to have a term of nine (9)
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<PAGE> 49
months, and be cancellable in whole or in part at any time by Purchaser on
thirty (30) days prior written notice to Seller; (ii) the New York Sublease,
dated the Closing Date (the "New York Sublease"), on substantially the same
terms and conditions as presently exist in the New York Lease (as defined in
Section 4.18(a) of the Company Disclosure Schedule), it being understood that
lease payments and charges under the New York Sublease shall be determined on a
pro rata basis equal to WPS's average rent per square foot and charges under
the New York Lease; and (iii) the Machinery and Equipment Sublease, dated the
Closing Date (the "Equipment Sublease"), on substantially the same terms and
conditions as presently exist in the Equipment Lease (as defined in Section
4.6(a) of the Company Disclosure Schedule), as it relates to the machinery and
equipment listed on Section 4.6(a) of the Company Disclosure Schedule.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination of Agreement. This Agreement may be terminated prior
to the Closing as follows:
(a) by mutual written consent of Seller and Purchaser;
(b) (i) by Seller if the Closing shall not have occurred on or before
September 15, 1997; provided that Seller is not in material breach of its
obligations under this Agreement; or (ii) by Seller or Purchaser if there shall
have been enacted any Law, or there shall be in effect a final nonappealable
Order of any Governmental Body, restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby; it being agreed that
the applicable parties hereto shall promptly appeal, and shall diligently
pursue, any adverse determination that is not nonappealable; or
(c) (i) by Purchaser if any of the conditions in Section 7.1 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Purchaser to comply
with its obligations under this Agreement) and Purchaser has not waived such
condition on or before the Closing Date; or (ii) by Seller, if any of the
conditions in Section 7.2 has not
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<PAGE> 50
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Seller, WPS or the
Company to comply with their obligations under this Agreement) and Seller has
not waived such condition on or before the Closing Date.
Upon the occurrence of any of the events specified in this Section 9.1 (other
than Section 9.1(a) hereof), written notice of such event shall promptly be
given to the other parties to this Agreement, whereupon this Agreement shall
terminate as hereinabove provided.
9.2 Survival After Termination. If this Agreement is terminated in
accordance with Section 9.1 hereof and the transactions contemplated hereby are
not consummated, this Agreement shall become null and void and of no further
force and effect except (i) for the provisions of Sections 5.5, 6.1(e), 9.2,
12.2, 12.3, 12.6, and 12.7 hereof and (ii) that the termination of this
Agreement for any reason shall not relieve any party hereto from any liability
or obligations which at the time of termination had already accrued to another
party hereto or which thereafter may accrue in respect of any act or omission
of such party prior to such termination; provided that the Confidentiality
Agreement shall remain in full force and effect.
ARTICLE X
SURVIVAL; GENERAL INDEMNIFICATION
10.1 Survival. The representations and warranties of WPS and Seller
as to the Shares contained in Section 3.1 hereof, of WPS, Seller and the
Company contained in Sections 4.1, 4.2, 4.4 and 4.20 hereof, and of Purchaser
contained in Sections 5.1, 5.2 and 5.7 hereof, and any claim for
indemnification in respect thereof under this Article X, shall survive the
Closing. The representations and warranties of Seller contained in Section 4.17
hereof, and any claim for indemnification in respect thereof under this Article
X, shall survive the Closing until the third anniversary of the Closing Date.
Except as provided in the immediately preceding sentence and in Article XI
hereof with respect to Taxes, all other representations and warranties of the
parties hereto set forth herein shall terminate fifteen (15) months from the
date of this Agreement, and any
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claim for indemnification under this Article X with respect thereto, to be
valid, must be made on or prior to fifteen months after the date of this
Agreement.
10.2 Indemnification by WPS and Seller.
(a) Each of Seller and WPS (the "Indemnitors") jointly and severally
agrees that it shall, except with respect to (i) indemnification for breach of
any environmental representations, warranties and agreements which shall be
exclusively governed by the provisions of Section 10.5 hereof, and (ii) Tax
Indemnification which, except as otherwise provided in Section 11.8, shall be
exclusively governed by the provisions of Article XI hereof, indemnify, defend
and hold harmless Purchaser and its Affiliates, and each of their respective
directors, officers, shareholders, partners, attorneys, accountants, agents and
employees (other than the Transferred Employees), and their heirs, successors
and assigns (the "Purchaser Indemnified Parties"), from, against and in respect
of any damages, claims, losses, charges, actions, suits, proceedings,
deficiencies, interest, penalties, and reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses,
removal costs, remediation costs, closure costs, fines, penalties and expenses
of investigation and ongoing monitoring) (collectively, "Losses") imposed on,
sustained, incurred or suffered by or asserted against any of the Purchaser
Indemnified Parties, directly or indirectly, relating to or arising out of:
(i) any breach of any representation or warranty made by Seller, WPS
or the Company contained in this Agreement; and
(ii) the breach by Seller, WPS or the Company of any covenant or
agreement of such Person contained in this Agreement; and
(iii) any adverse impact upon the Company Pension Plans after the
Closing Date resulting directly or indirectly from any agreement or
understanding between WPS or any of its affiliates and the PBGC, or from any
action or litigation instituted by the PBGC, regarding the WPS Pension Plans or
any other defined benefit pension plan, such adverse impact including, but not
limited to, increased or accelerated funding, restrictions on termination or
amendment, or increased PBGC premiums affecting the Company Pension Plan.
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(b) Notwithstanding anything contained herein to the contrary,
neither Seller nor WPS shall be liable to the Purchaser Indemnified Parties for
any Losses with respect to the matters contained in Section 10.2(a) hereof
except to the extent (and then only to the extent) that the Losses therefrom
exceed an aggregate amount equal to $1,750,000, and with respect to payments
with respect to matters contained in Section 10.2(a), then only for all such
Losses in excess thereof up to an aggregate amount of indemnification payments
made by Indemnitors hereunder with respect to matters contained in Section
10.2(a) hereof) equal to $10,000,000, provided that the aggregate amount of any
Loss relating to a single claim (or group of claims relating to the same event
or transaction) exceeds $25,000.
10.3 Indemnification by Purchaser. Purchaser agrees that it shall
indemnify, defend and hold harmless each of Seller, WPS, the Company and their
Affiliates, and each of such Person's respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees, and their
heirs, successors and assigns (collectively, the "Seller Indemnified Parties"),
from, against and in respect of any Losses imposed on, sustained, incurred or
suffered by or asserted against any of the Seller Indemnified Parties, directly
or indirectly, relating to or arising out of:
(i) any breach of any representation and warranty made by
Purchaser in this Agreement;
(ii) the breach of any covenant or agreement of Purchaser
contained in this Agreement;
(iii) the breach of any representation, warranty or
covenant contained in the Human Resources Agreement, a copy of which is
attached hereto as Exhibit B; and
(iv) the failure of Purchaser to perform its obligations
under the New York Sublease, and the New York Lease to the extent it relates to
the New York Sublease, the Equipment Sublease and the Equipment Lease to the
extent it relates to the equipment listed in Section 4.6(a) of the Company
Disclosure Schedule.
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10.4 Indemnification Procedures.
(a) Except as otherwise provided in Article X hereof with respect to
Taxes, with respect to third-party claims, all claims for indemnification by
any party entitled to indemnification pursuant to Section 10.2 or 10.3 hereof
or Article XI hereof (an "Indemnified Party") shall be asserted and resolved as
set forth in this Section 10.4. In the event that any written claim or demand
for which Purchaser or Seller would be liable (as the case may be, an
"Indemnifying Party") to any Indemnified Party is asserted against or sought to
be collected from such Indemnified Party by a third party, such Indemnified
Party shall promptly, but in no event more than 15 days following its receipt
of such claim or demand, notify the Indemnifying Party of such claim or demand
and the amount or the estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim or
demand) (the "Claim Notice"). The Indemnifying Party shall have 20 days from
the personal delivery or receipt of the Claim Notice (the "Notice Period") to
notify the Indemnified Party (a) whether or not the Indemnifying Party disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand and (b) whether or not it desires to defend the
Indemnified Party against such claim or demand. All costs and expenses incurred
by the Indemnifying Party in defending such claim or demand shall be a
liability of, and shall be paid by, the Indemnifying Party. Except as
hereinafter provided, in the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend such party
against such claim or demand, the Indemnifying Party shall have the right to
defend such claim or demand by appropriate proceedings and shall have the sole
power to direct and control such defense. If any Indemnified Party desires to
participate in any such defense, it may do so at its sole cost and expense. The
Indemnified Party shall not settle a claim or demand without the consent of the
Indemnifying Party, which shall not be unreasonably withheld. The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party,
settle, compromise or offer to settle or compromise any such claim or demand.
If the Indemnifying Party elects not to defend the Indemnified Party against
such claim or demand, whether by not giving such party timely notice as
provided above or otherwise, then the amount of any such claim or demand or, if
the same be contested by such party, then that portion thereof as to which such
defense is unsuccessful
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(and the reasonable costs and expenses pertaining to such defense), shall be
the liability of the Indemnifying Party hereunder, subject, with respect to WPS
and Seller, to the limitations set forth in Section 10.2(b) hereof. To the
extent the Indemnifying Party shall direct, control or participate in the
defense or settlement of any third-party claim or demand, the Indemnified Party
will give the Indemnifying Party and its counsel access to, during normal
business hours, the relevant business records and other documents, and shall
permit them to consult with the employees and counsel of the Indemnified Party.
The Indemnified Party shall use its best efforts in the defense of all such
claims.
(b) Notwithstanding the foregoing, if an Indemnified Party determines
in good faith that there is a reasonable probability that a proceeding may
adversely affect it or its Affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Party may, by notice to the Indemnifying Party, assume the
exclusive right to defend, compromise or settle such proceeding, but the
Indemnifying Party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
10.5 Environmental Indemnity
(a) WPS, Seller and the Purchaser have agreed that Trigon Engineering
("Trigon") shall act as the environmental consultants for Purchaser with regard
to any follow-up investigation of the Plants, based upon the Phase I reports
previously concluded for the Company by Atlanta Environmental Management. Based
upon Trigon's review of the Phase I reports and other information obtained by
Trigon during its review, and its recommendations, the parties have agreed in
writing to the scope of a follow-up Phase II investigation.
(b) Purchaser shall have the right to immediately proceed with such
Phase II investigation and shall, not
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later than ten (10) days prior to the Closing, deliver to Seller its report
(with appropriate back-up documentation from Trigon) setting forth the scope of
Remedial Activities it intends to undertake subsequent to the Closing and the
estimate of its environmental consultant of the costs and expenses which that
consultant reasonably anticipates will be incurred in connection therewith (the
"Known Remedial Activities"). If the proposed costs of the Known Remedial
Activities are reasonably likely to exceed $10 million, either party shall,
within three (3) days after receipt of such report, have the right to terminate
this Agreement, effective immediately, upon written notice to the other party.
If neither party elects to terminate, the Closing under that Agreement shall
proceed as otherwise provided for, and Purchaser shall thereafter have the
right to proceed with such Known Remedial Activities, subject to the terms of
this Section 10.5.
(c) Any and all fees and expenses of Trigon incurred under Sections
10.5(a) and (b) above, up to the Closing Date, shall be borne solely by
Purchaser. Following the Closing, each of Seller and WPS jointly and severally
agrees that it shall indemnify, defend and hold harmless the Purchaser
Indemnified Parties (as defined in Section 10.2(a) hereof) from, against, and
in respect of Seller's Applicable Percentage of any and all Losses arising from
or related to (i) a breach of Section 4.17 or (ii) the Known Remedial
Activities.
It is the intention of the parties that all Losses under this Section
10.5 shall be borne by Sellers and Purchaser in proportion to their respective
Applicable Percentages set forth below:
<TABLE>
<CAPTION>
For Losses: Seller's Purchaser's
Applicable Applicable
Percentage Percentage
<S> <C> <C>
Up to $10 million 75% 25%
Greater than $10 million 67% 33%
and up to $20 million
Greater than $20 million 0% 100%
</TABLE>
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(d) The obligations of WPS and Seller to indemnify Purchaser for such
Remedial Activities shall be subject to the following:
i) any claim against Seller under this Section 10.5 must
relate to a matter notice of which has been given to Seller by Purchaser not
later than the third anniversary of the Closing Date and then only with respect
to work performed on or before such third anniversary date;
ii) Any Remedial Activities (1) shall be performed solely
with respect to the specific areas that have been either identified by the
parties, as provided for in Section 10.5(a) hereof or are the subject of a
breach of representation of warranty contained in Section 4.17 hereof; (2)
shall be performed in a reasonable, cost-effective manner; and (3) shall use
cleanup criteria no more stringent than (a) if specific applicable cleanup
criteria are specified by applicable Environmental Laws, that specific cleanup
criteria, or (b) otherwise, cleanup criteria that are reasonable and
appropriate to protect human health and the environment and to comply with
applicable Environmental Laws (in all cases where permitted and appropriate
such cleanup criteria shall be that applicable to real property that is used
for industrial purposes); and
iii) prior to the commencement of any Remedial Activities,
Purchaser shall provide Seller with a detailed plan as to its intended course
of action, the projected costs to be incurred in connection therewith, and the
anticipated time frame for completion. Seller shall have the right to review
such plan with Purchaser, to consult with Purchaser with respect to the
finalization and implementation of such plan and if Seller does not concur in
Purchaser's proposed plan of action, to provide alternative proposals and bids
for the undertaking and completion of such Remedial Activities. If Purchaser
and Seller, after due consultation, cannot agree as to the method of
proceeding, or the reasonable costs and expenses to be incurred in connection
therewith, WPS and Seller shall have the right to assume the obligation to
complete such Remedial Activities, which are subject to indemnification
hereunder, at their sole cost and expense, using such consultants and
contractors as they deem appropriate, provided that such work shall be
completed on a timely basis and in a workmanlike manner and on a basis
reasonably acceptable to Purchaser.
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(e) The party conducting the Remedial Activities shall (i) comply in
all material respects with Environmental Laws, (ii) in a timely manner, but no
less often than once every three months, provide the other party with progress
reports with respect to the Remedial Activities, and (iii) provide the other
party with all correspondence to or from any Governmental Authority, all
reports, all sampling results, and all other relevant and significant documents
relating to the Remedial Activities.
(f) For purposes of this Section 10.5, "Remedial Activities": shall
mean any actions specifically required by Environmental Laws to (i) cleanup,
remove, treat or in any other way address any Hazardous Materials located in,
on or under the soil or groundwater at concentrations in excess of the cleanup
criteria described in subsection (d)(ii) above and (ii) pre-remedial
investigations or post-remedial monitoring; provided, that other than the Known
Remedial Activities, Remedial Activities shall not include any investigations
voluntarily undertaken by Purchaser or the cleanup, removal or treatment
associated with such voluntary investigations but shall include any such
activities taken by Purchaser as a result of Seller's breach of any
representations and warranties contained in Section 4.17 hereof.
(g) Any party incurring costs hereunder, a portion of which is to be
paid by another party hereto (for purposes of this subsection (g), an
"Obligated Party") pursuant to Section 10.2, shall deliver to the Obligated
Party, on a quarterly basis, invoices for any Remedial Activities effected
during such quarterly period, along with appropriate back-up documentation,
setting forth in reasonable detail the work done during such period and a
detailed break-down of the fees and expenses incurred in connection therewith
and included in such invoice. The Obligated Party shall pay such invoices
within thirty (30) days after receipt thereof, except with respect to any
portion thereof which they claim by written notice to the other party,
delivered within ten (10) days after receipt of any such invoice, does not
conform to the terms of this indemnification.
(h) With respect to any invoices disputed by an Obligated Party under
subsection 10.5(g) above, the parties shall use reasonable efforts to resolve
such matter or matters on or before the due date of the relevant invoice; if
the parties cannot resolve any such dispute, said matters
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shall be referred for resolution to an independent engineering consulting firm
mutually agreed upon by the parties, whose determination with respect to any
such disputed matters shall be final and binding upon WPS, Seller and
Purchaser.
(i) This Section 10.5 shall be the sole and exclusive remedy with
respect to indemnification relating to environmental matters.
10.6 Characterization of Indemnification and Other Payments. All
amounts paid by Purchaser or Seller, as the case may be, under Article II
hereof, this Article X and Article XI hereof shall be treated as adjustments to
the Purchase Price for all Tax purposes.
10.7 Computation of Losses Subject to Indemnifi- cation. The amount
of any Loss for which indemnification is provided under this Article X and
Article XI hereof shall (i) be computed net of any insurance proceeds or Tax
benefits realized by the Indemnified Party in connection with such Loss (which
Tax benefits shall be reduced to the extent of any Taxes incurred by reason of
any such indemnification payment made hereunder) and (ii) exclude consequential
damages and lost profits.
ARTICLE XI
TAX MATTERS
11.1 Section 338(h)(10) Election.
(a) Seller and Purchaser shall join in making an election under
Section 338(h)(10) of the Code and the Treasury Regulations and
any corresponding or similar elections under state, local or foreign law
(collectively, a "Section 338(h)(10) Election") with respect to the purchase
and sale of the Shares.
(b) Purchaser, Seller and the Company shall cooperate fully with each
other in the making of the Section 338(h)(10)
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Election. In particular, and not by way of limitation, in order to effect the
Section 338(h)(10) Election, Seller and Purchaser shall jointly execute
necessary copies of Internal Revenue Service Form 8023 and all attachments
required to be filed therewith pursuant to applicable Treasury Regulations.
Purchaser and Seller shall cooperate fully with each other in preparing the
valuation statement reflecting, as of the Closing Date, the fair market values
of all of the assets and liabilities of the Company. Such valuation statement
shall be prepared as soon as practicable but no later than ninety (90) days
after the Closing Date. Purchaser and Seller shall file, and shall cause their
Affiliates to file, all Tax Returns and statements, forms and schedules in
connection therewith in a manner consistent with the Section 338(h)(10)
Election and with an allocation of the Purchase Price (including liabilities
and other relevant items) to the assets of the Company in accordance with such
valuations and shall take no position contrary thereto unless required to do so
by applicable tax laws. Any disputes regarding the valuation statement or the
preparation, execution or filing of the forms and documents required in
connection with making the Section 338(h)(10) Election which are not resolved
by WPS and Purchaser within ten (10) days of such parties' first attempt to do
so shall be resolved by the Final Arbiter, whose decision shall be final and
binding on the parties. All costs, fees and expenses paid to the Final Arbiter
in connection with any such disputes shall be shared equally by Seller and
Purchaser.
(c) To the extent permitted by state, local or foreign tax laws, the
principles and procedures of this Section 11.1 also shall apply with respect to
a Section 338(h)(10) Election or equivalent or comparable provision under
state, local or foreign law, including, without limitation, an election under
Section 338(g) of the Code or any equivalent or comparable provision under
state, local or foreign law. Purchaser shall make or cause to be made any
election similar to a Section 338(h)(10) Election that is optional under any
state, local or foreign law, and shall cooperate and join in any election made
by Seller, the Company or its Affiliates to effect such an election so as to
treat the sale of the Shares contemplated herein as a sale of assets for state,
local and foreign income tax purposes.
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11.2 Preparation of Tax Returns; Payment of Taxes.
(a) WPS shall include the Company and its Subsidiaries, or cause the
Company and its Subsidiaries to be included in, and shall file or cause to be
filed, (A) the United States consolidated federal income Tax Returns of the
Company and its Subsidiaries for the taxable periods of the Company and its
Subsidiaries ending on or prior to the Closing Date, and (B) where applicable,
all other consolidated, combined or unitary Tax Returns of the Company and its
Subsidiaries for the taxable periods of the Company and its Subsidiaries ending
(or the portion of any taxable period ending) on or prior to the Closing Date,
and Seller shall pay any and all Taxes due with respect to the returns referred
to in clause (A) or (B) of this paragraph (a), including, without limitation,
any liability due with respect to any Section 338(h)(10) Election made pursuant
to Section 11.1 hereof. WPS also shall file or shall cause the Company and its
Subsidiaries to file all other Tax Returns of or which include the Company and
its Subsidiaries required to be filed (taking into account any extensions) on
or prior to the Closing Date and Seller shall pay any and all Taxes due with
respect to such Tax Returns.
(b) Following the Closing, Purchaser shall be responsible for
preparing or causing to be prepared all Tax Returns required to be filed by the
Company and its Subsidiaries on a separate return basis after the Closing Date.
To the extent any Taxes shown due on such separate Tax Returns are
indemnifiable by Seller, (A) such Tax Returns shall be prepared in a manner
consistent with prior practice unless otherwise required by applicable tax
laws; (B) Purchaser shall provide Seller with copies of each such Tax Return at
least 30 days prior to the due date for filing such return; and (C) Seller
shall have the right to review and approve (which approval shall not be
unreasonably withheld) such Tax Returns for 15 days following receipt thereof.
The failure of Seller to propose any changes to any such Tax Return within such
15 days shall be deemed to be an indication of its approval thereof. Seller and
Purchaser shall attempt in good faith mutually to resolve any disagreements
regarding such Tax Returns prior to the due date for filing thereof. Any
disagreements regarding such Tax Returns which are not resolved by WPS and
Purchaser within ten (10) days of such parties' first attempt to do so shall be
resolved by the Final Arbiter, whose decision shall be final and binding on the
parties. All costs, fees and
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expenses paid to the Final Arbiter in connection with any such disputes shall
be shared equally by Seller and Purchaser. Purchaser shall file or cause to be
filed all such Tax Returns and shall pay the Taxes shown due thereon; provided,
however, that nothing contained in the foregoing shall in any manner terminate,
limit or adversely affect any right of Purchaser, Seller or the Company to
receive indemnification pursuant to any provision in this Agreement.
(c) For federal and state income tax purposes, the taxable year of
the Company and its Subsidiaries shall end as of the close of the Closing Date.
Neither Seller nor Purchaser shall take any position inconsistent with the
preceding sentence on any Tax Return. In any case where applicable law does not
permit the Company or any Subsidiary to close its taxable year on the Closing
Date or in any case in which a Tax is assessed with respect to a taxable period
which includes the Closing Date (but does not begin or end on that day), then
Taxes, if any, attributable to the taxable period of the Company or any
Subsidiary beginning before and ending after the Closing Date shall be
allocated (A) to Seller for the period up to and including the Closing Date,
and (B) to Purchaser for the period subsequent to the Closing Date. Any
allocation of income or deductions required to determine any Taxes attributable
to any period beginning before and ending after the Closing Date shall be made
by means of a closing of the books and records of the Company and each
Subsidiary as of the close of the Closing Date, provided that exemptions,
allowances or deductions that are calculated on an annual basis (including, but
not limited to, depreciation and amortization deductions) shall be allocated
between the period ending on the Closing Date and the period after the Closing
Date in proportion to the number of days in each such period.
11.3 Cooperation with Respect to Tax Returns. Purchaser and Seller
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to
books and records) and assistance, including making employees available on a
mutually convenient basis to provide additional information and explanations of
any material provided, relating to the Company and its Subsidiaries as is
reasonably necessary for the filing of any Tax Return, for the preparation for
any audit, and for the prosecution or defense of any claim, suit or proceeding
relating to any adjustment or proposed adjustment with respect to Taxes.
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11.4 Tax Audits.
(a) Whenever any taxing authority asserts a claim, makes an
assessment or otherwise disputes or affects the Tax reporting position of the
Company and its Subsidiaries for taxable periods ending on or prior to the
Closing Date, Purchaser shall, promptly upon receipt by Purchaser, the Company
or its Subsidiaries of notice thereof, inform WPS thereof.
(b) WPS shall have the sole right to represent the interests of the
Company and its Subsidiaries in any Tax audit or administrative or court
proceeding relating to taxable periods of the Company and its Subsidiaries
which end on or before the Closing Date; provided that if the results of such
Tax audit or proceeding could be expected to have a material adverse effect on
the assets, business, operations or financial condition of Purchaser, the
Company or its Subsidiaries for taxable periods ending after the Closing Date,
then there shall be no settlement or closing or other agreement with respect
thereto without the written consent of Purchaser (which consent shall not be
unreasonably withheld).
(c) WPS and Purchaser jointly shall represent the interests of the
Company and its Subsidiaries in any Tax audit or administrative or court
proceeding relating to any straddle period of the Company and its Subsidiaries.
Any disputes regarding the conduct or resolution of any such audit or
proceeding which are not resolved by WPS and Purchaser within ten (10) days of
such parties' first attempt to do so shall be resolved by the Final Arbiter,
whose decision shall be final and binding on the parties. All costs, fees and
expenses paid to third parties (including, if applicable, the Final Arbiter) in
the course of such proceeding shall be borne equally by Purchaser and Seller.
(d) Purchaser shall have the sole right to represent the interests of
the Company and its Subsidiaries in all other Tax audits or administrative or
court proceedings.
11.5 Refund Claims. To the extent any determina- tion of Tax
liability of the Company and its Subsidiaries, whether as the result of an
audit or examination, a claim for refund, the filing of an amended return or
otherwise, results in any refund of Taxes paid attributable to (i) any period
which ends on or before the Closing Date, (ii) the Section 338(h)(10) Election
or (iii) any period which
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includes the Closing Date but does not begin or end on that day, any such
refund shall belong to Seller, provided that in the case of any Tax refund
described in clause (iii) of this Section 11.5, the portion of such Tax refund
which shall belong to Seller shall be that portion that is attributable to the
portion of that period which ends on the Closing Date (determined on the basis
of an interim closing of the books as of the Closing Date), and Purchaser shall
promptly pay any such refund, and the interest actually received thereon, to
Seller upon receipt thereof by Purchaser. Any and all other refunds of Taxes
shall belong to Purchaser. Any payments made under this Section 11.5 shall be
net of any Taxes payable with respect to such refund, credit or interest
thereon (taking into account any actual reduction in Tax liability realized
upon the payment pursuant to this Section 11.5).
11.6 Preparation and Filing of Documents. Seller, the Company, its
Subsidiaries and Purchaser hereby agree to cooperate in the preparation and
filing of all necessary documents (including, but not limited to, all Tax
Returns) with respect to all such amounts in a timely manner.
11.7 Termination of Tax Sharing Agreements. All agreements providing
for the allocation or sharing of Taxes to which the Company and any Subsidiary
is a party shall terminate as to the Company and each Subsidiary on the Closing
Date and following the Closing Date, neither the Company nor any Subsidiary
shall have any liability to make payments to WPS or any member of the
consolidated group that includes the Company or any Subsidiary with respect to
such agreements for any Tax period. It being specifically understood by the
parties hereto that neither the Company nor any Subsidiary shall have any
liability to make payments to WPS, Seller or any member of the affiliated group
of which WPS is the common parent corporation under any such agreement
resulting from the Section 338(h)(10) Election.
11.8 Tax Indemnification.
(a) Without regard to the limitation on indemnification by WPS and
Seller set forth in Section 10.2(b) hereof, WPS and Seller jointly and
severally shall indemnify and hold harmless the Purchaser Indemnified Parties
from and against any and all Losses resulting from, arising out of, based on or
relating to:
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(i) any Taxes of the Company and its Subsidiaries with
respect to any taxable period ending on or before the Closing Date, including
any Taxes imposed on the Company and its Subsidiaries pursuant to Treasury
Regulation Section 1.1502-6 (or any comparable provision under state, local or
foreign law or regulation) and including any liability due with respect to the
Section 338(h)(10) Election;
(ii) any Taxes allocated to Seller in accordance with the
provisions of Section 11.2(c) hereof; and
(iii) a breach of a representation contained in Section
4.10 hereof.
(b) Purchaser shall indemnify and hold harmless the Seller
Indemnified Parties from and against any and all Losses resulting from, arising
out of, based on or relating to:
(i) any Taxes of the Company and its Subsidiaries for any
taxable period beginning on or after the Closing Date; and
(ii) any Taxes allocated to Purchaser in accordance with
the provisions of Section 11.2(c) hereof.
(c) Any claim for indemnity under this Section 11.8 may be made at
any time prior to sixty (60) days following the expiration of the applicable
Tax statute of limitations with respect to the relevant taxable period (as it
may be extended through agreement with the Internal Revenue Service or
otherwise, provided any such extension has been consented to by WPS, which
consent shall not be unreasonably withheld), and shall be subject to the
provisions set forth in Sections 10.5 and 10.6 hereof.
ARTICLE XII
MISCELLANEOUS
12.1 Certain Definitions; Rules of Construction.
(a) Certain Definitions.
"Adjustment Amount" has the meaning set forth in Section 2.3(a)
hereof.
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"Adjustment Certificate" has the meaning set forth in Section 2.3(a)
hereof.
"Affected Property" has the meaning set forth in
Section 4.17 hereof.
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended from time to time, or any successor
statute.
"Agreement" means this Stock Purchase Agreement, as amended from time
to time.
"Business" has the meaning set forth in the recitals hereof.
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks located in New York, New York are required to be closed.
"Claim Notice" has the meaning set forth in Section 11.4 hereof.
"Closing" has the meaning set forth in Section 8.1 hereof.
"Closing Date" has the meaning set forth in Section 8.1 hereof.
"Closing Date Pension Statement" has the meaning set forth in Section
2.4(a) hereof.
"Closing Date Statement of Working Capital" has the meaning set forth
in Section 2.3(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
"Company" has the meaning set forth in the preamble hereof.
"Company Disclosure Schedule" means the Disclosure Schedule delivered
by Seller to Purchaser on the date hereof.
"Company Documents" has the meaning set forth in Section 4.2 hereof.
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"Company Employee Arrangements" has the meaning set forth in Section
4.13(a) hereof.
"Company Employee Benefit Plans" has the meaning set forth in Section
4.13(a) hereof. In addition, the Company Pension Plans, as defined in Exhibit
B, shall be included in the term "Company Employee Benefit Plan" for purposes
of subsections (d), (e), (f), (g), (i), (k), (l), (m) and (n) of Section 4.13
hereof.
"Company Financial Statements" has the meaning set forth in Section
4.7(b) hereof.
"Company Interim Financial Statements" has the meaning set forth in
Section 4.7(c) hereof.
"Company Property" has the meaning set forth in Section 4.18(a)
hereof.
"Company's Representatives" has the meaning set forth in Section
6.1(b) hereof.
"Confidentiality Agreement" has the meaning set forth in Section
6.1(e) hereof.
"Consents" has the meaning set forth in Section 4.6(a) hereof.
"Contracts" has the meaning set forth in Section 4.12(a) hereof.
"Cotton Inventory Amount" has the meaning set forth in Section 2.5
hereof.
"December 31, 1996 Balance Sheet" has the meaning set forth in
Section 4.7(d) hereof.
"Environmental Claim" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any way
to any Environmental Law, to any Environmental Permit, or to the release of or
exposure to any Hazardous Materials (for purposes of (i) and (ii) below,
"Claims"), including without limitation (i) any and all Claims by governmental
or regulatory authorities for investigation, oversight, enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to
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any applicable Environmental Law; and (ii) any and all Claims by any third
party seeking damages, response costs, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
"Environmental Law" means any and all applicable federal, state or
local statute, rule, regulation, ordinance, code, or rule of common law now in
effect, and any applicable judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment
binding on the Company, relating to the environment, including without
limitation the federal Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss.ss. 9601 et seq. ("CERCLA"); the Toxic Substances
Control Act, as amended, 15 U.S.C. ss.ss. 2601, et seq.; the Clean Air Act, as
amended, 42 U.S.C. ss.ss. 7401, et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. ss.ss. 1251, et seq.; the Federal Insecticide,
Fungicide, and Rodenticide Act, as amended, 7 U.S.C. ss.ss. 136, et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.ss. 1801, et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.ss.
6901, et seq.; the Safe Drinking Water Act, 42 U.S.C. ss.ss. 300(f) et seq.;
and any similar state or local law.
"Environmental Permit" means any and all permits, approvals,
registrations, and/or licenses required by any Environmental Law.
"Equipment Sublease" has the meaning set forth in Section 8.4 hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute.
"Estimated Purchase Price" has the meaning set forth in Section 2.2
hereof.
"Excluded Assets" has the meaning set forth in Section 6.10 hereof.
"Final Arbiter" has the meaning set forth in Section 2.3(e) hereof.
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"Financing Agreements" has the meaning set forth in Section 6.16
hereof.
"Financing Commitments" has the meaning set forth in Section 5.5
hereof.
"Fiscal Quarter" means each fiscal quarter of the Company ending
March 31, June 30 and September 30.
"Fiscal Year" means each fiscal year of the Company ending December
31.
"Fixed Assets" means all of the furnishings, fixtures, furniture,
vehicles, tools, machinery and equipment used in the Business as presently
conducted.
"GAAP" means generally accepted accounting principles.
"Governmental Body" means any government or govern- mental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof,
or any court (public or private).
"Hazardous Materials" means those materials listed in Section 101(14)
of CERCLA, as defined herein under Environmental Laws, and any other substance,
material or waste defined as toxic or hazardous under, or otherwise regulated
under, any Environmental Law, including, but not limited to (i) any petroleum,
petroleum hydrocarbons, petroleum by-products, waste oil, used oil (any
constituent thereof to the extent regulated under any Environmental Law),
flammable, explosive or radioactive materials, friable asbestos products, urea
formaldehyde foam insulation, polychlorinated biphenyls, and radon gas; and
(ii) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated pursuant to an Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Information" has the meaning set forth in Section 6.1(b) hereof.
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"Indemnified Party" has the meaning set forth in Section 10.4(a)
hereof.
"Indemnifying Party" has the meaning set forth in Section 10.4(a)
hereof.
"Intellectual Property Assets" has the meaning set forth in Section
4.11 hereof.
"Inventory" shall mean all raw materials, work-in- process and
finished goods owned by the Company and its Subsidiaries, whether located at
the Plants or otherwise, but shall not include goods held under bill and hold
arrangements.
"Investment Company" has the meaning set forth in Section 5.7 hereof.
"June 30 Company Interim Financial Statements" has the meaning set
forth in Section 6.14 hereof.
"Knowledge of Seller, the Company, WPS and Purchaser," or, insofar as
it refers to Seller, the Company, WPS or Purchaser, "Knowledge", means only
matters as to which any officer of Seller (in the case of Seller), the Company
or any of its Subsidiaries (in the case of the Company), WPS (in the case of
WPS) or Purchaser (in the case of Purchaser) has actual knowledge, and shall
not include matters which are not actually known but should have been known by
any such officer. As used in this definition, "officer" shall, with respect to
Section 4.17 hereof, include Jim Walters.
"Law" means any material federal, state or local statute, code,
ordinance, rule or regulation or any Order of any Governmental Body.
"Legal Proceeding" means any judicial, admin- istrative or arbitral
actions, suits or proceedings (public or private).
"Lien" means any lien, encumbrance, mortgage, deed of trust, security
interest, easement, transfer restriction, option, pledge or other restriction
or third-party right.
"Losses" has the meaning set forth in Section 10.2(a) hereof.
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"Material Adverse Effect" or "Material Adverse Change" means any
material adverse change in, or effect on, the Business, results of operations
or financial condition of the Company and its Subsidiaries taken as a whole,
excluding any such change or effect relating to the Excluded Assets.
"New York Sublease" has the meaning set forth in Section 8.4 hereof.
"Notice Period" has the meaning set forth in Section 10.4 hereof.
"Order" means any material order, injunction, judgment, decree,
ruling, writ, assessment or arbitration award by a Governmental Body of
competent jurisdiction.
"Outside Date" has the meaning set forth in Section 9.1(b) hereof.
"Owned Property" and "Owned Properties" have the meanings set forth
in Section 4.18(a) hereof.
"PBGC" has the meaning set forth in Section 4.13(j) hereof.
"Pension Adjustment" has the meaning set forth in Section 2.4(b)
hereof.
"Pension Adjustment Certificate" has the meaning set forth in Section
2.4(b) hereof.
"Pension Arbiter" has the meaning set forth in Section 2.4(e) hereof.
"Permits" means all licenses, franchises, permits and governmental
authorizations necessary to conduct the Business as presently conducted.
"Permitted Encumbrances" means (i) Liens existing as of the date of
this Agreement on any assets or properties of the Company and/or any Subsidiary
relating to any indebtedness of the Company and/or any Subsidiary; (ii) all
defects, exceptions, restrictions, easements, rights of way and encumbrances
disclosed in policies of title insurance that have been made available to
Purchaser; (iii) statutory liens for current taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of
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which is being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (iv) mechanics', carriers',
workers', repairers' and similar Liens arising or incurred in the ordinary
course of business that are not material; (v) zoning, entitlement and other
land use and environmental regulations by Governmental Bodies disclosed to
Purchaser; (vi) Liens created in connection with leasing machinery and
equipment to WPS as referred to in Section 4.6(a) of the Company Disclosure
Schedule and subleased by Purchaser in accordance with the Equipment Sublease;
and (vii) such other imperfections in title, charges, easements, restrictions
and encumbrances that do not materially interfere with the use of such
property.
"Permitted Transactions" has the meaning set forth in Section 6.10
hereof.
"Person" means any individual, corporation, part- nership, limited
liability company, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
"Plants" means the manufacturing, warehouse, service and office
facilities of the Company and its Subsidiaries at which the Business is
conducted, all of which are listed in Exhibit C hereto.
"Pre-Closing Date Pension Statement" has the meaning set forth in
Section 2.4(a) hereof.
"Pre-Closing Date Statement of Working Capital" has the meaning set
forth in Section 4.7(d) hereof.
"Purchase Price" has the meaning set forth in Section 2.1 hereof.
"Purchaser" has the meaning set forth in the preamble hereof.
"Purchaser's Advisor" has the meaning set forth in Section 5.8
hereof.
"Purchaser's Representatives" has the meaning set forth in Section
6.1(b) hereof.
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"Purchaser Disclosure Schedule" means the Disclosure Schedule
delivered by Purchaser to Seller on the date hereof.
"Purchaser Documents" has the meaning set forth in Section 5.2
hereof.
"Purchaser Indemnified Parties" has the meaning set forth in Section
10.2(a) hereof.
"Qualified Plan" has the meaning set forth in Section 4.13(g) hereof.
"Real Property Lease" has the meaning set forth in Section 4.18(a)
hereof.
"Required Consents" has the meaning set forth in Section 6.3 hereof.
"Second Supplemental Closing" has the meaning set forth in Section
2.4(c) hereof.
"Section 338(h)(10) Election" has the meaning set forth in Section
11.1(a) hereof.
"Securities Act" has the meaning set forth in Section 5.6(a) hereof.
"Seller" has the meaning set forth in the preamble hereof.
"Seller Indemnified Parties" has the meaning set forth in Section
10.3(a) hereof.
"Seller's Advisors" has the meaning set forth in Section 4.20 hereof.
"Seller's Auditors" has the meaning set forth in Section 2.3(a)
hereof.
"Shares" has the meaning set forth in the recitals hereof.
"Significant Adverse Consequence" has the meaning set forth in
Section 4.17 hereof.
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"Subsidiary" means any Person of which a majority of the outstanding
voting securities are owned directly or indirectly by the Company.
"Supplemental Closing" has the meaning set forth in Section 2.3(c)
hereof.
"Tax" or "Taxes" means all taxes, charges, fees, levies, imposts,
duties and other assessments, including, without limitation, any income,
alternative minimum or add-on tax, estimated, gross income, gross receipts,
sales, use, transfer, gains, capital, paid-up capital, profits, withholding,
payroll, employment, excise, recording, real property, personal property,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalties or additions to
tax, and any interest or penalties imposed with respect to the filing,
obligation to file or failure to file any Tax Return.
"Tax Returns" means all reports and returns required to be filed with
respect to Taxes.
"Transferred Employees" has the meaning set forth in Section 4.13(a).
"Treasury Regulations" means the U.S. Treasury Regulations
promulgated under the Code from time to time, or any successor rules and
regulations.
"WPS" has the meaning set forth in the preamble hereof.
"WPS Financial Statements" has the meaning set forth in Section
4.7(a) hereof.
(b) Rules of Construction.
(i) Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
(ii) Whenever there appears in this Agreement an adjective
or series of adjectives (e.g., the word "material") which precedes a noun that
is followed by one or more other nouns that are joined in a series by the
conjunction "and," "or" or "and/or," such adjective or series of adjectives
shall be deemed to apply to each noun
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in such series of nouns. As used in the Agreement, unless the context otherwise
requires, the word "or" is not exclusive and shall mean "and/or."
(iii) The words "hereof," "herein" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and to any particular provision of this Agreement.
(iv) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
12.2 Expenses. Except as otherwise expressly provided in this
Agreement and regardless of whether the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by the
party incurring such expenses. Seller shall be responsible for all costs and
expenses incurred by the Company in connection with this Agreement.
12.3 Specific Performance. Each of Purchaser and Seller acknowledges
and agrees that the breach of this Agreement by the other (or, in Purchaser's
case, by WPS or the Company as well) would cause irreparable damage to such
party and that such party would not have an adequate remedy at law for such
damage. Therefore, the obligations of each party under this Agreement shall be
enforceable by a decree of specific performance issued by any court of
competent jurisdiction, and appropriate injunc- tive relief may be applied for
and granted in connection therewith. Such remedies shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
that any party may have under this Agreement or otherwise.
12.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
PRINCIPLES AND POLICIES OF CONFLICTS OF LAW OF SUCH STATE.
12.5 Entire Agreement; Amendments and Waivers. This Agreement
(including the Disclosure Schedules) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties; provided
that, except as other-
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wise modified hereby, the Confidentiality Agreement shall remain in full force
and effect. Except as otherwise provided herein, this Agreement may be amended,
supplemented or changed, and any provision hereof may be waived, only by
written instrument making specific reference to this Agreement signed by the
party against whom enforcement of any such amendment, supplement, modification
or waiver is sought. Except as otherwise provided herein, no action (other than
a waiver or consent) taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver of compliance by the party taking such action with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as
a waiver of any other or subsequent breach. Except as otherwise expressly
provided herein, no failure on the part of any party hereto to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power
or remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
12.6 Table of Contents and Headings. The table of contents and
article and section headings of this Agreement are for reference purposes only
and are to be given no effect in the construction or interpretation of this
Agreement.
12.7 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally, on the fifth Business Day after being mailed by certified mail,
return receipt requested, the next Business Day after delivery to a recognized
overnight courier or when sent by facsimile to the parties at the following
addresses (or to such other address as a party may have specified by notice
given to the other party pursuant to this Section 12.7):
If to WPS, Seller or the Company, to:
WestPoint Stevens Inc.
507 West Tenth Street
West Point, Georgia 31833
Attention: General Counsel
Facsimile: 706-645-4396
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If to Purchaser, to:
Dyersburg Corporation
1315 Phillips Street
Dyersburg, Tennessee 38024
Attention: President
Facsimile: (615) 286-3411
12.8 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in full force and
effect and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
12.9 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as otherwise provided herein, nothing in this
Agreement shall create or be deemed to create any third party beneficiary
rights in any person or entity not a party to this Agreement. No assignment of
this Agreement or of any rights or obligations hereunder may be made by WPS,
Seller or Purchaser (by operation of Law or otherwise) without the prior
written consent of the other parties hereto and any attempted assignment
without the required consents shall be void; except that before or after the
Closing the Purchaser shall have the right, without such consent, to assign to
a direct or indirect wholly-owned subsidiary of Purchaser its rights and
obligations hereunder, provided that no such assignment shall relieve Purchaser
of its obligations hereunder if such assignee does not perform such
obligations. Upon any such permitted assignment, the references in this
Agreement to Purchaser shall also apply to any such assignee unless the context
otherwise requires.
12.10 Disclosure Schedules. The Disclosure Schedules, dated the date
hereof, delivered by Seller and the Company to Purchaser, and by Purchaser to
Seller, are incorporated into this Agreement by reference and made a part
hereof. Disclosure of information in any section of any Disclosure Schedule (or
pursuant to any document delivered with respect thereto) or the schedules and
exhibits hereto (or pursuant to any document delivered with respect thereto)
shall be deemed to be disclosure in each section of such Disclosure Schedule.
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12.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
DYERSBURG CORPORATION
By: /s/ T. Eugene McBride
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Name: T. Eugene McBride
Title: President and Chief Executive Officer
ALAMAC SUB HOLDINGS INC.
By: /s/ Morgan M. Schuessler
--------------------------------------------
Name: Morgan M. Schuessler
Title: Executive Vice President
AIH INC.
By: /s/ Morgan M. Schuessler
--------------------------------------------
Name: Morgan M. Schuessler
Title: Executive Vice President
WESTPOINT STEVENS INC.
By: /s/ Morgan M. Schuessler
--------------------------------------------
Name: Morgan M. Schuessler
Title: Executive Vice President
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