ASSET PURCHASE AGREEMENT
BY AND AMONG
JPS AUTOMOTIVE L.P.
AND
SAFETY COMPONENTS INTERNATIONAL, INC.
Dated as of June 30, 1997
TABLE OF CONTENTS
Page No.
ARTICLE I. DEFINITIONS...................................................... 1
Section 1.1. Definitions.......................................... 1
Section 1.2. Use of Defined Terms.................................. 11
Section 1.3. Accounting Terms and Determinations................... 12
Section 1.4. Sections, Exhibits and Schedules...................... 12
Section 1.5. Miscellaneous Terms................................... 12
ARTICLE II. SALE AND PURCHASE............................................... 12
Section 2.1. Sale and Purchase of the Acquired Assets.............. 12
Section 2.2. Acquired Assets and Excluded Assets................... 12
Section 2.3. Assumption of Liabilities............................. 14
Section 2.4. Purchase Price........................................ 17
Section 2.5. Purchase Price Adjustment............................. 17
ARTICLE III. CLOSING........................................................ 20
Section 3.1. The Closing........................................... 20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER........................ 20
Section 4.1. Organization; Good Standing; Power
and Qualification... ............................... 20
Section 4.2. No Conflict or Violation; Consents.................... 20
Section 4.3. Authority of Seller................................... 21
Section 4.4. Acquired Assets....................................... 21
Section 4.5. No Material Misstatements............................. 22
Section 4.6. Financial Statements; Closing Date Liability
to Seller.. ................................ 22
Section 4.7. Undisclosed Liabilities............................... 23
Section 4.8. Accounts Receivable................................... 23
Section 4.9. Inventory............................................. 23
Section 4.10. Material Adverse Effect.............................. 24
Section 4.11. Real Property........................................ 24
Section 4.12. Tangible Property..................................... 25
Section 4.13. Intellectual Property................................ 25
Section 4.14. Compliance with Laws................................. 26
Section 4.15. Affiliate Agreements; Related Party Transactions..... 26
Section 4.16. Assumed Contracts.................................... 27
Section 4.17. Labor Relations...................................... 28
Section 4.18. Employee Benefits.................................... 28
Section 4.19. Insurance............................................ 31
Section 4.20. Litigation........................................... 31
Section 4.21. Environmental Matters................................ 31
Section 4.22. Tax Matters.......................................... 33
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Section 4.23. Interim Operations................................... 35
Section 4.24. Brokers.............................................. 36
Section 4.25. Products Liability................................... 36
Section 4.26. Books and Records.................................... 37
Section 4.27. Disclaimer of Additional Representations and
Warranties; Schedules.............................. 37
Section 4.28. Accruals............................................. 37
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 38
Section 5.1. Organization; Good Standing; Power and Qualification.. 38
Section 5.2. No Conflict or Violation; Consents.................... 38
Section 5.3. Litigation............................................ 38
Section 5.4. Brokers............................................... 38
Section 5.5. Financial Capacity.................................... 39
Section 5.6. Disclaimer of Additional Representations
and Warranties..................................... 39
ARTICLE VI. CERTAIN COVENANTS OF SELLER..................................... 39
Section 6.1. Conduct of Business................................... 39
Section 6.2. Legal Proceedings..................................... 41
Section 6.3. Solicitation.......................................... 41
Section 6.4. Information and Access................................ 41
Section 6.5. Confidentiality Agreements............................ 42
Section 6.6. Certain Environmental Covenants....................... 42
Section 6.7. Management Information System......................... 43
Section 6.8. Accounting; Human Resources; Credit Collection........ 43
Section 6.9. Taylors Facility...................................... 43
ARTICLE VII. CERTAIN COVENANTS.............................................. 44
Section 7.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and Other Filings.................... 44
Section 7.2. Certain Provisions Relating to Consents................ 44
Section 7.3. Nondisclosure; Noncompetition. ...................... 44
Section 7.4. Efforts............................................... 46
Section 7.5. Collections........................................... 46
Section 7.6. Ongoing Tax Cooperation............................... 46
Section 7.7. Clearance Certificates................................ 47
Section 7.8. Certain Tax Matters................................... 47
Section 7.9. W-2 Matters........................................... 48
Section 7.10. Ongoing Insurance Cooperation........................ 48
Section 7.11. Bulk Transfer Laws................................... 49
Section 7.12. Enhanced Severance Issues............................ 49
Section 7.13. Notice............................................... 50
Section 7.14. Policy............................................... 50
ARTICLE VIII. CONDITIONS TO SELLER'S OBLIGATIONS............................ 50
Section 8.1. Representations and Warranties........................ 50
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Section 8.2. Compliance with Agreement............................. 50
Section 8.3. No Adverse Proceeding................................. 50
Section 8.4. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇..................................... 51
Section 8.5. Corporate Documents................................... 51
Section 8.6. ▇▇▇▇ of Sale.......................................... 51
Section 8.7. Purchase Price........................................ 51
Section 8.8. Opinion of the Purchaser's Counsel.................... 51
Section 8.9. C&A Credit Agreements Consent......................... 51
ARTICLE IX. CONDITIONS TO PURCHASER'S OBLIGATIONS........................... 51
Section 9.1. Representations and Warranties........................ 51
Section 9.2. Compliance with Agreement............................. 51
Section 9.3. No Adverse Proceeding................................. 52
Section 9.4. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇..................................... 52
Section 9.5. Consents.............................................. 52
Section 9.6. Corporate Documents................................... 52
Section 9.7. FIRPTA................................................ 52
Section 9.8. Material Adverse Effect............................... 52
Section 9.9. ▇▇▇▇ of Sale.......................................... 52
Section 9.10. Opinion of the Seller's Counsel...................... 52
Section 9.11. Financing............................................ 52
Section 9.12. Loom Purchase........................................ 53
Section 9.13. Intellectual Property................................ 53
Section 9.14. Limited Partner Guarantee............................ 53
Section 9.15. Intentionally Left Blank............................. 53
Section 9.16. 1994 Financial Statements............................ 53
Section 9.17. SC Seller's Affidavit................................ 53
Section 9.18. KeyBank Consent...................................... 53
ARTICLE X. DELIVERIES AT CLOSING............................................ 53
Section 10.1. Deliveries by Seller at the Closing.................. 53
Section 10.2. Deliveries by Purchaser at the Closing............... 54
ARTICLE XI. TERMINATION..................................................... 55
Section 11.1. Termination.......................................... 55
Section 11.2. Effect of Termination................................ 56
ARTICLE XII. COVENANTS RELATING TO EMPLOYMENT AND EMPLOYEE
MATTERS.................................................. 56
Section 12.1. Offer of Employment, Welfare and Fringe Benefits.. 56
Section 12.2. Seller Plans...................................... 58
Section 12.3. Crediting of Service.............................. 60
Section 12.4. No Rights to Employees............................ 60
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ARTICLE XIII. INDEMNIFICATION............................................... 60
Section 13.1. Survival............................................. 60
Section 13.2. Indemnification Provisions for Benefit of Purchaser.. 61
Section 13.3. Indemnification Provisions for Benefit of Seller..... 63
Section 13.4. Matters Involving Third Parties...................... 63
Section 13.5. Certain Limitations on Environmental Indemnification. 64
Section 13.6. Certain Additional Provisions Relating to
Indemnification.................................... 66
ARTICLE XIV. MISCELLANEOUS PROVISIONS....................................... 67
Section 14.1. Notices.............................................. 67
Section 14.2. Amendments........................................... 68
Section 14.3. Assignment and Parties in Interest................... 68
Section 14.4. Announcements........................................ 68
Section 14.5. Expenses............................................. 69
Section 14.6. Entire Agreement..................................... 69
Section 14.7. Descriptive Headings................................. 69
Section 14.8. Counterparts......................................... 69
Section 14.9. Governing Law; Jurisdiction.......................... 69
Section 14.10. Construction........................................ 69
Section 14.11. Severability........................................ 70
Section 14.12. Specific Performance................................ 70
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SCHEDULE
NUMBER SCHEDULE NAME
1.1 Knowledge
1.2 Permitted Liens
2.2(b)(viii) Excluded Assets
2.3(b)(iv) Excluded Contracts
2.5(a) Closing Date Balance Sheet Principles
4.1 Qualification; Certificate and Partnership Agreement
4.2 No Conflict or Violation; Consents
4.4(a) Acquired Assets
4.4(b) Leased or Licensed Acquired Assets
4.6 Financial Statements
4.7 Undisclosed Liabilities
4.10 Material Adverse Effect
4.11(a) Business Real Property
4.11(b) Leased Business Real Property
4.12(a) Tangible Property
4.12(b) Tangible Property Leases
4.13 Intellectual Property
4.14(a) Compliance with Laws
4.14(b) Permits
4.15(a) Affiliate Agreements
4.15(b) Related Party Transactions
4.16 Assumed Contracts
4.17 Labor Relations
4.18(a) Employee Benefit Plans
4.18(c) Multiemployer Plans
4.18(d) Reportable Events
4.18(j) Employee Benefit Plan Post Retirement Liabilities
4.18(k) Employee Benefit Plan Compensation
4.19 Insurance
4.20 Litigation
4.21 Environmental Matters
4.22 Tax Matters
4.23 Interim Operations
4.25 Products Liability
5.2 No Conflict of Violation; Consents
5.4 Brokers
6.1 Conduct of Business
7.10 Insurance
7.12 Enhanced Severance Issues
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EXHIBIT EXHIBIT NAME
A ▇▇▇▇ of Sale
B Form of Opinion of Purchaser's Counsel
C Form of FIRPTA Certificate
D Form of Opinion of Seller's Counsel
E Guarantee
F SC Seller's Affidavit
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of June 30, 1997, by and between JPS AUTOMOTIVE L.P., a Delaware
limited partnership (the "Seller"), and SAFETY COMPONENTS INTERNATIONAL, INC., a
Delaware corporation (the "Purchaser").
PRELIMINARY STATEMENT
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, the air restraint and technical products division
of Seller (the "Business") on 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
Recital 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:
"AAA" has the meaning set forth in Section 13.5(d).
"Accountants" has the meaning set forth in Section 2.5(c).
"Acquired Assets" has the meaning set forth in Section 2.2(a).
"Actual Net Worth Amount" has the meaning set forth in Section
2.5(a).
"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.
"Assumed Contracts" has the meaning set forth in Section
2.2(a).
"Assumed Liabilities" has the meaning set forth in Section
2.3(a).
"Balance Sheet" has the meaning set forth in Section 4.6.
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"▇▇▇▇ of Sale" means a ▇▇▇▇ of Sale and Assignment and
Instrument of Assumption substantially in the form annexed hereto as
Exhibit A.
"Business" has the meaning set forth in the preamble to this
Agreement.
"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.
"Business Employees" means each individual who, on the
applicable date, performs services as an employee for the Business
(including such persons who are on an approved leave of absence,
vacation, short-term disability or otherwise treated as an active
employee of the Business).
"Business Real Property" has the meaning set forth in Section
4.11(a).
"C&A Credit Agreements" means (i) the Amended and Restated
Credit Agreement, dated as of June 3, 1996, among the Limited Partner,
as Borrower, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Canada Inc., as Canadian Borrower,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation as Guarantor, the Lenders named therein,
and The Chase Manhattan Bank, as Administrative Agent, and (ii) the
Credit Agreement, dated as of December 5, 1996, among the Limited
Partner, as Borrower, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation, as Guarantor, the
Lenders named therein and The Chase Manhattan Bank as Administrative
Agent, each as amended and in effect as of the date hereof.
"Cap" has the meaning set forth in Section 13.2(a).
"Certificate of Limited Partnership" means the certificate of
limited partnership of Seller, as amended and in effect on the date hereof.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
"Closing Date Balance Sheet" has the meaning set forth in
Section 2.5(a) as finally adjusted pursuant to Section 2.5.
"Closing Price" has the meaning set forth in Section 2.4(a).
"COBRA" has the meaning set forth in Section 12.1(e).
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" has the meaning set forth in
Section 6.4(a).
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"Consents" All governmental and third party consents, Permits,
approvals, orders, authorizations, qualifications and waivers necessary
for the consummation of the transactions contemplated by this Agreement
or that thereafter may be necessary to effectuate the transfer or
renewal of any Contract, license and Permit or other license, Permit,
approval, order, authorization, qualification or waiver.
"Contract" as of any date means, any contract, agreement,
mortgage, deed of trust, bond, indenture, lease, license, note,
franchise, certificate, option, warrant, right, commitment, instrument,
guarantee or other similar document or agreement, whether written or
oral, to which Seller is a party as of such date, including the Assumed
Contracts, all unfilled orders outstanding as of such date for the
purchase of raw materials, goods or services by Seller, and all
unfilled orders outstanding as of such date for the sale of goods or
services by Seller. Contracts, however, shall not include Leases or
Permitted Liens.
"Costs of Remediation" means all losses, amounts paid in
settlement, remediation, monitoring and reporting costs and expenses,
Taxes, claims, damages, punitive damages, consequential damages, treble
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,
primarily relating to the Business and 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 Business Real
Property, Leased Business Real Property or any real property at or to
which Seller, 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 Supply Agreement" means the Supply Agreement, dated
as of December 11, 1996, between Foamex L.P. and Cramerton Automotive
Products, L.P.
"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.
"Deductible" has the meaning set forth in Section 13.2(a).
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"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.
"Employee Welfare Benefit Plan" has the meaning set forth in
Section 3(1) of ERISA.
"Environmental Arbitrator" has the meaning set forth in
Section 13.5(d).
"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. ss. 9601 et seq., "CERCLA"); (b) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 et seq.,
"RCRA"); (c) the Hazardous Materials Transportation Act (49 U.S.C. ss.
1801 et seq., "HMTA"); (d) the Toxic Substances Control Act (15 U.S.C.
ss. 2061 et seq., "TSCA"); (e) the Federal Water Pollution Control Act
(33 U.S.C. ss. 1251 et seq.); (f) the Clean Air Act and Amendments (42
U.S.C. ss. 7401 et seq.); (g) the Safe Drinking Water Act (21 U.S.C.
ss. 349; 42 U.S.C. ss. 201 and ss. 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., "▇▇▇▇").
"Environmental Losses" has the meaning set forth in Section
13.5.
"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 Seller under Section 414(b), (c), (m) or (o) of
the Code or 4001(a) of ERISA.
"Estimated Net Worth Amount" has the meaning set forth in
Section 2.4(b).
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"Estimated Purchase Price" has the meaning set forth in
Section 2.4(b).
"Exchange Act" The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2(b).
"Excluded Contracts" has the meaning set forth in Section
2.3(b)(iv).
"Excluded Liabilities" has the meaning set forth in Section
2.3(b).
"Extended Health Benefits" has the meaning set forth in
Section 12.1(c).
"Financial Statements" has the meaning set forth in Section
4.6.
"FIRPTA Affidavit" has the meaning set forth in Section 9.7.
"Former Business Employee" means each individual other than a
Business Employee on the Closing Date who at any time prior to the
Closing Date performed services as an employee primarily for the
Business.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board, applied on a consistent basis and consistent with past
practices.
"General Partner" means PACJ, Inc., a Delaware corporation.
"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.
"Guarantee" has the meaning set forth in Section 9.14.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
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"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.
"Highly Confident Letter" has the meaning set forth in Section
9.11.
"Income Tax" or "Income Taxes" means all Taxes imposed on,
measured by, or that require reference to, net or taxable income
(including any income, franchise, estimated, alternative, minimum,
add-on minimum or other tax imposed on, measured by, or which requires
reference to, net or taxable income), together with interest and
penalties thereon and estimated payments thereof.
"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, and
6
(vii) every obligation of the type referred to in clauses (i) through
(vi) 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.
"Indemnified Party" has the meaning set forth in Section
13.4(a).
"Indemnifying Party" has the meaning set forth in Section
13.4(a).
"Insurance" means all binders or polices of fire, liability,
product liability, workers' compensation, vehicular, unemployment and
other insurance, self insurance programs and fidelity bonds.
"Intangible Property" All Contracts, certificates of deposit,
securities, partnership or other ownership interests, rights to receive
money or property by assignment, future interests, claims and rights
against third parties, accounts receivable, notes receivable,
Intellectual Property, prepaid expenses, acquisition costs and other
intangible property of any nature owned, leased, licensed, used or held
for use, directly or indirectly, by, on behalf of or for the account of
a Person.
"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
4.6.
"Interim Balance Sheet Date" means March 29, 1997.
"Interim Financial Statements" has the meaning set forth in
Section 4.6.
"IRS" means the Internal Revenue Service of the Department of
the Treasury.
"JPS Products" has the meaning set forth in Section 9.13.
"Judgment" means any judgment, writ, order, injunction, award
or decree of or by any Governmental Agency.
"KeyBank" has the meaning set forth in Section 9.18.
"Knowledge" as applied to Seller, means the actual knowledge,
after reasonable inquiry, of any person listed on Schedule 1.1 annexed
hereto.
7
"Last Offer" has the meaning set forth in Section 2.5(c).
"Law" Any statute, ordinance, code, rule, regulation, order or
other law enacted, adopted, promulgated, applied or followed by any
Governmental Agency.
"Leased Business Real Property" has the meaning set forth in
Section 4.11(b).
"Leases" has the meaning set forth in Section 4.11(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.
"Limited Partner" has the meaning set forth in Section 9.14.
"Loom Purchase" means the contemplated purchase by Seller of
18 looms for an aggregate purchase and installation price of up to $1.5
million dollars.
"Material Adverse Effect" has the meaning set forth in Section
4.1.
"Multiemployer Plan" has the meaning set forth in Section
3(37) of ERISA.
"Net Worth Amount" has the meaning set forth in Section
2.4(a).
"Non-Prevailing Party" has the meaning set forth in Section
2.5(c).
"Parent Entity" means The Blackstone Group, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., Inc., their respective Affiliates, other than Seller and its
Subsidiaries, and their respective officers and directors.
"Partnership Agreement" means the Seller's First Amended and
Restated Agreement of Limited Partnership, dated as of July 27, 1994,
and any amendments thereto.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any permit, approval, consent, authorization,
license, variance, certificate, franchise, registration, accreditation
or permission required by a Governmental Agency under any applicable
Laws.
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"Permitted Liens" means, with respect to any Acquired 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 Acquired 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 Acquired Asset and the continuation of the present occupancy or
use of such Acquired Asset; (ii) the matters set forth on Schedule 1.2
annexed hereto; (iii) mechanics', 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.
"Perpetual Representations" has the meaning set forth in
Section 13.1.
"Person" means any individual, trustee, corporation, general
or limited partnership, limited liability partnership, limited
liability company, joint venture, joint stock company, bank, firm,
Governmental Agency, trust, association, organization or unincorporated
entity of any kind or nature whatsoever.
"Plan" has the meaning set forth in Section 4.18(a).
"Plan Basket" has the meaning set forth in Section 13.2(a)
"Prevailing Party" has the meaning set forth in Section
2.5(c).
"Product" has the meaning set forth in Section 4.25(a).
"Product Claim" has the meaning set forth in Section 4.25(a).
"Purchase Price" has the meaning set forth in Section 2.4(a).
"Purchaser" has the meaning set forth in the preamble hereto.
"Purchaser's Counsel" means the law firm of Shereff, Friedman,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP.
9
"Purchaser's Plan" has the meaning set forth in Section
12.2(b).
"Recall" has the meaning set forth in Section 4.25(b).
"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.
"Returns" All returns, declarations and reports and all
information returns and statements of any kind or nature whatsoever.
"SC Seller's Affidavit" has the meaning set forth in Section
9.17.
"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.
"Seller" has the meaning set forth in the preamble hereto.
"Seller's Counsel" means the law firm of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇.
"Seller's Dependent Care Program" has the meaning set forth in
Section 12.1(c).
"Seller's Flexible Benefit Program" has the meaning set forth
in Section 12.1(c).
"Seller's Group Health Plan" has the meaning set forth in
Section 12.1(c).
"Seller's Group Life Policy" has the meaning set forth in
Section 12.1(c).
"Seller's Retirement Plan" has the meaning set forth in
Section 12.2(a).
"Seller's Savings Plan" has the meaning set forth in Section
12.2(c).
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Significant Employee" has the meaning set forth in Section
4.23.
"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.
10
"SMT License Agreement" means a Technology License Agreement
between Foamex L.P. and the Limited Partner.
"Subsidiary" means "subsidiary" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"Surviving Lien" Any Lien affecting the Acquired Assets which
the Purchaser, prior to the Closing, expressly agrees in writing or by
a notation on a Schedule shall survive the Closing, including, without
limitation, Permitted Liens.
"Tangible Property" All furnishings, machinery, equipment,
computer systems and Software, supplies, inventories, vehicles, books
and records and other tangible property and facilities of any kind or
nature whatsoever.
"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.
"Transferred Assets" has the meaning set forth in Section
12.2(c).
"Transferred Business Employee" means each Business Employee
who accepts the offer of employment made by Purchaser pursuant to
Article XII hereof.
"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.
"1994 Financial Statements" has the meaning set forth in
Section 4.6.
Section 1.2. Use of Defined Terms. Any defined term used in
the plural shall refer to all members of the relevant class, and any defined
term used in the singular shall refer to any one or more of the members of the
relevant class. The use of any gender shall be applicable to all genders.
11
Section 1.3. 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.
Section 1.4. Sections, Exhibits and Schedules. References in
this Agreement to Sections, Exhibits and Schedules are to Sections, Exhibits and
Schedules of and to this Agreement. All Exhibits and Schedules to this Agreement
are hereby incorporated herein by this reference as if fully set forth herein.
Section 1.5. Miscellaneous Terms. The term "or" shall not be
exclusive. The terms "herein," "hereof," "hereto," "hereunder" and other terms
similar to such terms shall refer to this Agreement as a whole and not merely to
the specific article, section, paragraph or clause where such terms may appear.
The term "including" shall mean "including, but not limited to."
ARTICLE II.
SALE AND PURCHASE
Section 2.1. Sale and Purchase of the Acquired Assets.
(a) Upon the terms and subject to the conditions of this
Agreement, and on the basis of the representations and warranties
contained in this Agreement, on the Closing Date, Seller will sell,
assign, convey, transfer and deliver to the Purchaser, and the
Purchaser will acquire, accept and receive from Seller, for the
Purchase Price and in the manner herein below provided, all of Seller's
rights, title and interests in and to all of the Acquired Assets.
(b) The aggregate purchase price, in consideration of the
sale, assignment, conveyance, transfer and delivery of the Acquired
Assets to Purchaser shall be the price as calculated pursuant to
Section 2.4 hereof plus the assumption of the Assumed Liabilities.
Section 2.2. Acquired Assets and Excluded Assets
(a) For purposes of this Agreement, the term "Acquired Assets"
means the following properties, assets and rights of whatever kind and
nature, real or personal, tangible or intangible, other than the
Excluded Assets, owned by Seller as of the Closing and used or held for
use in the Business:
12
(i) the Business Real Property and Leased Business Real
Property;
(ii) the inventory of Seller that as of the Closing is located
on either the Business Real Property or the Leased Business Real
Property and all other inventory of Seller on the Closing Date that is
used or held for use in the Business;
(iii) the machinery and equipment of Seller and other fixed
assets of the Business located at either the Business Real Property or
the Leased Business Real Property as of the Closing;
(iv) the prepaid expenses of Seller as of the Closing to the
extent relating to the Acquired Assets;
(v) the right, title and interest of Seller as of the Closing
in, to and under all Contracts (other than Excluded Contracts) relating
primarily to the Business ("Assumed Contracts") including without
limitation those Contracts that are listed or required to be listed on
Schedule 4.16 annexed hereto;
(vi) the right, title and interest of Seller as of the Closing
in, to and under the Intellectual Property listed or required to be
listed on Schedule 4.13 annexed hereto;
(vii) the trade secrets, know-how and goodwill owned by Seller
as of the Closing relating primarily to the Business;
(viii) the books of account, general, financial, accounting
and personnel records, files, invoices, customers' and suppliers' lists
and other written information (excluding Tax Returns) owned by Seller
as of the Closing and relating primarily to the Business;
(ix) the Permits of Seller as of the Closing relating
primarily to the Business;
(x) the assets reflected as such in the Closing Date Balance
Sheet; and
(xi) all other assets owned by Seller and used or held for use
in the Business.
(b) For purposes of this Agreement, the term "Excluded Assets"
means:
(i) cash and cash-equivalent assets;
(ii) the insurance policies or other insuring agreements of
Seller, whether or not pertaining to the Acquired Assets or the
Business, and all rights of every nature and description under or
arising out of such policies or agreements, including without
limitation prepaid balances and deposits with insurers, other than
rights to claims listed as
13
assets on the Closing Date Balance Sheet and except as expressly
provided in Section 7.10;
(iii) the rights of Seller under this Agreement and the
agreements, instruments and certificates delivered in connection with
this Agreement;
(iv) the Records referred to in Section 6.4(a)(i), (ii) or
(iii);
(v) the rights and other assets (including Tax and other
refunds and claims thereto) to the extent related to the Excluded
Liabilities;
(vi) the rights, title and interest in the trade names "JPS
Automotive" and the "JPS Automotive" logo, and "▇▇▇▇▇▇▇ & ▇▇▇▇▇▇" and
"C&A" and the "CA" logo, or any variations or derivations of such names
or logo;
(vii) Intentionally left blank;
(viii) the assets identified in Schedule 2.2(b)(viii) annexed
hereto;
(ix) the warehouse space currently rented by the Business at
Seller's Taylors facility; and
(x) Seller's Management Information System (MIS) equipment,
except to the extent listed as an asset on the Closing Date Balance
Sheet.
(c) As used in Sections 2.1 and 2.2 of this Agreement, the
phrases "used" or "held for use in," "related to," "related primarily
to" or "relating primarily to" the Business, or the conduct thereof and
similar phrases are intended to exclude assets of Seller owned or held
(i) primarily in any business other than the Business, (ii) for use
primarily in the businesses or activities of Seller generally, or (iii)
for use by both the Business and any other business of Seller so long
as such assets or rights do not primarily relate to the Business.
Nothing in this Section 2.2 will constitute a representation or
warranty with respect to the extent of Seller's right, title and
interest in or to any of the Acquired Assets.
Section 2.3. Assumption of Liabilities.
(a) On the terms and subject to the conditions of this
Agreement, effective as of the Closing, Purchaser will assume and agree
to pay, perform and discharge when due and to indemnify Seller and its
Affiliates against and hold them harmless from all obligations and
Liabilities of whatever kind and nature, primary or secondary, direct
or indirect, absolute or contingent, known or unknown, whether or not
accrued, whether arising before, on or after the Closing Date, other
than the Excluded Liabilities, of Seller to the extent relating to,
resulting from or arising out of the Business, any of the Acquired
14
Assets or any of the Products manufactured, produced, distributed or
sold by or on behalf of the Business (the "Assumed Liabilities") and
including without limitation the obligations and Liabilities specified
below other than Excluded Liabilities:
(i) the obligations and Liabilities of Seller under Assumed
Contracts;
(ii) the account payable and accrued expenses in respect of
the Business;
(iii) the obligations and Liabilities in respect of any and
all Products sold by or on behalf of the Business at any time,
including without limitation obligations and liabilities for refunds,
adjustments, allowances, damages, repairs, exchanges, returns,
warranties and personal injury;
(iv) the obligations and Liabilities relating to the Acquired
Assets or the conduct of the Business at any time;
(v) the obligations and Liabilities arising as a result of
being an owner, occupant or operator of the Business Real Property,
including, without limitation, all obligations and Liabilities relating
to personal injury, property damage, the environment, natural
resources, employee safety and health and waste generation,
transportation or disposal, in each case in respect of the Business
Real Property;
(vi) the obligations and Liabilities relating to Taxes with
respect to the conduct of the Business at any time, whether or not
reflected or reserved against in the Balance Sheet, but not including
Income Taxes that are Excluded Liabilities;
(vii) Except to the extent otherwise provided in Article XII
hereof, the obligations and Liabilities relating to the employment or
termination of employment of any of the Business Employees employed by
Seller at any time or arising under or relating to any benefit plan
listed on Schedule 4.18(a) annexed hereto, or any other program,
agreement, or arrangement, whether or not subject to ERISA, relating to
any such employee;
(viii) the Liabilities reflected as such in the Closing Date
Balance Sheet;
(ix) the obligations arising pursuant to Article XII hereof;
and
(x) any direct, out-of-pocket costs relating to any legal,
accounting, travel, printing or other expenses incurred on behalf of Purchaser
or any of its Affiliates in connection with the financing by Purchaser of this
transaction.
15
The assumption by Purchaser of the Assumed Liabilities pursuant to this Section
2.3(a) shall not be construed in any way to limit or diminish the
representations and warranties of Seller contained in Article IV hereof.
(b) For purposes of this Agreement, the term "Excluded
Liabilities" means:
(i) the obligations and Liabilities of Seller to the extent
attributable to any of the Excluded Assets;
(ii) the obligations or Liabilities of Seller or the Business
for Income Taxes (a) for all periods ending on or prior to the Closing
Date and (b) arising from or associated with the Transfer from Seller
to Purchaser of the Acquired Assets;
(iii) the obligations or Liabilities for any legal,
accounting, investment banking, brokerage or similar fees or expenses
incurred by Seller or any of its Affiliates in connection with the
transactions contemplated by this Agreement;
(iv) the obligations or Liabilities of Seller under the
Contracts listed on Schedule 2.3(b)(iv) annexed hereto (the "Excluded
Contracts");
(v) any Liability relating to the failure of Seller to comply
with ERISA, and to the extent attributable to acts of Seller in its
administration of the Plan, the Code or other applicable law, in each
case in respect of a Plan maintained by Seller for its employees
generally, notwithstanding that Business Employees are participants in
such Plan;
(vi) any Liability arising from or under any qualified defined
benefit plan (within the meaning of Section 414(j) of the Code or
Section 3(35) of ERISA) of Seller or any ERISA Affiliate (except for
the obligation to pay the amount described in Section 2.4(a));
(vii) any obligations and Liabilities of Seller under any Tax
Sharing Agreements listed on Schedule 4.22 annexed hereto.
(viii) the Liabilities specifically excluded under Article XII
hereof.
(c) Purchaser shall not assume or otherwise be bound by or
responsible or liable for any Excluded Liabilities.
16
Section 2.4. Purchase Price.
(a) In addition to assuming the Assumed Liabilities, at the
Closing, Purchaser will pay to Seller fifty six million three hundred
thousand U.S. dollars ($56,300,000) plus (at the Closing or, if not
determinable at Closing, promptly after an invoice showing the
calculation of the amount due is provided therefor) an amount equal to
the difference at the Closing Date between (i) the amount of
accumulated benefit obligations at the Closing Date under the Seller's
Retirement Plan, which was $(248,000) at December 28, 1996, which
amount includes the cost of fully vesting Transferred Business
Employees under such Plan, and (ii) the amount of such Plan assets at
the Closing Date, which was $(191,000) at December 28, 1996 (the
"Closing Price"), subject to adjustment as provided in Sections 2.4(b)
and 2.5 in respect of changes in the Net Worth Amount (as adjusted, the
"Purchase Price"). "Net Worth Amount" means the amount shown as "Total
Equity" as it would appear on a balance sheet of the Business prepared
in accordance with the second sentence of Section 2.5(a).
(b) Not less than two business days prior to the Closing Date,
Seller and Purchaser shall jointly agree on a consolidated balance
sheet which will set forth the estimate of the Net Worth Amount as of
the close of business on the Closing Date (the "Estimated Net Worth
Amount"), determined in accordance with the second sentence of Section
2.5(a) as if it were the Actual Net Worth Amount, but based upon
Seller's and Purchaser's review of monthly financial information then
available to Seller (which financial information Seller agrees to make
available to Purchaser) and their inquiries of personnel responsible
for the preparation of financial information relating to the Business
in the ordinary course thereof. The Closing Price will be reduced or
increased dollar-for-dollar, as the case may be (as so adjusted, the
"Estimated Purchase Price"), by the amount by which the Estimated Net
Worth Amount, calculated on the basis set forth in the second sentence
of Section 2.5(a), is less or more, as the case may be, than,
$38,008,000 such amount being the Net Worth Amount as of May 3, 1997,
as calculated on the basis set forth in the second sentence of Section
2.5(a). If Seller and Purchaser do not agree on the Estimated Net Worth
Amount, the Estimated Net Worth Amount shall be an amount equal to the
average of (x) Seller's reasonable computation of the Estimated Net
Worth Amount and (y) Purchaser's reasonable computation of the
Estimated Net Worth Amount.
(c) On the Closing Date, Purchaser will pay by wire transfer
of immediately available funds to such account as Seller has
theretofore designated an amount equal to the Estimated Purchase Price.
Section 2.5. Purchase Price Adjustment
(a) In order to determine the Purchase Price, the Estimated
Purchase Price will be reduced or increased dollar-for-dollar, as the
case may be, to the extent that the Actual Net Worth Amount is less or
greater, as the case may be, than the Estimated Net Worth
17
Amount determined in accordance with Section 2.4(b). For purposes of
this Agreement, the "Actual Net Worth Amount" means the Net Worth
Amount on a consolidated balance sheet for the Business prepared in
accordance with this Section 2.5 as of the close of business on the
Closing Date (the "Closing Date Balance Sheet"), on a basis consistent
with, and using the same accounting principles, policies, practices and
procedures used in preparing the Interim Balance Sheet, except that (i)
the principles set forth in Schedule 2.5(a) annexed hereto will be
applied in preparing the Closing Date Balance Sheet and (ii) the
Closing Date Balance Sheet will in all events exclude (A) any Excluded
Liabilities, (B) any Excluded Assets, (C) the assets resulting from the
Loom Purchase and (D) any intercompany balance and other accounts from
Seller or any of its Subsidiaries.
(b) Within 60 calendar days after the Closing Date, Seller
will prepare, or cause to be prepared, and deliver, to Purchaser a
Closing Date Balance Sheet setting forth the Actual Net Worth Amount.
Seller and its authorized representatives will be entitled to review,
during normal business hours, the books, records and workpapers of the
Business to prepare the Closing Date Balance Sheet. Without limiting
the generality or effect of any other provision hereof, Purchaser will
(i) provide Seller and its representatives access, during normal
business hours, to the facilities, personnel and accounting and other
records of the Business to the extent determined by Seller to be
necessary to permit Seller to prepare or have prepared the Closing Date
Balance Sheet as herein provided; provided, however, that Seller will
conduct any such review in a manner that does not unreasonably
interfere with the conduct of the Business after the Closing, and (ii)
take such actions as may be reasonably requested by Seller to close, or
to assist Seller in closing, as of the close of business on the Closing
Date, the books and accounting records for the Business and otherwise
reasonably to cooperate with Seller and its representatives in the
preparation of the Closing Date Balance Sheet.
(c) If, within 30 calendar days after the date of Seller's
delivery of its computation of the Actual Net Worth Amount, Purchaser
determines in good faith that such computation is inaccurate, Purchaser
shall give written notice to Seller within such 30 calendar day period
(i) setting forth Purchaser's computation of Actual Net Worth Amount as
of the close of business on the Closing Date and (ii) specifying in
reasonable detail Purchaser's basis for its disagreement with Seller's
computation. The failure by Purchaser so to express its disagreement or
provide such specification within such 30 calendar day period will
constitute Purchaser's acceptance of Seller's computation of the Actual
Net Worth Amount. Any amount that is not in dispute will be promptly
paid by the party obligated to make such payment hereunder to the party
entitled to receive such payment hereunder, together with interest
thereon, from the Closing Date to the date of payment at the rate
specified in Section 2.5(d). If Purchaser and Seller are unable to
resolve any disagreement between them within ten calendar days after
the giving of notice of such disagreement, the items in dispute will be
referred for determination to the principal dispute resolution unit of
Deloitte & Touche, or if they decline such
18
appointment, KPMG Peat Marwick (the "Accountants") as promptly as
practicable. Purchaser and Seller will use reasonable efforts to cause
the Accountants to render their decision as soon as practicable,
including without limitation by promptly complying with all reasonable
requests by the Accountants for information, books, records and similar
items. The Accountants will make a determination as to each of the
items in dispute, which determination will be (A) in writing, (B)
furnished to each of the parties hereto as promptly as practicable
after the items in dispute have been referred to the Accountants, (C)
made in accordance with this Agreement, and (D) conclusive and binding
upon each of the parties hereto. In connection with their determination
of the disputed items, (i) the Accountants will be entitled to rely on
presentations by Seller and Purchaser to the Accountants without any
independent review by the Accountants and the workpapers, trial
balances and similar materials prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in
connection with such firm's examination of the financial statements of
Seller and its Subsidiaries and (ii) the Accountants will not consider
or make any adjustment in respect of any matter which is not in
dispute, other than as a result of a change in a matter which is
disputed. Except as provided below, the fees and expenses of the
Accountants will be shared equally by Purchaser and Seller. If the
determination of the Accountants represents an outcome more favorable
to either Purchaser or Seller than the midpoint of such parties' last
written settlement offers related to all items in dispute, in the
aggregate, submitted to the Accountants upon the referral of the matter
to the Accountants (each a "Last Offer"), then the party obtaining such
favorable result will be deemed the "Prevailing Party" and the other
party will be deemed the "Non-Prevailing Party". For purposes hereof,
all of the fees and expenses of the Accountants, and the reasonable
out-of-pocket expenses of the Prevailing Party, will be borne by the
Non-Prevailing Party. No party will disclose to the Accountants, and
the Accountants will not consider for any purpose, any settlement offer
(other than the Last Offer) made by any party.
(d) To the extent that the Actual Net Worth Amount determined
as provided in this Section 2.5 is more or less than the Estimated Net
Worth Amount, Purchaser or Seller, as applicable, will, within ten
calendar days after the final determination of the Actual Net Worth
Amount pursuant to this Section 2.5, make payment by wire transfer of
immediately available funds of the amount of such difference (after
taking into account any payment made pursuant to Section 2.5(c)),
together with interest thereon from the Closing Date to the date of
payment (at a rate equal to Chase Manhattan Bank's prime rate, as
publicly announced and in effect from time to time during such period,
plus 2.0%, calculated on the basis of the actual number of days elapsed
over 365), to such account as has been designated by Purchaser or
Seller, as applicable.
(e) Except as set forth in Section 13.2(d), nothing in this
Section 2.5 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.
19
ARTICLE III.
CLOSING
Section 3.1. The Closing. Subject to the terms and conditions
of this Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Shereff, Friedman,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the date which
is two Business Days after the satisfaction or waiver of all conditions to the
consummation of the transactions contemplated hereby or at such other time and
place as Seller and Purchaser shall mutually agree in writing (the day on which
the Closing takes place is referred to herein as the "Closing Date").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to Section 4.27, Seller represents and warrants to
Purchaser as set forth in this Article IV:
Section 4.1. Organization; Good Standing; Power and
Qualification. Seller is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Delaware. Seller is duly
qualified to do business and is in good standing in the states listed on
Schedule 4.1 annexed hereto, such states being each jurisdiction in which the
ownership of the Acquired Assets or the conduct of the 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 change in
or effect with respect to the Business or the financial condition, properties,
or results of operations of the Business or materially impair the ability of
Seller to consummate the transactions contemplated by this Agreement (a
"Material Adverse Effect"). Seller has the requisite partnership power and
authority to own the Acquired Assets and to conduct the Business as presently
conducted. Schedule 4.1 annexed hereto includes true and correct copies of the
Certificate of Limited Partnership and the Partnership Agreement as in effect on
the date of this Agreement.
Section 4.2. No Conflict or Violation; Consents. Except as set
forth on Schedule 4.2 annexed hereto, neither the execution and delivery of this
Agreement by Seller, 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 Acquired Assets
(except as a result of Liens created by Purchaser) in connection with, (d)
impair Seller's 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:
20
(x) any law or Judgment of any Governmental Agency applicable to Seller, (y) the
Certificate of Limited Partnership or Partnership Agreement, or (z) any
Contract, Lease, Permit or other instrument to which Seller is a party or
subject or by which any of Seller'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 Seller to consummate the transactions contemplated by this
Agreement; provided, however, that no representation or warranty is made hereby
by Seller 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
Seller in connection with the execution and delivery of this Agreement by Seller
or the performance by Seller of the transactions contemplated hereby to be
performed by it except for such of the foregoing (i) as are listed or described
on Schedule 4.2 annexed hereto 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.
Section 4.3. Authority of Seller. Seller has full partnership
power and authority to execute and deliver this Agreement, and the execution and
delivery by Seller 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 Seller, and this Agreement constitutes the
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, or similar laws from time to time
in effect which affect creditors' rights generally and by legal and equitable
limitations on the enforceability of specific remedies.
Section 4.4. Acquired Assets.
(a) There are no properties or assets used, held for use or
usable by Seller in the Business having an original cost as of the
Interim Balance Sheet Date in excess of $10,000 which are not set forth
on the Schedules hereto and, except for contemplated additions or
deletions in the ordinary course of business consistent with past
practice, the Acquired Assets (i) include all properties and assets
owned by Seller or any of its Affiliates and used primarily in the
Business, other than the Excluded Assets, (ii) in the aggregate,
together with the Excluded Assets, are adequate to conduct the
operations of the Business in substantially the manner currently
conducted, (iii) are suitable for the purposes for which they are
currently used, (iv) have been maintained in accordance with Seller's
historical practices since December 29, 1996, and (v) are in good
condition, ordinary wear and tear excepted. Except as set forth on
Schedule 4.4(a) annexed hereto, (i) all Business Employees are
exclusive employees of the Business and do not perform services for
other businesses of Seller, (ii) the Acquired Assets are not used by
other businesses of Seller and (iii) the Acquired Assets include any
and all assets owned or leased by Seller that are located at the
Business Real Property and Leased Business Real Property, other than
the Excluded Assets.
21
(b) Seller has good and marketable title to all of the
Acquired Assets, free and clear of any Lien, except for Permitted
Liens. Seller is the direct sole and exclusive owner of all of the
Acquired Assets other than those listed on Schedule 4.4(b) annexed
hereto as being leased, licensed or otherwise used by the Seller. There
are no Subsidiaries of Seller which own or have any leasehold interests
in any of the Acquired Assets. Except as set forth on Schedule 4.4(b)
annexed hereto, Seller does not use any of the Acquired Assets by the
consent of any other Person and is not required to make any payments to
others with respect to the Acquired Assets. To the Knowledge of Seller,
Seller has the right to use all of the Acquired Assets leased, licensed
or otherwise used by it. Upon the Closing, Purchaser will hold good and
marketable title to all of the Acquired Assets owned by Seller, free
and clear of all Liens (except for any Permitted Liens and Surviving
Liens) of any nature whatsoever, whether such Liens are now existing or
perfected or at any time hereafter arise or become perfected pursuant
to any Law, Contract or otherwise, and Purchaser will have the right to
use all of the Acquired Assets leased, licensed or otherwise used by
Seller.
(c) The Business is not as of the date hereof, and will not be
on the Closing Date, subject in any way to the terms and conditions of
either the SMT License Agreement or the Cramerton Supply Agreement.
Section 4.5. No Material Misstatements. None of the
representations or warranties of Seller contained herein and none of the
information contained in the Schedules hereto furnished by Seller 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 4.6. Financial Statements; Closing Date Liability to
Seller. Schedule 4.6 annexed hereto contains an accurate, correct and complete
copy of (i) the audited balance sheets of the Business at December 28, 1996 (the
"Balance Sheet") and December 31, 1995, and the related statements of
operations, divisional equity and cash flows for the period from December 12,
1996 to December 28, 1996, the period from January 1, 1996 to December 11, 1996,
and the year ended December 31, 1995 and the notes thereto and (ii) the
unaudited balance sheet of the Business at the Interim Balance Sheet Date (the
"Interim Balance Sheet") and the related unaudited statements of operations and
cash flows of the Business for the period then ended. Promptly after they are
available, Seller shall have delivered to Purchaser and added to Schedule 4.6
annexed hereto an accurate, correct and complete copy of the audited balance
sheets of the Business at January 1, 1995 and June 28, 1994 and the statements
of operations, divisional equity and cash flows for the period from June 29,
1994 to January 1, 1995 and the period from January 3, 1994 to June 28, 1994 and
the notes thereto (the "1994 Financial Statements"). The financial statements
referenced in subsections (i) and (ii) and the immediately preceding sentence of
this Section 4.6 shall hereinafter be referred to collectively as the "Financial
Statements" and the financial statements referenced in subsection (ii) of this
Section 4.6 shall hereinafter be referred to collectively as the "Interim
Financial Statements". The Financial Statements (including the accompanying
notes), as of their respective dates, present, and
22
will present upon delivery to Purchaser in the case of the 1994 Financial
Statements, fairly the financial condition of the Business as of the dates
stated therein and the results of its operations for periods then ended, and
were prepared, and will be prepared upon delivery to Purchaser in the case of
the 1994 Financial Statements, in accordance with GAAP applied on a consistent
basis during the periods indicated (except, in each case, as may be indicated
therein or in the notes thereto), subject, in the case of unaudited financial
statements, to the absence of footnotes and to normal year-end adjustments. To
the Knowledge of Seller, the Interim Financial Statements included all
adjustments, consisting solely of normal recurring accruals, necessary for a
fair presentation of the consolidated financial position and results of
operations of the Business. As of the Closing, the Business will have no
Liabilities to any Parent Entity, other than Liabilities (i) as set forth on
Schedule 4.6 annexed hereto which are either reflected in full on the Closing
Date Balance Sheet or are not required under GAAP to be so reflected, and (ii)
as reflected in full in the Closing Date Balance Sheet.
Section 4.7. Undisclosed Liabilities. As of the Interim
Balance Sheet Date and the Closing Date, the Business 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 Taxes, (d) as set forth on Schedule
4.7 annexed hereto, (e) constituting Costs of Remediation, or (f) arising out of
or in connection with any claim by the ultimate retail purchaser of any Products
manufactured, produced, distributed or sold by or on behalf of the Business
resulting from an alleged defect in the design or manufacture of any such
Product or failure to warn with respect to any such Product.
Section 4.8. Accounts Receivable. All accounts receivable of
the Business reflected on the Interim Balance Sheet, and all accounts receivable
of the Business arising subsequent to the Interim Balance Sheet Date, have or
will have arisen in the ordinary course of business of the Business. 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 for accounts relating thereto are adequate under GAAP and have
been or will have been established in accordance with GAAP, consistently
applied. Nothing contained in this representation shall be construed as a
guaranty of collectibility of any or all accounts receivable.
Section 4.9. Inventory. The material, supplies and
work-in-process included in the inventory of the Business as set forth on the
Interim Balance Sheet were, and the inventory of the Business 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 Products in a manner substantially equivalent in quality to
that achieved generally by the Business in the past, and (c) valued in
23
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.
Section 4.10. Material Adverse Effect. Other than changes
resulting from (a) general economic conditions, (b) conditions affecting the
automotive textile industry generally, (c) changes in any applicable Law, rule,
regulation, statute or interpretation thereof, or (d) as set forth on Schedule
4.10 annexed hereto, since the Interim Balance Sheet Date except as reflected in
the Interim Financial Statements, 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 4.10 annexed hereto, there has not occurred any deterioration
in the Business' relationships with Business Employees or with any suppliers or
customers of the Business, and the Business has not lost or been threatened with
the loss of any program in each case which, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect.
Section 4.11. Real Property.
(a) Schedule 4.11(a) annexed hereto lists all real property
owned by Seller and used by Seller in its operation of the Business (the
"Business Real Property"). Seller has good and marketable title in fee simple to
all of the Business Real Property and the Business Real Property is free and
clear of any Liens, other than Permitted Liens.
(b) Schedule 4.11(b) annexed hereto lists all leases and
subleases, together with any amendments thereto (the "Leases") with
respect to all real property leased or subleased by Seller and used by
Seller in its operation of the Business (the "Leased Business Real
Property").
(c) Each of the Leases is in full force and effect. Seller has
delivered to Purchaser a copy of each Lease, and all amendments
thereto, listed on Schedule 4.11(b) annexed hereto, except to the
extent otherwise noted therein. Seller has performed all material
obligations required to be performed by it to date under each Lease,
and to the Knowledge of Seller, neither Seller nor any other party
thereto is in material default under any such Leases.
(d) The covenants, easements or rights-of-way affecting the
Business Real Property or Leased Business Real Property do not, with
respect to each Business Real Property or Leased Business Real
Property, materially impair the Seller's ability to use any
24
such Business Real Property or Leased Business Real Property in the
operation of the Business as presently conducted. There are no pending,
or to Seller's Knowledge, threatened condemnation or similar
proceedings affecting the Business Real Property. To Seller's Knowledge
there are no pending or threatened condemnation or similar proceedings
affecting the Leased Business Real Property. The Seller 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 Business Real Property (and to Seller's Knowledge, the Leased
Business Real Property), except as would not materially impair the
Seller's ability to use any such Business Real Property or Leased
Business Real Property in the operation of the Business as presently
conducted.
(e) Seller has delivered to the Purchaser accurate, correct
and complete copies of Phase I and Phase II environmental reports in
Seller's possession or the possession of its agents of all Business
Real Property purported to be owned by Seller.
Section 4.12. Tangible Property.
(a) Schedule 4.12(a) annexed hereto lists all Tangible
Property owned by Seller and used by Seller in its operation of the
Business with an original cost of $10,000 or more as of March 1997.
(b) Schedule 4.12(b) annexed hereto sets forth the name,
parties and term of all Tangible Property leases: (i) under which
Seller is the lessee, (ii) under which the annual rent is $10,000 or
more, and (iii) which leases are not cancelable (without Liability)
within 90 days. Except as set forth on Schedule 4.12(b) annexed hereto,
Seller holds good leaseholds in all of the Tangible Property shown or
required to be shown on Schedule 4.12(b) annexed hereto as leased by
Seller, in each case under valid and enforceable leases. Seller is not,
and to Seller's Knowledge no other party to any such Tangible Property
lease is, in material breach of or default under any lease of any item
of personal property listed on Schedule 4.12(b) annexed hereto (and no
event has occurred which, with due notice or lapse of time or both,
would constitute such a lapse or default).
Section 4.13. Intellectual Property.
(a) Schedule 4.13 annexed hereto lists all applications and
registrations for material Intellectual Property (other than know-how,
non-customized computer software, and customer lists) of Seller used by
Seller in its operation of the Business. Except as set forth on
Schedule 4.13 annexed hereto, Seller either owns or has the right to
use by license, sublicense, agreement or permission all of the
Intellectual Property set forth on Schedule 4.13 annexed hereto, and in
the case of patents and license agreements for the term set forth on
Schedule 4.13 annexed hereto. Except for Purchaser pursuant to this
Agreement or as otherwise set forth in Schedule 4.13 annexed hereto,
Seller has not granted a license, nor reached an understanding with any
third party, nor entered into a
25
written agreement, relating in whole or in part, to any of the
Intellectual Property, and to Seller's 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 4.13 annexed hereto,
Seller has not been charged with, nor to the Knowledge of Seller is it
threatened to be charged with, the infringement or other violation of
the intellectual property rights of any other Person.
Section 4.14. Compliance with Laws.
(a) Except as set forth on Schedule 4.14(a) annexed hereto,
Seller 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 or
Judgments, applicable to the Business, 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 4.14(b) annexed hereto lists each Permit that is
necessary for the operation of the Business as currently conducted 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 4.14(b) annexed
hereto, except as noted therein, are in full force and effect and no
proceeding is pending or, to the Knowledge of Seller, threatened, to
revoke or limit any such Permit.
Section 4.15. Affiliate Agreements; Related Party
Transactions.
(a) Except as set forth on Schedule 4.15(a) annexed hereto,
there are no written or oral Contracts relating to the Business between
Seller and any of its Affiliates or any of their respective officers or
directors, including, without limitation, any such Contracts relating
to the provision of any services by Seller to any Affiliate, or by any
such Affiliate to Seller, in respect of the Business. Other than (x) 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) or (y) as set forth on Schedule 4.15(a) annexed hereto, (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
involving the Acquired Assets or otherwise affecting the Business
between Seller and (i) any of its Affiliates or any of their respective
officers, directors or management personnel, or (ii) any member of the
immediate family of any individual described in clause (i) of this
sentence.
(b) Except as set forth on Schedule 4.15(b) annexed hereto,
none of the General Partner, the Limited Partner or any of their
respective Affiliates (i) owns, directly or indirectly, in whole or in
part, any Tangible Property or Intangible Property, the use of which is
necessary for the conduct of the Business as conducted on the date
hereof, and
26
which if not obtained from such Person could have a Material Adverse
Effect, or (ii) owes any amount to the Business or, to the Knowledge of
Seller, has any cause of action or other claim against the Business,
other than for sales of goods in the ordinary course of business
consistent with past practice.
Section 4.16. Assumed Contracts.
(a) Schedule 4.16 annexed hereto lists all of the Assumed
Contracts (other than the Leases or Permitted Liens), which are
material to the operation of the Business. Except for Leases and
Permitted Liens or as set forth on Schedule 4.16 annexed hereto, Seller
is not a party to or bound by any of the following, in connection with
the Business:
(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 the Acquired 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
Tangible Property with rent in excess of $25,000 per year;
(viii) agreement imposing confidentiality,
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 $50,000;
27
(x) Contract or agreement for the employment of any
partner, management personnel, 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;
(xii) Contract which terminates, accelerates or
creates any Liability as a result of this Agreement or any of
the transactions contemplated hereby, except in the ordinary
course of business; and
(xiii) Contract which involves future payment by or
to the Business in excess of $50,000 or is otherwise material
to the extent relating to the Business as currently conducted
by Seller or provides for a period of performance which
extends beyond twelve (12) months from the date hereof.
(b) Each Contract listed or required to be listed on Schedule
4.16 annexed hereto is valid, binding and enforceable against Seller
and to Seller's Knowledge the other parties thereto in accordance with
its terms, and is in full force and effect. Seller has performed all
material obligations required to be performed by it to date under each
of the Contracts. Except as set forth on Schedule 4.16 annexed hereto,
neither Seller nor, to Seller's Knowledge, any other party thereto is
in material breach of or default under any such Contract listed or
required to be listed on Schedule 4.16 annexed hereto (and no event has
occurred which, with due notice or lapse of time or both, would
constitute such a lapse or default). Seller has 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 on Schedule
4.16 annexed hereto, except to the extent otherwise noted thereon.
Section 4.17. Labor Relations. Except as set forth on Schedule
4.17 annexed hereto, Seller is not a party to any collective bargaining
agreement covering Business Employees, there are no controversies or unfair
labor practice proceedings pending or, to Seller's Knowledge, threatened between
Seller and any current or former Business Employees or any labor or other
collective bargaining unit representing any current or former Business Employees
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
Seller's Knowledge, except as set forth on Schedule 4.17 annexed hereto, no
organizational effort is presently being made, or to the knowledge of Seller,
threatened by or on behalf of any labor union with respect to the Business.
Section 4.18. Employee Benefits.
(a) Schedule 4.18(a) annexed hereto lists all Employee Benefit
Plans and all other material employee benefit arrangements or payroll
practices, including, without
28
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, or other insurances, scholarships or tuition
reimbursements, maintained by Seller or to which Seller or any ERISA
Affiliate is obligated to contribute for Business Employees or Former
Business Employees. Each of the employee benefit plans, practices and
arrangements set forth on Schedule 4.18(a) annexed hereto, 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
Seller: (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 three
most recent actuarial reports.
(c) Except as set forth on Schedule 4.18(c) annexed hereto,
none of the Plans is a Multiemployer Plan. Neither Seller nor any ERISA
Affiliate has incurred any Liability resulting from a complete or
partial withdrawal from any Plan or Multiemployer Plan maintained for
Business Employees or Former Business Employees, and none of them has
incurred, or is reasonably likely to incur, any Liability due to the
termination or reorganization of a Plan or Multiemployer Plan which has
not been satisfied in full, and to the Knowledge of Seller, no event
has occurred that would subject Seller or any ERISA Affiliate to any
such Liability.
(d) Neither Seller 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 maintained for
Business Employees or Former Business Employees, and to the Knowledge
of Seller, no event has occurred that would subject Seller or any ERISA
Affiliate to any such Liability. All premiums due the PBGC with respect
to all Single-Employer Plans maintained by Seller and its ERISA
Affiliates for Business Employees or Former Business Employees have
been timely paid. Neither Seller nor any such ERISA Affiliate has
engaged in any transaction described in Section 4069 of ERISA. Except
as set forth on Schedule 4.18(d) annexed hereto, there has been no
"reportable event", within the meaning of Section 4043 of ERISA, with
respect to any Single-Employer Plan maintained by Seller or its ERISA
Affiliates for Business Employees or Former Business Employees which
would require the giving of notice to the PBGC. No Single-Employer Plan
maintained by Seller or its ERISA Affiliates for Business Employees or
Former Business Employees 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
29
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.
(f) Except with respect to any Multiemployer Plan, there are
no material pending or, to Seller's Knowledge, threatened claims by, on
behalf of or, to the Knowledge of Seller, against any Plan (other than
routine claims for benefits).
(g) To Seller's Knowledge, no "prohibited transaction" (as
defined in Section 4975 of the Code or Section 406 of ERISA) has ever
occurred which involves the assets of any Plan maintained for Business
Employees or Former Business Employees and which would subject Seller
or any ERISA Affiliate to, and neither Seller 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 such
Plan.
(h) With respect to each Plan that is a Single Employer Plan
maintained for Business Employees or Former Business Employees, the
most recent actuarial report prepared by such 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 related to the Business 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
Seller's Knowledge, would cause such Plan to lose its qualified status.
(j) Except as set forth on Schedule 4.18(j) annexed hereto, or
as may be required under Section 4980B of the Code, Section 601 of
ERISA or other applicable foreign, state or local Law, Seller does not
have any Liability for post-retirement medical or life insurance
benefits or coverage for any Business Employee or Former Business
Employee or any dependent of any such Business Employee or Former
Business 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 4.18(k) annexed hereto,
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 Seller to or in respect of any
Business Employee or Former Business Employee or the beneficiary or
dependent of any such Business Employee or Former Business Employee
under any Plan.
30
Section 4.19. Insurance. Schedule 4.19 annexed hereto lists
all material current and past Insurance policies providing coverage for the
properties or operations or Liabilities of the Business 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 Seller. As of the date of this
Agreement, no such 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
Business since June 28, 1994. Seller has not received notice from any Insurance
carrier: (i) threatening a suspension, revocation, modification or cancellation
of any current Insurance policy relating to the Business or a material increase
in any premium in connection therewith, or (ii) informing Seller that any
current coverage listed or required to be listed on Schedule 4.19 annexed hereto
will or may not be available in the future on substantially the same terms as
now in effect.
Section 4.20. Litigation. Except as set forth on Schedule 4.20
annexed hereto, there are no actions, causes of action, claims, suits or
proceedings pending or, to the Knowledge of Seller, threatened against Seller,
the Business or the Acquired Assets, 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 4.20 annexed
hereto, neither Seller, the Business nor any of the Acquired Assets is subject
to, or in default with respect to, any Judgment, which individually or in the
aggregate has had, or could reasonably be expected to have, a Material Adverse
Effect.
Section 4.21. Environmental Matters. Except as set forth on
Schedule 4.21 annexed hereto:
(a) the operation of the Business is, and since June 28, 1994
has been, and to Seller's Knowledge, prior to June 28, 1994 was, in
compliance with all Environmental Laws except for any noncompliance
resulting in Damages of less than $5,000 individually or in the
aggregate;
(b) the Business has no Liability, whether contingent or
otherwise, under any Environmental Law except for any Liability
resulting in Damages of less than $5,000 individually or in the
aggregate;
(c) 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 the operation of the Business
has been received by or threatened in writing against Seller or any
prior owner of the Business since June 28, 1994, or, to Seller's
Knowledge, before June 28, 1994;
31
(d) Seller has not entered into or been subject to, and is not
currently a party or respondent to, any administrative, civil or
criminal Judgments outstanding, or any administrative, civil or
criminal actions, suits, proceedings or investigations pending or, to
Seller's Knowledge, threatened, relating to any Environmental Law
affecting the Business;
(e) Seller has obtained and has in full force and effect, or
as set forth on Schedule 4.14(b) annexed hereto, has applied for and
reasonably expects to obtain, all Permits required under any
Environmental Law for its operation of the Business on the Business
Real Property or Leased Business Real Property and for any alterations
or improvements existing at such property at any time since June 28,
1994;
(f) 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 Business to
Liability in excess of $5,000 individually or in the aggregate or cause
a Material Adverse Effect;
(g) except as set forth on Schedule 4.21 annexed hereto, the
Business 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;
(h) Seller has not, and does not have any Knowledge of any
other Person who has, caused any Release or threatened Release of any
Hazardous Material on, in, under, or from the Business Real Property or
Leased Business Real Property nor does Seller have Knowledge of any
such Release, except for any Release resulting in Damages of less than
$5,000 individually or in the aggregate;
(i) Seller has not received any written or, to Seller's
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 in connection
with its operation of the Business;
(j) the Business is not subject to any cleanup, remediation,
monitoring or corrective action Liability or requirement under any
Environmental Law;
(k) Seller has not arranged for the disposal of any Hazardous
Material at, or transported any Hazardous Material to, any site from
which, to the Seller's Knowledge, there exists a Release or threat of
Release of any Hazardous Material;
(l) 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
Business Real Property or, to the Knowledge of Seller, on the Leased
Business Real Property by any Governmental Agency under any
Environmental Law or in connection with any Hazardous Material;
32
(m) Except as set forth on Schedule 4.21 annexed hereto, to
Seller's Knowledge, neither the Business Real Property nor the Leased
Business Real Property (and any buildings, structures, fixtures or
materials on such real property) (i) contains or includes any friable
asbestos, polychlorinated biphenyls, or any underground storage tanks,
piping, or sumps (or other underground structures which contain
Hazardous Material), (ii) is included or proposed for inclusion on the
National Priorities List or any similar list maintained under any
Environmental Law, (iii) constitutes a habitat for any species
designated as threatened or endangered pursuant to the Endangered
Species Act, or (iv) contains any wetlands subject to regulation under
the Federal Water Pollution Control Act or any other Environmental Law;
and
(n) to Seller's Knowledge, Seller 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.
Section 4.22. Tax Matters.
(a) Except as set forth on Schedule 4.22 annexed hereto:
(i) Seller has filed (or joined in the filing of), or
will file (or join in the filing of), all Tax Returns which
relate to the Business or the ownership of the Acquired Assets
required to be filed under applicable Law prior to the Closing
Date that relate to any material Taxes;
(ii) as of the time of such filing, Seller has paid
or will 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) Seller has paid, or has made or will make
adequate provision for all material Taxes for any periods that
end on or before the Closing Date for which no Tax Returns
which relate to the Business or the ownership of the Acquired
Assets have yet been filed and for any periods that begin
before the Closing Date and end after the Closing Date to the
extent such Taxes are attributable to the portion of any such
period ending at the Closing Date;
(iv) Seller has not given or requested any waivers of
any statutes of limitation in respect of any Tax Returns which
relate to the Business or the ownership of the Acquired Assets
nor has Seller agreed to any extension of time with respect to
any Tax assessment or deficiency which relates to the Business
or the ownership of the Acquired Assets;
33
(v) no material claim for assessment or collection of
Taxes with respect to the Business or the Acquired Assets has
been asserted against Seller and Seller is not 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) Seller is not 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;
(vii) no Liens have been imposed upon or asserted
against any Acquired Assets as a result of or in connection
with any failure or alleged failure, to pay any Tax;
(viii) no ruling with respect to Taxes relating to
the Business or the Acquired Assets (other than a request for
determination of the status of a qualified pension plan) has
been requested by or on behalf of Seller;
(ix) since June 28, 1994, no claim has been made by a
Governmental Agency in a jurisdiction where Seller does not
currently file Tax Returns that relate to any Taxes in respect
of the Business or the Acquired Assets that it is or may be
subject to taxation by that jurisdiction, nor is Seller aware
that any such assertion of jurisdiction is threatened; and
(x) Seller has not requested any extension of time
within which to file any Tax Return that relates to any Taxes
in respect of the Business or the Acquired Assets which Tax
Return has not been filed.
(b) Seller is not 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 Acquired Asset being treated as owned by another Person.
None of the Acquired Assets 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.
(c) Seller has withheld and paid all material Taxes which
relate to the Business or the ownership of the Acquired Assets required
to be withheld, in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(d) For purposes of this Section 4.22, references to Seller
shall also refer to any predecessor companies.
34
(e) Seller is not a "foreign person" within the meaning of
Section 1445 of the Code.
Section 4.23. Interim Operations. Since the Interim Balance
Sheet Date, Seller has operated the Business in the ordinary course, except as
set forth on Schedule 6.1 annexed hereto, consistent with past practices, and
except as set forth in Schedule 4.23 annexed hereto, there has not been, other
than in connection with the Loom Purchase, with respect to the Business (or if
specifically referenced, Seller) any:
(i) incurrence, or agreement 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) mortgage or pledge of any Acquired Assets,
tangible or intangible, except for Permitted Liens;
(iii) sale or transfer, or agreement to sell or
transfer, any Acquired Assets, or cancellation or payment, or
agreement to cancel or pay, any debts, Liabilities or claims,
except in the ordinary course of business, consistent with
past practice;
(iv) extraordinary losses or except in the ordinary
course of business consistent with past practice, waiver of
any material rights;
(v) increase in the rate of compensation payable to
any Business Employee, whose current total annual compensation
or estimated annual compensation from the Business is $75,000
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) termination of any Contract, agreement, license,
or other instrument relating to the Business to which Seller
is a party, except in the ordinary course of business
consistent with past practice;
(vii) accrual or arrangement for or payment of, or
agreement to make any accrual or arrangement for or payment
of, any bonuses or special compensation of any kind to any
management personnel of the Business or Significant Employee,
or general increase in the salary or bonus payable or to
become payable by Seller to any other salaried employees or
hourly employees of the Business (other than (x) pursuant to
existing collective bargaining agreements, and (y) increases
granted to individual Business Employees for merit, length of
service, change in position or responsibility or other reasons
applicable to specific Business Employees and not generally to
a class or group thereof);
35
(viii) agreement, written or oral, providing for the
employment of any senior management personnel of the Business
or any severance or termination benefits payable or to become
payable by Seller to any senior management personnel of the
Business;
(ix) action which would have constituted a breach of
any negative covenant of Seller set forth in Article VI or VII
if such negative covenant had applied since December 29, 1996;
(x) 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; or
(xi) agreement or understanding to take any of the
actions described above in this Section 4.23.
Section 4.24. Brokers. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Seller 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 Purchaser
for a finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller.
Section 4.25. Products Liability. Except as disclosed in
Schedule 4.25 annexed hereto:
(a) 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
Business, which is pending or, to Seller's 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 Business, or any alleged failure to warn, or from any breach of
express or implied specifications or warranties or representations (a
"Product Claim"); and
(b) there has not been, nor is there under consideration or
investigation by the Seller, 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 Seller concerning any Products
manufactured, produced, distributed or sold by or on behalf of the
Business, or, to the Knowledge of Seller, any Recall conducted by or on
behalf of any entity as a result of any alleged defect in any Product
supplied by the Business. Except as disclosed in Schedule 4.25 annexed
hereto,
36
there is no Product Claim pending or, to Seller's Knowledge threatened,
on behalf of a customer of the Business or any Governmental Agency
which individually or in the aggregate has had or could reasonably be
expected to have a Material Adverse Effect.
Section 4.26. Books and Records. Seller 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
Seller relating primarily to the Business. The books and records of Seller
relating primarily to the Business accurately reflect in reasonable detail the
transactions to which Seller is a party or by which its properties are bound in
accordance with GAAP.
Section 4.27. 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, Seller makes no
representation or warranty, including, with respect to the Business 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 Acquired Assets, 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 or its relevance to
another Schedule is readily apparent. Disclosure of an item in any
Schedule shall not be deemed to be an admission that such item is
material.
Section 4.28. Accruals. As of the Interim Balance Sheet Date
and the Closing Date, the Business has and will have no material Liabilities
with respect to Plans in the aggregate, 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 Contracts or
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, or (c) constituting Taxes. For the
purposes of this representation, Plans and accruals therefor will be considered
in the aggregate and not on an individual Plan basis.
37
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 5.1. Organization; Good Standing; Power and
Qualification. 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 5.2. No Conflict or Violation; Consents. Except as set
forth on Schedule 5.2 annexed hereto, 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 Judgment 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
Law, 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 5.3. 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 5.4. 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
38
Person against Seller for a finder's fee, brokerage commission or other similar
payment based on an arrangement with Purchaser.
Section 5.5. Financial Capacity. The Highly Confident Letter
is valid and in full force and effect. Assuming the accuracy of the
representations and warranties of Seller herein and compliance by Seller with
the covenants contained herein, Purchaser believes that the financing described
in the Highly Confident Letter will be available prior to Closing and Purchaser
will use reasonable best efforts to obtain such financing.
Section 5.6. Disclaimer of Additional Representations and
Warranties. Except as expressly set forth in this Agreement, the Schedules and
the Exhibits hereto, and any other certificate or instrument delivered pursuant
to the terms hereof or thereof, Purchaser makes no representation or warranty.
ARTICLE VI.
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date
hereof through the Closing Date (except as expressly set forth below or in
Schedule 6.1, or as consented to or approved by Purchaser in writing):
Section 6.1. Conduct of Business. Seller shall use its
reasonable best efforts to:
(a) not amend its Certificate of Limited Partnership or
Partnership Agreement or merge with or into or consolidate with any
other Person, or change or agree to change the character of the
Business in any manner that would have a Material Adverse Effect other
than the transactions contemplated herein;
(b) operate the Business in the ordinary course in accordance
with past practices;
(c) use commercially reasonable efforts to keep available
generally the services of the present management personnel of the
Business and Business Employees (including Significant Employees), and
preserve generally the present relationships with Persons having
business dealings with the Business;
(d) not make any sale, assignment, transfer, abandonment, or
other conveyance of any Acquired Assets or any part thereof in each
case having a book value of $10,000 or more or a fair market value in
excess of $25,000, except (i) transactions pursuant to Assumed
Contracts set forth in Schedule 4.16 annexed hereto 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;
39
(e) to keep in full force and effect Insurance relating to the
Business 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 Seller 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;
(f) not settle, release or forgive any material claim or
litigation or waive any material right with respect to any Acquired
Asset or the Business;
(g) 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 the
Business;
(h) 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 the Business;
(i) not enter into any employment Contract with any management
personnel of the Business or Business Employee (including any
Significant Employee) or make any loan to, or enter into any material
transaction of any other nature with, any management personnel of the
Business or Business Employee (including any Significant Employee);
(j) increase or commit to increase the salary or other
compensation payable or to become payable to any Business Employees, or
management personnel, agents or independent contractors of the Business
(except for normal compensation adjustments to salaries or wages to
non-management personnel, and to management personnel as required by an
applicable employment agreement);
(k) to not acquire, lease or dispose or agree to acquire,
lease or dispose of any capital Acquired Assets having a book value in
excess of $5,000 or a fair market value in excess of $25,000 other than
the Loom Purchase or in the ordinary course of business of the Business
consistent with past practice and except as described on Schedule 4.16
annexed hereto; and
(l) 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 4.17 annexed hereto, (iii) changes in Environmental Law
proposed, contemplated or under consideration by a Governmental Agency
which will to Seller's Knowledge subject the Business to Liability in
excess of $5,000 individually or $25,000 in the aggregate or cause a
Material Adverse Effect, or (iv) any material discussion or development
of the amendment, termination or renewal of the Loan and Security
Agreement dated as of June 28, 1994 between JPS Automotive Products
Corp. and the CIT Group/Equipment Financing, Inc. identified on
Schedule 4.16 annexed hereto
40
and any and all agreements, notes, documents or allonges executed in
connection therewith; provided, however, that notwithstanding anything
to the contrary contained in this Agreement, any breach of this Section
6.1(l) shall be deemed to be a breach of a representation and warranty
and not a breach of covenant.
Section 6.2. Legal Proceedings. Seller shall promptly notify
Purchaser of any claim, action, suit, proceeding, complaint, charge, Tax or
other audit, investigation or arbitration or other formal method of settling
disputes or disagreements relating primarily to the Business by or before any
Governmental Agency, which after the date hereof is commenced or, to the
Knowledge of Seller, threatened against Seller or against the General Partner,
the Limited Partner, or any Business Employee or management personnel,
consultant, agent or other representative of the Business.
Section 6.3. Solicitation. Neither Seller nor any of its
Subsidiaries shall (directly or indirectly) solicit or initiate any discussions
or negotiations with, participate in any negotiations with, or provide any
information to or afford any access to the properties, books and records of
Seller or the Business to, or otherwise cooperate with, or facilitate or
encourage any effort or attempt by any Person concerning any merger, sale of
substantial assets, sale of limited partnership interests or similar transaction
involving the Business. In addition, it shall be a breach of this Agreement by
Seller if the Limited Partner or a Parent Entity takes any action which Seller
is prohibited from taking under this Section 6.3.
Section 6.4. Information and Access.
(a) Seller shall 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 Seller and its
Subsidiaries, to all premises, properties, personnel, accountants,
books, records, contracts and documents of Seller which relate
primarily to the Business (collectively, "Records"), subject to the
following exceptions:
(i) Purchaser recognizes that certain Records may
contain only incidental information relating to the Business
or may primarily relate to the Seller or any of its
Affiliates, or the businesses of the Seller or any of its
Affiliates other than the Business, and Seller and its
Affiliates may retain such Records and Seller may deliver
appropriately excised, but otherwise true and correct copies
of such Records so long as the effect of such excising is not
to omit information from the Records necessary for the conduct
of the Business;
(ii) Seller and each of its Affiliates may retain any
Tax Returns so long as true and complete copies of the
portions thereof relating to the Business are delivered to
Purchaser at or before the Closing or made available to the
Purchaser following the Closing; and
41
(iii) Seller and each post-Closing Affiliate may
retain Records that contain information that is privileged or
similarly protected from disclosure, except for such Records
relating to the Acquired Assets or Assumed Liabilities (but
only in the event that the disclosure of the information
contained in such Records does not damage the privilege of
such information) and Records relating to the Excluded
Liabilities or Excluded Assets.
After the Closing, Purchaser will retain all Records (except those
Records referred to in Section 6.4 (a)(i), (ii) and (iii)) required to
be retained pursuant to obligations imposed by any applicable Law.
Except as provided in the immediately preceding sentence or in Section
7.6 hereof, Purchaser will retain all Records for a period of seven
years after the Closing Date. After the end of such seven-year period,
before disposing of any such Records, Purchaser will give notice to
such effect to Seller and give Seller at its cost and expense an
opportunity to remove and retain all or any part of such Records as
Seller may elect. Purchaser and each of its representatives shall treat
and hold as confidential information contained in such Records in
accordance with the terms and provisions of that certain
Confidentiality Agreement, entered into as of March 14, 1997, between
Purchaser and Seller (the "Confidentiality Agreement"), which
Confidentiality Agreement shall remain in full force and effect until
the Closing Date, whereupon such Confidentiality Agreement will
terminate without further action.
(b) Purchaser shall indemnify, defend and hold harmless
Seller, 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 Business Real Property or Leased
Business Real Property, or (ii) any and all other activities undertaken
by Purchaser or Purchaser's representatives with respect to the
Business Real Property or Leased Business Real Property pursuant to
this Section 6.4.
Section 6.5. Confidentiality Agreements. At the Closing,
Seller will take all such commercially reasonable actions as may be required to
assign to Purchaser the benefits with respect to the Business of all
confidentiality agreements relating to the possible sale of the Business by
Seller.
Section 6.6. Certain Environmental Covenants. Upon reasonable
request, Seller 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 Seller, if
unavailable to Purchaser) relating to the compliance by Seller with
Environmental Laws or to the Release or threat of Release of Hazardous Materials
in connection with the ownership of the Acquired Assets or operation of the
Business by the Seller, whether generated by Seller or others, including,
without limitation, environmental audits, environmental risk assessments, or
site assessments of the Business Real Property or Leased Business Real
42
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 Business Real Property and Business 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 ▇▇▇▇▇ at the Leased Business
Real Property and the Business Real Property.
Section 6.7. Management Information System. For a period
beginning on the Closing Date and ending 12 months from the date thereof, Seller
shall make available to Purchaser at no cost to Purchaser, the Management
Information System (MIS) services for the Business comparable to that which was
previously provided to the Business by Seller.
Section 6.8. Accounting; Human Resources; Credit Collection.
For a period beginning on the Closing Date and ending 120 days from the date
thereof, Seller shall provide to Purchaser, at no cost to Purchaser, accounting,
cash management and credit collections personnel support comparable to that
which was previously provided to the Business by Seller. When requested by the
Purchaser, and if the Seller has the ability to do so without (i) unreasonably
disrupting or interfering with its or its Affiliates' requirements or services,
(ii) hiring additional personnel or (iii) retaining personnel that it would not
otherwise retain, for the period up to December 15, 1997, the Seller will
provide consulting human resources services relating to the Seller's employee
benefit plans and responding to questions regarding the transition of
Transferred Business Employees out of those plans. For any such services that
Seller is not otherwise required to provide under applicable law, the Purchaser
will reimburse the Seller based on the hours involved at the hourly compensation
rate for the individuals providing such services plus out-of-pocket expenses.
The hourly rate for ▇▇▇ ▇▇▇▇▇▇ is $59.37 per hour and for ▇▇▇▇▇ ▇▇▇▇ is $31.59
per hour. Notwithstanding anything contained herein to the contrary, neither
Seller nor any of its Affiliates nor any of their respective officers,
directors, employees, representatives or agents shall be liable to the Purchaser
or any of its Affiliates for any losses or damages suffered in respect of any
services or advice provided pursuant to this Section 6.6, other than for losses
or damages resulting from the gross negligence or willful misconduct of Seller
as finally determined by a court of competent jurisdiction. The Purchaser shall
indemnify and hold the Seller and its Affiliates and their respective officers,
directors, employees, representatives and agents harmless from and against any
loss, Liability, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by or to which such persons may become subject as
a result of or arising from any service (other than for services which Seller is
required to provide under applicable law) or advice provided pursuant to this
Section 6.6, other than for any loss, Liability, damage or expense resulting
from the gross negligence or willful misconduct of Seller as finally determined
by a court of competent jurisdiction.
Section 6.9. Taylors Facility. For a period beginning on the
Closing Date and ending six months from the date thereof, Seller shall rent to
Purchaser the warehouse space at
43
Seller's Taylors facility at a cost of $11,100 per month, which is consistent
with historical rental allocations to the Business for such space.
ARTICLE VII.
CERTAIN COVENANTS
Section 7.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and Other Filings.
(a) As promptly as practicable, and in any event within
fifteen Business Days following the execution and delivery of this
Agreement by the parties, Seller 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. Seller and
Purchaser shall, or shall cause their ultimate parents to, request
early termination of the waiting period thereunder.
(b) Seller 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, Seller 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 7.2. Certain Provisions Relating to Consents. Seller
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. Seller shall not obtain any Consent that will be
to the economic detriment of the Business, including any modification of any
Assumed 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 Seller 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 7.3. Nondisclosure; Noncompetition.
(a) From and after the Closing Date, Seller 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 Business (including, without limitation, customer lists,
supplier lists and pricing and marketing arrangements with customers or
suppliers),
44
and Seller shall cooperate reasonably with Purchaser in preserving such
proprietary, confidential or secret aspects of the Business.
(b) For a period of four years after the Closing Date, Seller
will not, and will cause ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation and each of its
wholly-owned Subsidiaries not to, directly or indirectly, through any
division, Subsidiary or otherwise, alone or in association with any
other Person in any form or manner, (i) engage in any business activity
which competes with the Business as currently conducted by Seller as of
the Closing or (ii) own stock or otherwise have an equity interest in
or be affiliated with any Person or entity engaged in any Business
activity which is competitive with the 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
any of the following: (x) in the event of an acquisition by Seller or
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation or any of their respective wholly-owned
Subsidiaries of an entity 35% or less of the assets or revenues of
which are attributable to a business activity which competes with the
Business so long as the competitive business which is a part of such
entity has less then 10% of the market share of the North America air
restraint fabric business, (y) in the event of an acquisition by Seller
or ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation or any of their respective wholly-owned
Subsidiaries which exceeds the limitations of subsection (x) of this
Section 7.3(b), provided that Seller or ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation or
any of their respective wholly-owned Subsidiaries, as the case may be,
subsequently sells such portion of the acquired entity attributable to
the competing business which exceeds the limitations of subsection (x)
of this Section 7.3(b) within two years from the date of acquisition
thereof and notifies Purchaser of such acquisition and intent to sell
promptly following the closing of the acquisition and allows Purchaser
to participate in any bidding process established for such sale, it
being understood that Seller or ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation or any of
their respective Affiliates may otherwise conduct the bidding process
in any manner it sees fit; or (z) to any Person who is or may be an
Affiliate of Seller (other than ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation and its
direct and indirect Subsidiaries), including without limitation, The
Blackstone Group, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. and their respective
Affiliates (other than ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Corporation and its direct and
indirect Subsidiaries). Seller will not, for a period of two years from
the Closing Date, solicit for hire any Business Employees (including
Significant Employees) without the prior written consent of Purchaser.
Seller agrees that a violation of this Section 7.3 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 Seller from doing or
continuing to do any such violation and any other violations or
threatened violations of Section 7.3.
(c) Seller acknowledges and agrees that the covenants set
forth in this Section 7.3 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
45
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 7.3(c), any of the provisions of this Section
7.3 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 7.4. 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. Without limiting the generality of the foregoing, Purchaser will
(i) use reasonable efforts to satisfy the conditions to the availability of
financing referred to in Section 9.11 hereof and (ii) promptly notify Seller if
Purchaser is given notice or Purchaser otherwise determines that the financing
contemplated by the Highly Confident Letter will not be available.
Section 7.5. Collections. On and after the Closing Date,
Purchaser shall have the sole right and authority to collect, for its own
account and sole benefit, all monies payable in respect of the Business, no
matter how or when earned, except for any monies relating to or arising from any
Excluded Liability or Excluded Asset. If Seller shall receive any such monies,
Seller shall hold all such monies in trust for the sole benefit of Purchaser.
Within five business days after receipt thereof, Seller shall cause the transfer
and delivery to Purchaser of any such monies or other property which it may
receive after the Closing Date in respect of the Business. Seller authorizes the
Purchaser to endorse in Seller's name all notes, checks, drafts, money orders or
other instruments of payment in respect of the foregoing which may come into the
possession of Purchaser. This right shall become irrevocable upon Closing.
Section 7.6. Ongoing Tax Cooperation. If the Closing occurs,
Seller and Purchaser shall cooperate fully with each other and make available or
cause to be made available to each other in a timely fashion such Tax data,
prior Tax Returns and filings and other information as may be reasonably
required for the preparation by Purchaser or Seller of any Tax Returns,
elections, Consents or certificates required to be prepared and filed by
Purchaser or Seller that relate to the Business 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 Seller 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 in any such case that
relate to the Business until the later of (i) the expiration of the statute of
limitations for the taxable periods to which such Tax Returns
46
and other documents relate, without regard to extensions except for extensions
executed by that party or its Affiliates or extensions of 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 that relates to the Business. Purchaser shall provide Seller with any
necessary payroll records relating to the Business attributable to the period
prior to the Closing Date. Purchaser shall cooperate with Seller to the extent
reasonably necessary for Sellers' preparation of their financial statements and
Tax Returns that relate to the Business 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 this Section 7.6 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 7.7. Clearance Certificates. To the extent required by
law to relieve Purchaser of any secondary Liability for unpaid sales or similar
Taxes of Seller attributable to periods prior to the Closing Date, Seller shall,
following execution of this Agreement, use reasonable efforts to obtain
clearance certificates or similar documents from any state Tax authority.
Section 7.8. Certain Tax Matters.
(a) Purchaser and Seller shall each bear and pay one-half of
all sales, use, transfer, stamp, conveyance, value added or other
similar Taxes, duties, excise or governmental charges imposed by any
United States federal, state or local Governmental Agency, and all
recording or filing fees, notarial fees and other similar costs of
Closing with respect to the transfer of the Acquired Assets or
otherwise on account of this Agreement or the transactions contemplated
hereby (collectively, the "Transfer Taxes"). Each of Seller and
Purchaser, as appropriate, shall in a timely manner sign and swear to
any return, certificate, questionnaire or affidavit as to matters
within its Knowledge required in connection with the payment of any
Transfer Tax.
(b) Purchaser will prepare and file or cause to be prepared
and filed all Tax Returns with respect to the Acquired Assets and the
Business required to be filed with the appropriate Governmental Agency
for all taxable periods beginning after the Closing Date. Purchaser
will make all payments required with respect to any such Tax Returns.
(c) Seller or an Affiliate of Seller will prepare and file or
cause to be prepared and filed all Tax Returns for the Seller that are
required to be filed with respect to the
47
Acquired Assets and the Business, other than Tax Returns that Purchaser
is obligated to prepare and file pursuant to Section 7.8(b), with the
appropriate Governmental Agency. Seller will pay or cause to be paid
all Taxes required to be paid with respect to such Tax Returns. The
amount of any Income Taxes attributable to a portion of a taxable
period that includes but does not end on the Closing Date shall be
determined pursuant to the interim closing of books method.
(d) From the date hereof through the Closing Date, Seller and
Purchaser will consult with one another with a view to determining a
mutually acceptable allocation of the Purchase Price among the Acquired
Assets. If such a mutually acceptable allocation is agreed upon, Seller
and Purchaser will jointly prepare Form 8594 pursuant to Section 1060
of the Code and Seller and Purchaser will file all of their respective
Tax Returns consistent with such allocation. If such a mutually
acceptable allocation is not agreed upon, each of Seller and Purchaser
will be free independently to determine an appropriate allocation of
the aggregate Purchase Price among the Acquired Assets for purposes of
preparing and filing its own Tax Returns.
(e) Purchaser will prepare and deliver, or will cause to be
prepared and delivered, within 60 calendar days of receipt of Seller's
request therefor, to Seller, Seller's standard federal and state Tax
Return data gathering packages relating to the Business. Such packages
will be prepared on a basis consistent with the prior year's Tax
Returns. In addition to providing such packages to Seller, Purchaser
will promptly provide or cause to be provided to Seller such other
information as Seller may reasonably request in order for the
operations of the Business to be properly reported in Seller's Tax
Returns.
Section 7.9. W-2 Matters. Pursuant to the alternate procedure
described by Revenue Procedure 96-60, Purchaser will assume Seller's entire
obligation to furnish Forms W-2 for the year ending December 31, 1997 to
Transferred Business Employees. Seller will provide Purchaser the information
not available to Purchaser and relating to periods ending on the Closing Date
necessary for Purchaser to prepare and distribute Forms W-2 to Transferred
Business Employees for the year ending December 31, 1997, which Forms W-2 will
include all remuneration earned by Transferred Business Employees from Seller
and Purchaser during the year ending December 31, 1997, and Purchaser will
prepare and distribute such Forms. The information provided by Seller pursuant
to this Section on 7.9 shall be true, correct and complete, and Seller shall
hold Purchaser harmless and indemnify Purchaser for any penalty or other charge
or loss incurred by Purchaser as a result of Seller providing inaccurate or
incomplete information hereunder.
Section 7.10. Ongoing Insurance Cooperation.
(a) If the Closing occurs, Seller and Purchaser shall
cooperate fully with each other and make available or cause to be made
available to each other in a timely fashion such information and
documentation as may be reasonably required for the processing of
48
Insurance claims and the determining of or obtaining of Insurance
coverage. Seller and Purchaser will use reasonable efforts to cooperate
(i) to transfer to Purchaser any Insurance and administrative services
contracts that relate to the Business, are separately transferable and
that Purchaser wishes to continue as set forth on Schedule 7.10 annexed
hereto 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 Seller's ownership or conduct of the
Business on or prior to the Closing Date for which Seller 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 Seller in respect of the Business, at the request of
Purchaser, Seller will use its reasonable best efforts to assert, or to
assist Purchaser to assert, one or more claims under such Insurance
covering such loss, Liability or damage if Purchaser, is not itself
entitled to assert such claim but Seller is so entitled and Seller will
promptly pay to Purchaser any amounts recovered in respect of any such
claim, provided that all of Seller'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 Seller retains any Liability under any such
policy of Insurance, are promptly reimbursed by Purchaser. Seller will
be deemed, solely for the purpose of asserting claims for Insurance
pursuant to the immediately preceding sentence, to have retained
Liability for such loss, Liability or damage to the extent of the
policy limits of the applicable Insurance. Nothing in this Section 7.10
will change or alter the provisions of Article XIII.
(c) Until the Closing Date, if any current Insurance policy
covering the Business or the Acquired Assets is cancelled or expires,
Seller will use its reasonable best 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.
Section 7.11. Bulk Transfer Laws. Purchaser hereby waives
compliance by Seller with the provisions of any so-called "bulk transfer" Law of
any jurisdiction in connection with the sale of the Acquired Assets to
Purchaser.
Section 7.12. Enhanced Severance Issues. Purchaser hereby
covenants and agrees to provide written notice to Seller on the earlier of
fourteen days prior to the Closing Date or August 15, 1997 of any decision by
Purchaser not to retain the services of the Business Employees listed on
Schedule 7.12 annexed hereto following the Closing. If Purchaser fails to
provide Seller with such notice pursuant to the preceding sentence, Purchaser
shall be liable for all severance payable to the Business Employees listed on
Schedule 7.12 annexed hereto and shall
49
indemnify and hold harmless Seller therefrom. The foregoing shall not obligate
Purchaser to continue the employment relationship with such persons for any
specific period of time.
Section 7.13. Notice. Purchaser hereby covenants and agrees to
provide prompt written notice to Seller in the event that Purchaser reasonably
believes that the representations and warranties of Purchaser set forth in
Section 5.5 hereof are no longer accurate.
Section 7.14. Policy. Purchaser will notify Seller, within two
weeks of the date hereof, if a policy reasonably comparable (in material terms
and cost) to the policy currently maintained by the Seller with Aetna Life and
Casualty Insurance Company, with respect to Seller's Employee Retiree Life Plan,
is not available to the Business on a standalone basis (without taking into
account any changes to the Business or to benefit plans to be made by
Purchaser). If Purchaser and Seller reasonably agree that such comparable policy
is not available, a closing adjustment will be made to the Purchase Price in
favor of Purchaser, to take into account any increased accrual for such Plan
which is made necessary by reason of such unavailability.
ARTICLE VIII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Seller) of each of the following conditions on or prior to the
Closing Date:
Section 8.1. Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects as of the date hereof, and shall also
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 Seller a certificate of its
President or a Vice President, dated the Closing Date, to the foregoing effect.
Section 8.2. Compliance with Agreement. Purchaser shall have
performed and complied in all material respects with the covenants to be
performed or complied with by it on or prior to the Closing Date. Purchaser
shall have delivered to Seller a certificate of its President or a Vice
President, 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 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.
50
Section 8.4. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
Section 8.5. Corporate Documents. Seller shall have received
from Purchaser certified copies of the resolutions duly adopted by the board of
directors of Purchaser approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and such
resolutions shall be in full force and effect as of the Closing Date.
Section 8.6. ▇▇▇▇ of Sale. The Purchaser shall have executed
and delivered the ▇▇▇▇ of Sale to Seller.
Section 8.7. Purchase Price. The Purchaser shall have paid to
the Seller the Purchase Price in accordance with Section 2.4.
Section 8.8. Opinion of the Purchaser's Counsel. The Seller
shall have received the opinion, dated the Closing Date, of the Purchaser's
Counsel, substantially in the form annexed hereto as Exhibit B ("Purchaser's
Opinion of Counsel").
Section 8.9. C&A Credit Agreements Consent. The C&A Credit
Agreements shall have been amended or effectively waived to permit the
consummation of the transactions contemplated herein; provided that it shall be
a breach of this Agreement by Seller if any of its Affiliates who are parties to
such agreements fail to use their reasonable best efforts to have such
agreements amended or waived.
ARTICLE IX.
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 9.1. Representations and Warranties. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the date hereof, and shall also
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, except for representations and warranties made as of a specified
date, which shall be true and correct in all material respects as of the
specified date. Seller shall have delivered to Purchaser a certificate of the
President or a Vice President of the General Partner dated the Closing Date, to
the foregoing effect.
Section 9.2. Compliance with Agreement. Seller shall have
performed and complied in all material respects with the covenants to be
performed or complied with by it on or
51
prior to the Closing Date. Seller shall have delivered to Purchaser a
certificate of the President or a Vice President of the General Partner, dated
the Closing Date, to the foregoing effect.
Section 9.3. 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 9.4. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All applicable waiting periods
(and any extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
Section 9.5. Consents. All consents, approvals,
authorizations, registrations or filings necessary for the consummation of the
transactions contemplated by this Agreement and the execution and delivery of
this Agreement by Seller which are listed on Schedule 4.2 annexed hereto shall
have been obtained.
Section 9.6. Corporate Documents. Purchaser shall have
received from Seller certified copies of the resolutions duly adopted by the
board of directors of the General Partner approving the execution and delivery
of this Agreement by Seller and the consummation of the transactions
contemplated hereby, and such resolutions shall be in full force and effect as
of the Closing Date.
Section 9.7. FIRPTA. Seller 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
C (the "FIRPTA Affidavit").
Section 9.8. 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 9.9. ▇▇▇▇ of Sale. Seller shall have executed and
delivered the ▇▇▇▇ of Sale to Purchaser.
Section 9.10. Opinion of the Seller's Counsel. Purchaser shall
have received the opinion, dated the Closing Date, of Seller's Counsel
substantially in the form annexed hereto as Exhibit D ("Seller's Opinion of
Counsel").
Section 9.11. Financing. The financing contemplated by the
highly confident letter of BT Securities Corporation, dated June 9, 1997 (the
"Highly Confident Letter") (a copy of which has been previously delivered by
Purchaser to Seller), shall be available to Purchaser on terms not materially
less favorable than those contemplated thereby or alternative financing shall be
available from another source, including a source identified by Seller, on terms
52
that in the aggregate, are not materially less favorable to Purchaser than the
terms set forth in the Highly Confident Letter.
Section 9.12. Loom Purchase. Seller shall have consummated the
Loom Purchase.
Section 9.13. Intellectual Property. Seller shall have caused
JPS Automotive Products Corp., a wholly-owned subsidiary of Seller ("JPS
Products"), to transfer to Purchaser all of its right, title and interest in all
applications and registrations for Intellectual Property listed on Schedule 4.13
annexed hereto that is owned by JPS Products.
Section 9.14. Limited Partner Guarantee. ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Products Co., the limited partner of Seller (the "Limited Partner"), shall have
executed the Guarantee substantially in the form annexed hereto as Exhibit E
(the "Guarantee").
Section 9.15. Intentionally left blank.
Section 9.16. 1994 Financial Statements. Seller shall have
delivered to Purchaser the 1994 Financial Statements.
Section 9.17. SC Seller's Affidavit. Seller shall have
delivered an affidavit, dated the Closing Date, pursuant to South Carolina Code
Section 12-8-580 et. seq. substantially in the form annexed hereto as Exhibit F
(the "SC Seller's Affidavit").
Section 9.18. KeyBank Consent. Purchaser shall have obtained
the consent of KeyBank National Association ("KeyBank") under the Credit
Agreement, dated as of May 21, 1997, among Purchaser, Phoenix Airbag GmbH and
Automotive Safety Components International Limited, as borrowers, KeyBank, as
administrative agent, and the lending institutions named therein. Purchaser
agrees to use reasonable best efforts to obtain such consent.
ARTICLE X.
DELIVERIES AT CLOSING
Section 10.1. Deliveries by Seller at the Closing. At the
Closing, Seller 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 9.1, 9.2 and 9.6;
(b) The Consents listed on Schedule 4.2 annexed hereto;
(c) Sellers' Opinion of Counsel;
53
(d) The ▇▇▇▇ of Sale;
(e) Certificates issued by appropriate Governmental
Authorities evidencing, as of a recent date, the good standing and tax
status of the Seller in its jurisdiction of formation;
(f) A copy of the Certificate of Limited Partnership and the
Partnership Agreement, certified by the President or a Vice President
of the General Partner;
(g) Except to the extent physically located at the Business
Real Property, the books and records necessary to operate the Business;
(h) All other previously undelivered documents that Seller is
required to deliver to Purchaser pursuant to this Agreement;
(i) Duly executed and acknowledged transfer Tax and other
required Tax forms reasonably required by Purchaser to consummate the
transactions contemplated hereby, all in the form required by
applicable Law;
(j) Duly executed warranty deed conveying the Business Real
Property to Purchaser in form substantially similar to the deeds
described on Schedule 4.11(a) annexed hereto.
(k) Duly executed instrument of transfer conveying to
Purchaser or a wholly-owned Subsidiary thereof all of the right, title
and interest of JPS Products in all applications and registrations for
Intellectual Property listed on Schedule 4.13 annexed hereto that is
owned by JPS Products;
(l) The Guarantee duly executed by the Limited Partner;
(m) The FIRPTA Affidavit; and
(n) The SC Seller's Affidavit.
Section 10.2. Deliveries by Purchaser at the Closing. At the
Closing, Purchaser shall deliver, or cause to be delivered, to Seller, the
following items:
(a) The duly executed officer's certificates referred to in
Sections 8.1, 8.2, and 8.5;
(b) The Consents listed on Schedule 5.2 annexed hereto;
(c) Purchaser's Opinion of Counsel;
54
(d) The ▇▇▇▇ of Sale;
(e) The Purchase Price in accordance with Section 2.4;
(f) A copy of the Certificate of Incorporation and By-Laws of
the Purchaser, certified by the President or a Vice President of the
Purchaser; and
(g) All other previously undelivered documents that Purchaser
is required to deliver to Seller pursuant to this Agreement; and
ARTICLE XI.
TERMINATION
Section 11.1. 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 Seller; or
(b) After September 15, 1997 (such date to be extended by one
day for each day after July 14, 1997 that the 1994 Financial Statements
are not delivered) by Purchaser or Seller (if such terminating party is
not then in default of any obligation hereunder), if the Closing has
not occurred on or before such date, unless such date is extended by
mutual consent of the parties hereto.
(c) By either Purchaser or Seller, if any Governmental Agency
shall have enacted, issued, promulgated, enforced or entered any Law or
Judgment which has the effect of prohibiting consummation of the
transactions contemplated hereby.
(d) By Purchaser, if it becomes apparent that any of the
conditions (other than the financing condition set forth in Section
9.11) to the obligations of Purchaser contained in Article IX of this
Agreement required to have been met on or prior to the Closing Date
will be incapable of being met on or prior to the date specified in
Section 11.1(b), and such failure has not been waived by Purchaser or
cured by Seller.
(e) By Seller, if it becomes apparent that any of the
conditions to the obligations of Seller contained in Article VIII of
this Agreement required to have been met on or prior to the Closing
Date will be incapable of being met on or prior to the date specified
in Section 11.1(b), and such failure has not been waived by Seller or
cured by Purchaser.
(f) By Seller if BT Securities, Inc. withdraws the Highly
Confident Letter or Purchaser notifies Seller that BT Securities, Inc.
has informed Purchaser that the financing
55
contemplated by the Highly Confident Letter will not be obtained or
that Purchaser has determined that such financing is not available.
(g) By Purchaser if (i) BT Securities, Inc. has withdrawn the
Highly Confident Letter or BT Securities, Inc. has informed Purchaser
that the financing contemplated by the Highly Confident Letter will not
be obtained, (ii) Purchaser shall have so notified Seller, (iii)
Purchaser shall have used reasonable best efforts to obtain alternative
financing on terms that, in the aggregate, are not materially less
favorable to Purchaser than the terms set forth in the Highly Confident
Letter, and (iv) financing shall not be available to Purchaser from
another source within 45 calendar days after Purchaser is notified that
the Highly Confident Letter has been withdrawn or that the financing
contemplated thereby will not be obtained, including a source
identified by Seller, on terms that, in the aggregate, are not
materially less favorable to Purchaser than the terms set forth in the
Highly Confident Letter.
Section 11.2. Effect of Termination. In the event this
Agreement is terminated pursuant to Section 11.1, all further obligations of the
parties hereunder shall terminate, except for the obligations set forth in
Sections 6.4(b), 14.4, 14.5 and 14.9 and the Confidentiality Agreement, and
except that nothing in this Article XI shall relieve any party hereto of any
Liability for breach of any of the covenants or breach of any of the
representations or warranties contained in this Agreement.
ARTICLE XII.
COVENANTS RELATING TO EMPLOYMENT AND EMPLOYEE MATTERS
Section 12.1. Offer of Employment, Welfare and Fringe
Benefits.
(a) Effective as of the Closing Date, Purchaser shall offer
employment to each Business Employee in the same positions and at the
same level of wages and/or salary as in effect for such Business
Employee on the business day immediately preceding the Closing Date;
provided, however, except as may be specifically required by applicable
law or any Contract, the Purchaser shall not be obligated to continue
any employment relationship with any Transferred Business Employee for
any specific period of time.
(b) Purchaser shall be solely responsible for all compensation
accruing on and after the Closing Date with respect to Transferred
Business Employees. Purchaser shall also assume as an Assumed Liability
and be solely responsible for all compensation accrued but unpaid as of
the Closing Date with respect to the Transferred Business Employees.
Nothing in this Section 12.1(c) shall be construed in any way to limit
or diminish the representations and warranties of Seller contained in
Article IV hereof.
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(c) Except as provided in Section 12(d) and subject to the
reimbursement obligations referred to in this Section 12.1(c) below,
Seller shall, with respect to Business Employees, continue to be
responsible after the Closing Date for any welfare benefits or claims
(whether submitted before, on or after the Closing Date) which will by
reason of events which took place prior to the Closing Date become
payable under any group insurance (including, without limitation, the
Term Life Insurance under the Group Protection Plan for Employees of
JPS automotive L.P. (Salaried Employees) and (Hourly Employees) (the
"Seller's Group Life Policy"), the Group Long Term Disability Insurance
Income Protection for Salaried Employees of JPS Automotive L.P., the
JPS Automotive L.P. Voluntary Group Accident Insurance Programs for
Full-Time Hourly Employees and their Families and the JPS Automotive
Voluntary Group Accident Insurance Programs for Salaried Employees and
their Families), welfare benefits for purposes of complying with the
▇▇▇▇▇▇▇'▇ compensation law or group health or dental plan (including,
without limitation, the Health Care Plan for Employees or Dependents of
The Group Protection Plan for Employees of JPS Automotive L.P., (the
"Seller's Group Health Plan") and the JPS Automotive L.P. Flexible
Benefits Program (the "Seller's Flexible Benefit Program")), in each
case, affecting Business Employees. Subject to the reimbursement
obligations referred to in this Section 12.1(c) below, Seller shall
continue to be responsible for any benefits or claims under such plans
arising by reason of events which took place before the Closing Date.
In the case of health benefits, the event referred to in the foregoing
sentence is the provision of the service for which reimbursement or
payment is sought by the employee and in the case of long-term
disability benefits, the event referred to is the onset of disability.
Subject to the reimbursement obligations referred to in this Section
12.1(c) below, on or after the Closing Date, Seller shall continue to
be responsible for extended benefits after termination provided to
Transferred Business Employees who are hospitalized at the Closing Date
under the terms of Seller's group health or dental plan (the "Extended
Health Benefits") and extended death benefits for Business Employees
who are disabled at the Closing Date under the Seller's Group Life
Policy. After the Closing Date, Seller shall continue to honor claims
by Business Employees under the JPS Automotive L.P. Dependent Care
Spending Account Program (the "Seller's Dependent Care Program"), with
respect to deferrals made by such Business Employees during 1997 up to
the Closing Date, based on eligible dependent care expenses incurred at
any time during 1997, whether before or after the Closing Date. Any
out-of-pocket expenses incurred by Seller (including the amount of
claims paid by it, the direct out-of-pocket costs of processing those
claims and a pro rata share of indirect out-of-pocket costs, including
without limitation, the pro rata share of administrative fees to third
party administrators of the Plans) by reason of the payment of claims
under this Section 12.1(c), to the extent not covered by insurance,
shall be billed to Purchaser and promptly reimbursed to Seller;
provided, however, that nothing contained in this sentence shall
undermine the ability of Purchaser to make a claim for a breach of a
representation or warranty.
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(d) Purchaser shall assume as an Assumed Liability and be
solely responsible for all Liability of Seller for post-retirement
medical and post-retirement life insurance benefits and/or coverage for
Business Employees (including without limitation Transferred Business
Employees) and Former Business Employees and any dependents of such
Business Employees and Former Business Employees. Nothing in this
Section 12.1(d) shall be construed in any way to limit or diminish the
representations and warranties of Seller contained in Article IV
hereof.
(e) Purchaser shall make available to all Transferred Business
Employees who are participating in Seller's group health and medical
plan immediately prior to the Closing Date group health and medical
coverage which has no waiting period for such Transferred Business
Employees with respect to eligibility to enroll and participate and no
exclusions or limitations based on preexisting conditions for such
Transferred Business Employees, other than any waiting periods with
respect to such exclusions or limitations already applicable to such
Transferred Business Employees, if not longer than would otherwise be
applicable under Purchaser's Plan. For purposes of determining the
amount of any benefit under Purchaser's group health and medical plan,
all service of Transferred Business Employees credited under Seller's
group health and medical plan shall be treated as service with
Purchaser. If the employment of a Transferred Business Employee is
terminated by Purchaser on or after the Closing Date, Purchaser shall
fulfill its obligations, to the extent required by law with respect to
such Transferred Business Employee under Section 4980B of the Code and
Title I, Subtitle B, Part 6 of ERISA ("COBRA"). Seller shall be
required to comply with the provisions of COBRA, to the extent required
by law, for Business Employees and Former Business Employees who do not
become Transferred Business Employees and Purchaser shall have no
Liability under COBRA as to Business Employees or Former Business
Employees who do not become Transferred Business Employees.
Section 12.2. Seller Plans.
(a) As of the Closing Date, Seller agrees to take all action
necessary, including amendment of the Retirement Pension Plan for
Employees of JPS Automotive L.P. (the "Seller's Retirement Plan") to
fully vest the accrued benefits of all Transferred Business Employees
under the Seller's Retirement Plan. Accrued benefits having an
actuarial present value of $3,500 or less based on the interest
assumption currently in the Sellers's Retirement Plan for such purpose
will automatically be cashed out in accordance with current provisions
of such plan and shall be eligible for direct rollover at the
distributee's election.
(b) Purchaser shall, effective as of the Closing Date,
establish or designate a plan intended to qualify under Section 401(a)
of the Code and a trust maintained thereunder intended to be exempt
from federal income taxation under Section 401 of the Code for the
benefit of Transferred Business Employees ("Purchaser's Plan").
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Purchaser shall cause Purchaser's Plan to accept as a rollover
contribution, pursuant to Sections 401(a)(31) and 402(c) of the Code,
the lump sum value of the accrued benefits from Seller's Retirement
Plan as to which Transferred Business Employees' designate Purchaser's
Plan as the recipient of rollover contributions. Seller agrees to
notify the Transferred Business Employees that if they receive a lump
sum distribution from Seller's Retirement Plan they have the option to
take such distribution in cash or make a direct rollover pursuant to
Sections 401(a)(31) and 402(c) of the Code to an individual retirement
account or annuity or to Purchaser's Plan. All such rollover
contributions shall be required to be in cash. Purchaser agrees to
accept rollover contributions from Transferred Business Employees who
elect to make such rollover within 180 days following the Closing Date.
(c) The Business Employees participate in the Savings,
Investment and Profit Sharing Plan of JPS Automotive, L.P. ("Seller's
Savings Plan"). No earlier than January 1, 1998 and no later than March
31, 1998 (or as soon as practicable thereafter), the Seller shall cause
the trustee of the Seller's Savings Plan to transfer to the funding
agent of Purchaser's Plan, for the benefit of Transferred Business
Employees, an amount, in cash, equal to the total account balances,
including actual investment earnings or losses through the date of the
last valuation, held under the Seller's Savings Plan for the
Transferred Business Employees, except for any amounts as to which
withdrawal requests have been duly submitted prior to such transfer and
which shall be paid by the Seller's Savings Plan to Transferred
Business Employees in accordance with ERISA and the Code and the terms
of the Seller's Savings Plan (the "Transferred Assets"). Purchaser's
Plan shall provide, as of the date of such transfer, benefits for each
Transferred Business Employee which are equal to such Transferred
Business Employees' respective account balances (including any net
earnings or losses accrued thereon from the Closing Date to the actual
date of the last valuation) under the Seller's Savings Plan as of the
date of the last valuation in addition to the account balance (if any)
to which such Transferred Business Employees are entitled based on
their participation in Purchaser's Plan on and after the Closing Date.
Pending the transfer of the Transferred Assets, the accounts of the
Transferred Business Employees shall remain in the trust fund for the
Seller's Savings Plan and Seller shall cause the trustee of the
Seller's Savings Plan to pay any current benefits or make any
distributions to Transferred Business Employees, including but not
limited to such benefits as may be payable to Transferred Business
Employees on account of termination of employment with Purchaser, as
they become due. Between the date hereof and the date of transfer of
the Transferred Assets, Seller shall administer the Seller's Savings
Plan in compliance with all the applicable laws.
(d) Seller and Purchaser agree to provide each other with such
records and information as they may reasonably request relating to
their respective obligations under this section or the administration
of the Seller's Savings Plan or Purchaser's Plan.
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Section 12.3. Crediting of Service. From and after the Closing
Date, Purchaser shall credit to the Transferred Business Employees, for all
purposes under all employee benefit plans, employee benefit arrangements and
employee compensation policies and practices of Purchaser, all prior service
recognized by Seller with respect to such Transferred Business Employees
immediately prior to the Closing Date for purposes of eligibility to participate
in, vesting or payment of benefits under, and eligibility for early retirement
or any subsidized benefit provided under, but not, except as provided in Section
12.1 and this Section 12.3, for purposes of determining the amount of any
benefit under any employee benefit plan (including but not limited to any
"employee benefit plan" as defined in Section 3(3) of ERISA) maintained by
Purchaser. For purposes of computing deductible amounts (or like adjustments or
limitations on coverage) under any "welfare plan" (as defined in Section 3(1) of
ERISA), expenses and claims previously recognized for similar purposes under the
applicable welfare plan of Seller shall be credited or recognized under
Purchaser's welfare plan. Notwithstanding anything in this Section 12.3 to the
contrary, Purchaser shall give the Transferred Business Employees full credit
for all prior service recognized by Seller with respect to such Transferred
Business Employees immediately prior to the Closing Date under the Purchaser's
vacation pay plan or policy.
Section 12.4. No Rights to Employees. Nothing in this
Agreement expressed or implied shall confer upon any employee or legal
representative thereof or any collective bargaining agent any rights or
remedies, including, without limitation, any right to employment or continued
employment for any specified period, of any nature or kind whatsoever under or
by reason of this Agreement.
ARTICLE XIII.
INDEMNIFICATION
Section 13.1. Survival. All of the representations and
warranties of Seller contained in Article IV of this Agreement or in any
certificate delivered by Seller 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 Seller contained in Section 4.22, until five
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 Seller contained in Section 4.21, August 15, 2000, (c) in the case
of the representations and warranties of Seller contained in Section 4.11(a),
until November 11, 2006, and (d) in the case of any other representation or
warranty of Seller contained in this Agreement (other than the representations
and warranties of Seller contained in Sections 4.1, 4.3, and 4.24 (collectively
the "Perpetual Representations")) or any certificate delivered by Seller for a
period of sixteen months from the Closing Date; provided however that Purchaser
will give written notice to Seller of any matter of which it becomes aware as to
which it intends to make a claim in respect of any of the representations and
warranties referred to in this clause (d) as promptly as practicable after
Purchaser has actual knowledge of facts which a reasonable person (having
knowledge of this Agreement) would believe reasonably might impose Liability on
Seller pursuant to the indemnification provisions of this Agreement.
Notwithstanding
60
the foregoing, (i) any notice given in accordance with Section 14.1 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 and
(ii) to the extent that any representation or warranty of Seller is qualified by
the phrase "Material Adverse Effect," the portion of the definition of such
phrase that states "or materially impair the ability of Seller to consummate the
transactions contemplated by this Agreement" shall not survive the Closing. The
Perpetual Representations, the representations and warranties of Purchaser
contained in Sections 5.1 and 5.4, and all of the covenants of Seller and
Purchaser contained in this Agreement shall survive the Closing and continue in
full force and effect forever thereafter.
Section 13.2. Indemnification Provisions for Benefit of
Purchaser.
(a) Seller agrees to indemnify Purchaser and its Affiliates
against (i) any Damages Purchaser suffers arising out of or resulting
from Seller's breach of any of its representations, warranties or
covenants contained in this Agreement or any certificate delivered by
Seller 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 Seller within the applicable survival
period, if applicable, and (ii) any and all Damages related to any of
the Excluded Liabilities; provided, however, Seller shall not have any
obligation to indemnify Purchaser from and against any Damages
resulting from the breach of any representation or warranty of Seller
(as opposed to any covenant of Seller) contained in Article IV of this
Agreement (other than Perpetual Representations): (x) 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 $250,000 (or $150,000 in the event
of a breach of Section 4.28 hereof (the "Plan Basket")) (the
"Deductible") (after which point Seller will be obligated only to
indemnify Purchaser from and against further Damages in excess of the
Deductible), (y) in the case of a breach, or alleged breach, of the
representations and warranties contained in Section 4.21, to the extent
that Purchaser has not complied with the provisions of Section 13.5, or
(z) notwithstanding anything to the contrary contained in this
Agreement, to the extent the aggregate amount that Seller has actually
indemnified Purchaser for prior breaches of representations and
warranties of Seller contained in Article IV of this Agreement exceeds
the Purchase Price (the "Cap"). Breaches of Section 4.28 shall be
applied first against the Plan Basket and thereafter, to the extent of
any excess, against the $250,000 Deductible.
(b) Without limiting the generality or effect of the
foregoing, Seller shall indemnify, defend and hold harmless Purchaser
and any of its Affiliates from and against any and all Damages
resulting from or arising out of any of the following:
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(i) Subject to Section 13.5, any business or property
formerly operated by the Business or any predecessor but not
operated by the Business or included in the Acquired Assets at
the Closing;
(ii) Any claim of any creditor of Seller or any of
its Affiliates that is not an Assumed Liability, whether
arising prior to, on or after the Closing Date; or
(iii) except with respect to the Plans identified
under Items 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 12, 13, 20, and 25
on Schedule 4.18(a) annexed hereto and in Schedule 4.18(j))
(x) any Liability to any Former Business Employee or any
employee of any predecessor of Seller 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) except as set forth in Section 13.3(w) below, any
severance or other benefit payable to any Business Employee or
Former Business 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;
(iv) (A) Any breach of the 1994 Acquisition Agreement
by JPSGP Inc., Foamex-JPS Automotive L.P., Seller or any of
their respective Affiliates to the extent occurring or
commencing, in whole or in part, prior to the closing date
thereof and (B) all Taxes of another Person assumed by Seller
pursuant to the 1994 Acquisition Agreement which Seller is
obligated to pay.
(c) The Indemnification provided for in Sections 13.2(a) and
13.2(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 13.2, 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 May 3, 1997 to the
Closing Date as reflected on the Closing Date Balance Sheet as finally
adjusted in connection with the computation of Actual Net Worth Amount.
(e) Notwithstanding anything to the contrary contained in this
Agreement, including this Section 13.2, Purchaser shall not be entitled
to indemnity hereunder for any breach of Section 4.11(a), until
Purchaser has first made, or has caused Seller 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.
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Section 13.3. Indemnification Provisions for Benefit of
Seller. Purchaser agrees to indemnify Seller and its Affiliates against any
Damages Seller suffers arising out of or resulting from (w) any Liability
incurred by Seller for a severance payment to any Transferred Business Employee
to the extent that such Liability results from the failure of Purchaser to offer
a benefit package that is comparable to the benefit package maintained by Seller
with respect to such employee, (x) the Assumed Liabilities, (y) any other
obligation or liability of the Business of whatever kind and nature, primary or
secondary, direct or indirect, absolute or contingent, known or unknown, whether
or not accrued, arising with respect to periods on or after the Closing,
including, without limitation, with respect to employee benefit plans, practices
and arrangements of the Purchaser and with respect to all compensation accruing
on and after the Closing Date with respect to Transferred Business Employees
(other than Excluded Liabilities) or (z) Purchaser's breach of any of its
representations, warranties or covenants contained in this Agreement or any
certificate delivered by Purchaser pursuant to this Agreement and provided that,
as to any claim for breach of representations or warranties, Seller makes a
written claim for indemnification against Purchaser within the applicable
survival period. Nothing in this Section 13.3 shall be construed in any way to
limit or diminish the representations and warranties of Seller contained in
Article IV hereof.
Section 13.4. Matters Involving Third Parties.
(a) If any third party notifies any party hereto (the
"Indemnified Party") with respect to any matter which may give rise to
a claim for indemnification against the other party hereto (the
"Indemnifying Party") under this Article XIII, 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
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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 XIII.
(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 prior 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 prior written consent of the Indemnified
Party (not to be unreasonably withheld or delayed).
Section 13.5. Certain Limitations on Environmental
Indemnification.
(a) Purchaser and Seller agree that except as provided in this
Agreement or the Guarantee, Purchaser forever waives any right it has
or may in the future have against the Parent Entities or Seller under
any Environmental Law (collectively, "Environmental Losses").
(b) Notwithstanding any other provision of this Agreement to
the contrary, Seller shall have no obligation to indemnify Purchaser
pursuant to Section 13.2 for Environmental Losses unless, and only to
the extent that, after the Closing Date, Purchaser, or any of its
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 13.1 so long as notice of breach or alleged breach or claim for
Costs of Remediation is given during the survival period. Such "Costs
of Remediation" shall be the
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sole basis for calculating Damages arising out of Environmental Losses
pursuant to Section 13.2, 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 Business Real Property,
Leased Business Real Property or formerly owned, leased or
operated properties or third party properties with respect to
the Business prior to the Closing Date;
(ii) to bring Purchaser from any non-compliance with
Environmental Laws with respect to the Business first
occurring in whole or in part prior to the Closing Date into
compliance with all Environmental Laws with respect to the
Business 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 with respect to the
Business brought by third parties;
provided, however, Seller 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) Seller waives any right it may have under any
Environmental Law against Purchaser for any matter to the extent
arising out of a breach by Seller of Section 4.21.
(d) If a dispute arises with respect to whether a claim for
Costs of Remediation meets the requirements of Section 13.5(b)(i),
(ii), and (iii) (without respect to whether there has been a breach of
the representations and warranties of Section 4.21), 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 13.5(b)(i), (ii) and (iii)
(without respect to whether there has been a breach of the
representations and warranties of Section 4.21) by applying the
standards set forth in this Section 13.5. Any fees charged by the
Environmental Arbitrator shall be allocated as determined by the
Environmental Arbitrator between Purchaser and Seller. 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
65
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
Seller may enforce any final determination of the Environmental
Arbitrator in any court of competent jurisdiction.
Section 13.6. Certain Additional Provisions Relating to
Indemnification.
(a) Notwithstanding Section 14.12, after the Closing Date, the
indemnification provisions set forth in this Article XIII shall
constitute the sole and exclusive recourse and remedy available to the
parties hereto with respect to the breach of any representation or
warranty contained in this Agreement or in any certificate delivered
pursuant to this Agreement except for actual fraud.
(b) The Indemnifying Party shall have no obligation to
indemnify or hold harmless the Indemnified Party pursuant to this
Article XIII 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 this
Article XIII. The Indemnified Party agrees to cooperate reasonably with
the Indemnifying Party, at the Indemnifying Party's sole cost and
expense, in connection with the Indemnifying Party's efforts to pursue
such rights, including, without limitation, providing reasonable access
to the Indemnified Party's personnel, books and records, making its
personnel and those of its Affiliates reasonably available for
deposition and testimony and executing such additional instruments of
assignment to evidence the assignment of such rights. In the event such
rights by their terms may not be assigned, the Indemnified Party agrees
to pursue its rights against such other Person, at the sole cost and
expense and direction of the Indemnifying Party, and to remit to the
Indemnifying Party any recovery.
(d) To the extent permitted by applicable Law, any payments by
an Indemnifying Party under this Article XIII shall be treated as an
adjustment to the Purchase Price for all foreign, federal, state and
local income tax purposes.
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ARTICLE XIV.
MISCELLANEOUS PROVISIONS
Section 14.1. 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 Seller and to Purchaser at the addresses
indicated below:
If to Purchaser: Safety Components, International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Shereff, Friedman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
(which shall not ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
constitute notice) ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: JPS Automotive L.P.
c/▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Products Co.
(which shall not ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
constitute notice) ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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and
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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 14.2. 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 14.3. 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 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
Acquired Assets.
(b) Except as provided in Article XIII, this Agreement
(including, without limitation, Article XII) shall not confer any
rights or remedies upon any person or entity other than the parties
hereto and their respective permitted successors and assigns. Business
Employees are not third party beneficiaries of this Agreement.
Section 14.4. 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 Seller
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).
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Section 14.5. 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 14.6. Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, supersedes and is in full substitution for any and all prior agreements
and understandings among them relating to such subject matter, and no party
shall be liable or bound to the other party hereto in any manner with respect to
such subject matter by any warranties, representations, indemnities, covenants,
or agreements except as specifically set forth herein. The Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.
Section 14.7. 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 14.8. 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 14.9. 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) 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.
Section 14.10. 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
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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 14.11. 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 14.12. 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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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first written above.
SELLER: JPS AUTOMOTIVE L.P.
BY: PACJ, Inc.
Its: General Partner
BY:
Name:
Title:
PURCHASER: SAFETY COMPONENTS INTERNATIONAL, INC.
BY:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
