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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
May 25, 1994, is by and among JPS Textile Group, Inc., a Delaware
corporation ("JPS"), JPS Auto Inc., a Delaware corporation ("Auto"),
JPS Converter and Industrial Corp., a Delaware corporation ("C&I" and,
hereinafter, JPS, Auto and C&I are sometimes referred to individually
as "Seller" and collectively as "Sellers"), JPS Automotive Products
Corp., a Delaware corporation ("Purchaser"), and Foamex International
Inc., a Delaware corporation ("Foamex" or "Guarantor"), as guarantor
of certain of the obligations of Purchaser hereunder.
W I T N E S S E T H :
WHEREAS, JPS owns all of the outstanding capital stock of
each of Auto and C&I; and
WHEREAS, Auto is engaged in the business of manufacturing,
designing and selling textiles and specialty textile products for the
automotive industry; and
WHEREAS, C&I is engaged through its synthetic industrial
textile division (the "Division") in the business of manufacturing,
designing and selling synthetic textile products;
WHEREAS, Sellers desire to sell, and Purchaser desires to
purchase, (i) all of the properties, rights and assets used in the
conduct by Auto of its business (the "Auto Business") and (ii) all of
the properties, rights and assets used in the conduct by the Division
of its business (the "Division Business" and, together with the Auto
Business, the "Business"), in each case other than the Excluded Assets
(as hereinafter defined), upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, prior to the Closing Date, a partnership
beneficially owned by Foamex will own all of the outstanding capital
stock of Purchaser; and
WHEREAS, in connection with the sale of, and in order to
induce Sellers to sell, the Business to Purchaser pursuant to this
Agreement, Foamex has agreed to guarantee certain obligations of
Purchaser hereunder as more fully set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
covenants, representations and warranties contained herein and of
other good and valuable consideration, the receipt
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and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Unless otherwise defined herein, the
following terms as used herein shall have the following respective
meanings:
"Ancillary Agreements" means the other agreements,
instruments and documents to be executed by Sellers or Purchaser or
their respective Affiliates, as the case may be, in connection with
this Agreement, including, without limitation, the limited warranty
deeds, the Bill of Sale, the Lease Assignment and Assumption
Agreement, the Personal Property Lease Assignment and Assumption
Agreement, the Dunean Reciprocal Easement Agreement, the Services
Agreement and the Sublease Agreement.
"Affiliate" means, with respect to any Person, any Person
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
Person.
"Assumed Liabilities" shall have the meaning assigned to
such term in Section 2.1(b) hereof.
"Benefit Plans" means any "employee benefit plans", as
defined in Section 3(3) of ERISA, and all other employee benefit
plans, policies, arrangements or payroll practices, including, without
limitation, severance pay, sick leave, vacation pay, disability,
retirement, deferred compensation, bonus, stock purchase, stock
option, hospitalization, medical insurance, life insurance and
educational assistance programs, maintained for the benefit of or to
which contributions are made, or have been made, on behalf of current
or former employees of Sellers or Cramerton whether or not listed in
Schedule 4.16(a).
"Bills of Sale" means one or more Bills of Sale made as of
the Closing Date by Sellers substantially in the form of Exhibit A
hereto.
"Books and Records" means all books and records relating to
the Business or pertaining to the Transferred Assets and the customers
and suppliers thereof.
"CIT Agreement" means that certain Loan and Security
Agreement, dated as of October 30, 1991, as amended on June 26,
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1992, December 22, 1992 and August 6, 1993, and as further amended
with the consent of Foamex subsequent to the date hereof, between C&I
and the CIT Group/Equipment Financing, Inc. ("CIT").
"Closing Date" means the date which is the fifth business
day after all the conditions to Closing set forth in Articles VII and
VIII have been satisfied or waived, or such other date as Guarantor
and Sellers shall mutually agree.
"Closing Statement" means the audited statement of
Transferred Assets and Assumed Liabilities, which shall also set forth
therein the Net Assets of Auto and the Division (which includes JPS's
ownership interest in CMC) as of the Closing Date, prepared in
accordance with GAAP as consistently applied by Sellers on the same
basis as and in accordance with the same accounting principles applied
by Sellers in preparing the January 29, 1994 Balance Sheet.
"CMC" means Cramerton Management Corp., a Delaware
corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contaminant" means any substance, material or waste whether
in a solid, liquid or gaseous state which is regulated by any
Governmental Agency of or within the United States or by any other
national government, including, without limitation, any material,
substance or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste,"
"restricted hazardous waste," "contaminant," "toxic waste" or "toxic
substance" under any provision of Environmental Law, which includes,
but is not limited to, petroleum, petroleum products, asbestos, urea,
formaldehyde and polychlorinated biphenyls.
"Contract Rights" means all of the rights, duties and
obligations of each Seller under the contracts and commitments set
forth on Schedule 4.6 hereto and all of Sellers' right, title and
interest in and to (i) all contracts, agreements, leases, notes,
purchase orders, sales orders and other commitments of Sellers
relating primarily to the Business and (ii) all security and other
deposits made by Sellers with respect thereto.
"Covered Employees" means all (a) current or former
employees of the Business or Cramerton listed on Schedule 1.1(a)
hereto (i) who participate in any of the plans listed on Schedule
4.16(a) or (ii) who are eligible to participate and are within the
enrollment period of any of the plans listed on Schedule 4.16(a) as of
the Closing Date, (b) any Employee who is offered
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but does not accept employment pursuant to Section 6.3(a), and (c) any
current or former employee of the Business or Cramerton (i) who is
first hired in the ordinary course by the Business or Cramerton after
May 11, 1994 and (ii) who participates or is eligible to participate
and is within the enrollment period of any of the plans listed on
Schedule 4.16(a) as of the Closing Date. The parties agree that any
beneficiaries and dependents of Covered Employees are deemed Covered
Employees without being listed on Schedule 1.1(a).
"Cramerton" means Cramerton Automotive Products, L.P., a
Delaware limited partnership, and CMC.
"Cramerton Agreements" means collectively, (i) that certain
Partner Interest Purchase Agreement, dated as of December 2, 1991 (the
"Cramerton Purchase Agreement"), by and among Auto, CMC, Seiren U.S.A.
Corporation ("Seiren") and Seiren Automotive Textile Corporation, (ii)
that certain Amended and Restated Agreement of Limited Partnership of
Cramerton Automotive Products, L.P., dated as of December 2, 1991,
(iii) that certain Stockholders' Agreement, dated as of December 2,
1991 (the "CMC Stockholders' Agreement"), by and among CMC, JPS, and
Seiren Co., Ltd. and (iv) that certain Consulting Agreement, dated as
of December 2, 1991, between Auto and Cramerton Automotive Products,
L.P.
"Cramerton Credit Agreement" means that certain Credit
Facility, dated as of June 4, 1993, as amended on April 29, 1994 and
as further amended with the consent of Foamex subsequent to the date
hereof, between Cramerton and NationsBank of North Carolina, N.A.
"Cramerton Excluded Liabilities" means (A) any obligation or
liability of Cramerton arising on or before the Closing Date to any
Affiliate of Sellers except (i) obligations or liabilities which are a
part of the Transferred Assets, (ii) to the extent such obligation or
liability is reflected on the Closing Statement, and (iii) obligations
or liabilities created pursuant to this Agreement or the Ancillary
Agreements, (B) any liability of Cramerton for purchase money debt,
debt for borrowed money or a guaranty in respect thereof, except to
the extent such liabilities are reflected on the Closing Statement,
(C) any liability of Cramerton under any defined contribution or
defined benefit plan of Cramerton (prior to the Closing Date) or of
the Sellers, except to the extent that any such plan is explicitly
assumed or assets are transferred from such plan pursuant to Section
6.3 hereof, (D) any liability for which any Seller is covered by
insurance and with respect to Covered Employees any salaried long-term
disability, stop-loss medical and voluntary contributory accidental
death and dismemberment insurance
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coverage, pursuant to which any Seller or Covered Employee receives
payment of such insurance, but only up to the amount of such payment
of insurance coverage, (E) any contingent liability, including any
guaranty, which does not arise in the ordinary course of the business
and operations of Cramerton, except to the extent reflected on the
Closing Statement (it being agreed by Foamex, Purchaser and Sellers
that, without limitation, any claim or litigation which is related to
employment or a failure to employ any Employee or former employee,
such as sexual harassment or discrimination claims, will be considered
to have arisen in the ordinary course); (F) any claims for benefits
with respect to current or former employees of Cramerton who are not
Employees or Covered Employees with respect to any Benefit Plan; (G)
any liability or obligation of Cramerton with respect to an employee
of Cramerton arising under any Benefit Plan, other than the
obligations assumed pursuant to Section 6.3 hereto or with respect to
the plans in the form delivered to Foamex and which plans are listed
on Schedule 4.16(a) hereto; (H) any liability with respect to any
employee other than liability in respect of: (i) an Employee or a
Covered Employee and (ii) any claim or litigation which is related to
employment or failure to employ, such as sexual harassment or
discrimination claims, except in the case of this clause (ii) any
Benefit Plans; and (I) Environmental Costs and Liabilities arising out
of any Environmental Claim arising from or related to a Release at any
real property, other than Cramerton Real Property, at or to which
Sellers or Cramerton disposed, transported, treated, stored or
arranged to dispose Contaminants prior to the Closing Date (including,
without limitation, off-site liability under any Environmental Law
arising from or in connection with transportation, treatment, storage,
disposal or arranging for disposal of Contaminants).
"Cramerton Intellectual Properties" means all registrations
of trademarks and of other marks and pending applications therefor,
all registrations of trade names, brand names, labels or other trade
rights and pending applications therefor, all registered user entries
and all pending applications for any such registrations or entries;
all copyright registrations and pending applications thereof; all
United States and foreign patents and pending applications therefor;
all other registered and unregistered copyrights and pending
applications therefor; and all unregistered trademarks and other
marks, trade names and other trade rights and all other ideas and
know-how, formulae, treatments, discoveries, improvements, and
applications thereof, and all other know-how used in connection with
the business of Cramerton, confidential or secret proprietary and
technical information, inventions, designs and patterns, whether or
not patentable, which are used by Cramerton in connection with the
business of Cramerton.
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"Cramerton Permits" means all of Cramerton's licenses,
permits, certificates and other public, governmental and private third
party authorizations and approvals reasonably necessary to carry on
the business of Cramerton as presently conducted.
"Cramerton Real Property" means the real property relating
to the business of Cramerton and owned by Cramerton together with the
improvements located thereon.
"Dunean Reciprocal Easement Agreement" means collectively,
that certain agreement dated as of the Closing Date between C&I and
Purchaser substantially in the form of Exhibit B-1 hereto.
"Employees" means all persons listed on Schedule 6.3(a)
hereto, or who are hired in the ordinary course of the Business or by
Cramerton subsequent to May 11, 1994, and who are employed as current
employees, whether active or inactive, of the Business or Cramerton on
the Closing Date.
"Encumbrance" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any nature whatsoever or any right
or interest whatsoever of any third party, including, without
limitation, a lien, claim or other interest of a Governmental Agency
or municipality for Taxes, assessments and other such charges.
"Enjema" means Industrias Enjema, S.A. de C.V., a
corporation organized and existing under the laws of the United
Mexican States.
"Environmental Claim" means any accusation, allegation,
notice of violation, action, claim, Environmental Lien, demand,
abatement or other order or direction (conditional or otherwise) by
any Governmental Agency or any other Person for personal injury
(including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release
(including, without limitation, sudden or non-sudden accidental or
non-accidental Releases) of, or exposure to, any Contaminant, odor or
audible noise in, into or onto the environment (including, without
limitation, the air, soil, surface water or groundwater) at, in, by,
from or related to any of the Transferred Assets or any activities or
operations thereof; (ii) the transportation, storage, treatment or
disposal of Contaminants in connection with any of the Transferred
Assets or any activities or operations thereof; (iii) the violation,
or alleged violation, of any Environmental Permit of or from any
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Governmental Agency relating to environmental matters connected with
any of the Transferred Assets or the Business; or (iv) any violations
of any Environmental Law.
"Environmental Costs and Liabilities" means any and all
losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses (including, without
limitation, fees, disbursements and expenses of legal counsel,
experts, engineers and consultants and the costs of investigation and
feasibility studies and Remedial Action) arising from or under any
Environmental Law or order (including, without limitation, any order,
consent, decree or agreement with any Governmental Agency).
"Environmental Laws" means all applicable federal, state,
local or foreign laws relating to (i) pollution or protection of the
air, surface, water, ground water or soil; (ii) the generation,
treatment, storage, use, handling, disposal or transportation of
Contaminants; (iii) the Release of or exposure to Contaminants; (iv)
natural resources; (v) public or community right-to-know laws; or (vi)
employee safety and health including, without limitation, the
Comprehensive Environmental Resource, Compensation, and Liability Act
(42 U.S.C. # 9601 et seq.) ("CERCLA"), the Hazardous Material
Transportation Act (49 U.S.C. # 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. # 6901 et seq.) ("RCRA"), the
Clean Water Act (33 U.S.C. # 1251 et seq.), the Clean Air Act (42
U.S.C. # 7401 et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. # 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. # 136 et seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. # 11001 et seq.), the Safe
Drinking Water Act (42 U.S.C. # 201 and # 300f et seq.), the Oil
Pollution Act (33 U.S.C. # 2701 et seq.) and the Occupational Safety
and Health Act (29 U.S.C. # 651 et seq.), as such laws have been
amended or supplemented from time to time, and all regulations, rules
or ordinances duly promulgated pursuant thereto and any analogous
state, local or foreign laws.
"Environmental Lien" means any lien in favor of any
Governmental Agency arising under Environmental Laws.
"Environmental Permit" means any permit, approval,
authorization, registration, license, variance or permission required
under any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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"Excluded Assets" means the properties and assets of the
Business listed on Exhibit C hereto and which are not being acquired
by Purchaser hereunder.
"Excluded MSBT" means (i) in the case of Sellers, the amount
of liability incurred by Sellers for MSBT solely by reason of the sale
by Sellers of the Transferred Assets pursuant to this Agreement, and
(ii) in the case of Cramerton, the amount (if any) of liability
incurred by Cramerton for MSBT solely by reason of the sale by Sellers
pursuant to this Agreement of the limited partnership interest in
Cramerton.
"Final Prospectus" means the prospectus of Purchaser
relating to the Senior Notes Offering as first declared effective by
the Securities and Exchange Commission and any post-effective
amendments or supplements thereto prior to the Closing Date.
"Fixtures and Equipment" means all of the furniture,
fixtures, furnishings, machinery, tools, equipment and other personal
property (a) owned by Sellers and (b) used in connection with, or
which may be located in, at or upon the Real Property and the
Leasehold Estates as of the Closing Date, including all warranties and
licenses received from manufacturers and sellers of the aforesaid
items to the extent assignable by Sellers to Purchaser and any related
claims, credits and rights of recovery with respect to such items.
"GAAP" means U.S. generally accepted accounting principles
applicable to financial statements which omit complete footnotes and
schedules, consistently applied throughout the periods involved.
"Governmental Agency" means (a) any international, foreign,
federal, state, county, local or municipal government or
administrative agency or political sub-division thereof, (b) any
governmental agency, authority, board, bureau, commission, department
or instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency, tribunal or entity that is vested by a
governmental agency with applicable jurisdiction, or (e) any
arbitration tribunal or other non-governmental authority with
applicable jurisdiction. By way of illustration and not by
limitation, "Governmental Agency" does not include a citizen or group
of citizens of any state, except where a citizen or group of citizens
of a state is seeking to recover a penalty or fine payable to a
government or Governmental Agency.
"Hourly Plan" means Hourly Plan as defined in Section
4.16(c).
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Intellectual Properties" means all registrations of
trademarks and of other marks and pending applications therefor, all
registrations of trade names, brand names, labels or other trade
rights and pending applications therefor, all registered user entries
and all pending applications for any such registrations or entries;
all copyright registrations and pending applications thereof; all
United States and foreign patents and pending applications therefor;
all other registered and unregistered copyrights and pending
applications therefor; and all unregistered trademarks and other
marks, trade names and other trade rights as identified on Schedule
4.12 hereto, and all other ideas and know-how, formulae, treatments,
discoveries, improvements, and applications thereof, and all other
know-how used in connection with the Business, confidential or secret
proprietary and technical information, inventions, designs and
patterns, whether or not patentable, which are used by Sellers in
connection with the Business.
"IRS" means the Internal Revenue Service.
"Inventory" means all of (i) the inventory held for sale to
customers in the ordinary course of the Business, (ii) the raw
materials, work in process, finished products, wrapping, supply and
packaging items, and similar items relating to the Business and (iii)
related claims and rights of recovery with respect to the items listed
in clauses (i) and (ii) hereto.
"January 29, 1994 Balance Sheet" means that certain balance
sheet dated January 29, 1994 which is attached hereto as Exhibit E.
"JPS Mexico" means JPS Mexico Corporation, a Delaware
corporation.
"Lease Assignment and Assumption Agreement" means that
certain agreement dated as of the Closing Date among Sellers and
Purchaser, substantially in the form of Exhibit F hereto.
"Leasehold Estates" means all of Sellers' rights and
obligations as lessee under the Leases.
"Leasehold Improvements" means all of Sellers' leasehold
improvements situated in or located on the property leased under the
Leases.
"Leases" means all leases or subleases of real property as
listed on Schedule 4.3(a) hereto.
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"Legal Proceedings" means any judicial, administrative or
arbitral actions, suits or proceedings (public or private), including
any investigations, inquiries or proceedings by a Governmental Agency.
"License Agreement" means that certain License Agreement
dated as of the Closing Date between Purchaser and C&I in the form of
Exhibit B-2 hereto.
"Material Adverse Change" or "Material Adverse Effect" means
any change in, effect on, or event or condition relating to or
concerning the operations, affairs, financial condition, results of
operations, assets, liabilities or any other aspect of the Business,
including the business of Cramerton, that results in, or is reasonably
likely to result in, a material adverse change in the Transferred
Assets taken as a whole, or a material adverse effect on the Business,
including the business of Cramerton, taken as a whole.
"MSBT" means the Michigan Single Business Tax.
"Net Assets" means, for purposes of determining the Purchase
Price adjustments set forth in Section 2.3 hereof, the amount of
assets in excess of the liabilities of all Transferred Assets and
Assumed Liabilities being transferred by Sellers to Purchaser
hereunder as reported in JPS's combined balance sheet, determined in
accordance with GAAP as consistently applied by Sellers; provided,
however, that the following categories of assets and liabilities
shall not be a part of Net Assets: (i) the portion of the Seller
Credit Agreement which has been allocated to Auto and the Division,
along with the related accrued interest and deferred financing fees
and expenses; (ii) deferred tax assets or liabilities (other than
deferred tax assets or liabilities of JPS Mexico, Enjema and CMC);
(iii) assets and liabilities related to the specific lines of business
which were being displaced in the Dunean, South Carolina plant as of
March 24, 1994, as disclosed in the Preliminary Prospectus and as
adjusted in footnote 1 to the pro forma adjustments included therein;
(iv) liabilities for accrued long-term incentive compensation plans to
be paid by JPS, as disclosed in the Preliminary Prospectus and as
adjusted in footnote 9 to the pro forma adjustments therein; (v) any
purchase accounting adjustments or other adjustments related to the
transactions contemplated by this Agreement (including, but not
limited to, the Senior Notes Offering and the Purchaser Credit
Agreement); (vi) assets or liabilities included in the Closing
Statement by virtue of the application of accounting principles,
pronouncements or methodologies not applied in connection with the
January 29, 1994 Balance Sheet (e.g., liabilities pursuant to SFAS No.
112); and (vii) any assets or liabilities resulting from
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the fees and expenses of the type set forth in Sections 2.2(b) or
10.8.
"Owned Real Property" means the real property relating to
Auto, the Division or both of them and owned by one or more of the
Sellers, together with the improvements located thereon.
"Permissible Liens" means, with respect to any Transferred
Asset, (i) any minor imperfection of title with respect to such asset
which does not materially adversely affect the value of such asset or
materially interfere with the present use and the continuation of such
present use of such asset in the Business, (ii) such covenants,
restrictions, easements, encroachments or encumbrances that are not
related to mortgages or other financial encumbrances, and any other
state of facts, which do not, individually or in the aggregate,
materially detract from the value, or, as presently used or occupied,
materially interfere with the present occupancy or use of such asset,
(iii) the specified exceptions to title set forth on Schedule 1.1(b)
hereto with respect to the applicable Real Property or Leasehold
Estate (which Schedule shall indicate those specified exceptions that
will be released on the Closing Date), (iv) real estate taxes not yet
due and payable, (v) the Encumbrances created by the Dunean Reciprocal
Easement Agreement and (vi) with respect to the Cramerton Real
Property (A) the Encumbrances created pursuant to the Cramerton Credit
Agreement, and (B) that certain Agreement dated March 21, 1988 by and
between Burlington Industries and J.P. Stevens & Co. together with all
modifications and amendments thereto, true, correct and complete
copies of which have been delivered by Cramerton to Foamex.
"Permits" means all of Sellers' licenses, permits,
certificates and other public, governmental and private third party
authorizations and approvals reasonably necessary to carry on the
Business as presently conducted.
"Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization
or a government or political subdivision thereof.
"Personal Property Lease Assignment and Assumption
Agreement" means that certain agreement dated as of the Closing Date
among Sellers and Purchaser, substantially in the form of Exhibit H
hereto.
"Personal Property Leases" means all of the leases of
personal property listed on Schedule 4.3(b) hereto and all other
leases for or relating to any items of personal property used in
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connection with Auto or the Division which are not required to be
scheduled pursuant to Section 4.3(b).
"Preliminary Prospectus" means the preliminary prospectus of
Purchaser dated March 24, 1994 relating to the Senior Notes Offering.
"Purchase Price" means the consideration received by Sellers
for the Transferred Assets as set forth in Section 2.2 hereof.
"Purchaser Credit Agreement" means the Credit Agreement,
dated as of the Closing Date, by and among Purchaser and Citibank,
N.A. and Bank of Nova Scotia, the material terms of which are set
forth on Exhibit I hereto.
"Real Property" means real property as defined in Section
4.4.
"Release" means any release, spill, emission, leaking,
pumping, emptying, dumping, injection, abandonment, deposit, disposal,
discharge, dispersal, leaching or migration on or into the indoor or
outdoor environment or on, into, above, out of or beneath any
property.
"Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by any Governmental
Agency or by any other person under or pursuant to any Environmental
Law to (i) clean up, remove, treat, or in any other way address any
Contaminant or other substance; (ii) prevent the Release or threat of
Release, or minimize the further Release of any Contaminant or other
substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; (iii)
perform pre-remedial studies and investigations or post-remedial
monitoring and care; or (iv) bring the Transferred Assets, including
the assets of Cramerton, and the Business, including the business of
Cramerton, into compliance with all Environmental Laws and
Environmental Permits.
"Seller Credit Agreement" means the Third Amended and
Restated Credit Agreement, dated as of March 18, 1993, as amended from
time to time, among JPS, Auto, JPS Carpet Corp., C&I, JPS Elastomerics
Corp., the financial institutions party thereto (the "Senior
Lenders"), Citibank, N.A., as agent and administrative agent for the
Senior Lenders, and General Electric Capital Corporation, in its
capacity as co-agent and collateral agent.
"Senior Notes Offering" means the public offering by
Purchaser pursuant to the registration statement on Form S-1
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(registration number 33-75510), of up to $180,000,000 aggregate
principal amount of its Senior Notes due 2001, the material terms of
which are set forth on Exhibit J hereto.
"Services Agreement" means a mutually acceptable Services
Agreement to be entered into prior to the Closing Date between Sellers
and Purchaser.
"Sublease Agreement" means that certain agreement to be
dated as of the Closing Date among Purchaser, JPS, C&I and LB Credit
attached hereto as Exhibit K, or such lease agreement as shall be
reasonably acceptable to such parties.
"Taxes" means (i) all federal, state, local and foreign
taxes, charges, fees, levies, imposts, duties or other assessments,
including, without limitation, income, gross receipts, excise,
employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental
(including taxes under Code section 59A), premium, federal highway
use, commercial rent, customs duties, capital stock, paid up capital,
profits, withholding, Social Security, single business and unemploy-
ment, disability, real property, personal property, registration, ad
valorem, value-added, alternative or add-on minimum, estimated, or
other tax or governmental fee of any kind whatsoever, imposed or
required to be withheld by the United States or any state, local,
foreign government or subdivision or agency thereof, including any
interest, penalties or additions thereto and (ii) any Taxes (defined
in (i) above) for which a Seller is liable (a) as a transferee, (b) as
an indemnitor, guarantor, surety or in a similar capacity under any
contract, arrangement, understanding or commitment, whether oral or
written, or (c) under Treas. Reg. # 1.1502-6 or any comparable
provision of state, local or foreign tax law. The parties acknowledge
that, consistent with the past practice of the Sellers, the Michigan
Single Business Tax is not an income tax, a franchise tax based on net
income, or a transfer tax.
"Transferred Assets" means all of Sellers' rights, title and
interests in and to all properties, assets, and rights of any kind,
whether contingent, tangible or intangible, real, personal or mixed
and wherever situated, owned by Sellers or in which Sellers have any
interest and constituting the Business (other than the Excluded
Assets), including those Transferred Assets which are reflected on the
Closing Statement and which shall include, without limitation, (other
than the Excluded Assets) the following:
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(a) all accounts and notes receivable, refunds and deposits
relating to the Business together, in each case, with all security and
collateral therefor;
(b) all Contract Rights;
(c) all Owned Real Property;
(d) all Leasehold Estates;
(e) all Leasehold Improvements;
(f) all Fixtures and Equipment;
(g) all of Sellers' rights and obligations under the
Personal Property Leases;
(h) all Inventory;
(i) all Intellectual Properties;
(j) to the extent transferable, all Permits;
(k) all Books and Records, including books of account,
records, files, invoices, manuals, sales, marketing and advertising
materials, customer and supplier files, personnel files, equipment
maintenance records, equipment warranty information, material,
software, specifications and drawings, equipment drawings, customer
specifications, sales, distribution and purchase correspondence, trade
association memberships and all other similar data, computer programs
and software, manuals and data and property relating to the Business;
(l) All insurance, condemnation and reimbursement claims
and proceeds, if any, received by any of the Sellers in connection
with any damage or casualty to any Transferred Assets;
(m) All of those prepaid expenses relating to the Business
which are set forth on Exhibit L; and
(n) All of Sellers' right, title and interest in and to (i)
the capital stock of JPS Mexico, (ii) the capital stock of CMC, and
(iii) the limited partnership interests in Cramerton.
"Transferred Employees" means all Employees who commence
employment with Purchaser pursuant to Section 6.3(a) hereof.
15
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Sale of Assets; Assumption of Liabilities. On the
Closing Date, in reliance upon the covenants, representations and
warranties contained herein and subject to the terms and conditions
hereof:
(a) Sellers will sell, convey, transfer, assign, and
deliver to Purchaser, and Purchaser will purchase from Sellers, the
Transferred Assets; it being the intention of Sellers to sell, and the
intention of Purchaser to acquire, all assets, rights and properties
of the Business (other than the Excluded Assets) as a going concern.
(b) Purchaser shall assume and pay, perform and discharge
as and when due all debts, claims, liabilities, obligations, Taxes,
damages and expenses of every kind and nature, whether known, unknown,
contingent, absolute, determined, indeterminable or otherwise on the
Closing Date and whether incurred or accruing prior to, on or after
the Closing Date, to the extent relating to or arising from the
Transferred Assets and/or the Business, including, without limitation,
those claims against, and liabilities and obligations of, Sellers with
respect to (i) any Contract Rights related to the Business (including
the collective bargaining agreement described in Schedule 4.17
hereto), to the extent they remain unsatisfied and are required to be
performed on or after the Closing Date, (ii) accounts payable to third
parties, together with any interest accrued thereon, incurred in
connection with the Business, (iii) the Employees or the Covered
Employees, and (iv) all Environmental Claims and Environmental Costs
and Liabilities (collectively the "Assumed Liabilities"); provided,
however, Purchaser shall not assume or pay any liabilities relating
to (A) the Excluded Assets, (B) income or franchise Taxes imposed on
net income for which Sellers are liable for any taxable period or
portion thereof ending on or prior to the Closing Date, (C) sales,
transfer, use or other similar taxes and Excluded MSBT which are to be
paid by the Sellers in accordance with Section 9.4(c) as a result of
the transfer of the Transferred Assets pursuant to this Agreement, (D)
any obligation or liability of Sellers arising on or before the
Closing Date to any Affiliate of Sellers, except (i) to the extent
such obligation or liability is reflected on the Closing Statement and
(ii) obligations or liabilities created pursuant to this Agreement or
the Ancillary Agreements (other than obligations or liabilities that
are assets of Cramerton), (E) any liability for purchase money debt,
debt for borrowed money or a guaranty in respect thereof, except to
the extent such liabilities are reflected on the Closing Statement,
(F) any
16
obligation or liability arising on or before the Closing Date related
to the long term incentive plan (which payments are to be made by
JPS), (G) any liability under any defined contribution or defined
benefit plan of the Sellers, except to the extent that any such plan
is explicitly assumed or assets are transferred from such plan
pursuant to Section 6.3 hereof, (H) any liability for which any Seller
is covered by insurance and with respect to Covered Employees any
salaried long-term disability, stop-loss medical and voluntary
contributory accidental death and dismemberment insurance coverage,
pursuant to which any Seller or Covered Employee receives payment of
such insurance, but only up to the amount of such payment of insurance
coverage, (I) any contingent liability, including any guaranty, which
does not arise in the ordinary course of the operation of the
Business, except to the extent reflected on the Closing Statement (it
being agreed by Foamex, Purchaser and Sellers that, without
limitation, any claim or litigation which is related to employment or
a failure to employ any Employee or former employee, such as sexual
harassment or discrimination claims, will be considered to have arisen
in the ordinary course); (J) any liability with respect to any
employee other than liability in respect of: (i) an Employee or a
Covered Employee and (ii) any claim or litigation which is related to
employment or failure to employ, such as sexual harassment or
discrimination claims, except in the case of this clause (ii) any
Benefit Plans; (K) any liability with respect to an Employee or a
Covered Employee arising under any Benefit Plan, other than the
obligations assumed pursuant to Section 6.3 hereto or with respect to
the plans in the form delivered to Foamex and which plans are listed
on Schedule 4.16(a) hereto; (L) any liability for real or personal
property tax imposed by the State of South Carolina (or a political
subdivision thereof) for any taxable period or portion thereof ending
on or prior to the Closing Date that results solely from the failure
of the State of South Carolina to permit the exemption provided by
Section 12-37-220A(7) of the Code of Laws of the State of South
Carolina to be applied to those assets that were purchased by any
Seller in May 1988 (as so applied, the "South Carolina Exemption");
and (M) Environmental Costs and Liabilities arising out of any
Environmental Claim arising from or related to a Release at real
property, other than Owned Real Property, at or to which Sellers
disposed, transported, stored, treated, or arranged to dispose
Contaminants prior to the Closing Date (including, without limitation,
off-site liability under any Environmental Law arising from or in
connection with transportation, treatment, storage, disposal or
arranging for disposal of Contaminants).
2.2 Purchase Price.
17
(a) On the Closing Date, as consideration for the sale,
conveyance, transfer, assignment and delivery of the Transferred
Assets, Purchaser shall:
(i) pay to Sellers in cash an amount equal to
$263,750,000 (the "Cash Purchase Price"); and
(ii) assume the Assumed Liabilities.
(b) Within 30 days after the Closing Date, Purchaser shall
pay to Sellers the excess, if any, of the Sellers' Unrelated Expenses
over the Purchaser's Unrelated Expenses and Sellers shall pay to
Foamex the excess, if any, of the Purchaser's Unrelated Expenses over
the Sellers' Unrelated Expenses.
(i) For purposes of this Section 2.2(b), "Purchaser's
Unrelated Expenses" shall mean the sum of (w) amounts in excess
of one-half of the documented costs incurred by Purchaser or
Foamex of the negotiation and execution of the CIT Agreement, (x)
amounts in excess of one-half of the documented costs incurred by
Purchaser or Foamex in connection with the negotiation of the
Bank Facility (as described in the Preliminary Prospectus), (y)
any documented expense or liability incurred by Foamex or
Purchaser which relates to or arises out of (A) the proposed
public offering by Purchaser of its common stock, (B) the
fairness opinion described in Section 7.7 hereof, and (C) the
solvency opinion described in Section 7.8(a) hereof and (z) any
documented expense or liability with respect to the transfer of
the Transferred Assets as contemplated in the Preliminary
Prospectus arising prior to April 27, 1994.
(ii) For purposes of this Section 2.2(b), "Sellers'
Unrelated Expenses" shall mean the sum of (x) the documented
fees, costs and expenses actually incurred by Sellers in
connection with the Senior Notes Offering, a reasonable estimate
of such fees, costs and expenses, as of the date hereof, being
set forth in the column of Schedule 2.2(b) labeled "Senior
Notes", (y) amounts in excess of one-half of the documented costs
incurred by Sellers in connection with the negotiation of the
Bank Facility (as described in the Preliminary Prospectus), a
reasonable estimate of which is set forth in the column of
Schedule 2.2(b) labeled "New Auto Credit Agreement", and (z)
amounts in excess of one-half of the documented costs incurred by
Sellers of the negotiation and execution of the CIT Agreement, a
reasonable estimate of such fee costs and expenses, as of the
date hereof, is set forth in the column of Schedule 2.2(b)
labeled "CIT Amendment".
18
(c) At the election of Sellers, the Cash Purchase Price,
shall be paid on the Closing Date by wire transfer of immediately
available funds to an account designated in writing by JPS.
(d) As soon as reasonably practicable (but not later than
120 days after the Closing Date) following the Closing, Purchaser
shall prepare and deliver to Sellers a schedule which shall set forth
the allocation of the Purchase Price among the Transferred Assets.
Such allocation shall be based on an appraisal performed by a
qualified appraiser chosen by Purchaser (the fees and expenses of
which shall be borne by Purchaser). Subject to the requirements of
any applicable tax law, all Tax returns filed by the Purchaser and the
Sellers shall be prepared consistently with such allocation and,
subject to Section 9.4(k), with the treatment of the transaction
pursuant to this Agreement as a purchase and sale of the Transferred
Assets. In the event of any Purchase Price adjustment pursuant to
Section 2.3 hereof after the delivery of the Closing Statement by
Sellers, the Purchaser and Sellers agree to adjust such allocation to
reflect such Purchase Price adjustment and, subject to the
requirements of any applicable Tax laws, to file consistently any Tax
returns required as a result of such Purchase Price adjustment. In
the event no such agreement is reached, subject to Section 9.4(k),
Purchaser and Sellers shall nonetheless file their respective Tax
returns in a manner which is consistent with the transactions
contemplated pursuant to this Agreement as a purchase and sale of the
Transferred Assets.
2.3 Adjustments to Purchase Price.
(a) The Purchase Price shall be increased or decreased (on
a dollar for dollar basis), as the case may be, for any increase or
decrease in the Net Assets as of the Closing Date as set forth on the
Closing Statement as compared to the Net Assets as of January 29, 1994
included in the January 29, 1994 Balance Sheet.
(b) As soon as is reasonably practicable following the
Closing Date, Sellers shall prepare and deliver to Purchaser and
Foamex the Closing Statement which shall set forth the Purchase Price
adjustments to be made, if any, in accordance with Section 2.3(a). In
connection with the preparation of the Closing Statement, subject to
Section 10.12 hereof, Purchaser shall grant Sellers and their
accountants, counsel and other representatives, full and complete
access to all of the books and records of the Business. The Closing
Statement shall be audited by Sellers' accountants and shall include a
schedule reviewed by such accountants showing the computation of Net
Assets as of the Closing Date, computed in accordance with the
definition of Net
19
Assets set forth herein. The Closing Statement shall also include an
opinion of Sellers' accountants that such accountants audited the
Closing Statement in accordance with generally accepted auditing
standards and that the Closing Statement was prepared in accordance
with the terms of this Agreement. In connection with the preparation
of the Closing Statement, Sellers shall include in the Closing
Statement any adjustment proposed by Sellers' accountants in the
course of the conduct of their audit which either (a) is in excess of
$50,000, or (b) together with all other adjustments proposed by
Sellers' accountants and not otherwise reflected on the Closing
Statement, exceeds $250,000. Concurrently with their delivery of the
Closing Statement to Purchaser and Foamex, Sellers shall cause access
to be granted to Purchaser and Foamex to the work papers, schedules
and other documents prepared or used by Sellers and their accountants
in connection with the preparation of the Closing Statement. Sellers
shall pay all fees and expenses of its accountants in connection with
the preparation of the Closing Statement and the computation of Net
Assets.
(c) Unless Purchaser, within 25 business days after receipt
of the Closing Statement, gives Sellers a notice (the "Dispute
Notice") (i) objecting in good faith to the Closing Statement, (ii)
setting forth in reasonable detail the items being disputed and the
reasons therefor and (iii) specifying that Sellers' calculation of Net
Assets as of the Closing Date was not in conformity with GAAP or is
inconsistent with the terms of this Agreement, and that Purchaser's
calculation of Net Assets as of the Closing Date is in an amount which
differs from that reflected in such Closing Statement (the entire
amount of such difference being hereinafter referred to as the
"Adjusted Amount"), the Net Assets as set forth in the Closing
Statement and the Purchase Price adjustment set forth therein shall be
binding and final upon the parties. If a Dispute Notice is given by
Purchaser, the parties shall negotiate in good faith with a view to
agreeing upon the Net Assets as of the Closing Date and the
corresponding amount of the adjustment required by paragraph (a) of
this Section 2.3. In addition, after receipt of the Dispute Notice,
Sellers shall have the right for 5 business days to deliver to
Purchaser a notice setting forth any additional items (the "Sellers
Disputed Items") which Sellers have determined to be subject to
dispute based solely on events, other than the existence of
Purchaser's dispute, which have occurred or evidence which has been
discovered in the period from the delivery of the Closing Statement
and concluding on the date of delivery of the Dispute Notice. For a
period of 5 business days after the receipt by Purchaser of Sellers'
notice of the Sellers Disputed Items, Purchaser shall have the right
to withdraw its Dispute Notice, in which event the Net Assets as set
forth in the Closing Statement and the Purchase Price adjustment set
forth
20
therein shall be binding and final on the parties. If negotiations
between Purchaser and Sellers fail to resolve all disputed items
within 30 days after the Dispute Notice was given to Sellers, the
remaining disputed items, which shall include Sellers Disputed Items,
shall be submitted to a nationally recognized firm of independent
public accountants which is designated jointly by Sellers and Foamex.
After affording each of Sellers, Purchaser and Foamex and their
accountants the opportunity to present its position as to such
determination (which opportunity shall not extend for more than 30
days from the date the independent public accountants are retained),
the accounting firm selected pursuant to this paragraph shall
determine the adjustment pursuant to paragraph (a) of this Section 2.3
and such determination shall be final and binding. If a party raising
a claim for a Purchase Price adjustment is successful and the
accounting firm selected pursuant to this paragraph agrees with each
and every disputed item raised by such party and none of the disputed
items raised by the other party, then all fees, costs and expenses of
such accounting firm shall be borne by the other party. Otherwise,
all fees, costs and expenses of such accounting firm shall be
allocated between Sellers and Purchaser as determined by such
accounting firm in its sole discretion. Notwithstanding the
foregoing, to the extent that any amount of the Purchase Price
adjustment is not disputed, such undisputed amount shall be delivered
to Sellers or Foamex, as the case may be, in accordance with Section
2.3(d) below.
(d) The amount of any Purchase Price adjustment required
under this Section 2.3 shall be delivered to Sellers or Foamex, as the
case may be, with interest thereon (calculated on the basis of a 360-
day year comprised of twelve 30-day months, from and including the
Closing Date until paid at an annual rate equal to the prime rate of
interest of Citibank, N.A. (as such prime rate is publicly announced
from time to time as the prime rate of such bank)), at such place in
the United States as the party receiving such amount shall designate
in writing to the other party and shall be paid in immediately
available funds within 30 days after the final determination of such
Purchase Price adjustment.
ARTICLE III
CLOSING
3.1 Closing. The Closing of the transactions contemplated
hereby (the "Closing") shall be held at 10:00 a.m. local time on the
Closing Date at the New York offices of Weil, Gotshal & Manges, New
York, New York, or at such other time, date
21
or place as the parties hereto may otherwise agree, provided that the
conditions to the obligations of Sellers and Purchaser to consummate
the transactions contemplated hereby shall have been at such time
satisfied or waived.
3.2 Conveyances at Closing.
(a) Instruments and Possession. To effect the sale and
transfer referred to in Section 2.1 hereof, Sellers shall, on the
Closing Date, execute and deliver to Purchaser, in such form
reasonably approved by Purchaser as to transfer to Purchaser good, and
in the case of Owned Real Property, marketable, title to the Trans-
ferred Assets, subject to no Encumbrances, imperfections of title,
covenants, restrictions, easements, encroachments or any state of
facts, other than Permissible Liens:
(i) one or more limited warranty deeds, in proper form
for recording and mutually and reasonably acceptable to Purchaser
and Sellers, conveying good, marketable and insurable title
(other than Permissible Liens) to all Owned Real Property
included in the Transferred Assets together with all of Sellers'
right, title and interest in and to the easements appurtenant
thereto;
(ii) one or more Bills of Sale, conveying all of the
owned personal property included in the Transferred Assets;
(iii) subject to Section 3.4(d), one or more Lease
Assignment and Assumption Agreements with respect to the
assignment of the Leases hereunder;
(iv) subject to Section 3.2(c), the Personal Property
Lease Assignment and Assumption Agreement with respect to the
assignment of the Personal Property Leases hereunder;
(v) subject to Section 3.2(c), assignments and
assumptions of all Contract Rights included in the Transferred
Assets;
(vi) such other instruments as shall be reasonably
requested by Purchaser to vest in Purchaser good title (other
than Permissible Liens) in and to the Transferred Assets
(including any Intellectual Properties) in accordance with the
provisions hereof;
(vii) such affidavits, certificates or filings as may be
required to convey the Transferred Assets to
22
Purchaser or as may be reasonably requested by Purchaser's title
company and agreed to by Sellers in form and substance
substantially similar to those contained in the title affidavits
which are attached hereto as Exhibit G in connection with the
issuance of the title policies with respect to the Real Property
and the Leasehold Estates identified as item 1 on Schedule 4.3(a)
hereof;
(viii) an affidavit, in a form reasonably satisfactory to
Purchaser, of each Seller stating under penalties of perjury such
Seller's United States taxpayer identification number and that
such Seller is not a foreign person within the meaning of Section
1445(b)(2) of the Code;
(ix) evidence that all of Sellers' material licenses,
Permits, certificates and authorizations necessary to conduct the
Business have been transferred to Purchaser on or prior to the
Closing Date to the extent that Purchaser has not theretofore
been issued such necessary licenses, permits, certificates and
authorizations;
(x) all other previously undelivered documents that
Sellers are required to deliver to Purchaser pursuant to this
Agreement or the Ancillary Agreements;
(xi) certificates, properly endorsed for transfer, for
shares of stock or limited partnership interests, as the case may
be, in CMC, JPS Mexico and Cramerton which are owned by Sellers;
(xii) such other instruments and documents as counsel
for Purchaser may reasonably require as necessary or desirable in
connection with the transactions contemplated by this Agreement;
and
(xiii) physical possession and control of the Transferred
Assets.
(b) Form of Instruments. All of the foregoing instruments
shall be in form and substance, and shall be executed and delivered in
a manner, reasonably satisfactory to Purchaser, and where applicable,
in appropriate form for recording.
(c) Consents to Assignment. Anything in this Agreement to
the contrary notwithstanding, and subject to the provisions concerning
Leases and Personal Property Leases set forth in Section 3.4 hereof,
this Agreement shall not constitute an assignment of, or an agreement
to assign, any claim, contract, license, lease commitment, sales
order, purchase order or any claim or right or any benefit arising
thereunder or resulting
23
therefrom if an attempted assignment thereof, without the consent of
the other party thereto, would constitute a breach thereof. If (i)
such consent is not obtained, or if an attempted assignment thereof
would be ineffective or would affect the rights of Sellers thereunder
so that Purchaser would not receive all such rights, and (ii) on the
Closing Date, Purchaser waives its right to receive such consent,
then, in accordance with Section 3.4(d) hereof, Sellers shall
thereafter take all reasonable actions in order to provide to
Purchaser the benefits under any such claim, contract, license, lease
commitment, sales order or purchase order, including, without limita-
tion, enforcement for the benefit of Purchaser (at Sellers' expense)
of any and all rights of Sellers against such other party thereto
arising out of the breach or cancellation by such other party or
otherwise; and any transfer or assignment to Purchaser of any property
or property rights or any contract or agreement which shall require
the consent or approval of any such other party shall be made subject
to such consent or approval being obtained. Nothing contained in this
Section 3.2 shall be deemed to require Sellers to make any payments to
obtain a consent or approval from any third party to the assignment by
Sellers to Purchaser prior to the Closing Date; provided, however,
nothing contained in this sentence shall affect Sellers' or
Purchaser's rights under Articles VII and VIII hereunder. In
addition, Sellers shall not obtain any consent that will affect
Purchaser to its economic detriment unless Purchaser expressly
approves the obtaining of such consent.
3.3 Assumption Documents. Upon the terms and subject to
the conditions contained herein, on the Closing Date, Purchaser shall
deliver to Sellers instruments of assumption evidencing Purchaser's
assumption, pursuant to Section 2.1(b) hereof, of the Assumed
Liabilities. All such instruments shall be in form and substance, and
executed in a manner, reasonably satisfactory to Sellers.
3.4 Other Deliveries at Closing. In addition to the
foregoing matters, at the Closing:
(a) Lease Assignment and Assumption Agreements. Purchaser
agrees to assume the Leases and Personal Property Leases assigned
hereunder by joining with Sellers in the execution of the Lease
Assignment and Assumption Agreement and the Personal Property Lease
Assignment and Assumption Agreement.
(b) Sublease Agreement, Dunean Reciprocal Easement
Agreement and License Agreement. Purchaser and C&I shall execute and
deliver the Sublease Agreement, the Dunean Reciprocal Easement
Agreement and the License Agreement.
24
(c) Certificates; Opinions. Purchaser and Sellers shall
deliver the certificates, opinions and other instruments described in
Articles VII and VIII hereof.
(d) Leases and other Third-Party Consents. To the extent
any of the Leases or any other Contract Right may not be assigned by
Sellers without the written consent of the landlord, any mortgagee,
lender or other third party (collectively, a "Consenting Party"),
Sellers shall use their reasonable efforts to secure and deliver the
required consents to Purchaser within 90 days after the Closing Date;
provided, however, that no modification of any such Leases or Contract
Right shall be made without Purchaser's prior written consent, which
consent shall not be unreasonably withheld; provided further, however,
to the extent such consents are not obtained within 90 days after the
Closing Date then Sellers shall have no further obligations hereunder
and such Leases or Contract Rights shall be deemed to not be a part of
the Transferred Assets. Purchaser shall cooperate as reasonably
necessary or desirable to secure the consent of any Consenting Party,
including, without limitation, providing to such Consenting Party
financial information, operating history and information regarding
Purchaser's intended use or disposition of any Facility.
(e) Services Agreement. Purchaser and Sellers shall
execute and deliver the Services Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant
to Purchaser and Foamex as follows:
4.1 Organization. (a) Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to carry
on its business as it is now being conducted and to own and lease all
of its properties and assets. Each of the Sellers is duly qualified
to do business and is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business
requires such qualification, except where the failure so to qualify
would not have a Material Adverse Effect.
(b) Each of CMC and JPS Mexico is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power to carry on its
business as it is now being conducted. Cramerton is a limited
partnership duly organized, validly existing and in good standing
25
under the laws of the State of Delaware and has full partnership power
to carry on its business as it is now being conducted. Each of CMC,
JPS Mexico and Cramerton is duly qualified as a foreign corporation or
limited partnership, as the case may be, to do business and is in good
standing in each jurisdiction where the character of its properties or
the conduct of its business requires such qualification, except where
the failure to be so qualified would not have a Material Adverse
Effect.
(c) All of the outstanding shares of capital stock or
limited partnership interests, as the case may be, of CMC, JPS Mexico
and Cramerton are duly authorized, validly issued, fully paid and non-
assessable, and those shares of capital stock and limited partnership
interests owned by Sellers and set forth on Schedule 4.1(c) hereto are
owned free and clear, to the best of Sellers' knowledge, of any
security interest, claim, lien or encumbrance other than Permissible
Liens and other than as set forth on Schedule 4.1(c) hereto.
(d) There are no outstanding or authorized options,
warrants, calls, subscriptions, rights, commitments or any other
agreements of any character (i) evidencing the right to purchase or
subscribe for any shares of capital stock or limited partnership
interests, as the case may be, of CMC, JPS Mexico and Cramerton owned
by Sellers and set forth on Schedule 4.1(c) or (ii) obligating any of
CMC, JPS Mexico, Cramerton or, to the best of Sellers' knowledge,
Enjema to issue any additional shares of its respective capital stock
or limited partnership interests, as the case may be.
4.2 Authorization. Each Seller has all necessary corporate
power and authority and has taken all corporate action necessary to
enter into this Agreement and the Ancillary Agreements, to consummate
the transactions contemplated on its part hereby and thereby and to
perform its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions described herein
and therein by each of the Sellers have been duly authorized by all
requisite corporate action. This Agreement and the Ancillary
Agreements have been duly executed and delivered by the respective
Sellers party thereto and, assuming the due execution and delivery
thereof by Foamex and by Purchaser (in the case of Ancillary
Agreements to be executed subsequent to the Foamex Acquisition), each
is a valid and binding obligation of each such Seller, enforceable
against each such Seller in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratoriums or other similar laws now or hereafter in
effect relating to creditors' rights generally and by general
principles of equity (whether considered in an action
26
at law or in equity) and the discretion of the court before which any
proceeding therefor may be brought.
4.3 Leases.
(a) Real Property. Schedule 4.3(a) hereto sets forth the
name, address, parties and date of all material leases of real
property relating to the Business and/or the business of Cramerton.
Foamex has been provided with true, correct and complete copies of all
such leases. Sellers have good and valid title to the Leasehold
Estates and Cramerton has good and valid title to its material leases
of real property, in each case, free and clear of any and all liens,
charges, pledges, leases, subleases, licenses, mortgages, security
interests or other encumbrances of any kind, imperfections of title,
covenants, restrictions, easements, encroachments or any other state
of fact except Permissible Liens and the terms of the Leases creating
the Leasehold Estate. Each lease listed on Schedule 4.3(a) hereto is
in full force and effect. Sellers or Cramerton, as the case may be,
have performed all material obligations required to be performed by
them to date under, and are not in material default in respect of, any
lease set forth on Schedule 4.3(a) hereto, and no event has occurred
which, with due notice or lapse of time or both, would constitute such
a material default by Sellers or Cramerton. To the knowledge of each
Seller, there is no material default asserted thereunder by any other
party thereto and there are no unasserted material defaults, except
for defaults of a party to any such lease which have been consented to
or waived in writing by the other party thereto. All rentals and
other payments due under each such Lease have been duly paid.
(b) Personal Property. Schedule 4.3(b) hereto sets forth
the name, parties and date of (i) all material Personal Property
Leases with respect to the Business and (ii) all material leases of
personal property with respect to the business of Cramerton, in each
case (x) under which one or more of the Sellers and/or Cramerton is
the lessee, (y) under which the annual rent is $10,000 or more or
which are material to the Business or the business of Cramerton and
(z) which leases are not cancelable (without liability) within 90
days. At the request of Foamex, Sellers will deliver true, correct
and complete copies of such personal property leases. Each personal
property lease listed on Schedule 4.3(b) hereto is in full force and
effect. Sellers or Cramerton, as the case may be, have performed all
material obligations required to be performed by them to date under,
and are not in material default in respect of, any personal property
lease set forth on Schedule 4.3(b) hereto, and no event has occurred
which, with due notice or lapse of time or both, would constitute such
a material default. To the knowledge of each Seller, there is no
default asserted
27
thereunder by any other party thereto and there are no unasserted
material defaults, except for any defaults of a party to any such
personal property lease which have been consented to or waived in
writing by Seller or Cramerton.
4.4 Owned Real Property. Schedule 4.4 hereto contains a
summary of all Owned Real Property and all Cramerton Real Property
(collectively, the "Real Property"). Each of the Sellers and
Cramerton, as the case may be, has good, marketable and insurable fee
title to all Real Property, free and clear of any and all liens,
charges, pledges, mortgages, security interests or other encumbrances
of any kind, imperfections of title, covenants, restrictions,
easements, encroachments or any other state of fact except Permissible
Liens.
Other than Permissible Liens or as set forth on Schedule 4.4
hereto, none of the Sellers and/or Cramerton have granted any purchase
options or rights of first refusal or first offer with respect to the
Owned Real Property and none of the Owned Real Property is subject to
any such options or rights.
4.5 Title to Owned Personal Property. Except as set forth
on Schedule 4.5(a) hereto as of the date of this Agreement and
Schedule 4.5(b) as of the Closing Date, each Seller or Cramerton, as
the case may be, has good title to all of the personal property owned
by such Seller or by Cramerton and JPS Mexico has good title to one-
half of the outstanding capital stock of Enjema, and, in the case of
the Sellers, included in the Transferred Assets, and in each case free
and clear of any and all liens, charges, pledges, mortgages, security
interests or other encumbrances of any kind, except for Permissible
Liens.
4.6 Contracts and Commitments. Schedule 4.6 hereto lists
all of the contracts, commitments, arrangements and understandings,
both oral and written, which are material to the conduct, operations
and prospects of the Business or the business of Cramerton
(collectively, the "Contracts"). Except as set forth in Schedule 4.6
hereto, none of the Contracts include any: (i) contract or agreement
for the employment of any stockholder, director, officer, consultant
or key employee not terminable without penalty or liability arising
from such termination; (ii) joint venture agreement, shareholder
agreement or similar arrangement; (iii) contract or other agreement
relating to indebtedness for borrowed money or capitalized leases, or
other agreement or contract in respect of which Purchaser (after the
Closing) or Cramerton is obligated in any way to provide funds in
respect of, or to guarantee or assume, any debt, obligation or
dividend of any person or entity, in each case, in excess of $50,000;
(iv) contract or other agreements containing any covenant under which
Purchaser (after the Closing) or Cramerton
28
may not compete in any line of business or with any person or entity
in any geographic area; (v) indemnity arrangement arising in
connection with any sale or disposition of assets (other than sales of
assets in the ordinary course of business); and (vi) sales
representation and distributorship contacts and arrangements. Sellers
and Cramerton have performed all material obligations required to be
performed by them to date under, and are not in material default in
respect of, any Contract, and no event has occurred which, with due
notice or lapse of time or both, would constitute such a material
default. Except as described in Schedule 4.6 hereto, no other party
to any Contract is in default in respect thereof and, to Sellers'
knowledge, no event has occurred which, with due notice or lapse of
time or both, would constitute such a default. Except as indicated in
Schedule 4.11 hereto, Sellers' right, title and interest in and to the
Contracts are assignable to Purchaser without any required consent of
the other party thereto or any Governmental Authority. Sellers will
provide true, correct, and complete copies of the Contracts to Foamex
upon request.
4.7 Litigation, Proceedings and Applicable Law. Except as
set forth on Schedule 4.7 hereto, there are no claims, actions, suits
or proceedings pending or, to the knowledge of Sellers, threatened
against or affecting the Business, or the business of Cramerton, or
any of the Transferred Assets and the assets of Cramerton which, if
adversely determined, would have, individually or in the aggregate, a
Material Adverse Effect or impair any of Sellers' ability to
consummate the transactions contemplated hereby, or which question or
challenge the validity of this Agreement or any actions to be taken by
Sellers hereunder or in connection with any of the transactions
contemplated hereby. Except as set forth on Schedule 4.7 hereto,
neither Sellers nor Cramerton is subject to any judgment, order, writ,
injunction or decree of any court or Governmental Agency, and there
are no unsatisfied judgments against the Sellers, Cramerton or the
Business, including the business of Cramerton.
4.8 Compliance with Law. Except as set forth on Schedule
4.8 hereto, the Business, including the business of Cramerton, has
been operated in material compliance with all applicable laws,
statutes, rules, regulations, ordinances, codes, orders, licenses,
permits or authorizations, as such now apply to such Business,
including the business of Cramerton, or the Transferred Assets and the
assets of Cramerton, including, without limitation, any applicable
business, building, zoning, antipollution, occupational safety,
health, welfare, pension, antitrust, consumer protection, disabled
employees, wages, hours, collective bargaining, discrimination, plant
closing, or other law, ordinance or regulation and to the knowledge of
Sellers no notification has been received alleging any violation of
any of the foregoing.
29
4.9 Taxes. Except as set forth on Schedule 4.9 hereto:
(a) None of the Transferred Assets or the assets of
Cramerton is: (1) property which Purchaser or Sellers are or will be
required to treat as owned by another person pursuant to the
provisions of Section 168(f) of the Internal Revenue Code of 1954 (as
in effect immediately prior to the Tax Reform Act of 1986); (2) "Tax-
exempt use property" within the meaning of Section 168(h)(1) of the
Code; (3) property used predominately outside the United States within
the meaning of Prop. Treas. Reg. # 1.168-2(g)(5), or (4) "Tax-exempt
bond financed property" within the meaning of Section 168(g)(5) of the
Code.
(b) The Sellers are not foreign persons within the meaning
of Section 1445(b)(2) of the Code.
4.10 No Conflict or Violation. Without giving effect to
Sections 3.2(c) an 3.4(d) hereof, and except as set forth in Schedule
4.11 hereto, neither the execution, delivery nor performance of this
Agreement or any of the transactions contemplated hereby will (a)
violate or conflict with any provision of (i) the Certificate of
Incorporation or By-laws of each of the Sellers, CMC and JPS Mexico or
(ii) the Cramerton Agreements, (b) result in a breach of or default
(or an event which, with notice, lapse of time or both, would
constitute a breach or default) under, result in the termination of,
accelerate the performance required by, cause the acceleration of the
maturity of any debt or obligation pursuant to, or result in the
creation or imposition of any lien, security interest, charge or other
encumbrance in or upon any of the Transferred Assets or the assets of
Cramerton under any provision of any material contract, agreement,
lease, commitment, license, franchise, permit, authorization or
concession to which any of Sellers or Cramerton is a party or bound
and to which the Transferred Assets, or the assets of Cramerton, or
the Business, including the business of Cramerton, is subject, or (c)
result in a violation by Sellers or Cramerton of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction,
decree, or award (or an event which with notice, lapse of time, or
both, would result in any such violation) or (d) result in the
creation of an Encumbrance on the Transferred Assets, or the assets of
Cramerton, other than a Permissible Lien, which individually or in the
aggregate in the case of clauses (b) through (d), would have a
Material Adverse Effect or impair Sellers' ability to consummate the
transactions contemplated hereby.
4.11 Consents and Approvals. Without giving effect to
Sections 3.2(c) and 3.4(d) hereof, except as set forth on
30
Schedule 4.11 hereto and other than real property recording and filing
documents normally required in connection with the conveyance of
title, no notice to, consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Agency, or
any other person or entity, is required to be made or obtained by any
Seller or Cramerton in connection with the execution, delivery and
performance of this Agreement or the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby.
4.12 Intellectual Properties. Schedule 4.12 hereto con
tains a list of all Intellectual Properties and Cramerton Intellectual
Properties, in which Sellers or Cramerton have any right, title or
interest and which have been used in connection with, or which relate
to, the Business, including the business of Cramerton, or the products
or processes of Auto, the Division or Cramerton. Except for Purchaser
pursuant to this Agreement or as otherwise set forth in Schedule 4.12
hereto, none of the Sellers or Cramerton has granted a license, or has
an understanding with any third party and/or has entered into a
written agreement, relating in whole or in part to any of the
Intellectual Properties and the Cramerton Intellectual Properties of
Sellers or Cramerton used in connection with the Business, including
the business of Cramerton and there has been no assertion thereof by
any person. To the knowledge of Sellers, there is no infringement or
other adverse claim against the rights of Sellers or Cramerton with
respect to any of the Intellectual Properties and the Cramerton
Intellectual Properties used or owned by Sellers or Cramerton in con-
nection with the conduct of the Business, including the business of
Cramerton. Neither Sellers nor Cramerton has been charged with nor to
the knowledge of Sellers is it threatened to be charged with, nor to
Sellers' best knowledge is there any basis for any charge of,
infringement or other violation of, nor has it infringed, nor is it
infringing, any unexpired patent, trademark, trademark registration,
trade name, service mark, copyright, copyright registration or other
proprietary right of any other person in connection with the Business,
including the business of Cramerton.
4.13 Insurance.
(a) Schedule 4.13 hereto contains a list of all policies of
title, liability, fire, workers' compensation and other forms of
insurance insuring the products, properties, assets and operations of
the Business or the business of Cramerton since June 1, 1991. Set
forth on Schedule 4.13 hereto is a list of the aggregate claims and
all individual claims in excess of $25,000 relating to the Business,
including the business of Cramerton, or Sellers in the last four
years. Except as set forth on Schedule 4.13 hereto, there is no claim
by any of
31
the Sellers or Cramerton pending under any of the policies listed in
Schedule 4.13 hereto as to which coverage has been questioned, denied
or disputed by the underwriters of such policies. At Foamex's
request, Sellers will provide Foamex with true, correct and complete
copies of all such insurance policies. Except as set forth in
Schedule 4.13 hereto, all such policies are in full force and effect
and, to the knowledge of Sellers, underwritten by unaffiliated finan-
cially sound and reputable insurers and sufficient for all applicable
requirements of law and for the conduct of the Business, including the
business of Cramerton, and provide insurance, including, without
limitation, liability and products liability insurance, in such
amounts and against such risks as indicated, subject to commercially
reasonable self-insurance retention levels and/or deductibles set
forth on Schedule 4.13 hereto, to protect in all material respects the
operations of the Business, including the business of Cramerton, and
the Transferred Assets, and the assets of Cramerton.
(b) To the knowledge of Sellers, no notice of cancellation,
termination or reduction in coverage has been received by Sellers or
Cramerton with respect to any policy listed in Schedule 4.13 hereto.
Neither Sellers nor Cramerton has been refused any insurance with
respect to the Transferred Assets, or the assets of Cramerton, by any
insurance carrier to which Sellers or Cramerton has applied for any
such insurance or with which Sellers or Cramerton has maintained
insurance during the preceding four years with the reason for such
refusal arising as a result of the operations of the Business, or the
business of Cramerton.
4.14 No Brokers. Except as set forth on Schedule 4.14
hereto, none of the Sellers nor any Affiliate of Sellers has entered
into or will enter into any agreement, arrangement or understanding
with any Person which will result in the obligation of Purchaser or
any affiliate of Purchaser to pay any finder's fee, brokerage
commission or similar payment in connection with the transactions
contemplated hereby.
4.15 Compliance with Environmental Laws. Except as set
forth on Schedule 4.15 hereto and other than as not reasonably likely
to have a Material Adverse Effect:
(a) Sellers and Cramerton (i) have obtained and hold or
have made timely application to renew all Environmental Permits
necessary for Sellers and Cramerton to conduct the operations of the
Business, including the business of Cramerton, and Sellers are in
material compliance with such Environmental Permits, (ii) there are no
Legal Proceedings pending or, to the best knowledge of the Sellers,
threatened to revoke such Environmental Permits, (iii) Sellers have
not received notice
32
from any source to the effect that there is not in existence any
Environmental Permit required for the current use or operation of the
Business, including the business of Cramerton or the Transferred
Assets and the assets of Cramerton; and (iv) Sellers have not received
notice from any Governmental Agency that such Governmental Agency will
not renew any Environmental Permit subject to Section 4.15(a)(i).
(b) The operations of the Business, including the business
of Cramerton, and Sellers' and Cramerton's operations with respect to
the Transferred Assets and the assets of Cramerton are in material
compliance with all applicable Environmental Laws.
(c) There are no underground storage tanks, as defined
under any Environmental Law, located within any portion of any
Transferred Asset or asset of Cramerton, nor have any liens been
placed upon any Transferred Asset or asset of Cramerton in connection
with any actual or alleged liability under any Environmental Law.
(d) As of the date hereof there are, and as of the Closing
Date there will be, no facts, circumstances or conditions relating to,
arising from, associated with or attributable to the Business,
including the business of Cramerton, or the Transferred Assets and the
assets of Cramerton, including, without limitation, facts,
circumstances or conditions relating to Contaminants, that may give
rise to an Environmental Claim or result in Environmental Costs and
Liabilities.
(e) There are no Environmental Claims or Legal Proceedings
under Environmental Laws pending or threatened against any of Sellers
or Cramerton, respectively, as a result of Sellers' or Cramerton's
operation of the Business, including the business of Cramerton or
ownership of the Transferred Assets and the assets of Cramerton.
(f) To the Sellers' knowledge, Sellers and Cramerton are
not required to give notice of or record or deliver to any
Governmental Agency an environmental disclosure document or statement
by virtue of the transactions set forth herein and contemplated
hereby, or as a condition to the recording of any mortgage or the
effectiveness of any of the transactions contemplated hereby.
33
4.16 Employee Benefit Plans.
(a) Schedule 4.16(a) hereto sets forth a list of the
"employee benefit plans", as defined in Section 3(3) of ERISA, and all
other employee benefit plans, policies, arrangements or payroll
practices, including, without limitation, severance pay, sick leave,
vacation pay, disability, retirement, deferred compensation, bonus,
stock purchase, stock option, hospitalization, medical insurance, life
insurance and educational assistance programs, maintained for the
benefit of or to which contributions are made, or have been made, on
behalf of current or former employees of Sellers or Cramerton. The
plans, policies, arrangements and payroll practices listed in Schedule
4.16(a) hereto shall hereafter be referred to as the "Plans".
(b) With respect to each of the Plans, true, correct and
complete copies of each plan and its related trust documents,
including any amendments thereto, have been delivered to Foamex by
Sellers. True, correct and complete copies of the following
documents, with respect to each of the Plans, have been delivered or
made available to Foamex by Sellers: (i) the most recent Forms 5500
filed with the IRS; (ii) the most recent actuarial valuation report
prepared for each defined benefit plan and post-retirement medical
plan; (iii) the last IRS determination letter for each Plan; (iv)
summary plan descriptions for each Plan; (v) material written
communications to employees relating to the Plans; and (vi) written
descriptions of all material non-written agreements relating to the
Plans.
(c) Auto's "Hourly Employees' Pension Plan of JPS
Automotive Products Corp." (the "Hourly Plan") is not a "multiemployer
plan", as defined in Section 3(37) of ERISA.
(d) The Hourly Plan and each other Plan that is intended to
qualify under Section 401(a) of the Code and the trusts maintained
thereto that will transfer assets to any similar plan of Purchaser
pursuant to Section 6.3(d) hereto are so qualified or exempt from
federal income taxation under Section 501 of the Code by the IRS, and
nothing has occurred with respect to the operation of such Plans which
could reasonably cause the loss of such qualification or exemption or
the imposition of any liability, penalty or tax under ERISA or the
Code.
(e) All contributions required to have been made under the
Hourly Plan, by law or pursuant to any collective bargaining agreement
identified in Schedule 4.17 hereto (without regard to any waivers
granted under Section 412 of the Code) to any funds or trusts
established thereunder or in connection therewith have been made by
the due date thereof (including any valid extension), and all
contributions for any period ending on or
34
before the Closing Date which are not yet due will have been paid or
accrued on or prior to the Closing Date. No accumulated funding
deficiency, as defined in Section 412 of the Code or Section 302 of
ERISA, exists with respect to the Hourly Plan.
(f) Sellers or Cramerton, as the case may be, are in
material compliance with the terms of each plan set forth on Schedule
4.16(a) and have satisfied any obligation which has matured and become
due and payable under such plans to any current or former employee of
the Business, including the business of Cramerton, including any
Employee, Transferred Employee or Covered Employee.
(g) There has been no "reportable event", as that term is
defined in Section 4043 of ERISA and the regulations thereunder, with
respect to the Hourly Plan which would require the giving of notice to
the Pension Benefit Guaranty Corporation for which there would be any
liability to Purchaser.
(h) There has been no material violation of ERISA with
respect to the filing of applicable reports, documents and notices
relating to the Hourly Plan with the Secretary of Labor and the
Secretary of the Treasury or the furnishing of such reports, documents
or notices to the participants or beneficiaries of the Hourly Plan.
(i) There are no pending actions, claims or lawsuits which
have been asserted or instituted against the Hourly Plan, the assets
of any of the trusts under the Hourly Plan or the plan sponsor or the
plan administrator, or against any fiduciary of the Hourly Plan (other
than routine benefit claims), nor do Sellers have knowledge of any
facts which could form the basis for any such claim or lawsuit.
(j) All amendments and actions required to bring the Hourly
Plan into conformity in all respects with all of the applicable
provisions of ERISA and other applicable laws have been made or taken
except to the extent that such amendments or actions are not required
by law to be made or taken until a date after the Closing Date.
(k) The Hourly Plan has been maintained, in all material
respects, in accordance with its terms and with all provisions of
ERISA (including rules and regulations thereunder) and other
applicable federal and state laws and regulations, and neither the
Sellers nor any "party in interest" or any "disqualified person" with
respect to the Hourly Plan has engaged in a "prohibited transaction"
within the meaning of Section 4975 of the Code or Section 406 of ERISA
or any other transaction for which a material liability could be
imposed under Section 502 of
35
ERISA. No fiduciary of the Hourly Plan has any liability for any
breach of a fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of the
Hourly Plan.
(l) There has been no "mass layoff" or "plant closing" as
defined by the Worker Adjustment and Retraining Notification Act or
any similar state or local "plant closing" law with respect to the
Employees.
(m) Except as disclosed on Schedule 4.16(m) hereto and for
any other Employee who becomes eligible on or prior to the Closing
Date and as required under Section 4980B of the Code and Section 601
of ERISA, Sellers and Cramerton do not provide continuing and/or
lifetime health care benefits or coverage for any former employee.
4.17 Labor Relations. Except as set forth on Schedule 4.17
hereto, each Seller does not have any obligation under, and there are
no Employees covered by, any collective bargaining agreement and there
are no pending or, to the knowledge of Sellers, threatened strikes,
work stoppages, slowdowns, grievances or other labor disputes with
respect to individuals employed in the Business which would be
reasonably likely to have a Material Adverse Effect, and there are no
pending or, to the knowledge of Sellers, threatened complaints or
charges with any federal, state or local governmental agency or court
with respect to any individual or group of individuals employed in the
Business alleging employment discrimination. No individuals employed
in the Business other than those covered by the collective bargaining
agreement listed in Schedule 4.17 are represented by any labor
organization, and to the knowledge of Sellers, no group of such
individuals or labor organization with respect to such individuals has
made a pending demand for recognition or have filed a petition seeking
a representation proceeding with the National Labor Relations Board.
4.18 Operations in Ordinary Course. Since January 29,
1994, the Business, including the business of Cramerton, has been
operated in the ordinary course in accordance with past practices.
4.19 Preliminary Prospectus. (a) The information set forth
in the Preliminary Prospectus under the captions "Risk Factors",
"Selected Historical and Pro Forma Financial Data" Unaudited Pro Forma
Combined Financial Data, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Business",
"Management" "Certain Transactions", "Security Ownership of Principal
Stockholders and Management", Description of Certain Indebtedness --
Cramerton Credit Facility"
36
and Financial Statements, did not, as of the date of the Preliminary
Prospectus, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that with respect to pro forma
financial information or information which relates to Purchaser
following consummation of the transactions contemplated hereunder,
Sellers' representation and warranty shall be given only on the basis
as if the Transaction (as defined in the Preliminary Prospectus) was
consummated.
(b) The historical financial information set forth in Pre-
Effective Amendment No. 3 to the registration statement relating to
the Senior Notes Offering under the caption "Summary--Recent
Developments" does not, and the historical financial statements and
Managements' Discussion and Analysis of Financial Condition and
Results of Operations of the Business, including the business of
Cramerton, other than Excluded Information, for the second fiscal
quarter of 1994 set forth in the Final Prospectus will not, contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading, in each
case as of the date thereof.
4.20 Seiren Call Option. Seiren's option to purchase
certain limited partnership interests of Cramerton from Auto, as such
option is described in Article II of the Cramerton Purchase Agreement,
and Seiren's option to purchase certain shares of common stock of CMC,
as such option is described in Article II of the CMC Stockholders'
Agreement, have not been exercised by Seiren and such options have
expired.
4.21 Transactions with Affiliates. Other than in the
ordinary course of business and except as set forth on Schedule 4.21
hereto or disclosed in the Preliminary Prospectus, since November 1,
1993, there have been, and prior to the Closing Date there will be, no
transactions, agreements or arrangements between the Business or the
business of Cramerton and (i) Sellers, (ii) any Affiliate of Sellers,
(iii) any director or officer of any Seller or any Affiliate of
Sellers or (iv) any member of the immediate family of any individual
described in clause (ii) or (iii) of this sentence.
4.22 No Investments. Except as set forth on Schedule 4.22
hereto or disclosed in the Preliminary Prospectus, none of the Sellers
nor Cramerton owns or has purchased or otherwise acquired, or has
entered into any contract, agreement, commitment or understanding to
purchase or otherwise acquire, any shares of capital stock or other
securities of any corporation,
37
partnership, joint venture or other entity, or any rights, warrants or
options to acquire any of the foregoing.
4.23 Permits. Schedule 4.23 hereto sets forth all Permits
and Cramerton Permits necessary to conduct the Business, including the
business of Cramerton, the dates such Permits and Cramerton Permits
were obtained, the date of renewals thereof and the status of each
Permit and Cramerton Permits. Except as set forth on Schedule 4.23
there are no Legal Proceedings pending or, to Sellers' knowledge,
threatened which seek to revoke, cancel or declare such Permits or
Cramerton Permits invalid in any respect. The Permits and Cramerton
Permits are sufficient in all material respects to permit the lawful
conduct of the Business, including the business of Cramerton, except
where the failure to have such Permits would not have a Material
Adverse Effect on the Business, including the business of Cramerton
taken as a whole. Schedule 4.23 sets forth (i) a list of those
Permits (x) which are necessary for the conduct of the Business after
the Closing Date, and which are non-assignable, (y) which may only be
assigned to Purchaser with the consent of a Governmental Agency or
third party, or (z) which will terminate or which must otherwise be
amended upon the consummation of the transactions contemplated by this
Agreement, and (ii) a list of those Cramerton Permits which must be
amended, modified, renewed, or with respect to which notice must be
given to any Governmental Agency or other person upon consummation of
the transactions contemplated by this Agreement. The Business,
including the business of Cramerton, is not being conducted in a
manner which violates any of the material terms or conditions under
which any Permit or Cramerton Permit was granted, and the Sellers or
Cramerton, as the case may be, have performed all material obligations
and satisfied all conditions required to be performed or satisfied by
them to date under, and are not in default in respect of, any Permit
or Cramerton Permit and no event has occurred which, with due notice
or lapse of time or both, would constitute such a default or permit
the revocation or cancellation of any Permit or Cramerton Permit, in
each case, except where the failure to be in compliance with such
Permit or Cramerton Permit would not have a material adverse effect on
any individual property listed on Schedule 4.3(a) or 4.4 hereto and
would not have a Material Adverse Effect on the Business, including
the business of Cramerton. A true, correct and complete copy of each
Permit and each Cramerton Permit has heretofore been provided to
Foamex.
4.24 Representations of Sellers with Respect to Purchaser.
With respect to the period ending at the time which immediately
follows the execution of this Agreement (the "Representation Period"),
Sellers hereby represent and warrant to Foamex as follows:
38
(a) Purchaser's Conduct of Business. Purchaser has not
incurred or suffered to exist any liabilities or obligations of
Purchaser, nor engaged, and will not engage, in any activity, other
than in connection with its organization, the preparation of the
registration statement relating to the Senior Notes Offering and
related documents, the registration statement relating to the initial
public offering of its common stock and related documents and the
negotiation and preparation of this Agreement and the Ancillary
Agreements and the execution of this Agreement.
(b) Organization of Purchaser. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware; Purchaser has full corporate power and
authority to conduct its business as it is now being conducted.
(c) Authorization. Purchaser has all necessary corporate
power and authority to enter into this Agreement and the Ancillary
Agreements, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the
Ancillary Agreements and the consummation of the transactions
described herein and therein by Purchaser have been duly authorized by
all requisite corporate action. This Agreement and the Ancillary
Agreements executed during the Representation Period have been duly
executed and delivered by Purchaser and each is a valid and binding
obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws now or
hereafter in effect relating to creditors' rights generally and by
general principles of equity (whether considered in an action at law
or in equity) and the discretion of the court before which any
proceeding therefor may be brought.
(d) No Conflict or Violation. Neither the execution,
delivery nor performance of this Agreement or any of the transactions
contemplated hereby will (i) violate or conflict with any provision of
the Certificate of Incorporation or By-laws of Purchaser, (ii) result
in a breach of or a default under any provision of any contract,
agreement, lease, commitment, license, franchise, permit,
authorization or concession to which Purchaser is a party or bound or
to which any property or asset of Purchaser is subject or an event
which with notice, lapse of time, or both, would result in any such
breach or default, or (iii) result in a violation by Purchaser of any
statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree, or award, or an event which with notice, lapse of
time, or both, would result in any such violation, which breach,
39
default or violation would have a material adverse effect on the
ability of Purchaser to consummate the transactions contemplated
hereby.
(e) Consents and Approvals. Except as set forth on
Schedule 5.1(d) hereto, no consent, approval or authorization or
declaration, filing or registration with any Governmental Agency, or
any other person or entity, is required to be made or obtained by
Purchaser in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby.
(f) Litigation. There is no claim, action, suit,
proceeding or governmental investigation against Purchaser which (i)
seeks to restrain or enjoin the consummation of the transactions
contemplated hereby or (ii) if adversely determined, could reasonably
be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated by this
Agreement. Purchaser is not in violation of any term of any judgment,
decree, injunction or order outstanding against it, which violation
could reasonably be expected to have a material adverse effect on the
ability of Purchaser to consummate the transactions contemplated
hereby.
(g) No Brokers. Purchaser has not entered into any
agreement or incurred any obligation, directly or indirectly, for the
payment of any broker's or finder's fee or commission, or any other
payment to any person or entity in connection with this Agreement or
the transactions contemplated hereby, and Purchaser is not otherwise
obligated to pay any such fee, commission or other payment and is not
aware of any basis for any claim by any person or entity for the
payment of such a fee, commission or other payment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND FOAMEX
5.1 Purchaser Representations. Purchaser represents and
warrants to Sellers with respect to Purchaser as of the Closing Date
(except to the extent that there was a breach of a corresponding
representation of Sellers in Section 4.24 with respect to Purchaser as
of the expiration of the Representation Period and which was not, or
has not been, cured by Sellers prior to the effectiveness of such
representation given pursuant to Section 5.1 hereof, in which event,
no representation or warranty is given), as follows:
40
(a) Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; Purchaser has full corporate power and authority to
conduct the Business as it is now being conducted and to own and lease
the Transferred Assets.
(b) Authorization. Purchaser has all necessary corporate
power and authority to enter into this Agreement and the Ancillary
Agreements, to consummate the transactions contemplated on its part
hereby and thereby and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement
and the Ancillary Agreements and the consummation of the transactions
described herein and therein by Purchaser have been duly authorized by
all requisite corporate action. This Agreement and the Ancillary
Agreements to which it is a party have been duly executed and
delivered by Purchaser and assuming the due execution and delivery
thereof by Foamex and by Sellers, each is a valid and binding
obligation, enforceable against Purchaser in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws now or
hereafter in effect relating to creditors' rights generally and by
general principles of equity (whether considered in an action at law
or in equity) and the discretion of the court before which any
proceeding therefor may be brought.
(c) No Conflict or Violation. Except as set forth on
Schedule 5.1(d), neither the execution, delivery nor performance of
this Agreement or any of the transactions contemplated hereby will (i)
violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser, (ii) result in a breach of or a
default under any provision of any contract, agreement, lease,
commitment, license, franchise, permit, authorization or concession to
which Purchaser is a party or bound or to which any property or asset
of Purchaser is subject, or an event which with notice, lapse of time,
or both, would result in any such breach or default, or (iii) result
in a violation by Purchaser of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree, or award,
or an event which with notice, lapse of time, or both, would result in
any such violation, which breach, default or violation would have a
material adverse effect on the ability of Purchaser to consummate the
transactions contemplated hereby.
(d) Consents and Approvals. Except as set forth on
Schedule 5.1(d), no consent, approval or authorization or declaration,
filing or registration with any Governmental Agency, or any other
person or entity, is required to be made or obtained by Purchaser in
connection with the execution, delivery and
41
performance of this Agreement and the consummation of the transactions
contemplated hereby.
(e) Litigation. There is no claim, action, suit,
proceeding or governmental investigation against Purchaser which (i)
seeks to restrain or enjoin the consummation of the transactions
contemplated hereby or (ii) if adversely determined, could reasonably
be expected to have a material adverse effect on the ability of
Purchaser to consummate the transactions contemplated by this
Agreement. Purchaser is not in violation of any term of any judgment,
decree, injunction or order outstanding against it, which violation
could reasonably be expected to have a material adverse effect on the
ability of Foamex to consummate the transactions contemplated hereby.
(f) No Brokers. Except as set forth on Schedule 5.1(f)
hereto, neither Purchaser nor any Affiliate of Purchaser has entered
into any agreement or incurred any obligation, directly or indirectly,
for the payment of any broker's or finder's fee or commission, or any
other payment to any person or entity in connection with this
Agreement or the transactions contemplated hereby, and Purchaser is
not otherwise obligated to pay any such fee, commission or other
payment and is not aware of any basis for any claim by any person or
entity for the payment of such a fee, commission or other payment.
5.2 Foamex Representations. Foamex hereby represents and
warrants to Sellers as of the date hereof and as of the Closing Date,
as follows:
(a) Organization. Foamex is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) Authorization. Foamex has all necessary corporate
power and authority to enter into this Agreement, to consummate the
transactions contemplated on its part hereby and thereby and to
perform its obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation of the transactions
described herein by Foamex has been duly authorized by all requisite
corporate action. This Agreement and the Ancillary Agreements to
which it is a party have been duly executed and delivered by Foamex,
and assuming the due execution and delivery thereof by Purchaser and
by Sellers, each is a valid and binding obligation, enforceable
against Foamex in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws now or hereafter in effect
relating to creditors' rights generally and by general principles of
equity (whether
42
considered in an action at law or in equity) and the discretion of the
court before which any proceeding therefor may be brought.
(c) No Conflict or Violation. Except as set forth on
Schedule 5.2(d) hereto, neither the execution, delivery nor
performance of this Agreement or any of the transactions contemplated
hereby will (i) violate or conflict with any provision of the
Certificate of Incorporation or By-laws of Foamex, (ii) result in a
breach of or a default under any provision of any contract, agreement,
lease, commitment, license, franchise, permit, authorization or
concession to which Foamex is a party or bound or to which any
property or asset of Foamex is subject, or an event which with notice,
lapse of time, or both, would result in any such breach or default, or
(iii) result in a violation by Foamex of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction,
decree, or award, or an event which with notice, lapse of time, or
both, would result in any such violation, which breach, default or
violation would have a material adverse effect on the ability of
Foamex to consummate the transactions contemplated hereby.
(d) Consents and Approvals. Except as set forth on
Schedule 5.2(d), no consent, approval or authorization or declaration,
filing or registration with any Governmental Agency, or any other
person or entity, is required to be made or obtained by Foamex in
connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby.
(e) Litigation. Except as set forth on Schedule 5.2(e)
hereto, there is no claim, action, suit, proceeding or governmental
investigation against Foamex which (i) seeks to restrain or enjoin the
consummation of the transactions contemplated hereby or (ii) if
adversely determined, could reasonably be expected to have a material
adverse effect on the ability of Foamex to consummate the transactions
contemplated by this Agreement. Except as set forth on Schedule
5.2(e) hereto, Foamex is not in violation of any term of any judgment,
decree, injunction or order outstanding against it, which violation
could reasonably be expected to have a material adverse effect on the
ability of Purchaser to consummate the transactions contemplated
hereby.
ARTICLE VI
COVENANTS OF SELLERS AND PURCHASER
Sellers and Purchaser each covenant with the other as
follows:
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6.1 Maintenance of Auto, the Division, Cramerton and the
Business Prior to Closing. Unless otherwise consented to by Purchaser
and Foamex in writing, from the date hereof until the Closing, Sellers
shall have, and shall cause Cramerton and JPS Mexico to have:
(a) carried on the Business, including the business of
Cramerton, in the ordinary course in accordance with past practice and
as described in the Preliminary Prospectus, and not taken any action
inconsistent therewith or with the consummation of the transactions
contemplated hereby and shall not have consented to any action to be
taken by Enjema not in accordance with its past practice and not in
the ordinary course of its business;
(b) used their best efforts to keep available generally the
services of the present officers and employees of Auto, the Division
and Cramerton, and preserved generally the present relationships with
persons having business dealings with Auto, the Division, Cramerton
and the Business;
(c) maintained all of the Transferred Assets and the assets
of Cramerton in good repair, order and condition (except for ordinary
wear and tear and equipment breakdowns of a type normally occurring
which do not interfere with the operation of the Business);
(d) maintained the books, accounts and records in the
ordinary course consistent with past practice, and complied, in all
material respects, with all laws applicable to Auto, the Division and
Cramerton and to the conduct of the Business;
(e) not changed or entered into any agreement to change the
character of the Business, including the business of Cramerton in any
manner;
(f) not granted any increase in the salary or other
compensation of any of Transferred Employees or employees of Cramerton
whose annual salary exceeds $50,000 per annum, and Sellers shall
promptly notify Purchaser and Foamex in writing of all such increases
in compensation;
(g) not entered into any employment contract with any
officer or employee of Auto, the Division or Cramerton or made any
loan to, or entered into any material transaction of any other nature
with, any officer or employee of Auto, the Division or Cramerton;
(h) not sold or transferred any of the Transferred Assets,
including the assets of Cramerton, except inventory and
44
obsolete Fixtures and Equipment in the ordinary course of business,
and maintained Inventory and the inventory of Cramerton at levels
consistent with past practice;
(i) not terminated or modified any lease, license, permit,
contract or other agreement included in the Transferred Assets or the
assets of Cramerton in a manner adverse to the Business, including the
business of Cramerton;
(j) not released, waived, sold or assigned any debts,
claims, rights or other intangible rights included in the Transferred
Assets or the assets of Cramerton;
(k) maintained insurance coverages in the usual manner
consistent with prior practices;
(l) performed in all material respects its obligations
under all material Contracts to which it is a party or by which it is
bound; and
(m) not acquired, leased or disposed or agreed to acquire,
lease or dispose of any capital assets or any other assets other than
in the ordinary course of business.
6.2 Consents. Subject to Section 3.2(c) and 3.4(d),
Purchaser and Sellers, as applicable, will take all reasonable action
required hereunder to obtain all applicable Permits, consents,
approvals and agreements of, and to give all notices and make all
filings with, public and governmental authorities and third parties
(at such time as the parties mutually determine) as may be necessary
to authorize, approve or permit the full and complete sale,
conveyance, assignment and transfer of the Transferred Assets.
6.3 Employees.
(a) Employment. Effective as of the Closing Date,
Purchaser shall offer employment to the Employees, other than those
Employees who are employees of Cramerton, listed in Schedule 6.3(a)
hereto (which Schedule sets forth their current compensation, position
and, with respect to any inactive Employee, the reason for such
status) and shall provide such employees who accept such employment
with Purchaser with a comparable position and at the same level of
wages and/or salary together with a substantially similar benefit
program as provided by Sellers immediately prior to the Closing Date
(except with respect to Purchaser's retirement and deferred
compensation program, which may be substantially comparable to that of
the Sellers). However, nothing in this paragraph shall restrict
Purchaser from changing the terms and conditions of employment of
45
any Transferred Employee or of any benefit program maintained for the
benefit of the Transferred Employees or the Covered Employees after
the Closing Date, provided that such change is not prohibited by (i)
any collective bargaining agreement assumed by the Purchaser, (ii) any
other agreement assumed under this Agreement or (iii) any applicable
law.
(b) Health and Welfare Plan Coverage. Effective as of the
Closing Date, Purchaser shall provide to any eligible Covered Employee
group health and welfare coverage that contains no (i) pre-existing
condition exclusions or limitations or (ii) eligibility waiting
periods, applicable to Covered Employees other than any limitations or
waiting periods that are already in effect and have not been satisfied
with respect to such employees. As of the Closing Date, all
liabilities accrued prior to the Closing Date under Sellers' post-
retirement group health and life insurance plans with respect to the
Covered Employees shall be reflected in the Closing Statement in
accordance with SFAS No. 106 for purposes of determining the Purchase
Price adjustments set forth in Section 2.3 hereof. If an event
causing a Covered Employee to be eligible for health care benefits
under Part 6 of Title I of ERISA, 29 U.S.C. ## 1161 et. seq., as
amended, occurs after the Closing Date, the Purchaser will be
obligated to provide such health care benefits.
(c) Pension Benefits. Sellers shall cause the Retirement
Pension Plan for Employees of JPS Textile Group, Inc. (the "Textile
Plan") to be amended to provide that Transferred Employees who accept
such employment with Purchaser will receive, for vesting purposes
only, credit for their years of service with the Purchaser and any of
its Affiliates. Purchaser will cause the Transferred Employees to
receive, for vesting purposes only, credit for their years of service
with the Sellers and any of their Affiliates under any defined benefit
pension plan maintained or sponsored by Purchaser or any of its
Affiliates to which such employees are eligible to participate.
Effective as of the Closing Date, Purchaser shall assume the
sponsorship of the Hourly Plan, together with all of the liabilities
accrued thereunder. As soon as practicable after the Closing Date,
either (i) the Purchaser shall assume the trust agreement with Mellon
Bank, the trustee of the trust associated with the Hourly Plan (the
"Hourly Trust") or (ii) the Sellers shall cause Mellon Bank, as
trustee of the Hourly Trust, to transfer in cash or in kind the assets
held in the Hourly Trust to a trustee designated by the Purchaser;
provided, however, that (i) such transfer of assets in the Hourly
Trust and such assumption of liabilities under such plan is
conditioned on proper notification to and bargaining, if any, with the
Chicago and Central States Joint Board, Amalgamated Clothing and
Textile Workers Union and (ii) if there is a transfer of the assets
held in the Hourly Trust to a
46
trustee designated by Purchaser, Purchaser provides to Sellers a
determination letter or opinion of counsel reasonably acceptable to
the Sellers that such trust and each plan associated therewith is
qualified as to form under Sections 401(a) and 501(a) of the Code.
(d) Savings Plan. Effective as of the Closing, Purchaser
shall establish or provide a tax-qualified savings plan ("Purchaser's
Savings Plan") for the benefit of the Transferred Employees with
substantially similar features as are provided under the Amended and
Restated Savings, Investment and Profit Sharing Plan of JPS Textile
Group, Inc. ("Sellers' Savings Plan"). Purchaser's Savings Plan shall
expressly provide that Transferred Employees who were participants in
Sellers' Savings Plan immediately prior to the Closing Date shall
participate in Purchaser's Savings Plan as of the Closing Date, and
that all Transferred Employees will have their service with Sellers
and their Affiliates recognized under Purchaser's Savings Plan for
eligibility, vesting and any other purpose for which service is taken
into account under Sellers' Savings Plan. As soon as practical after
the Closing Date, Sellers shall cause the accounts of any current or
former employee of the Business or Cramerton who participates in
Sellers' Savings Plan to be valued. As of such valuation date, assets
equal in value to the amount credited to each such employee's account
under Sellers's Savings Plan will be transferred to the trust
maintained under Purchaser's Savings Plan; provided, however, that
Purchaser provides to Sellers a determination letter or an opinion of
counsel reasonably acceptable to the Sellers that such trust and each
plan associated therewith is qualified as to form under Sections
401(a) and 501(a) of the Code. Purchaser and Seller agree to "clone"
any guaranteed investment contracts ("GICs") so that such contracts
may be transferred to the trust maintained under Purchaser's Savings
Plan. The costs associated with "cloning" such GICs shall be deemed
to be a transfer fee, and shall be paid pursuant to the terms of
Section 10.8 hereof. Such transferred assets shall be in cash or, to
the extent mutually agreed upon by Purchaser and Sellers, in kind
(including the "cloned" GICs), and shall also include any promissory
notes evidencing outstanding loan balances of the Transferred
Employees. As of such transfer date, Purchaser shall be liable for
the payment of the benefits accrued by and transferred in respect of
the Transferred Employees under Sellers' Savings Plan; provided,
however, that Purchaser assumes no liability for the valuation of the
accounts of the Transferred Employees under Sellers' Savings Plan.
(e) Flex Plans. Effective as of the Closing Date,
Purchaser will establish a Code Section 125 flexible benefits program
("Purchaser's FSA") providing benefits that are the same
47
as those available under the JPS Textile Group, Inc. Flexible Benefits
Program ("Sellers' FSA"). Effective as of the Closing Date, Purchaser
shall assume all obligations to pay all unpaid claims of the Employees
and Covered Employees participating in Sellers' FSA as of the Closing
Date. Each Employee and Covered Employee shall be credited as of the
Closing Date under Purchaser's FSA with the amounts available for
reimbursement for each elected benefit equal to such amounts as were
credited under Sellers' FSA with respect to such person immediately
prior to the Closing Date. The Purchaser shall give effect under
Purchaser's FSA to calendar year 1994 salary reduction elections made
by Transferred Employees with respect to Sellers' FSA and no new
benefit elections for 1994 will be allowed to the Transferred
Employees except as otherwise provided by Purchaser's FSA in the event
of a change in family circumstances. The Closing Statement shall
reflect, (i) as a credit to the Sellers, the excess, if any, of (A)
the aggregate claims paid under Sellers' FSA to Employees and Covered
Employees from January 1, 1994 through the Closing Date over (B) the
aggregate amount of payroll withholding related to Sellers' FSA with
respect to such persons during such period, and (ii) as a credit to
the Purchaser, the excess, if any, of (A) the aggregate amount of
payroll withholding related to Sellers' FSA with respect to Employees
and Covered Employees from January 1, 1994 through the Closing Date
over (B) the aggregate claims paid under Sellers' FSA to such persons
during such period.
(f) Nothing herein expressed or implied shall confer upon
any Transferred Employee, Covered Employee or other current or former
employee of Sellers, or legal representative thereof, any rights or
remedies, including, without limitation, any right to employment for
any specified period, of any nature or kind whatsoever, under or by
reason of this Agreement.
(g) Purchaser shall provide Sellers with a list of each
Transferred Employee who terminated employment with the Purchaser
during the calendar year, including such employee's name, social
security number and hours of service with the Purchaser during such
calendar year upon Sellers' request in accordance with Section 9.1,
(i) within sixty (60) days following the end of each of the next five
calendar years or (ii) in connection with the confirmation of the
termination of employment of a Transferred Employee.
6.4 Insurance. Sellers shall provide Foamex within a
reasonable time subsequent to the date hereof with a list of all
policies of title, liability, fire, workers' compensation and other
forms of insurance insuring the products, properties, assets and
operations of the Business or the business of Cramerton for the period
from June 1, 1990 through June 1, 1991.
48
6.5 Name. From and after the Closing Date and consistent
with the terms hereof, Purchaser shall possess, to the exclusion of
Sellers and its Affiliates, all rights to the use of the names or
marks listed on Schedule 4.12 hereto, and all logos listed on Schedule
4.12 hereto, in connection with the business of manufacturing and
distributing the products, whether currently or in the future,
manufactured and distributed by the Business. Sellers shall change
the name of all subsidiaries of Sellers which contain one of the names
or marks listed on Schedule 4.12 hereto, or a derivative thereof using
the phrase "Automotive" or a derivative thereof, to a name which is
not so listed, or similar to a name so listed using the phrase
"Automotive" or a derivative thereof, as promptly as practicable
following the Closing Date.
6.6 Further Assurances; Cooperation and Assistance. From
time to time, at Purchaser's reasonable request, Sellers will (and
will cause their officers, directors, employees, affiliates and agents
to) execute and deliver such other instruments of conveyance and
transfer and take such other actions as Purchaser may reasonably
request in order to (i) perfect and record, if necessary, the sale,
assignment, conveyance, transfer, and delivery to Purchaser of the
Transferred Assets, (ii) convey, transfer to and vest in Purchaser and
to put Purchaser in possession and operating control of all or any
part of the Transferred Assets, including, without limitation,
cooperating with and assisting Purchaser in the prosecution of any
claims and in the collection or reduction to possession of accounts
receivable and all the other Transferred Assets and (iii) prepare
audited or unaudited financial statements and other documents required
to be filed by Purchaser with the Securities and Exchange Commission.
Sellers hereby agree that all out-of-pocket expenses incurred in
connection with the matters set forth in clause (ii) above shall be
borne by them, and all other costs incurred in clauses (i) and (iii)
shall be borne by Purchaser.
6.7 Nondisclosure. (a) From and after the Closing Date,
Sellers will not use, divulge, furnish or make accessible to anyone
any knowledge or information with respect to confidential or secret
processes, inventions, discoveries, improvements, formulae, plans,
material, devices or ideas or know-how, whether patentable or not,
with respect to any proprietary, material non-public, confidential or
secret aspects of the Business (including, without limitation,
customer lists, supplier lists and pricing and marketing arrangements
with customers or suppliers) and Sellers will cooperate reasonably
with Purchaser in preserving such proprietary, confidential or secret
aspects of the Business; provided, however, that nothing herein shall
prohibit Sellers from (i) complying with any order
49
or decree of any court of competent jurisdiction or governmental
authority, but Sellers will give Purchaser timely notice of the
receipt of any such order or decree, or (ii) disclosing such
information to the extent necessary to the lenders under the Seller
Credit Agreement, the Cramerton Credit Agreement or the CIT Agreement
as it relates to the Business, and provided, further, that the
foregoing provision shall not apply to any information which is or
becomes generally available to the public through no breach of this
Agreement.
(b) Sellers shall (i) promptly, but in no event more than
three business days following execution of this Agreement, deliver to
Foamex a list of all confidentiality agreements entered into between
any of the Sellers and Cramerton and any third party, in the period
from April 28, 1994 through the date of this Agreement, and (ii) prior
to the Closing Date, Sellers shall cause to be delivered to Purchaser
and Foamex a list of all confidentiality agreements entered into
between any of the Sellers and Cramerton with any third party,
pursuant to which confidential or proprietary information relating to
the Business was provided to a third party. After the Closing Date,
upon the reasonable request of Purchaser, Sellers shall (i) cooperate
with Purchaser, at Purchaser's request, in enforcing the terms of such
confidentiality agreements, and (ii) to the extent any of such
confidentiality agreements are assignable by Sellers thereunder,
assign all of Sellers' rights thereunder to Purchaser.
6.8 No Solicitation. Neither the Sellers nor any of their
respective officers or directors shall, and the Sellers shall direct
and otherwise use their best efforts to cause their employees, agents
or representatives (including, without limitation, investment bankers,
attorneys and accountants) not to, directly or indirectly, (a) solicit
any inquiries or proposals by, or (b) except as considered appropriate
by the Board of Directors of JPS in the exercise of its fiduciary
duties after having received the advice of Weil, Gotshal & Manges,
enter into any discussions or negotiations with, or disclose directly
or indirectly any information not customarily disclosed concerning its
business and properties to, or afford any access to its properties,
books and records to, any corporation, partnership, person or other
entity or group in connection with any possible proposal regarding a
sale of the Sellers' capital stock or a merger, consolidation, or sale
of all or a substantial portion of the Business which is material to
the Business, or any similar transaction. In the event the Board of
Directors of JPS approves any of the actions set forth in clause (b)
of the immediately preceding sentence, or any of the Sellers receives
a proposal, whether or not legally binding, for all or substantially
all of the Business, Sellers shall (i) not disclose any confidential
information to such Person, unless such Person
50
has entered into a confidentiality agreement with Sellers on
substantially the same terms and conditions as the confidentiality
agreement entered into with Foamex, other than with respect to
paragraph 7 contained therein, and at such time as Sellers or such
Person have entered into a confidentiality agreement, Sellers shall
inform Foamex of the existence of such confidentiality agreement and
the proposal to which it relates (but not the identity of the person
making the proposal or any of the terms and conditions of the
proposal), and (ii) promptly after Sellers are advised by counsel that
they are no longer required pursuant to their fiduciary duty or by the
terms of any such offer or proposal to keep such information
confidential, but no later than three (3) business days prior to the
effective date of termination of this Agreement, deliver a copy of
such confidentiality agreement to Foamex and inform Foamex of the
existence of such proposal and the material terms and conditions
thereof.
6.9 Non-Competition. (a) Except as set forth in Schedule
6.9(a), Sellers agree that for four (4) years from and after the
Closing Date, neither they, nor any of their subsidiaries or
Affiliates, shall directly or indirectly, as a partner, joint
venturer, manager, manufacturer, retailer or otherwise, engage in
North America, South America or Central America in any business in
competition with the Business, including the business of Cramerton, or
own stock or otherwise have an interest in or be affiliated with any
person, corporation, firm, partnership or other entity engaged in such
business (except as a stockholder holding less than 10% of the stock
of a publicly-owned corporation).
(b) None of the Sellers will, for a period of two (2) years
from the Closing Date, solicit for hire any of the persons listed as
"Key Employees" in Schedule 6.9(b) hereto, without the prior written
consent of Purchaser.
(c) Sellers agree that a violation of Section 6.9(a) or
6.9(b) will cause irreparable injury to Purchaser, and Purchaser will
be entitled, in addition to any other rights and remedies it may have
at law or in equity, to apply for an injunction enjoining and
restraining Sellers from doing or continuing to do any such act and
any other violations or threatened violations of Section 6.9 hereof.
(d) The Sellers acknowledge and agree that the covenants
set forth in this Section 6.9 are reasonable and valid in geographical
and temporal scope and in all other respects. If any of such
covenants are found to be invalid or unenforceable by a final
determination of a court of competent jurisdiction (i) the remaining
terms and provisions hereof shall be unimpaired and
51
(ii) the invalid or unenforceable term or provision shall be deemed
replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or
unenforceable term or provision. In the event that, notwithstanding
the first sentence of this paragraph (d), any of the provisions of
this Section 6.9 relating to the geographic or temporal scope of the
covenants contained therein or the nature of the business restricted
thereby shall be declared by a court of competent jurisdiction to
exceed the maximum restrictiveness such court deems enforceable, such
provision shall be deemed to be replaced herein by the maximum
restriction deemed enforceable by such court.
6.10 Sums Received in Respect of Business. Sellers shall
pay or cause to be paid over to Purchaser, promptly after the receipt
thereof after the Closing Date, all sums received in respect or on
account of the Transferred Assets other than the consideration
received by Sellers as set forth in Section 2.2 hereof and other
amounts paid to Sellers by Purchaser pursuant to this Agreement.
6.11 Access and Information. Each of the Sellers shall,
and shall cause Cramerton to, afford to Foamex and to Foamex's
accountants, counsel and other representatives full and reasonable
access, during normal business hours (and at such other times as the
parties may mutually agree) throughout the period prior to the Closing
Date, to all of its properties, books, contracts, commitments, records
and personnel which relate to the Business (including the business of
Cramerton) and, during such period, Sellers shall, and shall cause
Cramerton to, furnish promptly to Foamex (i) a copy of each report,
schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws which relate to the
Business (including the business of Cramerton), and (ii) all other
information concerning its business, properties and personnel which
relate to the Business (including the business of Cramerton) as the
other may reasonably request. Foamex shall hold, and shall cause its
employees and agents to hold, in confidence all such information in
accordance with the terms of this Agreement.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers to consummate the transactions
provided for hereby are subject to the satisfaction, on or prior to
the Closing Date, of each of the following conditions:
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7.1 Representations, Warranties and Covenants. All
representations and warranties of Purchaser contained in this
Agreement, without giving effect to any qualification as to
materiality contained in any particular representation or warranty,
shall be true and correct on the date hereof and on and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date, except as affected by the transactions
contemplated hereby and to the extent any such breach together with
all other such breaches does not constitute a Material Adverse Effect,
and Purchaser shall have performed in all material respects all
covenants and conditions contained in this Agreement to be performed
or complied with by it prior to or on the Closing Date.
7.2 Certificates. Purchaser shall have furnished Sellers
with such certificates, dated the Closing Date, of Purchaser's
officers, directors and others to evidence compliance with the
conditions set forth in this Article VII as may be reasonably
requested by Sellers.
7.3 Corporate Documents. Sellers shall have received from
Purchaser certified copies of the resolutions duly adopted by the
board of directors of Purchaser approving the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby, and such resolutions shall be in full force and
effect as of the Closing Date.
7.4 Legal Opinion. Sellers shall have received the opinion
of Willkie Farr & Gallagher, counsel to Purchaser, substantially in
the form of Exhibit M hereto.
7.5 Consents. All consents, Permits, Cramerton Permits,
authorizations, approvals and waivers from governmental authorities,
stockholders or other parties which are listed on Schedule 7.5 hereto
shall have been obtained.
7.6 No Governmental Proceedings or Litigation. No suit,
action, investigation or other proceeding by any governmental
authority or other person or any other legal or administrative
proceeding shall have been instituted or threatened which would make
illegal, or prevent, or question the validity or legality of, the
transactions contemplated hereby or which seeks material damages in
respect thereof.
53
7.7 Fairness Opinion. Sellers shall have received a duly
executed opinion from C.J. Lawrence/Deutsche Bank Securities
Corporation to the effect that the transactions contemplated hereunder
are fair from a financial point of view to JPS's bondholders and
stockholders.
7.8 Solvency Opinions. (a) JPS shall have received a duly
executed opinion from Houlihan, Lokey, Howard & Zukin ("Houlihan,
Lokey") to the effect that, upon consummation of the transactions
contemplated hereby, the fair value of JPS's assets will exceed the
sum of its stated and contingent liabilities.
(b) JPS shall have received a copy of the opinion from
Houlihan, Lokey addressed to JPS to the effect that, upon consummation
of the transactions contemplated hereby, the fair value of Purchaser's
assets will exceed the sum of its stated and contingent liabilities.
7.9 Expiration of HSR Act Waiting Period. All applicable
waiting periods in respect of the transactions contemplated by this
Agreement under the HSR Act shall have expired or been terminated.
7.10 Consummation of Seller Credit Agreement. Sellers
shall have successfully consummated an amendment to the Seller Credit
Agreement on terms which are reasonably acceptable to Sellers and
substantially the same as those set forth in the term sheet attached
hereto as Exhibit N.
7.11 Amendment to CIT Agreement. Sellers shall have
successfully consummated an amendment to the CIT Agreement on terms
which are reasonably acceptable to Sellers and substantially similar
to those set forth in the term sheet attached hereto as Schedule 7.11.
7.12 Permitting Costs. The costs, fees and expenses (other
than those subject to Section 9.2) for the modification of the
Business in connection with the transfer of the Permits as set forth
in Section 10.8(a)(iii)(C) shall not exceed $150,000, except to the
extent paid by Purchaser.
ARTICLE VIII
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to consummate the transactions
provided for hereby are subject to the satisfaction, on or prior to
the Closing Date, of each of the following conditions:
54
8.1 Representations, Warranties and Covenants. The
representations and warranties of Sellers contained in this Agreement
shall be true and correct, without giving effect to any qualification
as to materiality contained in any particular representation or
warranty, on the date hereof and on and as of the Closing Date with
the same force and effect as though made on and as of the Closing
Date, except as affected by the transactions contemplated hereby and
to the extent any such breach together with all other such breaches
does not constitute a Material Adverse Effect, and Sellers shall have
performed in all material respects all covenants and conditions
contained in this Agreement to be performed or complied with by them
prior to or on the Closing Date.
8.2 Certificates. Sellers shall have furnished Purchaser
with such certificates, dated the Closing Date, of Sellers' officers,
directors and others to evidence compliance with the conditions set
forth in this Article VIII as may be reasonably requested by
Purchaser.
8.3 Section 1445 Certificate. Each Seller shall have
furnished Purchaser with a certificate that such Seller is not a
foreign person within the meaning of Section 1445 of the Code, which
certificate shall set forth all information required by, and otherwise
be executed in accordance with, Treasury Regulation Section
1.1445-2(b).
8.4 Corporate Documents. Purchaser shall have received
from Sellers certified copies of the resolutions duly adopted by the
respective boards of directors of Sellers approving the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
8.5 Legal Opinion. Purchaser shall have received the
opinion of Weil, Gotshal & Manges, counsel for the Sellers,
substantially in the form of Exhibit O hereto.
8.6 Consents. All consents, Permits, Cramerton Permits,
authorizations, approvals and waivers from governmental authorities,
stockholders or other parties which are listed on Schedule 8.6 hereto
shall have been obtained, which consents shall include the consent to
the subsequent transfer of the Transferred Assets to a partnership
beneficially owned by Foamex.
8.7 No Governmental Proceedings or Litigation. No suit,
action, investigation or other proceeding by any U.S. governmental
authority or other person or any other legal or administrative
proceeding shall have been instituted or threatened which would make
illegal, or prevents, or questions
55
the validity or legality of, the transactions contemplated hereby or
which seeks material damages in respect thereof.
8.8 Financing. (a) Purchaser shall have successfully
consummated each of the Senior Notes Offering and Purchaser Credit
Agreement on terms which are reasonably acceptable to Purchaser and
substantially similar to those set forth in the term sheets attached
hereto as Exhibits I (including that certain letter agreement related
thereto) and J, respectively; (b) Foamex L.P. shall have entered into
an amendment to the terms of its credit facility, on terms and
conditions reasonably acceptable to Foamex L.P. and substantially
similar to those set forth in the term sheet attached hereto as
Exhibit R; and (c) Foamex or its Affiliates shall have privately
placed up to $60 million initial proceeds of discount debentures and
warrants on terms and conditions acceptable to Foamex and
substantially similar to those set forth in the term sheet attached
hereto as Exhibit S (including that certain letter agreement related
thereto).
8.9 Amendment to Cramerton Agreements. The Cramerton
Agreements shall have been amended on terms and conditions reasonably
acceptable to Foamex in the manner set forth in Schedule 8.9.
8.10 Consummation of Agreement with CIT. Purchaser shall
have successfully consummated a loan and security agreement with CIT
on terms which are reasonably acceptable to Purchaser and
substantially similar to those set forth in the term sheet attached
hereto as Schedule 8.10.
8.11 No Material Adverse Change. Since January 29, 1994,
there shall have been no event or occurrence which has resulted in a
material adverse effect to any of the individual properties listed on
Schedule 4.3(a) or 4.4 hereto (without regard to any recovery of
insurance proceeds related thereto) or any Material Adverse Change.
8.12 Solvency Opinion. (a) Purchaser and Foamex shall
have received a duly executed opinion from Houlihan, Lokey to the
effect that, upon consummation of the transactions contemplated
hereby, the fair value of Purchaser's assets will exceed the sum of
its stated and contingent liabilities.
(b) Purchaser shall have received a copy of the opinion
from Houlihan, Lokey addressed to Foamex to the effect that, upon
consummation of the transactions contemplated hereby, the fair value
of JPS's assets will exceed the sum of its stated and contingent
liabilities.
56
8.13 Title Insurance (a) Purchaser shall be able to obtain
title insurance from a reputable and financially sound title insurance
company ("Title Company") for all of the Owned Real Property and for
the Lease identified as item 1 on Schedule 4.3(a) hereto in form and
substance reasonably satisfactory to Purchaser; (b) Purchaser shall be
able to obtain title insurance from Title Company for the Cramerton
Real Property insuring that Cramerton is the fee owner of the
Cramerton Real Property together with a non-imputation endorsement and
otherwise in form and substance reasonably satisfactory to Purchaser;
(c) Purchaser shall be able to obtain title insurance from Title
Company with respect to the easements described on Schedule 8.13
hereto insuring that Cramerton is the owner of such easements together
with a non-imputation endorsement and otherwise in form and substance
reasonably satisfactory to Purchaser; and (d) the title insurance
policies referenced in this Section 8.13 shall be deemed to be in form
and substance reasonably satisfactory to Purchaser and be deemed
obtainable only if such title policies are available from the Title
Company at the then prevailing premium rates and do not contain any
exceptions to title other than Permissible Liens.
8.14 Estoppel Letter. Purchaser and Foamex shall have
received letters, dated as of the date of the Final Prospectus and as
of the Closing Date, from Sellers to the effect that all additional
disclosure reasonably requested by Sellers pursuant to Section
9.2(a)(iii) to be included in the Final Prospectus has been so
included.
ARTICLE IX
CERTAIN ACTIONS BY SELLERS AND PURCHASER
AFTER THE CLOSING
9.1 Books and Records. Each party agrees that it will
cooperate with and make available to the other party, subject to
Section 10.11 hereof, during normal business hours, all Books and
Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing Date
which are necessary or useful in connection with any Tax inquiry,
investigation or dispute, any litigation or investigation or any other
matter requiring any such Books and Records, information or employees
for any reasonable business purpose. The party requesting any such
Books and Records, information or employees shall bear all of the out-
of-pocket costs and expenses (including, without limitation,
attorneys' fees) reasonably incurred in connection with providing such
Books and Records, information or employees. Sellers may require
certain financial information relating to Auto or the
57
Division for periods prior to the Closing Date for the purpose of
filing federal, state, local and foreign tax returns and other
governmental reports, and Purchaser agrees to furnish such information
to Sellers at reasonable request and Sellers shall bear all of the
out-of-pocket costs and expenses (including, without limitation,
attorneys' fees) reasonably incurred by Purchaser in connection with
providing such information.
9.2 Indemnifications.
(a) By Sellers. Sellers shall indemnify and hold harmless
Foamex, Purchaser and their successors and assigns from and against
any and all demands, claims (whether legal or equitable in nature),
penalties, actions or causes of action, assessments, deficiencies,
damages, injunctive relief, losses, liabilities and expenses
(including, without limitation, reasonable expenses of investigation
and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding or investigation brought against Purchaser)
(herein, the "Damages"), incurred in connection with or arising out of
or resulting from (i) any breach of or inaccuracy in (determined
without regard to any materiality standard or any environmental matter
disclosed in any schedule or elsewhere) any representation or warranty
made by Sellers pursuant to this Agreement and/or the Ancillary
Agreements (including, without limitation, the Schedules, Exhibits,
Annexes and certificates delivered hereunder and thereunder); (ii) the
failure of Sellers to comply with any of the covenants contained in
this Agreement or the Ancillary Agreements which are required to be
performed by Sellers; (iii) any claim made by any purchaser or holder
of the Senior Notes and/or any underwriter of the Senior Notes based
on alleged material misstatements or material omissions with respect
to information contained in the Final Prospectus; provided, however,
such indemnity shall not extend to any claims based on information
which has been marked as to be excluded (the "Excluded Information")
in the draft of the prospectus dated May 20, 1994 and attached hereto
as Exhibit P; provided further, however, Purchaser shall not be
entitled to any indemnity pursuant to this clause (iii) if Sellers
have not had the opportunity to include any additional reasonable
disclosure or other information in the Final Prospectus relating to
the information in Exhibit P other than Excluded Information, but only
to the extent that such Damages arise out of the failure to include
such information requested by Sellers in the Final Prospectus; (iv)
the failure by Sellers to pay any liability arising on or prior to the
Closing Date and relating to the Business other than an Assumed
Liability; (v) without duplication of clause (iv), the failure by
Sellers to pay any liability for income taxes or franchise taxes
imposed on net income for which Sellers are liable, or relating to the
Transferred Assets which
58
are attributable to any taxable period or portion thereof ending on or
prior to the Closing Date; and (vi) 80% of any and all Cramerton
Excluded Liabilities.
(b) By Purchaser. Purchaser shall indemnify and hold
harmless Sellers and their respective successors and assigns from and
against any and all Damages incurred in connection with or arising out
of or resulting from (i) any breach of or inaccuracy in (determined
without regard to any materiality standard) any representation or
warranty made by Purchaser pursuant to this Agreement and/or the
Ancillary Agreements (including, without limitation, the Schedules,
Exhibits, Annexes and certificates delivered hereunder and
thereunder); (ii) the failure of Purchaser or Foamex to comply with
any of the covenants contained in this Agreement or the Ancillary
Agreements which are to be performed by Purchaser or Foamex; (iii) any
other claim, liability, obligation or commitment of any nature which
is assumed by Purchaser pursuant to this Agreement (including, without
limitation, pursuant to Section 2.1); (iv) the operation of the
Business by Purchaser or its successors and assigns (other than with
respect to the Excluded Assets or any liabilities attributable to any
period on or prior to the Closing Date and which are not Assumed
Liabilities) from and after the Closing Date; and (v) any claim made
by any purchaser or holder of the Senior Notes and/or any underwriter
of the Senior Notes based on alleged material misstatements or
material omissions with respect to Excluded Information (other than
that set forth under the caption "Underwriting" or information
relating to stabilization by the Underwriters) contained in the Final
Prospectus.
(c) By Foamex. Foamex shall indemnify and hold harmless
Sellers and their respective successors and assigns from and against
any and all Damages incurred in connection with or arising out of or
resulting from any breach of or inaccuracy in (determined without
regard to any materiality standard) any representation or warranty
made by Foamex pursuant to this Agreement (including, without
limitation, the Schedules, Exhibits, Annexes and certificates
delivered hereunder and thereunder).
(d) Claims by Third Parties. Promptly after receipt by an
indemnified party of written notice of the commencement of any
investigation, claim, proceeding or other action in respect of which
indemnity may be sought from the indemnitor (an "Action"), such
indemnified party shall notify the indemnitor in writing of the
commencement of such Action; but the omission to so notify the
indemnitor shall not relieve it from any liability that it may other-
wise have to such indemnified party, except to the extent that the
indemnitor is materially prejudiced or forfeits substantive rights or
defenses as a result of such
59
failure. In connection with any Action in which the indemnitor and
any indemnified party are parties, the indemnitor shall be entitled to
participate therein, and may assume the defense thereof. To the
extent that indemnitor assumes the defense as set forth in the
preceding sentence, then such assumption of the defense shall
constitute an agreement that the Action is a proper matter for
indemnification pursuant to this Section 9.2, except to the extent
that indemnitee is not prejudiced by such assumption and the conduct
of such defense. Notwithstanding the assumption of the defense of any
such Action by the indemnitor, each indemnified party shall have the
right to employ separate counsel and to participate in the defense of
such Action, and the indemnitor shall bear the reasonable fees, costs
and expenses of such separate counsel to such indemnified party if:
(a) the indemnitor shall have agreed to the retention of such separate
counsel, (b) the defendants in, or target of, any such Action include
more than one indemnified party or both an indemnified party and the
indemnitor, and the indemnified party shall have concluded that
representation of such indemnified party and the indemnitor by the
same counsel would be inappropriate due to actual or, as reasonably
determined by such indemnified party's counsel, potential differing
interests between them in the conduct of the defense of such Action,
or if there may be legal defenses available to such indemnified party
that are different from or additional to those available to the other
indemnified party or to the indemnitor, or (c) the indemnitor shall
have failed to employ counsel reasonably satisfactory to such
indemnified party within a reasonable period of time after notice of
the institution of such Action. If such indemnified party retains
separate counsel in cases other than as described in clauses (a), (b)
or (c) above, such counsel shall be retained at the expense of such
indemnified party. Except as provided above, it is hereby agreed and
understood that the indemnitor shall not, in connection with any
Action in the same jurisdiction, be liable for the fees and expenses
of more than one counsel for all such indemnified parties (together
with appropriate local counsel). The party from whom indemnification
is sought shall not, without the written consent of the party seeking
indemnification (which consent shall not be unreasonably withheld),
settle or compromise any claim or consent to entry of any judgment
that does not include an unconditional release of the party seeking
indemnification from all liabilities with respect to such claim.
(e) Other Claims. In the event one party hereunder should
have a claim for indemnification that does not involve a claim or
demand being asserted by a third party, the party seeking
indemnification shall promptly send notice of such claim to the party
from whom indemnification is sought.
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(f) Limitations on Indemnification. Notwithstanding any
other provision of this Agreement, none of the parties hereto shall be
entitled to indemnification pursuant to this Section 9.2 for any
Damages arising out of the breach of any representation, warranty,
covenant or agreement made by the other party in this Agreement except
as follows: (i) with respect to any Damages resulting from a failure
by either Sellers or Purchaser to perform any covenants under this
Agreement or the Ancillary Agreements, the party seeking such
indemnification shall be entitled to the full amount of Damages
resulting therefrom; (ii) with respect to any Damages resulting from a
breach of any of the representations and warranties by Sellers, Foamex
or Purchaser, (and in the case of obligations of Sellers in respect of
environmental matters pursuant to Section 10.8(a) hereof), Foamex,
Purchaser or Sellers, as the case may be, shall be entitled to
indemnification, or payment (in the case of such obligations), for
only those Damages which arise out of all such breaches and such
obligations which are in excess of $2,000,000 (it being agreed that
Purchaser or Sellers, as the case may be, shall bear the first
$2,000,000 of Damages arising from such breaches or alleged breaches
and such obligations; provided, however, with respect to Damages and
such obligations which in the aggregate are in excess of $2,000,000
but less than $3,000,000, then such Damages and such obligations shall
be borne 50% by Sellers and 50% by Purchaser; and provided further,
however, that such limitations in this clause (ii) shall not apply to
Damages resulting from a breach of Sections 4.1(a); 4.2; 4.10(a)(i);
4.14; 4.24(a), (b), (c), (d)(i) and (g); 5.1(a), (b), (c)(i) and (f);
and 5.2(a), (b) and (c)(i); and (iii) unless the party seeking such
indemnification shall make its claim therefor on or prior to the date
on which the relevant representation or warranty shall expire pursuant
to Section 10.2, except that if a claim arises under a representation
or warranty and a notice of such claim is given prior to the
expiration of the survival period, then such representation or
warranty shall not terminate with respect to such claim until
indemnification thereof (if any is owing) shall have been made in
accordance with the provisions of this Agreement. Notwithstanding the
foregoing, no payment for Damages hereunder shall be made by either
party if and to the extent that such Damages have been included in the
Purchase Price adjustment set forth in Section 2.3 hereof. Purchaser
and Foamex hereby agree that if Foamex makes a claim for any Damages
and seeks indemnification from Sellers pursuant to this Section 9.2,
then Sellers shall have available all of the defenses, claims, and
counter-claims (as relates to Foamex only, not to exceed the amount of
the claim, unless otherwise covered by the guaranty set forth in
Article XI hereof) available to them against Foamex as they would have
against Purchaser. In addition, to the extent any payments are to be
made by Sellers to Foamex pursuant to this Section 9.2, Purchaser and
Foamex hereby agree that such payment
61
will discharge all obligations Sellers have with respect to Purchaser
in connection therewith. In no event will either party be liable
under or with respect to this Agreement for any Damages or any portion
of any Damages arising out of the breach of any representation or
warranty in excess of $263,750,000 in the aggregate; provided,
however, that Sellers shall not be liable for such Damages resulting
from a claim or claims described in Section 9.2(a)(iii) aggregating in
excess of $150,000,000; provided further, however, Purchaser shall not
be liable for such Damages resulting from a claim or claims described
in Section 9.2(b)(v) aggregating in excess of $180,000,000.
(g) Each party hereto acknowledges and agrees that, after
the Closing Date, except as set forth in Sections 2.2(b), 2.3, 6.5,
6.6., 6.7, 6.8, 6.9, 9.4, 10.12, 10.13 and 10.14 and Article XI, its
sole and exclusive legal remedy with respect to any and all claims
relating to or arising out of a breach of any representation,
warranty, covenant or agreement made by the other party in this
Agreement shall be pursuant to the indemnification provisions set
forth in this Section 9.2. Nothing contained in this paragraph (g)
hereto shall be deemed to limit any equitable remedies of the parties
hereto.
(h) Environmental Costs. (i) Purchaser, Foamex, and
Sellers agree that (A) this Agreement provides Purchaser, Foamex and
their successors or assigns with their sole and exclusive remedy for
any and all Environmental Claims, Environmental Costs and Liabilities,
and Damages arising out Environmental Claim or Environmental Costs and
Liabilities that Purchaser, Foamex and their successors or assigns has
or may in the future have against Sellers or Cramerton from the
beginning of the world, whether known, unknown, or unknowable, with
respect to the Business and the Transferred Assets ("Environmental
Losses"); and (B) except as provided in the Agreement, Purchaser,
Foamex and their successors or assigns forever waive any right either
or both have or may in the future have against Sellers or Cramerton to
recover for, on, or against any and all Environmental Losses.
(ii) Notwithstanding any other provision of this Agreement
to the contrary, Sellers shall have no obligation to Purchaser or
Foamex under Section 9.2(a)(i) or 10.8(a) for Environmental Claims,
Environmental Costs and Liabilities, and Damages arising out of
Environmental Claims and Environmental Costs and Liabilities unless,
and only to the extent that, after the Closing Date Purchaser or
Foamex incurs, undertakes to incur, or becomes liable to incur
reasonably necessary costs:
(A) to respond at or on the Transferred Assets to a Release
of any Contaminant that occurred at, on, or under the
Transferred Assets prior to the Closing Date;
62
(B) to bring the Business from any non-compliance with
Environmental Laws prior to the Closing Date into compliance
with all Environmental Laws that may continue in effect
after the Closing Date;
(C) to respond to any Legal Proceedings under Environmental
Laws that may continue in effect after the Closing Date or
Environmental Claims arising from or relating to (i) any
underground storage tanks which may exist on the Transferred
Assets as of the Closing Date; or (ii) Legal Proceedings
pertaining to Environmental Permits which proceedings were
commenced prior to the Closing Date;
(D) to respond to any Legal Proceedings under Environmental
Laws or Environmental Claims brought by third parties
relating to matters involving the truth and accuracy of the
representations and warranties in Section 4.15 of this
Agreement as of the Closing Date; or
(E) to investigate breach of a representation or warranty
under Section 4.15.
(iii) For purposes of this Section 9.2(h), "reasonably
necessary costs" shall mean those costs that are
(A) incurred or to be incurred pursuant to or in response
to allegations of violations of Environmental Laws which
laws continue in effect after the Closing Date;
(B) consistent with custom and good business practice; and
(C) consistent with the most cost-effective means allowable
by all applicable Governmental Agencies which means are
consistent with good business practice;
Such reasonably necessary costs shall be the sole basis for
calculating Damages constituting or arising out of Environmental
Claims or Environmental Costs and Liabilities pursuant to Sections
9.2(f) and 10.8(a).
(iv) Notwithstanding any other provision of the Agreement
to the contrary, Sellers shall have no obligation to Purchaser or
Foamex for (A) costs associated with implementing standards for the
protection of the environment, human health, or safety that come into
effect after the Closing Date and that are more stringent than
standards in effect prior to the Closing
63
Date, or (B) costs associated with obtaining or renewing any Permit
for the coal-fired boiler at the facility operated by Cramerton.
(v) Sellers shall have no obligation pursuant to this
Section 9.2(h) unless Purchaser or Foamex provides Sellers with prompt
notice of any Environmental Claim against Purchaser or Foamex, or any
event or occurrence for which Seller may be required to indemnify and
hold harmless Purchaser or Foamex pursuant to Sections 9.2(a)(i) or
10.8(a); provided, however, that the failure of Purchaser or Foamex to
provide Sellers with such prompt notice shall not relieve Sellers of
their obligation under Section 9.2(h) unless and only to the extent
that Sellers are materially prejudiced by such failure. Whenever
feasible, all such notice shall be given to Sellers prior to
Purchaser's incurring any costs described in Section 9.2(h)(ii).
(vi) (A) Sellers shall have no obligation to indemnify or
hold harmless Purchaser or Foamex pursuant to Section 9.2(a) for any
reasonably necessary costs described in Section 9.2(h)(ii) actually
recovered by Purchaser or Foamex (net of expenses of recovery) from
any Person other than Sellers or Cramerton; provided, however that
this provision 9.2(h)(vii)(A) shall not be interpreted to require
Purchaser or Foamex to take steps to recover such costs from any
Person other than Sellers or Cramerton.
(B) Purchaser or Foamex, may assign to Sellers any right
Purchaser or Foamex may have against any Person (other than their
insurers), other than Seller or Cramerton, to recover any amounts that
Sellers have paid to Purchaser or Foamex pursuant to Section 9.2(h)
and such assignment shall not be unreasonably withheld by Purchaser or
Foamex if such assignment does not have an adverse effect on them.
(i) Except to the extent set forth in Section
9.2(h)(vii)(B), an indemnitor, upon the payment of any amount pursuant
to this Section 9.2, shall not be subrogated to any claim of the
indemnitee with respect to the Damages for which indemnification is
being made. The indemnitee may, in its sole discretion, assign to the
indemnitor any right the indemnitee may have against any Person (other
than indemnitor's insurer) to recover any Damages for which the
indemnitor has indemnified the indemnitee pursuant to Section 9.2.
Such assignment shall not be unreasonably withheld by the indemnitee
if such assignment does not have an adverse effect on the indemnitee.
9.3 Bulk Sales. Purchaser waives compliance by Sellers
with any applicable bulk sales statutes. Sellers indemnify Purchaser
for any liabilities or losses incurred on
64
account of the failure to comply with such statutes to the extent that
such liabilities or losses are not specifically assumed by Purchaser
hereunder.
9.4 Tax Matters. (a) Sellers and Purchaser shall
cooperate fully with each other and make available or cause to be made
available to each other in a timely fashion such tax data, prior tax
returns and filings and other information as may be reasonably
required for the preparation by Purchaser or Sellers of any tax
returns, elections, consents or certificates required to be prepared
and filed by Purchaser or Sellers and any audit or other examination
by any taxing authority, or judicial or administrative proceeding
relating to liability for Taxes. Purchaser and Sellers will each
retain and provide to the other party all records and other
information which may be relevant to any such Tax return, audit or
examination, proceeding or determination, and will each provide the
other party with any final determination of any such audit or
examination, proceeding or determination that affects any amount
required to be shown on any tax return of the other party for any
period. Each of Purchaser and Sellers will retain copies of all tax
returns, supporting work schedules and other records relating to tax
periods or portions thereof ending prior to or on the Closing Date.
(b) Not later than five days before the due date for
payments to be made after the Closing Date in respect of Taxes assumed
by the Purchaser, but imposed on Sellers, for any taxable period or
portion thereof which ends on or before the Closing Date (including,
without limitation, estimated tax payments and payments to be made
with Tax returns), Purchaser shall (i) deliver to Sellers (A) a
schedule which sets forth in reasonable detail a calculation of the
amount of such Taxes required to be paid on such due date and (B)
except in the case of payments to be made with Tax returns, any
documentation required to be submitted to a taxing authority with such
payment, which calculation and documentation shall be accepted by
Sellers unless Sellers reasonably believe that such computation or
documentation would subject any Seller to a penalty, in which event
the computation or documentation (as the case may be) shall be revised
to avoid the potential for such penalty and (ii) pay to Sellers the
amount shown on such schedule (as the same may be revised in
accordance with this sentence). Sellers shall remit such amounts and
submit such documentation to the appropriate taxing authority in a
timely manner. Purchaser shall cause to be prepared all required Tax
returns relating to Taxes assumed by the Purchaser, but imposed on
Sellers, for any taxable period or portion thereof which ends on or
before the Closing Date for which returns shall not have been filed as
of the Closing Date and shall submit such Tax returns to Sellers not
later than 20 days prior to the due date for filing thereof,
determined with
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extensions. Sellers shall (i) approve such Tax returns for filing
unless Sellers reasonably believe that such return would subject any
Seller to a penalty, in which event the return will be revised to
avoid the potential for such penalty and the amount remitted to
Sellers shall be adjusted accordingly, and (ii) cause such returns to
be timely filed. Purchaser acknowledges and agrees that it shall be
required to pay additional amounts in respect of such assumed Taxes in
the event any such Tax liability is increased by reason of an audit
(or any administrative or judicial proceeding) or the filing of an
amended return.
(c) Any sales, recording, transfer, use or other similar
taxes or fees and Excluded MSBT imposed as a result of the sale of the
Business to Purchaser pursuant to this Agreement shall be paid by
Sellers and/or Purchaser as set forth in accordance with Section 10.8.
At the Closing, Sellers and Purchaser shall deliver to each other such
properly completed resale exemption certificates and other similar
certificates or instruments as are necessary to claim available
exemptions from the payment of sales, transfer, use or other similar
taxes under applicable law.
(d) Sellers shall indemnify Purchaser for any liability or
obligation for (i) Taxes arising solely by reason of the inclusion of
JPS Mexico in any consolidated, combined or unitary tax return that
includes the Sellers for any period prior to or including the Closing
Date under Treas. Reg. # 1.1502-6 (or analogous provisions of state,
local or foreign law) or (ii) income taxes or franchise taxes imposed
on net income in respect of taxable periods or portions thereof ending
on or before the Closing Date for which JPS Mexico is liable as a
transferee or as an indemnitor, guarantor, surety or in a similar
capacity under any contract, arrangement, understanding or commitment,
whether oral or written. The indemnity contained in this Section
9.4(d) shall survive to the expiration of the statute of limitations
on assessment of tax (including any extension thereof) of Sellers.
(e) The Sellers and Purchaser shall close the taxable
period of JPS Mexico on the Closing Date, unless such action is
prohibited by law. In any case where applicable law prohibits JPS
Mexico from closing its taxable year on the Closing Date, then income
taxes and franchise taxes based on net income, if any, attributable to
the taxable period of JPS Mexico beginning before and ending after the
Closing Date shall be allocated (i) to Sellers for the period up to
and including the Closing Date, and (ii) to Purchaser for the period
subsequent to the Closing Date. For purposes of this Section 9.4(e),
such taxes for the period up to and including the Closing Date shall
be determined on the basis of an interim closing of the books as of
the end of the Closing Date. Sellers shall be responsible for and
shall
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indemnify Purchaser against any income taxes and franchise taxes based
on net income which are imposed on JPS Mexico (i) for the taxable
periods ending on or before the Closing Date (other than a liability
arising by reason of the making of a Code Section 338 election which
is not made together with a Code Section 338(h)(10) election and other
than as provided in section 9.4(e)), or (ii) in the case of a taxable
period of JPS Mexico which includes but does not end on the Closing
Date, which are allocable to Sellers pursuant to this Section 9.4(e).
(f) Any tax sharing agreements between Sellers or any
member of any affiliated, consolidated, combined or unitary group of
which Sellers are members (other than JPS Mexico), on the one hand,
and JPS Mexico, Cramerton, CMC or Enjema on the other, shall be
terminated as of the Closing Date except for any tax sharing agreement
set forth in this Agreement.
(g) Neither Purchaser nor any Affiliate of Purchaser shall,
or shall cause or permit their representatives to, communicate with
any legislative, judicial or administrative branch of the government
of the State of South Carolina (or any political subdivision thereof),
or unless required by applicable law make any public announcement,
concerning the applicability of the South Carolina Exemption to
Purchaser or its Affiliates without the prior written consent of JPS
and, if desired by JPS, the participation of JPS.
(h)(i) The Purchaser will promptly notify the Sellers of the
commencement of any claim, audit, examination, or other proposed
change or adjustment by any taxing authority concerning any Tax for
which Sellers are responsible pursuant to this Agreement ("Tax
Claim"); and Sellers shall promptly notify the Purchaser of the
commencement of any claim, audit, examination, or other proposed
change or adjustment by any taxing authority concerning any Tax for
which Purchaser is responsible pursuant to this Agreement; provided,
however, that the failure by either party to so notify the other
shall not relieve such other party of any liability hereunder that it
may otherwise have to the indemnified party, except to the extent that
the indemnifying party is materially prejudiced or forfeits
substantive rights or defenses as a result of such failure.
(ii) The Sellers shall have the exclusive right to control
the conduct (including the settlement thereof) of any Tax audit or
administrative or court proceeding in respect of a Tax Claim relating
to (a) any consolidated, affiliated, combined, or unitary Tax return
of JPS or its Affiliates which includes (1) JPS Mexico or (2) any
other Tax item for which Sellers indemnify Purchaser hereunder
relating to any taxable period or portion thereof ending on or before
the Closing Date, and (b) any other
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Tax item for which Sellers indemnify Purchaser hereunder relating to
any taxable period or portion thereof ending on or before the Closing
Date, provided that in the case of this clause (b) the Sellers shall
have confirmed their obligation to indemnify Purchaser in respect of
such Tax Claim.
(iii) With respect to a taxable period (if any) of JPS
Mexico beginning before and ending after the Closing Date, the
Purchaser and the Sellers shall jointly control the defense and
settlement of any Tax audit or administrative or court proceeding
relating to income tax or franchise tax based on net income and each
party shall cooperate with the other party at its own expense and
there shall be no settlement or closing or other agreement with
respect thereto without the consent of the other party, which consent
shall not be unreasonably withheld.
(i) Except to the extent hereinafter provided, Purchaser
shall assign and promptly remit (and cause any Affiliate to promptly
remit) to Sellers all refunds and the amount of all credits (including
interest thereon) received by or credited to Purchaser (or such
Affiliate), net of Taxes paid or incurred by Purchaser (or such
Affiliate) by reason of such receipt or credit, for any Taxes for
which Sellers are required to indemnify Purchaser hereunder. Except
to the extent hereinafter provided, Purchaser agrees that, upon the
request (and at the expense) of Sellers, Purchaser shall file, or
cause an Affiliate to file, a claim for refund of any Taxes for any
taxable period in respect of which Sellers are required to indemnify
Purchaser hereunder, provided that a reasonable basis exists for such
claim for refund.
(j) Except to the extent hereinafter provided, Sellers shall
assign and promptly remit (and cause any Affiliate to promptly remit)
to Purchaser all refunds and the amount of all credits (including
interest thereon) received by or credited to Sellers (or such
Affiliate), net of Taxes paid or incurred by Sellers (or such
Affiliate) by reason of such receipt or credit, for any Taxes which
Purchaser is required to assume hereunder. Except to the extent
hereinafter provided, Sellers agree that, upon the request (and at the
expense) of Purchaser, Sellers shall file, or cause an Affiliate to
file, a claim for refund of any Taxes which Purchaser is required to
assume hereunder, provided that a reasonable basis exists for such
claim for refund.
(k)(i) If the amount of the Purchase Price allocated to the
shares of JPS Mexico pursuant to this Agreement shall be less than the
adjusted tax basis of the Sellers in such shares, Sellers may elect,
at the Sellers' sole option, to file an election under Section
338(h)(10) of the Code and under comparable provisions of state or
local law with respect to the
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purchase of the stock of JPS Mexico (collectively, the "Election").
Purchaser shall join and shall cause any Affiliate to join, in both
cases at the request of Sellers, in the Election. If the Election is
made, Sellers and Purchaser shall report, in connection with the
determination of income, franchise or other Taxes measured by net
income, the transactions being undertaken pursuant to this Agreement
in a manner consistent with the Election. The Sellers shall notify
the Purchaser in writing of their intention to file the Election no
later than ten days prior to the due date for filing the Election (the
"Election Notice").
(ii) The Sellers shall be responsible for the preparation
and filing of all forms and documents required in connection with the
Election. In connection with the Election Notice, the Sellers shall
provide the Purchaser with copies of (i) the Internal Revenue Service
Form 8023 as reasonably agreed to by the parties, (ii) all attachments
required to be filed therewith pursuant to applicable Treasury
Regulations, and (iii) any comparable forms and attachments with
respect to any applicable state or local elections being made pursuant
to the Election. The Purchaser shall execute and deliver to the
Sellers within five days of receipt of the Election Notice such
documents or forms as are required by any tax laws to complete
properly the Election. The Sellers and the Purchaser shall cooperate
fully with each other and make available to each other such Tax data
and other information as may be reasonably required by the Sellers or
the Purchaser in order to timely file the Election and any other
required statements or schedules. The Purchaser shall promptly
execute and deliver to the Sellers any amendments subsequent to the
filing of the Election to Form 8023 (and any comparable state and
local forms) and attachments which are required to be filed under
applicable law and are reasonably requested by the Sellers.
(iii) The Purchaser shall comply with all of the
requirements of Section 338(h)(10) of the Code and the Treasury
Regulations thereunder. The Purchaser shall take no action which is
inconsistent with the requirements for filing the Election under the
Code and the applicable Treasury Regulations.
(iv) To the extent permitted by state and local laws, the
principles and procedures of this Section 9.4(k) shall also apply with
respect to an election under state or local law which is the
equivalent of or comparable to a Code Section 338(h)(10) election.
The Purchaser covenants and agrees that, to the extent that an
election similar to a Code Section 338(h)(10) election is optional
under any state or local law, the Purchaser shall join in any such
similar election as designated by the Sellers in the Election Notice.
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(l) Notwithstanding anything in this Agreement to the
contrary, in no event shall Sellers be responsible for any Tax arising
by reason of any transaction taken by Purchaser or any of its
Affiliates on or after the Closing Date, including without limitation
the transfer of any of the Transferred Assets to an Affiliate of
Purchaser.
9.5 Mail Received After Closing. (a) Following the
Closing, Purchaser may receive and open all mail and other
communications addressed to Sellers or Auto or the Division and deal
with the contents thereof in its discretion to the extent that such
mail relates to the Business; provided that (i) Purchaser shall have
no right to deal with the contents of any mail or other communication
to the extent that the same are not in respect of the Transferred
Assets and (ii) Purchaser shall promptly notify Sellers as to the
receipt thereof and make appropriate arrangements to deliver such
materials promptly to Sellers.
(b) Following the Closing, Sellers shall promptly notify
Purchaser of all mail and other communications relating to the
Business addressed to Sellers or Auto or the Division and received by
Sellers, and shall make appropriate arrangements to deliver such
materials promptly to Purchaser.
9.6 Insurance. Sellers shall leave in effect all insurance
for a period of ten (10) years from the Closing Date which insurance
was in effect at the time immediately prior to the Closing Date in
respect of risks and losses relating to the conduct of the Business,
including the business of Cramerton, prior to the Closing Date.
Subsequent to such period, Sellers shall not surrender, terminate, or
otherwise transfer such insurance without first providing Purchaser
with a right of first refusal, to the extent Sellers are not
prohibited by such insurance policy to grant such a right. To the
extent permitted by applicable contract and law, Sellers shall assign
such insurance policies, and/or all claims and other rights to enforce
or assure insurance coverage to Purchaser. In addition, Sellers
shall, and shall cause their respective officers, directors,
employees, and agents to cooperate with Purchaser in adjusting any
claim and take such further actions as Purchaser may reasonably
request in order to secure the benefit of Sellers' insurance with
respect to the Business.
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ARTICLE X
MISCELLANEOUS
10.1 Termination. Sellers may terminate this Agreement
without the consent of Purchaser and Foamex if the Closing has not
occurred on or before July 8, 1994 and a reason therefor is because a
condition precedent to closing hereunder is not satisfied or waived,
other than (a) the conditions set forth in Sections 7.5, 7.7, 7.8(a),
7.10, 7.11 and 7.12, (b) the conditions set forth in Sections 8.1,
8.2, 8.3, 8.4, 8.5, 8.6, 8.9, 8.10, 8.11, 8.12(b), 8.13 and 8.14, and
(c) any other condition to the extent the failure to satisfy such
condition arises from the failure of a condition set forth in clauses
(a) or (b) of this Section 10.1. Either party may terminate this
Agreement if the Closing Date has not occurred on or before July 31,
1994 and a reason therefor is because a condition precedent to such
party's obligation to close hereunder is not satisfied or waived. In
the event of the termination of this Agreement by either party in
accordance with this Section 10.1, neither party shall have any
liability hereunder of any nature whatsoever (other than pursuant to
Section 10.8 below) to the other party, including any liability for
damages, unless a party is in default hereunder, in which event the
party in default shall be liable to the other party for such default;
provided, however, that no party shall be liable hereunder for any
consequential damages as a result of such termination.
Notwithstanding anything in this Agreement to the contrary, if any
condition precedent specified in Articles VII or VIII is not
satisfied, Sellers and Purchaser, as the case may be, in addition to
any other rights which may be available to it, shall have the right to
waive such condition and require the other party to proceed with the
Closing. Notwithstanding the foregoing, Sellers shall have the right,
at their sole option, to terminate this Agreement if Sellers shall
have been advised by C.J. Lawrence/Deutsche Bank Securities
Corporation that the fairness opinion to be delivered pursuant to
Section 7.7 hereof will not be so delivered.
10.2 Survival of Representations and Warranties. (a) The
respective representations and warranties made by Sellers and
Purchaser, respectively, in this Agreement (including those made in
the Exhibits and Schedules hereto) or in any Ancillary Agreement shall
not be deemed waived or otherwise affected by any investigation made
by any party hereto. Except as indicated in Section 10.2(b), each and
every such representation and warranty shall expire with, and be
terminated and extinguished, on and as of the Closing Date or the
termination of this Agreement pursuant to Section 10.1 hereof.
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(b) Notwithstanding Section 10.2(a) above, the
representations and warranties of Sellers set forth in Sections
4.1(a); 4.2; 4.10(a)(i); 4.14; and 4.24(a), (b), (c), (d)(i), and (g)
hereof and all of the representations and warranties of Purchaser set
forth in Sections 5.1(a), (b), (c)(i), and (f); and 5.2(a), (b) and
(c) hereof shall indefinitely survive the execution and delivery of
this Agreement and the Closing hereunder. In addition, the
representations and warranties set forth in Sections 4.1(b), (c) and
(d); 4.3; 4.5; 4.6; 4.7; 4.8; 4.10(a)(ii), (b), (c) and (d); 4.11;
4.13; 4.16(c)-(k) and (m); 4.23; 4.24(d)(ii), (d)(iii), (e) and (f);
5.1(c) (ii) and (c) (iii), (d) and (e); and 5.2(c)(ii) and (c)(iii),
(d) and (e) shall remain operative until the first anniversary of the
Closing Date, the representations and warranties set forth in Section
4.15 shall remain operative until the third anniversary of the Closing
Date, and the representations and warranties set forth in Section 4.19
hereof shall remain operative and in full force and effect until the
earlier of (i) one year after the discovery by Foamex of facts
constituting a cause of action for a breach of such representations or
warranties or (ii) three years after the Closing Date.
10.3 Assignment. (a) Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties.
Notwithstanding the foregoing, Purchaser may assign its rights
hereunder without the prior written consent of Sellers to a wholly-
owned subsidiary (which may include a corporation or partnership) of
Foamex; provided, however, Purchaser and Foamex, respectively, shall
not be released or discharged from its obligations, duties or
liabilities under the Agreement. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of only the
parties hereto and their respective successors and assigns, and no
other person shall have any right, benefit or obligation hereunder.
In addition to the foregoing, Purchaser (or its successor as permitted
in the second sentence of this Section 10.3) and any Affiliate of
Purchaser shall have the right to assign, and reassign, all of its
rights and obligations hereunder to any other Affiliate of Purchaser,
and a one-time right to assign all of its rights and obligations
hereunder to any other person who acquires in a sale or otherwise all
or substantially all of the Transferred Assets; provided, however, a
foreclosure by a creditor of Purchaser shall not be deemed an
assignment for purposes of the one-time right of assignment contained
herein (but shall apply to any subsequent assignment by such
creditor).
(b) Notwithstanding any provision of this Agreement to the
contrary, Purchaser hereby acknowledges and agrees that Sellers may
collaterally assign their respective rights, title
72
and interest to any payments under this Agreement to General Electric
Capital Corporation, as collateral agent (in such capacity, the
"Collateral Agent"), pursuant to the Seller Credit Agreement and
Purchaser and Foamex hereby consents to such assignment. Furthermore,
Purchaser and Foamex hereby acknowledge and agree that upon receipt of
written notice from the Collateral Agent that an "Event of Default"
has occurred pursuant to the Seller Credit Agreement, Purchaser will
tender any payments due under this Agreement to the Collateral Agent
in accordance with the instructions set forth in such notice;
provided, however, in the event that Purchaser tenders payment to
Sellers, such payment shall be a complete discharge of Purchaser's
obligation to the Collateral Agent and Purchaser and Foamex shall
thereafter have no further liability to the Collateral Agent with
respect to such payment.
(c) Notwithstanding any provision of this Agreement to the
contrary, Sellers hereby acknowledge and agree that Purchaser and
Foamex may collaterally assign their respective rights, title and
interest to any payments under this Agreement to any creditor of
Purchaser or Foamex. Furthermore, Sellers hereby acknowledge and
agree that upon receipt of written notice from such creditor that an
"Event of Default" has occurred, Sellers will tender any payments due
under this Agreement to such creditor in accordance with the
instructions set forth in such notice; provided, however, in the event
that Sellers tender payment to Purchaser, such payment shall be a
complete discharge of Sellers' obligation to such creditor and Sellers
shall thereafter have no further liability to such creditor with
respect to such payment.
10.4 Notices. Unless otherwise provided herein, any
notice, request, instruction or other document to be given hereunder
by either party to the other shall be in writing and shall be deemed
to have been duly given if delivered by hand or sent by facsimile
(with confirmation by facsimile answer back) or mailed by certified or
registered mail, postage prepaid, return receipt requested (such
mailed notice to be effective on the date such receipt is
acknowledged), as follows:
If to Sellers, addressed to:
JPS Textile Group, Inc.
555 N. Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: David H. Taylor
Facsimile No.: (803) 271-9939
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With a copy to:
Odyssey Partners, L.P.
31 West 52nd Street, 17th Floor
New York, New York 10019
Attention: Stephen Berger
Facsimile No.: (212) 708-0750
and
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Simeon Gold, Esq.
Facsimile No.: (212) 310-8007
If to Purchaser, addressed to:
JPS Automotive Products Corp.
29 Stevens Street
Greenville, South Carolina 29602
Attention: Jerry A. Burns
Facsimile No.: (803) 239-2332
With a copy to:
Foamex International Inc.
823 Waterman Avenue
East Providence, Rhode Island 02914
Attention: Robert J. Vanaria
Facsimile No.: (401) 435-4205
`21' International Holdings, Inc.
153 East 53rd Street
Suite 5900
New York, New York 10022
Attention: Phillip N. Smith, Esq.
Facsimile No.: (212) 593-1363
and
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Laurence D. Weltman
Facsimile No.: (212) 821-8111
or to such other place with such other copies as either party may
designate as to itself by written notice to the others.
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10.5 Choice of Law. The Agreement shall be construed and
interpreted, and the rights of the parties determined, in accordance
with the laws of the State of New York (without reference to the
choice of law provisions of New York law).
10.6 Entire Agreement; Amendments and Waivers. This
Agreement and the Ancillary Agreements, together with all Exhibits and
Schedules hereto and thereto, constitutes the entire Agreement among
the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No supplement, modification
or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
10.7 Multiple Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
10.8 Expenses; Break-up Fee. (a) Except as set forth in
Sections 2.2 hereof and 10.8(b) below, or as otherwise specified
herein, each party hereto shall pay its own legal, accounting, out-of-
pocket and other expenses incident to this Agreement; provided,
however, in the event the transactions contemplated by this Agreement
are consummated, then (without regard to any materiality standard or
any environmental matter disclosed in any schedule or elsewhere) with
respect to (i) any sales, recording, transfer, use or other similar
taxes or fees or Excluded MSBT imposed as a result of the sale of the
Business including the Business of Cramerton to Purchaser pursuant to
this Agreement, (ii) costs and expenses incurred in connection with
the splitting of the Dunean, South Carolina manufacturing facility
which such costs and expenses are estimated in Schedule 10.8 hereto,
and (iii) costs, fees or expenses paid in connection with (A)
transferring Permits, (B) obtaining new Permits and new Cramerton
Permits which shall include Permits that are temporary in nature to
allow the transfer of such to Purchaser, or any subsequent Permits
which are permanent in nature to enable the Purchaser to operate and
continue to operate the Business or to continue to operate the
Business in the manner as it is currently being conducted; provided,
however, that Sellers shall not be liable for any costs of Purchasers
in obtaining any new Permits or amendments to or modifications of
existing Permits which are required or necessary to be obtained in the
event Purchaser assigns its rights to an Affiliate beyond those which
would have
75
been required had it not done so, or (C) modification or alteration of
the Business, including the business of Cramerton, the Transferred
Assets and the assets of Cramerton or any capital purchase or
expenditure deemed necessary and advisable by Sellers or requested or
required by any Governmental Agency in order to obtain such Permit,
the first $1,000,000 of such costs (other than costs under this
clause (C) in respect of environmental matters and Environmental
Permits which shall be governed by Section 9.2(f) and (h) hereof)
which are described in clauses (i), (ii), and (iii) shall be borne 50%
by Sellers and 50% by Purchaser, and any additional costs set forth in
such clauses above $1,000,000 will be borne solely by Sellers;
provided, however, that with respect to such costs described in clause
(ii) above, Sellers and Purchaser agree that in the event the actual
cost of (x) reconfiguring the executive offices at such facility
exceeds $100,000 or (y) reconfiguring and/or modifying the management
information systems of Sellers with respect to the Transferred Assets
exceeds $150,000, then such excess shall be borne by Purchaser.
(b) In the event that the Closing hereunder does not occur
and the transactions contemplated hereby are not consummated by reason
of either (i) the fairness opinion referred to in Section 7.7 hereof
not being rendered to JPS or (ii) JPS not receiving the requisite
consents of its stockholders to approve the sale of the Business, then
Sellers shall pay to Foamex any out-of-pocket bank or lender
commitment fees and costs and expenses incurred by Foamex which are
reasonably documented, the obligations with respect to which were
consented to by Sellers in writing and which were actually incurred by
Purchaser or Foamex.
(c) In the event that the Closing hereunder does not occur
and the transactions contemplated hereby are not consummated by reason
of either (i) the failure of Purchaser to obtain title insurance for
the easements referred to in Section 8.13(c) or (ii) the failure of
the condition set forth in Section 7.12, which condition shall not
have been waived by Sellers, then Sellers shall pay to Foamex $500,000
as a reimbursement of that much of Purchaser's bank commitment fees
already paid.
(d) To the extent that Sellers receive an offer or proposal
whether or not legally binding to purchase the Business (including,
but not limited to, all of the Transferred Assets and Assumed
Liabilities), and a transaction involving the sale of all or
substantially all of the Business is subsequently consummated with any
person which is not an Affiliate of Foamex for an aggregate purchase
price (which shall be calculated to include only cash, cash
equivalents and the fair market value of any securities (including
general partnership interests) or the
76
assumption of debt by such person) which exceeds the Purchase Price
hereunder, which transaction shall be consummated within 15 months
from the date hereof, then Sellers shall pay to Foamex (i) a fee equal
to $2,637,500 plus (ii) any reasonable out-of-pocket fees, costs and
expenses, which were actually incurred by Purchaser or Foamex in
connection with this Agreement including, without limitation, those
expenses described in Section 10.8(b) hereof.
(e) All search charges and reasonable legal fees invoiced
in connection with the issuance of the title commitments or title
policies described in Section 8.13(c) shall be paid by Sellers. All
other search charges, reasonable legal fees and premiums charged in
connection with the issuance of the title commitments or title
policies obtained by Purchaser shall be paid by Purchaser.
(f) Subject to Section 9.2(h), in connection with the
capital projects contemplated by the capital expenditure budget
delivered by Sellers to Purchaser and Foamex, Sellers agree to
indemnify and hold harmless Purchaser and Foamex from and against the
cost of any and all Remedial Action with respect to asbestos,
including but not limited to removal, encapsulation, and/or post-
remedial monitoring, in excess of $400,000 (up to a maximum of
$250,000) actually paid by Purchaser in connection with such capital
project at the Taylor, South Carolina manufacturing facility.
10.9 Final Prospectus. Purchaser shall afford Sellers and
their representatives the reasonable opportunity to review, approve
and include in their sole discretion any changes to, amendments or
modifications of, or additions to the information other than Excluded
Information as set forth in Exhibit P hereto.
10.10 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other
such instrument.
10.11 Titles. The titles, captions or headings of the
Articles and Sections herein are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
10.12 Confidential Information. The parties acknowledge
that the transactions described herein are of a confidential nature
and shall not be disclosed except as provided herein in a
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dispute between the parties hereto or as required by law; provided,
however, in the event the transactions contemplated hereunder are not
consummated then Sellers shall be entitled to seek a protective order
or such other remedy to prevent the disclosure of such confidential
information to a third party. Neither Sellers, Purchaser nor their
respective Affiliates shall make any public disclosure of the specific
terms of this Agreement without the prior written consent of the other
parties hereto, except in a dispute between parties hereto or as
required by law. In connection with the negotiation of this
Agreement, the preparation for the consummation of the transactions
contemplated hereby, and the performance of obligations hereunder,
each party acknowledges that it will have access to confidential
information relating to the other parties. Each party hereto shall
treat such information as confidential, preserve the confidentiality
thereof and not duplicate or disclose such information in connection
with the transactions contemplated hereby, except to advisors, lenders
consultants and affiliates who also agree to treat such information as
confidential. Sellers, at a time and in a manner which they
reasonably determine and after prior notice to and consultation with
Purchaser, may notify employees, unions, bargaining agents and the
public at large of the fact of the subject transaction. In the event
of the termination of this Agreement for any reason whatsoever, each
party shall return to the others all documents, work papers and other
material (including all copies thereof) obtained in connection with
the transactions contemplated hereby and will use all reasonable
efforts, including instructing its employees and others who have had
access to such information, to keep confidential and not to use any
such information, unless such information is now, or is hereafter
disclosed, through no act or omission of such party, in any manner
making it available to the general public.
10.13 Third Parties. Except as specifically set forth or
referred to herein, nothing expressed or implied herein is intended or
shall be construed to confer upon or give to any person or entity
other than the parties hereto, and their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
10.14 Specific Performance. Without limiting or waiving in
any respect any rights or remedies of Purchaser or Foamex under this
Agreement, or now or hereinafter existing at law or in equity or by
statute, Purchaser and Foamex shall be entitled to seek specific
performance of the obligations to be performed by the Sellers in
accordance with the provisions of this Agreement.
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10.15 Ancillary Documents. To the extent any Ancillary
Document contains any representation or warranty that provides for
different or conflicting rights, duties or obligations from those
representations and warranties contained herein the provisions of this
Agreement will control.
ARTICLE XI
FOAMEX GUARANTY
11.1 Foamex hereby irrevocably and unconditionally
guarantees the due and prompt payment and performance of all
obligations, covenants and agreements to be performed by Purchaser to
Sellers hereunder (the "Obligations"); provided, however, (a) Foamex
shall not be required to guarantee (i) the performance of any
Obligation of Purchaser which directly arises out of or results from
the breach (without regard to any materiality standard or any
environmental matter disclosed in any schedule or elsewhere) of any
representation, warranty, covenant or agreement made by any Seller to
Purchaser hereunder or (ii) Purchaser's Obligations under Section
9.2(b)(v) and (b) Foamex's obligation under this Section 11.1 shall
expire on the second anniversary of the Closing except to the extent
Sellers shall have made claims in writing against Foamex or Purchaser
by the second anniversary of the Closing Date and then only to the
extent made.
11.2 The guaranty to be provided by Foamex pursuant to
Section 11.1 hereof is the exclusive remedy of Sellers against Foamex
with respect to Sellers rights as against Purchaser (but not as to any
rights Sellers have directly against Foamex without regard to this
Article XI) and is a guaranty of payment and performance, not merely
of collection, and is independent of any other guaranty or surety of
the Obligations. If the Purchaser shall fail to perform or pay any
Obligation, Foamex shall pay or perform such Obligation as and when
due. Foamex hereby waives (i) promptness, diligence, notice,
disclosure, demand for, presentment, protest and dishonor, (ii) setoff
and counterclaim and (iii) any right to force the Sellers to proceed
first, concurrently or jointly against the Purchaser, any other
guarantor, surety or other co-obligor. Sellers hereby agree that
prior to enforcing their rights of payment and performance against
Foamex pursuant to Section 11.1 hereof with respect to any obligation,
covenant or agreement of Purchaser, Sellers shall have (i) made demand
on Purchaser to perform such obligation, covenant or agreement
hereunder, (ii) given Purchaser a reasonable opportunity to comply
with such obligation, covenant or agreement, and (iii) determined in
its reasonable discretion
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that Purchaser has not or will not comply with such obligation,
covenant or agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their
respective officers thereunto duly authorized, in multiple originals,
all as of the day and year first above written.
JPS TEXTILE GROUP, INC.
By__________________________
Name:
Title:
JPS AUTO INC.
By__________________________
Name:
Title:
JPS CONVERTER & INDUSTRIAL CORP.
By__________________________
Name:
Title:
JPS AUTOMOTIVE PRODUCTS CORP.
By__________________________
Name:
Title:
FOAMEX INTERNATIONAL INC., as to itself with
respect to its representations, warranties
and other agreements contained in this
Agreement and as Guarantor of Purchaser's
Obligations to Seller pursuant to Article 11
hereof
By__________________________
Name:
Title: