<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: August 28, 1996
Foamex International Inc.
Foamex-JPS Automotive L.P.
Foamex-JPS Capital Corporation
JPS Automotive L.P.
JPS Automotive Products Corp.
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(Exact Name of Registrant as specified in its Charter)
Delaware 0-22624 05-0473908
Delaware 33-82028 13-3770906
Delaware 33-82028-01 13-3770901
Delaware 33-75510-01 13-3770905
Delaware 1-12944 57-0993690
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of corporation) Identification No.)
1000 Columbia Avenue
Linwood, PA 19061
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code:
---------------------------------------------------
(610) 859-3000
n/a
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
On August 28, 1996, JPSGP Inc. ("JPSGP"), Foamex-JPS Automotive L.P.
("FJPS") and Collins & Aikman Products Co. ("Collins & Aikman") entered into an
Equity Purchase Agreement (the "Agreement") pursuant to which Collins & Aikman
will acquire all of the outstanding partnership interest in JPS Automotive L.P.
("JPS Automotive") from JPSGP and FJPS. JPSGP and FJPS are both wholly-owned
subsidiaries of Foamex International Inc. (the "Company"), which guaranteed the
obligations of these subsidiaries under the Agreement.
The purchase price, which is subject to closing and post-closing
adjustments, is $220.0 million and includes approximately $198.0 million of
indebtedness of JPS Automotive (the "Purchase Price"). The Agreement provides
that the Purchase Price is subject to adjustment for changes in the net assets,
as defined, of JPS Automotive. Such adjustment to the Purchase Price will be
determined after completion of a closing balance sheet of JPS Automotive as of
the Closing Date, and pursuant to the Agreement, any unresolved dispute
concerning an adjustment to the Purchase Price will be subject to binding
arbitration.
Upon the closing of the sale, the Company and Collins & Aikman intend
to enter into a licensing agreement that will include products utilizing the
Company's proprietary SMT(TM) technology for automotive carpet backed systems.
The Company expects to report a net loss of approximately $59.0
million (net of an income tax benefit of approximately $36.0 million) related to
the sale of JPS Automotive in the third quarter of 1996 as part of discontinued
operations.
The sale of JPS Automotive to Collins & Aikman is expected to close in
approximately 60 to 90 days, subject to the satisfaction of a number of
conditions, including: expiration of the federal antitrust review waiting period
under the Hart-Scott-Rodino Act; the acquisition by Collins & Aikman of the 20%
of Cramerton Automotive Products L.P., not currently owned by JPS Automotive;
the arrangement of standby financing; and the obtaining of certain consents from
Collins & Aikman's and the Company's bank groups as well as bondholders of
Foamex-JPS Automotive L.P./Foamex-JPS Capital Corporation Senior Secured
Discount Debentures. There can be no assurance that these conditions will be
satisfied.
JPS Automotive, which reported 1995 revenues of approximately $312.1
million, is a supplier of automotive carpet, trim and textiles in North America.
JPS Automotive is headquartered in Greenville, South Carolina and has six
manufacturing, distribution and sales facilities in South Carolina, North
Carolina, and Michigan, as well as a joint venture in Mexico.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired:
None
(b) Pro Forma Financial Information:
None
(c) Exhibits
2 Equity Purchase Agreement, dated as of August 28,
1996, by and among JPSGP Inc., Foamex-JPS Automotive
L.P., and Collins & Aikman Products Co.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOAMEX INTERNATIONAL INC.
Date: September 11, 1996 By: /s/ Kenneth R. Fuette
------------------------
Name: Kenneth R. Fuette
Title: Chief Financial Officer and
Chief Accounting Officer
FOAMEX-JPS AUTOMOTIVE L.P.
By: FJGP Inc., General Partner
Date: September 11, 1996 By: /s/ Kenneth R. Fuette
------------------------
Name: Kenneth R. Fuette
Title: Chief Financial Officer and
Chief Accounting Officer
FOAMEX-JPS AUTOMOTIVE
CAPITAL CORPORATION
Date: September 11, 1996 By: /s/ Kenneth R. Fuette
------------------------
Name: Kenneth R. Fuette
Title: Chief Financial Officer and
Chief Accounting Officer
JPS AUTOMOTIVE L.P.
By: JPSGP Inc., General Partner
Date: September 11, 1996 By: /s/ M. Dale Anderson
-----------------------
Name: M. Dale Anderson
Title: Chief Financial Officer and
Chief Accounting Officer
JPS AUTOMOTIVE PRODUCTS CORP.
Date: September 11, 1996 By: /s/ M. Dale Anderson
-----------------------
Name: M. Dale Anderson
Title: Chief Financial Officer and
Chief Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit Page
2 Equity Purchase Agreement, dated as of August 28, 1996,
by and among JPSGP Inc., Foamex-JPS Automotive L.P., and
Collins & Aikman Products Co.
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JPS AUTOMOTIVE L.P.
EQUITY PURCHASE AGREEMENT
BY AND AMONG
JPSGP INC.,
FOAMEX-JPS AUTOMOTIVE L.P.
AND
COLLINS & AIKMAN PRODUCTS CO.
Dated as of August 28, 1996
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I. DEFINITIONS.........................................................1
Section 1.1. Definitions ..................................................1
Section 1.2. Accounting Terms and Determinations..........................11
ARTICLE II. SALE AND PURCHASE.................................................11
Section 2.1. Agreement to Sell and to Purchase............................11
Section 2.2. Purchase and Sale of Equity..................................11
Section 2.3. Purchase Price Adjustment....................................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLERS........................15
Section 3.1. Authority of Sellers.........................................15
Section 3.2. Organization of the Company..................................15
Section 3.3. Capitalization of the Company; Title to the Equity...........16
Section 3.4. No Conflict or Violation; Consents...........................16
Section 3.5. Subsidiaries and Investments.................................17
Section 3.6. Financial Statements; Closing Date Liability to Sellers......18
Section 3.7. Undisclosed Liabilities......................................19
Section 3.8. Accounts Receivable..........................................19
Section 3.9. Inventory....................................................19
Section 3.10. Material Adverse Effect.....................................20
Section 3.11. Real Property...............................................20
Section 3.12. Condition and Compliance of Property........................21
Section 3.13. Compliance with Laws........................................21
Section 3.14. Affiliate Agreements and Liabilities........................22
Section 3.15. Contracts...................................................22
Section 3.16. Intellectual Property.......................................23
Section 3.17. Labor Relations.............................................24
Section 3.18. Employee Benefits...........................................24
Section 3.19. Insurance...................................................26
Section 3.20. Litigation..................................................27
Section 3.21. Environmental Matters.......................................27
Section 3.22. Tax Matters.................................................28
Section 3.23. Interim Operations..........................................30
Section 3.24. Brokers.....................................................31
Section 3.25. Product Liability...........................................31
Section 3.26. SEC Reports.................................................31
Section 3.27. Books and Records of the Company............................32
Section 3.28. 1994 Acquisition Agreement..................................32
Section 3.29. No Material Misstatements...................................32
Section 3.30. Certain Matters Regarding the Senior Notes..................32
Section 3.31. No Seiren Right of First Refusal............................33
Section 3.32. Disclaimer of Additional Representations
and Warranties; Schedules.............................33
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................33
Section 4.1. Authority of Purchaser.......................................33
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Section 4.2. No Conflict or Violation.....................................34
Section 4.3. Litigation...................................................34
Section 4.4. Brokers......................................................34
Section 4.5. Investment Intent; Status....................................35
Section 4.6. Disclaimer of Additional Representations and Warranties......35
ARTICLE V. CERTAIN COVENANTS OF SELLERS.......................................35
Section 5.1. Conduct of Business..........................................35
Section 5.2. Information and Access.......................................37
Section 5.3. Confidentiality Agreements...................................37
Section 5.4. Certain Environmental Covenants..............................37
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS..................................38
Section 6.1. Hart-Scott-Rodino and Other Filings..........................38
Section 6.2. Transfer Taxes...............................................38
Section 6.3. Obligation to File Tax Returns...............................39
Section 6.4. Certain Provisions Relating to Consents......................39
Section 6.5. Nondisclosure; Noncompetition................................39
Section 6.6. Efforts......................................................41
Section 6.7. Ongoing Tax Cooperation......................................41
Section 6.8. Certain Agreements...........................................42
Section 6.9. Clearance Certificates.......................................42
Section 6.10. Control of Tax Audits.......................................42
Section 6.11. Tax Sharing Agreements and Arrangements.....................43
Section 6.12. Sale of Assets for Tax Purposes.............................43
Section 6.13. Certain Matters Relating to Enhanced Severance..............45
Section 6.14. Ongoing Insurance Cooperation...............................46
Section 6.15. Cramerton Tax Distribution..................................47
ARTICLE VII. CONDITIONS TO SELLERS' OBLIGATIONS...............................47
Section 7.1. Representations and Warranties...............................47
Section 7.2. Compliance with Agreement....................................48
Section 7.3. No Adverse Proceeding........................................48
Section 7.4. Hart-Scott-Rodino............................................48
Section 7.5. Consents.....................................................48
Section 7.6. Corporate Documents..........................................48
Section 7.7. Certain Agreements...........................................48
Section 7.8. Discount Debentures Change of Control Put....................48
Section 7.9. Opinion of Counsel...........................................49
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS...........................49
Section 8.1. Representations and Warranties...............................49
Section 8.2. Compliance with Agreement....................................49
Section 8.3. No Adverse Proceeding........................................49
Section 8.4. Hart-Scott-Rodino............................................49
Section 8.5. Consents.....................................................49
Section 8.6. Corporate Documents..........................................49
Section 8.7. FIRPTA ......................................................50
Section 8.8. Cramerton....................................................50
Section 8.9. Purchaser Bank Consent.......................................50
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<PAGE>
Section 8.10. Financing of Senior Note Change of Control Put..............50
Section 8.11. Certain Agreements..........................................50
Section 8.12. Material Adverse Effect.....................................50
Section 8.13. Opinion of Counsel..........................................50
ARTICLE IX. THE CLOSING; TERMINATION..........................................50
Section 9.1. The Closing..................................................50
Section 9.2. Deliveries by Sellers at the Closing.........................51
Section 9.3. Deliveries by Purchaser at the Closing.......................51
Section 9.4. Termination..................................................51
ARTICLE X. INDEMNIFICATION....................................................52
Section 10.1. Survival....................................................52
Section 10.2. Indemnification Provisions for Benefit of Purchaser.........52
Section 10.3. Indemnification Provisions for Benefit of Sellers...........55
Section 10.4. Tax Indemnity...............................................55
Section 10.5. Matters Involving Third Parties.............................56
Section 10.6. Certain Limitations on Environmental Indemnification........57
Section 10.7. Certain Additional Provisions Relating to Indemnification...59
Section 10.8. Certain Litigation Matters..................................60
ARTICLE XI. EMPLOYEE BENEFITS.................................................61
Section 11.1. Employees...................................................61
ARTICLE XII. MISCELLANEOUS PROVISIONS.........................................61
Section 12.1. Notices.....................................................61
Section 12.2. Amendments..................................................62
Section 12.3. Assignment and Parties in Interest..........................62
Section 12.4. Announcements...............................................63
Section 12.5. Expenses....................................................63
Section 12.6. Entire Agreement............................................63
Section 12.7. Descriptive Headings........................................64
Section 12.8. Counterparts................................................64
Section 12.9. Governing Law; Jurisdiction.................................64
Section 12.10. Construction...............................................64
Section 12.11. Severability...............................................65
Section 12.12. Specific Performance.......................................65
ARTICLE XIII. FOAMEX INTERNATIONAL INC. GUARANTY..............................65
Section 13.1. Guaranty....................................................65
Section 13.2. Nature of Guaranty..........................................65
Section 13.3. Limitation on Guaranty......................................66
Section 13.4. Authority of Guarantor......................................66
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SCHEDULE
NUMBER SCHEDULE NAME
1.1 Certain Officers
1.2 Permitted Liens
2.3 Base Line Adjusted Net Assets
3.2 Certificate and Partnership Agreement
3.3 Capitalization
3.4 Conflicts or Violations
3.5 Subsidiaries
3.6(a) Financial Statements
3.6(b) Interim Financial Statements
3.6(e) Warranty Reserve
3.7 Undisclosed Liabilities
3.10 Material Adverse Effect
3.11(a) Owned Real Property
3.11(b) Lease Obligations
3.12(a) Personal Property; Liens
3.12(b) Leased Personal Property
3.13(a) Compliance with Laws
3.13(b) Permits
3.14 Affiliate Agreements
3.15 Contracts
3.16 Intellectual Property
3.17 Collective Bargaining Agreements
3.18 Employee Benefit Plans
3.19 Insurance
3.20 Litigation
3.21 Environmental Matters
3.22 Tax Matters
3.23 Interim Operations
3.25 Products Liability
5.1 Interim Operations
6.8 Certain Agreements
6.13 Certain Employees
8.5 Required Consents
8.8 Terms of Cramerton Contract
EXHIBIT EXHIBIT NAME
A Terms of SMT License Agreement
B Terms of Cramerton Supply Agreement
C Form of Jones, Day, Reavis & Pogue Opinion
D Form of Willkie Farr & Gallagher Opinion
E Intentionally Omitted
F Form of Amendments to Partnership Agreement
G Form of FIRPTA Certificate
<PAGE>
EQUITY PURCHASE AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of August 28, 1996, by and among JPSGP INC., a Delaware
corporation ("JPSGP"), FOAMEX-JPS AUTOMOTIVE L.P., a Delaware limited
partnership ("FJPS" and, together with JPSGP, "Sellers"), and COLLINS & AIKMAN
PRODUCTS CO., a Delaware corporation ("Purchaser").
PRELIMINARY STATEMENT
WHEREAS, JPSGP owns a 1% general partnership interest (the "GP
Interest") in JPS Automotive L.P. (the "Company");
WHEREAS, FJPS owns a 99% limited partnership interest in the
Company (the "LP Interest" and, together with the GP Interest, the "Equity");
and
WHEREAS, Purchaser desires to purchase the Equity from
Sellers, and Sellers desire to sell the Equity to Purchaser, in each case upon
the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined
elsewhere herein, the terms defined in the introductory paragraph and the
Recitals to this Agreement shall have the respective meanings specified therein,
and the following terms shall have the meanings specified below when used herein
with initial capital letters:
"Adjusted Net Assets" means as of any date the excess of the
total assets of the Company and its Subsidiaries (excluding cash and
cash equivalents) over the total liabilities of the Company and its
Subsidiaries (excluding Indebtedness) and minority interests as
reflected in a balance sheet prepared in accordance with this
Agreement. In calculating Closing Date Adjusted Net Assets, there shall
be no reduction in "Minority Interest" for any distributions made to
the minority partner in Cramerton since the Interim Balance Sheet Date
with respect to the amount of taxes paid or to be paid by such partner
on account of the income of Cramerton.
"Adjustment Report" has the meaning set forth in Section
2.3(a).
<PAGE>
"Affiliate" means "affiliate" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"Agreement" has the meaning set forth in the preamble, and
shall include all Schedules and Exhibits hereto.
"Arbiter" has the meaning set forth in Section 2.3(d).
"Balance Sheet" has the meaning set forth in Section 3.6(a).
"Base Line Adjusted Net Assets" has the meaning set forth in
Section 2.3(a).
"Business Day" means a day, other than a Saturday or a Sunday,
on which commercial banks are not required or authorized to close in
the City of New York.
"Cap" has the meaning set forth in Section 10.2(a).
"Cash Purchase Price" has the meaning set forth in Section
2.2, as adjusted pursuant to Section 2.3.
"Closing" has the meaning set forth in Section 9.1.
"Closing Date" has the meaning set forth in Section 9.1.
"Closing Date Adjusted Net Assets" has the meaning set forth
in Section 2.3(a).
"Closing Date Balance Sheet" has the meaning set forth in
Section 2.3(a) as finally adjusted pursuant to Section 2.3(d).
"Closing Date Net Indebtedness" has the meaning set forth in
Section 2.3(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble hereto
and, in Sections 3.4 through 3.32, includes the Company and the
Company's Subsidiaries.
"Contracts" as of any date means, collectively, all contracts,
agreements, commitments, instruments and guaranties to which the
Company or any Subsidiary of the Company is a party as of such date,
including those listed or required to be listed on Schedule 3.15, all
unfilled orders outstanding as of such date for the purchase of raw
materials, goods or services by the Company or any Subsidiary of the
Company, and all unfilled orders outstanding as of such date for the
sale of goods or services by the Company or any Subsidiary of the
Company; Contracts, however, shall not include Leases or Permitted
Liens.
2
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"Costs of Remediation" means all losses, amounts paid in
settlement, remediation, monitoring and reporting costs and expenses,
Taxes, claims, damages, Liabilities, obligations, judgments,
settlements and out-of-pocket costs (including, without limitation,
costs of investigation or enforcement), expenses and attorneys' fees
including, without limitation, fees for services of attorneys,
consultants, contractors, experts, engineers and laboratories, and all
other out-of-pocket costs, incurred in connection with investigation,
characterization, remediation, monitoring, reporting or mitigation,
arising out of or related to the presence or Release of any Hazardous
Materials existing as of or prior to the Closing Date at, on, or
emanating from any of the Owned Real Property, Leased Property or any
real property at or to which the Company, any Subsidiary or predecessor
of any of the foregoing disposed, Released, transported, stored,
treated, or arranged to dispose of Hazardous Materials prior to the
Closing Date including, without limitation, off-site liability under
any Environmental Law arising from or in connection with
transportation, treatment, storage, disposal, Release, or arranging for
disposal of Hazardous Materials.
"Cramerton" means Cramerton Automotive Products, L.P., a
Delaware limited partnership.
"Cramerton Supply Agreement" means a Supply Agreement, having
the terms and conditions set forth in Exhibit B hereto, to be entered
into between Foamex L.P. and Cramerton as of the Closing Date.
"Damages" means any losses, amounts paid in settlement,
claims, damages, Liabilities, obligations, judgments, settlements and
reasonable out-of-pocket costs (including, without limitation, costs of
investigation or enforcement), expenses and attorneys' fees, including,
without limitation, (i) any consequential damages or (ii) any special
or punitive damages which are assessed against an Indemnified Party as
a result of a third party action.
"Employee Benefit Plan" means an Employee Pension Benefit Plan
or an Employee Welfare Benefit Plan, where no distinction is required
by the context in which the term is used.
"Employee Pension Benefit Plan" has the meaning set forth in
Section 3(2) of ERISA.
3
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"Employee Welfare Benefit Plan" has the meaning set forth in
Section 3(1) of ERISA.
"Employees" means each individual who, on the applicable date,
performs services as an employee primarily for the Company or any of
its Subsidiaries (including such persons who are on an approved leave
of absence, vacation, short-term disability or otherwise treated as an
active employee of the Company or its Subsidiaries).
"Enjema" means Industrias Enjema S.A. de C.V.
"Environmental Laws" means any existing and applicable
federal, state or local statute, regulation or ordinance or any rules,
orders, writs, decrees, or injunctions of any Governmental Agency with
respect to the protection of the environment, including, without
limitation, with respect to any Hazardous Materials, drinking water,
groundwater, wetlands, landfills, open dumps, storage tanks, solid
waste, or waste water, water, soil, air, pollution, the protection,
preservation or restoration of natural resources, plant and animal life
or human health or the environment, or waste management, regulation or
control. Without limiting the generality of the foregoing, the term
will encompass each of the following statutes, and the regulations
promulgated thereunder, in each case as in effect as of Closing: (a)
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (codified in scattered sections of 26 U.S.C., 33 U.S.C., 42
U.S.C. and 42 U.S.C. Section 9601 et seq., "CERCLA"); (b) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.,
"RCRA"); (c) the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq., "HMTA"); (d) the Toxic Substances Control Act (15
U.S.C. Section 2061 et seq., "TSCA"); (e) the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.); (f) the Clean Air Act and
Amendments (42 U.S.C. Section 7401 et seq.); (g) the Safe Drinking
Water Act (21 U.S.C. Section 349; 42 U.S.C. Section 201 and Section 300
et seq.); and (h) the Superfund Amendment and Reauthorization Act of
1986 (codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C.
and 42 U.S.C., "SARA").
"Equity" has the meaning set forth in the preamble hereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which has been under common control or treated as a
single employer with the Company under Section 414(b), (c) or (m) of
the Code.
"Final Adjusted Net Assets" means: (i) if Purchaser does not
timely deliver an Objection Notice, the Adjusted Net Assets as of the
Closing Date as set forth in the Adjustment Report, or (ii) if
Purchaser timely delivers an Objection Notice, the Adjusted Net Assets
as of the Closing Date determined pursuant to Section 2.3(d).
4
<PAGE>
"Final Base Line Adjusted Net Assets" means: (i) Base Line
Adjusted Net Assets as set forth in Schedule 2.3, or (ii) if Sellers
deliver a notice of Sellers' Adjustments, Base Line Adjusted Net Assets
as determined pursuant to Section 2.3(d).
"Final Net Indebtedness" means: (i) if Purchaser does not
timely deliver an Objection Notice, the Closing Date Net Indebtedness
as set forth in the Adjustment Report, or (ii) if Purchaser timely
delivers an Objection Notice objecting to the calculation of Closing
Date Net Indebtedness, the Net Indebtedness as of the Closing Date
determined pursuant to Section 2.3(d).
"Former Employee" means each individual other than an Employee
on the Closing Date who at any time prior to the Closing Date performed
services as an employee primarily for the Company or any Subsidiary of
the Company.
"GAAP Objections" has the meaning set forth in Section 2.3(c).
"Governmental Agency" means (a) any international, foreign,
federal, state, county, local or municipal government or administrative
agency or political subdivision thereof, (b) any governmental agency,
authority, board, bureau, commission, department or instrumentality,
(c) any court or administrative tribunal, (d) any non-governmental
agency, tribunal or entity that is vested by a governmental agency with
applicable jurisdiction, or (e) any arbitration tribunal or other
non-governmental authority with applicable jurisdiction.
"GP Interest" has the meaning set forth in the preamble
hereto, as the same may be altered as described on Exhibit F.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Hazardous Materials" means each and every element, compound,
chemical mixture, pollutant, contaminant material, waste or other
substance which is defined, designated, determined, classified or
identified as of the Closing Date as hazardous, radioactive or toxic
under any Environmental Law, or the Release of which is prohibited or
regulated under any Environmental Law, or which to the knowledge of
Seller could reasonably be expected to cause, whether now or with the
passage of time, damage to Persons, property, flora, fauna or the
environment. Without limiting the generality of the foregoing, the term
will include any "toxic substance," "hazardous substance," "hazardous
waste," or "hazardous material" as defined in any Environmental Law as
amended to date, and any explosive or radioactive material, friable
asbestos, friable asbestos-containing material, waste water, sludge,
untreated dye, other effluent, coal ash, polychlorinated biphenyls,
special waste, petroleum or any derivative or byproduct thereof, and
toxic waste.
5
<PAGE>
"Indebtedness" means (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of
such Person, (i) the principal of and premium, if any, in respect of
any indebtedness of such Person for money borrowed, (ii) the principal,
premium, if any, and interest of such Person with respect to
obligations evidenced by bonds, debentures, notes or, except for
accrued liabilities arising in the ordinary course of business, other
similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses (other than trade
payables), (iii) all obligations of such Person in respect of letters
of credit or other similar instruments (including reimbursement
obligations with respect thereto) but only to the extent of drawings
thereunder (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i), (ii),
and (v)) entered into in the ordinary course of business of such Person
to the extent such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit), (iv) every
obligation of such Person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business), (v)
every capital lease obligation (determined in accordance with GAAP) of
such Person, (vi) all Indebtedness of other Persons secured by a Lien
on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided, however, that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such
asset at such date of determination and (B) the amount of such
Indebtedness of such other Persons, (vii) the present value (discounted
using an interest rate of 11(OMEGA)% per annum) as of the date of
determination of every obligation to pay rent or other payment amounts
of such Person with respect to any sale-leaseback transaction to which
such Person is a party, payable through the stated maturity of such
sale-leaseback transaction, and (viii) every obligation of the type
referred to in clauses (i) through (vii) of another Person the payment
of which, in any case, such Person has guaranteed or is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise.
6
<PAGE>
"Indemnified Party" has the meaning set forth in Section
10.5(a) and in the case of Purchaser shall also include the Company and
its Subsidiaries.
"Indemnifying Party" has the meaning set forth in Section
10.5(a).
"Intellectual Property" means any inventions, improvements,
trademarks, service marks, brand names, logos, trade names, trade
dress, label designs and copyrightable works and all patents,
registrations and applications therefor; customer lists and rights in
computer software and all know-how; and all rights granted or retained
in licenses under any of the foregoing.
"Interim Balance Sheet" has the meaning set forth in Section
3.6(b).
"Interim Balance Sheet Date" means June 30, 1996.
"Interim Financial Statements" has the meaning set forth in
Section 3.6(b).
"IRS" means the Internal Revenue Service of the Department of
the Treasury.
"Knowledge" as applied to Sellers, means the actual knowledge,
after reasonable inquiry, of any person listed on Schedule 1.1 hereto.
"Leased Property" has the meaning set forth in Section
3.11(b).
"Leases" has the meaning set forth in Section 3.11(b).
"Liability" means any liability or obligation (whether known
or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated and whether due or to become due), including, without
limitation, any liability for Taxes.
"Lien" means any lien, mortgage, pledge, or other security
interest.
"LP Interest" has the meaning set forth in the preamble
hereto, as the same may be altered as described on Exhibit F.
"Material Adverse Effect" means a material adverse change in
or effect with respect to the business, results of operations,
properties, or financial condition of either (i) the Company and its
Subsidiaries taken as a whole, or (ii) the Company's carpet division.
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"MSBT" means the Michigan Single Business Tax.
"MSBT Recapture" means the amount of liability incurred by
Sellers or the Company for MSBT solely by reason of the sale by Sellers
of the Equity pursuant to this Agreement.
"Multiemployer Plan" has the meaning set forth in Section
3(37) of ERISA.
"Net Indebtedness" as of any date means: (a) the net principal
amount of Indebtedness of the Company and its Subsidiaries (on a
consolidated basis), less (b) the cash and cash equivalents of the
Company and its Subsidiaries (on a consolidated basis).
"Net Indebtedness Statement" means a statement delivered by
Sellers to Purchaser not less than five nor more than ten Business Days
prior to the Closing Date setting forth Sellers' reasonable, good faith
estimate of the Net Indebtedness as of the Closing Date after giving
effect to the repayment of any Net Indebtedness to be made on or prior
to the Closing Date.
"New JPS Automotive" has the meaning set forth in Section
6.12.
"1994 Acquisition Agreement" means that certain Asset Purchase
Agreement, dated as of May 25, 1994, by and among JPS Textile Group,
Inc., JPS Auto, Inc., JPS Converter and Industrial Corp., JPS
Automotive Products Corp. and Foamex International Inc.
"Objection Notice" has the meaning set forth in Section
2.3(b).
"Owned Real Property" has the meaning set forth in Section
3.11(a).
"Parent Entities" means Sellers and their Affiliates, other
than the Company and its Subsidiaries and their respective officers and
directors.
"Partnership Agreement" means the Company's First Amended and
Restated Agreement of Limited Partnership, dated as of July 27, 1994,
as the same may be amended in accordance with the terms of this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any permit, approval, consent, authorization,
license, variance, or permission required by a Governmental Agency
under any applicable laws.
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"Permitted Liens" means, with respect to any asset, (i) any
covenants, conditions, restrictions, easements, encroachments,
encumbrances or other imperfections of title (other than a Lien
securing any Indebtedness) with respect to such asset which,
individually or in the aggregate, does not materially detract from the
value of, or materially interfere with the present occupancy or use of,
such asset and the continuation of the present occupancy or use of such
asset; (ii) the matters set forth on Schedule 1.2 hereto; (iii)
mechanic's, materialmen's and similar liens with respect to amounts not
yet due and payable or which are being contested in good faith through
appropriate proceedings and, for those existing on the Interim Balance
Sheet Date or the Closing Date, for which adequate reserves in
accordance with GAAP are reflected on the Interim Balance Sheet or the
Closing Date Balance Sheet, as the case may be; (iv) liens for Taxes
not yet delinquent or which are being contested in good faith through
appropriate proceedings and, for those existing on the Interim Balance
Sheet Date or the Closing Date, for which adequate reserves in
accordance with GAAP are reflected on the Interim Balance Sheet or the
Closing Date Balance Sheet, as the case may be; and (v) liens securing
rental payments under capital lease arrangements, which capital lease
arrangements existing as of the Closing Date are in accordance with
GAAP reflected as Indebtedness on the Closing Date Balance Sheet and
the Closing Date Net Indebtedness Statement.
"Perpetual Representations" has the meaning set forth in
Section 10.1.
"Person" means any individual, partnership, corporation,
trust, association, limited liability company, Governmental Agency or
any other entity.
"Plan" has the meaning set forth in Section 3.18(a).
"Product" has the meaning set forth in Section 3.25.
"Product Claim" has the meaning set forth in Section 3.25.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchaser" has the meaning set forth in the preamble hereto.
"Recall" has the meaning set forth in Section 3.25.
"Release" means any spilling, leaking, pumping, releasing,
depositing, pouring, emitting, emptying, migrating, discharging,
injecting, storing, escaping, leaching, dumping, burying, abandoning,
disposing or moving into the environment.
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"Schedules" or "Disclosure Schedules" means, collectively, the
various Schedules referred to in this Agreement delivered separately to
Purchaser on or before the date of this Agreement.
"SEC Reports" means (a) the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, as filed with the
Securities and Exchange Commission (the "SEC"), and (b) the Company's
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1996 and June 30, 1996, as filed with the SEC.
"Seller Entity" means any of the Company, JAPC, Cramerton, CMC
and JMC.
"Sellers" has the meaning set forth in the preamble hereto.
"Sellers' Adjustment" has the meaning set forth in Section
2.3(c).
"Senior Note Indenture" has the meaning set forth in Section
3.30.
"Significant Employee" has the meaning set forth in Section
3.23.
"Single-Employer Plan" means an Employee Pension Benefit Plan
which is described in Section 4001(a)(15) of ERISA and which is subject
to Title IV of ERISA.
"SMT License Agreement" means a Technology License Agreement,
having the terms and conditions set forth in Exhibit A hereto, to be
entered into between Foamex L.P. and Purchaser as of the Closing Date.
"Straddle Period" has the meaning set forth in Section 3.22.
"Subsidiary" means "subsidiary" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"Tax Return" means any report, return, information return,
forms, declarations, claims for refund, statements or other information
(including any amendments thereto and including any schedule or
statement thereto) required to be supplied to a Governmental Agency in
connection with Taxes.
"Taxes" means all federal, state, local, foreign and other
taxes, assessments and water and sewer charges and rents, including
without limitation, income, gross receipts, excise, employment, sales,
use, transfer, license, payroll, franchise, severance, stamp,
withholding, Social Security, unemployment, real property, personal
property, registration, capital stock, value added, single business,
occupation, workers' compensation, alternative or add-on minimum,
estimated, or other tax, including without limitation any interest,
penalties or additions thereto.
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Section 1.2. Accounting Terms and Determinations. All
references in this Agreement to "generally accepted accounting principles" or
"GAAP" shall mean generally accepted accounting principles in effect in the
United States of America at the time of application thereof, applied on a
consistent basis. Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and certificates
and reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a consistent basis.
ARTICLE II.
SALE AND PURCHASE
Section 2.1. Agreement to Sell and to Purchase. On the terms
and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser shall purchase from Sellers, and Sellers shall sell, transfer, assign,
convey and deliver to Purchaser, the Equity.
Section 2.2. Purchase and Sale of Equity. On the terms and
subject to the conditions set forth in this Agreement, at the Closing (in
addition to the transactions referred to in Article IX):
(a) JPSGP shall deliver to a corporate Affiliate of Purchaser
designated by Purchaser in accordance with Section 12.3(a) hereof on or
prior to the Closing Date certificates representing the GP Interest,
duly endorsed in blank for transfer or accompanied by appropriate
powers duly executed in blank, and FJPS shall deliver to Purchaser or
its designees certificates representing the LP Interest, duly endorsed
in blank for transfer or accompanied by appropriate powers duly
executed in blank.
(b) Purchaser shall deliver to Sellers by wire transfer of
immediately available funds an amount equal to $220,000,000 (the
"Purchase Price") less the amount of Net Indebtedness set forth on the
Net Indebtedness Statement (the "Cash Purchase Price"), of which 99%
shall be paid by Purchaser to FJPS and 1% shall be paid by the
Affiliate described in Section 2.2(a) hereof to JPSGP.
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Section 2.3. Purchase Price Adjustment.
(a) Attached as Schedule 2.3 hereto is the computation of
Adjusted Net Assets, assuming that the Closing had occurred on the
Interim Balance Sheet Date (the "Base Line Adjusted Net Assets"). As
soon as reasonably practical after the Closing, but in no event more
than 120 days after the Closing Date, Sellers and Purchaser shall
jointly prepare (i) a consolidated balance sheet of the Company as of
the close of business on the Closing Date (the "Closing Date Balance
Sheet"), together with (ii) a schedule ("the Adjustment Report")
showing the computation, without giving effect to any extraordinary
transactions taken after the Closing on the Closing Date, of (A)
Adjusted Net Assets as of the Closing Date (the "Closing Date Adjusted
Net Assets"), (B) the Net Indebtedness as of the Closing Date ("Closing
Date Net Indebtedness"), and (C) the purchase price adjustment to be
made in accordance with this Section 2.3. The Closing Date Balance
Sheet shall be prepared in accordance with GAAP applied on a basis
consistent with that used in, and in accordance with the same
accounting principles, policies and practices applied in, the
preparation of the Interim Balance Sheet and shall present fairly the
financial position of the Company as of the Closing Date. In the event
of a disagreement between Purchaser and Sellers of any amounts to be
recorded on the Closing Date Balance Sheet or the Adjustment Report,
the views of Sellers shall be utilized to commence the review process
set forth in this Section 2.3 (which process will not be required if
the parties agree in writing to a Closing Date Balance Sheet and
Adjustment Report). In connection with the preparation of the Closing
Date Balance Sheet and the Adjustment Report, Purchaser and Sellers
shall grant Sellers' counsel and other representatives reasonable
access to all of the books and records of the Company.
(b) Within ten Business Days after receipt of the Closing Date
Balance Sheet and the Adjustment Report, Purchaser may, by written
notice to Sellers, object to the Closing Date Balance Sheet, or the
Closing Date Adjusted Net Assets or the Closing Date Net Indebtedness
as set forth in the Adjustment Report. If Purchaser objects in good
faith to the Closing Date Balance Sheet, or the Closing Date Adjusted
Net Assets or the Closing Date Net Indebtedness as set forth in the
Adjustment Report, it shall within such ten Business Day period deliver
written notice of its objection (the "Objection Notice") to Sellers:
(i) objecting in good faith to the Closing Date Balance Sheet, the
Closing Date Adjusted Net Assets and/or the Closing Date Net
Indebtedness, (ii) setting forth the items being disputed and the
reasons therefor, and (iii) specifying Purchaser's calculation of the
Closing Date Adjusted Net Assets and Closing Date Net Indebtedness and
the adjustment to be made in accordance with Section 2.3.
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(c) Sellers may, within 20 Business Days after receipt of such
Objection Notice, deliver in writing to Purchaser the adjustments
("Sellers' Adjustments") to the Interim Balance Sheet and the
calculation of Base Line Adjusted Net Assets, which (i) reflect
Purchaser's objections as set forth in the Objection Notice to the
effect that the Closing Date Balance Sheet and the calculation of
Closing Date Adjusted Net Assets were not prepared in accordance with
GAAP (the "GAAP Objections"), and (ii) adjust the Interim Balance Sheet
and the calculation of Base Line Adjusted Net Assets set forth therein
in accordance with the same principles utilized by Purchaser in respect
of such matters in the Objection Notice (the "Base Line Adjustments").
Purchaser and Sellers agree that to the extent Purchaser's GAAP
Objections are correct, adjustments will be made in the Interim Balance
Sheet and the calculation of Base Line Adjusted Net Assets, subject to
paragraph (d) below, so that such items are so provided for or
reflected therein in a manner consistent with the principles used by
Purchaser in providing for or reflecting the same in the Closing Date
Balance Sheet. Sellers' Adjustments shall not constitute an admission
by Sellers that Purchaser's GAAP Objections are correct or that any of
Seller's representations or warranties, including without limitation
those set forth in Section 3.6, are not true in all respects.
(d) For 30 Business Days after delivery of the Objection
Notice, Purchaser and Sellers shall attempt to resolve all disputes
between them regarding the Closing Date Adjusted Net Assets, the Base
Line Adjustments and/or the Closing Date Net Indebtedness. If Purchaser
and Sellers cannot resolve all such disputes within such 30 Business
Day period, the matters in dispute shall be determined by KPMG Peat
Marwick or another nationally recognized independent public accounting
firm mutually satisfactory to Purchaser and Sellers (the "Arbiter").
Promptly, but not later than 30 Business Days after the acceptance of
its appointment, the Arbiter shall determine (based solely on
presentations by Sellers and Purchaser to the Arbiter and not by
independent review) only those items in dispute and shall render a
report as to its resolution of such items and the resulting calculation
of the Closing Date Adjusted Net Assets, the Base Line Adjusted Net
Assets, the Base Line Adjustments and the Closing Date Net
Indebtedness. For purposes of the Arbiter's calculation of the Final
Adjusted Net Assets, the Final Base Line Adjusted Net Assets, the Base
Line Adjustments and the Final Net Indebtedness, the amounts to be
included shall be the appropriate amounts from Schedule 2.3, the
Closing Date Balance Sheet or the Adjustment Report, as the case may
be, as to items that are not in dispute, and the amounts determined by
the Arbiter, as to items that are submitted for resolution by the
Arbiter. In resolving any disputed item, the Arbiter may not assign a
value to such item greater than the greatest value for such item
claimed by either party or less than the lowest value for such item
claimed by either party. Purchaser and Sellers shall cooperate with the
Arbiter in making its determination and such determination shall be
conclusive and binding upon Purchaser and Sellers.
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(e) Purchaser and Sellers shall each bear one-half of the fees
and expenses of the Arbiter.
(f) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of preparing the Closing Date Balance Sheet and
calculating Final Adjusted Net Assets, (i) the "Warranty Reserve" shall
be recorded as $4,089,634, subject to adjustment (x) downward to
reflect cash expenditures and (y) upward, in each case, only for events
or occurrences subsequent to the Interim Balance Sheet Date, and,
except for such adjustments, shall not be subject to dispute (whether
pursuant to Section 2.3(c) or otherwise) or any other adjustment and
(ii) there will be no increase in the carrying value of the Company's
equity investment in Enjema.
(g) Within five Business Days after determination of the Final
Adjusted Net Assets and, if applicable, Final Base Line Adjusted Net
Assets and Final Net Indebtedness:
(i) Either (x) Sellers shall pay Purchaser by wire
transfer of immediately available funds the amount, if any, by
which Final Base Line Adjusted Net Assets exceeds the Final
Adjusted Net Assets; or (y) Purchaser shall pay Sellers by
wire transfer of immediately available funds the amount, if
any, by which the Final Adjusted Net Assets exceeds Final Base
Line Adjusted Net Assets.
(ii) Either (x) Sellers shall pay Purchaser by wire
transfer of immediately available funds the amount, if any, by
which Final Net Indebtedness exceeds the Net Indebtedness set
forth on the Net Indebtedness Statement; or (y) Purchaser
shall pay Sellers by wire transfer of immediately available
funds the amount, if any, by which the Net Indebtedness set
forth on the Net Indebtedness Statement exceeds Final Net
Indebtedness.
(iii) Amounts payable pursuant to clauses (i) and
(ii) above may be offset, one against the other. Any net
payment to Sellers shall be made 99% to FJPS and 1% to JPSGP.
Any payment by Sellers or Purchaser required by this paragraph
(g) shall bear interest at the rate equal to 8.0% per annum
from the Closing Date until the date of payment. Any payment
pursuant to this Section (excluding payments attributable to
interest) shall be treated by the parties as an increase or
decrease in the Purchase Price.
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(h) Except as set forth in Section 10.2(d), nothing in this
Section 2.3 or in the statements, reports or documents contemplated
hereby shall affect the parties' rights and obligations in respect of a
breach or alleged breach of any representation or warranty herein.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to Section 3.32, each of the Sellers, jointly and
severally, represents and warrants to Purchaser as set forth in this Article
III; provided, however, to the extent any representation or warranty relates to
Enjema, such representation or warranty (other than Section 3.5(e)) shall be
deemed to be made to Sellers' Knowledge:
Section 3.1. Authority of Sellers.
(a) JPSGP is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. JPSGP has
full corporate power and authority to execute and deliver this
Agreement, and the execution and delivery by JPSGP of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the
part of JPSGP, and this Agreement constitutes the legal, valid and
binding obligation of JPSGP enforceable against JPSGP in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium, or similar laws from time to time
in effect which affect creditors' rights generally and by legal and
equitable limitations on the enforceability of specific remedies.
(b) FJPS is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of Delaware,
including after giving effect to the transactions set out on Exhibit F
hereto. FJPS has full partnership power and authority to execute and
deliver this Agreement, and the execution and delivery by FJPS of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary partnership
action on the part of FJPS, and this Agreement constitutes the legal,
valid and binding obligation of FJPS enforceable against FJPS in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally and by
legal and equitable limitations on the enforceability of specific
remedies.
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Section 3.2. Organization of the Company. The Company is a
limited partnership duly organized, validly existing, and in good standing under
the laws of the State of Delaware. The Company is duly qualified to do business
and is in good standing in the states listed in Schedule 3.2, such states being
each jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except where the failure to so qualify,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The Company has the requisite partnership power and
authority to own its properties and to conduct its business as presently
conducted. Schedule 3.2 includes true and correct copies of the Certificate of
Limited Partnership and the Partnership Agreement as in effect on the date of
this Agreement.
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Section 3.3. Capitalization of the Company; Title to the
Equity. The partnership equity of the Company is as follows: (i) the LP
Interest, which, except as set forth on Schedule 3.3, is owned solely by FJPS,
and (ii) the GP Interest, which is owned solely by JPSGP. The Company has no
other partners other than FJPS and JPSGP. FJPS will have at the Closing valid
and marketable title to the LP Interest, free and clear of any Liens, except
those arising under this Agreement and the Partnership Agreement. JPSGP will
have at the Closing valid and marketable title to the GP Interest, free and
clear of any Liens, except those arising under this Agreement and the
Partnership Agreement.
Section 3.4. No Conflict or Violation; Consents. Except as set
forth on Schedule 3.4, neither the execution and delivery of this Agreement by
Sellers, nor the consummation of the transactions contemplated hereby, nor the
fulfillment of the terms and compliance with the provisions hereof, will (a)
conflict with or result in a breach of or a default (or in an occurrence which
with the lapse of time or action by a third party, or both, could result in a
default) with respect to any of the terms, conditions or provisions of, (b)
result in the termination of, accelerate the performance required by, (c) result
in the creation of any Lien upon the assets of the Company in connection with,
(d) impair Sellers' ability to consummate the transactions contemplated hereby,
(e) require any filing with or approval of any Person, including without
limitation any Governmental Agency arising out of, or (f) give rise to any right
of termination or renegotiation, or purchase or offer right, under: (x) any
statute, rule, regulation, code, order, writ or decree of any Governmental
Agency applicable to Sellers or the Company, (y) the certificate of limited
partnership or partnership agreement of FJPS or JPS Automotive L.P. or the
certificate of incorporation or by-laws of JPSGP, or (z) any Contract, Lease,
Permit or other instrument to which the Company or any Seller is a party or
subject or by which any of Sellers' or the Company's properties or assets are
bound, except in the cases of clauses (x) and (z) for those conflicts, breaches,
defaults, terminations, or accelerations, which individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect or
materially impair the ability of Sellers to consummate the transactions
contemplated by this Agreement; provided, however, that no representation or
warranty is made hereby by Sellers with respect to the effect of antitrust laws
or regulations. No consent, approval, or authorization of, or registration or
filing with, any Governmental Agency is required to be obtained or made by or
with respect to Sellers in connection with the execution and delivery of this
Agreement by Sellers or the performance by Sellers of the transactions
contemplated hereby to be performed by them, except for such of the foregoing
(i) as are listed or described on Schedule 3.4 or (ii) which, if not so obtained
or made, individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
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Section 3.5. Subsidiaries and Investments.
(a) Except as set forth on Schedule 3.5, the Company does not
own any stock of, or any equity participation in, any Person (other
than those held by Employee Benefit Plans or acquired in connection
with the settlement of outstanding accounts receivable subsequent to
the date hereof).
(b) Each of Cramerton Management Corporation ("CMC"), JPS
Automotive Products Corp. ("JAPC") and JPS Mexico Corp. ("JMC"), is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware and has the requisite corporate
power to carry on its business as it is now being conducted. Cramerton
is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
partnership power to carry on its business as it is now being
conducted. Each of CMC, JAPC, JMC, and Cramerton is duly qualified as a
foreign corporation or limited partnership, as the case may be, to do
business and is in good standing in each jurisdiction where the
character of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(c) All of the outstanding shares of capital stock or limited
partnership interests, as the case may be, of CMC, JAPC, JMC, and
Cramerton are duly authorized, validly issued, fully paid, and
non-assessable, and those shares of capital stock and limited
partnership interests owned by the Company and set forth on Schedule
3.5 are owned free and clear of any Lien other than as set forth on
Schedule 3.5.
(d) Except as set forth on Schedule 3.5, there are no
outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character (i)
evidencing the right to purchase or subscribe for any shares of capital
stock or limited partnership interests, as the case may be, of CMC,
JAPC, JMC, and Cramerton owned by the Company and set forth on Schedule
3.5 or (ii) obligating any of CMC, JAPC, JMC, or Cramerton to issue any
additional shares of its respective capital stock or limited
partnership interests, as the case may be.
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(e) Enjema is a limited liability variable stock corporation
(sociedad anUnima de capital variable) incorporated and existing
pursuant to the laws of Mexico. Fifty percent of the outstanding shares
of capital stock of Enjema is owned by JMC free and clear of any Lien.
There are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any
character evidencing the right to purchase or subscribe for any shares
of capital stock of Enjema owned by JMC. No Seller Entity nor any
Subsidiary of any Seller Entity (other than Enjema itself or JMC) has
any liability or obligation, whether arising by law, by Contract or
otherwise, for any liability or obligation of Enjema or JMC. JMC has no
assets other than its interest in Enjema.
Section 3.6. Financial Statements; Closing Date Liability to
Sellers.
(a) The audited balance sheet of the Company at December 31,
1995 (the "Balance Sheet"), and related statement of income, retained
earnings and cash flow for the periods then ended and the notes
thereto, (i) are included as Schedule 3.6(a), (ii) were prepared in
accordance with GAAP, consistently applied, and (iii) present fairly
the financial condition and the results of operations of the Company as
of the dates and for the periods indicated thereon.
(b) The unaudited balance sheet as of the Interim Balance
Sheet Date (the "Interim Balance Sheet"), and the related income
statement for the period then ended (collectively, the "Interim
Financial Statements"), included as Schedule 3.6(b) were prepared in
accordance with GAAP, consistently applied, and present fairly the
financial condition and the results of operations of the Company as of
the dates and for the periods indicated thereon, subject to normal
year-end adjustments. To the Knowledge of Sellers, the Interim
Financial Statements included all adjustments, consisting solely of
normal recurring accruals, necessary for a fair presentation of the
Company's consolidated financial position and results of operations.
(c) As of the Closing, the Company will have no Liabilities to
any Parent Entity, other than (i) as set forth on Schedule 3.14 which
are either reflected in full on the Closing Date Balance Sheet or are
not required under GAAP to be so reflected, (ii) the SMT License
Agreement and the Cramerton Supply Agreement, and (iii) as reflected in
full in the Closing Date Balance Sheet.
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(d) The $8.4 million account payable to FII reflected in Note
3 to the Interim Balance Sheet arose out of purchases of goods by FII
on behalf of the Company in the ordinary course of business of the
Company ("Intracompany Trade Payables") and the matters comprising such
item consist of accounts payable by the Company to FII which are
identical to corresponding accounts payable by FII to unrelated third
parties, except as otherwise expressly permitted under the Supply
Agreement, dated as of June 28, 1994, between FII and the Company.
(e) The warranty reserve reflected on the Interim Balance
Sheet is comprised of the matters set forth in Schedule 3.6(e).
Section 3.7. Undisclosed Liabilities. As of the Interim
Balance Sheet Date and the Closing Date, the Company has and will have no
material Liabilities, except for Liabilities: (a) reflected or reserved for on
the Interim Balance Sheet or the Closing Date Balance Sheet, as the case may be,
(b) relating to performance obligations, under Leases, Contracts and Permitted
Liens in accordance with the terms and conditions thereof which are not required
by GAAP to be reflected on the Interim Balance Sheet or the Closing Date Balance
Sheet, as the case may be, (c) constituting Costs of Remediation, (d) arising
out of or in connection with any claim by the ultimate retail purchaser of any
of the Company's Products resulting from an alleged defect in the design or
manufacture of any Product, or any alleged failure to warn with respect to any
Product, (e) as specifically disclosed in the SEC Reports, (f) constituting
Taxes, or (g) as set forth on Schedule 3.7.
Section 3.8. Accounts Receivable. All accounts receivable
reflected on the Interim Balance Sheet, and all accounts receivable arising
subsequent to the Interim Balance Sheet Date, have or will have arisen in the
ordinary course of business of the Company. All items that are required by GAAP
to be reflected as accounts receivable on the Interim Balance Sheet and on the
Closing Date Balance Sheet are or will be so reflected and any reserve accounts
relating thereto are adequate under GAAP and have been or will have been
established in accordance with GAAP, consistently applied.
Section 3.9. Inventory. The materials, supplies and
work-in-process included in the inventory of the Company as set forth on the
Interim Balance Sheet were, and the inventory of the Company at the Closing and
reflected on the Closing Date Balance Sheet will be, as the case may be, (a)
substantially equivalent in quality and quantity, subject to seasonality, to the
materials, supplies and work-in-process, and additions thereto, generally
included in such inventory in the past; (b) suitable for the manufacture and
distribution of the Company's products in a manner substantially equivalent in
quality to that achieved generally by the Company in the past and (c) valued in
accordance with GAAP, consistently applied, subject, in each case, to all
reserves reflected in the Interim Balance Sheet with respect to such inventory
existing on the Interim Balance Sheet Date or in the Closing Date Balance Sheet
with respect to inventory existing on the Closing Date. Such reserves on the
Interim Balance Sheet are, and on the Closing Date Balance Sheet will be,
adequate under GAAP and are, in the case of the Interim Balance Sheet, or will
have been, in the case of the Closing Date Balance Sheet, established in
accordance with GAAP, consistently applied.
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Section 3.10. Material Adverse Effect. Other than changes
resulting from (a) general economic conditions, (b) conditions affecting the
automotive carpet and textile industry generally, (c) changes in any applicable
law, rule, regulation, statute, or interpretation thereof, or (d) as set forth
in Schedule 3.10, since the Interim Balance Sheet Date, there has not been any
Material Adverse Effect, nor have any events occurred nor do any circumstances
exist which, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. Since the Interim Balance Sheet Date,
except as set forth on Schedule 3.10, there has not occurred any deterioration
in the Company's relationships with its Employees, unions, suppliers or
customers, and the Company has not lost or been threatened with the loss of any
model or program in each case which, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.
Section 3.11. Real Property.
(a) Schedule 3.11(a) lists all real property owned by the
Company (the "Owned Real Property"). The Company has good and
marketable title in fee simple to the Owned Real Property free and
clear of any Liens other than Permitted Liens.
(b) Schedule 3.11(b) contains a list of all leases and
subleases, together with any amendments thereto (the "Leases"), with
respect to all real property leased by the Company (the "Leased
Property"). Each Lease is in full force and effect, the Company has
performed all material obligations required to be performed by it to
date under each of the Leases and neither the Company nor, to Sellers'
Knowledge, any other party thereto is in material default under any of
the Leases. Sellers have delivered to Purchaser a copy of each Lease,
and all amendments thereto, listed in Schedule 3.11(b), except to the
extent otherwise noted therein.
(c) Neither of the Sellers is a "foreign person" within the
meaning of Section 1445 of the Code.
(d) The covenants, easements or rights-of-way affecting the
Owned Real Property or Leased Property do not with respect to each
Owned Real Property or Leased Property materially impair the Company's
ability to use any such Owned Real Property or Leased Property in the
operation of the Company's business as presently conducted. There are
no pending, or to Sellers' Knowledge, threatened condemnation or
similar proceedings affecting the Owned Real Property. To Sellers'
Knowledge there are no pending or threatened condemnation or similar
proceedings affecting the Leased Property. The Company has access to
public roads, streets or the like or valid easements over private
streets, roads or other private property for such ingress to and egress
from the Owned Real Property (and to Sellers' Knowledge, the Leased
Property), except as would not materially impair the Company's ability
to use any such Owned Real Property or Leased Property in the operation
of the Company's business as presently conducted.
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Section 3.12. Condition and Compliance of Property.
(a) Schedule 3.12(a) contains a list of owned personal
property of the Company (excluding Enjema) with an original cost of
$25,000 or more as of June 30, 1996. As of such date, the Company owned
outright and had good and marketable title to all such personal
property subject to no Lien except Permitted Liens and except as set
forth on Schedule 3.12(a).
(b) Schedule 3.12(b) sets forth the name, parties and date of
all personal property leases: (i) under which the Company is the
lessee, (ii) under which the annual rent is $25,000 or more, and (iii)
which leases are not cancelable (without liability) within 90 days.
Except as set forth in Schedule 3.12(b), the Company holds good
leaseholds in all of the personal property shown or required to be
shown on Schedule 3.12(b) as leased by the Company, in each case under
valid and enforceable leases. The Company is not, and to Sellers'
Knowledge no other party to any such personal property lease is, in
material breach of or default under any lease of any item of personal
property listed on Schedule 3.12(b) (and no event has occurred which,
with due notice or lapse of time or both, would constitute such a lapse
or default).
(c) The assets of the Company: (i) in the aggregate are
adequate to conduct the operations of the Company in substantially the
manner currently conducted, (ii) are suitable for the purposes for
which they are currently used, (iii) have been maintained in accordance
with the Company's historical practices since December 31, 1995, and
(iv) are in good condition, ordinary wear and tear excepted.
Section 3.13. Compliance with Laws.
(a) Except as set forth on Schedule 3.13(a), the Company has
complied with, has not received any notice of violation of, and has no
Knowledge of any facts which with or without notice could reasonably be
expected to constitute a violation of, any laws, ordinances, rules,
regulations, orders, judgments, injunctions, awards or decrees of
Governmental Agencies applicable to the Company and its property,
including but not limited to Environmental Laws, except for any
violation or failure so to comply which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Schedule 3.13(b) sets forth a list of each Permit that is
necessary for the operations of the Company as currently or currently
proposed to be conducted, the lack of which individually or in the
aggregate could reasonably be expected to have a Material Adverse
Effect. All Permits included on Schedule 3.13(b), except as noted
therein, are in full force and effect and no proceeding is pending or,
to the Knowledge of Sellers, threatened, to revoke or limit any such
Permit.
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Section 3.14. Affiliate Agreements and Liabilities. Except as
set forth on Schedule 3.14, there are no written or oral Contracts between the
Company and any of the Parent Entities, including, without limitation, any such
Contracts relating to the provision of any services by the Company to any such
Parent Entity, or by any such Parent Entity to the Company. Other than (w) in
the ordinary course of business consistent with past practice (which in the case
of transactions with Affiliates will be on an arms' length basis), (x) as
expressly permitted by Section 5.1(a), (y) as set forth on Schedule 3.14 or (z)
the SMT License Agreement and the Cramerton Supply Agreement, (a) since the
Interim Balance Sheet Date, there have been, (b) from the date hereof to the
Closing Date there will be, and (c) after the Closing Date there will be, no
transactions, agreements or arrangements between the Company and (i) any Parent
Entity, (ii) any director or officer of any Parent Entity or (iii) any member of
the immediate family of any individual described in clause (i) or (ii) of this
sentence.
Section 3.15. Contracts. Schedule 3.15 hereto lists all of the
Contracts, commitments, arrangements and understandings (other than the Leases
or Permitted Liens), which are material to the properties, conduct, operations
or financial condition of the Company or are otherwise material. Except as set
forth on Schedule 3.15 (and for Leases and Permitted Liens), the Company is not
a party to or bound by any: (i) mortgage, indenture, note, or installment
obligation, or other instrument for or relating to Indebtedness; (ii) guaranty
of any obligation for borrowings or performance, or guaranty or warranty of
products or services, excluding endorsements or guaranties of instruments made
in the ordinary course of business in connection with the deposit of items for
collection, and express product and statutory warranties; (iii) agreement or
arrangement for the sale or lease of any of its assets other than in the usual,
regular and ordinary course of business; (iv) agreement or other arrangement for
the purchase of any real estate, machinery, equipment, or other capital assets
in excess of $25,000; (v) Contract pursuant to which it is or may be obligated
to make payments, contingent or otherwise, on account of or arising out of prior
acquisitions or sales of businesses, assets, or stock of other companies; (vi)
distribution, dealership, representative, broker, sales agency, advertising or
consulting Contract excepting any such contract that is terminable at will, or
by giving notice of 30 days or less, without Liability; (vii) lease or other
agreement for the use of personal property with rent in excess of $25,000 per
year; (viii) agreement imposing non-competition or exclusive dealing obligations
on it; (ix) Contract for the future purchase of materials, supplies, services,
merchandise, or equipment parts in excess of $100,000; (x) Contract or agreement
for the employment of any stockholder, director, officer, consultant or key
employee not terminable without penalty or liability arising from such
termination or any severance or change-in-control contract or arrangement; (xi)
Contract relating to cleanup, abatement or other actions in connection with
environmental liabilities; or (xii) Contract which terminates, accelerates or
creates any liability or obligation as a result of this Agreement or any of the
transactions contemplated hereby, except in the ordinary course of business; or
(xiii) Contract which (A) involves future payment by or to the Company in excess
of $250,000 or (B) is otherwise material to the extent relating to the conduct
of the business of the Company. Each Contract listed or required to be listed on
Schedule 3.15 is valid, binding and enforceable against the Company, and to
Sellers' Knowledge the other parties thereto in accordance with its terms, and
is in full force and effect. The Company has performed all material obligations
required to be performed by it to date under each of the Contracts. Except as
set forth in Schedule 3.15, neither the Company nor, to Sellers' Knowledge, any
other party thereto is in material breach of or default under any Contract to
which the Company is a party or by which it is bound or to which its assets are
subject (and no event has occurred which, with due notice or lapse of time or
both, would constitute such a lapse or default). Sellers have delivered to
Purchaser a copy of each Contract or other written evidence of the obligations,
and all amendments thereto, listed or required to be listed in Schedule 3.15,
except to the extent otherwise noted thereon.
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Section 3.16. Intellectual Property. Schedule 3.16 contains a
list of all applications and registrations for material Intellectual Property
(other than know-how, non-customized computer software, and customer lists)
which the Company owns or has used in connection with, or which relates to, its
business. Except as set forth in Schedule 3.16, the Company either owns or has
the right to use by license, sublicense, agreement, or permission all of the
Intellectual Property set forth on Schedule 3.16, and in the case of patents and
license agreements for the term set forth on Schedule 3.16. Except for Purchaser
pursuant to this Agreement or as otherwise set forth in Schedule 3.16, the
Company has not granted a license, nor reached an understanding with any third
party, nor entered into a written agreement, relating in whole or in part, to
any of the Intellectual Property, and to Sellers' Knowledge since June 28, 1994,
there has been no assertion thereof by any Person that has not been fully
withdrawn. Except as noted in Schedule 3.16, the Company has not been charged
with nor to the Knowledge of Sellers is it threatened to be charged with, the
infringement or other violation of the intellectual property rights of any other
Person.
Section 3.17. Labor Relations. Except as set forth on Schedule
3.17, the Company is not a party to any collective bargaining agreement covering
Employees, there are no controversies or unfair labor practice proceedings
pending or, to Sellers' Knowledge, threatened between the Company and any of its
current or former Employees or any labor or other collective bargaining unit
representing any current or former Employee of the Company that could reasonably
be expected to result in a labor strike, dispute, slow-down or work stoppage or
otherwise have a Material Adverse Effect. To Sellers' Knowledge, except as set
forth on Schedule 3.17, no organizational effort is presently being made or to
the Knowledge of Sellers, threatened by or on behalf of any labor union.
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Section 3.18. Employee Benefits.
(a) Schedule 3.18(a) sets forth all Employee Benefit Plans and
all other employee benefit arrangements or payroll practices,
including, without limitation, any such arrangements or payroll
practices providing severance pay, sick leave, vacation pay, salary
continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options, hospitalization
insurance, medical insurance, life insurance, scholarships or tuition
reimbursements, maintained by the Company or to which the Company is
obligated to contribute for Employees or Former Employees. Each of the
employee benefit plans, practices and arrangements set forth on
Schedule 3.18(a) shall hereafter be referred to as a "Plan" (or "Plans"
as the context may require).
(b) Except with respect to any Multiemployer Plan, copies of
the following documents, with respect to each of the Plans as
applicable, have been delivered or made available to Purchaser by
Sellers: (i) all plan and related trust documents, and amendments
thereto; (ii) the most recent IRS Form 5500; (iii) the last IRS
determination letter; (iv) summary plan descriptions; and (v) the most
recent actuarial report.
(c) Except as set forth on Schedule 3.18(c), none of the Plans
is a Multiemployer Plan. Neither the Company nor any ERISA Affiliate
has incurred any liability resulting from a complete or partial
withdrawal from any Multiemployer Plan, and none of them has incurred,
or is reasonably likely to incur, any liability due to the termination
or reorganization of a Multiemployer Plan which has not been satisfied
in full, and to the Knowledge of Sellers, no event has occurred that
would subject the Company or any ERISA Affiliate to any such liability.
(d) Neither the Company nor any ERISA Affiliate has incurred,
or is reasonably likely to incur, any liability under Section 4062,
4063 or 4064 of ERISA to the PBGC or to a trustee appointed under
Section 4042 of ERISA with respect to any Single-Employer Plan, and to
the Knowledge of Sellers, no event has occurred that would subject the
Company or any ERISA Affiliate to any such liability. All premiums due
the PBGC with respect to all Single-Employer Plans maintained by the
Company and its ERISA Affiliates have been timely paid. Neither the
Company nor any ERISA Affiliate has engaged in any transaction
described in Section 4069 of ERISA. Except as set forth on Schedule
3.18(d), there has been no "reportable event", within the meaning of
Section 4043 of ERISA, with respect to any Single-Employer Plan
maintained by the Company or its ERISA Affiliates which would require
the giving of notice to the PBGC. No Single-Employer Plan maintained by
the Company or its ERISA Affiliates has incurred an accumulated funding
deficiency within the meaning of Section 412 of the Code.
(e) Except with respect to any Multiemployer Plan, each Plan
complies with, and has been established, operated and administered in
accordance with its terms and the requirements of, ERISA, the Code and
other applicable laws, except for any failures to comply that could
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
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(f) Except with respect to any Multiemployer Plan, there are
no material pending or, to Sellers' Knowledge, threatened claims by or
on behalf of any Plan (other than routine claims for benefits).
(g) Neither the Company nor any ERISA Affiliate has incurred
any liability for any tax or penalty imposed by Section 4975 of the
Code or Section 502(i) of ERISA with respect to any Plan.
(h) With respect to each Plan that is a Single Employer Plan,
the most recent actuarial report prepared by the Plan's actuary, using
the actuarial methods and assumptions contained in such report, fairly
presents the fair market value of the assets of each such Plan and the
present value of the liabilities in respect of the benefits accrued
under each such Plan, and since the date of such actuarial report there
has been no material adverse change in the funded status of any such
Plan after taking into account the additional accrual of benefits by
participants since the date of such actuarial report through the
Closing Date.
(i) Each Plan which is intended to qualify under Section
401(a) of the Code has received an IRS determination letter concluding
that such Plan so qualifies in form, and no amendment has been adopted
or action been taken that, to the Sellers' Knowledge, would cause such
Plan to lose its qualified status.
(j) Except as set forth on Schedule 3.18(j) or as may be
required under Section 4980B of the Code, Section 601 of ERISA or other
applicable foreign, state or local law, the Company does not have any
Liability for post-retirement medical or life insurance benefits or
coverage for any Employee or Former Employee or any dependent of any
such employee. The reserve reflected in the Closing Date Balance Sheet
will be adequate in accordance with GAAP for the payment or provision
of all such benefits.
(k) Except as set forth on Schedule 3.18(k), the consummation
of the transactions contemplated by this Agreement will not result in
any increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any compensation or benefits
payable by the Company to or in respect of any Employee or Former
Employee or the beneficiary or dependent of any such employee under any
Plan.
Section 3.19. Insurance. Schedule 3.19 sets forth a list of
all material current and past insurance policies providing coverage for the
properties or operations or Liabilities of the Company since June 28, 1994, the
type and amount of coverage, and the expiration dates of the policies. Such
policies are valid and enforceable in accordance with their terms, are in full
force and effect and insure against risk and liabilities to the extent and in
the manner deemed appropriate and sufficient by the Company. As of the date of
this Agreement, no insurance policy aggregates, limits or maximums have been
reached or exceeded, and no insurance carrier has been declared insolvent, for
policies providing coverage for the properties, operations or Liabilities of the
Company since June 28, 1994. The Company has not received notice from any
insurance carrier: (i) threatening a suspension, revocation, modification or
cancellation of any current insurance policy or a material increase in any
premium in connection therewith, or (ii) informing the Company that any current
coverage listed or required to be listed on Schedule 3.19 will or may not be
available in the future on substantially the same terms as now in effect.
Section 3.20. Litigation. Except as set forth in Schedule
3.20, there are no actions, causes of action, claims, suits, or proceedings
pending or, to the Knowledge of Sellers, threatened against the Company at law,
in equity, in admiralty, or otherwise before or by any Governmental Agency or
any other Person, which (i) seeks to restrain or enjoin the consummation of the
transactions contemplated hereby or (ii) individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.20, the Company is not subject to, or in default with respect to, any
order, writ, injunction, or decree of any Governmental Agency, which
individually or in the aggregate has had, or could reasonably be expected to
have, a Material Adverse Effect.
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Section 3.21. Environmental Matters. Except as set forth on
Schedule 3.21: (i) the Company is, and since June 28, 1994 has been, and to
Sellers' Knowledge, prior to June 28, 1994 was, in compliance with all
Environmental Laws except for any noncompliance resulting in Damages of less
than $20,000 individually or in the aggregate; (ii) the Company has no
Liability, whether contingent or otherwise, under any Environmental Law except
for any Liability resulting in Damages of less than $20,000 individually or in
the aggregate; (iii) no request for information, notice, Governmental Agency
inquiry, demand letter, notice of violation or alleged violation of,
non-compliance or alleged non-compliance with or any Liability under, any
Environmental Law by or relating to operations or properties of the Company has
been received by or threatened in writing against the Company since June 28,
1994, or, to Sellers' Knowledge, before June 28, 1994; (iv) the Company has not
entered into or been subject to, and is not currently a party or respondent to,
any administrative, civil or criminal writs, injunctions, decrees, orders, or
judgments outstanding, or any administrative, civil or criminal actions, suits,
proceedings or investigations pending or, to Sellers' Knowledge, threatened,
relating to any Environmental Law affecting the Company; (v) the Company has
obtained and has in full force and effect, or as set forth on Schedule 3.13(b),
has applied for and reasonably expects to obtain, all Permits required under any
Environmental Law for the activities and operations of the Company on the Owned
Real Property or Leased Property and for any alterations or improvements
existing at such property at any time since June 28, 1994; (vi) as of the date
of this Agreement, no changes in Environmental Law proposed, contemplated or
under consideration by a Governmental Agency will to Seller's knowledge subject
the Company to Liability in excess of $20,000 individually or in the aggregate
or cause a Material Adverse Effect, (vii) except as set forth in the 1994
Acquisition Agreement, the Company has neither expressly nor by operation of
law, assumed or undertaken any liability, including without limitation any
obligation for Costs of Remediation of any other Person, (viii) the Company has
not, and Sellers have no Knowledge of any other Person who has, caused any
Release or threatened Release of any Hazardous Material on, in, under, or from
the Owned Real Property or Leased Property nor does Seller have knowledge of any
such Release, except for any Release resulting in Damages of less than $20,000
individually or in the aggregate, (ix) the Company has not received any written
or, to Sellers' Knowledge, other communication indicating or claiming potential
liability for response costs, Damages, or remediation with respect to a Release
or threatened Release of any Hazardous Material; (x) the Company is not subject
to any cleanup, remediation, monitoring or corrective action liability or
requirement under any Environmental Law; (xi) the Company has not arranged for
the disposal of any Hazardous Material at, or transported any Hazardous Material
to, any site from which, to the Sellers' Knowledge, there exists a Release or
threat of Release of any Hazardous Material; (xii) no Lien has been or with the
passage of time and or the giving of notice could reasonably be expected to be
imposed on the property of the Company by any Governmental Agency under any
Environmental Law or in connection with any Hazardous Material; (xiii) to
Sellers' Knowledge none of the Owned Real Property or Leased Property (and any
buildings, structures, fixtures or materials on such real property) (1) contains
or includes any friable asbestos, polychlorinated biphenyls, or any underground
storage tanks, piping, or sumps (or other underground structures which contain
Hazardous Material), (2) is included or proposed for inclusion on the National
Priorities List or any similar list maintained under any Environmental Law, (3)
constitutes a habitat for any species designated as threatened or endangered
pursuant to the Endangered Species Act, or (4) contains any wetlands subject to
regulation under the Federal Water Pollution Control Act or any other
Environmental Law; and (xiv) to Sellers' Knowledge the Company is not required
to give notice of or record or deliver to any Governmental Agency an
environmental disclosure document or statement by virtue of the transactions set
forth herein and contemplated hereby.
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Section 3.22. Tax Matters.
(a) Except as set forth on Schedule 3.22 hereto, (i) the
Seller Entities have filed (or joined in the filing of), or will file
(or join in the filing of), all Tax Returns required to be filed under
applicable law prior to the Closing Date that relate to any material
Taxes of the Seller Entities; (ii) as of the time of such filing, the
Seller Entities have paid all Taxes shown to be due and payable on such
Tax Returns and, as to any such Tax Returns not filed as of the date
hereof, will pay all Taxes shown to be due and payable thereon; (iii)
the Seller Entities have made or will make adequate provision for all
material Taxes payable for any periods that end on or before the
Closing Date for which no Tax Returns have yet been filed and for any
periods that begin before the Closing Date and end after the Closing
Date (a "Straddle Period") to the extent such Taxes are attributable to
the portion of any such period ending at the Closing Date; (iv) none of
the Seller Entities has given or requested any waivers of statutes of
limitation in respect of any Tax Returns nor has any Seller Entity
agreed to any extension of time with respect to any Tax assessment or
deficiency; (v) no material claim for assessment or collection of Taxes
has been asserted against any Seller Entity and no Seller Entity is a
party to (or has been informed that it may become a party to) any
pending action, proceeding or investigation by any Governmental Agency
for the assessment or collection of any such Taxes; (vi) none of the
Seller Entities has granted or received any extension of the limitation
period applicable to any Tax; (vii) except as otherwise permitted
pursuant to Section 6.12, each of the Company and Cramerton is and has
been since June 28, 1994 a "partnership" within the meaning of Section
7701(a)(2) of the Code; (viii) the Seller Entities (other than
Cramerton or any Seller Entity that is a corporation for Federal income
tax purposes) has not made an election under Section 754 of the Code;
(ix) except for the 1994 Acquisition Agreement, none of the Seller
Entities is a party to any agreement, whether written or unwritten,
providing for the payment of Tax liabilities, payment for Tax losses,
entitlements to refunds or similar tax matters; (x) no security
interests have been imposed upon or asserted against any assets of any
Seller Entity as a result of or in connection with any failure or
alleged failure, to pay any Tax; (xi) no ruling with respect to Taxes
(other than a request for determination of the status of a qualified
pension plan) has been requested by or on behalf of any Seller Entity;
(xii) since June 28, 1994, no claim has been made by a Governmental
Agency in a jurisdiction where any Seller Entity does not currently
file Tax Returns that it is or may be subject to taxation by that
jurisdiction, nor is any Seller Entity aware that any such assertion of
jurisdiction is threatened; (xiii) no Seller Entity has filed a consent
under Section 341(f) of the Code; (xiv) no Seller Entity has requested
any extension of time within which to file any Tax Return which Tax
Return has not been filed; and (xv) no Seller Entity has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(b) Sellers have delivered to Purchaser copies of all federal
income Tax Returns (redacted as appropriate to exclude any information
not related to any of the Seller Entities), examination reports,
closing agreements and statements of deficiencies assessed against or
agreed to by any Seller Entity since June 28, 1994. Schedule 3.22 lists
all federal, state, local and foreign income Tax Returns filed with
respect to each Seller Entity for taxable periods ended on or after
June 28, 1994, indicates those Tax Returns that have been audited and
indicates those Tax Returns that currently are the subject of audit.
(c) No Seller Entity is a party to any agreement that is or
may be characterized as a lease under the safe-harbor leasing
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954
that would result in any asset being treated as owned by another
person. None of the assets of the Seller Entities is tax exempt use
property within the meaning of Section 168(h) of the Code or tax-exempt
bond financed property within the meaning of Section 168(g)(5) of the
Code.
(d) All Seller Entities have withheld and paid all material
Taxes required to be withheld in connection with any amounts paid or
owing to any employee, creditor, independent contractor or other third
party.
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Section 3.23. Interim Operations. Since the Interim Balance
Sheet Date, the Company has operated in the ordinary course, except as set forth
on Schedule 5.1, consistent with past practices, and except as set forth in
Schedule 3.23 the Company has not: (i) incurred or become subject to, or agreed
to incur or become subject to, any material obligation or Liability, except in
the ordinary course of business, consistent with past practice or as
contemplated by this Agreement; (ii) mortgaged or pledged any of its assets,
tangible or intangible, except for Permitted Liens; (iii) sold or transferred or
agreed to sell or transfer any of its assets, or canceled or agreed to cancel
any debts or claims except in the ordinary course of business, consistent with
past practice; (iv) suffered any extraordinary losses or, except in the ordinary
course of business consistent with past practice, waived any material rights;
(v) increased the rate of compensation payable by it to any of its executive
officers or to any employee, whose current total annual compensation or
estimated annual compensation from the Company is $100,000 or more ("Significant
Employee"), over the rate being paid or accrued to them as of the Interim
Balance Sheet Date except in accordance with its prior practices or employment
agreements; (vi) terminated any contract, agreement, license, or other
instrument to which it is a party except in the ordinary course of business,
consistent with past practice; (vii) made or agreed to make any accrual or
arrangement for or payment of bonuses or special compensation of any kind to any
of its executive officers or Significant Employees; or general increase in the
salary or bonus payable or to become payable by the Company to any other
salaried employees or to hourly employees (other than (x) pursuant to existing
collective bargaining agreements, and (y) increases granted to individual
employees for merit, length of service, change in position or responsibility or
other reasons applicable to specific employees and not generally to a class or
group thereof); (viii) entered into any agreement, written or oral, providing
for the employment of any senior executive of the Company or any severance or
termination benefits payable or to become payable by the Company to any senior
executive of the Company; (ix) taken any action which would have constituted a
breach of any negative covenant of Sellers set forth in Article V or VI if such
negative covenant had applied since the Interim Balance Sheet Date; or (x)
suffered any shortages of materials or supplies or any casualty that
individually or in the aggregate has had or could reasonably be expected to have
a Material Adverse Effect.
Section 3.24. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Sellers without the intervention of any other Person (other than Donaldson,
Lufkin & Jenrette Securities Corporation and Lazard FrEres & Co. LLC the fees
and expenses of which will not be reflected on the Closing Date Balance Sheet)
acting on its behalf in such manner as to give rise to any valid claim by any
such Person against the Company or Purchaser for a finder's fee, brokerage
commission or other similar payment based on an arrangement with Sellers.
Sellers covenant that they shall pay the fees and expenses of Donaldson, Lufkin
& Jenrette Securities Corporation and Lazard FrEres & Co. LLC, if any, arising
out of the transactions contemplated by this Agreement.
Section 3.25. Product Liability. Except as disclosed in
Schedule 3.25, (i) there is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil, criminal
or administrative nature by or before any Governmental Agency against or
involving any product, substance or material (collectively, a "Product"), or
class of claims or lawsuits involving a Product manufactured, produced,
distributed or sold by or on behalf of the Company which is pending or, to
Sellers' Knowledge, threatened, on behalf of the ultimate retail purchaser of
any Product, resulting from an alleged defect in design, manufacture, materials
or workmanship of any Product manufactured, produced, distributed or sold by or
on behalf of the Company, or any alleged failure to warn, or from any breach of
express or implied specifications or warranties or representations (a "Product
Claim"), and (ii) there has not been, nor is there under consideration or
investigation by the Company, any Product recall, rework, retrofit or post-sale
warning (collectively, recalls, reworks, retrofits and post-sale warnings are
referred to in this Agreement as "Recalls") conducted by or on behalf of the
Company concerning any Products manufactured, produced, distributed or sold by
or on behalf of the Company or, to the Knowledge of Sellers, any Recall
conducted by or on behalf of any entity as a result of any alleged defect in any
Product supplied by the Company. Except as disclosed in Schedule 3.25, there is
no Product Claim pending or, to Sellers' Knowledge threatened, on behalf of a
customer of the Company or any Governmental Agency which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
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Section 3.26. SEC Reports. Sellers have furnished Purchaser
true and correct copies (with exhibits) of each of the SEC Reports. As of their
respective dates, the SEC Reports did not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except any statement or omission therein which has been corrected or
otherwise disclosed or updated in a subsequent filing with the SEC prior to the
date hereof. Since June 1, 1994, the Company has filed with the SEC all reports
and registration statements and all other filings required to be filed by the
Company with the SEC under the rules and regulations of the SEC.
Section 3.27. Books and Records of the Company. The Company
has made available to Purchaser and its directors, officers, attorneys,
accountants and representatives true and correct copies of all agreements,
documents and other items listed on the Schedules to this Agreement and all
books and records of the Company. The books and records of the Company
accurately reflect in reasonable detail the transactions to which the Company is
a party or by which its properties are bound in accordance with GAAP.
Section 3.28. 1994 Acquisition Agreement. Sellers have
previously furnished to Purchaser copies of all notices, claims and other
correspondence under the 1994 Acquisition Agreement (collectively, the "Prior
Notices"). As of the date of this Agreement, there are no pending or, to
Sellers' Knowledge, threatened claims arising under or with respect to the 1994
Acquisition Agreement not included in the Prior Notices.
Section 3.29. No Material Misstatements. None of the
representations or warranties of Sellers contained herein and none of the
information contained in the Schedules hereto furnished by Sellers is false or
misleading in any material respect or omits to state a material fact necessary
to make the statements herein or therein not misleading in any material respect.
Section 3.30. Certain Matters Regarding the Senior Notes.
(a) The Company's 11-1/8% Senior Notes, due 2001, constitute
"Existing Indebtedness", as such term is defined in the Indenture,
dated as of June 28, 1994, by and among JPS Automotive Products Corp.,
as Issuer, JPS Automotive L.P., as Issuer, and Fleet National Bank of
Connecticut (formerly known as Shawmut Bank Connecticut, National
Association), as amended (the "Senior Note Indenture").
(b) There is no Default (as such term is defined in the Senior
Note Indenture) existing under the Senior Note Indenture (other than
any Default arising out of the requirement or failure of the Company to
take any action after the Closing) or any litigation alleging such a
Default.
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Section 3.31. No Seiren Right of First Refusal. In connection
with the consummation of the purchase and sale of the Equity contemplated by
this Agreement:
(a) Seiren U.S.A. Corporation does not have a right of first
refusal pursuant to Section 3.2 of that certain Partner Interest
Purchase Agreement dated as of December 2, 1991, by and among JPS
Automotive Products Corp., Cramerton Management Corp., Seiren U.S.A.
Corporation and Seiren Automotive Textile Corporation, as amended and
supplemented; and
(b) Seiren Co. Ltd. does not have a right of first refusal
pursuant to Section 1.2 of that certain Stockholders Agreement dated as
of December 2, 1991, by and among JPS Textile Group, Inc., Cramerton
Management Corp., and Seiren Co. Ltd., as amended and supplemented.
Section 3.32. Disclaimer of Additional Representations and
Warranties; Schedules.
(a) Except as expressly set forth in this Agreement, the
Schedules and Exhibits hereto, and any other certificate or instrument
delivered pursuant to the terms hereof or thereof, Sellers make no
representation or warranty, including, with respect to the Company, or
its operations, assets, Liabilities, or conditions, including, any
representation or warranty of merchantability, suitability or fitness
for a particular purpose, or quality as to the assets of the Company,
or any part thereof, or as to the condition or workmanship thereof, or
the absence of any defects therein, whether latent or patent.
(b) Notwithstanding anything to the contrary contained in this
Agreement, any item disclosed on any one Schedule shall be deemed to be
disclosed on each Schedule, where relevant, provided that a specific
cross-reference is made in the relevant Schedule. Any information
included in the SEC Reports shall be deemed to be included in the
Schedules to the extent a specific cross-reference is made in the
applicable Schedule. Disclosure of an item in any Schedule shall not be
deemed to be an admission that such item is material.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
Section 4.1. Authority of Purchaser. Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Purchaser has full corporate power and authority
to execute and deliver this Agreement, the execution and delivery by Purchaser
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
enforceability of specific remedies. Purchaser has the requisite corporate power
and authority to own its properties and to carry on the business presently being
conducted by it.
Section 4.2. No Conflict or Violation. Except as referenced in
Section 8.9, neither the execution and delivery of this Agreement by Purchaser,
nor the consummation of the transactions contemplated hereby, nor the
fulfillment of the terms and compliance with the provisions hereof will conflict
with or result in a material breach of or a material default (or in an
occurrence which with the lapse of time or action by a third party, or both,
could result in a material default) with respect to any of the terms, conditions
or provisions of any applicable order, writ or decree of any court or of any
Governmental Agency, applicable to Purchaser, or of the Certificate of
Incorporation or By-Laws of Purchaser, or of any indenture, contract, agreement,
lease, or other instrument to which Purchaser is a party or subject or by which
Purchaser or any of its properties or assets are bound, or of any applicable
statute, rule, or regulation to which Purchaser or its businesses is subject,
except for those conflicts, breaches, defaults, terminations, or accelerations,
which individually or in the aggregate could not reasonably be expected to have
a material adverse effect on Purchaser or materially impair the ability of
Purchaser to consummate the transactions contemplated by this Agreement;
provided, however, that no representation or warranty is made hereby by
Purchaser with respect to the effect of antitrust laws or regulations.
Section 4.3. Litigation. There are no actions, causes of
action, claims, suits, proceedings, orders, writs, injunctions or decrees
pending or, to the actual knowledge, after reasonable inquiry, of the executive
officers of Purchaser, threatened against Purchaser at law, in equity, in
admiralty or otherwise, or before or by any Governmental Agency, which seeks to
restrain or enjoin the consummation of the transactions contemplated hereby.
Section 4.4. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Purchaser without the intervention of any other Person acting on its behalf in
such manner as to give rise to any valid claim by any such Person against
Sellers or their Affiliates (other than, after the Closing, the Company) for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with Purchaser.
Section 4.5. Investment Intent; Status. The Equity will be
acquired hereunder solely for the account of Purchaser for investment, and not
with a view to the resale or distribution thereof in violation of the Securities
Act of 1933, as amended, subject to the right of the Purchaser and any such
designees to sell, assign, transfer or distribute any or all of the Equity to
any corporation which is an Affiliate of the Purchaser. Purchaser is an
"accredited investor" within the mean of Regulation 501 promulgated under the
Securities Act of 1933, as amended.
Section 4.6. Disclaimer of Additional Representations and
Warranties Except as expressly set forth in this Agreement and the Exhibits
hereto, and any other certificate or instrument delivered pursuant to the terms
hereof or thereof, Purchaser makes no representation or warranty.
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ARTICLE V.
CERTAIN COVENANTS OF SELLERS
Each of Sellers covenants with Purchaser that from and after the date
hereof through the Closing Date (except as provided in Section 6.12 hereof, as
expressly set forth in Schedule 5.1, or as consented to or approved by Purchaser
in writing):
Section 5.1. Conduct of Business. Sellers shall (x) cause the
Company and each Subsidiary which the Company controls, and (y) not
affirmatively consent to any action which would cause or permit Enjema not:
(a) to operate in the ordinary course, in accordance with past
practices, except for payment of intercompany items, the existence of
which would otherwise violate Section 3.6 or 3.14;
(b) to use commercially reasonable efforts to keep available
generally the services of its present officers and employees, and
preserve generally the present relationships with Persons having
business dealings with it;
(c) to not make any sale, assignment, transfer, abandonment,
or other conveyance of any of its assets or any part thereof in each
case having a book value of $25,000 or more or a fair market value in
excess of $100,000, except (i) transactions pursuant to existing
Contracts set forth in Schedule 3.15 and (ii) dispositions of inventory
or of worn-out or obsolete equipment for fair or reasonable value in
the ordinary course of business consistent with past practices;
(d) to keep in full force and effect insurance comparable in
amount and scope to coverage maintained by it (or on behalf of it) on
the date hereof; after the Closing, policies held by the Parent
Entities will not be available to cover occurrences (in the case of
occurrence-based policies) occurring, or claims made (in the case of
claims-made-based policies), after the Closing Date;
(e) to not settle, release or forgive any material claim or
litigation or waive any material right;
(f) to not make, change or revoke, or permit to be made,
changed or revoked, without the consent of Purchaser any material
election or method of accounting with respect to Taxes affecting or
relating to any of the Seller Entities;
(g) to not enter into, or permit to be entered into, without
the consent of Purchaser any closing or other agreement or settlement
with respect to Taxes affecting or relating to any of the Seller
Entities;
(h) to not grant any increase in the salary or other
compensation of any Significant Employee;
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(i) to not enter into any employment Contract with any
director, executive officer or Significant Employee of the Company or
any of its Subsidiaries or make any loan to, or enter into any material
transaction of any other nature with, any director, executive officer
or Significant Employee of the Company or any of its Subsidiaries;
(j) to not acquire, lease or dispose or agree to acquire,
lease or dispose of any capital assets having a book value in excess of
$25,000 or a fair market value in excess of $100,000 other than in the
ordinary course of business;
(k) to inform the Purchaser of (i) any loss or threat of loss
of any automotive program, (ii) any material development in any
organizational effort on behalf of any labor union set forth on
Schedule 3.17, (iii) changes in Environmental Law proposed,
contemplated or under consideration by a Governmental Agency which will
to Sellers' knowledge subject the Company to Liability in excess of
$20,000 individually or aggregate or cause a Material Adverse Effect,
or (iv) any material discussion or development of the amendment,
termination or renewal of the lease identified as Item 3 on Schedule
3.12(b); provided, however, that notwithstanding anything to the
contrary contained in this Agreement, any breach of this Section 5.1(k)
shall be deemed to be a breach of representation and warranty and not a
breach of covenant; and
(l) to use commercially reasonable efforts to inform Purchaser
of (i) all material insurance policies providing coverage for the
properties or operations or Liabilities of the Company prior to June
28, 1994 of which Seller has Knowledge, (ii) the type and amount of
coverage, and the expiration dates of such policies, and (iii) whether,
with respect to such policies, the insurance policy aggregates, limits
or maximums have been reached or exceeded, and whether the insurance
carrier has been declared insolvent; provided, however, that
notwithstanding anything to the contrary contained in this Agreement,
any breach of this Section 5.1(l) shall be deemed to be a breach of
representation and warranty and not a breach of covenant.
Section 5.2. Information and Access.
(a) Sellers shall permit and cause the Company and its
Subsidiaries to permit representatives of Purchaser to have reasonable
access during normal business hours, and in a manner so as not to
interfere with the normal operations of the Company and its
Subsidiaries, to all premises, properties, personnel, accountants,
books, records, contracts and documents of the Company and its
Subsidiaries. Purchaser and each of its representatives shall treat and
hold as confidential such information in accordance with the terms and
provisions of that certain Confidentiality Agreement, entered into as
of January 17, 1996, between Purchaser and Sellers, which
Confidentiality Agreement shall remain in full force and effect until
the Closing Date, whereupon such Confidentiality Agreement will
terminate without further action.
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(b) Purchaser shall indemnify, defend and hold harmless
Sellers, the lessors under the Leases and their respective Affiliates
from and against any and all claims, demands, causes of action, losses,
damages, Liabilities, cost and expenses (including, without limitation,
attorneys' fees and disbursements), suffered or incurred by such
Persons in connection with (i) Purchaser's and/or Purchaser's
representatives' entry upon the Owned Real Property or Leased Property,
or (ii) any and all other activities undertaken by Purchaser or
Purchaser's representatives with respect to the Owned Real Property or
Leased Property pursuant to this Section 5.2.
Section 5.3. Confidentiality Agreements. At the Closing,
Sellers will take all such commercially reasonable actions as may be required to
assign to the Company the benefits of all confidentiality agreements relating to
the possible sale of the Company or any division or Subsidiary thereof.
Section 5.4. Certain Environmental Covenants67. Upon
reasonable request, Sellers shall promptly respond to Purchaser's requests for
information, and make available to Purchaser copies of all documents, records
and correspondence in their possession or control (or available to Sellers, if
unavailable to Purchaser) relating to the compliance by the Company with
Environmental Laws or to the release or threat of release of Hazardous Materials
in connection with the ownership or operation of the Company, any of its
Subsidiaries, or any predecessor of either, whether generated by Sellers or
others, including, without limitation, environmental audits, environmental risk
assessments, or site assessments of the Owned Real Property or Leased Property,
documentation regarding off-site or on-site disposal of Hazardous Materials,
spill control plans, and environmental agency reports and correspondence. Prior
to the Closing Date, Purchaser shall have the right to inspect and investigate
the Leased Property and Owned Real Property. The scope of the investigation
shall not include any sampling, monitoring, testing, soil borings, well or
wellpoint installation, or any other physical testing of the indoor or outdoor
environment unless agreed to in writing by Seller at Seller's sole discretion;
provided, however, Purchaser shall be permitted to sample existing groundwater
wells at the Leased Property and the Owned Real Property.
ARTICLE VI.
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1. Hart-Scott-Rodino and Other Filings.
(a) As promptly as practicable, and in any event within ten
Business Days following the execution and delivery of this Agreement by
the parties, Sellers and Purchaser shall each prepare and file, or
shall cause its "ultimate parent" (as defined in the HSR Act) to
prepare and file, any required notification and report form under the
HSR Act, in connection with the transactions contemplated hereby, the
filing fees for which shall be borne by Purchaser. Sellers and
Purchaser shall, or shall cause their ultimate parents to, request
early termination of the waiting period thereunder.
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(b) Sellers and Purchaser shall, or shall cause their ultimate
parents to, respond with reasonable diligence to any request for
additional information made in response to such filings.
(c) As promptly as practicable, Sellers and Purchaser shall
prepare and file any other application, report, or other filing
required to be submitted to any other Governmental Agency in connection
with the transactions contemplated hereby.
Section 6.2. Transfer Taxes. Any sales, recording, transfer,
stamp, conveyance, value added, use, or other similar Taxes, duties, excise,
governmental charges or fees imposed as a result of the sale of the Equity to
Purchaser pursuant to this Agreement shall be borne by Sellers, and any MSBT
Recapture shall be borne by Sellers. Purchaser shall promptly remit any refunds
of such items to Sellers. Sellers and Purchaser, to the extent required by law,
shall prepare and file all Tax Returns on a timely basis with respect to any
such Taxes or fees.
Section 6.3. Obligation to File Tax Returns. Sellers shall
prepare and file (or cause to be prepared and filed) (i) all Tax Returns of or
relating to the operations of the Seller Entities that are due, taking into
account applicable extensions not entered into in violation of this Agreement,
before the Closing Date, and (ii) all income Tax Returns of or relating to the
Seller Entities for taxable periods ending on or before the Closing Date.
Purchaser shall prepare (or cause to be prepared or filed) all other Tax Returns
of or relating to the operations of the Seller Entities. The party preparing and
filing Tax Returns hereunder shall pay or cause to be paid all Taxes shown as
due thereon (subject to any rights to indemnification hereunder). The party
preparing or causing the preparation of any Tax Return under this Section 6.3
shall allow the other parties to review, comment upon and reasonably approve any
Tax Returns relating to a Straddle Period at any time during the 45 day period
immediately preceding the filing of such return. Purchaser and Sellers agree to
file or cause the filing of all Tax Returns relating to the Seller Entities for
any Straddle Period on the basis that the relevant taxable period ended as of
the Closing Date or of the date of the sale described in Section 6.12, as
appropriate, unless the relevant taxing authority will not accept a Tax Return
filed on that basis.
Section 6.4. Certain Provisions Relating to Consents. Sellers
shall use commercially reasonable efforts prior to and after the Closing Date to
obtain all consents that are required in connection with the transactions
contemplated by this Agreement. Sellers shall not obtain any consent that will
affect Purchaser or the Company to either of their economic detriment, including
any modification of any Contract, Lease or Permit. Purchaser shall cooperate as
reasonably necessary or desirable to secure the third party consents, including,
without limitation, providing to such third party information, including
financial information, provided, however, that neither Purchaser nor the Company
will be required to incur any liability or obligation in connection therewith,
other than for the underlying matter for which such consent was obtained as in
effect immediately prior to such consent.
Section 6.5. Nondisclosure; Noncompetition.
(a) From and after the Closing Date, Sellers shall not use,
divulge, furnish or make accessible to anyone any proprietary, material
non-public, confidential or secret information to the extent relating
to the Company or any Subsidiary (including, without limitation,
customer lists, supplier lists and pricing and marketing arrangements
with customers or suppliers), and Sellers shall cooperate reasonably
with Purchaser in preserving such proprietary, confidential or secret
aspects of the Company.
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(b) For a period of four years after the Closing Date, Sellers
will not, and will cause each of their Affiliates not to, directly or
indirectly, manufacture or sell any products manufactured or sold by
the Company or any Subsidiary thereof as of the Closing, or own stock
or otherwise have an equity interest in or be affiliated with any
person or entity engaged in such business (except as a stockholder
holding less than 5% of the stock of a publicly held corporation);
provided, however that the foregoing shall not apply to (i) products
sold pursuant to the SMT License Agreement, (ii) any products in which
foam is combined with textiles, whether pursuant to flame lamination,
adhesive lamination, or otherwise, and (iii) needle-punch floormats and
trunk liners sold in the after-market (i.e. not to original equipment
manufacturers); provided that in no event will any of the foregoing
exceptions apply to permit any Parent Entity to bid on any Toyota
program as to which the Company or any Subsidiary thereof is a supplier
as of the Closing Date. None of the Sellers will, for a period of two
years from the Closing Date, solicit for hire any Employees without the
prior written consent of Purchaser. Sellers agree that a violation of
this Section 6.5 will cause irreparable injury to Purchaser, and
Purchaser will be entitled, in addition to any other rights and
remedies it may have at law or in equity, to an injunction enjoining
and restraining Sellers from doing or continuing to do any such
violation and any other violations or threatened violations of Section
6.5. This Section 6.5(b) shall not apply to any Person or any
Affiliates of such Person which acquires all or substantially all of
the assets or the capital stock of Foamex International Inc. unless
such Person or Affiliate is presently an Affiliate of Sellers.
(c) Sellers acknowledge and agree that the covenants set forth
in this Section 6.5 are reasonable and valid in scope and in all other
respects. If any of such covenants is found to be invalid or
unenforceable by a final determination of a court of competent
jurisdiction (i) the remaining terms and provisions hereof shall be
unimpaired and (ii) the invalid or unenforceable term or provision
shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision. In the event that,
notwithstanding the first sentence of this Section 6.5(c), any of the
provisions of this Section 6.5 relating to scope of the covenants
contained therein or the nature of the business restricted thereby
shall be declared by a court of competent jurisdiction to exceed the
maximum restrictiveness such court deems enforceable, such provision
shall be deemed to be replaced herein by the maximum restriction deemed
enforceable by such court.
Section 6.6. Efforts. Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto shall use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby; provided, however, that
nothing in this covenant or any other provision of this Agreement will require
Purchaser to agree to any divestiture, hold-separate or other similar agreement
or requirement.
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Section 6.7. Ongoing Tax Cooperation. If the Closing occurs,
Sellers and Purchaser shall cooperate fully with each other and make available
or cause to be made available to each other in a timely fashion such Tax data,
prior Tax Returns and filings and other information as may be reasonably
required for the preparation by Purchaser or Sellers of any tax returns,
elections, consents or certificates required to be prepared and filed by
Purchaser or Sellers and any audit or other examination by any taxing authority,
or judicial or administrative proceeding relating to liability for Taxes.
Without limiting the generality of the foregoing, each of Purchaser and Sellers
shall retain copies of all Tax Returns, supporting work schedules and other
records relating to tax periods or portions thereof ending prior to or including
the Closing Date until the later of (i) the expiration of the statute of
limitations for the taxable periods to which such Tax Returns and other
documents relate, without regard to extensions except for extensions executed by
that party or its Affiliates or extensions or which such party has received
written notice from another party, or (ii) six years following the due date
(without extensions) for such Tax Returns; provided, however, that no party will
dispose of its copies without first notifying the other parties and providing
such other parties with a reasonable period of time to assume possession of such
copies. In addition, without limiting the generality of the foregoing, each
party shall make its personnel and those of its Affiliates reasonably available
for deposition and testimony in any tax controversy or proceeding. Purchaser
shall provide Sellers with any necessary payroll records attributable to the
period prior to the Closing Date. Purchaser shall cooperate with Sellers to the
extent reasonably necessary for Sellers' preparation of their financial
statements and Tax Returns and in the sharing of financial and accounting
information with respect thereto or with respect to any audit, examination, or
other proceeding with respect thereto. Any information or documentation provided
pursuant to the Section 6.7 shall not be disclosed by the recipient thereof to
any Person except its accountants and relevant tax authorities or as required by
applicable law (in which case the disclosing party shall consult in good faith
with the other party prior to making any such disclosure).
Section 6.8. Certain Agreements.
(a) Purchaser and Sellers shall use their commercially
reasonable efforts to cause the parties to the agreements listed on
Schedule 6.8 Part A to release Sellers and Foamex International Inc.
("FII") from all obligations arising under such agreements.
Notwithstanding the foregoing, it is understood and agreed that
Purchaser shall not, and shall not cause the Company to, provide any
guarantee or security, or expend any money, or incur any Liability, or
agree to any change in any of the terms of any such agreement to obtain
such release. To the extent such release is not obtained, Purchaser
shall cause the Company and its Subsidiaries to indemnify Sellers and
FII for all Damages arising under such agreements after the Closing
Date that are obligations of Purchaser, the Company or any of its
Subsidiaries, without regard to any right of set-off.
(b) On the Closing Date, Sellers shall assign, and shall cause
FII to assign, all of their respective right, title interest and
obligations (other than any right to receive payment which is reflected
as a liability in the Closing Date Balance Sheet in accordance herewith
and the right to indemnification for periods prior to the Closing Date)
under the agreements listed on Schedule 6.8 Part B to Purchaser or its
designee, and Purchaser shall cause the Company to release and
discharge Sellers and FII from all further obligations under such
agreements.
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(c) From and after the Closing Date, Purchaser shall cause the
Company to pay all amounts due to the Parent Entities pursuant to the
terms of the Supply Agreement or any item that would constitute an
Intracompany Trade Payables had it existed prior to the Interim Balance
Sheet Date in the ordinary course, consistent with past practice.
Section 6.9. Clearance Certificates To the extent required by
law to relieve Purchaser of any secondary liability for unpaid sales or similar
Taxes of any of the Seller Entities attributable to periods prior to the Closing
Date, Sellers shall, following execution of this Agreement, use reasonable
efforts to obtain clearance certificates or similar documents from any state Tax
authority.
Section 6.10. Control of Tax Audits. Each party shall promptly
notify the other party in writing upon receipt by such first party, or its
Affiliates of notice of any pending or threatened Tax audits or assessments
relating to the Company or its Subsidiaries for any taxable period which may
affect any Tax for which such other party may be liable or have otherwise agreed
to indemnify such first party under this Agreement. Such notice shall contain
factual information (to the extent known) describing the asserted Tax Liability
in reasonable detail and shall be accompanied by copies of any notice or other
document received from any tax authority in respect of such matter. Sellers
shall control any audits and disputes related to any Tax for which Sellers are
liable or for which Sellers have otherwise agreed to indemnify the Company or
Purchaser under this Agreement at Sellers' sole expense. Sellers and Purchaser
shall jointly control, in good faith with each other, any Tax audit or dispute
involving a Straddle Period. A party shall not compromise, and shall prevent its
Affiliates from compromising, any audit issue or other controversy the
resolution of which is reasonably likely to result in a Tax for which another
party may be liable or has agreed to indemnify the first such party under this
Agreement without first advising such other party in writing of the proposed
compromise and obtaining the written consent of such other party, which consent
shall not be unreasonably withheld or delayed.
Section 6.11. Tax Sharing Agreements and Arrangements. Sellers
will cause any tax sharing agreement or similar arrangement with respect to
Taxes involving the Seller Entities (other than as provided in Section 6.8 or
Contracts solely among such Seller Entities) to be terminated, amended or
assigned effective as of the Closing Date, to the extent that any such agreement
or arrangement relates to the Company or any Subsidiary of the Company, on the
one hand, and any Parent Entity, on the other hand, and after the Closing Date
none of the parties shall have any obligation to a Parent Entity under any such
agreement or arrangement for any past, present or future period.
Section 6.12. Sale of Assets for Tax Purposes.
(a) Purchaser acknowledges and agrees that, notwithstanding
any other provision of this Agreement, following the execution of this
Agreement and prior to the Closing Date, Sellers shall take the actions
specified on Exhibit F hereto (including causing the amendments to the
Partnership Agreement specified therein) to convert JPS Automotive,
L.P. into an "association" taxable as a corporation ("New JPS
Automotive") within the meaning of Treasury Regulation (beta)
301.7701-2(a). Sellers, the Company and Purchaser agree to treat such
conversion for all federal, state and local income tax purposes as a
taxable transfer of all of the assets of JPS Automotive, L.P. to New
JPS Automotive in exchange for the entire equity interest in New JPS
Automotive, which transfer fails to meet the "control" requirement
under Sections 351(a) and 368(c) of the Code, and therefore constitutes
a taxable sale of all such assets. Purchaser further covenants and
agrees to treat New JPS Automotive as a corporation for all such
purposes from and after the Closing Date, including (i) treating New
JPS Automotive as an "includible corporation" within the meaning of
Section 1504(b) of the Code in any consolidated federal income tax
return filed by or on behalf of Purchaser after the Closing Date; and
(ii) taking no action the effect of which would terminate the status of
New JPS Automotive as a corporation for all such purposes at any time
prior to the end of the taxable year of Purchaser that includes the
Closing Date.
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(b) Following the Closing Date, the Company shall prepare an
allocation (in accordance with the methodology required by Section 1060
of the Code and regulations thereunder) of the fair market value of the
assets of the Company (which shall be deemed to equal the Purchase
Price) among the assets of the Company in connection with the sale of
such assets from the Company to New JPS Automotive described in Section
6.12(a). This allocation shall be subject to the approval of Sellers,
which approval shall not be unreasonably withheld or delayed. All
income tax filings by the parties and their affiliates shall be fully
consistent with such allocation and Section 6.12(a), including without
limitation (i) those statements or forms (including Form 8594) required
by Section 1060 of the Code and the regulations thereunder, or similar
state or local tax law, with respect to such sale; (ii) the Form 1065
partnership tax return of the Company for the period ending with such
sale; and (iii) any consolidated federal income tax return in which any
Affiliate of Foamex International Inc. and New JPS Automotive are
included.
(c) Purchaser and Sellers further acknowledge and agree that
as a result of the sale described in Section 6.12(a), the Company will
be treated for federal income tax purposes as having sold its interest
in Cramerton to New JPS Automotive, resulting in an adjustment to the
basis of Cramerton in its assets pursuant to Section 743(b) of the Code
and a termination of Cramerton within the meaning of Section 708 of the
Code. After the Closing, the Company shall prepare a schedule of the
fair market value and tax basis of each of its assets (such fair market
value in the aggregate to be consistent with the allocation described
in Section 6.12(b)) and a calculation of the basis of Cramerton's
assets following such basis adjustment and such termination. All income
tax filings by the parties and their affiliates shall be fully
consistent with such schedule and calculations.
(d) In addition to complying with Section 6.3, within 45 days
after the preparation and approval of the allocation described in
Section 6.12(b) hereof, Sellers shall prepare or cause to be prepared
drafts of the U.S. Form 1065 partnership federal income tax returns,
and any similar state or local income tax returns for the Company and
for Cramerton for the period ending with the sale described in Section
6.12(a), together with pro forma corporate income tax returns for New
JPS Automotive for the period beginning with such sale and ending with
the Closing Date, all prepared in accordance with this Section 6.12.
Such returns shall be subject to the approval of Purchaser, and shall
not be filed by Sellers or their affiliates without such approval. Any
consolidated or combined income tax return including the income of New
JPS Automotive shall be filed in accordance with (or amended to comply
with) such pro forma corporate income tax returns as approved by
Purchaser. Sellers and Purchaser shall, and shall cause their
respective Affiliates to, cooperate in the execution and filing of such
returns as approved by Purchaser.
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Section 6.13. Certain Matters Relating to Enhanced Severance.
(a) In the event that in the nine months following the Closing
Date, the employment of any of the persons listed on Schedule 6.13 Part
A terminates under circumstances in which he or she is entitled to
benefits, then Sellers shall reimburse the Company or such Subsidiary
for all amounts which the Company or such Subsidiary is obligated to
pay and actually pays to or for the benefit of such person (whether in
the form of a severance payment or continued benefits, if any) pursuant
to the JPS Automotive and/or Successor Company Obligations Severance
Plan, dated April 11, 1996, as in effect as of the date hereof (the
"Enhanced Severance Plan"), as such Enhanced Severance Plan is
interpreted pursuant to the Memorandum set forth on Schedule 3.18,
beyond the payment or benefit (if any) otherwise payable whether
pursuant to an employment agreement or otherwise. In addition, Sellers
shall reimburse the Company or any such Subsidiary for any payroll or
FICA tax which the Company or such Subsidiary is obligated to pay in
connection with any payment for which Sellers are required to provide
reimbursement pursuant to this paragraph (a).
(b) In the event that in the nine months following the Closing
Date, the employment of any person listed on Schedule 6.13 Part B
terminates under circumstances in which he or she is entitled to
benefits, then Sellers shall reimburse the Company or such Subsidiary
for one-half of all amounts which the Company or such Subsidiary is
obligated to pay and actually pays to or for the benefit of such person
pursuant to the Enhanced Severance Plan beyond the payment or benefit
(if any) otherwise payable whether pursuant to an employment agreement
or otherwise; provided, however, in no event shall Sellers be obligated
to provide reimbursement pursuant to this sentence in excess of
$652,500. In addition, Sellers shall reimburse the Company or any such
Subsidiary for any payroll or FICA tax which the Company or such
Subsidiary is obligated to pay in connection with any payment for which
Sellers are required to provide reimbursement pursuant to this
paragraph (b).
(c) Sellers shall not be obligated to reimburse Purchaser, the
Company or any Subsidiary pursuant to this Section 6.13 with respect to
any person whose employment is terminated if such person is employed
(or retained as an independent contractor or consultant) by the Company
or any of its Affiliates in the period of fifteen months from the
Closing Date. To the extent Sellers have previously reimbursed
Purchaser, the Company or any Subsidiary, such entity shall, subject to
Purchaser's rights to make additional claims under Section 6.13(b),
promptly repay such excess reimbursement to Sellers.
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(d) The parties will reasonably cooperate with each other to
avoid the application of the special tax rules applicable to "excess
parachute payments" within the meaning of Section 280G of the Code to
any payments to or for the benefit of Employees referred to in this
Section 6.13 or any other Contract or Plan listed or required to be
listed on any Schedule hereto.
Section 6.14. Ongoing Insurance Cooperation.
(a) If the Closing occurs, Sellers and Purchaser shall
cooperate fully with each other and make available or cause to be made
available to each other in a timely fashion such information and
documentation as may be reasonably required for the processing of
insurance claims and the determining of or obtaining of insurance
coverage. Sellers and Purchaser will use reasonable efforts to
cooperate (i) to transfer to Purchaser any insurance and administrative
services contracts that Purchaser wishes to continue and (ii) to cause
any insurance carrier or third party administrator administering
workers' compensation or other insurance programs or liabilities
assumed by Purchaser to deal directly with Purchaser.
(b) With respect to any loss, liability or damage relating to,
resulting from or arising out of the ownership or conduct of the
business of the Company on or prior to the Closing Date for which any
Parent Entity would be entitled to assert, or cause any other person or
entity to assert, a claim for recovery under any policy of insurance
maintained by or for the benefit of a Parent Entity in respect of the
Company or any Subsidiary ("Insurance"), at the request of Purchaser,
Sellers will and will cause any such Parent Entity to use their
reasonable efforts to assert, or to assist Purchaser to assert, one or
more claims under such Insurance covering such loss, liability or
damage if Purchaser, the Company or any Subsidiary of the Company is
not itself entitled to assert such claim but such Parent Entity is so
entitled and Sellers will cause such Parent Entity to promptly pay to
Purchaser any amounts recovered in respect of any such claim, provided
that all of such Parent Entity's out-of-pocket costs and expenses
incurred in connection with the foregoing, including without limitation
any cost in asserting or assisting in asserting any claim, or any
deductible, self-insurance retention, retrospective premium or other
like arrangement by which such Parent Entity retains any liability
under any such policy of Insurance, are promptly reimbursed by
Purchaser. Sellers will be deemed, solely for the purpose of asserting
claims for insurance pursuant to the immediately preceding sentence, to
have retained liability for such loss, liability or damage to the
extent of the policy limits of the applicable Insurance. Nothing in
this Section 6.14 will change or alter the provisions of Article X.
(c) Until the Closing Date, if any current insurance policy is
cancelled or expires, Sellers will use their reasonable efforts to have
such current insurance policy renewed or extended or to replace such
policy with one or more policies providing substantially the same type
and amount of coverage prior to such cancellation or expiration,
provided that any such renewal, extension or replacement is on
reasonable terms. After the Closing Date, Sellers will not, and will
cause each Parent Entity not to, terminate or otherwise discontinue any
current insurance policy solely for the purpose of obtaining a refund
thereunder; provided, however, that nothing in this Agreement will
prevent or interfere with Sellers' or any other Parent Entity's right
to terminate or otherwise discontinue any insurance policy, including
without limitation any current insurance policy, for any other reason,
including without limitation in connection with the settlement or
discharge of any claim.
Section 6.15. Cramerton Tax Distribution. Prior to the
Closing, Sellers shall cause Cramerton to distribute to its partners, an amount
equal to (a) all distributions declared but not paid to the date hereof, (b) all
distributions declared from the date hereof to the Closing Date, and (c) to the
extent not reflected in (a) or (b), Cramerton's reasonable good faith estimate
of the amount of taxes paid or to be paid by such partners on account of the
income of Cramerton through the Closing Date, net of any prior overpayment of
such amounts.
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ARTICLE VII.
CONDITIONS TO SELLERS' OBLIGATIONS
The obligation of Sellers to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Sellers) of each of the following conditions on or prior to the
Closing Date:
Section 7.1. Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date, as
though such representations and warranties were made anew on and as of the
Closing Date. Purchaser shall have delivered to Sellers a certificate of its
President or a Vice President, dated the Closing Date, to the foregoing effect.
Section 7.2. Compliance with Agreement. Purchaser shall have
performed and complied in all material respects with the covenants set forth in
Sections 6.1(b) and (c), 6.4 and 6.6, and in all respects with all other
covenants to be performed or complied with by it on or prior to the Closing
Date. Purchaser shall have delivered to Sellers a certificate of its President
or a Vice President, dated the Closing Date, to the foregoing effect.
Section 7.3. No Adverse Proceeding. As of the Closing Date,
there shall not have been instituted or be pending any suit, action or other
proceeding by any Governmental Agency in which it is sought to restrain or
prohibit or question the validity or legality of the transactions contemplated
by this Agreement, nor shall any such suit, action or proceeding under any
applicable antitrust law, rule or regulation be threatened by any Governmental
Agency.
Section 7.4. Hart-Scott-Rodino. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
Section 7.5. Consents. All consents, Permits, authorizations,
approvals, waivers and amendments which are listed on Schedule 8.5 hereto shall
have been obtained.
Section 7.6. Corporate Documents. Sellers shall have received
from Purchaser certified copies of the resolutions duly adopted by the board of
directors of Purchaser approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and such
resolutions shall be in full force and effect as of the Closing Date.
Section 7.7. Certain Agreements. Purchaser shall have
executed and delivered the SMT License Agreement and Cramerton shall have
executed and delivered the Cramerton Supply Agreement on terms and conditions
satisfactory to Sellers in their sole discretion.
Section 7.8. Discount Debentures Change of Control Put.
Sellers shall have either (i) received the consent of the holders of FJPS's
Senior Secured Discount Debentures due 2004 ("Discount Debentures") to a waiver
of the offers to repurchase upon a Change of Control (as such term is defined in
the Indenture, dated as of June 28, 1994, by and among FJPS and Foamex-JPS
Capital Corporation, as joint and several obligors, and Foamex International
Inc., as guarantor, and Fleet National Bank of Connecticut (formerly known as
Shawmut Bank Connecticut, National Association)) for the Discount Debentures or
(ii) obtained a commitment letter for financing to satisfy the offers to
purchase upon a Change of Control for the Discount Debentures in each case, on
terms and conditions satisfactory to Sellers in their sole discretion.
Section 7.9. Opinion of Counsel. Sellers shall have received
an opinion of Jones, Day, Reavis & Pogue, counsel to Purchaser, in the form of
Exhibit C hereto ("Purchaser's Opinion of Counsel").
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ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Purchaser) of each of the following conditions on or prior to the
Closing Date:
Section 8.1. Representations and Warranties. The
representations and warranties of Sellers contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date, as
though such representations and warranties were made anew on and as of the
Closing Date. Sellers shall have delivered to Purchaser a certificate of the
President or a Vice President of JPSGP and the general partner of FJPS, dated
the Closing Date, to the foregoing effect.
Section 8.2. Compliance with Agreement. Sellers shall have
performed and complied in all material respects with the covenants set forth in
Sections 5.1(a), (b), (d), and (g), 5.2, 5.3, 5.4, 6.1(b) and (c), 6.4, 6.6 and
6.15, and in all respects with all other covenants to be performed or complied
with by them on or prior to the Closing Date. Sellers shall have delivered to
Purchaser a certificate of the President or a Vice President of JPSGP and the
general partner of FJPS, dated the Closing Date, to the foregoing effect.
Section 8.3. No Adverse Proceeding. As of the Closing Date,
there shall not have been instituted or be pending any suit, action or other
proceeding by any Governmental Agency in which it is sought to restrain,
prohibit or question the validity or legality of the transactions contemplated
by this Agreement, nor shall any such suit, action or proceeding under any
applicable antitrust law, rule or regulation be threatened by any Governmental
Agency.
Section 8.4. Hart-Scott-Rodino. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
Section 8.5. Consents. All consents, Permits, authorizations,
approvals, waivers and amendments which are listed on Schedule 8.5 hereto shall
have been obtained.
Section 8.6. Corporate Documents. Purchaser shall have
received from Sellers certified copies of the resolutions duly adopted by the
board of directors of JPSGP and the general partner of FJPS approving the
execution and delivery of this Agreement by JPSGP and FJPS, respectively, and
the consummation of the transactions contemplated hereby, and such resolutions
shall be in full force and effect as of the Closing Date.
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Section 8.7. FIRPTA. Sellers shall have delivered an
affidavit, dated the Closing Date, pursuant to Section 1445 of the Code (Foreign
Investment in Real Property Tax Act of 1980 affidavit) in substantially the form
of Exhibit G.
Section 8.8. Cramerton. Purchaser or one or more of its
Affiliates and Seiren Co. Ltd. or one or more of its Affiliates, shall have
entered into definitive agreements relating to the purchase by Purchaser or its
Affiliates of all of the direct and/or indirect interest in Cramerton not
beneficially owned by the Company, on terms and conditions set forth in Schedule
8.8 and on such other terms as are reasonably satisfactory to Purchaser.
Section 8.9. Purchaser Bank Consent. Purchaser shall have
obtained, on terms and conditions satisfactory to Purchaser in its sole
discretion, the consent of the requisite lenders under its existing bank credit
facility to the extent necessary to consummate the transactions contemplated by
this Agreement.
Section 8.10. Financing of Senior Note Change of Control Put.
Purchaser shall have obtained a commitment letter for a standby facility in an
amount of at least $120 million, to satisfy the offers to repurchase upon a
Change of Control (as such term is defined in the Senior Note Indenture) for the
JPS Automotive L.P. Senior Notes on terms and conditions satisfactory to
Purchaser in its sole discretion.
Section 8.11. Certain Agreements. Foamex L.P. shall have
executed and delivered the SMT License Agreement and the Cramerton Supply
Agreement on terms and conditions satisfactory to Purchaser in its sole
discretion.
Section 8.12. Material Adverse Effect. Since the date hereof,
there shall not have occurred (i) a Material Adverse Effect or (ii) any event
which could reasonably be expected to have a Material Adverse Effect.
Section 8.13. Opinion of Counsel. Purchaser shall have
received an opinion of Willkie Farr & Gallagher, counsel to Sellers, in the form
of Exhibit D ("Sellers' Opinion of Counsel").
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ARTICLE IX.
THE CLOSING; TERMINATION
Section 9.1. The Closing. The Closing of the transactions
contemplated hereby (the "Closing") shall be held two Business Days after each
of the conditions precedent set forth in Articles VII and VIII have been
satisfied or waived by the party entitled to the benefit thereof (the "Closing
Date"). The Closing shall be held at the offices of Jones, Day, Reavis & Pogue,
599 Lexington Avenue, New York, New York 10022 or at such other place as the
parties may mutually agree. At the Closing, all of the transactions provided for
in Article II hereof shall be consummated on a substantially concurrent basis.
Section 9.2. Deliveries by Sellers at the Closing. At the
Closing, Sellers shall deliver, or cause to be delivered, to Purchaser, the
following items:
(a) The duly executed officer's certificates and certified
resolutions referred to in Sections 8.1, 8.2, and 8.6;
(b) The consents listed on Schedule 8.5;
(c) Sellers' Opinion of Counsel; and
(d) All other previously undelivered documents that Sellers
are required to deliver to Purchaser pursuant to this Agreement.
Section 9.3. Deliveries by Purchaser at the Closing. At the
Closing, Purchaser shall deliver, or cause to be delivered, to Sellers, the
following items:
(a) The duly executed officer's certificates referred to in
Sections 7.1, 7.2, and 7.6;
(b) Duly executed and acknowledged transfer tax and other
required tax forms reasonably required by Sellers to consummate the
transactions contemplated hereby, all in the form required by
applicable law;
(c) Purchaser's Opinion of Counsel;
(d) All other previously undelivered documents that Purchaser
is required to deliver to Sellers pursuant to this Agreement; and
(e) The Purchase Price.
Section 9.4. Termination. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated in any of the following ways at any time before the
Closing and in no other manner:
(a) By mutual written consent of Purchaser and Sellers; or
(b) After October 31, 1996 by Purchaser or Sellers (if such
terminating party is not then in default of any obligation hereunder),
if the Closing has not occurred on or before such date.
In the event this Agreement is terminated pursuant to this Section 9.4, all
further obligations of the parties hereunder shall terminate, except for the
obligations set forth in Sections 5.2, 12.4, 12.5, and 12.9, and except that
nothing in this Section 9.4 shall relieve any party hereto of any liability for
breach of any of the covenants or willful or intentional breach of any of the
representations or warranties contained in this Agreement.
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ARTICLE X.
INDEMNIFICATION
Section 10.1. Survival. All of the representations and
warranties of Sellers contained in Article III of this Agreement or in any
certificate delivered by Sellers pursuant to this Agreement shall survive the
Closing and continue in full force and effect: (a) in the case of the
representations and warranties of Sellers contained in Section 3.22, until six
months after the expiration of the statute of limitations with respect to the
matter to which the claim relates, (b) in the case of the representations and
warranties of Sellers contained in Section 3.21, until September 15, 2000, (c)
in the case of the representations and warranties of Sellers contained in
Section 3.30(b), until June 15, 2001, (d) in the case of the representations and
warranties of Sellers contained in Section 3.11(a), until the tenth anniversary
of the Closing Date, and (e) in the case of any other representation or warranty
of Sellers contained in this Agreement (other than the representations and
warranties of Sellers contained in Sections 3.1, 3.2, 3.3, 3.5, and 3.24
(collectively the "Perpetual Representations")) or any certificate delivered by
Sellers, until April 30, 1998. Notwithstanding the foregoing, any notice given
in accordance with Section 12.1 of this Agreement claiming an alleged breach of
any representation or warranty hereunder will without further action extend the
survival period for the representation or warranty alleged to have been breached
as applied to the circumstances set forth in such notice until immediately after
the final resolution of the matter. The Perpetual Representations, all of the
representations and warranties of Purchaser, and all of the covenants of Sellers
and Purchaser contained in this Agreement shall survive the Closing and continue
in full force and effect forever thereafter.
Section 10.2. Indemnification Provisions for Benefit of
Purchaser. Except in the case of any claim related to Taxes, for which the
Purchaser's right to indemnification shall be limited to the rights provided
under Section 10.4 hereof,
(a) In the event Sellers breach any of their representations,
warranties or covenants contained in this Agreement or in any
certificate delivered by Sellers pursuant to this Agreement and
provided that, as to any claim for breach of representations or
warranties, Purchaser makes a written claim for indemnification against
Sellers within the applicable survival period, if applicable, then
Sellers agree jointly and severally to indemnify Purchaser and its
Affiliates from and against all Damages Purchaser suffers resulting
from or arising out of such event; provided, however, Sellers shall not
have any obligation to indemnify Purchaser from and against any Damages
resulting from the breach of any representation or warranty of Sellers
(as opposed to any covenant of Sellers) contained in Article III of
this Agreement (other than Perpetual Representations): (i) until
Purchaser has suffered aggregate Damages, by reason of all such
breaches (excluding breaches or series of related breaches resulting in
Damages of less than $5,000), in excess of $1 million (the
"Deductible") (after which point Sellers will be obligated only to
indemnify the Purchaser from and against further Damages in excess of
the Deductible), (ii) in the case of a breach, or alleged breach, of
the representations and warranties contained in Section 3.21, to the
extent that Purchaser has not complied with the provisions of Section
10.6, or (iii) notwithstanding anything to the contrary contained in
this Agreement, to the extent the aggregate amount that Sellers have
actually indemnified Purchaser for prior breaches of representations
and warranties of Sellers contained in Article III of this Agreement
exceeds $220 million (the "Cap"). Notwithstanding anything to the
contrary contained in this Agreement, to the extent any Damages for
which Purchaser may claim indemnity (or satisfaction of the Deductible)
pursuant to this Section 10.2 relate to a breach of any of the
representations or warranties contained in Article III (other than
Section 3.5) and are due to Damages suffered by Cramerton (which are
not directly suffered by Purchaser or the Company or any other
Subsidiary of the Company other than Cramerton), Sellers shall only be
obligated to indemnify Purchaser and its Affiliates for (or reduce the
remaining portion of the Deductible by) 80% of the total Damages
suffered by Cramerton. Notwithstanding anything to the contrary
contained in this Agreement, Sellers shall not be obligated to
indemnify Purchaser for (or apply against the Deductible) any Damages
which relate to a breach of any of the representations or warranties
contained in Article III (other than Section 3.5) and are due to
Damages suffered by Enjema (which are not directly suffered by the
Company or any other Subsidiary of the Company (other than JMC)) to the
extent that such Damages exceed $1,000,000.
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(b) Without limiting the generality or effect of the
foregoing, Sellers shall indemnify, defend and hold harmless the
Company, Purchaser and any of their respective Affiliates from and
against any and all Damages resulting from or arising out of any of the
following:
(i) Subject to Section 10.6, any business or property
formerly owned or operated by the Company, any of its
Subsidiaries or any of their respective predecessors but not
owned or operated by the Company or its Subsidiaries
immediately after the Closing;
(ii) (A) Any breach of the 1994 Acquisition Agreement
by Sellers, the Company or any of their respective Affiliates
to the extent occurring or commencing, in whole or in part,
prior to the Closing Date and (B) all Taxes of another Person
assumed by the Company pursuant to the 1994 Acquisition
Agreement which the Company is obligated to pay after the
Closing Date;
(iii) Any claim of any creditor of Sellers or any of
their Affiliates (other than the Company and its
Subsidiaries), whether arising prior to, on or after the
Closing Date; or
(iv) Except as set forth on the Closing Date Balance
Sheet or Schedules 3.15 Items J.2-5, or 3.18: (x) any
liability to any Former Employee of the Company, any of its
Subsidiaries or any of their respective predecessors as of the
Closing Date arising under any employee welfare benefit plan,
including, without limitation, post-retirement health
benefits, to the extent not fully funded immediately prior to
the Closing, and (y) any severance or other benefit payable to
any Employee or Former Employee by reason of this Agreement or
the transactions contemplated hereby, including, without
limitation, any stay bonus, golden parachute or other
change-in-control payment or benefit. This provision does not
affect the obligations of the parties under Section 6.13
hereof.
(c) The Indemnification provided for in Section 10.2(a) and
10.2(b) shall survive any investigation at any time made by or on
behalf of Purchaser or any knowledge or information that Purchaser may
have.
(d) Notwithstanding anything to the contrary contained in this
Agreement, including this Section 10.2, Purchaser shall not be entitled
to indemnity hereunder if and to the extent that there has been an
increase in a liability or contra-asset with respect to the matter for
which indemnification is sought in the period from the Interim Balance
Sheet Date to the Closing Date as reflected on the Closing Date Balance
Sheet as finally adjusted in connection with the computation of Final
Adjusted Net Assets.
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(e) Notwithstanding anything to the contrary contained in this
Agreement, including this Section 10.2, Purchaser shall not be entitled
to indemnity hereunder for any breach of Section 3.11(a), until
Purchaser has first made, or has caused the Company or the applicable
Subsidiary to first make, a demand against the insurer under any
available title insurance and Purchaser has concluded in its sole
discretion that such insurer is unable or unwilling to comply with such
demand.
Section 10.3. Indemnification Provisions for Benefit of
Sellers. In the event Purchaser breaches any of its representations, warranties
or covenants contained in this Agreement or in any certificate delivered by
Purchaser pursuant to this Agreement and provided that Sellers make a written
claim for indemnification against Purchaser, then Purchaser agrees to indemnify
Sellers from and against the entirety of any Damages Sellers suffer resulting
from, arising out of, relating to or caused by such breach.
Section 10.4. Tax Indemnity. Provided that Purchaser makes a
written claim for indemnification hereunder, Sellers shall indemnify and hold
harmless Purchaser and its Affiliates against any Damages resulting from (i) any
Taxes of (or assertions of Tax against) the Seller Entities or Enjema for any
taxable period ending on or before the Closing Date (and any Taxes of the Seller
Entities or Enjema for any Straddle Period, to the extent allocable to the
portion of such period ending with the Closing Date) including any Taxes under
Section 6.2, except to the extent provided for on the Closing Date Balance
Sheet; (ii) Taxes relating to any pre-Closing Affiliate of any of the Seller
Entities which are imposed on Purchaser, any Affiliate of Purchaser or any of
the Seller Entities under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise; (iii) a breach of any representation, warranty or
covenant under Sections 3.22(a)(ix), 3.22(c), 3.22(d) or 6.11; and (iv)
compliance with Section 6.12(a) hereof. For purposes of this Section 10.4, the
portion of Taxes for any Straddle Period deemed to be allocable to the portion
of such period ending with the Closing Date shall be (i) in the case of Taxes
that are either (x) based upon or related to income or receipts, or (y) imposed
in connection with any sale or other transfer or assignment of property, the
amount which would have been payable if such period had ended on such date
(except that, solely for purposes of determining the marginal tax rate
applicable in a jurisdiction in which such rate depends upon the level of income
or receipts, annualized income or receipts may be taken into account if
appropriate for an equitable sharing of such Taxes); and (ii) in the case of
Taxes described in subparagraph (i) that are imposed on a periodic basis and
measured by the level of any item, the amount of such Taxes for the entire
Straddle Period multiplied by a fraction, the numerator of which is the number
of calendar days in the portion of the period ending on the Closing Date and the
denominator of which is the number of calendar days in the entire Straddle
Period. In the case of Damages attributable to Taxes of Cramerton or Enjema
described in Section 10.4(i) above, Seller shall only be obligated to indemnify
Purchaser to the extent of 80% or 50%, respectively, of such Damages.
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Section 10.5. Matters Involving Third Parties.
(a) If any third party notifies any party hereto (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification against the other party hereto (the
"Indemnifying Party") under this Article X, then the Indemnified Party
shall use reasonable efforts to notify the Indemnifying Party thereof
promptly and in any event within ten days after receiving any written
notice from a third party; provided, however, that no delay on the part
of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless,
and then solely to the extent that, the Indemnifying Party is actually
prejudiced thereby.
(b) Once the Indemnified Party has given notice of the matter
to the Indemnifying Party, the Indemnified Party may, subject to the
Indemnifying Party's rights to assume the defense of such matter
pursuant to paragraph (c) below, defend against the matter in any
manner it deems appropriate.
(c) The Indemnifying Party may at any point in time choose to
assume the defense of all of such matter, in which event:
(i) the Indemnifying Party shall defend the
Indemnified Party against the matter with counsel of its
choice reasonably satisfactory to the Indemnified Party,
(ii) the Indemnified Party may retain separate
counsel at its sole cost and expense (except that the
Indemnifying Party shall be responsible for the fees and
expenses of one separate co-counsel for all Indemnified
Parties to the extent the Indemnified Party is advised, in
writing by its counsel, that either (x) the counsel the
Indemnifying Party has selected has a conflict of interest, or
(y) there are legal defenses available to the Indemnified
Party that are different from or additional to those available
to the Indemnifying Party (but only to the extent of such
additional defenses)), and
(iii) the Indemnifying Party shall reimburse the
Indemnified Party for the reasonable costs of defense or
investigation for the period prior to the assumption of the
defense.
(d) Assumption of the defense of any matter by the
Indemnifying Party shall without further action constitute an
irrevocable waiver by the Indemnifying Party of its right to claim at a
later date that such third party action for which the defense was
assumed is not a proper matter for indemnification pursuant to this
Article X.
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(e) The Indemnified Party shall not consent to the entry of a
judgment or enter into any settlement with respect to any matter which
may give rise to a claim for indemnification without the written
consent of the Indemnifying Party, which consent may not be
unreasonably withheld or delayed. The Indemnifying Party shall not
consent to the entry of a judgment with respect to any matter which may
give rise to a claim for indemnification or enter into any settlement
which does not include a provision whereby the plaintiff or claimant in
the matter releases the Indemnified Party from all liability with
respect thereto, without the written consent of the Indemnified Party
(not to be unreasonably withheld or delayed).
Section 10.6. Certain Limitations on Environmental
Indemnification.
(a) Purchaser and Sellers agree that except as provided in
this Agreement, Purchaser forever waives, and shall cause the Company
and its Subsidiaries to forever waive, any right it has or may in the
future have against the Parent Entities under any Environmental Law
(collectively, "Environmental Losses").
(b) Notwithstanding any other provision of this Agreement to
the contrary, Sellers shall have no obligation to indemnify Purchaser
pursuant to Section 10.2 for Environmental Losses unless, and only to
the extent that, after the Closing Date, Purchaser, the Company, or any
of their respective Affiliates, incurs, undertakes to incur, or becomes
liable to incur Costs of Remediation as a result of a breach of this
Agreement; provided, however, that nothing herein will require that
Costs of Remediation be incurred, undertaken to be incurred or liable
to be incurred prior to the expiration of the survival period set forth
in Section 10.1 so long as notice of a breach or alleged breach or
claim for Costs of Remediation is given during the survival period.
Such "Costs of Remediation" shall be the sole basis for calculating
Damages arising out of Environmental Losses pursuant to Section 10.2,
and shall be limited to those costs that are necessary:
(i) in accordance with Environmental Laws in effect
at the time such costs are incurred, to respond to a Release
of any Hazardous Materials that first occurred in whole or in
part at, on, under, in or from the Owned Real Property, Leased
Property or formerly owned, leased or operated properties or
third party properties prior to the Closing Date;
(ii) to bring the Company from any non-compliance
with Environmental Laws first occurring in whole or in part
prior to the Closing Date into compliance with all
Environmental Laws in effect as of the time the Costs of
Remediation are incurred; or
(iii) in accordance with Environmental Laws in effect
at the time such costs are incurred, to respond to any legal
proceedings, notices, requests for information, investigations
or claims under Environmental Laws brought by third parties;
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provided, however, Sellers shall not be required to indemnify Purchaser for
Costs of Remediation to the extent arising solely out of the knowing acts or
knowing omissions of Purchaser occurring after the Closing Date.
(c) Sellers waive any right they may have under Environmental
Law against Purchaser, the Company and its Subsidiaries for any matter
to the extent arising out of a breach by Sellers of Section 3.21.
(d) If a dispute arises with respect to whether a claim for
Costs of Remediation meets the requirements of Section 10.6(b)(i), (ii)
and (iii) (without respect to whether there has been a breach of the
representations and warranties of Section 3.21), and such dispute
cannot be resolved within 20 days of written notice of the dispute, the
parties shall select within 14 days thereafter a mutually satisfactory
qualified environmental consultant who is a professional engineer (the
"Environmental Arbitrator"). The Environmental Arbitrator shall review
the information relevant to the dispute provided by the parties and
within 30 days render a decision as to whether or not the Costs of
Remediation meet the requirements of Section 10.6(b)(i), (ii) and (iii)
(without respect to whether there has been a breach of the
representations and warranties of Section 3.21) by applying the
standards set forth in this Section 10.6. Any fees charged by the
Environmental Arbitrator shall be allocated as determined by the
Environmental Arbitrator between Purchaser and Sellers. If an
Environmental Arbitrator cannot be agreed upon within the aforesaid
period, the parties shall direct the American Arbitration Association
("AAA") to immediately provide a list of six potential arbitrators who
are qualified environmental consultants each of whom is a professional
engineer. From the list provided, each party shall have the opportunity
to strike one name, and the AAA shall appoint the Environmental
Arbitrator from the remaining names. The final determination of the
Environmental Arbitrator shall be final and binding on the parties and
there shall be no appeal from or reexamination of such final
determination, except for fraud, perjury, or misconduct by the
Environmental Arbitrator prejudicing the rights of any party, and to
correct manifest clerical errors. Purchaser and Sellers may enforce any
final determination of the Environmental Arbitrator in any court of
competent jurisdiction.
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Section 10.7. Certain Additional Provisions Relating to
Indemnification.
(a) Notwithstanding Section 12.12, after the Closing Date, the
indemnification provisions set forth in this Article X shall constitute
the sole and exclusive recourse and remedy available to the parties
hereto with respect to the breach of any representation or warranty
contained in this Agreement or in any certificate delivered pursuant to
this Agreement except for actual fraud.
(b) The Indemnifying Party shall have no obligation to
indemnify or hold harmless the Indemnified Party pursuant to Article X
for any Damages to the extent that the Indemnified Party or its
Affiliates have actually recovered such Damages (net of expenses or
other costs (including without limitation attorneys' fees and expenses)
of recovery and any retroactive or retrospective premium increases
resulting from such recovery, including without limitation obligations
engendered thereby) from any Person other than the Indemnifying Party
or any Affiliate thereof.
(c) The Indemnified Party hereby assigns to the Indemnifying
Party any right the Indemnified Party may have against any Person
(other than the Indemnifying Party, the Indemnified Party and any
Affiliate of any of the foregoing), including, without limitation, any
insurance company, to recover any Damages or other amounts that the
Indemnifying Party has paid to the Indemnified Party pursuant to
Article X. The Indemnified Party agrees to cooperate reasonably with
the Indemnifying Party, at the Indemnifying Party's sole cost and
expense, in connection with the Indemnifying Party's efforts to pursue
such rights, including, without limitation, providing reasonable access
to the Indemnified Party's personnel, books and records, making its
personnel and those of its Affiliates reasonably available for
deposition and testimony and executing such additional instruments of
assignment to evidence the assignment of such rights. In the event such
rights by their terms may not be assigned (including, without
limitation, the rights of the Company under the 1994 Acquisition
Agreement), the Indemnified Party agrees to pursue its rights against
such other Person, at the sole cost and expense and direction of the
Indemnifying Party, and to remit to the Indemnifying Party any
recovery.
(d) To the extent permitted by applicable law, any payments by
an Indemnifying Party under Article X shall be treated as an adjustment
to the Purchase Price for all foreign, federal, state and local income
tax purposes.
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Section 10.8. Certain Litigation Matters .
(a) Sellers shall indemnify, defend and hold harmless the
Company, Purchaser and any of their respective Affiliates from and
against any and all Damages resulting from or arising out of or caused
by the matters set forth on Item 2 of Schedule 3.20 (the "Indemnified
Litigation").
(b) Purchaser shall cause the Company and its Subsidiaries to
assign to Sellers, subject to Purchaser's rights under paragraph (c)
below, any right that they may have against any Person (other than
Purchaser, the Company or any Affiliate of any of the foregoing), that
is a party or an Affiliate of a party to the Indemnified Litigation,
including, without limitation, any counterclaim, right of offset, or
claim arising out of the transactions giving rise to the Indemnified
Litigation.
(c) Sellers shall control the Indemnified Litigation pursuant
to the provisions of Section 10.5; provided, however, that Purchaser
shall have the right to control any aspect of the Indemnified
Litigation relating to any provisional or other remedy, other than one
imposing solely monetary relief. Purchaser shall also have the right to
approve any settlement, provided that such approval is not unreasonably
withheld; except that this proviso shall be inapplicable in respect of
any settlement involving anything other than the exchange of releases
or the payment of money. Sellers shall direct their counsel to
communicate with Purchaser and to consult with Purchaser on all
significant matters relating to the Indemnified Litigation, including
by providing Purchaser with any and all papers served or filed in the
Indemnified Litigation or other correspondence or documents requested
by Purchaser, including papers otherwise subject to a claim under the
attorney-client privilege or the work-product doctrine, provided that
Purchaser executes a joint defense agreement or takes other reasonable
steps to preserve such privilege or doctrine. Purchaser shall also be
entitled, in its sole discretion, but will not be required to
participate in the Indemnified Litigation. Purchaser shall cause the
Company and its Subsidiaries and Affiliates to cooperate reasonably
with Sellers in connection with Sellers' efforts to pursue such rights,
including, without limitation, providing access to their personnel,
books and records, and making their personnel reasonably available for
deposition and testimony.
ARTICLE XI.
EMPLOYEE BENEFITS
Section 11.1. Employees.
(a) Effective as of the Closing Date, the Employees shall
continue employment with the Company and its Subsidiaries in the same
positions and at the same level of wages and/or salary; provided,
however, except as may be specifically required by applicable law or
any Contract, the Company and its Subsidiaries shall not be obligated
to continue any employment relationship with any Employee for any
specific period of time.
(b) Subject to Sections 10.2 and 6.13, upon the Closing, the
Company and its Subsidiaries shall be solely responsible for all
Liabilities and shall honor and satisfy all obligations with respect to
the Plans. Notwithstanding the foregoing, the Company shall not be
required to continue any particular Plan after the Closing, and any
Plan may be amended or terminated in accordance with its terms and
applicable law; provided such change is not prohibited by any
collective bargaining agreement. Purchaser shall take all required
actions so that the Employees will receive credit for eligibility and
vesting purposes, but not for the accrual of retirement benefits, for
their periods of service with the Company and its predecessors prior to
the Closing under any employee benefit plans, programs or arrangements
established, maintained, continued or made available by the Purchaser,
the Company or any Affiliate after the Closing in which the Employees
are eligible to participate.
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ARTICLE XII.
MISCELLANEOUS PROVISIONS
Section 12.1. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day, (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid), or (d) seven Business Days after the
date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to Sellers and to Purchaser at the addresses
indicated below:
If to Purchaser: Collins & Aikman Products Co.
701 McCullough Drive
Charlotte, North Carolina 28232
Attention: Chief Executive Officer
Fax: (704) 548-2208
With a copy to: Collins & Aikman Products Co.
(which shall not 201 Madison Avenue, 6th Floor
constitute notice) New York, New York 10016
Attention: Elizabeth Philipp, Esq.
Fax: (212) 578-1269
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Fax: (212) 755-7306
If to Sellers: Foamex-JPS Automotive L.P.
JPSGP Inc.
c/o Foamex International Inc.
375 Park Avenue, 11th Floor
New York, New York 10152
Attention: Philip N. Smith, Jr.
Facsimile No. (212) 593-1363
With a copy to: Willkie Farr & Gallagher
(which shall not 153 East 53rd Street
constitute notice) New York, New York 10022
Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section.
Section 12.2. Amendments. The terms, provisions and conditions
of this Agreement may not be changed, modified or amended in any manner except
by an instrument in writing duly executed by both of the parties hereto.
Section 12.3. Assignment and Parties in Interest.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be assigned or delegated (by
operation of law or otherwise) by either party hereto except with the
prior written consent of the other party hereto, provided, however,
that (i) prior to or after the Closing, Purchaser may assign all of its
rights hereunder to any Affiliate of Purchaser, provided that no such
assignment will relieve Purchaser of its obligations hereunder unless
such assignment is made at Closing to Collins & Aikman Corp., and
provided further that such assignment shall not hinder, delay or
prevent the Closing, and (ii) Purchaser has a one-time right to assign
all of its rights hereunder to any other Person which acquires all or
substantially all of the assets of, or equity interest in, the Company.
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(b) Notwithstanding any provision of this Agreement to the
contrary, Purchaser hereby acknowledges and agrees that Sellers may
collaterally assign their rights, title and interest to any payments
under this Agreement to any creditor of Sellers. Furthermore, Sellers
hereby acknowledge and agree that upon receipt of written notice from
such creditor that an "Event of Default" has occurred, Purchaser will
tender any payments due under this Agreement to such creditor in
accordance with the instructions set forth in such notice; provided,
however, in the event that Purchaser tenders payment to Sellers, such
payment shall be a complete discharge of Purchaser's obligation to such
creditor for such payment and Purchaser shall thereafter have no
further liability to such creditor with respect to such payment.
(c) Except as provided in Article X, this Agreement (including
without limitation Article XI) shall not confer any rights or remedies
upon any person or entity other than the parties hereto and their
respective permitted successors and assigns.
Section 12.4. Announcements. All press releases, notices to
customers and suppliers and similar public announcements prior to or within five
days after the Closing Date with respect to this Agreement and the transactions
contemplated by this Agreement shall be approved by both Purchaser and Sellers
prior to the issuance thereof; provided that either party may make any public
disclosure it believes in good faith is required by law, regulation or rule of
any stock exchange on which its securities are traded (in which case the
disclosing party shall use reasonable efforts to advise the other party prior to
making such disclosure and to provide the other party a reasonable opportunity
to review the proposed disclosure).
Section 12.5. Expenses. Except as expressly set forth in this
Agreement, each party to this Agreement shall bear all of its legal, accounting,
investment banking, and other expenses incurred by it or on its behalf in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated.
Section 12.6. Entire Agreement. This Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof, supersedes and is in full substitution for any and all prior agreements
and understandings among them relating to such subject matter, and no party
shall be liable or bound to the other party hereto in any manner with respect to
such subject matter by any warranties, representations, indemnities, covenants,
or agreements except as specifically set forth herein. The Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.
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Section 12.7. Descriptive Headings. The descriptive headings
of the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 12.8. Counterparts. For the convenience of the
parties, any number of counterparts of this Agreement may be executed by any one
or more parties hereto, and each such executed counterpart shall be, and shall
be deemed to be, an original, but all of which shall constitute, and shall be
deemed to constitute, in the aggregate but one and the same instrument.
Section 12.9. Governing Law; Jurisdiction.
(a) This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws
of the State of New York, applicable to contracts made and performed
therein.
(b) Except as set forth in Section 10.6(d), the parties hereto
irrevocably submit to the exclusive in personam jurisdiction of any New
York State or Federal court sitting in the City of New York over any
suit, action or proceeding arising out of or relating to this
Agreement. To the fullest extent it may effectively do so under
applicable law, each of the parties hereto irrevocably waives and
agrees not to assert, by way of motion, as a defense or otherwise, (i)
any claim that (A) any proceeding arising out of or relating to this
Agreement may be brought in another jurisdiction (except a proceeding
brought by a third party) or (B) that it is not subject to the in
personam jurisdiction of any court referenced in the first sentence of
this clause (b), (ii) any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding
brought in any such court and (iii) any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
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Section 12.10. Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any party. Any references to any federal, state, local or foreign statute or law
will also refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. Unless the context otherwise requires: (a) a term
has the meaning assigned to it by this Agreement; (b) an accounting term not
otherwise defined has the meaning assigned to by GAAP; (c) "or" is disjunctive
but not exclusive; (d) words in the singular include the plural, and in the
plural include the singular; (e) provisions apply to successive events and
transactions; and (f) "$" means the currency of the United States of America.
Section 12.11. Severability. In the event that any one or more
of the provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 12.12. Specific Performance. Without limiting or
waiving in any respect any rights or remedies of Purchaser under this Agreement
now or hereinafter existing at law or in equity or by statute, each of the
parties hereto shall be entitled to seek specific performance of the obligations
to be performed by the other in accordance with the provisions of this
Agreement.
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ARTICLE XIII.
FOAMEX INTERNATIONAL INC. GUARANTY
Section 13.1. Guaranty. Foamex International Inc., a Delaware
corporation ("Guarantor"), hereby irrevocably and unconditionally guarantees the
due and prompt payment and performance of all obligations, covenants and
agreements to be performed by Sellers to Purchaser hereunder (the
"Obligations").
Section 13.2. Nature of Guaranty. The guaranty to be provided
by Guarantor pursuant to Section 13.1 hereof is the exclusive remedy of
Purchaser against Guarantor and is a guaranty of payment and performance, not
merely of collection, and is independent of any other guaranty or surety of the
Obligations. If Sellers shall fail timely to perform or pay any Obligation,
Guarantor shall pay or perform such Obligation as and when due. Guarantor hereby
waives (i) promptness, diligence, notice, disclosure, demand for, presentment,
protest and dishonor, and (ii) except as set forth below, any right to force
Purchaser to proceed first, concurrently or jointly against Sellers, any other
guarantor, surety or other co-obligor. Purchaser hereby agrees that prior to
enforcing its rights of payment and performance against Guarantor pursuant to
Section 13.1 hereof with respect to any Obligation, Purchaser shall have (x)
made demand on Sellers to perform such obligation, covenant or agreement
hereunder, (y) given Sellers a reasonable opportunity to comply with such
obligation, covenant or agreement, and (z) determined in its sole discretion
that Sellers have not or will not comply with such Obligation.
Section 13.3. Limitation on Guaranty. Notwithstanding anything
to the contrary contained in this Agreement, the scope of Guarantor's liability
hereunder shall in no event be greater than the scope of the liability of
Sellers under this Agreement. Purchaser expressly agrees that the defenses
available to Guarantor shall be no less than the defenses which are, or would
have been, available to Sellers.
Section 13.4. Authority of Guarantor. Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Guarantor has full corporate power and authority to
execute and deliver this Agreement, and the execution and delivery by Guarantor
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Guarantor, and this Agreement constitutes the legal, valid and binding
obligation of Guarantor enforceable against Guarantor in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which affect
creditors' rights generally and by legal and equitable limitations on the
enforceability of specific remedies. The execution, delivery and performance of
this Agreement does not conflict with any contractual or other obligation to
which Guarantor is a party, except for such conflicts which individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on Guarantor or materially impair the ability of Guarantor to consummate the
transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, Sellers and Purchaser have executed and
delivered this Agreement as of the day and year first written above.
SELLERS: FOAMEX-JPS AUTOMOTIVE L.P.
BY: FJGP, Inc.
Its: General Partner
BY: /s/ Philip N. Smith, Jr.
---------------------------------
Name: Philip N. Smith, Jr.
Title: Vice President
JPSGP INC.
BY: /s/ Philip N. Smith, Jr.
---------------------------------
Name: Philip N. Smith, Jr.
Title: Vice President
GUARANTOR: FOAMEX INTERNATIONAL INC.
pursuant to Article XIII.
BY: /s/ Philip N. Smith, Jr.
---------------------------------
Name: Philip N. Smith, Jr.
Title: Vice President
PURCHASER: COLLINS & AIKMAN PRODUCTS CO.
BY: /s/ David A. Stockman
---------------------------------
Name: David A. Stockman
Title: Co-Chairman of the Board
60
