1
EXHIBIT 2.1
================================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
DYERSBURG CORPORATION,
AS PURCHASER,
ALAMAC SUB HOLDINGS INC.,
AS SELLER,
AIH INC.
AND
WESTPOINT ▇▇▇▇▇▇▇ INC.
--------------------
Dated as of July 15, 1997
--------------------
================================================================================
2
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares.............................................................. 2
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price........................................................................... 2
2.2 Payment of Estimated Purchase Price...................................................... 2
2.3 Post-Closing Adjustment of Estimated Purchase Price...................................... 2
2.4 Post Closing Adjustment of Changes In Pension Liability.................................. 5
2.5 Purchase of Cotton Inventory............................................................. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
WPS AND SELLER AS TO SHARES
3.1 Ownership and Transfer of Shares......................................................... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WPS, SELLER AND THE COMPANY
4.1 Organization and Good Standing........................................................... 8
4.2 Authorization of Agreement............................................................... 9
4.3 Subsidiaries............................................................................. 9
4.4 Capitalization........................................................................... 10
4.5 Corporate Records........................................................................ 10
4.6 Consents of Third Parties; Non-Contravention............................................. 11
4.7 Financial Statements..................................................................... 12
4.8 No Undisclosed Liabilities............................................................... 13
4.9 Absence of Certain Changes............................................................... 13
4.10 Taxes.................................................................................... 15
4.11 Intangible Property...................................................................... 17
4.12 Material Contracts....................................................................... 17
i
3
Section Page
------- ----
4.13 Employee Benefits........................................................................ 19
4.14 Labor.................................................................................... 23
4.15 Litigation............................................................................... 23
4.16 Compliance with Laws..................................................................... 23
4.17 Environmental Matters.................................................................... 23
4.18 Real Property............................................................................ 25
4.19 Title to Assets.......................................................................... 26
4.20 Brokers, Etc............................................................................. 27
4.21 No Material Adverse Change............................................................... 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Organization and Good Standing........................................................... 27
5.2 Authorization of Agreement............................................................... 27
5.3 Consents of Third Parties; Non-Contravention............................................. 28
5.4 Litigation............................................................................... 29
5.5 Financing................................................................................ 29
5.6 Investment Representation................................................................ 29
5.7 Investment Company Act................................................................... 29
5.8 Financial Advisors....................................................................... 30
5.9 No Material Adverse Change............................................................... 30
ARTICLE VI
FURTHER AGREEMENTS OF THE PARTIES
6.1 Access to Information; Confidentiality................................................... 30
6.2 Conduct of the Business Pending the Closing.............................................. 33
6.3 Reasonable Commercial Efforts............................................................ 36
6.4 Further Assurances....................................................................... 37
6.5 Preservation of Records.................................................................. 37
6.6 Publicity................................................................................ 37
6.7 Notice Regarding Regulatory Proceedings.................................................. 38
6.8 Employee Matters......................................................................... 38
6.9 Financial Advisors....................................................................... 38
6.10 Permitted Transactions................................................................... 38
6.11 Repayment of Loans....................................................................... 39
6.12 Notification............................................................................. 39
6.13 No Negotiation........................................................................... 39
6.14 June 30 Company Interim Financial Statements............................................. 39
ii
4
Section Page
------- ----
6.15 Non-Compete.............................................................................. 40
6.16 Financing................................................................................ 40
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser......................................... 41
7.2 Conditions Precedent to Obligations of Seller............................................ 42
ARTICLE VIII
CLOSING; DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 Closing Date............................................................................. 43
8.2 Documents to Be Delivered by Seller, WPS and/or the Company.............................. 43
8.3 Documents to Be Delivered by Purchaser................................................... 44
8.4 Documents to be Delivered by the Parties................................................. 44
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination of Agreement................................................................. 44
9.2 Survival After Termination............................................................... 45
ARTICLE X
SURVIVAL; GENERAL INDEMNIFICATION
10.1 Survival................................................................................. 46
10.2 Indemnification by WPS and Seller........................................................ 46
10.3 Indemnification by Purchaser............................................................. 47
10.4 Indemnification Procedures............................................................... 48
10.5 Environmental Indemnity.................................................................. 50
10.6 Characterization of Indemnification and Other Payments................................... 53
10.7 Computation of Losses Subject to Indemnification......................................... 53
iii
5
Section Page
------- ----
ARTICLE XI
TAX MATTERS
11.1 Section 338(h)(10) Election.............................................................. 54
11.2 Preparation of Tax Returns; Payment of Taxes............................................. 55
11.3 Cooperation with Respect to Tax Returns.................................................. 57
11.4 Tax Audits............................................................................... 57
11.5 Refund Claims............................................................................ 58
11.6 Preparation and Filing of Documents...................................................... 58
11.7 Termination of Tax Sharing Agreements.................................................... 58
11.8 Tax Indemnification...................................................................... 59
ARTICLE XII
MISCELLANEOUS
12.1 Certain Definitions; Rules of Construction............................................... 60
12.2 Expenses................................................................................. 69
12.3 Specific Performance..................................................................... 69
12.4 GOVERNING LAW............................................................................ 70
12.5 Entire Agreement; Amendments and Waivers................................................. 70
12.6 Table of Contents and Headings........................................................... 70
12.7 Notices.................................................................................. 70
12.8 Severability............................................................................. 71
12.9 Binding Effect; Assignment............................................................... 71
12.10 Disclosure Schedules..................................................................... 72
12.11 Counterparts............................................................................. 72
Exhibit A-1 Pre-Closing Date Statement of Working Capital
Exhibit A-2 Valuation Methods
Exhibit B Human Resources Agreement
Exhibit C Plants
Exhibit D Interim Services
Schedules
Company
Purchaser
iv
6
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of July 15, 1997 by and among ALAMAC
SUB HOLDINGS INC., a Delaware corporation ("Seller"), AIH INC., a Delaware
corporation and a wholly owned subsidiary of Seller (the "Company"), WESTPOINT
▇▇▇▇▇▇▇ INC., a Delaware corporation and the indirect 100% stockholder of Seller
("WPS"), and Dyersburg Corporation, a Tennessee corporation ("Purchaser").
Section 12.1(a) hereof sets forth the definitions of certain capitalized terms
used herein that are not defined where used and the locations herein of the
definitions of certain capitalized terms not defined therein.
W I T N E S S E T H :
WHEREAS, Seller is the record and beneficial owner of one hundred (100)
shares of common stock, par value $1.00 per share (collectively, the "Shares"),
of the Company, which Shares constitute all of the issued and outstanding shares
of capital stock of the Company;
WHEREAS, the Company is engaged, indirectly through its Subsidiaries,
in the business of manufacturing and selling knitted apparel fabrics (the
"Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, the Shares, for the purchase price and upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
7
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares. Upon and subject to the terms and
conditions of this Agreement, on the Closing Date, Seller shall sell, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase from Seller, the
Shares.
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The aggregate purchase price for the Shares (the
"Purchase Price") shall be an amount equal to the Estimated Purchase Price, as
adjusted in accordance with Sections 2.3 and 2.4 hereof. The Purchase Price and
any adjustments thereto shall be payable as provided in Sections 2.2, 2.3 and
2.4 hereof.
2.2 Payment of Estimated Purchase Price. On the Closing Date, Purchaser
shall pay to Seller an amount in cash equal to One Hundred Twenty-Six Million
Dollars ($126,000,000) (the "Estimated Purchase Price"), by wire transfer of
immediately available funds to an account designated in writing by Seller to
Purchaser prior to Closing.
2.3 Post-Closing Adjustment of Estimated Purchase Price.
(a) On the Closing Date, representatives of Seller, Purchaser and Ernst
& Young LLP ("Seller's Auditors") shall conduct and complete a physical count of
the Inventory. As soon as practicable (and in any event within 60 days)
following the completion of the physical count of the Inventory, Seller shall
prepare and deliver to Purchaser a statement of working capital of the Company
and its Subsidiaries as of the close of business on the Closing Date, which
statement shall have been audited by Seller's Auditors (the "Closing Date
Statement of Working Capital"), together with a certificate (the "Adjustment
Certificate") of WPS's chief accounting officer setting forth the positive or
negative difference, if any, between the working capital of the Company and its
Subsidiaries as reflected in the Closing Date Statement of Working Capital and
the working capital of the Company and its Subsidiaries as reflected in the
Pre-Closing Date Statement of Working Capital (the
2
8
"Adjustment Amount"). The Closing Date Statement of Working Capital shall be
prepared in accordance with the same accounting principles applicable to the
Pre-Closing Date Statement of Working Capital as described in Exhibit A-2 hereof
(it being understood that only assets that are owned by the Company on the
Closing Date and liabilities that remain the responsibility of the Company after
the Closing Date will be reflected on the Closing Date Statement of Working
Capital. Notwithstanding the foregoing, the Closing Date Statement of Working
Capital will reflect (i) an inventory reserve of not less than $3.5 million,
representing the balance for such reserves as of the Closing Date, and (ii) an
accrual for bonuses payable of $1.2 million.
(b) During the preparation of the Closing Date Statement of Working
Capital, Purchaser and the Company shall provide WPS, WPS's authorized
representatives, Seller and Seller's authorized representatives (including,
without limitation, Seller's Auditors) with reasonable access to the books,
records, facilities and employees of the Company and its Subsidiaries during
normal business hours, and shall cooperate fully and cause their respective
representatives to cooperate fully with WPS, WPS's authorized representatives,
Seller and Seller's authorized representatives, including the provision on a
timely basis of all information, work papers, schedules and other documents to
be used by Seller in preparing the Closing Date Statement of Working Capital and
the Adjustment Certificate.
(c) During the preparation of the Closing Date Statement of Working
Capital, WPS shall provide Purchaser and Purchaser's authorized representatives
with reasonable access to the books, records, facilities and employees of WPS
and its affiliates, as such books, records, facilities and employees relate to
the Company, during normal business hours, and shall cooperate fully and cause
their respective representatives to cooperate fully with Purchaser and
Purchaser's authorized representatives, including the provision on a timely
basis of all information, work papers, schedules and other documents to be used
by Seller in preparing the Closing Date Statement of Working Capital and the
Adjustment Certificate.
(d) Purchaser shall have a period of fifteen (15) Business Days after
the delivery by Seller of the Closing Date Statement of Working Capital and
Adjustment Certificate to present in writing to Seller any objections to the
calcu-
3
9
lation of the Adjustment Amount, which objections shall be set forth in
reasonable detail. If no such objections are raised within such fifteen (15)
Business Day period, the Closing Date Statement of Working Capital and
Adjustment Certificate shall be deemed to be accepted and approved by Purchaser
and a supplemental closing (the "Supplemental Closing") shall be held on the
fifth (5th) Business Day following the expiration of such fifteen (15) Business
Day period, or on such other date as may be mutually agreed upon in writing by
Purchaser and Seller.
(e) If Purchaser shall raise any objections within the aforesaid
fifteen (15) Business Day period, Seller and Purchaser together shall attempt to
resolve the matter or matters in dispute, and if resolved, the parties shall
prepare a new Adjustment Certificate setting forth the original Adjustment
Amount or a revised Adjustment Amount based upon such resolution, whereupon the
confirmed or revised Adjustment Amount shall be final and binding on the parties
hereto. The Supplemental Closing shall then take place five (5) Business Days
following the preparation by the parties of such new Adjustment Certificate, or
on such other date as may be mutually agreed upon in writing by Purchaser and
Seller.
(f) If any such dispute cannot be resolved by Purchaser and Seller
within twenty (20) Business Days after the delivery by Purchaser of its
objections to the calculation of the Adjustment Amount in accordance with
Section 2.3(c), then the specific matters in dispute shall be submitted to an
agreed upon independent accounting firm, mutually acceptable to Purchaser and
Seller (the "Final Arbiter"), which firm shall make a final and binding
determination as to such matter or matters. The Final Arbiter shall send its
written determination to Purchaser and Seller, together with a new Adjustment
Certificate setting forth the original Adjustment Amount or, if necessary, a
revised Adjustment Amount based upon such determination, whereupon the confirmed
or revised Adjustment Amount shall be binding on the parties hereto. The
Supplemental Closing shall then take place five (5) Business Days following the
delivery of such written determination to Purchaser and Seller, or on such other
date as may be mutually agreed upon in writing by Purchaser and Seller.
4
10
(g) The parties hereto agree to cooperate with each other and each
other's authorized representatives and with the Final Arbiter in order that any
and all matters in dispute shall be resolved as soon as practicable and that
final determination of the Adjustment Amount shall be made.
(h) At the Supplemental Closing, any positive Adjustment Amount shall
be paid by Purchaser to Seller, and any negative Adjustment Amount shall be paid
by Seller to Purchaser, in cash by wire transfer of immediately available funds
to an account of the party entitled to payment of same designated in writing by
such party to the other party prior to the Supplemental Closing.
(i) All fees and expenses incurred in connection with the determination
of the Purchase Price shall be borne by the party or parties that incurred such
fees and expenses, except that the fees and expenses hereunder of the Final
Arbiter shall be paid one-half by Purchaser and one-half by Seller.
2.4 Post Closing Adjustment of Changes In Pension Liability.
(a) Seller shall cause Seller's actuaries to prepare a Closing Date
statement of pension assets and liabilities (the "Closing Date Pension
Statement"). There shall be reflected on the Closing Date Pension Statement the
value of the assets spun off or to be spun off from the WPS Pension Plans to the
Company Pension Plan (as such terms are defined in the Human Resources
Agreement, a copy of which is attached hereto as Exhibit B) and any
contributions made or agreed to be made by WPS to the Company Pension Plan, all
valued as of the Closing Date (so that assets transferred prior to the Closing
Date will reflect expenses and gains or losses to the Closing Date) and the
pension liabilities of the Company Pension Plan determined as of the Closing
Date on an accumulated benefit obligation basis utilizing the assumptions,
described in Section 2.4(a) of the Company Disclosure Schedule, utilized by WPS
in determining its December 31, 1996 FAS 87 liability for the WPS Pension Plans.
For purposes of the Closing Date Pension Statement, the assets of the Company
Pension Plan shall include any amounts transferred from the WPS Pension Plans
after the Closing Date under Section 6.2(d) of Exhibit B, excluding any such
amounts that represent interest credited under Section 6.2(e) of Exhibit B in
respect of periods after the Closing Date.
5
11
(b) No later than 120 days after the Closing Date, Seller shall deliver
to the Purchaser the Closing Date Pension Statement together with a certificate
of WPS' chief accounting officer (the "Pension Adjustment Certificate") setting
forth the positive or negative difference between the pension assets and
liabilities reflected on the Closing Date Pension Statement and a net unfunded
pension obligation as of December 31, 1996 equal, in the aggregate, to $2.2
million (the "Pension Adjustment") (e.g., if the net unfunded obligation on the
Closing Date is $1 million, there would be a positive Pension Adjustment of $1.2
million).
(c) Purchaser shall have a period of fifteen (15) Business Days after
the delivery by WPS of the Closing Date Pension Statement and the Pension
Adjustment Certificate, to present in writing to Seller any objections to the
calculations in the Pension Adjustment Certificate, which objections shall be
set forth in reasonable detail. If no such objections are raised within such
fifteen (15) Business Day period, the Pension Adjustment Certificate shall be
deemed to be accepted and approved by Purchaser and a second supplemental
closing (the "Second Supplemental Closing") shall be held on the fifth (5th)
Business Day following the expiration of such fifteen (15) Business Day period,
or on such other date as may be mutually agreed upon in writing by Purchaser and
Seller.
(d) If Purchaser shall raise any objections within the aforesaid
fifteen (15) Business Day period to the Pension Adjustment Certificate, WPS and
Purchaser together shall attempt to resolve the matter or matters in dispute and
if resolved the parties shall prepare a new Pension Adjustment Certificate
setting forth the original Pension Adjustment or a revised Pension Adjustment
based upon such resolution whereupon the confirmed or revised Pension Adjustment
shall be final and binding on the parties hereto. The Second Supplemental
Closing shall then take place five (5) Business Days following the preparation
by the parties of such new Pension Adjustment Certificate or on such other date
as may be mutually agreed upon in writing by Purchaser and WPS.
(e) If any such dispute cannot be resolved by Purchaser and Seller
within twenty (20) Business Days after delivery by Purchaser of its objections
to the calculation of the Pension Adjustment in accordance with this Section
2.4, then the specific matters in dispute shall be submitted to an actuarial
firm mutually agreed upon by
6
12
Purchaser and Seller (the "Pension Arbiter"), which firm shall make a final and
binding determination as to such matter or matters. The Pension Arbiter shall
send its written determination to Purchaser and Seller together with a new
Pension Adjustment Certificate setting forth the original Pension Adjustment or
if necessary a revised Pension Adjustment based upon such determination,
whereupon the confirmed or revised Pension Adjustment shall be binding on the
parties hereto. The Second Supplemental Closing shall then take place five (5)
Business Days following the delivery of such written determination to Purchaser
and Seller or on such other date as mutually agreed upon in writing by Purchaser
and Seller.
(f) The parties hereto agree to cooperate with each other and each
other's authorized representatives and with the Pension Arbiter in order that
any and all matters and disputes under this Section 2.4 shall be resolved as
soon as practicable and that the final determination of the Pension Adjustment
shall be made.
(g) At the Second Supplemental Closing, any positive Pension Adjustment
(an increase in the net pension assets (assets less liabilities) at the Closing
Date versus an unfunded obligation of $2.2 million) shall be paid by Purchaser
to Seller in cash and any negative Pension Adjustment (a decrease in the net
pension assets (assets less liabilities) at the Closing Date versus an unfunded
obligation of $2.2 million) shall be paid by Seller to Purchaser in cash. Any
payments to be made in cash shall be made by wire transfer, of immediately
available funds to an account of the party entitled to payment of same
designated in writing by such party to the other party prior to the Second
Supplemental Closing.
(h) All fees and expenses incurred in connection with the determination
of the Pension Adjustment shall be borne by the party or parties that incur such
fees and expenses, except that the fees and expenses hereunder of the Pension
Arbiter shall be paid one-half by Purchaser and one-half by Seller.
2.5 Purchase of Cotton Inventory. On the Closing Date, Seller shall
conduct, and Purchaser shall have a right to participate in, a physical
inventory count of the unopened ▇▇▇▇▇ of cotton owned by WPS located at the
Clinton, North Carolina facility of the Company. Upon completion of such
physical inventory count, Seller shall
7
13
deliver to Purchaser a statement setting forth the inventory count and the
aggregate purchase price thereof, based upon WPS's actual costs (the "Cotton
Inventory Amount"), along with appropriate back-up documentation. Within three
(3) Business Days after the delivery of such statement, Purchaser shall pay to
WPS, by wire transfer to an account designated by Seller, as the full and
complete purchase price for such cotton inventory, the Cotton Inventory Amount
and WPS shall execute appropriate documentation evidencing the transfer of the
cotton inventory to Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
WPS AND SELLER AS TO SHARES
3.1 Ownership and Transfer of Shares. WPS and Seller jointly and
severally represent and warrant to Purchaser that Seller is the record and
beneficial owner of the Shares, free and clear of any Liens except as set forth
in Section 3.1 of the Company Disclosure Schedule (and except for any Liens in
favor of Purchaser under this Agreement). Upon transfer of the Shares to
Purchaser at the Closing, Purchaser will receive valid title to the Shares, free
and clear of any Liens.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF WPS, SELLER AND THE COMPANY
Each of WPS, Seller and the Company jointly and severally represents
and warrants to Purchaser as follows:
4.1 Organization and Good Standing. It is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now conducted. The Company is
duly qualified or authorized to do business as a foreign corporation and in good
standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to so qualify or be in good standing
would not be material.
8
14
4.2 Authorization of Agreement. It has all requisite corporate power
and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement to be
executed by it in connection with the consummation of the transactions
contemplated by this Agreement (collectively, the "Company Documents"), and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance by it of this Agreement and the Company Documents to which it is a
party have been duly authorized by all necessary corporate action on its part.
This Agreement has been, and at or prior to the Closing each Company Document to
which it is a party will be, duly and validly executed and delivered by it and
(assuming the due authorization, execution and delivery by Purchaser), this
Agreement constitutes, and each Company Document to which it is a party when so
executed and delivered will constitute, legal, valid and binding obligations of
it enforceable against it in accordance with their respective terms.
4.3 Subsidiaries.
(a) Section 4.3(a) of the Company Disclosure Schedule sets forth the
name of each Subsidiary and, with respect to each such Subsidiary, the
jurisdiction in which it is incorporated, each class and number of shares of its
authorized capital stock, the number of shares of each such class issued and
outstanding.
(b) Each Subsidiary is a corporation validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now conducted. Each Subsidiary is duly qualified
or authorized to do business as a foreign corporation and in good standing under
the laws of each jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization, except
where the failure to so qualify or be in good standing would not be material.
(c) Except as set forth in Section 4.3(c) of the Company Disclosure
Schedule, neither the Company nor any of the Subsidiaries (i) owns beneficially
or of record, or has any agreement to acquire, any shares of capital stock or
any other security of any other Person or (ii) has any other direct or indirect
equity investment in any other Person.
9
15
(d) The outstanding shares of capital stock of each Subsidiary were
duly authorized for issuance and are validly issued, fully paid and
non-assessable and the Company is the record and beneficial owner of all such
outstanding shares of each Subsidiary, free and clear of any Liens except as set
forth in Section 4.3(d) of the Company Disclosure Schedule (and except for any
Liens in favor of Purchaser under this Agreement). Upon transfer of the Shares
to Purchaser at the Closing, the Company shall be the record and beneficial
owner of all such outstanding shares of each Subsidiary, free and clear of any
Liens.
(e) There are no agreements, arrangements or understandings with
respect to the voting, sale, issuance or transfer of shares of the capital stock
or other equity security of any Subsidiary to which the Company or any
Subsidiary (or WPS or any of its other Affiliates) is a party, other than as set
forth in Section 4.3(e) of the Company Disclosure Schedule.
4.4 Capitalization.
(a) The authorized, issued and outstanding capital stock of the Company
consists of the Shares, which Shares shall be delivered to Seller at the Closing
free and clear of all Liens. All of the Shares were duly authorized for issuance
and are validly issued, fully paid and non-assessable.
(b) There are no outstanding options or rights of any kind to which the
Company or any Subsidiary (or WPS or any of its other Affiliates) is a party to
acquire any shares of any class of securities or any securities convertible into
any shares of any class of securities of the Company or any of the Subsidiaries,
nor are there any obligations of the Company or any Subsidiary to issue any such
options, rights or securities.
4.5 Corporate Records.
(a) The copies of the certificate of incorporation, by-laws and books
of account of the Company and each of the Subsidiaries, all of which have
previously been delivered or otherwise made available to Purchaser, are complete
and correct as of the date of this Agreement.
10
16
(b) The minute books of the Company and each Subsidiary, all of which
have previously been made available to Purchaser contain complete and accurate
records of all meetings and accurately reflect all other corporate action of the
stockholders and boards of directors and committees of the boards of directors
of the Company and its Subsidiaries.
(c) At the Closing, all of the books and records referred to in this
Section 4.5 will be in the possession of the Company and its Subsidiaries.
4.6 Consents of Third Parties; Non-Contravention.
(a) No consent, waiver, approval or authorization of, or material
declaration or filing with, or notification to, any Governmental Body or other
Person (collectively, "Consents") that has not been previously obtained, made or
filed is required on the part of WPS, Seller or the Company or any of its
Subsidiaries in connection with the execution, delivery and performance by WPS,
Seller or the Company of this Agreement or any Company Document to which it is a
party, except (i) for compliance with the applicable requirements of the HSR
Act; (ii) other non-material contractual assignments; or (iii) as set forth in
Section 4.6(a) of the Company Disclosure Schedule.
(b) Except as set forth in Section 4.6(b) of the Company Disclosure
Schedule, the execution, delivery and performance by WPS, Seller or the Company
of this Agreement and each Company Document to which any of them is a party, and
the consummation by any of them of the transactions contemplated hereby and
thereby, do not and will not (i) violate any provision of their respective
certificate of incorporation or by-laws, or the certificates of incorporation
or by-laws of any Subsidiary, each as currently in effect; (ii) subject to
obtaining the Consents referred to in Section 4.6(a) hereof, conflict with, or
result in the breach of, or constitute a default under, or result in the
termination, cancellation or acceleration of any right or obligation of WPS,
Seller, the Company or any Subsidiary under, any material lease, agreement,
commitment or other instrument to which WPS, Seller, the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
respective properties is bound (except for the Excluded Assets); (iii) assuming
compliance with the matters set forth in Section 4.6(a) hereof, violate, or
result in a breach of or constitute a default
11
17
under, any Law applicable to WPS, Seller, the Company or any Subsidiary; or (iv)
result in the creation of any Lien upon the properties or assets of the Company
or any Subsidiary (except for the Excluded Assets).
4.7 Financial Statements. The Company has heretofore provided to
Purchaser the following financial statements:
(a) audited consolidated balance sheets of WPS and its consolidated
subsidiaries, including the notes thereto, at December 31, 1995 and 1996,
respectively, and consolidated statements of income and cash flows of WPS and
its consolidated subsidiaries for the years ended December 31, 1994, 1995, and
1996, respectively, accompanied by the reports of Seller's Auditors
(collectively, the "WPS Financial Statements"), which WPS Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis (except
as may be indicated in the notes thereto) and present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations and cash flows of WPS and its consolidated subsidiaries as at the
dates and for the periods indicated therein;
(b) audited consolidated balance sheets, including the notes thereto,
of the Company and its Subsidiaries at December 31, 1995 and 1996, respectively,
and consolidated statements of income and cash flows of the Company and its
Subsidiaries for the years ended December 31, 1994, 1995 and 1996, respectively,
accompanied by the reports of Seller's Auditors (collectively, the "Company
Financial Statements"), which Company Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis with the WPS Financial
Statements (except as may be indicated in the notes thereto) and present fairly,
in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries as at the dates and for the periods indicated therein;
(c) an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of May 31, 1997 and consolidated statements of income and cash
flows of the Company and its Subsidiaries for the five months then ended (the
"Company Interim Financial Statements"), which Company Interim Financial
Statements have been prepared in accordance with GAAP applied on a consistent
basis with the
12
18
Company Financial Statements (subject to normal recurring year-end adjustments
and the absence of notes that, if presented, would not differ materially from
those included in the Company Financial Statements), and present fairly in all
material respects the consolidated financial position and results of operations
and cash flows of the Company and its Subsidiaries as at the date and for the
period indicated therein;
(d) (i) an unaudited pro forma consolidated balance sheet of the
Company and its Subsidiaries at December 31, 1996 (the "December 31, 1996
Balance Sheet"), (ii) an unaudited pro forma consolidated balance sheet of the
Company and its Subsidiaries at May 31, 1997 and (iii) an unaudited pro forma
statement of working capital of the Company and its Subsidiaries at December 31,
1996 (the "Pre-Closing Date Statement of Working Capital"), each adjusted to
reflect the exclusion of the Excluded Assets) and each of which are true,
correct and complete in all material respects; and
(e) The Pre-Closing Date Statement of Working Capital, a copy of which
is attached hereto as Exhibit A-1, has been prepared by WPS based on the
December 31, 1996 Balance Sheet and in accordance with the accounting principles
described in Exhibit A-2 hereto.
4.8 No Undisclosed Liabilities. As of the date of this Agreement, none
of the Company or its Subsidiaries has any material liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, and whether due
or to become due or asserted or unasserted, which would be required by GAAP to
be reflected in, reserved against or otherwise described in the balance sheet of
the Company and its Subsidiaries included in the Company Interim Financial
Statements, except as set forth therein and except for liabilities and
obligations incurred in the ordinary course of business since May 31, 1997.
4.9 Absence of Certain Changes. Except as set forth in Section 4.9 of
the Company Disclosure Schedule and except for the Permitted Transactions, the
Company and its Subsidiaries have conducted the Business only in the ordinary
course from December 31, 1996 to and including the date of this Agreement and
there has not been since December 31, 1996 and on or prior to the date of this
Agreement:
13
19
(a) any change in the Company's or any Subsidiary's authorized or
issued capital stock; any grant of any stock option or right to purchase shares
of capital stock of the Company or any Subsidiary; any issuance of any security
convertible into such capital stock; any grant of any registration rights; any
purchase, redemption, retirement or other acquisition by the Company or any
Subsidiary or any shares of any such capital stock;
(b) any declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of the Company or any Subsidiary
(other than any dividend or other distribution in cash);
(c) any incurrence, assumption or guaranty by the Company or any
Subsidiary of any indebtedness for borrowed money other than (A) in the ordinary
course of business consistent with past practice, (B) borrowings under existing
lines of credit in the ordinary course of business, or (C) guarantees by the
Company or any Subsidiary of indebtedness of the Company or any Subsidiary;
(d) other than in the ordinary course of business consistent with past
practice, (i) any increase above normal and usual merit or cost-of-living
increases in the compensation payable or to become payable by the Company or any
Subsidiary to any of its respective directors, officers or employees or (ii) any
increase in the coverage or benefits available under, or any adoption of, any
severance pay, termination pay, vacation pay, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other employee benefit plan, payment or
arrangement made to, for or with any of the directors, officers or employees of
the Company or any Subsidiary;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien (other than Liens set forth in any section of the Company Disclosure
Schedule and Permitted Encumbrances) on any of the properties or assets (whether
tangible or intangible) of the Company or any Subsidiary;
(f) any making of any loan or advance to any Person (other than in the
ordinary course of business consistent with past practice and other than to
wholly owned Subsidiaries of the Company);
14
20
(g) any damage, destruction or other casualty or loss (whether or not
covered by insurance) affecting the Business or assets of the Company or any
Subsidiary which has had or would have a Material Adverse Effect;
(h) any termination of or receipt of notice of termination of any
material license, distributorship, dealer, sales representative, joint venture,
credit or similar agreement;
(i) any sale (other than sales of inventory in the ordinary course of
business and other than the Permitted Transactions), lease or other material
disposition of any asset or property of the Company or any Subsidiary;
(j) any material change in the accounting methods used by the Company
or any Subsidiary; or
(k) any commitment or agreement to do any of the foregoing, except as
otherwise permitted by this Agreement.
4.10 Taxes.
(a) Except as set forth in Section 4.10(a) of the Company Disclosure
Schedule, (i) all material Tax Returns required to be filed by or on behalf of
the Company and its Subsidiaries have been timely filed in all jurisdictions in
which such Tax Returns are required to be filed (after giving effect to any
valid extensions of time in which to make such filings), and all such Tax
Returns are true and complete in all material respects, (ii) all amounts shown
on such Tax Returns (including interest and penalties) as due from the Company
and its Subsidiaries have been fully and timely paid, (iii) no waivers of
statutes of limitation have been given or requested with respect to the Company
and its Subsidiaries in connection with any Tax Returns covering the Company and
its Subsidiaries with respect to any Taxes payable by it, and (iv) the Company
and its Subsidiaries have or have caused to be duly and timely withheld from
employee salaries, wages and other compensation and have paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over for all periods under all applicable laws.
(b) The United States federal income Tax Returns filed by or on behalf
of the Company and its Subsidiaries for the taxable years ended on the
respective dates set forth in Section 4.10(b) of the Company Disclosure Schedule
15
21
have been examined by the Internal Revenue Service or the statute of limitations
with respect to such returns has expired.
(c) Section 4.10(c) of the Company Disclosure Schedule lists each
jurisdiction in which the Company and each Subsidiary file all income and other
material Tax Returns for each period or portion thereof ending on or before the
Closing Date. No claim is outstanding against the Company or any Subsidiary by
any taxing authority in a jurisdiction where the Company or any Subsidiary does
not file any such Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(d) Except as set forth in Section 4.10(d) of the Company Disclosure
Schedule, all material deficiencies asserted or assessments made as a result of
any examinations by the Internal Revenue Service or any other taxing authority
of the Tax Returns of or covering or including the Company and its Subsidiaries
have been fully paid or duly provided for in the Company Financial Statements,
and there are no other audits or investigations by any taxing authority in
progress.
(e) Seller is not a foreign person within the meaning of Section 1445
of the Code.
(f) Except as set forth in Section 4.10(f) of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is a party to or bound by any
agreement providing for the allocation or sharing of Taxes.
(g) Neither the Company nor any Subsidiary nor any corporation to which
the Company or any Subsidiary is a successor, directly or indirectly, by merger
or otherwise (i) has been a member of an affiliated group of corporations (as
defined in Section 1504(a) of the Code) other than the group in which WPS (or
any predecessor thereof) has been the common parent or (ii) has filed or been
included in a combined, consolidated or unitary income tax return other than
with WPS (or any predecessor thereof) or a member of WPS' affiliated group (or
any predecessor of any such member).
16
22
4.11 Intangible Property. The Company has delivered or otherwise made
available to Purchaser a complete and accurate list of all of its patents,
patent applications, trademarks, trade names, copyrights, service marks and
applications for trademarks and for service marks, such list as set forth in
Section 4.11(a) of the Company Disclosure Schedule. Except as set forth in
Section 4.11(b) of the Company Disclosure Schedule, the Company, directly or
indirectly through its Subsidiaries, owns or possesses adequate licenses or
other rights to use all intellectual property and other proprietary rights used
in the Business as presently conducted. The parties hereto agree that, except as
set forth in Section 4.11(c) of the Company Disclosure Schedule, Purchaser does
not have and none of Purchaser, the Company or its Subsidiaries shall have
subsequent to the Closing the right to use any patent, trademark, trade name,
copyright or symbol owned by WPS or any Affiliate of WPS, other than the
trademarks, trade names, copyrights and symbols owned by the Company and the
Subsidiaries. Except as set forth in Section 4.11(d) of the Company Disclosure
Schedule, (a) there is no pending assertion or claim challenging the validity of
the Company's or any Subsidiary's material patents, trademarks, trade names,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other material proprietary rights and information
used or held for use in connection with the Business as presently conducted (the
"Intellectual Property Assets"), (b) the Company has not received any written
notice that the conduct of the Business conflicts in any way with any patent,
trademark, trade name, copyright, service ▇▇▇▇ or trade secret of any third
party and (c) to the knowledge of WPS, Seller and the Company there are no
infringements of any proprietary rights owned or licensed by or to the Company
or any Subsidiary.
4.12 Material Contracts.
(a) The Company has delivered or otherwise made available to Purchaser
true, correct and complete copies of all contracts and agreements (and all
amendments, modifications and supplements thereto) to which the Company or any
of its Subsidiaries is a party or by which any of their respective properties or
assets are bound that are in effect on the date of this Agreement and are
material to the Business, including, without limitation: (i) employment,
consulting (in which a Person is acting as a consultant to the Company or any of
its Subsidiaries), non-competition,
17
23
severance, golden parachute or indemnification contracts involving employees of
the Company or any of its Subsidiaries; (ii) license agreements; (iii)
partnership or joint venture agreements; (iv) leases of Company Property
relating to the Business and all assignments relating thereto; (v) contracts or
agreements with any Governmental Body; (vi) other contracts and agreements; and
(vii) commitments and agreements to enter into any of the foregoing
(collectively, and together with any such contracts entered into in accordance
with Section 6.2 hereof, the "Contracts"). Section 4.12(a) of the Company
Disclosure Schedule sets forth a list of the Contracts.
(b) Except as set forth in Section 4.12(b) of the Company Disclosure
Schedule:
(i) each of the Contracts is valid and enforceable
against the Company or the applicable Subsidiary in accordance with its terms;
(ii) there is no material default under any Contract
either by the Company or any Subsidiary or, to the Knowledge of WPS, Seller and
the Company, by any other party thereto. The Company or such Subsidiary is in
full compliance in all material respects with the terms and conditions of each
Contract, and no event has occurred that, with the giving of notice or the lapse
of time or both, would constitute a material default thereunder by the Company
or any Subsidiary or, to the Knowledge of WPS, Seller and the Company, any other
party;
(iii) no party to any such Contract has given notice to the
Company of, or made, a claim against the Company with respect to any material
breach or default thereunder; and
(iv) the Contracts relating to the sale, design,
manufacture or provision of products or services by the Company or any
Subsidiary have been entered into in the ordinary course of business and have
been entered into without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised, that is or
would be in violation of any Law.
18
24
4.13 Employee Benefits.
(a) Section 4.13(a) of the Company Disclosure Schedule refers to a
preliminary list of all the employees of the Company, including employees on
vacation, sickness and short-term and long-term disability leave heretofore
provided by Seller to Purchaser. Within five (5) business days prior to the
Closing Date, Seller shall deliver to Purchaser (i) a final list of such
employees (the "Transferred Employees"); (ii) a list of all "employee benefit
plans," as defined in Section 3(3) of ERISA, which are maintained or contributed
to by the Company for the benefit of the Transferred Employees (the "Company
Employee Benefit Plans"); and (iii) all material employment agreements, and all
material bonus and other incentive compensation, deferred compensation,
disability, severance, stock award, stock option or stock purchase agreements,
collective bargaining agreements, workers' compensation, and other material
policies and arrangements with respect to the employment and termination of
employment of the Transferred Employees (the "Company Employee Arrangements").
(b) With respect to each Company Employee Benefit Plan and Company
Employee Arrangement, to the extent applicable, a complete and correct copy of
each of the following documents has been provided or made available to
Purchaser: (i) the most recent plan document or agreement, and all amendments
thereto and all related trust documents; (ii) the most recent summary plan
description, and all related summaries of material modifications; (iii) the most
recent annual actuarial valuation report; (iv) the last three filed Form 5500
series, including applicable schedules; (v) the last three filed Forms PBGC-1;
(vi) the most recent auditor's report; (vii) copies of any private letter
rulings, requests and applications for determination and determination letters
issued within the past five years; and (viii) the most recent annual and
periodic accounting of related plan assets.
(c) None of the Company Employee Benefit Plans is subject to Section
4063, 4064 or 4202 of ERISA. Neither Seller, WPS, the Company, nor any entity
required to be aggregated with the Seller, WPS or the Company under Section
414(b), (c), (m) or (o) of the Code has incurred any liability under Sections
4063, 4064 or 4202 of ERISA for which Purchaser, the Company or any of their
Affiliates may become liable.
19
25
(d) With respect to each Company Employee Benefit Plan that is subject
to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code, there
does not exist any accumulated funding deficiency within the meaning of Section
412 of the Code or Section 302 of ERISA, whether or not waived.
(e) All contributions required to have been made by WPS, Seller or the
Company under any Company Employee Benefit Plan or Company Employee Arrangement
have been made by the due date thereof (including any valid extensions), except
where any failure to contribute would not, individually or in the aggregate,
have a Material Adverse Effect.
(f) To the Knowledge of WPS and Seller, the Company Employee Benefit
Plans and Company Employee Arrangements have been maintained, in all material
respects, in accordance with their terms and applicable provisions of ERISA and
the Code.
(g) With respect to each Company Employee Benefit Plan that is intended
to be a "qualified plan" within the meaning of Section 401(a) of the Code (a
"Qualified Plan"), either the Internal Revenue Service has issued a favorable
determination letter that has not been revoked, or an application for a
favorable determination letter was or will be timely submitted to the Internal
Revenue Service for which no final action has been taken by the Internal Revenue
Service, and, to the Knowledge of WPS, Seller and the Company, there are no
existing circumstances or any events, including any form or operational plan
qualification defects, that have occurred that could adversely affect the
qualified status of any Qualified Plan or its related trust.
(h) Neither Seller, WPS, the Company, nor any entity required to be
aggregated with the Seller, WPS, or the Company under Section 414(b), (c), (m)
or (o) of the Code currently is a party to any multiemployer plan as defined in
Section 4001(a)(3) of ERISA, and neither Seller, WPS or the Company nor any of
such other entities (i) currently has any liability to make any withdrawal
liability payment to any multiemployer plan; (ii) will incur any such liability
for which the Company or Purchaser or any of their affiliates may become liable;
(iii) are delinquent in making any contributions required to be paid to any
multiemployer plan; or (iv) are involved in any pending dispute with any
multiemployer plan.
20
26
(i) To the Knowledge of WPS, Seller and the Company, neither Seller,
its affiliates, nor any administrator or fiduciary of any Company Employee
Benefit Plan (or agent or delegate of any of the foregoing) has engaged in any
transaction or acted or failed to act in any manner that could subject Purchaser
or the Company to any liability for a breach of any fiduciary or co-fiduciary
duty under ERISA. No party in interest (as defined in ERISA) or disqualified
person (as defined in the Code) of any Company Employee Benefit Plan has engaged
in any prohibited transaction (within the meaning of ERISA Section 406 or Code
Section 4975) that could subject the Purchaser or the Company to any liability
under such provisions.
(j) Neither Seller, WPS, the Company, nor any entity required to be
aggregated with Seller, WPS or the Company under Section 414(b), (c), (m) or (o)
of the Code has incurred any liability under Section 4062 of ERISA for which
Purchaser, the Company or any of their Affiliates may become liable.
(k) No condition exists which would constitute grounds of involuntary
termination for any of the Company Employee Benefit Plans under Section 4042 of
ERISA, and there have been no reportable events as defined in Section 4043(b) of
ERISA (other than events for which the thirty-day notice period has been waived
by the Pension Benefit Guaranty Corporation (the "PBGC")) with respect to any of
the Company Employee Benefit Plans.
(l) No proceeding or other action has been initiated by the PBGC to
terminate any of the Company Employee Benefit Plans, no notice has been received
of any intention by the PBGC to commence or seek commencement of any such
proceeding or actions, and, other than as described in Section 4.13(l) of the
Company Disclosure Schedule, no agreement or understanding has been entered into
between the PBGC and the Seller, WPS, or the Company regarding any of the
Company Employee Benefit Plans that would result in any liability to the
Purchaser or the Company on or after the Closing Date or adversely affect in any
way the Company Pension Plan (as defined in Section 6.2 of the Human Resources
Agreement).
(m) Neither of the WPS Pension Plans nor the Savings Plan (as defined
in Sections 6.1 and 6.2 of the Human Resources Agreement), nor any trust which
serves as a funding medium for the WPS Pension Plans or the Savings
21
27
Plan, is currently under examination by or involved in any action pending before
the IRS (including, but not limited to, the IRS Closing Agreement Program or
Voluntary Compliance Resolution Program), the Department of Labor, the PBGC, or
any court, other than any applications for determinations pending before the
IRS.
(n) No claims are currently pending against any of the Company Employee
Benefit Plans and Company Employee Arrangements (except those submitted in the
ordinary course of administration of such plan or arrangement).
(o) As of the Closing Date, the Company has no post employment
obligations (other than pensions) with respect to any Transferred Employee,
except for any liability attributable to the postretirement welfare benefits
specified in Footnote 4 to the letter dated June 25, 1997 from ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
FSA to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as more particularly described in Section
4.13(o) of the Company Disclosure Statement, and the present value (based on
actuarial assumptions and methods determined by Purchaser's actuary to be
reasonable) of such liability determined in accordance with FAS 106 will not
exceed $100,000 as of the Closing Date.
(p) The consummation of the transactions contemplated by this Agreement
will not (i) result in the payment or series of payments by the Company to any
Transferred Employee or other person of an "excess parachute payment" within the
meaning of Section 280G of the Code, (ii) entitle any Transferred Employee or
other person to severance pay or other compensation or benefit entitlements by
reason of any Transferred Employee's or other person's deemed termination of
employment as a result of the transaction contemplated hereby (except as
provided in Section 3.1 of the Human Resources Agreement), or (iii) accelerate
the time of payment for vesting of any stock option, stock appreciation right,
deferred compensation, or other employee benefits under any of the Company
Employee Benefit Plans or Company Employee Arrangements (including vacation and
sick pay) that would constitute an obligation of the Company.
22
28
4.14 Labor. Since December 31, 1991, neither the Company nor any
Subsidiary has been or is a party to any collective bargaining or other labor
agreement. Since December 31, 1993, there has not been, there is not presently
pending or existing, and there is not threatened, (a) any strike, slowdown,
picketing, work stoppage or employee grievance process; or (b) any application
for certification of a collective bargaining agent. The Company and each
Subsidiary have complied in all material respects with all Laws relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health and plant closing. Neither the
Company nor any Subsidiary is liable for the payment of any compensation,
damages, taxes, fines, penalties or other amounts, however designated, for
failure to comply with any of the foregoing Laws.
4.15 Litigation. Except as set forth in Section 4.15 of the Company
Disclosure Schedule, there are no Legal Proceedings pending or, to the Knowledge
of WPS, Seller or the Company, threatened (a) against WPS, Seller, the Company
or any Subsidiary that question any action taken or to be taken by WPS, Seller,
the Company or any Subsidiary in connection with the consummation of the
transactions contemplated hereby or by any Company Document or (b) against or
affecting the Company or any Subsidiary or the Business, at law or in equity.
Except as set forth in Section 4.15 of the Company Disclosure Schedule, none of
the Company or any of the Subsidiaries is subject to any outstanding Order
applicable to the Company or any of its Subsidiaries or any of the assets owned
or used by the Company or any Subsidiary.
4.16 Compliance with Laws. Except as set forth in Section 4.16 of the
Company Disclosure Schedule, the Company and its Subsidiaries are in compliance
with all Laws applicable to the Company or any of its Subsidiaries, except where
the failure so to comply, individually or in the aggregate, would not have a
Material Adverse Effect.
4.17 Environmental Matters. Except as disclosed in Section 4.17 of the
Company Disclosure Schedule, to the Knowledge of WPS, Seller or the Company:
23
29
(a) the operations of the Company and its Subsidiaries are in
compliance with applicable Environmental Laws and with the terms of all
Environmental Permits, excluding instances of non-compliance that cannot
reasonably be expected to result in a Significant Adverse Consequence;
(b) the Company and its Subsidiaries have all necessary or required
Environmental Permits, except where failure to have such Environmental Permits
could not reasonably be expected to result in a Significant Adverse Consequence;
(c) there are no past, pending or, threatened Environmental Claims
against the Company or any of its Subsidiaries, nor is there a basis for any
Environmental Claim against the Company or any of its Subsidiaries, excluding
Environmental Claims that cannot reasonably be expected to result in a
Significant Adverse Consequence;
(d) neither the Company nor its Subsidiaries are subject to any
outstanding agreements, decrees, consent orders, or judgments respecting the
environment or any Environmental Law that could reasonably be expected to result
in a Significant Adverse Consequence; and
(e) no actions, suits, claims or other proceedings are pending,
threatened or alleged, against the Company or any of its Subsidiaries either
regarding the disposal, discharge or release of Hazardous Materials by the
Company or its Subsidiaries, alleging a violation or noncompliance with or
seeking to impose liability under any Environmental Law, which, if adversely
determined, could reasonably be expected to result in a Significant Adverse
Consequence.
Neither the Company nor its Subsidiaries have received any notice under
any applicable Environmental Laws that any of them is a potentially responsible
party for the costs of investigating or remediating contamination which could
reasonably be expected to result in a Significant Adverse Consequence and, to
the Knowledge of WPS, Seller and the Company, neither the Company nor any of its
Subsidiaries have arranged for the disposal of Hazardous Materials at any
property that is listed on the National Priorities List, the CERCLIS or any
other list of a Governmental Body that identifies sites for investigation and/or
remediation due to the presence of Hazardous Materials, which could reasonably
be expected to result in a Significant Adverse Consequence.
24
30
As used in this Section 4.17, the term "Significant Adverse
Consequence" means (i) any criminal enforcement action brought against the
Company, (ii) any administrative or civil action reasonably likely to result in
penalties in excess of $25,000 for a single violation or group of violations
relating to the same transaction or event, (iii) any other liability or expense
actually incurred by the Company (e.g., investigation actually incurred by the
Company, remediation, removal, and/or other cleanup costs) in excess of a total
of $25,000 in the aggregate for a single claim or group of claims relating to
the same transaction, or that materially impairs the ability of the Company and
its Subsidiaries to operate any of the Plants.
4.18 Real Property.
(a) Section 4.18(a) of the Company Disclosure Schedule sets forth a
complete list of (i) all real property and interests in real property owned in
fee by the Company and its Subsidiaries (individually, an "Owned Property" and
collectively, the "Owned Properties") and (ii) all real property and interests
in real property leased by the Company and its Subsidiaries (individually, a
"Real Property Lease" and the real properties specified in such leases, together
with the Owned Properties, being referred to herein as "Company Property") as
lessee or lessor. The Company and its Subsidiaries have good and marketable fee
title to all Owned Property, free and clear of all Liens except (A) Liens set
forth in Section 4.18(a) of the Company Disclosure Schedule and (B) Permitted
Encumbrances. Except as set forth in Section 4.18(a) of the Company Disclosure
Schedule (i) the Company Property constitutes all interests in real property
presently used or currently held for use in the Business and which are necessary
for the conduct of the Business as presently conducted, and (ii) the Company and
its Subsidiaries have a valid and enforceable leasehold interest under each of
the Real Property Leases, and none of WPS, Seller, the Company nor any
Subsidiary has received any written notice of any default or event that with
notice or lapse of time, or both, would constitute a default by the Company or
any Subsidiary under any of the Real Property Leases. All of the Company
Property and the buildings, fixtures and improvements thereon owned or leased by
the Company and its Subsidiaries are suitable for the uses they are currently
put to with respect to the Business. Seller has delivered or otherwise made
available to Purchaser true, correct and complete copies of (i) all deeds, title
reports
25
31
and surveys for the Owned Properties and (ii) the Real Property Leases, together
with all amendments, modifications or supplements, if any, thereto.
(b) The Company and its Subsidiaries have all material certificates of
occupancy and Permits of any Governmental Body necessary or useful for the
current use and operation of each Company Property, and the Company and its
Subsidiaries have fully complied with all material conditions of the Permits
applicable to them. No default or violation, or event which, with the lapse of
time or giving of notice or both, would become a default or violation, has
occurred in the due observance of any Permit.
(c) There do not exist any actual or, to the Knowledge of WPS, Seller
and the Company, threatened or contemplated condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and none of
Seller, WPS, the Company or any Subsidiary has received any written notice of
the intention of any Governmental Body or other Person to take or use all or any
part thereof.
(d) Neither the Company nor any Subsidiary owns or holds, or is
obligated under or a party to any option, right of first refusal or other
contractual right to purchase, acquire, sell, assign or dispose of any real
estate or any portion thereof or interest therein, except as provided in this
Agreement.
4.19 Title to Assets. Except as set forth in Section 4.19 of the
Company Disclosure Schedule, the Company or its Subsidiaries own outright and
have good and valid title to all of the property and assets included in the
Business, free and clear of any Liens, except for (i) immaterial assets and
properties; (ii) assets and properties disposed of or subject to purchase or
sales orders in the ordinary course of business; and (iii) Liens set forth in
Section 4.19 of the Company Disclosure Schedule (which shall be released at the
Closing) and Permitted Encumbrances; provided, however, that the representation
and warranty contained in this Section 4.19 does not apply to the Excluded
Assets and does not include or relate to the Real Property, which is addressed
by the representations and warranties contained in Section 4.18.
26
32
4.20 Brokers, Etc. No Person has acted directly or indirectly as a
broker, finder or financial advisor for WPS, Seller or the Company in connection
with the transactions contemplated by this Agreement, except that ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. and Lazard Freres & Co. LLC (together, "Seller's Advisors") each have
acted as financial advisors to WPS and Seller, and no Person other than Seller's
Advisors are entitled to any fees or commissions or like payments in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of WPS, Seller or the Company.
4.21 No Material Adverse Change. Since December 31, 1996 there has not
been any Material Adverse Change, and no event has occurred or circumstance
exists that may result in such a Material Adverse Change.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants as follows:
5.1 Organization and Good Standing. Purchaser is a corporation validly
existing and in good standing under the laws of the State of Tennessee and has
all requisite corporate power and authority to own and operate its properties
and to carry on its business as now conducted.
5.2 Authorization of Agreement. Purchaser has all requisite corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement to
be executed by Purchaser in connection with the consummation of the transactions
contemplated by this Agreement (collectively, the "Purchaser Documents"), and to
perform its obligations hereunder and thereunder. The execution, delivery and
performance by Purchaser of this Agreement and the Purchaser Documents have been
duly authorized by all necessary corporate action on behalf of Purchaser. This
Agreement has been, and at or prior to the Closing each Purchaser Document will
be, duly and validly executed and delivered by Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each Purchaser Document when so executed and
delivered will constitute, legal, valid and binding obligations of Purchaser.
27
33
5.3 Consents of Third Parties; Non-Contravention.
(a) No consent, waiver, approval or authorization of, or declaration or
filing with, or notification to, any Governmental Body that has not been
previously obtained, made or filed is required on the part of Purchaser in
connection with the execution, delivery and performance by Purchaser of this
Agreement or the Purchaser Documents, or the consummation by Purchaser of the
transactions contemplated hereby or thereby except (i) for compliance with the
applicable requirements of the HSR Act; and (ii) as set forth in Section 5.3(a)
of the Purchaser Disclosure Schedule and (iii) where the failure to obtain such
consent, waiver, approval or authorization would not materially impair or delay
the ability of Purchaser to perform its obligations hereunder.
(b) Except as set forth in Section 5.3(b) of the Purchaser Disclosure
Schedule, the execution, delivery and performance by Purchaser of this Agreement
and each of the Purchaser Documents, and the consummation of the transactions
contemplated hereby and thereby, do not and will not (i) violate any provision
of the certificate of incorporation or by-laws (or comparable organizational
documents) of Purchaser, each as currently in effect; (ii) subject to obtaining
the consents referred to in Section 5.3(a) above, conflict with, or result in
the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration of any right or obligation of Purchaser under, any
lease, agreement, commitment or other instrument to which Purchaser is a party
or by which Purchaser or any of its properties is bound, except where such
conflict, breach or default would not materially impair or delay the ability of
Purchaser to perform its obligations hereunder; or (iii) assuming compliance
with the matters set forth in Section 5.3(a) hereof, violate, or result in a
breach of or constitute a default under, any Law applicable to Purchaser, other
than in the cases of clauses (ii) and (iii) above any violation, conflict,
breach, termination, default, cancellation or acceleration which, individually
or in the aggregate, would not materially impair or delay the ability of
Purchaser to consummate the transactions contemplated hereby.
5.4 Litigation. As of the date hereof, there are no Legal Proceedings
pending or, to the Knowledge of Purchaser, threatened against Purchaser that
question the validity of this Agreement or any action taken or to be
28
34
taken by Purchaser in connection with the consummation of the transactions
contemplated hereby or that would impair or delay the ability of Purchaser to
consummate the transactions contemplated hereby.
5.5 Financing. Purchaser has, as of the date hereof, provided to Seller
copies of executed commitments between Purchaser and each of The Bear ▇▇▇▇▇▇▇
Companies, Inc., Prudential Securities Credit Corp., SunTrust Bank, Atlanta and
Suntrust Capital Markets, Inc. (the "Financing Commitments"), providing for
sufficient funds to effect the Closing and all other transactions contemplated
by this Agreement.
5.6 Investment Representation.
(a) Purchaser is acquiring the Shares for its own account, for
investment purposes only and not with a view to the resale or distribution (as
such term is used in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act")) thereof. Purchaser understands and acknowledges that the
Shares have not been registered under the Securities Act and cannot be sold,
transferred, pledged, hypothecated or otherwise disposed of unless subsequently
registered under the Securities Act or an exemption from such registration is
available.
(b) Purchaser possesses such knowledge and experience in financial and
business matters so that it is capable of evaluating the merits and risks of its
investment hereunder. Purchaser acknowledges that it has conducted its own
investigation of the business and affairs of the Company and the Subsidiaries
and it has received all the information that it requested from, and has had an
opportunity to ask questions of and receive answers from officers and
representatives of, Seller, WPS and the Company concerning the Company and the
Subsidiaries.
5.7 Investment Company Act. Purchaser is not, nor is Purchaser directly
or indirectly controlled by any Person that is, an investment company within the
meaning of the Investment Company Act of 1940, as amended (an "Investment
Company"), and, immediately following the consummation of the transactions
contemplated by this Agreement, Purchaser will not be, nor will Purchaser be
directly or indirectly controlled by any Person that will be, an Investment
Company.
29
35
5.8 Financial Advisors. No Person has acted directly or indirectly as a
broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement except for Bear, ▇▇▇▇▇▇▇ & Co., Inc.
and Prudential Securities, Inc. ("Purchaser's Advisor") and no Person other than
Purchaser's Advisor is entitled to any fee or commission or like payment in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of Purchaser.
5.9 No Material Adverse Change. Since September 30, 1996, there has not
been any material adverse change in the business, results of operations or
financial condition of Purchaser, and no event has occurred or circumstance
exists that may result in such a material adverse change.
ARTICLE VI
FURTHER AGREEMENTS OF THE PARTIES
6.1 Access to Information; Confidentiality.
(a) Seller, WPS and the Company agree that, prior to the Closing Date,
Purchaser shall be entitled, through its authorized officers, employees and
representatives (including, without limitation, its legal counsel and
accountants), to make such reasonable investigation of the properties, business
and operations of the Company and the Subsidiaries and such examination of the
books, records and financial condition of the Company and the Subsidiaries as it
reasonably requests, and to make extracts and copies to the extent necessary of
such books and records; provided, however, that (i) the Company shall not be
obligated to provide Purchaser with any information that may be prohibited by
Law or contractual obligation from being so provided and (ii) all requests for
information, to visit facilities or to interview officers or employees of the
Company shall be directed to and coordinated with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and shall
take place during regular business hours and upon reasonable advance notice.
(b) All information (whether in written, oral or other form and whether
or not displaying proprietary or restrictive markings) furnished (whether before
or after the date hereof) by the Company or its directors, officers,
30
36
employees or Affiliates (including, without limitation, Seller, WPS or any of
the Subsidiaries) or their respective representatives (including, without
limitation, financial advisors (including, without limitation, Seller's
Advisors), attorneys and accountants) (collectively, the "Company's
Representatives") or agents to Purchaser or Purchaser's directors, officers,
employees, affiliates, representatives (including, without limitation, financial
advisors (including, without limitation, Purchaser's Advisor), attorneys and
accountants) or agents or Purchaser's potential sources of financing for the
transactions contemplated hereby (collectively, "Purchaser's Representatives")
and all analyses, compilations, forecasts, studies or other documents prepared
by Purchaser or Purchaser's Representatives in connection with this Agreement or
the transactions contemplated hereby (including, without limitation, in
connection with Purchaser's or Purchaser's Representatives' review of the
Company and its Subsidiaries) which contain or reflect any such information is
hereinafter referred to as the "Information." The term Information shall not,
however, include information which (i) is or becomes publicly available, without
restriction on use or disclosure, other than as a result of a disclosure by
Purchaser or Purchaser's Representatives or (ii) is or becomes available to
Purchaser on a nonconfidential basis and without restriction on use or
disclosure from a source (other than the Company or the Company's
Representatives) which, to the best of Purchaser's knowledge after due inquiry,
is not prohibited from using or disclosing such information to Purchaser by a
legal, contractual or fiduciary obligation to the Company or any of the
Company's Representatives.
(c) Purchaser and Purchaser's Representatives (i) will keep the
Information confidential and will not (except as required by applicable law,
regulation or legal process, and only after compliance with Section 6.1(d)
below), without the prior written consent of WPS, directly or indirectly
disclose any Information in any manner whatsoever or reproduce any Information,
in any form, in whole or in part, and (ii) will not use any Information other
than in connection with the consummation of the transactions contemplated
hereby; provided, however, that Purchaser may reveal the Information only to
those of Purchaser's Representatives who (A) need to know the Information for
the purpose of consummating the transactions contemplated hereby, (B) are
informed by Purchaser of the confidential nature of and the obligations relating
to the Information and (C) agree to comply with the obligations and restric-
31
37
tions of this Section 6.1(c). Purchaser further agrees that, except as required
by applicable Law or legal process and after compliance with paragraph (d)
below, neither Purchaser nor any of Purchaser's Representatives will use any
Information in any litigation or legislative or regulatory proceeding. Purchaser
will cause Purchaser's Representatives to comply with the terms of this Section
6.1, and Purchaser will be responsible for any breach of this Section 6.1 by any
of Purchaser's Representatives.
(d) If Purchaser or any of Purchaser's Representatives are requested
pursuant to, or required by, applicable Law or legal process to disclose any of
the Information, Purchaser will notify WPS (Attention: General Counsel) promptly
prior to any such disclosure so that a protective order or other appropriate
remedy may be sought or, in the sole discretion WPS, compliance with the terms
of this Section 6.1 may be waived. In the event that no such protective order or
other remedy is obtained, or that compliance with the terms of this Section 6.1
is waived as provided above, Purchaser and Purchaser's Representatives will
furnish only that portion of the Information which Purchaser is advised by
counsel is legally required and will exercise all reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded the Information.
(e) If this Agreement is terminated prior to the Closing pursuant to
Section 9.1 hereof, Purchaser (i) shall, at WPS's option and written request,
promptly destroy or return and cause Purchaser's Representatives to destroy or
return to the Company, at Purchaser's expense, all Information (including all
copies, if any, thereof), and thereafter the Information shall be subject to the
provisions of the Confidentiality Agreement, dated May 28, 1997, between
▇▇▇▇▇▇▇, Sachs & Co., on behalf of the Company, and Purchaser (the
"Confidentiality Agreement") and (ii) shall not use or disclose the Information
for any purpose or make the Information available to any other entity or person.
(f) Purchaser acknowledges and agrees that a remedy at law for any
breach, or threatened breach, of the provisions of this Section 6.1 would be
inadequate and, accordingly, Purchaser covenants and agrees that Seller shall,
in addition to any other rights and remedies that
32
38
Seller may have, be entitled to equitable relief, including injunctive relief,
and to the remedy of specific performance with respect to any breach of such
covenant, as may be available from any court of competent jurisdiction. Such
right to obtain equitable relief may be exercised, at the option of Seller,
concurrently with, prior to, after or in lieu of, the exercise of any other
rights or remedies that Seller may have as a result of any such breach or
threatened breach.
6.2 Conduct of the Business Pending the Closing. Except as otherwise
contemplated by this Agreement, as set forth in Section 6.2 of the Company
Disclosure Schedule and except for the Permitted Transactions, or with the prior
written consent of Purchaser, which consent shall not be unreasonably withheld,
from the date hereof until the Closing Date:
(a) the Company shall, and shall cause each Subsidiary to:
(i) conduct the Business only in the ordinary course
consistent with past practice;
(ii) use reasonable commercial efforts to (A) preserve the
present business operations, organization (including, without limitation,
management and the sales force) and goodwill of the Business and (B) preserve
the present relationships with suppliers, customers and other Persons having
material business dealings with the Company and the Subsidiaries relating to the
Business; and
(iii) confer with Purchaser concerning operational matters
of a material nature;
(b) the Company shall not, and shall not cause or permit any Subsidiary
to:
(i) declare, set aside, make or pay any dividend or other
distribution (other than any dividend or distribution in cash) in respect of the
capital stock of the Company or repurchase, redeem or otherwise acquire any
outstanding shares of the capital stock or other securities of, or other
ownership interests in, the Company or effect any recapitalization, split or
like change in the capitalization of the Company or any Subsidiary;
33
39
(ii) transfer, authorize for issuance, issue, sell or
dispose of any shares of capital stock or other securities of the Company or any
Subsidiary or grant options or other rights to purchase or otherwise acquire
shares of the Company's or any Subsidiary's capital stock or other securities;
(iii) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any Subsidiary;
(iv) incur, assume or guarantee any indebtedness for
borrowed money, other than (A) in the ordinary course of its business consistent
with past practice, (B) borrowings under existing lines of credit in the
ordinary course of business, or (C) guarantees by the Company or any Subsidiary
of indebtedness of the Company or any Subsidiary;
(v) amend the certificate of incorporation or by-laws of
the Company or any Subsidiary;
(vi) other than in the ordinary course of business
consistent with past practice, (A) increase the compensation payable or to
become payable by the Company or any Subsidiary to any of its respective
directors, officers or employees; (B) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, salary continuation for disability, sick leave, deferred compensation,
bonus or other incentive compensation, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any of the directors,
officers or employees of the Company or any Subsidiary; or (C) enter into any
employment, deferred compensation, severance, consulting (in which a Person is
acting as a consultant to the Company or any of its Subsidiaries),
non-competition or similar agreement (or amend any such existing agreement to
which the Company or a Subsidiary is a party) involving a director, officer or
employee of the Company or a Subsidiary;
(vii) subject to any Lien (other than Liens set forth in
any section of the Company Disclosure Schedule and other than Permitted
Encumbrances) any of the material properties or assets (whether tangible or
intangible) of the Company or any Subsidiary, other than the Excluded Assets;
34
40
(viii) (i) acquire (except for purchases of inventory and
supplies in the ordinary course of business) any material properties or material
assets or (ii) sell, assign, transfer, convey, lease, license or otherwise
dispose of any of the material properties or material assets of the Company or
any Subsidiary (except for the transfer of the Excluded Assets);
(ix) other than as required by GAAP or by Law, make any
material alteration with respect to accounting policies, procedures and
practices;
(x) enter into any contract or agreement with Seller, WPS
or any Affiliate of WPS, other than in the ordinary course of business,
consistent with past practice, and on terms that are, in all material respects,
no less favorable, in the aggregate, to the Company or any Subsidiary party
thereto than could be obtained in arm's-length negotiations with an unaffiliated
third party;
(xi) other than in the ordinary course of business
consistent with past practice, compromise or settle, or enter into any agreement
which has the effect of compromising or settling, any material Legal Proceeding
listed in (or which, if such Legal Proceeding had been pending or threatened as
of the date of this Agreement, would have been required to be listed in) Section
4.15 of the Company Disclosure Schedule;
(xii) enter into any labor or collective bargaining
agreement or, through negotiation or otherwise, make any commitment or incur any
liability to any labor organization with respect to the Company or the
Subsidiaries;
(xiii) make any loan or advance (other than in the ordinary
course of business consistent with past practice) or capital contribution to, or
invest in, any Person (other than to or in wholly owned Subsidiaries of the
Company);
(xiv) amend in any material respect any Contract, other
than in the ordinary course of business;
(xv) make any new election with respect to Taxes, or make
any changes in any current election with respect to Taxes that can reasonably be
expected to have a Material Adverse Effect on the Company or any Subsidiary;
35
41
(xvi) commit or agree to do anything prohibited by this
Section 6.2(b), except as otherwise permitted by this Agreement.
6.3 Reasonable Commercial Efforts. Each party will cooperate and use
its reasonable commercial efforts to fulfill the conditions precedent to the
parties' obligations hereunder, including, without limitation, (i) using
reasonable commercial efforts to secure as promptly as practicable all consents,
approvals, waivers and authorizations required in connection with the
transactions contemplated hereby (collectively, "Required Consents"), (ii)
providing to the other parties such information as may be necessary in
connection with obtaining such Required Consents (including, without limitation,
updating and/or correcting if specifically requested by Purchaser, information
previously provided) or in connection with Purchaser's obtaining financing for
the transactions contemplated hereby (including, without limitation, making
available reasonably requested financial information concerning the Business),
and (iii) making available such officers or other employees of such party as may
be necessary or desirable to participate in any regulatory proceedings required
to obtain such Required Consents. Each of WPS and Purchaser will promptly file
documentary materials required by the HSR Act and promptly file any additional
information requested as soon as practicable after receipt of request therefor.
Furthermore, each party will cooperate and use its reasonable commercial efforts
to obtain for Purchaser the benefits (subject to the obligations set forth
therein) under the Real Property Leases, including the New York Lease (as
defined in Section 4.18(a) of the Company Disclosure Schedule) and the Equipment
Leases (as defined in Section 4.6(a) of the Company Disclosure Schedule).
6.4 Further Assurances. At any time after the Closing Date, Seller and
Purchaser shall promptly execute, acknowledge and deliver any other assurances
or documents reasonably requested by the other and necessary for it to satisfy
its obligations hereunder or obtain the benefits contemplated hereby.
6.5 Preservation of Records. Purchaser and the Company each shall
preserve and keep the Tax and other material records held by it relating to the
Business and the Company and the Subsidiaries for a period of five (5) years
from the Closing Date or such longer period as may be required by applicable Law
and shall make such records and
36
42
personnel available to WPS or its Affiliates as may be reasonably required by
WPS in connection with, among other things, any Legal Proceedings against or
governmental investigations of WPS, Seller or any of their Affiliates or in
order to enable Seller, WPS or the Company to comply with its obligations under
this Agreement. If the Company wishes to destroy such records after that time,
the Company shall first give 90 days' prior written notice to WPS and WPS shall
have the right, at its option and expense, upon prior written notice given to
the Company within that 90-day period, to take possession of the records within
180 days after the date of the initial notice.
6.6 Publicity. Prior to the Closing, none of the parties or their
respective Affiliates shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval, in the cases of Seller, WPS and the
Company, of Purchaser, and in Purchaser's case, of WPS, which approval will not
be unreasonably withheld or delayed, unless such release or announcement
otherwise is required by applicable Law or by the applicable rules of any stock
exchange on which WPS, Purchaser or their respective Affiliates list securities.
Prior to making any public disclosure at any time prior to the Closing that is
required by applicable Law or the rules and regulations of any such stock
exchange, the disclosing party or parties shall, to the extent practicable under
the circumstances, give the other parties a copy of the proposed disclosure and
reasonable opportunity to comment thereon.
6.7 Notice Regarding Regulatory Proceedings.
(a) Each party shall notify the other parties hereto of the status of
any pending filing with any Governmental Body required pursuant to Section
4.6(a) or 5.3(a) hereof promptly upon (i) receipt of any material notice or
other material communication from such Governmental Body relating to, or (ii)
upon any material change in the status of, any such filing and at such other
times as the other party may reasonably request, such notice to specify in
reasonable detail the nature of such communication or change or the status of
such filing, as applicable.
37
43
(b) Each party shall notify the other parties hereto promptly upon the
receipt of any notice from any Governmental Body to the effect that such
Governmental Body has determined that a consent, waiver, approval or
authorization that is not listed in Section 4.6(a) of the Company Disclosure
Schedule or Section 5.3(a) of the Purchaser Disclosure Schedule, as applicable,
is or may be required.
6.8 Employee Matters. Effective on the Closing Date, WPS, Seller, the
Company and Purchaser shall enter into the Human Resources Agreement
substantially in the form attached as Exhibit B hereto and incorporated by this
reference herein.
6.9 Financial Advisors.
(a) The fees and expenses of Seller's Advisors shall be paid by Seller
in accordance with Seller's agreements with such advisor.
(b) The fees and expenses of Purchaser's Advisor shall be paid by
Purchaser in accordance with Purchaser's agreement with such advisor.
6.10 Permitted Transactions. Prior to the Closing, the Company shall
transfer and convey (the "Permitted Transactions") (i) to WPS or its designated
Affiliate any and all cash or cash equivalents and accounts receivable of the
Company and its Subsidiaries in existence up to the time of the Closing (a
listing of which shall be provided to Purchaser at the Closing) and (ii) to WPS,
its designated Affiliate or a third party the business and assets related to the
▇▇▇▇▇▇▇▇ spinning plant including inventory, pre-paid leases and fixed assets,
as such fixed assets are set forth on a schedule thereof, a copy of which has
been delivered to Purchaser and described in Section 6.10 of the Company
Disclosure Schedule (collectively, the "Excluded Assets"). Notwithstanding
anything to the contrary in this Agreement, Purchaser expressly understands and
agrees that the Excluded Assets will not be included in the Business at the time
of consummation of the transactions contemplated by this Agreement, and at no
time will Purchaser have any interest or rights of any kind therein.
6.11 Repayment of Loans. On or as of the Closing, all loans or advances
to the Company or any Subsidiary from, or amounts due by the Company or any
Subsidiary to, WPS or any of its Affiliates (including
38
44
Seller) listed in Section 6.11 of the Company Disclosure Schedule, including,
without limitation, any accrued and unpaid interest thereon, shall be repaid in
full by the Company or such Subsidiary to the payee thereof. Such amounts shall
be repaid out of the proceeds of the Estimated Purchase Price paid by Purchaser
to Seller at the Closing.
6.12 Notification. Between the date of this Agreement and the Closing
Date, Seller will promptly notify Purchaser of the occurrence of any event that
would or may make the satisfaction of the conditions in Article VII impossible
or unlikely to be fulfilled.
6.13 No Negotiation. Until such time, if any, as this Agreement is
terminated in accordance with Article IX, none of Seller, WPS or the Company
will, and will cause the Company's Representatives not to, directly or
indirectly solicit, initiate or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any inquiries or proposals from, any Person (other than Purchaser)
relating to any transaction involving the sale of the business or assets (other
than sales of inventory in the ordinary course of business and the Permitted
Transactions) of the Company or any of its Subsidiaries, or any of the capital
stock of the Company or any of its Subsidiaries, or any merger, consolidation,
business combination or similar transaction involving the Company or any of its
Subsidiaries.
6.14 June 30 Company Interim Financial Statements. As soon as
reasonably practicable after the date of this Agreement, the Company shall
provide an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of June 30, 1997 and consolidated statements of income and cash
flows of the Company and its Subsidiaries for the six months then ended (the
"June 30 Company Interim Financial Statements"), which shall be prepared in
accordance with GAAP applied on a consistent basis with the Company Financial
Statements (subject to normal recurring year-end adjustments and the absence of
notes that, if presented, would not differ materially from those included in the
Company Financial Statements), and present fairly in all material respects the
consolidated financial position and results of operations and cash flows of the
Company and its Subsidiaries as at the date and for the period indicated
therein.
39
45
6.15 Non-Compete. WPS and Seller agree that for a period of five (5)
years following the Closing Date, neither WPS nor Seller nor any of their
respective Affiliates shall (i) engage in the Business, or (ii) directly or
indirectly acquire any company which is substantially engaged in the Business,
which is in any market in which the Company conducts Business as the Company's
Business is conducted at that time; provided, however, that this provision shall
not apply to any transaction in which WPS or Seller is acquired by, or merges
with, a third party. Each of Seller and WPS acknowledges and agrees that this
Section 6.15 is reasonable in duration and scope and geographic area and is
reasonably necessary for the protection of Purchaser's interests under this
Agreement. In the event that in any proceeding it is determined that the
duration or scope or geographic area of the provisions of this Section 6.15 are
unenforceable, the parties intend and agree that the foregoing agreements shall
remain in full force and effect to the greatest extent that would not render
them unenforceable.
6.16 Financing. Purchaser shall use its best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable (i) so that there is in effect, as promptly as practicable
but in no event later than September 15, 1997, definitive agreements
(collectively the "Financing Agreements") from one or more financial
institutions pursuant to which Purchaser shall have received commitments to
provide the Financing, and (ii) to satisfy all conditions contained in each of
the Financing Commitments and Financing Agreements to be performed by it.
Purchaser shall provide to the Seller copies of any such commitment letters and
Financing Agreements and shall keep the Seller reasonably informed of the status
of the financing process contemplated by the Commitment Letters.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions (any or all of which may be waived by Purchaser in whole or in part
to the extent permitted by applicable Law):
40
46
(a) the representations and warranties of each of Seller, WPS and the
Company to Purchaser contained herein shall be true and correct in all material
respects as of the date of this Agreement and at and as of the Closing Date with
the same effect as though those representations and warranties had been made
again at and as of that date;
(b) each of Seller, WPS and the Company shall have performed and
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date;
(c) the waiting period under the HSR Act shall have expired or been
earlier terminated;
(d) no Law shall have been enacted, and no Order of any Governmental
Body shall be in effect, which restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby;
(e) the consents, waivers, approvals or other authorizations of
Governmental Bodies required to have been obtained by Purchaser in connection
with the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, shall have been obtained;
(f) Purchaser shall have received an opinion of counsel to Seller, WPS
and the Company, dated the Closing Date, in form and content reasonably
acceptable to Purchaser; and
(g) Purchaser shall have received sufficient funds to effect the
Closing and all other transactions contemplated by this Agreement.
7.2 Conditions Precedent to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated by this Agreement is subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions (any or all of which may be waived by Seller):
(a) the representations and warranties of Purchaser to Seller and WPS
contained herein shall be true and correct in all material respects as of the
date of this Agreement and at and as of the Closing Date with the same
41
47
effect as though those representations and warranties had been made again at and
as of that date;
(b) Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) the waiting period under the HSR Act shall have expired or been
earlier terminated;
(d) no Law shall have been enacted, and no Order of any Governmental
Body shall be in effect, which restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby;
(e) all material consents, waivers, approvals or other authorizations
of any Governmental Body required to be obtained by Seller in connection with
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, shall have been obtained;
(f) no Legal Proceeding shall have been instituted or threatened by any
Governmental Body against Seller seeking to restrain or prohibit the
consummation by Seller of the transactions contemplated by this Agreement;
(g) Seller shall have received an opinion of counsel to Purchaser,
dated the Closing Date, in form and content reasonably acceptable to Seller;
(h) the Permitted Transactions shall have been consummated; and
(i) all amounts owed by the Company and its Subsidiaries to WPS or any
of its Affiliates as listed in Section 6.11 of the Company Disclosure Schedule
shall have been, contemporaneously with the Closing, repaid from the proceeds of
the Purchase Price.
ARTICLE VIII
CLOSING; DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 Closing Date. The closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take place at 9:00 a.m.
(New York City
42
48
time) at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, New York, New York (or at
such other time and/or place as Seller and Purchaser may designate in writing)
on September 15, 1997 or such earlier date to which the parties shall mutually
agree. The date on which the Closing occurs is referred to in this Agreement as
the "Closing Date." At the Closing, the parties shall execute and deliver the
documents referred to in Sections 8.2 and 8.3 hereof.
8.2 Documents to Be Delivered by Seller, WPS and/or the Company. At the
Closing, Seller, WPS and/or the Company, as applicable, shall deliver, or cause
to be delivered, to Purchaser the following:
(a) stock certificates representing all the Shares, as well as all of
the issued and outstanding shares of each Subsidiary, duly endorsed in blank or
accompanied by stock transfer powers duly endorsed in blank; and
(b) a certificate dated the Closing Date executed on behalf of Seller,
WPS and the Company by the Chief Executive Officer or Chief Financial Officer of
WPS, certifying as to the fulfillment of the conditions specified in Sections
7.1(a) and 7.1(b) hereof applicable to Seller, WPS or the Company, as the case
may be.
8.3 Documents to Be Delivered by Purchaser. At the Closing, Purchaser
shall deliver to Seller the following:
(a) the Estimated Purchase Price as provided in Section 2.2 hereof; and
(b) a certificate dated the Closing Date executed by the Chief
Executive Officer or Chief Financial Officer of Purchaser certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b) hereof.
8.4 Documents to be Delivered by the Parties. At the Closing, Seller,
WPS, the Company and the Purchaser shall execute and deliver (i) an Interim
Services Agreement, dated the Closing Date (the "Interim Services Agreement"),
in substantially the form of Exhibit D attached hereto, such Interim Services
Agreement to have a term of nine (9)
43
49
months, and be cancellable in whole or in part at any time by Purchaser on
thirty (30) days prior written notice to Seller; (ii) the New York Sublease,
dated the Closing Date (the "New York Sublease"), on substantially the same
terms and conditions as presently exist in the New York Lease (as defined in
Section 4.18(a) of the Company Disclosure Schedule), it being understood that
lease payments and charges under the New York Sublease shall be determined on a
pro rata basis equal to WPS's average rent per square foot and charges under the
New York Lease; and (iii) the Machinery and Equipment Sublease, dated the
Closing Date (the "Equipment Sublease"), on substantially the same terms and
conditions as presently exist in the Equipment Lease (as defined in Section
4.6(a) of the Company Disclosure Schedule), as it relates to the machinery and
equipment listed on Section 4.6(a) of the Company Disclosure Schedule.
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination of Agreement. This Agreement may be terminated prior to
the Closing as follows:
(a) by mutual written consent of Seller and Purchaser;
(b) (i) by Seller if the Closing shall not have occurred on or before
September 15, 1997; provided that Seller is not in material breach of its
obligations under this Agreement; or (ii) by Seller or Purchaser if there shall
have been enacted any Law, or there shall be in effect a final nonappealable
Order of any Governmental Body, restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby; it being agreed that
the applicable parties hereto shall promptly appeal, and shall diligently
pursue, any adverse determination that is not nonappealable; or
(c) (i) by Purchaser if any of the conditions in Section 7.1 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Purchaser to comply
with its obligations under this Agreement) and Purchaser has not waived such
condition on or before the Closing Date; or (ii) by Seller, if any of the
conditions in Section 7.2 has not
44
50
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Seller, WPS or the
Company to comply with their obligations under this Agreement) and Seller has
not waived such condition on or before the Closing Date.
Upon the occurrence of any of the events specified in this Section 9.1 (other
than Section 9.1(a) hereof), written notice of such event shall promptly be
given to the other parties to this Agreement, whereupon this Agreement shall
terminate as hereinabove provided.
9.2 Survival After Termination. If this Agreement is terminated in
accordance with Section 9.1 hereof and the transactions contemplated hereby are
not consummated, this Agreement shall become null and void and of no further
force and effect except (i) for the provisions of Sections 5.5, 6.1(e), 9.2,
12.2, 12.3, 12.6, and 12.7 hereof and (ii) that the termination of this
Agreement for any reason shall not relieve any party hereto from any liability
or obligations which at the time of termination had already accrued to another
party hereto or which thereafter may accrue in respect of any act or omission of
such party prior to such termination; provided that the Confidentiality
Agreement shall remain in full force and effect.
ARTICLE X
SURVIVAL; GENERAL INDEMNIFICATION
10.1 Survival. The representations and warranties of WPS and Seller as
to the Shares contained in Section 3.1 hereof, of WPS, Seller and the Company
contained in Sections 4.1, 4.2, 4.4 and 4.20 hereof, and of Purchaser contained
in Sections 5.1, 5.2 and 5.7 hereof, and any claim for indemnification in
respect thereof under this Article X, shall survive the Closing. The
representations and warranties of Seller contained in Section 4.17 hereof, and
any claim for indemnification in respect thereof under this Article X, shall
survive the Closing until the third anniversary of the Closing Date. Except as
provided in the immediately preceding sentence and in Article XI hereof with
respect to Taxes, all other representations and warranties of the parties hereto
set forth herein shall terminate fifteen (15) months from the date of this
Agreement, and any
45
51
claim for indemnification under this Article X with respect thereto, to be
valid, must be made on or prior to fifteen months after the date of this
Agreement.
10.2 Indemnification by WPS and Seller.
(a) Each of Seller and WPS (the "Indemnitors") jointly and severally
agrees that it shall, except with respect to (i) indemnification for breach of
any environmental representations, warranties and agreements which shall be
exclusively governed by the provisions of Section 10.5 hereof, and (ii) Tax
Indemnification which, except as otherwise provided in Section 11.8, shall be
exclusively governed by the provisions of Article XI hereof, indemnify, defend
and hold harmless Purchaser and its Affiliates, and each of their respective
directors, officers, shareholders, partners, attorneys, accountants, agents and
employees (other than the Transferred Employees), and their heirs, successors
and assigns (the "Purchaser Indemnified Parties"), from, against and in respect
of any damages, claims, losses, charges, actions, suits, proceedings,
deficiencies, interest, penalties, and reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses, removal costs,
remediation costs, closure costs, fines, penalties and expenses of investigation
and ongoing monitoring) (collectively, "Losses") imposed on, sustained, incurred
or suffered by or asserted against any of the Purchaser Indemnified Parties,
directly or indirectly, relating to or arising out of:
(i) any breach of any representation or warranty made by
Seller, WPS or the Company contained in this Agreement; and
(ii) the breach by Seller, WPS or the Company of any
covenant or agreement of such Person contained in this Agreement; and
(iii) any adverse impact upon the Company Pension Plans
after the Closing Date resulting directly or indirectly from any agreement or
understanding between WPS or any of its affiliates and the PBGC, or from any
action or litigation instituted by the PBGC, regarding the WPS Pension Plans or
any other defined benefit pension plan, such adverse impact including, but not
limited to, increased or accelerated funding, restrictions on termination or
amendment, or increased PBGC premiums affecting the Company Pension Plan.
46
52
(b) Notwithstanding anything contained herein to the contrary, neither
Seller nor WPS shall be liable to the Purchaser Indemnified Parties for any
Losses with respect to the matters contained in Section 10.2(a) hereof except to
the extent (and then only to the extent) that the Losses therefrom exceed an
aggregate amount equal to $1,750,000, and with respect to payments with respect
to matters contained in Section 10.2(a), then only for all such Losses in excess
thereof up to an aggregate amount of indemnification payments made by
Indemnitors hereunder with respect to matters contained in Section 10.2(a)
hereof) equal to $10,000,000, provided that the aggregate amount of any Loss
relating to a single claim (or group of claims relating to the same event or
transaction) exceeds $25,000.
10.3 Indemnification by Purchaser. Purchaser agrees that it shall
indemnify, defend and hold harmless each of Seller, WPS, the Company and their
Affiliates, and each of such Person's respective directors, officers,
shareholders, partners, attorneys, accountants, agents and employees, and their
heirs, successors and assigns (collectively, the "Seller Indemnified Parties"),
from, against and in respect of any Losses imposed on, sustained, incurred or
suffered by or asserted against any of the Seller Indemnified Parties, directly
or indirectly, relating to or arising out of:
(i) any breach of any representation and warranty made by
Purchaser in this Agreement;
(ii) the breach of any covenant or agreement of Purchaser
contained in this Agreement;
(iii) the breach of any representation, warranty or
covenant contained in the Human Resources Agreement, a copy of which is attached
hereto as Exhibit B; and
(iv) the failure of Purchaser to perform its obligations
under the New York Sublease, and the New York Lease to the extent it relates to
the New York Sublease, the Equipment Sublease and the Equipment Lease to the
extent it relates to the equipment listed in Section 4.6(a) of the Company
Disclosure Schedule.
47
53
10.4 Indemnification Procedures.
(a) Except as otherwise provided in Article X hereof with respect to
Taxes, with respect to third-party claims, all claims for indemnification by any
party entitled to indemnification pursuant to Section 10.2 or 10.3 hereof or
Article XI hereof (an "Indemnified Party") shall be asserted and resolved as set
forth in this Section 10.4. In the event that any written claim or demand for
which Purchaser or Seller would be liable (as the case may be, an "Indemnifying
Party") to any Indemnified Party is asserted against or sought to be collected
from such Indemnified Party by a third party, such Indemnified Party shall
promptly, but in no event more than 15 days following its receipt of such claim
or demand, notify the Indemnifying Party of such claim or demand and the amount
or the estimated amount thereof to the extent then feasible (which estimate
shall not be conclusive of the final amount of such claim or demand) (the "Claim
Notice"). The Indemnifying Party shall have 20 days from the personal delivery
or receipt of the Claim Notice (the "Notice Period") to notify the Indemnified
Party (a) whether or not the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such claim
or demand and (b) whether or not it desires to defend the Indemnified Party
against such claim or demand. All costs and expenses incurred by the
Indemnifying Party in defending such claim or demand shall be a liability of,
and shall be paid by, the Indemnifying Party. Except as hereinafter provided, in
the event that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend such party against such claim or demand,
the Indemnifying Party shall have the right to defend such claim or demand by
appropriate proceedings and shall have the sole power to direct and control such
defense. If any Indemnified Party desires to participate in any such defense, it
may do so at its sole cost and expense. The Indemnified Party shall not settle a
claim or demand without the consent of the Indemnifying Party, which shall not
be unreasonably withheld. The Indemnifying Party shall not, without the prior
written consent of the Indemnified Party, settle, compromise or offer to settle
or compromise any such claim or demand. If the Indemnifying Party elects not to
defend the Indemnified Party against such claim or demand, whether by not giving
such party timely notice as provided above or otherwise, then the amount of any
such claim or demand or, if the same be contested by such party, then that
portion thereof as to which such defense is unsuccessful
48
54
(and the reasonable costs and expenses pertaining to such defense), shall be the
liability of the Indemnifying Party hereunder, subject, with respect to WPS and
Seller, to the limitations set forth in Section 10.2(b) hereof. To the extent
the Indemnifying Party shall direct, control or participate in the defense or
settlement of any third-party claim or demand, the Indemnified Party will give
the Indemnifying Party and its counsel access to, during normal business hours,
the relevant business records and other documents, and shall permit them to
consult with the employees and counsel of the Indemnified Party. The Indemnified
Party shall use its best efforts in the defense of all such claims.
(b) Notwithstanding the foregoing, if an Indemnified Party determines
in good faith that there is a reasonable probability that a proceeding may
adversely affect it or its Affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive
right to defend, compromise or settle such proceeding, but the Indemnifying
Party will not be bound by any determination of a proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
10.5 Environmental Indemnity
(a) WPS, Seller and the Purchaser have agreed that Trigon Engineering
("Trigon") shall act as the environmental consultants for Purchaser with regard
to any follow-up investigation of the Plants, based upon the Phase I reports
previously concluded for the Company by Atlanta Environmental Management. Based
upon Trigon's review of the Phase I reports and other information obtained by
Trigon during its review, and its recommendations, the parties have agreed in
writing to the scope of a follow-up Phase II investigation.
(b) Purchaser shall have the right to immediately proceed with such
Phase II investigation and shall, not
49
55
later than ten (10) days prior to the Closing, deliver to Seller its report
(with appropriate back-up documentation from Trigon) setting forth the scope of
Remedial Activities it intends to undertake subsequent to the Closing and the
estimate of its environmental consultant of the costs and expenses which that
consultant reasonably anticipates will be incurred in connection therewith (the
"Known Remedial Activities"). If the proposed costs of the Known Remedial
Activities are reasonably likely to exceed $10 million, either party shall,
within three (3) days after receipt of such report, have the right to terminate
this Agreement, effective immediately, upon written notice to the other party.
If neither party elects to terminate, the Closing under that Agreement shall
proceed as otherwise provided for, and Purchaser shall thereafter have the right
to proceed with such Known Remedial Activities, subject to the terms of this
Section 10.5.
(c) Any and all fees and expenses of Trigon incurred under Sections
10.5(a) and (b) above, up to the Closing Date, shall be borne solely by
Purchaser. Following the Closing, each of Seller and WPS jointly and severally
agrees that it shall indemnify, defend and hold harmless the Purchaser
Indemnified Parties (as defined in Section 10.2(a) hereof) from, against, and in
respect of Seller's Applicable Percentage of any and all Losses arising from or
related to (i) a breach of Section 4.17 or (ii) the Known Remedial Activities.
It is the intention of the parties that all Losses under this Section
10.5 shall be borne by Sellers and Purchaser in proportion to their respective
Applicable Percentages set forth below:
For Losses: Seller's Purchaser's
Applicable Applicable
Percentage Percentage
Up to $10 million 75% 25%
Greater than $10 million 67% 33%
and up to $20 million
Greater than $20 million 0% 100%
50
56
(d) The obligations of WPS and Seller to indemnify Purchaser for such
Remedial Activities shall be subject to the following:
i) any claim against Seller under this Section 10.5 must
relate to a matter notice of which has been given to Seller by Purchaser not
later than the third anniversary of the Closing Date and then only with respect
to work performed on or before such third anniversary date;
ii) Any Remedial Activities (1) shall be performed solely
with respect to the specific areas that have been either identified by the
parties, as provided for in Section 10.5(a) hereof or are the subject of a
breach of representation of warranty contained in Section 4.17 hereof; (2) shall
be performed in a reasonable, cost-effective manner; and (3) shall use cleanup
criteria no more stringent than (a) if specific applicable cleanup criteria are
specified by applicable Environmental Laws, that specific cleanup criteria, or
(b) otherwise, cleanup criteria that are reasonable and appropriate to protect
human health and the environment and to comply with applicable Environmental
Laws (in all cases where permitted and appropriate such cleanup criteria shall
be that applicable to real property that is used for industrial purposes); and
iii) prior to the commencement of any Remedial Activities,
Purchaser shall provide Seller with a detailed plan as to its intended course of
action, the projected costs to be incurred in connection therewith, and the
anticipated time frame for completion. Seller shall have the right to review
such plan with Purchaser, to consult with Purchaser with respect to the
finalization and implementation of such plan and if Seller does not concur in
Purchaser's proposed plan of action, to provide alternative proposals and bids
for the undertaking and completion of such Remedial Activities. If Purchaser and
Seller, after due consultation, cannot agree as to the method of proceeding, or
the reasonable costs and expenses to be incurred in connection therewith, WPS
and Seller shall have the right to assume the obligation to complete such
Remedial Activities, which are subject to indemnification hereunder, at their
sole cost and expense, using such consultants and contractors as they deem
appropriate, provided that such work shall be completed on a timely basis and in
a workmanlike manner and on a basis reasonably acceptable to Purchaser.
51
57
(e) The party conducting the Remedial Activities shall (i) comply in
all material respects with Environmental Laws, (ii) in a timely manner, but no
less often than once every three months, provide the other party with progress
reports with respect to the Remedial Activities, and (iii) provide the other
party with all correspondence to or from any Governmental Authority, all
reports, all sampling results, and all other relevant and significant documents
relating to the Remedial Activities.
(f) For purposes of this Section 10.5, "Remedial Activities": shall
mean any actions specifically required by Environmental Laws to (i) cleanup,
remove, treat or in any other way address any Hazardous Materials located in, on
or under the soil or groundwater at concentrations in excess of the cleanup
criteria described in subsection (d)(ii) above and (ii) pre-remedial
investigations or post-remedial monitoring; provided, that other than the Known
Remedial Activities, Remedial Activities shall not include any investigations
voluntarily undertaken by Purchaser or the cleanup, removal or treatment
associated with such voluntary investigations but shall include any such
activities taken by Purchaser as a result of Seller's breach of any
representations and warranties contained in Section 4.17 hereof.
(g) Any party incurring costs hereunder, a portion of which is to be
paid by another party hereto (for purposes of this subsection (g), an "Obligated
Party") pursuant to Section 10.2, shall deliver to the Obligated Party, on a
quarterly basis, invoices for any Remedial Activities effected during such
quarterly period, along with appropriate back-up documentation, setting forth in
reasonable detail the work done during such period and a detailed break-down of
the fees and expenses incurred in connection therewith and included in such
invoice. The Obligated Party shall pay such invoices within thirty (30) days
after receipt thereof, except with respect to any portion thereof which they
claim by written notice to the other party, delivered within ten (10) days after
receipt of any such invoice, does not conform to the terms of this
indemnification.
(h) With respect to any invoices disputed by an Obligated Party under
subsection 10.5(g) above, the parties shall use reasonable efforts to resolve
such matter or matters on or before the due date of the relevant invoice; if the
parties cannot resolve any such dispute, said matters
52
58
shall be referred for resolution to an independent engineering consulting firm
mutually agreed upon by the parties, whose determination with respect to any
such disputed matters shall be final and binding upon WPS, Seller and Purchaser.
(i) This Section 10.5 shall be the sole and exclusive remedy with
respect to indemnification relating to environmental matters.
10.6 Characterization of Indemnification and Other Payments. All
amounts paid by Purchaser or Seller, as the case may be, under Article II
hereof, this Article X and Article XI hereof shall be treated as adjustments to
the Purchase Price for all Tax purposes.
10.7 Computation of Losses Subject to Indemnification. The amount of
any Loss for which indemnification is provided under this Article X and Article
XI hereof shall (i) be computed net of any insurance proceeds or Tax benefits
realized by the Indemnified Party in connection with such Loss (which Tax
benefits shall be reduced to the extent of any Taxes incurred by reason of any
such indemnification payment made hereunder) and (ii) exclude consequential
damages and lost profits.
ARTICLE XI
TAX MATTERS
11.1 Section 338(h)(10) Election.
(a) Seller and Purchaser shall join in making an election under Section
338(h)(10) of the Code and the Treasury Regulations and any corresponding or
similar elections under state, local or foreign law (collectively, a "Section
338(h)(10) Election") with respect to the purchase and sale of the Shares.
(b) Purchaser, Seller and the Company shall cooperate fully with each
other in the making of the Section 338(h)(10) Election. In particular, and not
by way of limitation, in order to effect the Section 338(h)(10)
53
59
Election, Seller and Purchaser shall jointly execute necessary copies of
Internal Revenue Service Form 8023 and all attachments required to be filed
therewith pursuant to applicable Treasury Regulations. Purchaser and Seller
shall cooperate fully with each other in preparing the valuation statement
reflecting, as of the Closing Date, the fair market values of all of the assets
and liabilities of the Company. Such valuation statement shall be prepared as
soon as practicable but no later than ninety (90) days after the Closing Date.
Purchaser and Seller shall file, and shall cause their Affiliates to file, all
Tax Returns and statements, forms and schedules in connection therewith in a
manner consistent with the Section 338(h)(10) Election and with an allocation of
the Purchase Price (including liabilities and other relevant items) to the
assets of the Company in accordance with such valuations and shall take no
position contrary thereto unless required to do so by applicable tax laws. Any
disputes regarding the valuation statement or the preparation, execution or
filing of the forms and documents required in connection with making the Section
338(h)(10) Election which are not resolved by WPS and Purchaser within ten (10)
days of such parties' first attempt to do so shall be resolved by the Final
Arbiter, whose decision shall be final and binding on the parties. All costs,
fees and expenses paid to the Final Arbiter in connection with any such disputes
shall be shared equally by Seller and Purchaser.
(c) To the extent permitted by state, local or foreign tax laws, the
principles and procedures of this Section 11.1 also shall apply with respect to
a Section 338(h)(10) Election or equivalent or comparable provision under state,
local or foreign law, including, without limitation, an election under Section
338(g) of the Code or any equivalent or comparable provision under state, local
or foreign law. Purchaser shall make or cause to be made any election similar to
a Section 338(h)(10) Election that is optional under any state, local or foreign
law, and shall cooperate and join in any election made by Seller, the Company or
its Affiliates to effect such an election so as to treat the sale of the Shares
contemplated herein as a sale of assets for state, local and foreign income tax
purposes.
54
60
11.2 Preparation of Tax Returns; Payment of Taxes.
(a) WPS shall include the Company and its Subsidiaries, or cause the
Company and its Subsidiaries to be included in, and shall file or cause to be
filed, (A) the United States consolidated federal income Tax Returns of the
Company and its Subsidiaries for the taxable periods of the Company and its
Subsidiaries ending on or prior to the Closing Date, and (B) where applicable,
all other consolidated, combined or unitary Tax Returns of the Company and its
Subsidiaries for the taxable periods of the Company and its Subsidiaries ending
(or the portion of any taxable period ending) on or prior to the Closing Date,
and Seller shall pay any and all Taxes due with respect to the returns referred
to in clause (A) or (B) of this paragraph (a), including, without limitation,
any liability due with respect to any Section 338(h)(10) Election made pursuant
to Section 11.1 hereof. WPS also shall file or shall cause the Company and its
Subsidiaries to file all other Tax Returns of or which include the Company and
its Subsidiaries required to be filed (taking into account any extensions) on or
prior to the Closing Date and Seller shall pay any and all Taxes due with
respect to such Tax Returns.
(b) Following the Closing, Purchaser shall be responsible for preparing
or causing to be prepared all Tax Returns required to be filed by the Company
and its Subsidiaries on a separate return basis after the Closing Date. To the
extent any Taxes shown due on such separate Tax Returns are indemnifiable by
Seller, (A) such Tax Returns shall be prepared in a manner consistent with prior
practice unless otherwise required by applicable tax laws; (B) Purchaser shall
provide Seller with copies of each such Tax Return at least 30 days prior to the
due date for filing such return; and (C) Seller shall have the right to review
and approve (which approval shall not be unreasonably withheld) such Tax Returns
for 15 days following receipt thereof. The failure of Seller to propose any
changes to any such Tax Return within such 15 days shall be deemed to be an
indication of its approval thereof. Seller and Purchaser shall attempt in good
faith mutually to resolve any disagreements regarding such Tax Returns prior to
the due date for filing thereof. Any disagreements regarding such Tax Returns
which are not resolved by WPS and Purchaser within ten (10) days of such
parties' first attempt to do so shall be resolved by the Final Arbiter, whose
decision shall be final and binding on the parties. All costs, fees and
55
61
expenses paid to the Final Arbiter in connection with any such disputes shall be
shared equally by Seller and Purchaser. Purchaser shall file or cause to be
filed all such Tax Returns and shall pay the Taxes shown due thereon; provided,
however, that nothing contained in the foregoing shall in any manner terminate,
limit or adversely affect any right of Purchaser, Seller or the Company to
receive indemnification pursuant to any provision in this Agreement.
(c) For federal and state income tax purposes, the taxable year of the
Company and its Subsidiaries shall end as of the close of the Closing Date.
Neither Seller nor Purchaser shall take any position inconsistent with the
preceding sentence on any Tax Return. In any case where applicable law does not
permit the Company or any Subsidiary to close its taxable year on the Closing
Date or in any case in which a Tax is assessed with respect to a taxable period
which includes the Closing Date (but does not begin or end on that day), then
Taxes, if any, attributable to the taxable period of the Company or any
Subsidiary beginning before and ending after the Closing Date shall be allocated
(A) to Seller for the period up to and including the Closing Date, and (B) to
Purchaser for the period subsequent to the Closing Date. Any allocation of
income or deductions required to determine any Taxes attributable to any period
beginning before and ending after the Closing Date shall be made by means of a
closing of the books and records of the Company and each Subsidiary as of the
close of the Closing Date, provided that exemptions, allowances or deductions
that are calculated on an annual basis (including, but not limited to,
depreciation and amortization deductions) shall be allocated between the period
ending on the Closing Date and the period after the Closing Date in proportion
to the number of days in each such period.
11.3 Cooperation with Respect to Tax Returns. Purchaser and Seller
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to books
and records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided, relating to the Company and its Subsidiaries as is reasonably
necessary for the filing of any Tax Return, for the preparation for any audit,
and for the prosecution or defense of any claim, suit or proceeding relating to
any adjustment or proposed adjustment with respect to Taxes.
56
62
11.4 Tax Audits.
(a) Whenever any taxing authority asserts a claim, makes an assessment
or otherwise disputes or affects the Tax reporting position of the Company and
its Subsidiaries for taxable periods ending on or prior to the Closing Date,
Purchaser shall, promptly upon receipt by Purchaser, the Company or its
Subsidiaries of notice thereof, inform WPS thereof.
(b) WPS shall have the sole right to represent the interests of the
Company and its Subsidiaries in any Tax audit or administrative or court
proceeding relating to taxable periods of the Company and its Subsidiaries which
end on or before the Closing Date; provided that if the results of such Tax
audit or proceeding could be expected to have a material adverse effect on the
assets, business, operations or financial condition of Purchaser, the Company or
its Subsidiaries for taxable periods ending after the Closing Date, then there
shall be no settlement or closing or other agreement with respect thereto
without the written consent of Purchaser (which consent shall not be
unreasonably withheld).
(c) WPS and Purchaser jointly shall represent the interests of the
Company and its Subsidiaries in any Tax audit or administrative or court
proceeding relating to any straddle period of the Company and its Subsidiaries.
Any disputes regarding the conduct or resolution of any such audit or proceeding
which are not resolved by WPS and Purchaser within ten (10) days of such
parties' first attempt to do so shall be resolved by the Final Arbiter, whose
decision shall be final and binding on the parties. All costs, fees and expenses
paid to third parties (including, if applicable, the Final Arbiter) in the
course of such proceeding shall be borne equally by Purchaser and Seller.
(d) Purchaser shall have the sole right to represent the interests of
the Company and its Subsidiaries in all other Tax audits or administrative or
court proceedings.
11.5 Refund Claims. To the extent any determination of Tax liability of
the Company and its Subsidiaries, whether as the result of an audit or
examination, a claim for refund, the filing of an amended return or otherwise,
results in any refund of Taxes paid attributable to (i) any period which ends on
or before the Closing Date, (ii) the Section 338(h)(10) Election or (iii) any
period which
57
63
includes the Closing Date but does not begin or end on that day, any such refund
shall belong to Seller, provided that in the case of any Tax refund described in
clause (iii) of this Section 11.5, the portion of such Tax refund which shall
belong to Seller shall be that portion that is attributable to the portion of
that period which ends on the Closing Date (determined on the basis of an
interim closing of the books as of the Closing Date), and Purchaser shall
promptly pay any such refund, and the interest actually received thereon, to
Seller upon receipt thereof by Purchaser. Any and all other refunds of Taxes
shall belong to Purchaser. Any payments made under this Section 11.5 shall be
net of any Taxes payable with respect to such refund, credit or interest thereon
(taking into account any actual reduction in Tax liability realized upon the
payment pursuant to this Section 11.5).
11.6 Preparation and Filing of Documents. Seller, the Company, its
Subsidiaries and Purchaser hereby agree to cooperate in the preparation and
filing of all necessary documents (including, but not limited to, all Tax
Returns) with respect to all such amounts in a timely manner.
11.7 Termination of Tax Sharing Agreements. All agreements providing
for the allocation or sharing of Taxes to which the Company and any Subsidiary
is a party shall terminate as to the Company and each Subsidiary on the Closing
Date and following the Closing Date, neither the Company nor any Subsidiary
shall have any liability to make payments to WPS or any member of the
consolidated group that includes the Company or any Subsidiary with respect to
such agreements for any Tax period. It being specifically understood by the
parties hereto that neither the Company nor any Subsidiary shall have any
liability to make payments to WPS, Seller or any member of the affiliated group
of which WPS is the common parent corporation under any such agreement resulting
from the Section 338(h)(10) Election.
11.8 Tax Indemnification.
(a) Without regard to the limitation on indemnification by WPS and
Seller set forth in Section 10.2(b) hereof, WPS and Seller jointly and severally
shall indemnify and hold harmless the Purchaser Indemnified Parties from and
against any and all Losses resulting from, arising out of, based on or relating
to:
58
64
(i) any Taxes of the Company and its Subsidiaries with
respect to any taxable period ending on or before the Closing Date, including
any Taxes imposed on the Company and its Subsidiaries pursuant to Treasury
Regulation Section 1.1502-6 (or any comparable provision under state, local or
foreign law or regulation) and including any liability due with respect to the
Section 338(h)(10) Election;
(ii) any Taxes allocated to Seller in accordance with the
provisions of Section 11.2(c) hereof; and
(iii) a breach of a representation contained in Section
4.10 hereof.
(b) Purchaser shall indemnify and hold harmless the Seller Indemnified
Parties from and against any and all Losses resulting from, arising out of,
based on or relating to:
(i) any Taxes of the Company and its Subsidiaries for any
taxable period beginning on or after the Closing Date; and
(ii) any Taxes allocated to Purchaser in accordance with
the provisions of Section 11.2(c) hereof.
(c) Any claim for indemnity under this Section 11.8 may be made at any
time prior to sixty (60) days following the expiration of the applicable Tax
statute of limitations with respect to the relevant taxable period (as it may be
extended through agreement with the Internal Revenue Service or otherwise,
provided any such extension has been consented to by WPS, which consent shall
not be unreasonably withheld), and shall be subject to the provisions set forth
in Sections 10.5 and 10.6 hereof.
ARTICLE XII
MISCELLANEOUS
12.1 Certain Definitions; Rules of Construction.
(a) Certain Definitions.
"Adjustment Amount" has the meaning set forth in Section 2.3(a) hereof.
59
65
"Adjustment Certificate" has the meaning set forth in Section 2.3(a)
hereof.
"Affected Property" has the meaning set forth in Section 4.17 hereof.
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended from time to time, or any successor
statute.
"Agreement" means this Stock Purchase Agreement, as amended from time
to time.
"Business" has the meaning set forth in the recitals hereof.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks located in New York, New York are required to be closed.
"Claim Notice" has the meaning set forth in Section 11.4 hereof.
"Closing" has the meaning set forth in Section 8.1 hereof.
"Closing Date" has the meaning set forth in Section 8.1 hereof.
"Closing Date Pension Statement" has the meaning set forth in Section
2.4(a) hereof.
"Closing Date Statement of Working Capital" has the meaning set forth
in Section 2.3(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.
"Company" has the meaning set forth in the preamble hereof.
"Company Disclosure Schedule" means the Disclosure Schedule delivered
by Seller to Purchaser on the date hereof.
"Company Documents" has the meaning set forth in Section 4.2 hereof.
60
66
"Company Employee Arrangements" has the meaning set forth in Section
4.13(a) hereof.
"Company Employee Benefit Plans" has the meaning set forth in Section
4.13(a) hereof. In addition, the Company Pension Plans, as defined in Exhibit B,
shall be included in the term "Company Employee Benefit Plan" for purposes of
subsections (d), (e), (f), (g), (i), (k), (l), (m) and (n) of Section 4.13
hereof.
"Company Financial Statements" has the meaning set forth in Section
4.7(b) hereof.
"Company Interim Financial Statements" has the meaning set forth in
Section 4.7(c) hereof.
"Company Property" has the meaning set forth in Section 4.18(a) hereof.
"Company's Representatives" has the meaning set forth in Section 6.1(b)
hereof.
"Confidentiality Agreement" has the meaning set forth in Section 6.1(e)
hereof.
"Consents" has the meaning set forth in Section 4.6(a) hereof.
"Contracts" has the meaning set forth in Section 4.12(a) hereof.
"Cotton Inventory Amount" has the meaning set forth in Section 2.5
hereof.
"December 31, 1996 Balance Sheet" has the meaning set forth in Section
4.7(d) hereof.
"Environmental Claim" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any way to
any Environmental Law, to any Environmental Permit, or to the release of or
exposure to any Hazardous Materials (for purposes of (i) and (ii) below,
"Claims"), including without limitation (i) any and all Claims by governmental
or regulatory authorities for investigation, oversight, enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to
61
67
any applicable Environmental Law; and (ii) any and all Claims by any third party
seeking damages, response costs, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" means any and all applicable federal, state or
local statute, rule, regulation, ordinance, code, or rule of common law now in
effect, and any applicable judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment
binding on the Company, relating to the environment, including without
limitation the federal Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"); the Toxic Substances
Control Act, as amended, 15 U.S.C. Sections 2601, et seq.; the Clean Air Act, as
amended, 42 U.S.C. Sections 7401, et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Sections 1251, et seq.; the Federal Insecticide,
Fungicide, and Rodenticide Act, as amended, 7 U.S.C. Sections 136, et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801, et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections
6901, et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections 300(f) et seq.;
and any similar state or local law.
"Environmental Permit" means any and all permits, approvals,
registrations, and/or licenses required by any Environmental Law.
"Equipment Sublease" has the meaning set forth in Section 8.4 hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor statute.
"Estimated Purchase Price" has the meaning set forth in Section 2.2
hereof.
"Excluded Assets" has the meaning set forth in Section 6.10 hereof.
"Final Arbiter" has the meaning set forth in Section 2.3(e) hereof.
62
68
"Financing Agreements" has the meaning set forth in Section 6.16
hereof.
"Financing Commitments" has the meaning set forth in Section 5.5
hereof.
"Fiscal Quarter" means each fiscal quarter of the Company ending March
31, June 30 and September 30.
"Fiscal Year" means each fiscal year of the Company ending December 31.
"Fixed Assets" means all of the furnishings, fixtures, furniture,
vehicles, tools, machinery and equipment used in the Business as presently
conducted.
"GAAP" means generally accepted accounting principles.
"Governmental Body" means any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court
(public or private).
"Hazardous Materials" means those materials listed in Section 101(14)
of CERCLA, as defined herein under Environmental Laws, and any other substance,
material or waste defined as toxic or hazardous under, or otherwise regulated
under, any Environmental Law, including, but not limited to (i) any petroleum,
petroleum hydrocarbons, petroleum by-products, waste oil, used oil (any
constituent thereof to the extent regulated under any Environmental Law),
flammable, explosive or radioactive materials, friable asbestos products, urea
formaldehyde foam insulation, polychlorinated biphenyls, and radon gas; and (ii)
any other chemical, material or substance, exposure to which is prohibited,
limited or regulated pursuant to an Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Information" has the meaning set forth in Section 6.1(b) hereof.
63
69
"Indemnified Party" has the meaning set forth in Section 10.4(a)
hereof.
"Indemnifying Party" has the meaning set forth in Section 10.4(a)
hereof.
"Intellectual Property Assets" has the meaning set forth in Section
4.11 hereof.
"Inventory" shall mean all raw materials, work-in-process and finished
goods owned by the Company and its Subsidiaries, whether located at the Plants
or otherwise, but shall not include goods held under ▇▇▇▇ and hold arrangements.
"Investment Company" has the meaning set forth in Section 5.7 hereof.
"June 30 Company Interim Financial Statements" has the meaning set
forth in Section 6.14 hereof.
"Knowledge of Seller, the Company, WPS and Purchaser," or, insofar as
it refers to Seller, the Company, WPS or Purchaser, "Knowledge", means only
matters as to which any officer of Seller (in the case of Seller), the Company
or any of its Subsidiaries (in the case of the Company), WPS (in the case of
WPS) or Purchaser (in the case of Purchaser) has actual knowledge, and shall not
include matters which are not actually known but should have been known by any
such officer. As used in this definition, "officer" shall, with respect to
Section 4.17 hereof, include ▇▇▇ ▇▇▇▇▇▇▇.
"Law" means any material federal, state or local statute, code,
ordinance, rule or regulation or any Order of any Governmental Body.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits or proceedings (public or private).
"Lien" means any lien, encumbrance, mortgage, deed of trust, security
interest, easement, transfer restriction, option, pledge or other restriction or
third-party right.
"Losses" has the meaning set forth in Section 10.2(a) hereof.
64
70
"Material Adverse Effect" or "Material Adverse Change" means any
material adverse change in, or effect on, the Business, results of operations or
financial condition of the Company and its Subsidiaries taken as a whole,
excluding any such change or effect relating to the Excluded Assets.
"New York Sublease" has the meaning set forth in Section 8.4 hereof.
"Notice Period" has the meaning set forth in Section 10.4 hereof.
"Order" means any material order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award by a Governmental Body of competent
jurisdiction.
"Outside Date" has the meaning set forth in Section 9.1(b) hereof.
"Owned Property" and "Owned Properties" have the meanings set forth in
Section 4.18(a) hereof.
"PBGC" has the meaning set forth in Section 4.13(j) hereof.
"Pension Adjustment" has the meaning set forth in Section 2.4(b)
hereof.
"Pension Adjustment Certificate" has the meaning set forth in Section
2.4(b) hereof.
"Pension Arbiter" has the meaning set forth in Section 2.4(e) hereof.
"Permits" means all licenses, franchises, permits and governmental
authorizations necessary to conduct the Business as presently conducted.
"Permitted Encumbrances" means (i) Liens existing as of the date of
this Agreement on any assets or properties of the Company and/or any Subsidiary
relating to any indebtedness of the Company and/or any Subsidiary; (ii) all
defects, exceptions, restrictions, easements, rights of way and encumbrances
disclosed in policies of title insurance that have been made available to
Purchaser; (iii) statutory liens for current taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of
65
71
which is being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (iv) mechanics', carriers',
workers', repairers' and similar Liens arising or incurred in the ordinary
course of business that are not material; (v) zoning, entitlement and other land
use and environmental regulations by Governmental Bodies disclosed to Purchaser;
(vi) Liens created in connection with leasing machinery and equipment to WPS as
referred to in Section 4.6(a) of the Company Disclosure Schedule and subleased
by Purchaser in accordance with the Equipment Sublease; and (vii) such other
imperfections in title, charges, easements, restrictions and encumbrances that
do not materially interfere with the use of such property.
"Permitted Transactions" has the meaning set forth in Section 6.10
hereof.
"Person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Plants" means the manufacturing, warehouse, service and office
facilities of the Company and its Subsidiaries at which the Business is
conducted, all of which are listed in Exhibit C hereto.
"Pre-Closing Date Pension Statement" has the meaning set forth in
Section 2.4(a) hereof.
"Pre-Closing Date Statement of Working Capital" has the meaning set
forth in Section 4.7(d) hereof.
"Purchase Price" has the meaning set forth in Section 2.1 hereof.
"Purchaser" has the meaning set forth in the preamble hereof.
"Purchaser's Advisor" has the meaning set forth in Section 5.8 hereof.
"Purchaser's Representatives" has the meaning set forth in Section
6.1(b) hereof.
66
72
"Purchaser Disclosure Schedule" means the Disclosure Schedule delivered
by Purchaser to Seller on the date hereof.
"Purchaser Documents" has the meaning set forth in Section 5.2 hereof.
"Purchaser Indemnified Parties" has the meaning set forth in Section
10.2(a) hereof.
"Qualified Plan" has the meaning set forth in Section 4.13(g) hereof.
"Real Property Lease" has the meaning set forth in Section 4.18(a)
hereof.
"Required Consents" has the meaning set forth in Section 6.3 hereof.
"Second Supplemental Closing" has the meaning set forth in Section
2.4(c) hereof.
"Section 338(h)(10) Election" has the meaning set forth in Section
11.1(a) hereof.
"Securities Act" has the meaning set forth in Section 5.6(a) hereof.
"Seller" has the meaning set forth in the preamble hereof.
"Seller Indemnified Parties" has the meaning set forth in Section
10.3(a) hereof.
"Seller's Advisors" has the meaning set forth in Section 4.20 hereof.
"Seller's Auditors" has the meaning set forth in Section 2.3(a) hereof.
"Shares" has the meaning set forth in the recitals hereof.
"Significant Adverse Consequence" has the meaning set forth in Section
4.17 hereof.
67
73
"Subsidiary" means any Person of which a majority of the outstanding
voting securities are owned directly or indirectly by the Company.
"Supplemental Closing" has the meaning set forth in Section 2.3(c)
hereof.
"Tax" or "Taxes" means all taxes, charges, fees, levies, imposts,
duties and other assessments, including, without limitation, any income,
alternative minimum or add-on tax, estimated, gross income, gross receipts,
sales, use, transfer, gains, capital, paid-up capital, profits, withholding,
payroll, employment, excise, recording, real property, personal property,
custom, duty or other tax, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest, penalties or additions to
tax, and any interest or penalties imposed with respect to the filing,
obligation to file or failure to file any Tax Return.
"Tax Returns" means all reports and returns required to be filed with
respect to Taxes.
"Transferred Employees" has the meaning set forth in Section 4.13(a).
"Treasury Regulations" means the U.S. Treasury Regulations promulgated
under the Code from time to time, or any successor rules and regulations.
"WPS" has the meaning set forth in the preamble hereof.
"WPS Financial Statements" has the meaning set forth in Section 4.7(a)
hereof.
(b) Rules of Construction.
(i) Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
(ii) Whenever there appears in this Agreement an adjective
or series of adjectives (e.g., the word "material") which precedes a noun that
is followed by one or more other nouns that are joined in a series by the
conjunction "and," "or" or "and/or," such adjective or series of adjectives
shall be deemed to apply to each noun
68
74
in such series of nouns. As used in the Agreement, unless the context otherwise
requires, the word "or" is not exclusive and shall mean "and/or."
(iii) The words "hereof," "herein" and "hereunder" and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and to any particular provision of this Agreement.
(iv) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
12.2 Expenses. Except as otherwise expressly provided in this Agreement
and regardless of whether the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses. Seller shall be responsible for all costs and expenses incurred
by the Company in connection with this Agreement.
12.3 Specific Performance. Each of Purchaser and Seller acknowledges
and agrees that the breach of this Agreement by the other (or, in Purchaser's
case, by WPS or the Company as well) would cause irreparable damage to such
party and that such party would not have an adequate remedy at law for such
damage. Therefore, the obligations of each party under this Agreement shall be
enforceable by a decree of specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies that any party may have
under this Agreement or otherwise.
12.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
PRINCIPLES AND POLICIES OF CONFLICTS OF LAW OF SUCH STATE.
12.5 Entire Agreement; Amendments and Waivers. This Agreement
(including the Disclosure Schedules) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties; provided
that, except as other-
69
75
wise modified hereby, the Confidentiality Agreement shall remain in full force
and effect. Except as otherwise provided herein, this Agreement may be amended,
supplemented or changed, and any provision hereof may be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. Except as otherwise provided herein, no action (other than a
waiver or consent) taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver of compliance by the party taking such action with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. Except as otherwise expressly provided
herein, no failure on the part of any party hereto to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy.
12.6 Table of Contents and Headings. The table of contents and article
and section headings of this Agreement are for reference purposes only and are
to be given no effect in the construction or interpretation of this Agreement.
12.7 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, on the
fifth Business Day after being mailed by certified mail, return receipt
requested, the next Business Day after delivery to a recognized overnight
courier or when sent by facsimile to the parties at the following addresses (or
to such other address as a party may have specified by notice given to the other
party pursuant to this Section 12.7):
If to WPS, Seller or the Company, to:
WestPoint ▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
70
76
If to Purchaser, to:
Dyersburg Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12.8 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in full force and
effect and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
12.9 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as otherwise provided herein, nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any person or entity not a party to this Agreement. No assignment of this
Agreement or of any rights or obligations hereunder may be made by WPS, Seller
or Purchaser (by operation of Law or otherwise) without the prior written
consent of the other parties hereto and any attempted assignment without the
required consents shall be void; except that before or after the Closing the
Purchaser shall have the right, without such consent, to assign to a direct or
indirect wholly-owned subsidiary of Purchaser its rights and obligations
hereunder, provided that no such assignment shall relieve Purchaser of its
obligations hereunder if such assignee does not perform such obligations. Upon
any such permitted assignment, the references in this Agreement to Purchaser
shall also apply to any such assignee unless the context otherwise requires.
12.10 Disclosure Schedules. The Disclosure Schedules, dated the date
hereof, delivered by Seller and the Company to Purchaser, and by Purchaser to
Seller, are incorporated into this Agreement by reference and made a part
hereof. Disclosure of information in any section of any Disclosure Schedule (or
pursuant to any document delivered with respect thereto) or the schedules and
exhibits hereto (or pursuant to any document delivered with respect thereto)
shall be deemed to be disclosure in each section of such Disclosure Schedule.
71
77
12.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same Agreement.
72
78
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
DYERSBURG CORPORATION
By: /s/ T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Pres/CEO
ALAMAC SUB HOLDINGS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
AIH INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
WESTPOINT ▇▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Exec. V.P. - Finance
& CFO
73
79
EXHIBIT A-1
Pre-Closing Date Statement of Working Capital (1)
(000 omitted)
Inventories $ 32,935
Other Current Assets 1,500
---------
Total Current Assets 34,435
Accounts Payable 5,673
Accrued Employee and Other Liabilities(2) 5,016
---------
Total Current Liabilities 10,689
---------
Net Working Capital $ 23,746
=========
NOTE 1: This Pre-Closing date Statement of Working Capital was prepared
from the audited balance sheet of AIH Inc. and incorporates
certain adjustments. These adjustments are illustrated in
their entirety on Exhibit A-3.
NOTE 2: Accrued Employee and Other Liabilities include the following as
of December 31, 1996:
ALAMAC KNIT FABRICS
BALANCE SHEET
ACCURED EMPLOYEE AND OTHER LIABILITIES
DECEMBER 31, 1996
(OOO OMITTED)
Vacation Pay $ 2,400
Salaries and Wages 982
Bonus Expense 902
Real & Personal Property 479
Unearned Arvind Fees 133
Other 120
---------
Total Accrued Employee and
Other Liabilities $ 5,016
=========
80
EXHIBIT A-2
Pre-Closing Date Statement of
Working Capital -- Valuation Methods
The Pre-Closing Date Statement of Working Capital shall reflect the
current assets of AIH Inc. and subsidiaries, less the Excluded Assets, and less
current liabilities. No amounts due from or payable to Seller or any
affiliated company shall be reflected in the Pre-Closing Date Statement of
Working Capital.
Inventory shall be valued at the lower of cost, determined on a
first-in, first-out basis, or market. Market value reserves shall be
determined in a manner consistent with the determination of such reserves for
purposes of the December 31, 1996 Balance Sheet.
Other current assets and liabilities shall be valued in accordance with
generally accepted accounting principles consistent with the accounting
principles applied in the preparation of the December 31, 1996 Balance Sheet.
81
EXHIBIT A-3
82
AIH Inc. Consolidated
Reconciliation of Audited to Pro Forma Balance Sheet @ 12/31/96
(000 Omitted)
------------------------------------------------------------------------------
Cash and cash equivalents:
Audited Balance Sheet 9,554
Adjustment for dividend of all cash (9,554)
---------
00
Inventories:
Audited Balance Sheet $ 30,123
Adjustment to eliminate LIFO reserve 2,277
Adjustment to eliminate Corporate reserves
on AIH's books 2,000
Adjustment for ▇▇▇▇▇▇▇▇ sale (1,465)
---------
Pro Forma Balance Sheet $ 22,935
Other current assets:
Audited Balance Sheet $ 2,876
Adjustment for ▇▇▇▇▇▇▇▇ Sale
(prepaid losses) (1,376)
---------
Pro Forma Balance Sheet $ 1,500
Property, plant and equipment, net:
Audited Balance Sheet $ 104,194
Adjustment for ▇▇▇▇▇▇▇▇ Sale (18,500)
---------
Pro Forma Balance Sheet $ 85,694
Accounts payable:
Audited Balance Sheet $ 5,673
No adjustments (0)
---------
Pro Forma Balance Sheet $ 5,673
Accured employee and other liabilities:
Audited Balance Sheet (4,362 & 3,228) $ 7,590
Adjustment to eliminate Corporate reserves
on AIH's books (2,500)
Adjustment to reflect Alamac pension
plans net liability 2,300
Adjustment to eliminate net A/R credit (74)
---------
Pro Forma Balance Sheet $ 7,316
Grand Total Net Amounts Less Liabilities:
Audited Balance Sheet $ 133,404
Net all adjustments above (26,344)
---------
Pro Forma Balance Sheet $ 107,140
83
EXHIBIT B
HUMAN RESOURCES EXHIBIT
HUMAN RESOURCES AGREEMENT (the "Agreement"), dated as of August 27,
1997, by and among ALAMAC SUB HOLDINGS, INC., a Delaware corporation (the
"Seller"), AIH Inc., a Delaware corporation and a wholly-owned subsidiary of
Seller (the "Company"), WESTPOINT ▇▇▇▇▇▇▇ INC., a Delaware corporation and the
indirect 100% stockholder of Seller ("WPS"), and DYERSBURG CORPORATION, a
Tennessee corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the parties are entering into that certain Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement"), pursuant to
which Purchaser will purchase from Seller all of the issued and outstanding
shares of common stock of the Company; and
WHEREAS, the Stock Purchase Agreement contemplates that the parties
will, in connection with the execution of the Stock Purchase Agreement, enter
into certain ancillary agreements in respect of the transaction, including this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in the Stock Purchase Agreement and herein, the parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. In this Agreement, capitalized terms have the
meanings specified in the Stock Purchase Agreement unless otherwise noted. For
purposes of this Agreement, the following terms have the meanings specified in
this Section 1.1.
"COBRA" means the continuation coverage requirements under Code Section
4980B and Part 6 of Title I of ERISA.
B-1
84
"Company Employees" has the meaning set forth in Section 2.1.
"Company Pension Plan" has the meaning set forth in Section 6.2.
"Effective Time" means 12.01 a.m. EDST on the Closing Date.
"Purchaser's Savings Plan" has the meaning set forth in Section 6.1.
"Transferred Employees" has the meaning set forth in Section 2.1.
"WARN" means the federal Worker Adjustment and Retraining Notification
Act.
"Welfare Plan" means any plan, fund or program established or
maintained for the purpose of providing for its participants or their
beneficiaries, through the purchase of insurance or otherwise, medical, surgical
or hospital care or benefits, or benefits in the event of sickness, accident,
disability, death or unemployment or vacation benefits, including any welfare
plan within the meaning of Section 3(1) of ERISA.
"WPS Pension Plans" has the meaning set forth in Section 6.2.
"WPS Savings Plan" has the meaning set forth in Section 6.1.
"WPS Separation Plan" has the meaning set forth in Section 3.1.
ARTICLE II
EMPLOYEES
Section 2.1 Transferred Employees. At the Effective Time, Purchaser (or
any of its Affiliates) shall continue the employment by the Company of each
employee employed by the Company or its Subsidiaries on the day immediately
preceding the Closing Date, including all employees actively at work and all
employees on approved leave of absence, including but not limited to family and
medical leave, vacation, sickness, short-term or long-term
B-2
85
disability leave, military leave, worker's compensation leave or "no work
available" leave (all such employees herein referred to as "Company Employees").
All such employees who continue employment with the Company or Purchaser and its
Affiliates on and after the Closing Date are hereinafter referred to as
"Transferred Employees." Schedule 2.1(a) lists each potential Transferred
Employee and said employee's current job title and rate of compensation.
Section 2.2 Status of Transferred Employees. The provisions of this
Agreement pertaining to the employment of the Transferred Employees are solely
for the benefit of the parties hereto, and no employee of the Company or other
person shall be regarded for any purpose as a third party beneficiary of this
Agreement.
Section 2.3 Additional Information. Following the Closing Date, WPS
shall supply Purchaser with copies of the employment, salary, benefits and
similar data (including tax returns and other governmental filings) reasonably
requested by Purchaser within a reasonably practicable time, but not to exceed
60 days, from the date of such request or requests with respect to any of the
Transferred Employees which Purchaser may require to properly operate and
administer any employee benefit plan or arrangement maintained by Purchaser or
to comply with the provisions of this Agreement; such additional information
including, but not limited to, any information necessary or helpful in
determining a Transferred Employee's accrued benefit, benefit service or vesting
service under the Transferred Employees' Pension Plan and the WPS Pension Plans
as of the Closing Date and as of the dates that lump sum distributions were
eliminated on a prospective basis.
ARTICLE III
COMPENSATION
Section 3.1 Separation Plan. With respect to any non-hourly-paid
Company Employee who is a participant in WPS's Employee Separation Plan (the
"WPS Separation Plan") as of the Closing Date, Purchaser shall offer and provide
for a level of compensation (within the meaning of the WPS Separation Plan)
equal to or in excess of that received by the individual as a Company employee
immediately before the Closing Date. If Purchaser fails to offer or provide such
level of compensation to any such individual, Purchaser
B-3
86
shall provide to such individual, to the extent required under and subject to
the terms and conditions of the WPS Separation Plan, the separation benefits
payable under the WPS Separation Plan, such terms and conditions including
applicable offset and release provisions. If any Transferred Employees terminate
employment with the Company or Purchaser and its Affiliates within 12 months
after the Closing Date under circumstances that would have entitled such
individuals to separation benefits under the WPS Separation Plan had such
individuals been employed at such time by WPS or its Affiliates, then Purchaser
shall provide to the terminated individuals the separation benefits that would
have been provided under the WPS Separation Plan had such plan covered such
individuals at the time of termination of employment, subject to the terms and
conditions of the WPS Separation Plan, including applicable offset and release
provisions. Purchaser shall indemnify and hold harmless WPS and Seller for any
and all liabilities and expenses under the WPS Separation Plan in connection
with the Company or Purchaser's employment of, or failure to employ, any Company
Employees on or after the Closing Date.
ARTICLE IV
WELFARE BENEFITS
Section 4.1 WPS Plans. The participation by Company Employees in
Welfare Plans maintained by WPS and its Affiliates shall cease at the Effective
Time. WPS shall be solely responsible for all liabilities arising under the
Welfare Plan in respect of any Company Employee (and his or her dependents and
beneficiaries) for claims incurred before the Closing Date. Purchaser shall be
solely responsible for all liabilities arising under any Welfare Plan in respect
of any Company Employee (and his or her dependent) for claims incurred on or
after the Closing Date.
Section 4.2 Post-Closing Benefits. Effective as of the Effective Time,
Purchaser or its Affiliates shall provide Transferred Employees with Welfare
Plan benefits (including but not limited to group medical and dental benefits,
long-term disability benefits for salaried employees and group life insurance)
that are comparable to the Welfare Plan benefits provided by WPS immediately
before the Closing Date. With respect to coverage of the Transferred Employees
under Purchaser's Welfare Plans, (i) each Transferred Employee's credited
service with Seller shall be credited against any waiting period applicable to
B-4
87
eligibility for enrollment of new employees under Purchaser's group medical
plans; (ii) limitations on benefits due to pre-existing conditions shall be
waived for any Transferred Employee enrolled in any WPS group health plan as of
the Closing Date if, as of the Closing Date, such Transferred Employee is not
subject to any such limitation on benefits under the relevant WPS plan; and
(iii) any out-of-pocket annual maximums and deductibles paid by any Transferred
Employee in calendar year 1997 under WPS's group health plans shall be credited
under Purchaser's health plans for 1997, provided such information is provided
in writing to Purchaser by WPS. In the case of any Transferred Employee who
remains subject to any pre-existing condition limitation under WPS's group
health plans as of the day before the Closing Date, benefits under Purchaser's
group health plan shall be reduced or limited to the same extent that any such
reduction or limitation would have occurred under WPS's group health plans if
such Transferred Employee had continued coverage under WPS's health plan. With
respect to aggregate lifetime maximum benefits available under Purchaser's
Welfare Plans, a Transferred Employee's prior claim experience under any WPS
plans will be taken into account. Transferred Employees will be provided with
long-term disability and life insurance coverage in accordance with the policy
terms of Purchaser's plans.
Section 4.3 COBRA. WPS shall be solely responsible for the provision of
any coverage required under COBRA for any qualifying event occurring before the
Closing Date in respect of any employee or former employee of the Company (or
any qualified beneficiary of such person). Purchaser shall be solely responsible
for the provision of any coverage required under COBRA for any qualifying event
occurring on or after the Closing Date in respect of any Company Employee (or
any qualified beneficiary of such person).
ARTICLE V
VACATION
Purchaser shall provide hourly paid Transferred Employees with vacation
pay benefits in 1998 having an aggregate value equal to or greater than the
amounts on the Closing Date Balance Sheet representing acquired liabilities in
respect of WPS's policy of providing a lump-sum vacation payment to hourly
employees after June 30 of each year.
B-5
88
ARTICLE VI
QUALIFIED RETIREMENT PLANS
Section 6.1 Saving Plans. Effective as of the Effective Time, WPS shall
take such action as may be necessary to cause the Company to cease to be an
adopting employer of the Retirement Savings Value Plan for the Employees of
WestPoint ▇▇▇▇▇▇▇ Inc. (the "WPS Savings Plan") and to cause Company Employees
to cease to participate in the WPS Savings Plan. As soon as practicable
following the Closing Date, WPS shall take such actions as may be necessary to
cause the account balances of all Company Employees in the WPS Savings Plan to
be distributed pursuant to Section 401(k)(10) of the Code.
Section 6.2 Pension Plans.
(a) Prior to or as of the Closing Date, WPS shall establish a defined
benefit plan or plans and related funding media qualified under Sections 401(a)
and 501(a) of the Code, respectively (the "Company Pension Plan"). The Company
Pension Plan shall provide substantially identical benefits as the WestPoint
▇▇▇▇▇▇▇ Inc. Retirement Plan and the WestPoint ▇▇▇▇▇▇▇ Inc. Hourly Retirement
Plan (collectively, the "WPS Pension Plans") with respect to the respective
classes of employees covered under such plans. Prior to the effective date of
the Company Pension Plan, WPS shall provide Purchaser with a copy of the Company
Pension Plan so that Purchaser may confirm that the Company Pension Plan
provides substantially identical benefits as the WPS Pension Plans.
(b) As of a date determined by WPS, which date may be the Closing Date
or a date prior thereto (the "Spinoff Date"), (i) WPS shall take such action as
may be necessary to cause the Company to cease to be an adopting employer and to
cause all active employees of the Company to cease to participate in the WPS
Pension Plans, and (ii) all of the assets and liabilities under the WPS Pension
Plans in respect of all employees of the Company who are active participants in
the WPS Pension Plans immediately prior to the Spinoff Date ("Company
Participants") shall be transferred to the Company Pension Plan in the manner
provided below.
(c) If the Spinoff Date is prior to the Closing Date, Company
Participants shall continue to accrue benefits under the Company Pension Plan,
on the same basis as if they
B-6
89
had remained participants in the WPS Pension Plans, through the day immediately
preceding the Closing Date.
(d) The amount of assets and liabilities to be transferred from the WPS
Pension Plans to the Company Pension Plan shall be determined by the actuary for
the WPS Pension Plans (the "Actuary") in accordance with Section 414(l) of the
Code and the regulations thereunder using actuarial assumptions specified for
the "Section 414(l) safe harbor" in PBGC Regulation Section 4043.32 (c)(3). The
resulting calculated assets and liabilities, along with supporting information
used in such determination, shall be furnished to Purchaser as soon as it is
available. Such assets, consisting of cash or readily marketable securities,
shall be transferred to the Company Pension Plan in one or more payments as soon
as practicable after the Actuary has determined the amount of assets and
liabilities to be transferred, or, at the option of WPS, on an estimated basis
prior to the final determination. The assets of the Company Pension Plan shall
remain invested in readily marketable securities at the Closing Date.
(e) To the extent permitted under Section 414(l) of the Code as
determined by the Actuary, any assets transferred from the WPS Pension Plans to
the Company Pension Plan after the Spinoff Date shall be increased by interest
at a rate of 8.5 percent during the period between the Spinoff Date and the date
of transfer.
(f) As of the Closing Date, Purchaser shall assume and adopt the
Company Pension Plan, and neither WPS, Seller nor any of its Affiliates shall
have any further liability in respect of benefits payable to participants and
their beneficiaries under the Company Pension Plan, other than any assets
remaining to be transferred in respect of the spinoff described in Section
6.2(d) hereof and any required contributions under Section 412 of the Code in
respect of the period ending on the Closing Date.
ARTICLE VII
OTHER MATTERS
Section 7.1 Workers' Compensation. WPS shall be and remain responsible
and liable for, and shall pay if and when due before or after the Closing, the
expense for all workers' compensation benefits (including weekly benefits,
medical and rehabilitation expenses, and any other expenses
B-7
90
or obligations) payable on account of any injuries, illnesses or other
conditions of a Company Employee that were incurred before the Closing Date and
reported to any administrative, supervisory or medical personnel of WPS or the
Company prior to the expiration of the thirty (30) day period immediately
following the Closing Date. Purchaser shall be responsible and liable for, and
shall pay, the expense for all workers' compensation benefits (including weekly
benefits, medical and rehabilitation expenses, and any other expenses or
obligations) payable on account of any injuries, illnesses or other conditions
of a Company Employee that were incurred on or after the Closing Date or that
were incurred before the Closing Date but were not reported to any
administrative, supervisory or medical personnel of WPS or the Company until
after the end of the thirty (30) day period immediately following the Closing
Date.
Section 7.2 Credit Union Loans. Purchaser shall institute and
administer payroll deductions for purposes of repaying any loans made by the
WestPoint ▇▇▇▇▇▇▇ Inc. Employees' Credit Association Federal Credit Union to
Transferred Employees and outstanding as of the Closing Date.
Section 7.3 WARN. With respect to any Company Employee who is
terminated by the Company or Purchaser on or after the Closing Date, Purchaser
shall indemnify and hold harmless WPS and Seller for any losses and expenses
arising from Purchaser's failure to comply fully with the requirements of WARN
and the regulations thereunder and any similar applicable state or local plant
closing laws.
ARTICLE VIII
INDEMNIFICATION
This Agreement shall be subject to the indemnification provisions
contained in Article X of the Stock Purchase Agreement.
B-8
91
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
"Seller"
ALAMAC SUB HOLDINGS, INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
"Company"
AIH INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
"WPS"
WESTPOINT ▇▇▇▇▇▇▇ INC.
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President & Assistant
Secretary
"Purchaser"
DYERSBURG CORPORATION
By: /s/ T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
B-9
92
EXHIBIT C
Plants
1. Clinton Plant located in Clinton, North Carolina.
2. Elizabethtown Plant located in Elizabethtown, North Carolina.
3. ▇▇▇▇▇▇▇▇ Plant located in ▇▇▇▇▇▇▇▇, North Carolina.
4. Lumberton Complex located in Lumberton, North Carolina.
C-1
93
EXHIBIT D
94
INTERIM SERVICES AGREEMENT
THIS INTERIM SERVICES AGREEMENT (this "Agreement") is made and entered
into as of this 27th day of August 1997 by and between WESTPOINT ▇▇▇▇▇▇▇
INC., a Delaware corporation ("WPS") and Dyersburg Corporation, a Tennessee
corporation ("Purchaser");
W I T N E S S E T H:
WHEREAS, pursuant to the terms of and in order to induce WPS to enter
into a certain agreement of even date herewith, among WPS, Alamac Sub Holdings
Inc. ("ASH"), a Delaware corporation and a wholly owned subsidiary of WPS, AIH
Inc., a Delaware corporation and a wholly owned subsidiary of ASH (the
"Agreement"), WPS and Purchaser have agreed to enter into this Agreement by
which WPS shall provide certain transitional administrative and general services
to Purchaser;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Services. During the Term (as defined in Section 9 hereof) and upon
the terms and conditions described herein, WPS shall provide to Purchaser the
interim administrative and general services described on Schedule 1 attached
hereto (the "Services"; it being acknowledged and agreed that for purposes of
this Agreement, such Services include the sale of certain goods as described on
Schedule 1 attached hereto). WPS agrees to provide the Services required
hereunder with substantially the same degree of care and diligence, and using
substantially the same procedures and policies it uses in providing such
services for its own operations. Notwithstanding anything in this Agreement to
the contrary, WPS shall only be obligated to provide each Service listed on
95
Schedule 1 attached hereto to the extent that it continues to provide such
Service for its own operations, and, in addition, Purchaser shall only be
obligated to accept each such Service until such time as Purchaser, in its sole
discretion, deems such Service to be unnecessary to, or undesirable for, its
operations. In the event WPS elects to discontinue providing any Service listed
on Schedule 1 attached hereto for its own operations, WPS shall give Purchaser
at least thirty (30) days' prior written notice of such discontinuation of
Service, unless WPS is unable to provide such Service due to circumstances
beyond its control, in which case WPS will provide such prior written or other
notice as reasonably practicable. In the event Purchaser determines that any
such Service is no longer necessary to or desirable for its operations,
Purchaser shall be entitled to cause WPS to discontinue such Service to
Purchaser upon at least thirty (30) days' prior written notice thereof to WPS.
2. Fees; Invoices and Payment Terms.
(a) Purchaser shall pay to WPS the fees set forth on Schedule
1 attached hereto for each of the Services.
(b) Unless otherwise provided in Schedule 1 attached hereto,
fees hereunder shall be billed on a monthly basis. With respect to the Services
for which a fixed monthly fee is payable by Purchaser (as specified on Schedule
1 attached hereto), Purchaser shall pay for each such Service by the tenth day
of the month for which the Service is to be provided. In connection therewith,
WPS shall render to Purchaser on or before the tenth day of the month preceding
the month in which such Service is to be provided an invoice for each fixed
monthly fee for such Service using the schedule of fees specified therefor on
Schedule 1 attached hereto. Each such invoice shall refer to Schedule 1 attached
hereto and shall generally describe the Services to be rendered in that month.
In addition, WPS shall render to Purchaser periodic itemized invoices for the
Services provided which are not covered in the fixed monthly fees. Each such
invoice
96
shall refer to this Agreement, shall generally describe the Services or tasks
covered thereby, and shall be due and payable within ten (10) days after the
date thereof. Any portion of the amount due on any invoice which is not timely
paid shall bear interest at the rate of fifteen percent (15%) per annum from the
date due until paid in full, which interest shall be paid forthwith by
Purchaser. All amounts herein provided to be paid by Purchaser to WPS shall be
paid at P. ▇. ▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or at such
other place as WPS may from time to time designate in a notice given to
Purchaser.
3. Records. WPS shall keep accurate books and records, consistent with
its customary accounting and business practices, which relate directly to the
performance of the Services hereunder. As part of its performance of the
Services, WPS shall periodically provide to Purchaser the books and records
created and maintained by WPS which relate to WPS's performance of Services
completed through such time. After delivery of such books and records to
Purchaser, WPS shall have no further responsibility with respect thereto.
4. Taxes. In addition to the fees and other amounts payable by
Purchaser to WPS under this Agreement, Purchaser shall pay any applicable taxes
or assessments, however designated, which may be levied or assessed by any
government or other taxing authority in connection with this Agreement, the
Services or any other goods or services, or any receipts therefor, under this
Agreement, other than federal, state or local income taxes (including both
regular and alternative minimum taxes) or other federal, state or local taxes
based upon WPS's taxable income, alternative minimum taxable income or net
income. The purpose of this Section 4 is to confirm that Purchaser shall be
responsible for the payment of any sales or use taxes, any excise taxes or any
similar taxes or assessments payable with respect to this Agreement, the
Services or any other goods or services, or any receipts therefor, under this
Agreement.
3
97
5. Defaults. A party shall be deemed to be in default ("Default")
hereunder upon the occurrence of any one or more of the following events with
respect to it:
(a) Failure by Purchaser to make any payment when due
hereunder if such failure continues for ten (10) business days after written
notice thereof from WPS is given to Purchaser;
(b) Failure to perform or observe any obligation or condition
of this Agreement to be performed or observed by such party (other than as
described in Section 5(a) hereof) if such failure continues for thirty (30) days
(or such longer period of time as is reasonably necessary to allow such party to
so perform or observe such obligation) after written notice thereof is given by
the other party; or
(c) The making of any general assignment or arrangement for
the benefit of creditors, the filing of a voluntary or involuntary petition in
bankruptcy by or against such party under any bankruptcy or insolvency law or
similar proceeding (unless, in the case of an involuntary filing against such
party, the petition is dismissed within sixty (60) days), the appointment of a
trustee or receiver or the commencement of a similar proceeding to take
possession of or the attachment or other judicial seizure of substantially all
of such party's assets, or the taking by such party of any action in furtherance
of the foregoing.
6. Remedies. Following the occurrence of a Default by one party, the
other party may terminate, or, at its option suspend (provided that Purchaser
shall be required to make payment to WPS for all Services duly rendered prior
thereto before Purchaser may exercise any such right of termination or
suspension), its obligations under this Agreement and/or may pursue any other
remedy available to it under the laws of the State of Georgia, including
specific performance.
4
98
7. Limitation of Liability. Purchaser ACKNOWLEDGES THAT WPS IS NOT IN
THE BUSINESS OF PROVIDING THE SERVICES AND THAT WPS IS PROVIDING THE SERVICES
SOLELY AS AN ACCOMMODATION TO Purchaser. Purchaser AGREES THAT WPS HAS MADE, AND
MAKES, NO REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE, DIRECTLY OR
INDIRECTLY, EXPRESS OR IMPLIED, REGARDING THE SERVICES. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THERE ARE NO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, EXPRESS OR IMPLIED, GIVEN BY WPS. Purchaser
SPECIFICALLY WAIVES ALL RIGHTS TO MAKE ANY CLAIM AGAINST WPS FOR BREACH OF ANY
WARRANTY OF ANY KIND WHATSOEVER IN CONNECTION WITH THE SERVICES.
REGARDLESS OF THE NATURE OF ANY CLAIM OR THE FORM OF ANY ACTION WHICH
MAY BE BROUGHT AGAINST WPS AS A RESULT OF OR ARISING OUT OF ERRORS OR OMISSIONS
WHICH WPS MAY MAKE IN PERFORMING THE SERVICES FOR Purchaser, WPS'S SOLE
LIABILITY AND OBLIGATION TO Purchaser OR TO ANY OTHER PARTY, EXCEPT IN THE CASE
OF CLAIMS ARISING OUT OF INTENTIONAL WRONGFUL ACTS OF WPS, SHALL BE LIMITED TO
CORRECTION OF SUCH ERRORS. IN NO EVENT SHALL WPS'S LIABILITY HEREUNDER BE
GREATER THAN THE AMOUNT OF FEES PAID BY Purchaser HEREUNDER FOR THE SERVICES
WITH RESPECT TO WHICH THE ERROR OR OMISSION OCCURRED.
WPS SHALL NOT BE LIABLE TO Purchaser FOR INDIRECT, CONSEQUENTIAL OR
INCIDENTAL DAMAGES OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, LOSS OF
PROFITS OR DAMAGE TO OR LOSS OF USE OF ANY PROPERTY, ANY INTERRUPTION OR LOSS OF
SERVICE, OR ANY LOSS OF BUSINESS, HOWSOEVER CAUSED.
5
99
8. Indemnification. This Agreement is for the sole and exclusive
benefit of the parties, and it shall not be deemed to be for the direct or
indirect benefit of either party's customers or any other persons. Purchaser
shall indemnify and hold harmless WPS, and its officer, directors, employees and
agents, against and from any liability, loss, damage, cost and expense
(including attorneys' fees and costs of litigation) arising out of or in
connection with any claim or action which any person or entity (other than
Purchaser or any affiliate of Purchaser) may make or file against WPS or its
officers, directors, employees or agents in connection with this Agreement or
the Services. The indemnification provided for herein shall survive the
termination of this Agreement and the termination of any Service provided
pursuant to this Agreement. Notwithstanding any other provisions of this
Agreement, the employees, officers and directors of, and the consultants
retained by, WPS shall not have any liability to Purchaser, or to any affiliate
of Purchaser, under this Agreement or in connection with the Services to be
provided hereunder.
9. Term. Subject to the provision for early termination as to specific
Services provided in Section 1 hereof, and except that the Payroll Services
described on Schedule 1 attached hereto shall only be provided through
December 31, 1997, this Agreement shall have a term of six (6) months
commencing on the date hereof (the "Term").
10. Notices. Any notices or other communications required or permitted
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail return receipt requested, first class postage
prepaid, or sent by overnight courier or by facsimile addressed or sent as
follows:
If to WPS:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and Secretary
WestPoint ▇▇▇▇▇▇▇, Inc.
▇.▇. ▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6
100
If to Purchaser:
Dyersburg Corporation
Attn: Executive Vice President
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
11. Amendment. This Agreement shall not be amended or modified except
by written agreement executed by each of the parties hereto.
12. Assignment. This Agreement is nonassignable.
13. Special Termination for Illegality, Etc. Notwithstanding any
provision of this Agreement to the contrary, WPS shall not be obligated to
provide any Service if to provide such Service would result in any violation of
or would otherwise be prohibited by any law, court order, regulation or other
legal restriction or requirement, or would conflict with or constitute a breach
of any agreement listed on Schedule 2 attached hereto in force as of the date
hereof.
14. Force Majeure; Priority of Service. (a) WPS shall be excused for
failure to provide any Service to the extent that such failure is directly or
indirectly caused by acts of God, national emergency, labor dispute, software,
equipment or electrical malfunction, transportation delays, telecommunication
failures, or any other event or circumstance beyond the reasonable control of
WPS, but only until the cessation of such event or circumstance. In the event
that WPS's performance hereunder is affected by such an event or circumstance,
WPS shall promptly notify Purchaser of same, giving reasonably full particulars
thereof and, insofar as known, the probable extent to which it will be unable to
perform, or will be delayed in performing, its obligations hereunder, and WPS
shall use reasonable efforts to remove such force majeure.
7
101
(b) If at any time a Service to be provided by WPS to
Purchaser cannot reasonably be provided without adversely affecting the
performance by WPS of such Service or some other service for WPS's businesses
and operations, then Purchaser acknowledges and agrees that WPS may delay
providing such Service for Purchaser until such time as it can be performed
without adversely affecting the performance by WPS of such Service or another
service for WPS's businesses and operations.
15. Miscellaneous. Any provision of this Agreement which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Any party may, at its option, waive in writing any or all of the conditions
herein contained to which its obligations hereunder are subject. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. This Agreement constitutes the entire
agreement between the parties hereto relating to the subject matter hereof, and
supersedes and cancels all prior agreements, representations, warranties or
communications, whether oral or written, among the parties hereto relating to
the subject matter hereof. This Agreement shall be construed under and governed
in accordance with the laws of the State of Georgia. All Schedules attached
hereto are incorporated herein by reference. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which shall be considered one and the same instrument.
16. Information Confidential. Each party shall require its personnel to
keep confidential the contents of this Agreement, all information regarding any
computer programs or format of the other party, any procedures or manuals of the
other party, and any methods, procedures, information or data of the other party
relating to the Services (including, without limitation, the computer programs
and systems used by WPS in the
8
102
performance of this Agreement or to be used by Purchaser in the future), except
that either party may disclose such information to such of its agents, employees
and representatives and to other persons as such party deems appropriate
(provided such agents, employees, representatives and other persons agree to be
bound by the terms of this Section 16), and except that either party may make
such disclosures as it shall be legally compelled to make, provided such party,
unless not reasonably feasible, first notifies the other party of its legal
obligation to disclose.
IN WITNESS WHEREOF, each party has caused this Agreement to be duly
executed as of the day and year first above written.
WESTPOINT ▇▇▇▇▇▇▇ INC.
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
Title: Vice President & Assistant Secretary
-------------------------------------
DYERSBURG CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
Title: Executive Vice President,
-------------------------------------
Chief Financial Officer,
-------------------------------------
Secretary & Treasurer
-------------------------------------
9